Common Carrier of Passenger

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Transportation Law Common Carrier of Passenger...

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Common Carrier of Passenger

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Nature of Responsibility Definition 1732;1733;1755 1 Ampang v. Guino-o Transit Apr 30, 1953 (NF) 1 Landicho v BTC Sep 20, 1956 (NF)................1 Isaac v. A.L. Ammen Aug 23, 1957...............1 Laguna v. Tiongson Apr 30, 1966..................3 La Mallorca v. De Jesus May 14, 1966..........6 Anuran v. Buño May 20, 1966........................7 Maranan v. Perez Jun 26, 1967.......................8 BTC v. Caguimbal Jan 24, 1968...................10 Del Castillo v. Jaymalin Mar 17, 1982.........11 Vasquez v. CA Sep 13, 1985.........................13 Mecenas v. CA Dec 14, 1989........................15 Gatchalin v. Delim Oct 21, 1991...................20 Trans-Asia v. CA Mar 4, 1996......................24 Negros Navigation v. CA Nov 17, 1997......28 Cervantes v. CA Mar 25, 1999......................34 Calalas v. CA May 31, 2000........................36 Jose v. CA Jan 18, 2000...............................38 Baritua v. Mercader Jan 23, 2001.................42 Presumption of Negligence 1756....................46 Picart v. Smith Mar 15, 1918.........................46 Macawili v. Panay Mar 1,1956 (NF).............48 Sy v. Malate Taxicab Nov 29,1957..............48 Abeto v. PAL July 30,1982..........................50 PAL v. NLRC Sep 2,1983 (PDF)..................52 Bachelor Express v. CA July 231,1990........52 Mallari v. CA Jan 31, 2000..........................57 Breach of Contract of Carriage.......................59 Singson v. CA Nov 18, 1997, GR 119995....59 Cathay Pacific v. Vazquez Mar 14, 2003, GR#150843 63 Singapore Airlines v. Andion Dec 10, 2003, GR142305 Japan Airlines v. Asuncion Jan 28, 2005, GR#161730 72 Northwest v. Chiong Jan 31, 2008, GR 155550 74 Vector Shipping v. Macasa Jul 21, 2008, GR 160219 79 Japan Airlines v. Simangan Apr 22, 2008...83 Philippine Airlines v. CA Sep 22, 2008.......89 Northwest v. Hashan Feb 3, 2010 (NF-internet) 93 Spouses Villoria v. Continental Jan 16, 201293 Fortuitous Event as a Defense.......................103 Lasam v. Smith 45 PHIL 657, Feb 2, 1924. 103 Necesito v. Paras 104 SCRA 84, Jun 30, 1958 (NF) 105 Juntilla v. Fontanar May 31, 1985..............105 Yobido v. CA Oct 17, 1997........................107 Gacal v. PAL 183 SCRA 189....................109 Pilapil v. CA Dec 22, 1989.......................112 Fortune Express v. CA 305 SCRA 14, Mar 18, 1999 114 JAL v. CA Aug 7, 1998.............................118 Singapore Airlines v. Andion Dec 10, 2003, GR142305 Duration of Responsibility............................123 Bataclan v. Medina Oct 22, 1957................123 La Mallorca v. CA July 27, 1966................125 Phil. Rabbit v. IAC Aug 30, 1990...............127 PAL v. CA Sep 15, 1993............................133 Trans-Asia Shipping v. CA Mar 4, 1996. .137

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Baliwag Transit v. CA May 15, 1996.........142 Negros NavigationCo., v. CA Nov 7, 1997145 JAL v. CA Aug 7, 1998.............................152 Limited Liability; Validity of Stipulations 1757; 1758 Lara v. Valencia June 30, 1958...................154 Bataclan v. Medina Oct 22,1957.................156 Maranan v. Perez June 26,1967...................158 Baliwag Transit v. CA May 5,1996............160 Fabre v. CA July 26,1996............................163 Mallari v. CA Jan 31,2000.........................167 Contributory Negligence of Pax 1761; 1762.170 Cangco v. MRR Oct 14,1918......................170 Del Prado v. MRR Mar 7, 1929..................175 Briñas v. People Nov 25,1983.....................176 PNOC v. CA Oct 4,1985...........................179 Dangwa v. CA Oct 7,1991...........................186 Fortune Express v. Ca Mar 18,1999..........189 Isaac v. Al Ammen 101 PHIL 1046...........193 Responsibility for Acts of Strangers and Co-pax 1763 MRR v. Ballesteros Apr 29,1966................195 Bacarro v. Castaño Nov 5,1982.................197 Gacal v. PAL Mar 15,1990........................199 Fortune Express v. CA Mar 18,1999..........202 LRT Authority v. Marjorie Navidad Feb 6, 2003 Liability for Quasi-Delict..............................208 China Airlines v. CA May 18,1990............208 Calalas v. CA May 31,2000.......................212 Phoenix Construction v. IAC Mar 10, 1987215 PNR v. CA Oct 15, 2007............................219 Dy Teban v. Jose Ching, Liberty Forest Feb 4, 2008 Liability for Injury to Stevedores..................229 Sulpicio Lines v. CA July 14, 1995...........229

Nature of 1732;1733;1755

Ampang v. Guino-o Transit Landicho v BTC

Responsibility

Definition

Apr 30, 1953 (NF)

Sep 20, 1956 (NF)

Isaac v. A.L. Ammen G.R. No. L-9671

Aug 23, 1957 August 23, 1957

CESAR L. ISAAC, plaintiff-appellant, vs. A. L. AMMEN TRANSPORTATION defendant-appellee. Angel S. Gamboa for appellant. Manuel O. Chan for appellee. BAUTISTA ANGELO, J.:

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A. L. Ammen Transportation Co., Inc., hereinafter referred to as defendant, is a corporation engaged in the business of transporting passengers by land for compensation in the Bicol provinces and one of the lines it operates is the one connecting Legaspi City, Albay with Naga City, Camarines Sur. One of the buses which defendant was operating is Bus No. 31. On May 31, 1951, plaintiff boarded said bus as a passenger paying the required fare from Ligao, Albay bound for Pili, Camarines Sur, but before reaching his destination, the bus collided with a motor vehicle of the pick-up type coming from the opposite direction, as a result of which plaintiff's left arm was completely severed and the severed portion fell inside the bus. Plaintiff was rushed to a hospital in Iriga, Camarines Sur where he was given blood transfusion to save his life. After four days, he was transferred to another hospital in Tabaco, Albay, where he under went treatment for three months. He was moved later to the Orthopedic Hospital where he was operated on and stayed there for another two months. For these services, he incurred expenses amounting to P623.40, excluding medical fees which were paid by defendant. As an aftermath, plaintiff brought this action against defendants for damages alleging that the collision which

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resulted in the loss of his left arm was mainly due to the gross incompetence and recklessness of the driver of the bus operated by defendant and that defendant incurred in culpa contractual arising from its non-compliance with its obligation to transport plaintiff safely to his, destination. Plaintiff prays for judgment against defendant as follows: (1) P5,000 as expenses for his medical treatment, and P3,000 as the cost of an artificial arm, or a total of P8,000; (2) P6,000 representing loss of earning; (3) P75,000 for diminution of his earning capacity; (4) P50,000 as moral damages; and (5) P10,000 as attorneys' fees and costs of suit. Defendant set up as special defense that the injury suffered by plaintiff was due entirely to the fault or negligence of the driver of the pick-up car which collided with the bus driven by its driver and to the contributory negligence of plaintiff himself. Defendant further claims that the accident which resulted in the injury of plaintiff is one which defendant could not foresee or, though foreseen, was inevitable. The after trial found that the collision occurred due to the negligence of the driver of the pick-up car and not to that of the driver of the bus it appearing that the latter did everything he could to avoid the same but that notwithstanding his efforts, he was not able to avoid it. As a consequence, the court dismissed complaint, with costs against plaintiff. This is an appeal from said decision. It appears that plaintiff boarded a bus of defendant as paying passenger from Ligao, Albay, bound for Pili, Camarines Sur, but before reaching his destination, the bus collided with a pick-up car which was coming from the opposite direction and, as a, result, his left arm was completely severed and fell inside the back part of the bus. Having this background in view, and considering that plaintiff chose to hold defendant liable on its contractual obligation to carry him safely to his place of destination, it becomes important to determine the nature and extent of the liability of a common carrier to a passenger in the light of the law applicable in this jurisdiction. In this connection, appellant invokes the rule that, "when an action is based on a contract of carriage, as in this case, all that is necessary to sustain recovery is proof of the existence of the contract of the breach thereof by act or omission", and in support thereof, he cites several Philippine cases.1 With the ruling in mind, appellant seems to imply that once the contract of carriage is established and there is proof that the same was broken by failure of the carrier to transport the passenger safely to his destination, the liability of the former attaches. On the other hand, appellee claims that is a wrong presentation of the rule. It claims that the decisions of this Court in the cases cited do not warrant the construction sought to be placed upon, them by appellant for a mere perusal thereof would show that the liability of the carrier was predicated not upon mere breach of its contract of carriage but upon the finding that its negligence was found to be the direct or proximate cause of the injury complained of. Thus, appellee contends that "if there is no negligence on the part

of the common carrier but that the accident resulting in injuries is due to causes which are inevitable and which could not have been avoided or anticipated notwithstanding the exercise of that high degree of care and skill which the carrier is bound to exercise for the safety of his passengers", neither the common carrier nor the driver is liable therefor. We believe that the law concerning the liability of a common carrier has now suffered a substantial modification in view of the innovations introduced by the new Civil Code. These innovations are the ones embodied in Articles 1733, 1755 and 1756 in so far as the relation between a common carrier and its passengers is concerned, which, for ready reference, we quote hereunder: ART. 1733. Common carriers, from the nature of their business and for reasons of public policy, are bound to observe extra ordinary 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 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 articles 1755 and 1756. 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 of or injuries to passengers, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence as prescribed in articles 1733 and 1755. The Code Commission, in justifying this extraordinary diligence required of a common carrier, says the following: A common carrier is bound to carry the passengers safely as far as human care and foresight can provide, using the utmost deligence of very cautions persons, with due regard for all circumstances. This extraordinary diligence required of common carriers is calculated to protect the passengers from the tragic mishaps that frequently occur in connection with rapid modern transportation. This high standard of care is imperatively demanded by the precariousness of human life and by the consideration that every person must in every way be safeguarded against all injury. (Report of the Code Commission, pp. 35-36)" (Padilla, Civil Code of the Philippines, Vol. IV, 1956 ed., p. 197). From the above legal provisions, we can make the following restatement of the principles governing the liability of a common carrier: (1) the liability of a carrier is contractual and arises upon breach of its obligation. There is breach if it fails to exert extraordinary diligence according to all circumstances of each case; (2) a carrier is obliged to carry its passenger with the utmost diligence of a

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very cautious person, having due regard for all the circumstances; (3) a carrier is presumed to be at fault or to have acted negligently in case of death of, or injury to, passengers, it being its duty to prove that it exercised extraordinary diligence; and (4) the carrier is not an insurer against all risks of travel. The question that now arises is: Has defendant observed extraordinary diligence or the utmost diligence of every cautious person, having due regard for all circumstances, in avoiding the collision which resulted in the injury caused to the plaintiff? After examining the evidence in connection with how the collision occurred, the lower court made the following finding: Hemos examinado muy detenidamente las pruebas presentadas en la vista, principalmente, las declaraciones que hemos acotado arriba, y hernos Ilegado a la conclusion de que el demandado ha hecho, todo cuanto estuviere de su parte para evitar el accidente, pero sin embargo, no ha podido evitarlo. EI hecho de que el demandado, antes del choque, tuvo que hacer pasar su truck encima de los montones de grava que estaban depositados en la orilla del camino, sin que haya ido mas alla, por el grave riesgo que corrian las vidas de sus pasajeros, es prueba concluyente de lo que tenemos dicho, a saber: — que el cuanto esuba de su parte, para evitar el accidente, sin que haya podidoevitardo, por estar fuera de su control. The evidence would appear to support the above finding. Thus, it appears that Bus No. 31, immediately prior to the collision, was running at a moderate speed because it had just stopped at the school zone of Matacong, Polangui, Albay. The pick-up car was at full speed and was running outside of its proper lane. The driver of the bus, upon seeing the manner in which the pick-up was then running, swerved the bus to the very extreme right of the road until its front and rear wheels have gone over the pile of stones or gravel situated on the rampart of the road. Said driver could not move the bus farther right and run over a greater portion of the pile, the peak of which was about 3 feet high, without endangering the safety of his passengers. And notwithstanding all these efforts, the rear left side of the bus was hit by the pick-up car. Of course, this finding is disputed by appellant who cannot see eye to eye with the evidence for the appellee and insists that the collision took place because the driver of the bus was going at a fast speed. He contends that, having seen that a car was coming from the opposite direction at a distance which allows the use of moderate care and prudence to avoid an accident, and knowing that on the side of the road along which he was going there was a pile of gravel, the driver of the bus should have stopped and waited for the vehicle from the opposite direction to pass, and should have proceeded only after the other vehicle had passed. In other words, according to appellant, the act of the driver of the bus in squeezing his way through of the

bus in squeezing his way through between the oncoming pick-up and the pile of gravel under the circumstances was considered negligent. But this matter is one of credibility and evaluation of the evidence. This is evidence. This is the function of the trial court. The trial court has already spoken on this matter as we have pointed out above. This is also a matter of appreciation of the situation on the part of the driver. While the position taken by appellant appeals more to the sense of caution that one should observe in a given situation to avoid an accident or mishap, such however can not always be expected from one who is placed suddenly in a predicament where he is not given enough time to take the course of action as he should under ordinary circumstances. One who is placed in such a predicament cannot exercise such coolness or accuracy of judgment as is required of him under ordinary circumstances and he cannot therefore be expected to observe the same judgment, care and precaution as in the latter. For this reason, authorities abound where failure to observe the same degree of care that as ordinary prudent man would exercise under ordinary circumstances when confronted with a sadden emergency was held to be warranted and a justification to exempt the carrier from liability. Thus, it was held that "where a carrier's employee is confronted with a sudden emergency, the fact that he is obliged to act quickly and without a chance for deliberation must be taken into account, and he is held to the some degree of care that he would otherwise be required to exercise in the absence of such emergency but must exercise only such care as any ordinary prudent person would exercise under like circumstances and conditions, and the failure on his part to exercise the best judgement the case renders possible does not establish lack of care and skill on his part which renders the company, liable. . . . (13 C. J. S., 1412; 10 C. J.,970). Considering all the circumstances, we are persuaded to conclude that the driver of the bus has done what a prudent man could have done to avoid the collision and in our opinion this relieves appellee from legibility under our law. A circumstances which miliates against the stand of appellant is the fact borne out by the evidence that when he boarded the bus in question, he seated himself on the left side thereof resting his left arm on the window sill but with his left elbow outside the window, this being his position in the bus when the collision took place. It is for this reason that the collision resulted in the severance of said left arm from the body of appellant thus doing him a great damage. It is therefore apparent that appellant is guilty of contributory negligence. Had he not placed his left arm on the window sill with a portion thereof protruding outside, perhaps the injury would have been avoided as is the case with the other passenger. It is to be noted that appellant was the only victim of the collision. It is true that such contributory negligence cannot relieve appellee of its liability but will only entitle it to a reduction of the amount of damage caused (Article 1762, new Civil Code), but this is a circumstance which further militates against the position taken by appellant in this case.

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It is the prevailing rule that it is negligence per se for a passenger on a railroad voluntarily or inadvertently to protrude his arm, hand, elbow, or any other part of his body through the window of a moving car beyond the outer edge of the window or outer surface of the car, so as to come in contact with objects or obstacles near the track, and that no recovery can be had for an injury which but for such negligence would not have been sustained. (10 C. J. 1139) Plaintiff, (passenger) while riding on an interurban car, to flick the ashes, from his cigar, thrust his hand over the guard rail a sufficient distance beyond the side line of the car to bring it in contact with the trunk of a tree standing beside the track; the force of the blow breaking his wrist. Held, that he was guilty of contributory negligence as a matter of law. (Malakia vs. Rhode Island Co., 89 A., 337.) Wherefore, the decision appealed from is affirmed, with cost against appellant. Paras, C.J., Bengzon, Padilla, Montemayor, Reyes, A., Labrador, Concepcion, Endencia and Felix, JJ., concur.

heirs of the deceased Ricardo C. Tiongson, against petitioner. In its answer to the complaint, petitioner alleged that it had observed utmost diligence in operating Bus No. 204 on June 3, 1958; that its driver could not have prevented or avoided the accident which was fortuitous insofar as it was concerned; and that the proximate cause of the death of passenger Tiongson "as the negligence and imprudence of one Porvenir Aralar Barretto and his employer Santiago Syjuco, Inc. and/or Seven-Up Bottling Company of the Philippines, or, in the alternative, the gross negligence of the highway authorities in failing to keep and maintain the national roads in good repair at all times and safe condition for all motorists". Finding petitioner's driver to blame for the accident, the trial court, on December 28, 1959, rendered judgment as follows:

Laguna v. Tiongson Apr 30, 1966 G.R. No. L-22143 April 30, 1966

Wherefore, judgment is hereby rendered sentencing defendant to pay to plaintiffs the sum of P50,000.00 by way of actual, compensatory and moral damages, and the further sum of P5,000.00 as counsel fees, with costs against defendant.

LAGUNA TAYABAS BUS CO., petitioner, vs. ANTONIO TIONGSON and FELICITAS J. TIONGSON, respondents.

Both parties appealed to the Court of Appeals — petitioner from the portion thereof holding it liable for damages for breach of contract, and respondents from the portion determining the amount of damages awarded to them.

Ozaeta, Gibbs and Ozaeta and D. E. de Lara and Associates for petitioner. Ejercito, Velilla and Balonkita for respondents.

Meanwhile, on July 31, 1961, the Court of First Instance of Laguna, in Criminal Case No. B-3311, acquitted Claro Samonte, petitioner's driver, of the offense charged mentioned heretofore, on the ground of reasonable doubt. Upon the other hand, on October 28, 1963, the Court of Appeals rendered the decision appealed from.

DIZON, J.: This is an appeal by certiorari taken by Laguna Tayabas Bus Co., a common carrier engaged in the land transportation business in the southern Tagalog provinces, to review the decision of the Court of Appeals affirming that of the Court of First Instance of Bulacan in Civil Case No. 1760 entitled "Antonio Tiongson, Paz C. Tiongson and Felicitas J. Tiongson, plaintiffs, vs. Laguna Tayabas Bus Company, defendant" sentencing the latter to pay the former the sum of P50,000.00 by way of actual, compensatory and moral damages, and the further sum of P5,000.00 as attorney's fees and costs. On June 3, 1958, about two kilometers past the poblacion of Bay, Laguna, petitioner's LTB Bus No. 204, coming from San Pablo City towards Manila, collided with a 7-Up delivery truck coming from the opposite direction. As a consequence the bus fell on its right side on the shoulder of the road resulting in injuries to many of its passengers and the death of Ricardo C. Tiongson and a woman passenger. Both drivers were prosecuted for double homicide, multiple serious physical injuries and damage to property, thru reckless imprudence, in the Court of First Instance of Laguna, but a separate action for damages for breach of contract of carriage was filed in the Court of First Instance of Bulacan (Civil Case No. 1760) by respondents herein, as

In its first assignment of error, petitioner contends that the Court of Appeals erred in affirming instead of reversing the findings made by the trial court to the effect that the driver of the LTB bus and not the driver of the 7-Up truck was to blame for the accident in question. The following are the pertinent facts found established by the trial court: About two kilometers past the poblacion of Bay, Laguna, defendant's LTB Bus No. 204 collided with the 7-Up delivery truck which came from the opposite direction, that is, from Manila towards San Pablo City. As a result of the collision, defendant's bus fell on the right side on the shoulder of the road, which resulted in injuries to many passengers, and the death of Ricardo C. Tiongson and a woman passenger. ... Having been notified of the collision, Gerardo Dilla, chief of police of Bay, Laguna, immediately proceeded to the scene thereof. The Bay Chief of Police made an on-the-spot investigation and prepared a sketch of the spot where the collision occurred. From the findings of the chief of police, it appears that the road had an asphalted pavement, 5-1/2 meters wide, and shoulders on both sides, the shoulder going towards the poblacion of Bay being 65

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cm. wide and the one on the opposite side having a width of 70 cm. The chief of police also saw on the asphalted pavement a somewhat rectangular depression, 3 meters long, 2 meters wide, and 12 cm. deep, on the left side of the road going north, that is, going towards Manila . . . . . Perhaps of most value to plaintiffs is the testimony of Rufo Reaño, a farmer and a barrio lieutenant of Tabon, Bay, Laguna. The substance of Rufo's testimony is that ... he saw two LTB trucks, following each other, from south to north at a distance of about 30 meters from each other; that he also saw a 7-Up truck going from north to south; that the leading LTB bus (presumably Bus No. 204) was travelling faster than the 7-Up truck; that suddenly, he heard the impact of a collision between the leading LTB bus and the 7-Up truck; that as a result of the collision, the LTB bus fell on its side while the 7-Up truck turned crosswise on the road; . . . . Samonte testified that ... while he was in barrio Tabon, Bay, Laguna, at about 5:45 that same afternoon, he first saw the 7-Up truck from a distance of about 150 meters; that he was then running at about 30 kilometers per hour; that upon sighting the 7-Up truck, he slackened his speed and placed his bus on the right side of the road; that when the distance between his bus and the 7-Up truck had been reduced to about ten (10) meters and foreseeing that he could not avoid being hit by the truck which had swerved to the left, he applied his brakes and maneuvered his bus towards the right side of the road so much so that the right wheels were already on the shoulder of the road; but that before he could come to a complete stop, at a speed then of only 10 kilometers per hour, the left front mudguard of his bus was hit by the 7-Up truck. After thus evaluating the prosecution evidence and the testimony of petitioner's witnesses, namely, Claro Samonte, its driver, Ernesto Alcantara, its conductor, and Teotimo de Mesa, its Chief Clerk, the trial court said: In moving forward to a conclusion in this case, certain general principles must be borne in mind, namely: (1) the liability of a carrier is contractual and arises upon its breach of the obligation, and there is a breach if it fails to exercise extraordinary diligence according to all the circumstances of each case; (2) a carrier is obliged to carry its passengers with the utmost diligence of a very cautious person, having due regard for all the circumstances; (3) a carrier is presumed to be at fault or to have acted negligently in case of death of, or injury to its passengers, it being its duty to prove that it exercised extra-ordinary diligence; (4) a carrier is not an insurer against all risks of travel (Isaac vs. A.L. Ammen Transportation Co., Inc., G.R. No. L-9671, August 28, 1957); and (5) that a carrier shall not be responsible for events which could not be foreseen, or which, though foreseen, were inevitable (Alfaro vs. Ayson, 54 O.G. 7922). In the light of the foregoing principles and the evidence of record, the main questions for determination are whether defendant has successfully discharged its burden of disproving its presumptive negligence because of its failure to transport safely to his destination the deceased Ricardo

C. Tiongson, and whether defendant has sufficiently established its defense of fortuitous event. After a review of the record, the court believes that defendant has not successfully discharged its burden. Defendant's driver, Samonte, wanted to impress the court that he was entirely free from fault or negligence in the collision between his bus and the 7-Up truck. This he testified that when he first sighted the 7-Up truck, 150 meters away from his bus, the said truck was then running between 50 and 60 kilometers per hour, while he, for his part, was then going only at about 30 kilometers per hour. This testimony of Samonte is to be seriously doubted. In the first place, he and his conductor, Alcantara, must be necessarily biased witnesses for they are both employed by the defendant. In the second place, it is of common knowledge that a delivery truck fully loaded with cases of soft drinks is a slower-moving vehicle than a passenger bus. A passenger bus is necessarily designed for speed because travellers usually want to arrive at their destinations within the shortest possible time, whereas soft drinks delivery trucks are built for the safety of its bottled cargo than for speed. In the third place, Samonte's claim that when he applied the brakes of his bus when it was then about 10 meters away from the 7-Up truck, the speed of his bus was only about 10 kilometers per hour cannot be given full credence. He stated that after applying the brakes, his bus still moved less than 5 meters before being hit by the 7Up truck. If his speed had only been 10 kilometers per hour, upon the application of the brakes, he would have stopped the bus within a much shorter distance. But even assuming that defendant's bus was then running only at approximately 10 kilometers per hour when the driver Samonte first applied the brakes, it would seem that he applied the brakes too late. Samonte testified that upon sighting the 7-Up truck at a distance of approximately 150 meters, he slackened his speed by first reducing it to 20 and then to 10 kilometers per hour, and brought his bus towards the right side of the road; and that it was only when the distance between the two vehicles was only about 10 meters that he first stepped on the brakes. The court feels that it was not enough for Samonte to slacken his speed gradually until he came down to 10 kilometers per hour. He should have stopped his bus immediately upon seeing the 7-Up truck veer towards his lane after jumping out of the big depression on the asphalted pavement. He was not unaware of such depression, and the location thereof for he had been travelling on the same route for a considerable length of time prior to 3 June 1958.1äwphï1.ñët It will not do for defendant's driver to claim that he could not avoid the 7-Up truck because if he did he would have fallen into the ditch on his side of the highway. If he was placed in the position claimed by him, it was entirely his fault, for he could have easily avoided the 7-Up truck if he had applied his brakes on time, while the 7-Up truck was still more than 10 meters away from him. Besides, instead of applying the brakes while the 7-Up truck was still some distance away from him, he could have veered to the left side of the road, going north, where there was sufficient space for him, taking into account that the asphalted

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pavement of the road was 5-1/2 meters wide with a shoulder of 65 cm. wide. In such posture, he could have avoided collision with the 7-Up truck which, on the other hand, would have also been free to right its direction after it came out from the big depression. An examination of the sketch prepared by the chief of police of Bay, Laguna (Exhibit 1) shows that the collision between defendant's bus and the 7-Up truck occurred only 8 meters away from the big depression. This short distance would seem to indicate that defendant's driver, Samonte, knowing exactly the location of the depression, and anticipating that the 7-Up truck coming the opposite direction would veer to the left of the said depression in order to avoid the same, raced with the 7-Up truck in order that he could first pass through the space between the depression and what was left of the asphalted pavement of the lane on which he was then travelling, obviously for the purpose of avoiding delay. Because of this, the 7-Up truck driver who must have intended to pass on the said space in order to avoid going through the depression, was suddenly forced into the depression, in order to avoid a head-on collision with defendant's bus. But unfortunately, after bumping out of the depression, the truck veered to the left and hit defendant's bus on the left front side, thereby causing the bus to overturn on its right side. The Court of Appeals agreed with the above being of the opinion that the testimony of Rufo Reaño, a barrio lieutenant and a disinterested eye-witness of the accident, was credible; that, to the contrary, the testimony of Claro Samonte and Ernesto Alcantara, driver and conductor respectively of petitioner's bus, was improbable and biased; that Samonte actually applied the brakes on his bus too late to avoid the accident because at that time the distance between the two vehicles was only ten meters; that Samonte was well aware of the condition of the road, particularly of the existence of a depression near the place where the two vehicles collided, because he had been driving through and along the same route for a considerable period of time prior to the accident; that on May 16, 1958 or only two weeks before the fatal collission, Samonte had been apprehended for overspeeding, and finally, that certain admissions made on the witness stand by Teotimo de Mesa, petitioner's chief clerk since 1948, sufficiently showed that the company had not exercised due care and diligence in connection with the hiring of Samonte. The Court of Appeals therefore expressly found that petitioner not only failed to disprove the presumption of negligence arising against it (Articles 1733, 1755, and 1756 of the New Civil Code) but that, on the contrary, its negligence had been established by more than mere preponderance of evidence. A thorough review of the record by Us has not disclosed any material fact or circumstance showing that the trial court and the Court of Appeals erred in the respects covered by the issue under consideration. The remaining assignment of errors refer to the correctness of the decision appealed from in so far as it grants moral damages to respondents, the amount of the award for loss

of earnings, and the additional award of P5,000 for attorney's fees. Petitioner's liability for moral damages can not now be seriously questioned in view of the provisions of Articles 1764 and 2206, Nos. 1 and 3 of the New Civil Code and the ruling in Necesito, et al. vs. Paras, et al., G.R. Nos. L10605-06, Resolution on motion to reconsider, September 11, 1958 where, speaking through, Mr. Justice Jose B.L. Reyes, We said: In awarding to the heirs of the deceased Severino Garces an indemnity for the loss of "her guidance, protection and company," although it is but moral damages, the Court took into account that the case of a passenger who dies in the course of an accident, due to the carrier's negligence, constitutes an exception to the general rule. While, as pointed out in the main decision, under Article 2220 of the new Civil Code there can be no recovery of moral damages for a breach of contract in the absence of fraud (malice) or bad faith, the case of a violation of the contract or carrier leading to a passenger's death escapes this general rule, in view of Article 1764 in connection with Article 2206, No. 3 of the new Civil Code. "Art. 1764. Damages in cases comprised in this section shall be awarded in accordance with Title XVIII of this Book, concerning Damages. Article 2206 shall also apply to the death of a passenger caused by the breach of contract by a common carrier. "Art. 2206. x x x

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"(3) The spouse, legitimate and illegitimate descendants and ascendants of the deceased may demand moral damages for mental anguish by reason of the death of the deceased." Being a special rule limited to cases of fatal injuries, these articles prevail over the general rule of Article 2220. Special provisions control general ones (Lichauco & Co. vs. Apostol, 44 Phil. 138; Sancho vs. Lizarrage, 55 Phil. 601). It thus appears that under the new Civil Code, in case of accident due to a carrier's negligence, the heirs of a deceased passenger may recover moral damages, even though a passenger who is injured, but manages to survive, is not entitled to them. There is, therefore, no conflict between our main decision in the instant case and that of Cachero vs. Manila Taxicab Co., G.R. No. 8721, May 23, 1957, where the passenger suffered injuries, but did not lose his life. The above ruling was followed and applied in Cariaga vs. L.T.B., G.R. No. L-11037, December 29, 1960; Bernardo vs. Luna, G.R. Nos. L-13328-29, September 29, 1961; and Martinez vs. Gonzales, G.R. No. L-17570, October 30, 1962. Petitioner contends that the compensatory and moral damages awarded are excessive. We do not find them to be

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so, considering the pertinent facts of record. The deceased Ricardo C. Tiongson, at the time of his death on June 3, 1958, was only thirty-two years old. He was a Bachelor of Science in Commerce (Far Eastern University - 1949) and obtained employment with the San Pablo City Branch of the People's Bank in 1954 with a starting monthly salary of P150.00 which, after six months in the service, was increased to P175.00. While thus employed with the People's Bank, he was also administering his mother's farm in Calamba, Laguna. He was the only son of respondent spouses Antonio Tiongson and Paz Cailles Tiongson, and had been married hardly three years when he died. The foregoing circumstances, in our opinion, fully justify the damages awarded in the appealed decision which are substantially in accord with the rules of law contained in Articles 1764 and 2206, Nos. 1 and 3 of the New Civil Code. Lastly, it is contended that the Court of Appeals erred in affirming the trial court's award for attorney's fees. This contention is likewise untenable. Considering the provisions of Article No. 2208, Nos. 2 and 11 of the New Civil Code, and the proven fact that petitioner ignored respondents' demand for an amicable settlement of their claim, the award of attorney's fees in this case seems to be completely justified (Rex Taxicab Co., Inc. vs. Bautista, G.R. No. L-15392, September 30, 1960; Necesito vs. Paras, supra). Wherefore, the decision appealed, from is affirmed, with costs. Bengzon, C.J., Bautista Angelo, Concepcion, Reyes, J.B.L., Barrera, Regala, Makalintal, Bengzon, J.P., and Sanchez, JJ., concur. Zaldivar, J., took no part. La Mallorca v. De Jesus May 14, 1966 G.R. No. L-21486 May 14, 1966 LA MALLORCA and PAMPANGA BUS COMPANY, petitioner, vs. VALENTIN DE JESUS, MANOLO TOLENTINO and COURT OF APPEALS, respondents. Manuel O. Chan for petitioners. Sixto T. Antonio for respondents. MAKALINTAL, J.: La Mallorca and Pampanga Bus Company, Inc., commonly known as La Mallorca-Pambusco, filed this appeal by certiorari from the decision of the Court of Appeals which affirmed that rendered by the Court of First Instance of Bulacan in its civil case No. 2100, entitled "Valentin de Jesus and Manolo Tolentino vs. La Mallorca-Pambusco." The court a quo sentenced the defendant, now petitioner, "to pay to plaintiffs the amount of P2,132.50 for actual damages; P14,400.00 as compensatory damages;

P10,000.00 to each plaintiff by way of moral damages; and P3,000.00 as counsel fees." Two errors are attributed to the appellate Court: (1) "in sustaining the decision (of the court a quo) holding that the petitioners were liable for the accident which was caused by a blow-out of one of the tires of the bus and in not considering the same as caso fortuito," and (2) in holding petitioners liable for moral damages. The suit arose by reason of the death of Lolita de Jesus, 20year old daughter of Valentin de Jesus and wife of Manolo Tolentino, in a head-on collision between petitioner's bus, on which she was a passenger, and a freight truck traveling in the opposite direction, in a barrio in Marilao Bulacan, in the morning of October 8, 1959. The immediate cause of the collision was the fact that the driver of the bus lost control of the wheel when its left front tire suddenly exploded. Petitioner maintains that a tire blow-out is a fortuitous event and gives rise to no liability for negligence, citing the rulings of the Court of Appeals in Rodriguez vs. Red Line Transportation Co., CA-G.R. No. 8136, December 29, 1954, and People vs. Palapad, CA-G.R. No. 18480, June 27, 1958. These rulings, however, not only are not not binding on this Court but were based on considerations quite different from those that obtain in the at bar. The appellate Court there made no findings of any specified acts of negligence on the part of the defendants and confined itself to the question of whether or not a tire blowout, by itself alone and without a showing as to the causative factors, would generate liability. In the present case, the cause of the blow-out was known. The inner tube of the left front tire, according to petitioner's own evidence and as found by the Court of Appeals "was pressed between the inner circle of the left wheel and the rim which had slipped out of the wheel." This was, said Court correctly held, a mechanical defect of the conveyance or a fault in its equipment which was easily discoverable if the bus had been subjected to a more thorough, or rigid check-up before it took to the road that morning. Then again both the trial court and the Court of Appeals found as a fact that the bus was running quite fast immediately before the accident. Considering that the tire which exploded was not new — petitioner describes it as "hindi masyadong kalbo," or not so very worn out — the plea of caso fortuito cannot be entertained.1äwphï1.ñët The second issue raised by petitioner is already a settled one. In this jurisdiction moral damages are recoverable by reason of the death of a passenger caused by the breach of contract of a common carrier, as provided in Article 1764, in relation to Article 2206, of the Civil Code. These articles have been applied by this Court in a number of cases, among them Necesito, etc. vs. Paras, et al., L-10605-06, June 30, 1958; Mercado vs. Lira, L-13328-29, Sept. 29, 1961; Villa-Rey Transit vs. Bello, L-18957, April 23, 1963. Wherefore, the judgment appealed from is affirmed, with costs against petitioners.

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Bengzon, C.J., Bautista Angelo, Concepcion, Reyes, J.B.L., Barrera, Dizon, Regala, Bengzon, J.P., Zaldivar and Sanchez, JJ., concur. Anuran v. Buño May 20, 1966 G.R. Nos. L-21353 and L-21354

May 20, 1966

GREGORIO ANURAN, MARIA MALIGAYA, LAPAZ LARO, ET AL., petitioners, vs. PEPITO BUÑO, PEDRO GAHOL, LUISA ALCANTARA, GUILLERMO RAZON, ANSELMO MALIGAYA and CEFERINA ARO, respondents. Victoriano A. Endaya for petitioners. Trinidad and Borromeo for respondents Buño, et al. Contreras and Adapon for respondents Razon, et al. BENGZON, C.J.: At noon of January 12, 1958, a passenger jeepney was parked on the road to Taal, Batangas. A motor truck speeding along, negligently bumped it from behind, with such violence that three of its passengers died, even as two others (passengers too) suffered injuries that required their confinement at the Provincial Hospital for many days. So, in February 1958 these suits were instituted by the representatives of the dead and of the injured, to recover consequently damages against the driver and the owners of the truck and also against the driver and the owners of the jeepney. The Batangas Court of First Instance, after trial, rendered judgment absolving the driver of the jeepney and its owners, but it required the truck driver and the owners thereof to make compensation. The plaintiffs appealed to the Court of Appeals insisting that the driver and the owners of the jeepney should also be made liable for damages. The last mentioned court, upon reviewing the record, declared that: It is admitted that at about noontime on January 13, 1958, the passenger jeepney owned by defendants spouses Pedro Gahol and Luisa Alcantara, bearing plate No. TPU-13548, then being driven by their regular driver, defendant Pepito Buño was on its regular route travelling from Mahabang Ludlud, Taal, Batangas, towards the poblacion of the said municipality. When said passenger jeepney crossed the bridge separating Barrios Mahabang Ludlud and Balisong, Taal, Batangas, it had fourteen passengers, excluding the driver, according to the testimony of defendant Buño (pp. 12 and 18, t.s.n. July 17, 1958), or sixteen passengers according to the testimony of plaintiff Edita de Sagun, (pp. 9, 12 and 13, t.s.n. June 26, 1958). However, the fact remains that the vehicle was overloaded with passengers at the time, because according to the partial stipulation of facts "the maximum capacity of the jeepney bearing plate

No. TPU-13548 of said defendants was eleven (11) passengers including the driver. (Printed Record on Appeal, pp. 35, 37.) After crossing the bridge, defendant Buño stopped his vehicle in order to allow one of his passengers to alight. But he so parked his jeepney in such a way that one-half of its width (the left wheels) was on the asphalted pavement of the road and the other half, on the right shoulder of said road (pp. 21-22, t.s.n. May 26, 1958; p. 12 t.s.n. July 17, 1958). Approximately five minutes later and before Buño could start his vehicle, a speeding water truck, which bore plate No. T-17526 and owned by defendants-spouses Anselmo Maligaya and Ceferina Aro, then being driven by Guillermo Razon from the direction of Mahabang Ludlud, Taal, Batangas, towards the poblacion of that municipality, violently smashed against the parked jeepney from behind, causing it to turn turtle into a nearby ditch. Then said Appellate Court went on to affirm the exoneration of the jeepney driver and of its owners. It explained that although "the driver of the ill-starred vehicle was not free from fault, for he was guilty of an antecedent negligence in parking his vehicle with a portion thereof occupying the asphalted road", it considered the truck driver guilty of greater negligence which was the efficient cause of the collision; and applying the doctrine of the "last clear chance"1 said Court ordered the owners of the truck to pay, solidarily with its driver, damages as follows: x x x the sum of P6,000.00 for the death of their daughter Emelita, another sum of P5,000.00 as moral damages and the sum of P500.00 as actual damages, and to plaintiffs Simplicio, Alberto, Avelina and Alfredo, all surnamed Arriola, and represented by their guardian ad litem Agustin Arriola, the sum of P6,000.00 for the death of their natural mother, Leonor Masongsong, another sum of P5,000.00 as moral damages the sum of P3,600.00 for loss of earning capacity of said deceased and the sum of P850.00 as actual damages. The plaintiffs brought the matter to this Supreme Court insisting that the driver and the owners of the jeepney should also be made liable. We gave due course to the petition for review, because we thought the decision meant exoneration of the carrier from liability to its passengers, notwithstanding the negligence of its driver. Upon further and more extended consideration of the matter, we have become convinced that error of law was committed in releasing the jeepney from liability. It must be remembered that the obligation of the carrier to transport its passengers safely is such that the New Civil Code requires "utmost diligence" from the carriers (Art. 1755) who are "presumed to have been at fault or to have acted negligently, unless they prove that they have observed extraordinary diligence" (Art. 1756). In this instance, this legal presumption of negligence is confirmed by the Court of Appeals' finding that the driver of the jeepney in question was at fault in parking the vehicle improperly. It

9

must follow that the driver — and the owners — of the jeepney must answer for injuries to its passengers.

that the death was a caso fortuito for which the carrier was not liable.

The principle about the "last clear chance" would call for application in a suit between the owners and drivers of the two colliding vehicles. It does not arise where a passenger demands responsibility from the carrier to enforce its contractual obligations. For it would be inequitable to exempt the negligent driver of the jeepney and its owners on the ground that the other driver was likewise guilty of negligence.

The court a quo, after trial, found for the plaintiff and awarded her P3,000 as damages against defendant Perez. The claim against defendant Valenzuela was dismissed. From this ruling, both plaintiff and defendant Perez appealed to this Court, the former asking for more damages and the latter insisting on non-liability. Subsequently, the Court of Appeals affirmed the judgment of conviction earlier mentioned, during the pendency of the herein appeal, and on May 19, 1964, final judgment was entered therein. (Rollo, p. 33).

Now as to damages. The driver and the owners of the truck have not appealed from the Court of Appeals' assessment. The plaintiffs (petitioners) have not asked here for a greater amount of indemnity. They merely pray for a declaration that Pepito Buño, Pedro Gahol and Luisa Alcantara (the driver and the owners of the jeepney, respectively) be declared jointly and severally liable with the other defendants.1äwphï1.ñët Wherefore, affirming the decision under review, we hereby modify it in the sense prayed for by plaintiffs-petitioners. The three defendants last mentioned are required to pay solidarily with the other defendants-respondents the amounts fixed by the appealed decision. Costs of both appeals against said three defendants. So ordered. Bautista Angelo, Concepcion, J.B.L. Reyes, Dizon, Regala, Makalintal and Bengzon, J.P., JJ., concur. Barrera, Zaldivar and Sanchez, JJ., took no part. Maranan v. Perez Jun 26, 1967 G.R. No. L-22272 June 26, 1967 ANTONIA MARANAN, plaintiff-appellant, vs. PASCUAL PEREZ, ET AL., defendants. PASCUAL PEREZ, defendant appellant. Pedro Panganiban for plaintiff-appellant. Magno T. Bueser for defendant-appellant.

Defendant-appellant relies solely on the ruling enunciated in Gillaco v. Manila Railroad Co., 97 Phil. 884, that the carrier is under no absolute liability for assaults of its employees upon the passengers. The attendant facts and controlling law of that case and the one at bar are very different however. In the Gillaco case, the passenger was killed outside the scope and the course of duty of the guilty employee. As this Court there found: x x x when the crime took place, the guard Devesa had no duties to discharge in connection with the transportation of the deceased from Calamba to Manila. The stipulation of facts is clear that when Devesa shot and killed Gillaco, Devesa was assigned to guard the Manila-San Fernando (La Union) trains, and he was at Paco Station awaiting transportation to Tutuban, the starting point of the train that he was engaged to guard. In fact, his tour of duty was to start at 9:00 two hours after the commission of the crime. Devesa was therefore under no obligation to safeguard the passengers of the Calamba-Manila train, where the deceased was riding; and the killing of Gillaco was not done in line of duty. The position of Devesa at the time was that of another would be passenger, a stranger also awaiting transportation, and not that of an employee assigned to discharge any of the duties that the Railroad had assumed by its contract with the deceased. As a result, Devesa's assault can not be deemed in law a breach of Gillaco's contract of transportation by a servant or employee of the carrier. . . . (Emphasis supplied)

BENGZON, J.P., J.: Rogelio Corachea, on October 18, 1960, was a passenger in a taxicab owned and operated by Pascual Perez when he was stabbed and killed by the driver, Simeon Valenzuela. Valenzuela was prosecuted for homicide in the Court of First Instance of Batangas. Found guilty, he was sentenced to suffer imprisonment and to indemnify the heirs of the deceased in the sum of P6,000. Appeal from said conviction was taken to the Court of Appeals.1äwphï1.ñët On December 6 1961, while appeal was pending in the Court of Appeals, Antonia Maranan, Rogelio's mother, filed an action in the Court of First Instance of Batangas to recover damages from Perez and Valenzuela for the death of her son. Defendants asserted that the deceased was killed in self-defense, since he first assaulted the driver by stabbing him from behind. Defendant Perez further claimed

Now here, the killing was perpetrated by the driver of the very cab transporting the passenger, in whose hands the carrier had entrusted the duty of executing the contract of carriage. In other words, unlike the Gillaco case, the killing of the passenger here took place in the course of duty of the guilty employee and when the employee was acting within the scope of his duties. Moreover, the Gillaco case was decided under the provisions of the Civil Code of 1889 which, unlike the present Civil Code, did not impose upon common carriers absolute liability for the safety of passengers against wilful assaults or negligent acts committed by their employees. The death of the passenger in the Gillaco case was truly a fortuitous event which exempted the carrier from liability. It is true that Art. 1105 of the old Civil Code on fortuitous events has been substantially reproduced in Art. 1174 of the Civil Code of the Philippines but both articles clearly

10

remove from their exempting effect the case where the law expressly provides for liability in spite of the occurrence of force majeure. And herein significantly lies the statutory difference between the old and present Civil Codes, in the backdrop of the factual situation before Us, which further accounts for a different result in the Gillaco case. Unlike the old Civil Code, the new Civil Code of the Philippines expressly makes the common carrier liable for intentional assaults committed by its employees upon its passengers, by the wording of Art. 1759 which categorically states that Common carriers are liable for the death of or injuries to passengers through the negligence or willful acts of the former's employees, although such employees may have acted beyond the scope of their authority or in violation of the orders of the common carriers. The Civil Code provisions on the subject of Common Carriers1 are new and were taken from Anglo-American Law.2 There, the basis of the carrier's liability for assaults on passengers committed by its drivers rests either on (1) the doctrine of respondeat superior or (2) the principle that it is the carrier's implied duty to transport the passenger safely.3 Under the first, which is the minority view, the carrier is liable only when the act of the employee is within the scope of his authority and duty. It is not sufficient that the act be within the course of employment only.4 Under the second view, upheld by the majority and also by the later cases, it is enough that the assault happens within the course of the employee's duty. It is no defense for the carrier that the act was done in excess of authority or in disobedience of the carrier's orders.5 The carrier's liability here is absolute in the sense that it practically secures the passengers from assaults committed by its own employees.6 As can be gleaned from Art. 1759, the Civil Code of the Philippines evidently follows the rule based on the second view. At least three very cogent reasons underlie this rule. As explained in Texas Midland R.R. v. Monroe, 110 Tex. 97, 216 S.W. 388, 389-390, and Haver v. Central Railroad Co., 43 LRA 84, 85: (1) the special undertaking of the carrier requires that it furnish its passenger that full measure of protection afforded by the exercise of the high degree of care prescribed by the law, inter alia from violence and insults at the hands of strangers and other passengers, but above all, from the acts of the carrier's own servants charged with the passenger's safety; (2) said liability of the carrier for the servant's violation of duty to passengers, is the result of the formers confiding in the servant's hands the performance of his contract to safely transport the passenger, delegating therewith the duty of protecting the passenger with the utmost care prescribed by law; and (3) as between the carrier and the passenger, the former must bear the risk of wrongful acts or negligence of the carrier's employees against passengers, since it, and not the passengers, has power to select and remove them.

Accordingly, it is the carrier's strict obligation to select its drivers and similar employees with due regard not only to their technical competence and physical ability, but also, no less important, to their total personality, including their patterns of behavior, moral fibers, and social attitude. Applying this stringent norm to the facts in this case, therefore, the lower court rightly adjudged the defendant carrier liable pursuant to Art. 1759 of the Civil Code. The dismissal of the claim against the defendant driver was also correct. Plaintiff's action was predicated on breach of contract of carriage7 and the cab driver was not a party thereto. His civil liability is covered in the criminal case wherein he was convicted by final judgment. In connection with the award of damages, the court a quo granted only P3,000 to plaintiff-appellant. This is the minimum compensatory damages amount recoverable under Art. 1764 in connection with Art. 2206 of the Civil Code when a breach of contract results in the passenger's death. As has been the policy followed by this Court, this minimal award should be increased to P6,000. As to other alleged actual damages, the lower court's finding that plaintiff's evidence thereon was not convincing,8 should not be disturbed. Still, Arts. 2206 and 1764 award moral damages in addition to compensatory damages, to the parents of the passenger killed to compensate for the mental anguish they suffered. A claim therefor, having been properly made, it becomes the court's duty to award moral damages.9 Plaintiff demands P5,000 as moral damages; however, in the circumstances, We consider P3,000 moral damages, in addition to the P6,000 damages afore-stated, as sufficient. Interest upon such damages are also due to plaintiff-appellant. 10 Wherefore, with the modification increasing the award of actual damages in plaintiff's favor to P6,000, plus P3,000.00 moral damages, with legal interest on both from the filing of the complaint on December 6, 1961 until the whole amount is paid, the judgment appealed from is affirmed in all other respects. No costs. So ordered. Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez and Castro, JJ., concur. BTC v. Caguimbal Jan 24, 1968 G.R. No. L-22985 January 24, 1968 BATANGAS TRANSPORTATION COMPANY, petitioner, vs. GREGORIO CAGUIMBAL, PANCRACIO CAGUIMBAL, MARIA MARANAN DE CAGUIMBAL, BIÑAN TRANSPORTATION COMPANY and MARCIANO ILAGAN, respondents. Ozaeta, Gibbs and Ozaeta and Domingo E. de Lara for petitioner. Victoriano H. Endaya for respondents. CONCEPCION, C.J.:

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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 Barrio Calansayan, 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 by Tomas 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 Biñan Transportation Company, bearing plate TPU-820, driven by Marciano Ilagan, was coming 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) managed by Benito Makahiya, which was then ahead of the Biñan bus, was also coming from the opposite direction, meaning proceeding towards the north. As to what transpired thereafter, the lower court chose to give more credence to defendant Batangas Transportation Company's version which, in the words of the Court a quo, is as follows: "As the BTCO bus was nearing a house, a passenger requested the conductor to stop as he was going to alight, and when he heard the signal of the conductor, the driver Tomas Perez slowed down his bus swerving it farther to the right in order to stop; at this juncture, a calesa, then driven by Benito Makahiya was at a distance of several meters facing the BTCO bus coming from the opposite direction; that at the same time the Biñan bus was about 100 meters away likewise going northward and following the direction of the calesa; that upon seeing the Biñan bus the driver of the BTCO bus dimmed his light as established by Magno Ilaw, the very conductor of the Biñan bus at the time of the accident; that as the calesa and the BTCO bus were passing each other from the opposite directions, the Biñan bus following the calesa swerved to its left in an attempt to pass between the BTCO bus and the calesa; that without diminishing its speed of about seventy (70) kilometers an hour, the Biñan bus passed through the space between the BTCO bus and the calesa hitting first the left side of the BTCO bus with the left front corner of its body and then bumped and struck the calesa which was completely wrecked; that the driver was seriously injured and the horse was killed; that the second and all other posts supporting the top of the left side of the BTCO bus were completely smashed and half of the back wall to the left was ripped open. (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, Pedro Caguimbal and Guillermo Tolentino, apart from others who were injured. The widow and children of Caguimbal instituted the present action, which was tried jointly with a similar action of the Tolentinos, to recover damages from the Batangas Transportation Company, hereinafter referred to as BTCO. The latter, in turn, filed a third-party complaint against the Biñan Transportation Company — hereinafter referred to as

Biñan — and its driver, Marciano Ilagan. Subsequently, the Caguimbals amended their complaint, to include therein, as defendants, said Biñan and Ilagan. After appropriate proceedings, the Court of First Instance of Batangas rendered a decision dismissing the complaint insofar as the BTCO is concerned, without prejudice to plaintiff's right to sue Biñan — which had stopped participating in the proceedings herein, owing apparently, to a case in the Court of First Instance of Laguna for the insolvency of said enterprise — and Ilagan, and without pronouncement as to costs. On appeal taken by the Caguimbals, the Court of Appeals reversed said decision and rendered judgment for them, sentencing the BTCO, Biñan and Ilagan to, jointly and severally, pay to the plaintiffs the aggregate sum of P10,500.00 1 and the costs in both instances. Hence, this appeal by BTCO, upon the ground that the Court of Appeals erred: 1) in finding said appellant liable for damages; 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 the death of Pedro Caguimbal. Indeed, as driver of the Biñan bus, he overtook Benito Makahiya's horse-driven rig or calesa and passed between the same and the BTCO bus despite the fact that the space available was not big enough therefor, in view of which the Biñan bus hit the left side 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 exercise the "extraordinary diligence," required in Article 1733 of the new Civil Code, "in the vigilance for the safety" of his passengers. 2 The record shows that, in order to permit one of them to disembark, Perez drove his BTCO bus partly to the right shoulder of the road and partly on the asphalted portion thereof. Yet, he could have and should have seen to it — had he exercised "extraordinary diligence" — that his bus was 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 and should have done this, because, when the aforementioned passenger expressed his wish to alight from the bus, Ilagan had seen the aforementioned "calesa", driven by Makahiya, a few meters away, coming from the opposite direction, with the Biñan bus about 100 meters behind the rig cruising at a good speed. 3 When Perez slowed down his BTCO bus to permit said passenger to disembark, he must have known, therefore, that the Biñan bus would overtake the calesa at about the time when the latter and BTCO bus would probably be on the same line, on opposite sides of the asphalted portions of the road, and that the space between the BTCO bus and the "calesa" would not be enough to allow the Biñan bus to go through. It is true that the driver of the Biñan bus should have slowed down or stopped, and, hence, was reckless in not doing so; but, he had no especial obligations toward the passengers of the BTCO unlike Perez whose duty was to

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exercise "utmost" or "extraordinary" diligence for their safety. Perez was thus under obligation to avoid a situation which would be hazardous for his passengers, and, make their safety dependent upon the diligence of the Biñan driver. Such obligation becomes more patent when we considered the fact — of which the Court may take judicial cognizance — that our 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 fault or negligence on the part of the carrier in order to hold it responsible to pay the damages sought for by the passenger. By the contract of carriage, the carrier assumes the express obligation to transport the passenger to his destination safely and to observe extraordinary diligence with a due regard for all the circumstances, and any injury that might be suffered by the passenger is right away attributable to the fault or negligence of the carrier (Article 1756, new Civil Code). This is an exception to the general rule that negligence must be proved, and it is therefore incumbent upon the carrier to prove that it has exercised extraordinary diligence as prescribed in 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. For this 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 the accident, and could not have possibly avoided it, for he "swerved the bus to the very extreme right 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 is not authorized by law, because, of the eleven (11) cases specified in Article 1208 of the new Civil Code, only the fifth and the last are relevant to the one under consideration; but the fifth case requires bad faith, which does not exist in the case at bar. As regards the last case, which permits the award, "where the court deems it just and equitable that attorney's fees . . . should be recovered," it is urged that the evidence on record does not show the existence of such just and 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 vindicate their rights; and (2) it is high time to impress effectively upon public utility operators the nature and extent of their responsibility in respect of the safety of their passengers and their duty to exercise greater care in the selection of drivers and conductor and in supervising the performance of their duties, in accordance, not only with Article 1733 of the Civil Code of the Philippines, but, also, with Articles 1755 and 1756 thereof 6 and the spirit of

these provisions, as disclosed 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 costs of this instance against appellant Batangas Transportation Company. Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Angeles and Fernando, JJ., concur. Bengzon, J.P., J., took no part. Del Castillo v. Jaymalin Mar 17, 1982 G.R. No. L-28256 March 17, 1982 SEVERO DEL CASTILLO, plaintiff-appellant, vs. LORENZO JAYMALIN MANUEL SABIT and BITRANCO and A. L. AMMEN TRANS. CO., INC., defendants-appellees.

MELENCIO-HERRERA, J.: A direct appeal from the Decision, dated January 25, 1967, of the Court of First Instance of Sorsogon, Branch 1, dismissing this case for Damages (Civil Case No. 1784 below) by reason of plaintiff Severo del Castillo's death. On June 29, 1960, Mario del Castillo, a deaf-mute, son of plaintiff Severo del Castillo, and a paying passenger of defendant Bicol Transportation Company (Bitranco), operated by A.L. Ammen Transportation Co., Inc. (ALATCO) at Casiguran, Sorsogon, fell upon alighting from Bus No. 624 of said companies and died as a result. On September 5, 1962, an action for the recovery of damages for Mario's death was filed by his father, Severo, plaintiff herein, against the driver and conductor of the bus, and the transportation companies. The Complaint alleged that Severo, a widower, was the sole heir. Defendant transportation companies traversed the complaint by stating that the passenger bus involved was owned by Bicol Transportation Co. alone; that the two companies had always exercised due diligence in the selection and supervision of their employees; and that the proximate cause of Mario's death was his recklessness and gross negligence in jumping out of the bus while in motion. Trial ensued with plaintiff having been able to present his evidence and rest his case. Defendants proceeded with the presentation of their witnesses until July 9, 1966 when they filed a "Motion for Annulment of Proceedings after February 1, 1965", having learned that plaintiff Severo had died on February 1, 1965, at which time plaintiff had not yet rested his case having done so only on January 28, 1966. the Court a quo directed plaintiff's counsel to verify the existence of heirs and whether they were willing to be substituted as parties-plaintiffs."

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On August 6, 1966, plaintiff's counsel filed a "Motion to Admit Amended Complaint" substituting Severo's son-inlaw, one Wenceslao Haloc, as party plaintiff. This was in virtue of a "Deed of Assignment" dated August 13, 1960, thumbmarked by Severo, and reading as follows: KNOW ALL MEN BY THESE PRESENTS: That I, SEVERO DEL CASTILLO, of age, a widower and a resident of Casiguran, Sorsogon, Philippines, for reasons of my health and old age, do hereby transfer and assigned (sic) and by these presents do hereby assign and transfer unto the said WENCESLAO (sic) HALOC, my son in-law, of Barrio Storom Casiguran, Sorsogon, Philippines, my rights, privileges and all its accessory rights as such an heir to me (sic) for and in my behalf (sic) the case I originally instituted for indemnity for the death of my son the late Mario Castillo, who died while a passenger in an Alatco Bus No. 624, June 29, 1960 at about 7:00 P.M. more or less at Barrio Storom, Casiguran, Sorsogon. That I hereby declare that from this date August 13, 1960 on, my son-in-law Wenceslao Haloc, of legal age will be my assignee as aforesaid. (Sgd.) Thumb mark SEVERO DEL CASTILLO Res. Cert. No. A2920570 Issued on July 5, 1960 at Casiguran. Sorsogon The Amended Complaint was admitted by the trial Court for lack of objection thereto on August 20, 1966. Trial proceeded with defendants closing their evidence on November 25, 1966. On January 26, 1967, the trial Court rendered judgment in defendants' favor dismissing the original and the amended Complaints upon the following ratiocination ... Since Severo del Castillo died before the conclusion of this case, this action died with him. Wenceslao Haloc is without personality to continue this case. He is not even an heir of Severo del Castillo. Wenceslao Haloc appealed as a pauper directly to this Court contending that the Decision is "contrary to law."

assigned his rights to another, in which case, the proper procedure would have been for the transferee to have been substituted for the transferor as plaintiff. 1 The rights of Severo to claim damages for his son were transferable. Severo had transferred his rights as plaintiff to Wenceslao Haloc but after the assignment the case continued in Severo's name and there was no immediate and formal substitution of party plaintiff. This is but a formality, however, and the fact remains that, after the assignment, the substantial plaintiff and real party in interest became Haloc, with Severo as a sort of trustee of whatever fruits the litigation would bring It was reversible error, therefore, for the trial Court to have dismissed the case by virtue of Severo's death. The action did not die with him. In point is the following ruling of this Court: ... where an assignable right has been transferred before action brought, the proceeding ought to be instituted in the name of the assignee; and where an assignment is effect pendente lite, it is proper to have the assignee substituted for the original plaintiff. If such substitution should not be effected and the transfer of the right of action should not be brought to the attention of the court, the original plaintiff, if successful in the litigation, would hold the fruits of the action as a sort of trustee for the use and benefit of his assignee. ... 2 Relative to the aspect of damages, the trial Court ruled: Common carriers are responsible for the death of their passengers (Articles 1764 and 2206 of the Civil Code). This liability includes the loss of the earning capacity of the deceased. It appears proven that the defendant corporations failed to exercise the diligence that was their duty to observe according to Articles 1733 and 1755. The conductor was apprised of the fact that Mario del Castillo was deaf and dumb. With this knowledge the conductor should have taken extra-ordinary care for the safety of the said passenger. In this he failed. The trial Court then concluded that "under the circumstances obtaining in the case, the plaintiff Severo del Castillo would be entitled to actual and moral damages but did not determine the amount of damages because it dismissed the case.

Before this instance, it is urged that the trial Court erred: 1) In construing the Deed of Assignment as not a deed that transfers any benefit to the transferee. 2) In dismissing the case in virtue of the death of Severo del Castillo after the deed of assignment was executed and further still after the evidence testimonial and documentary were already presented. We find merit in the foregoing contentions. This is not a case where the provisions of Section 17, Rule 3 of the Rules of Court on "death of a party" are applicable. Rather, it is a situation where plaintiff, while alive, had

Technicality would require a remand of this case to the Court a quo, for a determination of the amount of damages [the total amount of P41,000.00 (P6,000.00 as damages for death, and P35,000.00 for loss of earning capacity), and attorney's fees of P5,000.00, were claimed]. Considering, however, the pendency of this case for 13 years and in order to put an end to the controversy, we determine the damages at P12,000.00 for the death of the victim, without interest, and P2,000.00 for attorney's fees. Loss of earning capacity in the amount of P35,000.00 has not been proven specially considering that the victim was a deaf-mute. WHEREFORE, the judgment appealed from is hereby reversed, and defendants hereby ordered jointly and

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severally, to pay Wenceslao Haloc, the amount of P12,000.00 as damages for death, without interest, and P2,000.00 as attorney's fees. No costs. SO ORDERED. Vasquez v. CA Sep 13, 1985 G.R. No. L-42926 September 13, 1985 PEDRO VASQUEZ, SOLEDAD ORTEGA, CLETO B. BAGAIPO, AGUSTINA VIRTUDES, ROMEO VASQUEZ and MAXIMINA CAINAY, petitioners, vs. THE COURT OF APPEALS and FILIPINAS PIONEER LINES, INC., respondents. Emilio D. Castellanes for petitioners. Apolinario A. Abantao for private respondents.

MELENCIO-HERRERA, J.: This litigation involves a claim for damages for the loss at sea of petitioners' respective children after the shipwreck of MV Pioneer Cebu due to typhoon "Klaring" in May of 1966. The factual antecedents, as summarized by the trial Court and adopted by respondent Court, and which we find supported by the record, read as follows: When the inter-island vessel MV "Pioneer Cebu" left the Port of Manila in the early morning of May 15, 1966 bound for Cebu, it had on board the spouses Alfonso Vasquez and Filipinas Bagaipo and a four-year old boy, Mario Marlon Vasquez, among her passengers. The MV "Pioneer Cebu" encountered typhoon "Klaring" and struck a reef on the southern part of Malapascua Island, located somewhere north of the island of Cebu and subsequently sunk. The aforementioned passengers were unheard from since then.

The evidence on record as to the circumstances of the last voyage of the MV "Pioneer Cebu" came mainly, if not exclusively, from the defendant. The MV "Pioneer Cebu" was owned and operated by the defendant and used in the transportation of goods and passengers in the inter-island shipping. Scheduled to leave the Port of Manila at 9:00 p.m. on May 14, 1966, it actually left port at 5:00 a.m. the following day, May 15, 1966. It had a passenger capacity of three hundred twenty-two (322) including the crew. It undertook the said voyage on a special permit issued by the Collector of Customs inasmuch as, upon inspection, it was found to be without an emergency electrical power system. The special permit authorized the vessel to carry only two hundred sixty (260) passengers due to the said deficiency and for lack of safety devices for 322 passengers (Exh. 2). A headcount was made of the passengers on board, resulting on the tallying of 168 adults and 20 minors, although the passengers manifest only listed 106 passengers. It has been admitted, however, that the headcount is not reliable inasmuch as it was only done by one man on board the vessel. When the vessel left Manila, its officers were already aware of the typhoon Klaring building up somewhere in Mindanao. There being no typhoon signals on the route from Manila to Cebu, and the vessel having been cleared by the Customs authorities, the MV "Pioneer Cebu" left on its voyage to Cebu despite the typhoon. When it reached Romblon Island, it was decided not to seek shelter thereat, inasmuch as the weather condition was still good. After passing Romblon and while near Jintotolo island, the barometer still indicated the existence of good weather condition continued until the vessel approached Tanguingui island. Upon passing the latter island, however, the weather suddenly changed and heavy rains felt Fearing that due to zero visibility, the vessel might hit Chocolate island group, the captain ordered a reversal of the course so that the vessel could 'weather out' the typhoon by facing the winds and the waves in the open. Unfortunately, at about noontime on May 16, 1966, the vessel struck a reef near Malapascua island, sustained leaks and eventually sunk, bringing with her Captain Floro Yap who was in command of the vessel.

Plaintiffs Pedro Vasquez and Soledad Ortega are the parents of Alfonso Vasquez; plaintiffs Cleto Bagaipo and Agustina Virtudes are the parents of Filipinas Bagaipo; and plaintiffs Romeo Vasquez and Maxima Cainay are the parents of the child, Mario Marlon Vasquez. They seek the recovery of damages due to the loss of Alfonso Vasquez, Filipinas Bagaipo and Mario Marlon Vasquez during said voyage.

Due to the loss of their children, petitioners sued for damages before the Court of First Instance of Manila (Civil Case No. 67139). Respondent defended on the plea of force majeure, and the extinction of its liability by the actual total loss of the vessel.

At the pre-trial, the defendant admitted its contract of carriage with Alfonso Vasquez, Filipinas Bagaipo and Mario Marlon Vasquez, and the fact of the sinking of the MV "Pioneer Cebu". The issues of the case were limited to the defenses alleged by the defendant that the sinking of the vessel was caused by force majeure, and that the defendant's liability had been extinguished by the total loss of the vessel.

WHEREFORE, judgment is hereby rendered ordering the defendant to pay:

After proper proceedings, the trial Court awarded damages, thus:

(a) Plaintiffs Pedro Vasquez and Soledad Ortega the sums of P15,000.00 for the loss of earning capacity of the deceased Alfonso Vasquez, P2,100.00 for support, and P10,000.00 for moral damages;

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(b) Plaintiffs Cleto B. Bagaipo and Agustina Virtudes the sum of P17,000.00 for loss of earning capacity of deceased Filipinas Bagaipo, and P10,000.00 for moral damages; and (c) Plaintiffs Romeo Vasquez and Maximina Cainay the sum of P10,000.00 by way of moral damages by reason of the death of Mario Marlon Vasquez. On appeal, respondent Court reversed the aforementioned judgment and absolved private respondent from any and all liability. Hence, this Petition for Review on Certiorari, the basic issue being the liability for damages of private respondent for the presumptive death of petitioners' children. The trial Court found the defense of caso fortuito untenable due to various decisive factors, thus: ... It is an admitted fact that even before the vessel left on its last voyage, its officers and crew were already aware of the typhoon brewing somewhere in the same general direction to which the vessel was going. The crew of the vessel took a calculated risk when it proceeded despite the typhoon advisory. This is quite evident from the fact that the officers of the vessel had to conduct conferences amongst themselves to decide whether or not to proceed. The crew assumed a greater risk when, instead of seeking shelter in Romblon and other islands the vessel passed en route, they decided to take a change on the expected continuation of the good weather the vessel was encountering, and the possibility that the typhoon would veer to some other directions. The eagerness of the crew of the vessel to proceed on its voyage and to arrive at its destination is readily understandable. It is undeniably lamentable, however, that they did so at the risk of the lives of the passengers on board. Contrariwise, respondent Appellate Court believed that the calamity was caused solely and proximately by fortuitous event which not even extraordinary diligence of the highest degree could have guarded against; and that there was no negligence on the part of the common carrier in the discharge of its duties. Upon the evidence and the applicable law, we sustain the trial Court. "To constitute a caso fortuito that would exempt a person from responsibility, it is necessary that (1) the event must be independent of the human will; (2) the occurrence must render it impossible for the debtor to fulfill the obligation in a normal manner; and that (3) the obligor must be free of participation in, or aggravation of, the injury to the creditor." 1 In the language of the law, the event must have been impossible to foresee, or if it could be foreseen, must have been impossible to avoid. 2 There must be an entire exclusion of human agency from the cause of injury or loss. 3 Turning to this case, before they sailed from the port of Manila, the officers and crew were aware of typhoon "Klaring" that was reported building up at 260 kms. east of

Surigao. In fact, they had lashed all the cargo in the hold before sailing in anticipation of strong winds and rough waters. 4 They proceeded on their way, as did other vessels that day. Upon reaching Romblon, they received the weather report that the typhoon was 154 kms. east southeast of Tacloban and was moving west northwest. 5 Since they were still not within the radius of the typhoon and the weather was clear, they deliberated and decided to proceed with the course. At Jintotolo Island, the typhoon was already reported to be reaching the mainland of Samar. 6 They still decided to proceed noting that the weather was still "good" although, according to the Chief Forecaster of the Weather Bureau, they were already within the typhoon zone. 7 At Tanguingui Island, about 2:00 A.M. of May 16, 1966, the typhoon was in an area quite close to Catbalogan, placing Tanguingui also within the typhoon zone. Despite knowledge of that fact, they again decided to proceed relying on the forecast that the typhoon would weaken upon crossing the mainland of Samar. 8 After about half an hour of navigation towards Chocolate Island, there was a sudden fall of the barometer accompanied by heavy downpour, big waves, and zero visibility. The Captain of the vessel decided to reverse course and face the waves in the open sea but because the visibility did not improve they were in total darkness and, as a consequence, the vessel ran aground a reef and sank on May 16, 1966 around 12:45 P.M. near Malapascua Island somewhere north of the island of Cebu. Under the circumstances, while, indeed, the typhoon was an inevitable occurrence, yet, having been kept posted on the course of the typhoon by weather bulletins at intervals of six hours, the captain and crew were well aware of the risk they were taking as they hopped from island to island from Romblon up to Tanguingui. They held frequent conferences, and oblivious of the utmost diligence required of very cautious persons, 9 they decided to take a calculated risk. In so doing, they failed to observe that extraordinary diligence required of them explicitly by law for the safety of the passengers transported by them with due regard for an circumstances 10 and unnecessarily exposed the vessel and passengers to the tragic mishap. They failed to overcome that presumption of fault or negligence that arises in cases of death or injuries to passengers. 11 While the Board of Marine Inquiry, which investigated the disaster, exonerated the captain from any negligence, it was because it had considered the question of negligence as "moot and academic," the captain having "lived up to the true tradition of the profession." While we are bound by the Board's factual findings, we disagree with its conclusion since it obviously had not taken into account the legal responsibility of a common carrier towards the safety of the passengers involved. With respect to private respondent's submission that the total loss of the vessel extinguished its liability pursuant to Article 587 of the Code of Commerce 12 as construed in Yangco vs. Laserna, 73 Phil. 330 [1941], suffice it to state that even in the cited case, it was held that the liability of a shipowner is limited to the value of the vessel or to the

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insurance thereon. Despite the total loss of the vessel therefore, its insurance answers for the damages that a shipowner or agent may be held liable for by reason of the death of its passengers. WHEREFORE, the appealed judgment is hereby REVERSED and the judgment of the then Court of First Instance of Manila, Branch V, in Civil Case No. 67139, is hereby reinstated. No costs. SO ORDERED. Mecenas v. CA Dec 14, 1989 G.R. No. 88052 December 14, 1989 JOSE P. MECENAS, ROMEO P. MECENAS, LILIA P. MECENAS, ORLANDO P. MECENAS, VIOLETA M. ACERVO, LUZVIMINDA P. MECENAS; and OFELIA M. JAVIER, petitioners, vs. HON. COURT OF APPEALS, CAPT. ROGER SANTISTEBAN and NEGROS NAVIGATION CO., INC., respondents.

Civil Case No. Q-31525, against private respondents Negros Navigation and Capt. Roger Santisteban, the captain of the "Don Juan" without, however, impleading either PNOC or PNOC Shipping. In their complaint, petitioners alleged that they were the seven (7) surviving legitimate children of Perfecto Mecenas and Sofia Mecenas and that the latter spouses perished in the collision which had resulted from the negligence of Negros Navigation and Capt. Santisteban. Petitioners prayed for actual damages of not less than P100,000.00 as well as moral and exemplary damages in such amount as the Court may deem 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 death of her husband Manuel Ciocon, another of the luckless passengers of the "Don Juan." Manuel Ciocon's body, too, was never found. The two (2) cases were consolidated and heard jointly by the Regional Trial Court of Quezon City, Branch 82. On 17 July 1986, after trial, the trial court rendered a decision, the dispositive of which read as follows:

Benito P. Favie and Jose Dario Magno for petitioners. Hernandez, Velicaria, Vibar & Santiago for private respondents.

FELICIANO, J.: At 6:20 o'clock in the morning of 22 April 1980, the M/T "Tacloban City," a barge-type oil tanker of Philippine registry, with a gross tonnage of 1,241,68 tons, owned by the Philippine National Oil Company (PNOC) and operated by the PNOC Shipping and Transport Corporation (PNOC Shipping), having unloaded its cargo of petroleum products, left Amlan, Negros Occidental, and headed 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, owned and operated by the Negros Navigation Co., Inc. (Negros Navigation) left Manila bound for Bacolod with seven hundred fifty (750) passengers listed in its manifest, and a complete set of officers and crew members. On the evening of that same day, 22 April 1980, at about 10:30 o'clock, the "Tacloban City" and the "Don Juan" collided at the Talbas Strait near Maestra de Ocampo Island in the vicinity of the island of Mindoro. When the collision occurred, the sea was calm, the weather fair and visibility good. As a result of this collision, the M/V "Don Juan" sank and hundreds of its passengers perished. Among the illfated passengers were the parents of petitioners, the spouses Perfecto Mecenas and Sofia Mecenas, whose bodies were never found despite intensive search by petitioners. On 29 December 1980, petitioners filed a complaint in the then Court- of First Instance of Quezon City, docketed as

WHEREFORE, the Court hereby renders judgment ordering: a) The defendant Negros Navigation Co., Inc. and Capt. Roger Santisteban jointly and severally liable to pay plaintiffs in Civil Case No Q-31525, the sum of P400,000.00 for the death of plaintiffs' parents, Perfecto A. Mecenas and Sofia P. Mecenas; to pay said plaintiff's the sum of 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 Oil Company/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 and severally, 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's decision to the Court of Appeals. Later, PNOC and PNOC Shipping withdrew their appeal citing a compromise agreement reached by them with Negros Navigation; the Court of Appeals granted the motion by a resolution dated 5 September 1988, subject to the reservation made by Lilia Ciocon that she could not be bound by the compromise agreement and would enforce the award granted her by the trial court. In time, the Court of Appeals rendered a decision dated 26 January 1989 which decreed the following: WHEREFORE, in view of the foregoing, the decision of the court a quo is hereby affirmed as modified with respect to Civil Case No. 31525, wherein defendant appellant Negros Navigation Co. Inc. and Capt. Roger Santisteban are held jointly and severally liable to pay the plaintiffs the

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amount of P100,000. 00 as actual and compensatory damages and P15,000.00 as attorney's fees 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 had erred in reducing the amount of the damages awarded by the trial court to the petitioners from P400,000.00 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 them P100,000.00 "as actual and compensatory damages" and P15,000.00 as attorney's fees. To determine whether such reduction of the damages awarded was proper, we must first determine whether petitioners were entitled to an award of damages other than actual or compensatory damages, 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 (Civil Case No. Q-31525) brought by the sons and daughters of the deceased Mecenas spouses against Negros Navigation as based on quasidelict. We believed that action is more appropriately 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; the surviving children while not themselves passengers are in effect suing the carrier in representation of their deceased parents. 3 Thus, the suit (Civil Case No. Q-33932) filed by the widow 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 is liable for the death of passengers arising from the negligence or willful act of the carrier's employees although such employees may have acted beyond the scope of their authority or even in violation of the instructions of the carrier, 4 which liability may include liability for moral damages. 5 It follows that petitioners would be entitled to moral damages so long as the collision with the "Tacloban City" and the sinking of the "Don Juan" were caused or attended by negligence on the part of private respondents. In respect of the petitioners' claim for exemplary damages, it is only necessary to refer to Article 2232 of the Civil Code: Article 2332. In contracts and quasi-contracts, the court may exemplary damages if the defendant acted in a wanton, fraudulent, reckless, oppressive or malevolent manner. 6 Thus, whether petitioners are entitled to exemplary damages as claimed must depend upon whether 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 and responsible for the collision." 7 Initially, the Minister of National Defense upheld the decision of Commodore Ochoco. 8 On Motion for Reconsideration, however, the Minister of National Defense 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 to both vessels for the collision. Accordingly, the decision dated March 12, 1982, subject of the Motion 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 are hereby 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" and the "Don Juan" were at fault in the collision. The trial court summarized the testimony and evidence 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; not picked up by radar (p. 15, Ibid). Tacloban City was travelling 310 degrees with a speed of 6 knots, estimated speed of Don Juan of 16 knots (TSN, May 9, pp. 5-6). As Don Juan approached, Tacloban City gave a leeway of 1 0 degrees to the left. 'The purpose was to enable Tacloban 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 give Don Juan more space for her passage (p. 22, Ibid). This was increased by Tacloban City to an additional 15 degrees towards the left (p. 22, Ibid). The way was clear and Don Juan has not changed its course (TSN, May 9,1985, p. 39). When Tacloban City altered its course the second time, from 300 degrees to 285 degrees, Don Juan was about 4.5 miles away (TSN, May 9,1985, p. 7). Despite executing a hardport maneuver, the collision nonetheless occurred. Don Juan rammed the 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

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will cross, the path of Don 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 nearly head 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, May 24,1983, p. 6). Don Juan, after execution of hard starboard, will move forward 200 meters before the vessel will respond to such maneuver (p. 7, Ibid). The speed of Don Juan at that time was 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 visual contact at a distance of something like 6 miles from each other. They were fully aware that if they 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 realize that, 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." The remaining question is whether the negligence on the part of the "Don Juan" reached that level of recklessness or gross negligence that our Civil Code requires for the imposition of exemplary damages. Our own review of the record in the case at bar requires us to answer this in the affirmative. 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 the collision," 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 the two (2) vessels. The decision of Commodore Ochoco said: xxx

xxx

xxx

M/S Don Juan's Master, Capt. Rogelio Santisteban, was playing mahjong before and up to the time of collision.

Moreover, after the collision, he failed to institute appropriate measures to delay the sinking MS Don Juan and to supervise properly the execution of his order of abandonship. As regards the officer on watch, Senior 3rd Mate Rogelio Devera, he admitted that he failed or did not call or inform Capt. Santisteban of the imminent danger of collision and of the actual collision itself Also, he failed to assist his master to prevent the fast sinking of the ship. The record also indicates that Auxiliary Chief Mate Antonio Labordo displayed laxity in maintaining 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 the part of the master of a vessel to whose hands the lives and welfare of at least seven hundred fifty (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 realistically speaking and in contemplation of law, no such thing as "off-duty" hours for the master of a vessel at sea that is a common carrier upon whom the law imposes the duty of extraordinary diligence[t]he duty 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. 14 The record does not show that was the first or only time that Capt. Santisteban had entertained himself during a voyage by playing mahjong with his officers and passengers; Negros Navigation in permitting, or in failing to discover and correct such behaviour, must be deemed grossly negligent. Capt. Santisteban was also faulted in the Philippine Coast Guard decision for failing after the collision, "to institute appropriate measures to delay the sinking of M/V Don Juan." This appears to us to be a euphemism for failure to maintain the sea-worthiness or the water-tight integrity of the "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 to supervise his officers and crew in the process of abandoning the ship and his failure to avail of measures to prevent the too rapid sinking of his vessel after collision, did not cause the collision by 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 in respect 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 been certified as allowed to

19

carry. The Certificate of Inspection 16 dated 27 August 1979, issued by the 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 April 22, 1980 at about 1:00 p.m." This headcount of the passengers "did not include the 126 crew members, children below three (3) years old and two (2) half-paying passengers" which had been counted as one adult passenger. 17 Thus, the total number of persons on board the "Don Juan" on that ill-starred night of 22 April 1 980 was 1,004, or 140 persons more than the maximum lumber that could be safely carried by the "Don Juan," per its own Certificate of Inspection. 18 We note in addition, that only 750 passengers had been listed in its manifest for its final voyage; in other words, at least 128 passengers on board had not even been entered into 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 of persons she was permitted to carry; in other words, she did not carry enough boats and life rafts for 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 the vessel (her officers and crew) and of its ship-owner arises; this presumption was never rebutted by Negros Navigation. The grossness of the negligence of the "Don Juan" is underscored when one considers the foregoing circumstances in the context of the following facts: Firstly, the "Don Juan" was more than twice as fast as the "Tacloban City." The "Don Juan's" top speed was 17 knots; while that of 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 "Don Juan" 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 still four (4) nautical miles away. Visual confirmation of radar contact was established by the "Don Juan" while the "Tacloban City" was still 2.7 miles away. 20 In the total set of circumstances which existed in the instant case, the "Don Juan," had it taken seriously its duty of extraordinary diligence, could have easily avoided the collision with the "Tacloban City," Indeed, the "Don Juan" 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 Road which requires two (2) power- driven vessels meeting end on or nearly end on each to alter her course 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 threetenths (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 and up to the collision. In any case, Rule 18 like all other International Rules of the Road, are not to be obeyed and construed without regard to all the circumstances surrounding a particular encounter between two (2) vessels. 22 In ordinary circumstances, a vessel discharges her duty to another by a faithful and literal observance of the Rules of Navigation, 23 and she cannot be held at fault for so doing even though a different course would have prevented the collision. This rule, however, is not to be applied where it is apparent, as in the instant case, that her captain was guilty of negligence or of a want of seamanship in not perceiving the necessity for, or in so acting 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 vessel from responsibility if the collision could have been avoided by proper care and skill on her part or 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 long way 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 no necessity for passing so near to the "Tacloban City" as to create that hazard or inevitability, for the "Don Juan" could choose its own distance. 26, It is noteworthy that the "Tacloban City," upon turning hard to port shortly before the moment of collision, signalled its intention to do so by giving two (2) short blasts with horn. 26A The "Don Juan " gave no answering horn blast to signal its own intention and proceeded to turn hatd to starboard. 26B We conclude that Capt. Santisteban and Negros Navigation are properly held liable for gross negligence 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 necessity for passing upon the degree of negligence or culpability properly attributable to PNOC and PNOC 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 for the death of their parents in the "Don Juan" tragedy. Clearly, the trial court should have included a breakdown of the lump sum award into its component parts: compensatory damages, moral damages and exemplary damages. On appeal, the Court of Appeals could have and should have 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 Manchester Development Corporation V. Court of Appeals 27 reduced the P400,000.00 lump sum award into a P100,000.00 for actual and compensatory damages only.

20

We believe that the Court of Appeals erred in doing so, It is true that the petitioners' complaint before the trial court had in the body indicated that the petitioner-plaintiffs believed that moral damages in the amount of at least P1,400,000.00 were properly due to them (not P12,000,000.00 as the Court of Appeals erroneously stated) as well as exemplary damages in the sum of P100,000.00 and that in the prayer of their complaint, they did not specify the amount 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 subsequent decision by the Court in Sun Insurance Office, Ltd. (SIOL), et al. v. Asuncion, et al. 28 can be applied in the instant case so as to work a striking out of that portion of the trial court's award which 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, the complaint in the case at bar was filed on 29 December 1980, that is, long before either Manchester or Circular No. 7 of 24 March 1988 emerged. The decision of the trial court was itself promulgated on 17 July 1986, again, before Manchester and Circular No. 7 were promulgated. We do not believe that Manchester should have been applied retroactively to this case where a decision on the merits had already been rendered by the trial court, even though such decision was then under appeal and had not yet reached finality. There is no indication at all that petitioners here sought simply to evade payment of the court's filing fees or to mislead the court in the assessment of the filing fees. In any event, we apply Manchester as clarified and amplified by Sun Insurance Office Ltd. (SIOL), by holding that the petitioners shall pay the additional filing fee that is properly payable given the award specified below, and that such additional filing fee shall constitute a lien upon the judgment. We consider, finally, the amount of damages-compensatory, moral and exemplary-properly imposable upon private respondents in this case. The original award of the trial court of P400,000.00 could well have been disaggregated by the trial court and the Court of Appeals in the following manner: actual or compensatory damages proved in the course of trial consisting of actual expenses incurred by petitioners in their search for their parents' bodies-

-P126,000.00

actual or compensatory damages 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 considering the pain and anxiety they doubtless experienced while searching for their parents among the survivors and the corpses recovered from the sea or washed ashore, we believe that an additional amount of P200,000.00 for moral damages, making a total of P307,000.00 for moral damages, 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 that is socially deleterious in its consequence by creating negative incentives or deterrents against such behaviour. In requiring compliance with the standard which is in fact that of the highest possible degree of diligence, from common carriers and in creating a presumption of negligence against them, the law seels to compel them to control their employees, to tame their reckless instincts 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 in our waters with massive loss of life. The bulk of our population is too poor to afford domestic air transportation. So it is that notwithstanding the frequent sinking of passenger vessels in our waters, crowds of people continue to travel by sea. This Court is prepared to use the instruments given to it by the law for securing the ends of law and public policy. One of those instruments is the institution of exemplary damages; one of those ends, of special importance in an archipelagic state like the Philippines, is the safe and reliable carriage of people and goods by sea. Considering the foregoing, we believe that an additional award in the amount of P200,000.00 as exmplary damages, is quite modest. The Court is aware that petitioners here merely asked for the restoration of the P 400.000.00 award 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 substantial justice to the parties, including issues not explicity raised by the party affected. In the case at bar, as in Kapalaran Bus Line v. Coronado, et al., 30 both the demands of sustantial justice and the imperious requirements of public policy compel us to the conclusion that the trial court's implicit award of moral and exemplary damages was erronoeusly deledted and must be restored and augmented and brought more nearely to the level required by public policy and substantial justice. WHEREFORE, the Petition for Review on certiorari is hereby GRANTED and the Decision of the Court of Appeals insofar as it redurce the amount of damages awarded to petitioners to P100,000.00 is hereby REVERSED and SET ASIDE. The award granted by the

21

trial court is hereby 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)

That we were passengers of Thames with Plate No. 52-222 PUJ Phil. 73 and victims after the said Thames met an accident at Barrio Payocpoc Norte, Bauang, La Union while passing through the National Highway No. 3;

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)

from the hospital. However, before Mrs. Delim left, she had the injured passengers, including petitioner, sign an already prepared Joint Affidavit which stated, among other things:

That after a thorough investigation the said Thames met the accident due to mechanical defect and went off the road and turned turtle to the east canal of the road into a creek causing physical injuries to us;

P 15,000.00 as attorney's fees. xxx

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

xxx

xxx

That we are no longer interested to file a complaint, criminal or civil against the said driver and owner of the said Thames, because it was an accident and the said driver and owner of the said Thames have gone to the extent of helping us to be treated upon our injuries.

SO ORDERED. xxx Gatchalin v. Delim Oct 21, 1991 G.R. No. L-56487 October 21, 1991 REYNALDA GATCHALIAN, petitioner, vs. ARSENIO DELIM and the HON. COURT OF APPEALS, respondents. Pedro G. Peralta for petitioner. Florentino G. Libatique for private respondent.

FELICIANO, J.:p At noon time on 11 July 1973, petitioner Reynalda Gatchalian boarded, as a paying passenger, respondent's "Thames" mini bus at a point in San Eugenio, Aringay, La Union, bound for Bauang, of the same province. On the way, while the bus was running along the highway in Barrio Payocpoc, Bauang, Union, "a snapping sound" was suddenly heard at one part of the bus and, shortly thereafter, the vehicle bumped a cement flower pot on the side of the road, went off the road, turned turtle and fell into a ditch. Several passengers, including petitioner Gatchalian, were injured. They were promptly taken to Bethany Hospital at San Fernando, La Union, for medical treatment. Upon medical examination, petitioner was found to have sustained physical injuries on the leg, arm and forehead, specifically described as follows: lacerated wound, forehead; abrasion, elbow, left; abrasion, knee, left; abrasion, lateral surface, leg, left. 1 On 14 July 1973, while injured. passengers were confined in the hospital, Mrs. Adela Delim, wife of respondent, visited them and later paid for their hospitalization and medical expenses. She also gave petitioner P12.00 with which to pay her transportation expense in going home

xxx

xxx 2

(Emphasis supplied) Notwithstanding this document, petitioner Gathalian filed with the then Court of First Instance of La Union an action extra contractu to recover compensatory and moral damages. She alleged in the complaint that her injuries sustained from the vehicular mishap had left her with a conspicuous white scar measuring 1 by 1/2 inches on the forehead, generating mental suffering and an inferiority complex on her part; and that as a result, she had to retire in seclusion and stay away from her friends. She also alleged that the scar diminished her facial beauty and deprived her of opportunities for employment. She prayed for an award of: P10,000.00 for loss of employment and other opportunities; P10,000.00 for the cost of plastic surgery for removal of the scar on her forehead; P30,000.00 for moral damages; and P1,000.00 as attorney's fees. In defense, respondent averred that the vehicular mishap was due to force majeure, and that petitioner had already been paid and moreover had waived any right to institute any action against him (private respondent) and his driver, when petitioner Gatchalian signed the Joint Affidavit on 14 July 1973. After trial, the trial court dismissed the complaint upon the ground that when petitioner Gatchalian signed the Joint Affidavit, she relinquished any right of action (whether criminal or civil) that she may have had against respondent and the driver of the mini-bus. On appeal by petitioner, the Court of Appeals reversed the trial court's conclusion that there had been a valid waiver, but affirmed the dismissal of the case by denying petitioner's claim for damages: We are not in accord, therefore, of (sic) the ground of the trial court's dismissal of the complaint, although we

22

conform to the trial court's disposition of the case — its dismissal.

— which is not the case of the one relied upon in this appeal. (Emphasis supplied)

IN VIEW OF THE FOREGOING considerations, there being no error committed by the lower court in dismissing the plaintiff-appellant's complaint, the judgment of dismissal is hereby affirmed.

If we apply the standard used in Yepes and Susaya, we would have to conclude that the terms of the Joint Affidavit in the instant case cannot be regarded as a waiver cast in "clear and unequivocal" terms. Moreover, the circumstances under which the Joint Affidavit was signed by petitioner Gatchalian need to be considered. Petitioner testified that she was still reeling from the effects of the vehicular accident, having been in the hospital for only three days, when the purported waiver in the form of the Joint Affidavit was presented to her for signing; that while reading the same, she experienced dizziness but that, seeing the other passengers who had also suffered injuries sign the document, she too signed without bothering to read the Joint Affidavit in its entirety. Considering these circumstances there appears substantial doubt whether petitioner understood fully the import of the Joint Affidavit (prepared by or at the instance of private respondent) she signed and whether she actually intended thereby to waive any right of action against private respondent.

Without special pronouncement as to costs. SO ORDERED. 3 In the present Petition for Review filed in forma pauperis, petitioner assails the decision of the Court of Appeals and ask this Court to award her actual or compensatory damages as well as moral damages. We agree with the majority of the Court of Appeals who held that no valid waiver of her cause of action had been made by petitioner. The relevant language of the Joint Affidavit may be quoted again: That we are no longer interested to file a complaint, criminal or civil against the said driver and owner of the said Thames, because it was an accident and the said driver and owner of the said Thames have gone to the extent of helping us to be treated upon our injuries. (Emphasis supplied) A waiver, to be valid and effective, must in the first place be couched in clear and unequivocal terms which leave no doubt as to the intention of a person to give up a right or benefit which legally pertains to him. 4 A waiver may not casually be attributed to a person when the terms thereof do not explicitly and clearly evidence an intent to abandon a right vested in such person. The degree of explicitness which this Court has required in purported waivers is illustrated in Yepes and Susaya v. Samar Express Transit (supra), where the Court in reading and rejecting a purported waiver said: . . . It appears that before their transfer to the Leyte Provincial Hospital, appellees were asked to sign as, in fact, they signed the document Exhibit I wherein they stated that "in consideration of the expenses which said operator has incurred in properly giving us the proper medical treatment, we hereby manifest our desire to waive any and all claims against the operator of the Samar Express Transit." xxx

xxx

xxx

Even a cursory examination of the document mentioned above will readily show that appellees did not actually waive their right to claim damages from appellant for the latter's failure to comply with their contract of carriage. All that said document proves is that they expressed a "desire" to make the waiver — which obviously is not the same as making an actual waiver of their right. A waiver of the kind invoked by appellant must be clear and unequivocal (Decision of the Supreme Court of Spain of July 8, 1887)

Finally, because what is involved here is the liability of a common carrier for injuries sustained by passengers in respect of whose safety a common carrier must exercise extraordinary diligence, we must construe any such purported waiver most strictly against the common carrier. For a waiver to be valid and effective, it must not be contrary to law, morals, public policy or good customs. 5 To uphold a supposed waiver of any right to claim damages by an injured passenger, under circumstances like those exhibited in this case, would be to dilute and weaken the standard of extraordinary diligence exacted by the law from common carriers and hence to render that standard unenforceable. 6 We believe such a purported waiver is offensive to public policy. Petitioner Gatchalian also argues that the Court of Appeals, having by majority vote held that there was no enforceable waiver of her right of action, should have awarded her actual or compensatory and moral damages as a matter of course. We have already noted that a duty to exercise extraordinary diligence in protecting the safety of its passengers is imposed upon a common carrier. 7 In case of death or injuries to passengers, a statutory presumption arises that the common carrier was at fault or had acted negligently "unless it proves that it [had] observed extraordinary diligence as prescribed in Articles 1733 and 1755." 8 In fact, because of this statutory presumption, it has been held that a court need not even make an express finding of fault or negligence on the part of the common carrier in order to hold it liable. 9 To overcome this presumption, the common carrier must slow to the court that it had exercised extraordinary diligence to prevent the injuries. 10 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 good paterfamilias established in respect of the ordinary relations between members of society. A common carrier is bound to

23

carry its passengers safely" as far as human care and foresight can provide, using the utmost diligence of a very cautious person, with due regard to all the circumstances". 11 Thus, the question which must be addressed is whether or not private respondent has successfully proved that he had exercised extraordinary diligence to prevent the mishap involving his mini-bus. The records before the Court are bereft of any evidence showing that respondent had exercised the extraordinary diligence required by law. Curiously, respondent did not even attempt, during the trial before the court a quo, to prove that he had indeed exercised the requisite extraordinary diligence. Respondent did try to exculpate himself from liability by alleging that the mishap was the result of force majeure. But allegation is not proof and here again, respondent utterly failed to substantiate his defense of force majeure. To exempt a common carrier from liability for death or physical injuries to passengers upon the ground of force majeure, the carrier must clearly show not only that the efficient cause of the casualty was entirely independent of the human will, but also that it was impossible to avoid. Any participation by the common carrier in the occurrence of the injury will defeat the defense of force majeure. In Servando v. Philippine Steam Navigation Company, 12 the Court summed up the essential characteristics of force majeure by quoting with approval from the Enciclopedia Juridica Española: Thus, where fortuitous event or force majeure is the immediate and proximate cause of the loss, the obligor is exempt from liability non-performance. The Partidas, the antecedent of Article 1174 of the Civil Code, defines "caso fortuito" as 'an event that takes place by accident and could not have been foreseen. Examples of this are destruction of houses, unexpected fire, shipwreck, violence of robber. In its dissertation on the phrase "caso fortuito" the Enciclopedia Juridica Española says: 'In legal sense and, consequently, also in relation to contracts, a "caso fortuito" presents the following essential characteristics: (1) the cause of the unforeseen and unexpected occurence, or of the failure of the debtor to comply with his obligation, must be independent of the human will; (2) it must be impossible to foresee the event which constitutes the "caso fortuito", or if it can be foreseen, it must be impossible to avoid; (3) the occurrence must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner; and (4) the obligor must be free from any participation in the aggravation of the injury resulting to the creditor. Upon the other hand, the record yields affirmative evidence of fault or negligence on the part of respondent common carrier. In her direct examination, petitioner Gatchalian narrated that shortly before the vehicle went off the road and into a ditch, a "snapping sound" was suddenly heard at one part of the bus. One of the passengers, an old woman, cried out, "What happened?" ("Apay addan samet nadadaelen?"). The driver replied, nonchalantly, "That is only normal" ("Ugali ti makina dayta"). The driver did not stop to check if anything had gone wrong with the bus.

Moreover, the driver's reply necessarily indicated that the same "snapping sound" had been heard in the bus on previous occasions. This could only mean that the bus had not been checked physically or mechanically to determine what was causing the "snapping sound" which had occurred so frequently that the driver had gotten accustomed to it. Such a sound is obviously alien to a motor vehicle in good operating condition, and even a modicum of concern for life and limb of passengers dictated that the bus be checked and repaired. The obvious continued failure of respondent to look after the roadworthiness and safety of the bus, coupled with the driver's refusal or neglect to stop the minibus after he had heard once again the "snapping sound" and the cry of alarm from one of the passengers, constituted wanton disregard of the physical safety of the passengers, and hence gross negligence on the part of respondent and his driver. We turn to petitioner's claim for damages. The first item in that claim relates to revenue which petitioner said she failed to realize because of the effects of the vehicular mishap. Petitioner maintains that on the day that the minibus went off the road, she was supposed to confer with the district supervisor of public schools for a substitute teacher's job, a job which she had held off and on as a "casual employee." The Court of Appeals, however, found that at the time of the accident, she was no longer employed in a public school since, being a casual employee and not a Civil Service eligible, she had been laid off. Her employment as a substitute teacher was occasional and episodic, contingent upon the availability of vacancies for substitute teachers. In view of her employment status as such, the Court of Appeals held that she could not be said to have in fact lost any employment after and by reason of the accident. 13 Such was the factual finding of the Court of Appeals, a finding entitled to due respect from this Court. Petitioner Gatchalian has not submitted any basis for overturning this finding of fact, and she may not be awarded damages on the basis of speculation or conjecture. 14 Petitioner's claim for the cost of plastic surgery for removal of the scar on her forehead, is another matter. A person is entitled to the physical integrity of his or her body; if that integrity is violated or diminished, actual injury is suffered for which actual or compensatory damages are due and assessable. Petitioner Gatchalian is entitled to be placed as nearly as possible in the condition that she was before the mishap. A scar, especially one on the face of the woman, resulting from the infliction of injury upon her, is a violation of bodily integrity, giving raise to a legitimate claim for restoration to her conditio ante. If the scar is relatively small and does not grievously disfigure the victim, the cost of surgery may be expected to be correspondingly modest. In Araneta, et al. vs. Areglado, et al., 15 this Court awarded actual or compensatory damages for, among other things, the surgical removal of the scar on the face of a young boy who had been injured in a vehicular collision. The Court there held: We agree with the appellants that the damages awarded by the lower court for the injuries suffered by Benjamin

24

Araneta are inadequate. In allowing not more than P1,000.00 as compensation for the "permanent deformity and — something like an inferiority complex" as well as for the "pathological condition on the left side of the jaw" caused to said plaintiff, the court below overlooked the clear evidence on record that to arrest the degenerative process taking place in the mandible and restore the injured boy to a nearly normal condition, surgical intervention was needed, for which the doctor's charges would amount to P3,000.00, exclusive of hospitalization fees, expenses and medicines. Furthermore, the operation, according to Dr. Diño, would probably have to be repeated in order to effectuate a complete cure, while removal of the scar on the face obviously demanded plastic surgery. xxx

xxx

xxx

The father's failure to submit his son to a plastic operation as soon as possible does not prove that such treatment is not called for. The damage to the jaw and the existence of the scar in Benjamin Araneta's face are physical facts that can not be reasoned out of existence. That the injury should be treated in order to restore him as far as possible to his original condition is undeniable. The father's delay, or even his negligence, should not be allowed to prejudice the son who has no control over the parent's action nor impair his right to a full indemnity. . . . Still, taking into account the necessity and cost of corrective measures to fully repair the damage; the pain suffered by the injured party; his feelings of inferiority due to consciousness of his present deformity, as well as the voluntary character of the injury inflicted; and further considering that a repair, however, skillfully conducted, is never equivalent to the original state, we are of the opinion that the indemnity granted by the trial court should be increased to a total of P18,000.00. (Emphasis supplied) Petitioner estimated that the cost of having her scar surgically removed was somewhere between P10,000.00 to P15,000.00. 16 Upon the other hand, Dr. Fe Tayao Lasam, a witness presented as an expert by petitioner, testified that the cost would probably be between P5,000.00 to P10,000.00. 17 In view of this testimony, and the fact that a considerable amount of time has lapsed since the mishap in 1973 which may be expected to increase not only the cost but also very probably the difficulty of removing the scar, we consider that the amount of P15,000.00 to cover the cost of such plastic surgery is not unreasonable. Turning to petitioner's claim for moral damages, the longestablished rule is that moral damages may be awarded where gross negligence on the part of the common carrier is shown. 18 Since we have earlier concluded that respondent common carrier and his driver had been grossly negligent in connection with the bus mishap which had injured petitioner and other passengers, and recalling the aggressive manuevers of respondent, through his wife, to get the victims to waive their right to recover damages even as they were still hospitalized for their injuries, petitioner must be held entitled to such moral damages. Considering the extent of pain and anxiety which petitioner must have

suffered as a result of her physical injuries including the permanent scar on her forehead, we believe that the amount of P30,000.00 would be a reasonable award. Petitioner's claim for P1,000.00 as atttorney's fees is in fact even more modest. 19 WHEREFORE, the Decision of the Court of Appeals dated 24 October 1980, as well as the decision of the then Court of First Instance of La Union dated 4 December 1975 are hereby REVERSED and SET ASIDE.Respondent is hereby ORDERED to pay petitioner Reynalda Gatchalian the following sums: 1) P15,000.00 as actual or compensatory damages to cover the cost of plastic surgery for the removal of the scar on petitioner's forehead; 2) P30,000.00 as moral damages; and 3) P1,000.00 as attorney's fees, the aggregate amount to bear interest at the legal rate of 6% per annum counting from the promulgation of this decision until full payment thereof. Costs against private respondent. SO ORDERED. Trans-Asia v. CA Mar 4, 1996 [G.R. No. 118126. March 4, 1996] TRANS-ASIA SHIPPING LINES, INC., petitioner, vs. COURT OF APPEALS and ATTY. RENATO T. ARROYO, respondents. DECISION DAVIDE, JR., J.: As formulated by the petitioner, the issue in this petition for review on certiorari under Rule 45 of the Rules of Court is as follows: In case of interruption of a vessel’s voyage and the consequent delay in that vessel’s arrival at its port of destination, is the right of a passenger affected thereby to be determined and governed by the vague Civil Code provision on common carriers, or shall it be, in the absence of a specific provision thereon, governed by Art. 698 of the Code of Commerce?[1] The petitioner considers it a “novel question of law.” Upon a closer evaluation, however, of the challenged decision of the Court of Appeals of 23 November 1994,[2] vis-a-vis, the decision of 29 June 1992 in Civil Case No. 91-491 of the Regional Trial Court (RTC) of Cagayan de Oro City, Branch 24,[3] as well as the allegations and arguments adduced by the parties, we find the petitioner’s formulation of the issue imprecise. As this Court sees it, what stands for resolution is a common carrier’s liability for damages to a passenger who disembarked from the vessel upon its return to the port of origin, after it suffered engine trouble and had to stop at sea, having commenced the contracted voyage on one engine. The antecedents are summarized by the Court of Appeals as follows: Plaintiff [herein private respondent Atty. Renato Arroyo], a public attorney, bought a ticket [from] defendant [herein

25

petitioner], a corporation engaged in x x x inter-island shipping, for the voyage of M/V Asia Thailand vessel to Cagayan de Oro City from Cebu City on November 12, 1991. At around 5:30 in the evening of November 12, 1991, plaintiff boarded the M/V Asia Thailand vessel. At that instance, plaintiff noticed that some repair works [sic] were being undertaken on the engine of the vessel. The vessel departed at around 11:00 in the evening with only one (1) engine running. After an hour of slow voyage, the vessel stopped near Kawit Island and dropped its anchor thereat. After half an hour of stillness, some passengers demanded that they should be allowed to return to Cebu City for they were no longer willing to continue their voyage to Cagayan de Oro City. The captain acceded [sic] to their request and thus the vessel headed back to Cebu City. At Cebu City, plaintiff together with the other passengers who requested to be brought back to Cebu City, were allowed to disembark. Thereafter, the vessel proceeded to Cagayan de Oro City. Plaintiff, the next day, boarded the M/V Asia Japan for its voyage to Cagayan de Oro City, likewise a vessel of defendant. On account of this failure of defendant to transport him to the place of destination on November 12, 1991, plaintiff filed before the trial court a complaint for damages against defendant.[4] In his complaint, docketed as Civil Case No. 91-491, plaintiff (hereinafter private respondent) alleged that the engines of the M/V Asia Thailand conked out in the open sea, and for more than an hour it was stalled and at the mercy of the waves, thus causing fear in the passengers. It sailed back to Cebu City after it regained power, but for unexplained reasons, the passengers, including the private respondent, were arrogantly told to ‘disembark without the necessary precautions against possible injury to them. They were thus unceremoniously dumped, which only exacerbated the private respondent’s mental distress. He further alleged that by reason of the petitioner’s wanton, reckless, and willful acts, he was unnecessarily exposed to danger and, having been stranded in Cebu City for a day, incurred additional expenses and loss of income. He then prayed that he be awarded P1,100.00, P50,000.00, and P25,000.00 as compensatory, moral, and exemplary damages, respectively.[5] In his pre-trial brief, the private respondent asserted that his complaint was “an action for damage&arising from bad faith, breach of contract and from tort,” with the former arising from the petitioner’s “failure to carry [him] to his place of destination as contracted,” while the latter from the “conduct of the [petitioner] resulting [in] the infliction of emotional distress” to the private respondent.[6] After due trial, the trial court rendered its decision[7] and ruled that the action was only for breach of contract, with Articles 1170, 1172, and 1173 of the Civil Code as

applicable law - not Article 2180 of the same Code. It was of the opinion that Article 1170 made a person liable for damages if, in the performance of his obligation, he was guilty of fraud, negligence, or delay, or in any manner contravened the tenor thereof; moreover, pursuant to Article 2201 of the same Code, to be entitled to damages, the non-performance of the obligation must have been tainted not only by fraud, negligence, or delay, but also bad faith, malice, and wanton attitude. It then disposed of the case as follows: WHEREFORE, it not appearing from the evidence that plaintiff was left in the Port of Cebu because of the fault, negligence, malice or wanton attitude of defendant’s employees, the complaint is DISMISSED. Defendant’s counterclaim is likewise dismissed it not appearing also that filing of the case by plaintiff was motivated by malice or bad faith.[8] The trial court made the following findings to support its disposition: In the light of the evidence adduced by the parties and of the above provisions of the New Civil Code, the issue to be resolved, in the resolution of this case is whether or not, defendant thru its employee in [sic] the night of November 12, 1991, committed fraud, negligence, bad faith or malice when it left plaintiff in the Port of Cebu when it sailed back to Cagayan de Oro City after it has [sic] returned from Kawit Island. Evaluation of the evidence of the parties tended to show nothing that defendant committed fraud. As early as 3:00 p.m. of November 12, 1991, defendant did not hide the fact that the cylinder head cracked. Plaintiff even saw during its repair. If he had doubts as to the vessel’s capacity to sail, he had time yet to take another boat. The ticket could be returned to defendant and corresponding cash [would] be returned to him. Neither could negligence, bad faith or malice on the part of defendant be inferred from the evidence of the parties. When the boat arrived at [the] Port of Cebu after it returned from Kawit Island, there was an announcement that passengers who would like to disembark were given ten (10) minutes only to do so. By this announcement, it could be inferred that the boat will [sic] proceed to Cagayan de Oro City. If plaintiff entertained doubts, he should have asked a member of the crew of the boat or better still, the captain of the boat. But as admitted by him, he was of the impression only that the boat will not proceed to Cagayan de Oro that evening so he disembarked. He was instead, the ones [sic] negligent. Had he been prudent, with the announcement that those who will disembark were given ten minutes only, he should have lingered a little by staying in his cot and inquired whether the boat will proceed to Cagayan de Oro City or not. Defendant cannot be expected to be telling [sic] the reasons to each passenger. Announcement by microphone was enough. The court is inclined to believe that the story of defendant that the boat returned to the Port of Cebu because of the

26

request of the passengers in view of the waves. That it did not return because of the defective engines as shown by the fact that fifteen (15) minutes after the boat docked [at] the Port of Cebu and those who wanted to proceed to Cagayan de Oro disembarked, it left for Cagayan de Oro City. The defendant got nothing when the boat returned to Cebu to let those who did not want to proceed to Cagayan de Oro City including plaintiff disembarked. On the contrary, this would mean its loss instead because it will have to refund their tickets or they will use it the next trip without paying anymore. It is hard therefore, to imagine how defendant by leaving plaintiff in Cebu could have acted in bad faith, negligently, want only and with malice. If plaintiff, therefore, was not able to [m]ake the trip that night of November 12, 1991, it was not because defendant maliciously did it to exclude him [from] the trip. If he was left, it was because of his fault or negligence.[9] Unsatisfied, the private respondent appealed to the Court of Appeals (CA-G.R. CV No. 39901) and submitted for its determination the following assignment of errors: (1) the trial court erred in not finding that the defendant-appellee was guilty of fraud, delay, negligence, and bad faith; and (2) the trial court erred in not awarding moral and exemplary damages.[10] In its decision of 23 November 1994,[11] the Court of Appeals reversed the trial court’s decision by applying Article 1755 in relation to Articles 2201, 2208, 2217, and 2232 of the Civil Code and, accordingly, awarded compensatory, moral, and exemplary damages as follows: WHEREFORE, premises considered, the appealed decision is hereby REVERSED and SET ASIDE and another one is rendered ordering defendant-appellee to pay plaintiffappellant: 1. 2. 3. 4.

P20,000.00 as moral damages; P10,000.00 as exemplary damages; P5,000.00 as attorney’s fees; Cost of suit.

SO ORDERED.[12] It did not, however, allow the grant of damages for the delay in the performance of the petitioner’s obligation as the requirement of demand set forth in Article 1169 of the Civil Code had not been met by the private respondent. Besides, it found that the private respondent offered no evidence to prove that his contract of carriage with the petitioner provided for liability in case of delay in departure, nor that a designation of the time of departure was the controlling motive for the establishment of the contract. On the latter, the court a quo observed that the private respondent even admitted he was unaware of the vessel’s departure time, and it was only when he boarded the vessel that he became aware of such. Finally, the respondent Court found no reasonable basis for the private respondent’s belief that demand was useless because the petitioner had rendered it beyond its power to perform its

obligation; on the contrary, he even admitted that the petitioner had been assuring the passengers that the vessel would leave on time, and that it could still perform its obligation to transport them as scheduled. To justify its award of damages, the Court of Appeals ratiocinated as follows: It is an established and admitted fact that the vessel before the voyage had undergone some repair work on the cylinder head of the engine. It is likewise admitted by defendant-appellee that it left the port of Cebu City with only one engine running. Defendant-appellee averred: x x x The dropping of the vessel’s anchor after running slowly on only one engine when it departed earlier must have alarmed some nervous passengers x x x The entries in the logbook which defendant-appellee itself offered as evidence categorically stated therein that the vessel stopped at Kawit Island because of engine trouble. It reads: 2330 HRS STBD ENGINE EMERGENCY STOP 2350 HRS DROP ANCHOR DUE TO. ENGINE TROUBLE, 2 ENGINE STOP. The stoppage was not to start and synchronized [sic] the engines of the vessel as claimed by defendant-appellee. It was because one of the engines of the vessel broke down; it was because of the disability of the vessel which from the very beginning of the voyage was known to defendantappellee. Defendant-appellee from the very start of the voyage knew for a fact that the vessel was not yet in its sailing condition because the second engine was still being repaired. Inspite of this knowledge, defendant-appellee still proceeded to sail with only one engine running. Defendant-appellee at that instant failed to exercise the diligence which all common carriers should exercise in transporting or carrying passengers. The law does not merely require extraordinary diligence in the performance of the obligation. The law mandates that common carrier[s] should exercise utmost diligence in the transport of passengers. Article 1755 of the New Civil Code provides: 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. Utmost diligence of a VERY CAUTIOUS person dictates that defendant-appellee should have pursued the voyage only when its vessel was already fit to sail. Defendantappellee should have made certain that the vessel [could] complete the voyage before starting [to] sail. Anything less

27

than this, the vessel [could not] sail x x x with so many passengers on board it. However, defendant-appellant [sic] in complete disregard of the safety of the passengers, chose to proceed with its voyage even if only one engine was running as the second engine was still being repaired during the voyage. Defendant-appellee disregarded the not very remote possibility that because of the disability of the vessel, other problems might occur which would endanger the lives of the passengers sailing with a disabled vessel.

Fraud and bad faith by defendant-appellee having been established, the award of moral damages is in order.[16] To serve as a deterrent to the commission of similar acts in the future, exemplary damages should be imposed upon defendant-appellee.[17] Exemplary damages are designed by our civil law to permit the courts to reshape behavior that is socially deleterious in its consequence by creating x x x negative incentives or deterrents against such behavior. [18]

As expected, x x x engine trouble occurred. Fortunate[ly] for defendant-appellee, such trouble only necessitated the stoppage of the vessel and did not cause the vessel to capsize. No wonder why some passengers requested to be brought back to Cebu City. Common carriers which are mandated to exercise utmost diligence should not be taking these risks.

Moral damages having been awarded, exemplary damages maybe properly awarded. When entitlement to moral damages has been established, the award of exemplary damages is proper.[19]

On this premise, plaintiff-appellant should not be faulted why he chose to disembark from the vessel with the other passengers when it returned back to Cebu City. Defendantappellee may call him a very “panicky passenger” or a “nervous person,” but this will not relieve defendantappellee from the liability it incurred for its failure to exercise utmost diligence.[13]

Undoubtedly, there was, between the petitioner and the private respondent, a contract of common carriage. The laws of primary application then are the provisions on common carriers under Section 4, Chapter 3, Title VIII, Book IV of the Civil Code, while for all other matters not regulated thereby, the Code of Commerce and special laws. [20]

xxx

xxx

xxx

As to the second assigned error, we find that plaintiffappellant is entitled to the award of moral and exemplary damages for the breach committed by defendant-appellee. As discussed, defendant-appellee in sailing to Cagayan de Oro City with only one engine and with full knowledge of the true condition of the vessel, acted in bad faith with malice, in complete disregard for the safety of the passengers and only for its own personal advancement/interest. The Civil Code provides: Art 2201. xxx

xxx

xxx

In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for all damages which may be reasonably attributed to the non-performance of the obligation. Plaintiff-appellant is entitled to moral damages for the mental anguish, fright and serious anxiety he suffered during the voyage when the vessel’s engine broke down and when he disembarked from the vessel during the wee hours of the morning at Cebu City when it returned.[14] Moral damages are recoverable in a damage suit predicated upon a breach of contract of carriage where it is proved that the carrier was guilty of fraud or bad faith even if death does not result.[15]

The petitioner then instituted this petition and submitted the question of law earlier adverted to.

Under Article 1733 of the Civil Code, the petitioner was bound to observe extraordinary diligence in ensuring the safety of the private respondent. That meant that the petitioner was, pursuant to Article 1755 of the said Code, bound to carry the private respondent safely as far as human care and foresight could provide, using the utmost diligence of very cautious persons, with due regard for all the circumstances. In this case, we are in full accord with the Court of Appeals that the petitioner failed to discharge this obligation. Before commencing the contracted voyage, the petitioner undertook some repairs on the cylinder head of one of the vessel’s engines. But even before it could finish these repairs, it allowed the vessel to leave the port of origin on only one functioning engine, instead of two. Moreover, even the lone functioning engine was not in perfect condition as sometime after it had run its course, it conked out. This caused the vessel to stop and remain adrift at sea, thus in order to prevent the ship from capsizing, it had to drop anchor. Plainly, the vessel was unseaworthy even before the voyage began. For a vessel to be seaworthy, it must be adequately equipped for the voyage and manned with a sufficient number of competent officers and crew. [21] The failure of a common carrier to maintain in seaworthy condition its vessel involved in a contract of carriage is a clear breach of is duty prescribed in Article 1755 of the Civil Code. As to its liability for damages to the private respondent, Article 1764 of the Civil Code expressly provides: ART. 1764. Damages in cases comprised in this Section shall be awarded in accordance with Title XVIII of this

28

Book, concerning Damages. Article 2206 shall also apply to the death of a passenger caused by the breach of contract by common carrier. The damages comprised in Title XVIII of the Civil Code are actual or compensatory, moral, nominal, temperate or moderate, liquidated, and exemplary. In his complaint, the private respondent claims actual or compensatory, moral, and exemplary damages. Actual or compensatory damages represent the adequate compensation for pecuniary loss suffered and for profits the obligee failed to obtain.[22] In contracts or quasi-contracts, the obligor is liable for all the damages which may be reasonably attributed to the non-performance of the obligation if he is guilty of fraud, bad faith, malice, or wanton attitude.[23] Moral damages include moral suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, or similar injury. They may be recovered in the cases enumerated in Article 2219 of the Civil Code, likewise, if they are the proximate result of, as in this case, the petitioner’s breach of the contract of carriage.[24] Anent a breach of a contract of common carriage, moral damages may be awarded if the common carrier, like the petitioner, acted fraudulently or in bad faith.[25] Exemplary damages are imposed by way of example or correction for the public good, in addition to moral, temperate, liquidated or compensatory damages.[26] In contracts and quasi-contracts, exemplary damages may be awarded if the defendant acted in a wanton fraudulent, reckless, oppressive or malevolent manner.[27] It cannot, however, be considered as a matter of right; the court having to decide whether or not they should be adjudicated. [28] Before the court may consider an award for exemplary damages, the plaintiff must first show that he is entitled to moral, temperate or compensatory damages; but it is not necessary that he prove the monetary value thereof.[29] The Court of Appeals did not grant the private respondent actual or compensatory damages, reasoning that no delay was incurred since there was no demand, as required by Article 1169 of the Civil Code. This article, however, finds no application in this case because, as found by the respondent Court, there was in fact no delay in the commencement of the contracted voyage. If any delay was incurred, it was after the commencement of such voyage, more specifically, when the voyage was subsequently interrupted when the vessel had to stop near Kawit Island after the only functioning engine conked out. As to the rights and duties of the parties strictly arising out of such delay, the Civil Code is silent. However, as correctly pointed out by the petitioner, Article 698 of the Code of Commerce specifically provides for such a situation. It reads:

In case a voyage already begun should be interrupted, the passengers shall be obliged to pay the fare in proportion to the distance covered, without right to recover for losses and damages if the interruption is due to fortuitous event or force majeure, but with a right to indemnity if the interruption should have been caused by the captain exclusively. If the interruption should be caused by the disability of the vessel and a passenger should agree to await the repairs, he may not be required to pay any increased price of passage, but his living expenses during the stay shall be for his own account. This article applies suppletorily pursuant to Article 1766 of the Civil Code. Of course, this does not suffice for a resolution of the case at bench for, as earlier stated, the cause of the delay or interruption was the petitioner’s failure to observe extraordinary diligence. Article 698 must then be read together with Articles 2199, 2200, 2201, and 2208 in relation to Article 21 of the Civil Code. So read, it means that the petitioner is liable for any pecuniary loss or loss of profits which the private respondent may have suffered by reason thereof. For the private respondent, such would be the loss of income if unable to report to his office on the day he was supposed to arrive were it not for the delay. This, however, assumes that he stayed on the vessel and was with it when it thereafter resumed its voyage; but he did not. As he and some passengers resolved not to complete the voyage, the vessel had to return to its port of origin and allow them to disembark. The private respondent then took the petitioner’s other vessel the following day, using the ticket he had purchased for the previous day’s voyage. Any further delay then in the private respondent’s arrival at the port of destination was caused by his decision to disembark. Had he remained on the first vessel, he would have reached his destination at noon of 13 November 1991, thus been able to report to his office in the afternoon. He, therefore, would have lost only the salary for half of a day. But actual or compensatory damages must be proved,[30] which the private respondent failed to do. There is no convincing evidence that he did not receive his salary for 13 November 1991 nor that his absence was not excused. We likewise fully agree with the Court of Appeals that the petitioner is liable for moral and exemplary damages. In allowing its unseaworthy M/V Asia Thailand to leave the port of origin and undertake the contracted voyage, with full awareness that it was exposed to perils of the sea, it deliberately disregarded its solemn duty to exercise extraordinary diligence and obviously acted with bad faith and in a wanton and reckless manner. On this score, however, the petitioner asserts that the safety of the vessel and passengers was never at stake because the sea was “calm” in the vicinity where it stopped as faithfully recorded in the vessel’s log book (Exhibit “4”). Hence, the petitioner concludes, the private respondent was merely ‘over-reacting” to the situation obtaining then.[31]

29

We hold that the petitioner’s defense cannot exculpate it nor mitigate its liability. On the contrary, such a claim demonstrates beyond cavil the petitioner’s lack of genuine concern for the safety of its passengers. It was, perhaps, only providential that the sea happened to be calm. Even so, the petitioner should not expect its passengers to act in the manner it desired. The passengers were not stoics; becoming alarmed, anxious, or frightened at the stoppage of a vessel at sea in an unfamiliar zone at nighttime is not the sole prerogative of the faint-hearted. More so in the light of the many tragedies at sea resulting in the loss of lives of hopeless passengers and damage to property simply because common carriers failed in their duty to exercise extraordinary diligence in the performance of their obligations. We cannot, however, give our affirmance to the award of attorney’s fees. Under Article 2208 of the Civil Code, these are recoverable only in the concept of actual damages,[32] not as moral damages[33] nor judicial costs.[34] Hence, to merit such an award, it is settled that the amount thereof must be proven.[35] Moreover, such must be specifically prayed for - as was not done in this case - and may not be deemed incorporated within a general prayer for “such other relief and remedy as this court may deem just and equitable.”[36] Finally, it must be noted that aside from the following, the body of the respondent Court’s decision was devoid of any statement regarding attorney’s fees: Plaintiff-appellant was forced to litigate in order that he can claim moral and exemplary damages for the suffering he encurred [sic]. He is entitled to attorney’s fees pursuant to Article 2208 of the Civil Code. It states: Article 2208. In the absence of stipulation, attorney’ s fees and expenses of litigation, other than judicial costs cannot be recovered except: 1. When exemplary damages are awarded; 2. When the defendant’s act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest. This Court holds that the above does not satisfy the benchmark of “factual, legal and equitable justification” needed as basis for an award of attorney’s fees.[37] In sum, for lack of factual and legal basis, the award of attorney’s fees must be deleted. WHEREFORE, the instant petition is DENIED and the challenged decision of the Court of Appeals in CA-G.R. CV No. 39901 is AFFIRMED subject to the modification as to the award for attorney’s fees which is hereby SET ASIDE. Costs against the petitioner. SO ORDERED. Negros Navigation v. CA Nov 17, 1997 [G.R. No. 110398. November 7, 1997]

NEGROS NAVIGATION CO., INC., petitioner, vs. THE COURT OF APPEALS, RAMON MIRANDA, SPS. RICARDO and VIRGINIA DE LA VICTORIA, respondents. DECISION MENDOZA, J.: This is a petition for review on certiorari of the decision of the Court of Appeals affirming with modification the Regional Trial Court’s award of damages to private respondents for the death of relatives as a result of the sinking of petitioner’s vessel. In April of 1980, private respondent Ramon Miranda purchased from the Negros Navigation Co., Inc. four special cabin tickets (#74411, 74412, 74413 and 74414) for his wife, daughter, son and niece who were going to Bacolod City to attend a family reunion. The tickets were for Voyage No. 457-A of the M/V Don Juan, leaving Manila at 1:00 p.m. on April 22, 1980. The ship sailed from the port of Manila on schedule. At about 10:30 in the evening of April 22, 1980, the Don Juan collided off the Tablas Strait in Mindoro, with the M/T Tacloban City, an oil tanker owned by the Philippine National Oil Company (PNOC) and the PNOC Shipping and Transport Corporation (PNOC/STC). As a result, the M/V Don Juan sank. Several of her passengers perished in the sea tragedy. The bodies of some of the victims were found and brought to shore, but the four members of private respondents’ families were never found. Private respondents filed a complaint on July 16, 1980 in the Regional Trial Court of Manila, Branch 34, against the Negros Navigation, the Philippine National Oil Company (PNOC), and the PNOC Shipping and Transport Corporation (PNOC/STC), seeking damages for the death of Ardita de la Victoria Miranda, 48, Rosario V. Miranda, 19, Ramon V. Miranda, Jr., 16, and Elfreda de la Victoria, 26. In its answer, petitioner admitted that private respondents purchased ticket numbers 74411, 74412, 74413 and 74414; that the ticket numbers were listed in the passenger manifest; and that the Don Juan left Pier 2, North Harbor, Manila on April 22, 1980 and sank that night after being rammed by the oil tanker M/T Tacloban City, and that, as a result of the collision, some of the passengers of the M/V Don Juan died. Petitioner, however, denied that the four relatives of private respondents actually boarded the vessel as shown by the fact that their bodies were never recovered. Petitioner further averred that the Don Juan was seaworthy and manned by a full and competent crew, and that the collision was entirely due to the fault of the crew of the M/T Tacloban City. On January 20, 1986, the PNOC and petitioner Negros Navigation Co., Inc. entered into a compromise agreement whereby petitioner assumed full responsibility for the payment and satisfaction of all claims arising out of or in

30

connection with the collision and releasing the PNOC and the PNOC/STC from any liability to it. The agreement was subsequently held by the trial court to be binding upon petitioner, PNOC and PNOC/STC. Private respondents did not join in the agreement.

3. Ordering and sentencing defendants-appellants, jointly and severally, to pay plaintiffs-appellees Dela Victoria spouses the amount of P50,000.00, instead of P30,000.00, as compensatory damages for the death of their daughter Elfreda Dela Victoria;

After trial, the court rendered judgment on February 21, 1991, the dispositive portion of which reads as follows:

Hence this petition, raising the following issues:

WHEREFORE, in view of the foregoing, judgment is hereby rendered in favor of the plaintiffs, ordering all the defendants to pay jointly and severally to the plaintiffs damages as follows: To Ramon Miranda: P42,025.00 for actual damages; P152,654.55 as compensatory damages for loss of earning capacity of his wife; P90,000.00 as compensatory damages for wrongful death of three (3) victims; P300,000.00 as moral damages; P50,000.00 as exemplary damages, all in the total amount of P634,679.55; and P40,000.00 as attorney’s fees. To Spouses Ricardo and Virginia de la Victoria: P12,000.00 for actual damages; P158,899.00 earning capacity;

as compensatory damages for loss of

P30,000.00 as compensatory damages for wrongful death; P100,000.00 as moral damages; P20,000.00 as exemplary damages, all in the total amount of P320,899.00; and P15,000.00 as attorney’s fees. On appeal, the Court of Appeals[1] affirmed the decision of the Regional Trial Court with modification – 1. Ordering and sentencing defendants-appellants, jointly and severally, to pay plaintiff-appellee Ramon Miranda the amount of P23,075.00 as actual damages instead of P42,025.00; 2. Ordering and sentencing defendants-appellants, jointly and severally, to pay plaintiff-appellee Ramon Miranda the amount of P150,000.00, instead of P90,000.00, as compensatory damages for the death of his wife and two children;

(1) whether the members of private respondents’ families were actually passengers of the Don Juan; (2) whether the ruling in Mecenas v. Court of Appeals,[2] finding the crew members of petitioner to be grossly negligent in the performance of their duties, is binding in this case; (3) whether the total loss of the M/V Don Juan extinguished petitioner’s liability; and (4) whether the damages awarded by the appellate court are excessive, unreasonable and unwarranted. First. The trial court held that the fact that the victims were passengers of the M/V Don Juan was sufficiently proven by private respondent Ramon Miranda, who testified that he purchased tickets numbered 74411, 74412, 74413, and 74414 at P131.30 each from the Makati office of petitioner for Voyage No. 47-A of the M/V Don Juan, which was leaving Manila on April 22, 1980. This was corroborated by the passenger manifest (Exh. E) on which the numbers of the tickets and the names of Ardita Miranda and her children and Elfreda de la Victoria appear. Petitioner contends that the purchase of the tickets does not necessarily mean that the alleged victims actually took the trip. Petitioner asserts that it is common knowledge that passengers purchase tickets in advance but do not actually use them. Hence, private respondent should also prove the presence of the victims on the ship. The witnesses who affirmed that the victims were on the ship were biased and unreliable. This contention is without merit. Private respondent Ramon Miranda testified that he personally took his family and his niece to the vessel on the day of the voyage and stayed with them on the ship until it was time for it to leave. There is no reason he should claim members of his family to have perished in the accident just to maintain an action. People do not normally lie about so grave a matter as the loss of dear ones. It would be more difficult for private respondents to keep the existence of their relatives if indeed they are alive than it is for petitioner to show the contrary. Petitioner’s only proof is that the bodies of the supposed victims were not among those recovered from the site of the mishap. But so were the bodies of the other passengers reported missing not recovered, as this Court noted in the Mecenas[3] case. Private respondent Miranda’s testimony was corroborated by Edgardo Ramirez. Ramirez was a seminarian and one of the survivors of the collision. He testified that he saw Mrs. Miranda and Elfreda de la Victoria on the ship and

31

that he talked with them. He knew Mrs. Miranda who was his teacher in the grade school. He also knew Elfreda who was his childhood friend and townmate. Ramirez said he was with Mrs. Miranda and her children and niece from 7:00 p.m. until 10:00 p.m. when the collision happened and that he in fact had dinner with them. Ramirez said he and Elfreda stayed on the deck after dinner and it was there where they were jolted by the collision of the two vessels. Recounting the moments after the collision, Ramirez testified that Elfreda ran to fetch Mrs. Miranda. He escorted her to the room and then tried to go back to the deck when the lights went out. He tried to return to the cabin but was not able to do so because it was dark and there was a stampede of passengers from the deck. Petitioner casts doubt on Ramirez’ testimony, claiming that Ramirez could not have talked with the victims for about three hours and not run out of stories to tell, unless Ramirez had a “storehouse” of stories. But what is incredible about acquaintances thrown together on a long journey staying together for hours on end, in idle conversation precisely to while the hours away? Petitioner also points out that it took Ramirez three (3) days before he finally contacted private respondent Ramon Miranda to tell him about the fate of his family. But it is not improbable that it took Ramirez three days before calling on private respondent Miranda to tell him about the last hours of Mrs. Miranda and her children and niece, in view of the confusion in the days following the collision as rescue teams and relatives searched for survivors. Indeed, given the facts of this case, it is improper for petitioner to even suggest that private respondents’ relatives did not board the ill-fated vessel and perish in the accident simply because their bodies were not recovered. Second. In finding petitioner guilty of negligence and in failing to exercise the extraordinary diligence required of it in the carriage of passengers, both the trial court and the appellate court relied on the findings of this Court in Mecenas v. Intermediate Appellate Court,[4] which case was brought for the death of other passengers. In that case it was found that although the proximate cause of the mishap was the negligence of the crew of the M/T Tacloban City, the crew of the Don Juan was equally negligent as it found that the latter’s master, Capt. Rogelio Santisteban, was playing mahjong at the time of collision, and the officer on watch, Senior Third Mate Rogelio De Vera, admitted that he failed to call the attention of Santisteban to the imminent danger facing them. This Court found that Capt. Santisteban and the crew of the M/V Don Juan failed to take steps to prevent the collision or at least delay the sinking of the ship and supervise the abandoning of the ship. Petitioner Negros Navigation was found equally negligent in tolerating the playing of mahjong by the ship captain and other crew members while on board the ship and failing to keep the M/V Don Juan seaworthy so much so that the ship sank within 10 to 15 minutes of its impact with the M/T Tacloban City.

In addition, the Court found that the Don Juan was overloaded. The Certificate of Inspection, dated August 27, 1979, issued by the Philippine Coast Guard Commander at Iloilo City stated that the total number of persons allowed on the ship was 864, of whom 810 are passengers, but there were actually 1,004 on board the vessel when it sank, 140 persons more than the maximum number that could be safely carried by it. Taking these circumstances together, and the fact that the M/V Don Juan, as the faster and better-equipped vessel, could have avoided a collision with the PNOC tanker, this Court held that even if the Tacloban City had been at fault for failing to observe an internationally-recognized rule of navigation, the Don Juan was guilty of contributory negligence. Through Justice Feliciano, this Court held: The grossness of the negligence of the “Don Juan” is underscored when one considers the foregoing circumstances in the context of the following facts: Firstly, the “Don Juan” was more than twice as fast as the “Tacloban City.” The “Don Juan’s” top speed was 17 knots; while that of the “Tacloban City” was 6.3. knots. Secondly, the “Don Juan” carried the full complement of officers and crew members specified for a passenger vessel of her class. Thirdly, the “Don Juan” 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 still four (4) nautical miles away. Visual confirmation of radar contact was established by the “Don Juan” while the “Tacloban City” was still 2.7 miles away. In the total set of circumstances which existed in the instant case, the “Don Juan,” had it taken seriously its duty of extraordinary diligence, could have easily avoided the collision with the “Tacloban City.” Indeed, the “Don Juan” 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 Road which requires two (2) power-driven vessels meeting end on or nearly end on each to alter her course to starboard (right) so that each vessel may pass on the port side (left) of the other. The “Tacloban City,” when the two (2) vessels were only threetenths (0.3) of a mile apart, turned (for the second time) 15o to port side while the “Don Juan” veered hard to starboard. . . . [But] “route observance” of the International Rules of the Road will not relieve a vessel from responsibility if the collision could have been avoided by proper care and skill on her part or even by a departure from the rules. In the petition at bar, the “Don Juan” having sighted the “Tacloban City” when it was still a long way 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 no necessity for passing so near to the “Tacloban City” as to create that hazard or inevitability, for the “Don Juan” could choose its own distance. It is noteworthy that the “Tacloban City,” upon turning hard to port shortly before

32

the moment of collision, signalled its intention to do so by giving two (2) short blasts with its horn. The “Don Juan” gave no answering horn blast to signal its own intention and proceeded to turn hard to starboard. We conclude that Capt. Santisteban and Negros Navigation are properly held liable for gross negligence 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. . . .[5] Petitioner criticizes the lower court’s reliance on the Mecenas case, arguing that, although this case arose out of the same incident as that involved in Mecenas, the parties are different and trial was conducted separately. Petitioner contends that the decision in this case should be based on the allegations and defenses pleaded and evidence adduced in it or, in short, on the record of this case. The contention is without merit. What petitioner contends may be true with respect to the merits of the individual claims against petitioner but not as to the cause of the sinking of its ship on April 22, 1980 and its liability for such accident, of which there can only be one truth. Otherwise, one would be subscribing to the sophistry: truth on one side of the Pyrenees, falsehood on the other! Adherence to the Mecenas case is dictated by this Court’s policy of maintaining stability in jurisprudence in accordance with the legal maxim “stare decisis et non quieta movere” (Follow past precedents and do not disturb what has been settled.) Where, as in this case, the same questions relating to the same event have been put forward by parties similarly situated as in a previous case litigated and decided by a competent court, the rule of stare decisis is a bar to any attempt to relitigate the same issue.[6] In Woulfe v. Associated Realties Corporation,[7] the Supreme Court of New Jersey held that where substantially similar cases to the pending case were presented and applicable principles declared in prior decisions, the court was bound by the principle of stare decisis. Similarly, in State ex rel. Tollinger v. Gill,[8] it was held that under the doctrine of stare decisis a ruling is final even as to parties who are strangers to the original proceeding and not bound by the judgment under the res judicata doctrine. The Philadelphia court expressed itself in this wise: “Stare decisis simply declares that, for the sake of certainty, a conclusion reached in one case should be applied to those which follow, if the facts are substantially the same, even though the parties may be different.”[9] Thus, in J. M. Tuason v. Mariano, supra, this Court relied on its rulings in other cases involving different parties in sustaining the validity of a land title on the principle of “stare decisis et non quieta movere.” Indeed, the evidence presented in this case was the same as those presented in the Mecenas case, to wit: Document This case

Mecenas case

Decision of Commandant Exh. 11-B-NN/X Phil. Coast Guard in BMI Case No. 415-80 dated 3/26/81 Decision of the Minister Exh. ZZ of National Defense dated 3/12/82 Resolution on the motion Exh. AAA for reconsideration (private respondents) decision of the Minister of National Defense dated 7/24/84 Certificate of inspection Exh. 19-NN dated 8/27/79 Certificate of Stability Exh. 19-D-NN dated 12/16/76

Exh. 10[10]

Exh. 11[11] Exh. 13[12] of

the

Exh. 1-A[13] Exh. 6-A[14]

Nor is it true that the trial court merely based its decision on the Mecenas case. The trial court made its own independent findings on the basis of the testimonies of witnesses, such as Senior Third Mate Rogelio de Vera, who incidentally gave substantially the same testimony on petitioner’s behalf before the Board of Marine Inquiry. The trial court agreed with the conclusions of the then Minister of National Defense finding both vessels to be negligent. Third. The next issue is whether petitioner is liable to pay damages notwithstanding the total loss of its ship. The issue is not one of first impression. The rule is wellentrenched in our jurisprudence that a shipowner may be held liable for injuries to passengers notwithstanding the exclusively real and hypothecary nature of maritime law if fault can be attributed to the shipowner.[15] In Mecenas, this Court found petitioner guilty of negligence in (1) allowing or tolerating the ship captain and crew members in playing mahjong during the voyage, (2) in failing to maintain the vessel seaworthy and (3) in allowing the ship to carry more passengers than it was allowed to carry. Petitioner is, therefore, clearly liable for damages to the full extent. Fourth. Petitioner contends that, assuming that the Mecenas case applies, private respondents should be allowed to claim only P43,857.14 each as moral damages because in the Mecenas case, the amount of P307,500.00 was awarded to the seven children of the Mecenas couple. Under petitioner’s formula, Ramon Miranda should receive P43,857.14, while the De la Victoria spouses should receive P97,714.28. Here is where the principle of stare decisis does not apply in view of differences in the personal circumstances of the victims. For that matter, differentiation would be justified even if private respondents had joined the private respondents in the Mecenas case. The doctrine of stare decisis works as a bar only against issues litigated in a previous case. Where the issue involved was not raised nor presented to the court and not passed upon by the court in

33

the previous case, the decision in the previous case is not stare decisis of the question presently presented.[16] The decision in the Mecenas case relates to damages for which petitioner was liable to the claimants in that case. In the case at bar, the award of P300,000.00 for moral damages is reasonable considering the grief petitioner Ramon Miranda suffered as a result of the loss of his entire family. As a matter of fact, three months after the collision, he developed a heart condition undoubtedly caused by the strain of the loss of his family. The P100,000.00 given to Mr. and Mrs. de la Victoria is likewise reasonable and should be affirmed. As for the amount of civil indemnity awarded to private respondents, the appellate court’s award of P50,000.00 per victim should be sustained. The amount of P30,000.00 formerly set in De Lima v. Laguna Tayabas Co.,[17] Heirs of Amparo delos Santos v. Court of Appeals,[18] and Philippine Rabbit Bus Lines, Inc. v. Intermediate Appellate Court[19] as benchmark was subsequently increased to P50,000.00 in the case of Sulpicio Lines, Inc. v. Court of Appeals,[20] which involved the sinking of another interisland ship on October 24, 1988. We now turn to the determination of the earning capacity of the victims. With respect to Ardita Miranda, the trial court awarded damages computed as follows:[21] In the case of victim Ardita V. Miranda whose age at the time of the accident was 48 years, her life expectancy was computed to be 21.33 years, and therefore, she could have lived up to almost 70 years old. Her gross earnings for 21.33 years based on P10,224.00 per annum, would be P218,077.92. Deducting therefrom 30% as her living expenses, her net earnings would be P152,654.55, to which plaintiff Ramon Miranda is entitled to compensatory damages for the loss of earning capacity of his wife. In considering 30% as the living expenses of Ardita Miranda, the Court takes into account the fact that plaintiff and his wife were supporting their daughter and son who were both college students taking Medicine and Law respectively. In accordance with the ruling in Villa-Rey Transit, Inc. v. Court of Appeals,[22] we think the life expectancy of Ardita Miranda was correctly determined to be 21.33 years, or up to age 69. Petitioner contends, however, that Mrs. Miranda would have retired from her job as a public school teacher at 65, hence her loss of earning capacity should be reckoned up to 17.33 years only. The accepted formula for determining life expectancy is 2/3 multiplied by (80 minus the age of the deceased). It may be that in the Philippines the age of retirement generally is 65 but, in calculating the life expectancy of individuals for the purpose of determining loss of earning capacity under Art. 2206(1) of the Civil Code, it is assumed that the deceased would have earned income even after retirement from a particular job. In this case, the trial court took into account the fact that Mrs. Miranda had a master’s degree and a good prospect of becoming principal of the school in which she was teaching. There was reason to believe that

her income would have increased through the years and she could still earn more after her retirement, e.g., by becoming a consultant, had she not died. The gross earnings which Mrs. Miranda could reasonably be expected to earn were it not for her untimely death was, therefore, correctly computed by the trial court to be P218,077.92 (given a gross annual income of P10,224.00 and life expectancy of 21.33 years). Petitioner contends that from the amount of gross earnings, 60% should be deducted as necessary living expenses, not merely 30% as the trial court allowed. Petitioner contends that 30% is unrealistic, considering that Mrs. Miranda’s earnings would have been subject to taxes, social security deductions and inflation. We agree with this contention. In Villa-Rey Transit, Inc. v. Court of Appeals,[23] the Court allowed a deduction of P1,184.00 for living expenses from the P2,184.00 annual salary of the victim, which is roughly 54.2% thereof. The deceased was 29 years old and a training assistant in the Bacnotan Cement Industries. In People v. Quilaton,[24] the deceased was a 26-year old laborer earning a daily wage. The court allowed a deduction of P120,000.00 which was 51.3% of his annual gross earnings of P234,000.00. In People v. Teehankee,[25] the court allowed a deduction of P19,800.00, roughly 42.4% thereof from the deceased’s annual salary of P46,659.21. The deceased, Maureen Hultman, was 17 years old and had just received her first paycheck as a secretary. In the case at bar, we hold that a deduction of 50% from Mrs. Miranda’s gross earnings (P218,077.92) would be reasonable, so that her net earning capacity should be P109,038.96. There is no basis for supposing that her living expenses constituted a smaller percentage of her gross income than the living expenses in the decided cases. To hold that she would have used only a small part of her income for herself, a larger part going to the support of her children would be conjectural and unreasonable. As for Elfreda de la Victoria, the trial court found that, at the time of her death, she was 26 years old, a teacher in a private school in Malolos, Bulacan, earning P6,192.00 per annum. Although a probationary employee, she had already been working in the school for two years at the time of her death and she had a general efficiency rating of 92.85% and it can be presumed that, if not for her untimely death, she would have become a regular teacher. Hence, her loss of earning capacity is P111,456.00, computed as follows: net earning capacity (x) = life expectancy x [ gross annual income less reasonable & necessary living expenses (50%) ] x P3,096.00]

=

[ 2 (80-26) ]

x

[P6,192.00

3 =

34

36

x

3,096.00

-

=

P111,456.00

On the other hand, the award of actual damages in the amount of P23,075.00 was determined by the Court of Appeals on the basis of receipts submitted by private respondents. This amount is reasonable considering the expenses incurred by private respondent Miranda in organizing three search teams to look for his family, spending for transportation in going to places such as Batangas City and Iloilo, where survivors and the bodies of other victims were found, making long distance calls, erecting a monument in honor of the four victims, spending for obituaries in the Bulletin Today and for food, masses and novenas. Petitioner’s contention that the expenses for the erection of a monument and other expenses for memorial services for the victims should be considered included in the indemnity for death awarded to private respondents is without merit. Indemnity for death is given to compensate for violation of the rights of the deceased, i.e., his right to life and physical integrity.[26] On the other hand, damages incidental to or arising out of such death are for pecuniary losses of the beneficiaries of the deceased. As for the award of attorney’s fees, we agree with the Court of Appeals that the amount of P40,000.00 for private respondent Ramon Miranda and P15,000.00 for the de la Victoria spouses is justified. The appellate court correctly held: The Mecenas case cannot be made the basis for determining the award for attorney’s fees. The award would naturally vary or differ in each case. While it is admitted that plaintiff-appellee Ramon Miranda who is himself a lawyer, represented also plaintiffs-appellees Dela Victoria spouses, we note that separate testimonial evidence were adduced by plaintiff-appellee Ramon Miranda (TSN, February 26, 1982, p. 6) and plaintiffs-appellees spouses Dela Victoria (TSN, August 13, 1981, p. 43). Considering the amount of work and effort put into the case as indicated by the voluminous transcripts of stenographic notes, we find no reason to disturb the award of P40,000.00 for plaintiff-appellee Ramon Miranda and P15,000.00 for plaintiffs-appellees Dela Victoria spouses.[27]

judicial notice of the dreadful regularity with which grievous maritime disasters occur in our waters with massive loss of life. The bulk of our population is too poor to afford domestic air transportation. So it is that notwithstanding the frequent sinking of passenger vessels in our waters, crowds of people continue to travel by sea. This Court is prepared to use the instruments given to it by the law for securing the ends of law and public policy. One of those instruments is the institution of exemplary damages; one of those ends, of special importance in an archipelagic state like the Philippines, is the safe and reliable carriage of people and goods by sea.[28] WHEREFORE, the decision of the Court of Appeals is AFFIRMED with modification and petitioner is ORDERED to pay private respondents damages as follows: To private respondent Ramon Miranda: P23,075.00

P109,038.96 as compensatory damages for loss of earning capacity of his wife; P150,000.00 as compensatory damages for wrongful death of three (3) victims; P300,000.00

P40,000.00

as attorney’s fees.

To private respondents Spouses Ricardo and Virginia de la Victoria: P12,000.00

for actual damages;

P111,456.00 loss of earning capacity;

as compensatory damages for

P50,000.00 wrongful death;

as compensatory damages for as moral damages;

P100,000.00 as exemplary damages, all in the total amount of P373,456.00; and P15,000.00

Exemplary damages are designed by our civil law to permit the courts to reshape behaviour that is socially deleterious in its consequence by creating negative incentives or deterrents against such behaviour. In requiring compliance with the standard of extraordinary diligence, a standard which is in fact that of the highest possible degree of diligence, from common carriers and in creating a presumption of negligence against them, the law seeks to compel them to control their employees, to tame their reckless instincts and to force them to take adequate care of human beings and their property. The Court will take

as moral damages;

P300,000.00 as exemplary damages, all in the total amount of P882,113.96; and

P100,000.00 The award of exemplary damages should be increased to P300,000.00 for Ramon Miranda and P100,000.00 for the de la Victoria spouses in accordance with our ruling in the Mecenas case:

for actual damages;

as attorney’s fees.

Petitioners are further ordered to pay costs of suit. In the event the Philippine National Oil Company and/or the PNOC Shipping and Transport Corporation pay or are required to pay all or a portion of the amounts adjudged, petitioner Negros Navigation Co., Inc. shall reimburse either of them such amount or amounts as either may have paid, and in the event of failure of Negros Navigation Co., Inc., to make the necessary reimbursement, PNOC and/or

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PNOC/STC shall be entitled to a writ of execution without need of filing another action. SO ORDERED. Cervantes v. CA Mar 25, 1999 THIRD DIVISION [G.R. No. 124320. March 2, 1999.] HEIRS OF GUIDO YAPTINCHAY AND ISABEL YAPTINCHAY, NAMELY: LETICIA ENCISOGADINGAN, EMILIO ENCISO, AURORA ENCISO, AND NORBERTO ENCISO, REPRESENTED BY LETICIA ENCISO-GADINGAN, ATTORNEY-IN-FACT, Petitioners, v. HON. ROY S. DEL ROSARIO, PRESIDING JUDGE, RTC, BRANCH 21, IMUS, CAVITE; THE REGISTER OF DEEDS FOR TRECE MARTIRES CITY, GEORGE T. CHUA, SPS. ALFONSO NG AND ANNABELLE CHUA, SPS. ROSENDO L. DY AND DIANA DY, SPS. ALEXANDER NG AND CRISTINA NG, SPS. SAMUEL MADRID AND BELEN MADRID, SPS. JOSE MADRID AND BERNARDA MADRID, SPS. DAVID MADRID AND VIOLETA MADRID, JONATHAN NG, SPS. VICTORIANO CHAN, JR. AND CARMELITA CHAN, SPS. MARIETES C. LEE AND GREGORIE W.C. LEE, JACINTO C. NG, JR., SPS. ADELAIDO S. DE GUZMAN AND ROSITA C. DE GUZMAN, SPS. RICARDO G. ONG AND JULIE LIMIT, SPS. MISAEL ADELAIDA P. SOLIMAN AND FERDINAND SOLIMAN, SPS. MYLENE T. LIM AND ARTHUR LIM, EVELYN K. CHUA, GOLDEN BAY REALTY AND DEVELOPMENT CORPORATION, Respondents. DECISION

Corporation ("Golden Bay") under Transfer Certificate of Title Nos. ("TCT") 225254 and 225255. With the discovery of what happened to subject parcels of land, petitioners filed a complaint for ANNULMENT and/or DECLARATIONS OF NULLITY OF TCT NO. 493363, 493364, 193665, 493366, 493367; and its Derivatives; As Alternative Reconveyance of Realty WITH A PRAYER FOR A WRIT OF PRELIMINARY INJUNCTION and/or RESTRAINING ORDER WITH DAMAGES, docketed as RTC BCV-94-127 before Branch 21 of the Regional Trial Court in Imus, Cavite. Upon learning that "Golden Bay" sold portions of the parcels of land in question, petitioners filed with the "RTC" an Amended Complaint to implead new and additional defendants and to mention the TCTs to be annulled. But the respondent court dismissed the Amended Complaint.chanrobles virtual lawlibrary Petitioners moved for reconsideration of the Order dismissing the Amended Complaint. The motion was granted by the RTC in an Order 1 dated July 7, 1995, which further allowed the herein petitioners to file a Second Amended Complaint, 2 which they promptly did. On August 12, 1995, the private respondents presented a Motion to Dismiss 3 on the grounds that the complaint failed to state a cause of action, that plaintiffs did not have a right of action, that they have not established their status as heirs, that the land being claimed is different from that of the defendants, and that plaintiffs’ claim was barred by laches. The said Motion to Dismiss was granted by the respondent court in its Order 4 dated October 25, 1995, holding that petitioners "have not shown any proof or even a semblance of it — except the allegations that they are the legal heirs of the above-named Yaptinchays — that they have been declared the legal heirs of the deceased couple."cralaw virtua1aw library

PURISIMA, J.: At bar is a Petition for Certiorari under Rule 65 of the Revised Rules of Court assailing the Orders dated October 25, 1995 and February 23, 1996, respectively, of Branch 21 of the Regional Trial Court in Imus, Cavite ("RTC"). The facts that matter are, as follows:chanrob1es virtual 1aw library Petitioners claim that they are the legal heirs of the late Guido and Isabel Yaptinchay, the owners-claimants of Lot No. 1131 with an area of 520,638 and Lot No. 1132 with an area of 36,235 square meters, more or less situated in Bancal, Carmona, Cavite.

Petitioners interposed a Motion for Reconsideration 5 but to no avail. The same was denied by the RTC in its Order 6 of February 23, 1996. Undaunted, petitioners have come before this Court to seek relief from respondent court’s Orders under attack. Petitioners contend that the respondent court acted with grave abuse of discretion in ruling that the issue of heirship should first be determined before trial of the case could proceed. It is petitioners submission that the respondent court should have proceeded with the trial and simultaneously resolved the issue of heirship in the same case.chanroblesvirtualawlibrary The petition is not impressed with merit.

On March 17, 1994, petitioners executed an Extra-Judicial Settlement of the estate of the deceased Guido and Isabel Yaptinchay. On August 26, 1994, petitioners discovered that a portion, if not all, of the aforesaid properties were titled in the name of respondent Golden Bay Realty and Development

To begin with, petitioners’ Petition for Certiorari before this Court is an improper recourse. Their proper remedy should have been an appeal. An order of dismissal, be it right or wrong, is a final order, which is subject to appeal and not a proper subject of certiorari 7 . Where appeal is available as a remedy certiorari will not lie 8 .

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Neither did the respondent court commit grave abuse of discretion in issuing the questioned Order dismissing the Second Amended Complaint of petitioners, as it aptly ratiocinated and ruled:jgc:chanrobles.com.ph "But the plaintiffs who claimed to be the legal heirs of the said Guido and Isabel Yaptinchay have not shown any proof or even a semblance of it — except the allegations that they are the legal heirs of the aforementioned Yaptinchays — that they have been declared the legal heirs of the deceased couple. Now, the determination of who are the legal heirs of the deceased couple must be made in the proper special proceedings in court, and not in an ordinary suit for reconveyance of property. This must take precedence over the action for reconveyance (Elena C. Monzon, et. al., v. Angelita Taligato, CA-G-R No. 33355, August 12, 1992)."cralaw virtua1aw library In Litam, etc., et. al. v. Rivera 9 , this court opined that the declaration of heirship must be made in an administration preceding, and not in an independent civil action. This doctrine was reiterated in Solivio v. Court of Appeals 10 where the court held:chanroblesvirtuallawlibrary:red "In Litam, Et. Al. v. Rivera, 100 Phil. 364, where despite the pendency of the special proceedings for the settlement of the intestate estate of the deceased Rafael Litam, the plaintiffs-appellants filed a civil action in which they claimed that they were the children by a previous marriage of the deceased to a Chinese woman, hence, entitled to inherit his one-half share of the conjugal properties acquired during his marriage to Marcosa Rivera, the trial court in the civil case declared that the plaintiffs-appellants were not children of the deceased, that the properties in question were paraphernal properties of his wife, Marcosa Rivera, and that the latter was his only heir. On appeal to this Court, we ruled that ‘such declarations (that Marcosa Rivera was the only heir of the decedent) is improper, in Civil Case No. 2071, it being within the exclusive competence of the court in Special Proceedings No. 1537, in which it is not as yet, in issue, and, will not be, ordinarily, in issue until the presentation of the project of partition.’ (p. 378)."cralaw virtua1aw library

(Phils.), Inc. v. Court of Appeals, 11 it was ruled that:jgc:chanrobles.com.ph ". . . if the suit is not brought in the name of or against the real party in interest, a motion to dismiss may be filed on the ground that the complaint states no cause of action."cralaw virtua1aw library WHEREFORE, for lack of merit, the Petition under consideration is hereby DISMISSED. No pronouncement as to costs.chanroblesvirtual|awlibrary SO ORDERED. Calalas v. CA May 31, 2000 [G.R. No. 122039. May 31, 2000] VICENTE CALALAS, petitioner, vs. COURT OF APPEALS, ELIZA JUJEURCHE SUNGA and FRANCISCO SALVA, respondents. D E C I S I ON MENDOZA, J.: This is a petition for review on certiorari of the decision[1] of the Court of Appeals, dated March 31, 1991, reversing the contrary decision of the Regional Trial Court, Branch 36, Dumaguete City, and awarding damages instead to private respondent Eliza Jujeurche Sunga as plaintiff in an action for breach of contract of carriage. The facts, as found by the Court of Appeals, are as follows: 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. Sclaw

The trial court cannot make a declaration of heirship in the civil action for the reason that such a declaration can only be made in a special proceeding. Under Section 3, Rule 1 of the 1997 Revised Rules of Court, a civil action is defined as "one by which a party sues another for the enforcement or protection of a right, or the prevention or redress of a wrong" while a special proceeding is "a remedy by which a party seeks to establish a status, a right, or a particular fact." It is then decisively clear that the declaration of heirship can be made only in a special proceeding inasmuch as the petitioners here are seeking the establishment of a status or right.chanroblesvirtuallawlibrary

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. She sustained a fracture of the "distal third of the left tibia-fibula with severe necrosis of the underlying skin." Closed reduction of the fracture, long leg circular casting, and case wedging were done under sedation. Her confinement in the hospital lasted from August 23 to September 7, 1989. Her attending physician, Dr. Danilo V. Oligario, an orthopedic surgeon, certified she would remain on a cast for a period of three months and would have to ambulate in crutches during said period.

We therefore hold that the respondent court did the right thing in dismissing the Second Amended Complaint, which stated no cause of action. In Travel Wide Associated Sales

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

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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. Korte The lower court rendered judgment against Salva as thirdparty defendant and absolved Calalas of liability, holding that it was the driver of the Isuzu truck who was responsible for the accident. It 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. Rtcspped On appeal to the Court of Appeals, the ruling of the lower court was reversed on the ground that Sunga’s cause of action was based on a contract of carriage, not quasi-delict, and that the common carrier failed to exercise the diligence required under the Civil Code. The appellate court dismissed the third-party complaint against Salva and adjudged Calalas liable for damages to Sunga. The dispositive portion of its decision reads: WHEREFORE, the decision appealed from is hereby REVERSED and SET ASIDE, and another one is entered ordering defendant-appellee Vicente Calalas to pay plaintiff-appellant: (1) P50,000.00 as actual and compensatory damages; (2) P50,000.00 as moral damages; (3) P10,000.00 as attorney’s fees; and (4) P1,000.00 as expenses of litigation; and (5) to pay the costs. SO ORDERED. Hence, this petition. Petitioner contends that the ruling in Civil Case No. 3490 that the 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 passengers. He contends that the bumping of the jeepney by the truck owned by Salva was a caso fortuito. Petitioner further assails the award of moral damages to Sunga on the ground that it is not supported by evidence. Sdaadsc The petition has no merit. The argument that Sunga is bound by the ruling in Civil Case No. 3490 finding the driver and the owner of the truck liable for quasi-delict ignores the fact that she was never a party to that case and, therefore, the principle of res judicata does not apply. Missdaa Nor are the issues in Civil Case No. 3490 and in the present case the same. The issue in Civil Case No. 3490 was whether Salva and his driver Verena were liable for quasidelict 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. The first, quasi-delict, also known as culpa aquiliana or culpa extra contractual, has as its source the negligence of the tortfeasor. The second, breach of contract or culpa contractual, is premised upon the negligence in the performance of a contractual obligation. Consequently, in quasi-delict, the negligence or fault should be clearly established because it is the basis of the action, whereas in breach of contract, the action can be prosecuted merely by proving the existence of the contract and the fact that the obligor, in this case the common carrier, failed to transport his passenger safely to his destination.[2] In 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. Slxmis There is, thus, no basis for the contention that the ruling in Civil Case No. 3490, finding Salva and his driver Verena liable for the damage to petitioner’s jeepney, should be binding on Sunga. It is immaterial that the proximate cause of the collision between the jeepney and the truck was the negligence of the truck driver. The doctrine of proximate cause is applicable only in actions for quasi-delict, not in actions involving breach of contract. The doctrine is a device for imputing liability to a person where there is no relation between him and another party. In such a case, the obligation is created by law itself. But, where there is a preexisting contractual relation between the parties, it is the parties themselves who create the obligation, and the function of the law is merely to regulate the relation thus created. Insofar as contracts of carriage are concerned, some aspects regulated by the Civil Code are those respecting the diligence required of common carriers with regard to the safety of passengers as well as the presumption of negligence in cases of death or injury to passengers. It provides: Slxsc 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 the vigilance over the goods is further expressed in articles 1734, 1735, and 1746, Nos. 5,6, and 7, while the extraordinary diligence for the safety of the passengers is further set forth in articles 1755 and 1756. 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 due regard 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

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observed extraordinary diligence as prescribed by articles 1733 and 1755.

foreseen the danger of parking his jeepney with its body protruding two meters into the highway. Kycalr

In the case at bar, upon the happening of the accident, the presumption of negligence at once arose, and it became the duty of petitioner to prove that he had to observe extraordinary diligence in the care of his passengers. Scslx

Finally, petitioner challenges the award of moral damages alleging that it is excessive and without basis in law. We find this contention well taken.

Now, did the driver of jeepney carry Sunga "safely as far as human care and foresight could provide, using the utmost diligence of very cautious persons, with due regard for all the circumstances" as required by Art. 1755? We do not think so. Several factors militate against petitioner’s contention. Slx First, as found by the Court of Appeals, the jeepney was not properly parked, its rear portion being exposed about two meters from the broad shoulders of the highway, and facing the middle of the highway in a diagonal angle. This is a violation of the R.A. No. 4136, as amended, or the Land Transportation and Traffic Code, which provides: Sec. 54. Obstruction of Traffic. - No person shall drive his motor vehicle in such a manner as to obstruct or impede the passage of any vehicle, nor, while discharging or taking on passengers or loading or unloading freight, obstruct the free passage of other vehicles on the highway. Second, it is undisputed that petitioner’s driver took in more passengers than the allowed seating capacity of the jeepney, a violation of §32(a) of the same law. It provides: Mesm Exceeding registered capacity. - No person operating any motor vehicle shall allow more passengers or more freight or cargo in his vehicle than its registered capacity. The fact that Sunga was seated in an "extension seat" placed her in a peril greater than that to which the other passengers were exposed. Therefore, not only was petitioner unable to overcome the presumption of negligence imposed on him for the injury sustained by Sunga, but also, the evidence shows he was actually negligent in transporting passengers. Calrky We find it hard to give serious thought to petitioner’s contention that Sunga’s taking an "extension seat" amounted to an implied assumption of risk. It is akin to arguing that the injuries to the many victims of the tragedies in our seas should not be compensated merely because those passengers assumed a greater risk of drowning by boarding an overloaded ferry. This is also true of petitioner’s contention that the jeepney being bumped while it was improperly parked constitutes caso fortuito. A caso fortuito is an event which could not be foreseen, or which, though foreseen, was inevitable.[3] This requires that the following requirements be present: (a) the cause of the breach is independent of the debtor’s will; (b) the event is unforeseeable or unavoidable; (c) the event is such as to render it impossible for the debtor to fulfill his obligation in a normal manner, and (d) the debtor did not take part in causing the injury to the creditor.[4] Petitioner should have

In awarding moral damages, the Court of Appeals stated: Kyle Plaintiff-appellant at the time of the accident was a firstyear college student in that school year 1989-1990 at the Silliman University, majoring in Physical Education. Because of the injury, she was not able to enroll in the second semester of that school year. She testified that she had no more intention of continuing with her schooling, because she could not walk and decided not to pursue her degree, major in Physical Education "because of my leg which has a defect already." Plaintiff-appellant likewise testified that even while she was under confinement, she cried in pain because of her injured left foot. As a result of her injury, the Orthopedic Surgeon also certified that she has "residual bowing of the fracture side." She likewise decided not to further pursue Physical Education as her major subject, because "my left leg x x x has a defect already." Those are her physical pains and moral sufferings, the inevitable bedfellows of the injuries that she suffered. Under Article 2219 of the Civil Code, she is entitled to recover moral damages in the sum of P50,000.00, which is fair, just and reasonable. As a general rule, moral damages are not recoverable in actions for damages predicated on a breach of contract for it is not one of the items enumerated under Art. 2219 of the Civil Code.[5] As an exception, such damages are recoverable: (1) in cases in which the mishap results in the death of a passenger, as provided in Art. 1764, in relation to Art. 2206(3) of the Civil Code; and (2) in the cases in which the carrier is guilty of fraud or bad faith, as provided in Art. 2220.[6] In this case, there is no legal basis for awarding moral damages since there was no factual finding by the appellate court that petitioner acted in bad faith in the performance of the contract of carriage. Sunga’s contention that petitioner’s admission in open court that the driver of the jeepney failed to assist her in going to a nearby hospital cannot be construed as an admission of bad faith. The fact that it was the driver of the Isuzu truck who took her to the hospital does not imply that petitioner was utterly indifferent to the plight of his injured passenger. If at all, it is merely implied recognition by Verena that he was the one at fault for the accident. Exsm WHEREFORE, the decision of the Court of Appeals, dated March 31, 1995, and its resolution, dated September 11, 1995, are AFFIRMED, with the MODIFICATION that the award of moral damages is DELETED.

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SO ORDERED. Jose v. CA Jan 18, 2000 [G.R. Nos. 118441-42. January 18, 2000] ARMANDO JOSE y PAZ and MANILA CENTRAL BUS LINES (MCL), represented by its General Manager MR. DANILO T. DE DIOS, petitioners vs. COURT OF APPEALS, ROMMEL ABRAHAM, represented by his father FELIXBERTO ABRAHAM, JOSE MACARUBO and MERCEDES MACARUBO, respondents. DECISION MENDOZA, J.: rny This is a petition for review on certiorari of the decision[1] of the Court of Appeals, reversing the decision of the Regional Trial Court, Branch 172, Valenzuela, Metro Manila and ordering petitioners to pay damages for injuries to persons and damage to property as a result of a vehicular accident. The facts are as follows: Petitioner Manila Central Bus Lines Corporation (MCL) is the operator-lessee of a public utility bus (hereafter referred to as Bus 203) with plate number NVR-III-TB-PIL and body number 203. Bus 203 is owned by the Metro Manila Transit Corporation and is insured with the Government Service Insurance System. On February 22, 1985, at around six o’clock in the morning, Bus 203, then driven by petitioner Armando Jose, collided with a red Ford Escort driven by John Macarubo on MacArthur Highway, in Marulas, Valenzuela, Metro Manila. Bus 203 was bound for Muntinlupa, Rizal, while the Ford Escort was headed towards Malanday, Valenzuela on the opposite lane. As a result of the collision, the left side of the Ford Escort’s hood was severely damaged while its driver, John Macarubo, and its lone passenger, private respondent Rommel Abraham, were seriously injured. The driver and conductress of Bus 203 rushed Macarubo and Abraham to the nearby Fatima Hospital where Macarubo lapsed into a coma. Despite surgery, Macarubo failed to recover and died five days later. Abraham survived, but he became blind on the left eye which had to be removed. In addition, he sustained a fracture on the forehead and multiple lacerations on the face, which caused him to be hospitalized for a week. On March 26, 1985, Rommel Abraham, represented by his father, Felixberto, instituted Civil Case No. 2206-V-85 for damages against petitioners MCL and Armando Jose in the Regional Trial Court, Branch 172, Valenzuela. On July 17, 1986, the spouses Jose and Mercedes Macarubo, parents of the deceased John Macarubo, filed their own suit for damages in the same trial court, where it was docketed as Civil Case No. 2428-V-86, against MCL alone. On the other hand, MCL filed a third-party complaint against Juanita Macarubo, registered owner of

the Ford Escort on the theory that John Macarubo was negligent and that he was the "authorized driver" of Juanita Macarubo. The latter, in turn, filed a counterclaim for damages against MCL for the damage to her car. Civil Case No. 2206-V-85 and Civil Case No. 2428-V-86 were consolidated and later tried jointly. The facts, as found by the trial court, are as follows: Esmsc In Civil Case No. 2206-V-85, the Court heard the testimonies that during the night previous to the accident of February 22, 1985 at 6:15 a.m., Rommel Abraham and John Macarubo were at a party. There was therefore, no sleep for them, notwithstanding testimony to the contrary and the service of drinks cannot be totally discounted. After the party at 11 p.m., while both Rommel and John were enroute home to Valenzuela from La Loma, the car encountered mechanical trouble and had to be repaired as its cross-joint was detached. The defect of a cross-joint is not minor and repair thereof would as testified to by Rommel lasted up to early dawn and the car started to run only after five o’clock in the morning. With lack of sleep, the strains of a party still on their bodies, and the attention to the repair coupled with the wait until the car was ready to run, are potentials in a driver for possible accident. The accident happened at 6:15 a.m. when the physical and mental condition of the driver John Macarubo was as expected not too fit for the driving as he could not anymore control the car. The desire to be home quick for the much needed sleep could have prompted him to overtake the preceding vehicle. Indeed the pictures taken of the two vehicles (Exh. 1,2 and 3) will clearly show that the MCL bus was at its proper lane and not in an overtaking position while the car driven by John Macarubo was positioned in a diagonal manner and crossed the line of the MCL, which is an indication of an overtaking act. If it were the bus that was overtaking at the time, the car would have been thrown farther away from the point of the impact. The court is convinced of the close supervision and control of MCL over their drivers, and its exercise of due diligence in seeing to it that no recklessness is committed by its employees, drivers especially, from the unrebutted testimonies of Cesar Cainglet. The Court noted the respective damages of the two vehicles especially the point of the impact. From these damages as shown by the picture, it can be clearly deduced which vehicle did the bumping. It was the car driven by John Macarubo that hit the MCL which was on its right and correct lane.[2] Based on the foregoing facts, the trial court rendered judgment on September 28, 1989, dismissing both civil cases against MCL and ruling favorably on its third-party complaint against Juanita Macarubo, ordering the latter to pay MCL P54,232.12 as actual damages, P24,000.00 for lost income, and P10,000.00 as attorney’s fees. Rommel Abraham, the Macarubo spouses, and third-party defendant Juanita Macarubo then appealed to the Court of

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Appeals which, on December 21, 1994, rendered a decision reversing the decision of the trial court. It held (1) that the trial court erred in disregarding Rommel Abraham’s uncontroverted testimony that the collision was due to the fault of the driver of Bus 203; (2) that the trial court erred in relying on photographs (Exhs. 1-3) which had been taken an hour after the collision as within that span of time, the positions of the vehicles could have been changed; (3) that the photographs do not show that the Ford Escort was overtaking another vehicle when the accident happened and that John Macarubo, its driver, was negligent; and (4) that MCL failed to make a satisfactory showing that it exercised due diligence in the selection and supervision of its driver Armando Jose. The dispositive portion of the decision reads: Jksm WHEREFORE, the appealed decision is hereby REVERSED and the defendants-appellees MCL and Armando Jose are adjudged to pay jointly and severally: 1. Rommel Abraham, represented by his father Felixberto Abraham: (a) P37,576.47 as actual damages; (b) P50,000.00 as compensatory damages; (c) P15,000.00 as moral damages; (d) P5,000.00 as exemplary damages; and (e) P10,000.00 as attorney’s fees.

this Court has, in many occasions, relied principally upon physical evidence in ascertaining the truth. In People v. Vasquez,[6] where the physical evidence on record ran counter to the testimonial evidence of the prosecution witnesses, we ruled that the physical evidence should prevail.[7] Esm In this case, the positions of the two vehicles, as shown in the photographs (Exhs. 1 to 3) taken by MCL line inspector Jesus Custodio about an hour and fifteen minutes after the collision, disputes Abraham’s self-serving testimony that the two vehicles collided because Bus 203 invaded the lane of the Ford Escort and clearly shows that the case is exactly the opposite of what he claimed happened. Contrary to Abraham’s testimony, the photographs show quite clearly that Bus 203 was in its proper lane and that it was the Ford Escort which usurped a portion of the opposite lane. The three photographs show the Ford Escort positioned diagonally on the highway, with its two front wheels occupying Bus 203’s lane. As shown by the photograph marked Exhibit 3, the portion of MacArthur Highway where the collision took place is marked by a groove which serves as the center line separating the right from the left lanes. The photograph shows that the left side of Bus 203 is about a few feet from the center line and that the bus is positioned parallel thereto. This negates the claim that Bus 203 was overtaking another vehicle and, in so doing, encroached on the opposite lane occupied by the Ford Escort.

2. The heirs of John Macarubo: (a) P50,000.00 as indemnity for his death; (b) P50,000.00 as moral damages; (c) P10,000.00 as exemplary damages; and (d) P10,000.00 as attorney’s fees. Costs against the appellees. SO ORDERED. Hence, this petition for review on certiorari. Petitioners MCL and Armando Jose raise four issues which boil down to the question whether it was the driver of Bus 203 or that of the Ford Escort who was at fault for the collision of the two vehicles. It is well-settled that a question of fact is to be determined by the evidence offered to support the particular contention. [3] In the proceedings below, petitioners relied mainly on photographs, identified in evidence as Exhibits 1 to 3, showing the position of the two vehicles after the collision. On the other hand, private respondents offered the testimony of Rommel Abraham to the effect that the collision took place because Bus 203 invaded their lane.[4] The trial court was justified in relying on the photographs rather than on Rommel Abraham’s testimony which was obviously biased and unsupported by any other evidence. Physical evidence is a mute but an eloquent manifestation of truth, and it ranks high in our hierarchy of trustworthy evidence.[5] In criminal cases such as murder or rape where the accused stands to lose his liberty if found guilty,

Indeed, Bus 203 could not have been overtaking another vehicle when the collision happened. It was filled with passengers,[8] and it was considerably heavier and larger than the Ford Escort. If it was overtaking another vehicle, it necessarily had to accelerate. The acceleration of its speed and its heavy load would have greatly increased its momentum so that the impact of the collision would have thrown the smaller and lighter Ford Escort to a considerable distance from the point of impact. Exhibit 1, however, shows that the Ford Escort’s smashed hood was only about one or two meters from Bus 203’s damaged left front. If there had been a great impact, such as would be the case if Bus 203 had been running at a high speed, the two vehicles should have ended up far from each other. In discrediting the physical evidence, the appellate court made the following observations: We cannot believe that it was the car which overtook another vehicle and proceeded to the lane occupied by the bus. There was a traffic jam on the "bus lane" while traffic was light on the "car lane." Indeed, we find it inconceivable that the car, occupying the lane without any traffic, would overtake and traverse a heavy traffic lane.[9] (Underscoring supplied.) This is correct. However, the fact remains that when the Ford Escort finally came to a stop, it encroached on the opposite lane occupied by Bus 203. Significantly, Rommel Abraham testified that on February 21, 1985, the night before the accident, he and John

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Macarubo went to a friend’s house in La Loma where they stayed until 11 p.m.[10] Abraham’s explanation as to why they did not reach Valenzuela until six o’clock in the morning of the next day when the accident happened indicates that the Ford Escort careened and slammed against Bus 203 because of a mechanical defect. Abraham told the court:[11] Esmmis

Q: So you were able to repair the car? A: Yes, ma’am. Q: What time were you able to repair the car? A: Around 5:00 o’clock in the morning, sir.

ATTY. RESPICIO: Q: You were able to replace the cross-joint or what? Q: I am sorry, Your honor. After leaving Arnel’s place where did you go?

A: Ginawaan ng paraan, ma’am.

ROMMEL ABRAHAM

Q: How?

A: We proceeded in going home, sir.

A: The cross-joint were welded in order to enable us to go home, ma’am.

Q: You were on your way home? Q: No spare parts was replaced? Msesm A: Yes, sir. A: No, ma’am. Q: What time did you . . . I will reform the question. You met the accident at about 6:00 o’clock the next day, 6:00 o’clock in the morning the next day, did it take you long to reach BBB? A: Our car had a mechanical trouble somewhere at 2nd Avenue, sir. Q: What kind of trouble? A: The cross-joint were detached, sir. Q: Are you familiar with cars? A: A little, sir. COURT: Q: What time was that when you have this cross-joint problem? A: About 12:00 o’clock perhaps, sir. Q: What happened to the cross joint? A: It was cut, ma’am. Q: You were able to repair that cross-joint 12:00 o’clock and you were able to run and reached this place of accident at 6:00 o’clock? A: No, we we’re not able to get spare parts, ma’am. Q: Why were you able to reach this place at 6:00 o’clock? A: We went home and look for the spare parts in their house, ma’am. Q: House of Macarubo?

Thus, as Rommel Abraham himself admitted, the Ford Escort’s rear cross-joint was cut/detached. This mechanism controls the movement of the rear tires. Since trouble in the cross-joint affects a car’s maneuverability, the matter should have been treated as a serious mechanical problem. In this case, when asked if they were able to repair the cross-joint, Abraham said "Ginawaan ng paraan, ma’am," by simply welding them just so they could reach home. His testimony indicates that the rear cross-joint was hastily repaired and that, at most, the kind of repairs made thereon were merely temporary; just enough to enable Abraham and Macarubo to reach home. Given such fact, the likelihood is that while the Ford Escort might not have been overtaking another vehicle, it actually strayed into the bus’ lane because of the defective cross-joint, causing its driver to lose control of the vehicle. The appellate court refused to give credence to the physical evidence on the ground that the photographs were taken an hour after the collision and that within such span of time the bus could have been moved because there was no showing that the driver left the scene of the accident. This is not correct. Constancia Gerolada, Bus 203’s conductress, testified that, immediately after the collision, she and bus driver, petitioner Armando Jose, took the injured driver and passenger of the Ford Escort to the Fatima Hospital.[12] This fact is not disputed by private respondents. Rommel Abraham mentioned in his appellant’s brief in the appellate court a sketch of the scene of the accident allegedly prepared by one Patrolman Kalale, which shows Bus 203 to be occupying the Ford Escort’s lane. However, the records of this case do not show that such a sketch was ever presented in evidence in the trial court or that Patrolman Kalale was ever presented as a witness to testify on the sketch allegedly prepared by him. Under Rule 132, §3 of the Rules on Evidence, courts cannot consider any evidence unless formally offered by a party.

A: Yes, ma’am.

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Finally, the appellate court also ruled that MCL failed to make a satisfactory showing that it exercised the diligence of a good father of a family in the selection and supervision of its bus driver, Armando Jose.[13] Under the circumstances of this case, we hold that proof of due diligence in the selection and supervision of employees is not required.

complaint are enough to make out a case of quasi-delict under Art. 2180 of the Civil Code, the failure to prove the employee’s negligence during the trial is fatal to proving the employer’s vicarious liability. In this case, private respondents failed to prove their allegation of negligence against driver Armando Jose who, in fact, was acquitted in the case for criminal negligence arising from the same incident.[15]

The Civil Code provides in pertinent parts: Art. 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is called a quasi-delict and is governed by the provisions of this chapter. Art. 2180. The obligation imposed in Art. 2176 is demandable not only for one’s own acts or omissions, but also for those of persons for whom one is responsible. Esmso .... Employers shall be liable for the damages caused by their employees and household helpers acting within the scope of their assigned tasks, even though the former are not engaged in any business or industry. .... The responsibility treated of in this article shall cease when the persons herein mentioned prove that they observed all the diligence of a good father of a family to prevent damage. Thus, the responsibility of employers is premised upon the presumption of negligence of their employees. As held in Poblete v. Fabros:[14] [I]t is such a firmly established principle, as to have virtually formed part of the law itself, that the negligence of the employee gives rise to the presumption of negligence on the part of the employer. This is the presumed negligence in the selection and supervision of the employee. The theory of presumed negligence, in contrast with the American doctrine of respondent superior, where the negligence of the employee is conclusively presumed to be the negligence of the employer, is clearly deducible from the last paragraph of Article 2180 of the Civil Code which provides that the responsibility therein mentioned shall cease if the employers prove that they observed all the diligence of a good father of a family to prevent damages (12 Manresa, 657; Balica vs. Litonjua and Leynes, 30 Phil. 624; Cangco vs. Manila Railroad Co., 30 Phil. 768), as observed in the same cases just cited. Therefore, before the presumption of the employer’s negligence in the selection and supervision of its employees can arise, the negligence of the employee must first be established. While the allegations of negligence against the employee and that of an employer-employee relation in the

For the foregoing reasons, we hold that the appellate court erred in holding petitioners liable to private respondents. The next question then is whether, as the trial court held, private respondent Juanita Macarubo is liable to petitioners. Article 2180 of the Civil Code makes the persons specified therein responsible for the quasi-delicts of others. The burden is upon MCL to prove that Juanita Macarubo is one of those specified persons who are vicariously liable for the negligence of the deceased John Macarubo. Exsm In its third-party complaint, MCL alleged that Juanita Macarubo was the registered owner of the Ford Escort car and that John Macarubo was the "authorized driver" of the car.[16] Nowhere was it alleged that John Macarubo was the son, ward, employee or pupil of private respondent Juanita Macarubo so as to make the latter vicariously liable for the negligence of John Macarubo. The allegation that John Macarubo was "the authorized driver" of the Ford Escort is not equivalent to an allegation that he was an employee of Juanita Macarubo. That John Macarubo was the "authorized driver" of the car simply means that he drove the Ford Escort with the permission of Juanita Macarubo. Nor did MCL present any evidence to prove that Juanita Macarubo was the employer of John Macarubo or that she is in any way liable for John Macarubo’s negligence under Art. 2180 of the Civil Code. For failure to discharge its burden, MCL’s third-party complaint should be dismissed. WHEREFORE, the decision of the Court of Appeals is REVERSED and the complaints filed in Civil Cases Nos. 2206-V-85 and 24428-V-86 against Manila Central Bus Lines and Armando Jose, as well as the third-party complaint filed in Civil Case No. 2206-V-85 against Juanita Macarubo, are hereby DISMISSED. SO ORDERED. Baritua v. MercaderJan 23, 2001 [G.R. No. 136048. January 23, 2001] JOSE BARITUA and JB LINE, petitioners, vs. NIMFA DIVINA MERCADER in her capacity and as guardian of DARWIN, GIOVANNI, RODEL and DENNIS, all surnamed MERCADER; LEONIDA Vda. de MERCADER on her behalf and on behalf of her minor child MARY JOY MERCADER; SHIRLEY MERCADER DELA CRUZ; MARIA THERESA MERCADER-GARCIA; DANILO MERCADER; JOSE DANTE MERCADER; and JOSEFINA MERCADER, respondents. DECISION

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PANGANIBAN, J.: The Manchester ruling requiring the payment of docket and other fees as a condition for the acquisition of jurisdiction has no retroactive effect and applies only to cases filed after its finality. The Case Before us is a Petition for Review under Rule 45 of the Rules of Court, assailing the April 17, 1998 Decision[1] and the October 28, 1998 Resolution[2] of the Court of Appeals (CA) in CA-GR CV No. 40772. The decretal portion of said Decision reads as follows: “WHEREFORE, upon all the foregoing premises considered, the DECISION appealed from is AFFIRMED with the MODIFICATION that the loss of earnings of the late Dominador Mercader is reduced to P798,000.00.”[3] The assailed Resolution denied petitioners’ Motion for Reconsideration.

The antecedents of the case are succinctly summarized by the Court of Appeals in this wise: “The original complaint was filed against JB Lines, Inc. [Petitioner JB Lines, Inc.] filed a motion to dismiss complaint, to strike out false-impertinent matters therefrom, and/or for bill of particulars on the primary grounds that [respondents] failed to implead Jose Baritua as an indispensable party and that the cause of action is a suit against a wrong and non-existent party. [Respondents] filed an opposition to the said motion and an amended complaint. “In an Order dated December 11, 1984 the trial court denied the aforesaid motion and admitted the amended complaint of [respondents] impleading Jose Baritua and alleged the following: ‘(10) The late Dominador Mercader is a [b]usinessman mainly engaged in the buy and sell of dry goods in Laoang, N. Samar. He buys his goods from Manila and bring[s] them to Laoang, Northern Samar for sale at his store located in the said locality;

The Court of Appeals sustained the Decision of the Regional Trial Court (RTC) of Laoang, Northern Samar (Branch 21). Except for the modification of the loss of earnings, it affirmed all the monetary damages granted by the trial court to respondents. The decretal portion of the assailed RTC Decision reads as follows:[4]

(11) Sometime on March 16, 1983, the late Dominador Mercader boarded [petitioners’] bus No. 142 with Plate No. 484 EU at [petitioners’] Manila Station/terminal, bound for Brgy. Rawis, Laoang Northern Samar as a paying passenger;

“WHEREFORE, on preponderance of evidence, judgment is for [herein respondents] and against [herein petitioners], ordering the latter to pay the former:

(12) At that time, Dominador Mercader had with him as his baggage, assorted goods (i.e. long pants, short pants, dusters, etc.) which he likewise loaded in [petitioners’] bus;

(a) As compensatory damages for the death of Dominador Mercader -- P50,000.00;

(13) The late Dominador Mercader was not able to reach his destination considering that on March 17, 1983 at Beily (Bugco) Bridge, Barangay Roxas, Mondragon, Northern Samar, while he was on board [petitioners’] bus no. 142 with Plate No. 484 EU, the said bus fell into the river as a result of which the late Dominador Mercader died. x x x.

(b) For the loss of earnings of the late Dominador Mercader -- P1,660,000.00, more or less, based on the average life span of 75 years from the time of his death who earned a net income of P5,000.00 monthly out of his business; (c) Actual damages of P30,000.00 receipted purchases of goods in Manila; P5,750.00 for the first class coffin and a 15-day wake services evidenced by a receipt marked Exh. ‘D’; [P]850.00 for the 50 x 60 headstone, receipt marked Exh. ‘E’ and P1,590.00 -- Deed of Absolute Sale of a burial lot, marked Exh. ‘F’; (d) 25% of whatever amount is collected by [respondents] from [petitioners] but no less than P50,000.00 plus P1,000.00 per hearing by way of attorney’s fees;

(14) The accident happened because [petitioners’] driver negligently and recklessly operated the bus at a fast speed in wanton disregard of traffic rules and regulations and the prevailing conditions then existing that caused [the] bus to fall into the river.’ “[Respondents] then filed a motion to declare [petitioners] in default which motion was opposed by [petitioners]. [Respondents] withdrew the said motion prompting the trial court to cancel the scheduled hearing of the said motion to declare [petitioners] in default in an Order dated January 23, 1985.

(e) As moral damages -- P50,000.00; (f) As exemplary damages -- P30,000.00; and

“In its answer, [petitioners] denied specifically all the material allegations in the complaint and alleged the following:

(g) To pay the costs.” The Facts

‘2. The alleged person of Dominador Mercader did not board bus 142 at [petitioners’] Manila station/terminal x x x as a (supposed paying passenger). There is even no statement in the complaint that Dominador Mercader (if it

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were true that he was a passenger of bus 142 ‘at the [petitioners’] Manila station/terminal’) was issued any passenger-freight ticket conformably with law and practice. It is a fact of public knowledge that, in compliance with existing rules and laws, [Petitioner] Baritua, as a public utility operator, issues, thru his conductors, in appropriate situations, to a true passenger, the familiar and known passenger and freight ticket which reads in part: ‘NOTICE Baggage carried at owner’s risk x x x liability on prepaid freight otherwise declared. x x x xxx

did not violate any traffic rule and regulation, contrary to plaintiffs’ insinuation. 5. Furthermore, [Petitioner] Baritua and his driver have no causative connection with the alleged death of Dominador Mercader who, according to a reliable source, was already seriously suffering from a lingering illness even prior to his alleged demise. Baritua also learned lately, and so it is herein alleged that Dominador Mercader contributed considerably, to, and/or provided the proximate and direct cause of his own death, hence, he himself is to be blamed for whatever may have happened to him or for whatever may have been sustained by his supposed heirs, vis-à-vis the suit against the wrong party.

x x x 6. Baritua and his driver, as earlier stated, did not commit any actionable breach of contract with the alleged Dominador Mercader or the latter’s supposed heirs.

Whole Fare Paid P ______________ Declared value ____________ x x x.

7. There is no factual nor any legal basis for plaintiffs’ proffered claims for damages.

Description of Freight _____________________________ II. AFFIRMATIVE DEFENSES Signature of Owner.’ 3. It is also a fact of public knowledge that [Petitioner] Baritua does not have any ‘Manila station/terminal,’ because what he has is a Pasay city station. 4. [Petitioner] Baritua had no prior knowledge that, on or about March 17, 1983, and/or previous thereto, the Bugko Bailey Bridge (across Catarman-Laoang road) in Barangay Roxas, Mondragon, Northern Samar, was in virtual dilapida[ted] and dangerous condition, in a state of decay and disrepair, thus calling for the concerned government and public officials’ performance of their coordinative and joint duties and responsibilities, to repair, improve and maintain that bridge, in good and reasonably safe condition, but, far from performing or complying with said subject duties and responsibilities, the adverted officials concerned, without just cause, not only failed and neglected to cause such needed repair, improvement and maintenance of the Bugko Bailey Bridge, on or prior to March 17, 1983, but also failed, and neglected to either close the Bugko Bridge to public use and travel, and/or to put appropriate warning and cautionary signs, for repair, improvement, maintenance, and safety purposes. So that, as a proximate and direct consequence of the aggregate officials’ nonfeasance, bad faith, negligence, serious inefficiency, and callous indifference to public safety, that Bugko Bridge collapsed inward and caved in ruin, on that March 17, 1983, while Baritua’s bus 142 was cautiously and prudently passing and travelling across the said bridge, as a result of which the bus fell into the river and sea waters, despite the exercise and compliance by Baritua and his driver of their duties in the matter of their requisite degree of diligence, caution and prudence, Baritua also exercised and complied with the requisite duty of diligence, care, and prudence in the selection and supervision over his driver, contrary to the baseless imputation in paragraphs 14 and 20 of the original and amended complaints. Moreover, Baritua and his driver

8. Based on the preceding averments, plaintiffs have neither a cause nor a right of action against [Petitioner] Baritua and his driver. 8.1. The allegation that supposedly the ‘x x x [p]laintiffs are the compulsory heirs of the late DOMINADOR MERCADER x x x‘ (par. 8, complaint) is too vague and too broad, as the subject allegation is a bare and pure conclusionary averment unaccompanied by the requisite statement of ultimate facts constitutive of a cause or right of action. 8.2. Even assuming arguendo, without however conceding, plaintiff’s statement of a cause of action, the complaint is nonetheless replete with false and impertinent matters which fit the rule on striking out pleadings or parts thereof. To mention only a glaring few: 8.2.a. The allegation on exemplary damages x x x is impertinent and immaterial in the complaint against a supposed employer. For, even theoretically assuming, without however admitting a negligent act-omission on the part of a driver, nevertheless, in such a hypothetical situation, the causative negligence, if any there was, is personal to the wrongdoer, i.e., the employee-driver, to the exclusion of the employer. 8.2.b. The allegation on supposed ‘minimum life of 75 years’ and on ‘he expects to earn no less than P1,680,000.00 x x x is false, a pure hyperbole, and bereft of factual and legal basis. Besides, what jurisprudential rule refers to is only net earning. The law abhors a claim, akin to plaintiffs’ allegation, which is manifestly speculative, as it may not exist at all. Furthermore, the questioned allegation in the plaintiff’s original and amended complaints is not preceded by the requisite statement of definitive facts, nor of any specific fact, which could

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possibly afford a rational basis for a reasonable expectation of supposed earning that could be lost, or impaired. 8.2.c. Likewise, the allegations that allegedly ‘x x x the late Dominador Mercader boarded x x x Bus No. 142 x x x and that supposedly the latter had a baggage x x x containing drygoods x x x in which case [petitioners have] to pay the value thereof in such amount as may be proven by [respondents] in court during the trial x x x, apart from being false, are offensive to the rule on concise statement of ultimate facts. The assailed allegations also contravene Interim Rule 11, ‘(i)f any demand is for damages in a civil action the amount thereof must be specifically alleged.’ In consequence of this averment, [respondents] have not yet paid the correct docket fee, for which reason, [respondents’] case may be dismissed on that ground alone. 8.3. In violation also of the same Interim Rule 11, regarding the requisite definitive amount of claim, the allegation on the supposed funeral expense x x x does not also indicate any specific amount. So with the averment on supposed moral damage which may not be warranted because of absence of allegation of fraud or bad faith, if any, there was, apart from want of causative connection with the defendant. 8.4. The allegation in paragraph 15 of the original and amended complaint is also a pure conclusionary averment, without a factual premise. 9. [Petitioner] JB LINE, impleaded in the amended complaint, is merely a business name and sole proprietorship of defendant Baritua. As such, JB Line is not a juridical person, nor an entity authorized by law to sue and be sued, hence, it cannot legally be a party to any action. With this averment, correlated with that in paragraphs 4-5 hereof, [respondents’] amended complaint is essentially a suit against a wrong party.”[5] The RTC, after due trial, rendered the aforesaid assailed Decision.

Did the honorable Court of Appeals (CA) gravely abuse its discretion when it allowed to pass sub silencio the trial court’s failure to rule frontally on petitioners’ plea for a bill of particulars, and ignored the nature of respondents’ prayer in the complaint pleading for an award of -‘a) P12,000.00 -- representing the death compensation; b) An amount to be proven in court, representing actual damages; c) P1,660,000.00 or more as may be proven during the trial, by way of loss of earnings; d) An amount to be proven in court as and by way of funeral expenses; e) An amount to be proven during the trial, representing moral damages; f) An amount to be determined by this Honorable Court, representing exemplary damages; g) An amount equivalent to 25% of whatever amount the plaintiffs would be able to collect from the defendant but in no case less than P50,000.00 plus an additional amount of P1,000.00 per hearing as and by way of Attorney’s fees;’ “II Did the CA also ignore the fact that the trial court was not paid the correct amount of the docket and other lawful fees; hence, without jurisdiction over the original and amended complaints or over the subject matter of the case; “III Did the CA likewise arbitrarily disregard petitioners’ constitutional right to procedural due process and fairness when it ignored and thrust aside their right to present evidence and to expect that their evidence will be duly considered and appreciated; and

Ruling of the Court of Appeals “IV As earlier stated, the Court of Appeals affirmed the trial court’s award of monetary damages in favor of respondents, except the amount of Dominador Mercader’s lost earnings, which it reduced to P798,000. It held that petitioners failed to rebut the presumption that in the event a passenger died or was injured, the carrier had acted negligently. Petitioners, it added, presented no sufficient proof that they had exercised extraordinary diligence. Hence, this Petition.[6]

In awarding excessive and extravagant damages, did the CA and the trial court adhere to the rule that their assailed decision must state clearly and distinctly the facts and the laws on which they are based?”[7] Distilling the alleged errors cited above, petitioners raise two main issues for our consideration: (1) whether the CA erred in holding that the RTC had jurisdiction over the subject matter of the case, and (2) whether the CA disregarded petitioners’ procedural rights.

The Issues The Court’s Ruling In their Memorandum, petitioners submit the following issues for our consideration:

The Petition is devoid of merit.

“I

First Issue: Jurisdiction

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Petitioners contend that since the correct amounts of docket and other lawful fees were not paid by respondents, then the trial court did not acquire jurisdiction over the subject matter of the case.

Such motion shall point out the defects complained of, the paragraphs wherein they are contained, and the details desired.”[16] (emphasis supplied) Petitioners’ Right to Adduce Evidence

The Court, in Manchester Development Corporation v. CA, [8] held that “[t]he court acquires jurisdiction over any case only upon the payment of the prescribed docket fee. An amendment of the complaint or similar pleading will not thereby vest jurisdiction in the court, much less the payment of the docket fee based on the amounts sought in the amended pleading. x x x.” Generally, the jurisdiction of a court is determined by the statute in force at the commencement of the action,[9] unless such statute provides for its retroactive application. [10] Once the jurisdiction of a court attaches, it continues until the case is finally terminated.[11] The trial court cannot be ousted therefrom by subsequent happenings or events, although of a character that would have prevented jurisdiction from attaching in the first instance.[12] The Manchester ruling, which became final in 1987, has no retroactive application and cannot be invoked in the subject Complaint filed in 1984. The Court explicitly declared: “To put a stop to this irregularity, henceforth all complaints, petitions, answers and other similar pleadings should specify the amount of damages being prayed for not only in the body of the pleading but also in the prayer, and said damages shall be considered in the assessment of the filing fees in any case. Any pleading that fails to comply with this requirement shall not be accepted nor admitted, or shall otherwise be expunged from the record.”[13] (emphasis supplied) Second Issue: Petitioners’ Procedural Rights

Petitioners also argue that their right to present evidence was violated by the CA, because it did not consider their contention that the trial judges who heard the case were biased and impartial. Petitioners contend, as they did before the CA, that Judge Tomas B. Noynay based his Decision “on certain chosen partial testimonies of [respondents’] witnesses x x x.” They further maintain that Judge Fortunato Operario, who initially handled the case, questioned some witnesses in an overzealous manner and “assum[ed] the dual role of magistrate and advocate.”[17] These arguments are not meritorious. First, judges cannot be expected to rely on the testimonies of every witness. In ascertaining the facts, they determine who are credible and who are not. In doing so, they consider all the evidence before them. In other words, the mere fact that Judge Noynay based his decision on the testimonies of respondents’ witnesses does not necessarily mean that he did not consider those of petitioners. Second, we find no sufficient showing that Judge Operario was overzealous in questioning the witnesses. His questions merely sought to clarify their testimonies. In all, we reject petitioners’ contention that their right to adduce evidence was violated. Alleged Failure to State Clearly the Facts and the Law We are not convinced by petitioners’ contention, either, that both the trial and the appellate courts failed to state clearly and distinctly the facts and the law involved in the case. As can be gleaned from their Decisions, both courts clearly laid down their bases for awarding monetary damages to respondents.

Motion for a Bill of Particulars Petitioners argue that the Court of Appeals erred when it passed sub silencio on the trial court’s failure to rule frontally on their plea for a bill of particulars. We are not impressed. It must be noted that petitioners’ counsel manifested in open court his desire to file a motion for a bill of particulars. The RTC gave him ten days from March 12, 1985 within which to do so.[14] He, however, filed the aforesaid motion only on April 2, 1985 or eleven days past the deadline set by the trial court.[15] Moreover, such motion was already moot and academic because, prior to its filing, petitioners had already filed their answer and several other pleadings to the amended Complaint. Section 1, Rule 12 of the Rules of Court, provides: “Section 1. When applied for; purpose. -- Before responding to a pleading, a party may move for a more definite statement or for a bill of particulars of any matter which is not averred with sufficient definiteness or particularity to enable him properly to prepare his responsive pleading. If the pleading is a reply, the motion must be filed within ten (10) days from service thereof.

Both the RTC and the CA found that a contract of carriage existed between petitioners and Dominador Mercader when he boarded Bus No. 142 in Pasay City on March 16, 1983. Petitioners failed to transport him to his destination, because the bus fell into a river while traversing the Bugko Bailey Bridge. Although he survived the fall, he later died of asphyxia secondary to drowning. We agree with the findings of both courts that petitioners failed to observe extraordinary diligence[18] that fateful morning. It must be noted that a common carrier, by the nature of its business and for reasons of public policy, is bound to carry passengers safely as far as human care and foresight can provide. It is supposed to do so by using the utmost diligence of very cautious persons, with due regard for all the circumstances.[19] In case of death or injuries to passengers, it is presumed to have been at fault or to have acted negligently, unless it proves that it observed extraordinary diligence as prescribed in Articles 1733 and 1755[20] of the Civil Code. We sustain the ruling of the CA that petitioners failed to prove that they had observed extraordinary diligence.

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First, petitioners did not present evidence on the skill or expertise of the driver of Bus No. 142 or the condition of that vehicle at the time of the incident. Second, the bus was overloaded at the time. In fact, several individuals were standing when the incident occurred.[21] Third, the bus was overspeeding. Its conductor testified that it had overtaken several buses before it reached the Bugko Bailey Bridge.[22] Moreover, prior to crossing the bridge, it had accelerated and maintained its speed towards the bridge.[23] We therefore believe that there is no reason to overturn the assailed CA Decision, which affirmed that of the RTC. It is a well-settled rule that the trial court’s factual findings, when affirmed by the appellate court, are conclusive and binding, if they are not tainted with arbitrariness or oversight of some fact or circumstance of significance and influence.[24] As clearly discussed above, petitioners have not presented sufficient ground to warrant a deviation from this rule. Finally, we cannot fault the appellate court in its computation of the damages and lost earnings, since it effectively computed only net earnings in accordance with existing jurisprudence.[25] WHEREFORE, the Petition is hereby DENIED, and the assailed Decision AFFIRMED. Costs against petitioners. SO ORDERED.

B

Presumption of Negligence

1756

Picart v. Smith Mar 15, 1918 G.R. No. L-12219 March 15, 1918 AMADO PICART, plaintiff-appellant, vs. FRANK SMITH, JR., defendant-appellee. Alejo Mabanag for appellant. G. E. Campbell for appellee. STREET, J.: In this action the plaintiff, Amado Picart, seeks to recover of the defendant, Frank Smith, jr., the sum of P31,000, as damages alleged to have been caused by an automobile driven by the defendant. From a judgment of the Court of First Instance of the Province of La Union absolving the defendant from liability the plaintiff has appealed. The occurrence which gave rise to the institution of this action took place on December 12, 1912, on the Carlatan Bridge, at San Fernando, La Union. It appears that upon the occasion in question the plaintiff was riding on his pony over said bridge. Before he had gotten half way across, the defendant approached from the opposite direction in an

automobile, going at the rate of about ten or twelve miles per hour. As the defendant neared the bridge he saw a horseman on it and blew his horn to give warning of his approach. He continued his course and after he had taken the bridge he gave two more successive blasts, as it appeared to him that the man on horseback before him was not observing the rule of the road. The plaintiff, it appears, saw the automobile coming and heard the warning signals. However, being perturbed by the novelty of the apparition or the rapidity of the approach, he pulled the pony closely up against the railing on the right side of the bridge instead of going to the left. He says that the reason he did this was that he thought he did not have sufficient time to get over to the other side. The bridge is shown to have a length of about 75 meters and a width of 4.80 meters. As the automobile approached, the defendant guided it toward his left, that being the proper side of the road for the machine. In so doing the defendant assumed that the horseman would move to the other side. The pony had not as yet exhibited fright, and the rider had made no sign for the automobile to stop. Seeing that the pony was apparently quiet, the defendant, instead of veering to the right while yet some distance away or slowing down, continued to approach directly toward the horse without diminution of speed. When he had gotten quite near, there being then no possibility of the horse getting across to the other side, the defendant quickly turned his car sufficiently to the right to escape hitting the horse alongside of the railing where it as then standing; but in so doing the automobile passed in such close proximity to the animal that it became frightened and turned its body across the bridge with its head toward the railing. In so doing, it as struck on the hock of the left hind leg by the flange of the car and the limb was broken. The horse fell and its rider was thrown off with some violence. From the evidence adduced in the case we believe that when the accident occurred the free space where the pony stood between the automobile and the railing of the bridge was probably less than one and one half meters. As a result of its injuries the horse died. The plaintiff received contusions which caused temporary unconsciousness and required medical attention for several days. The question presented for decision is whether or not the defendant in maneuvering his car in the manner above described was guilty of negligence such as gives rise to a civil obligation to repair the damage done; and we are of the opinion that he is so liable. As the defendant started across the bridge, he had the right to assume that the horse and the rider would pass over to the proper side; but as he moved toward the center of the bridge it was demonstrated to his eyes that this would not be done; and he must in a moment have perceived that it was too late for the horse to cross with safety in front of the moving vehicle. In the nature of things this change of situation occurred while the automobile was yet some distance away; and from this moment it was not longer within the power of the plaintiff to escape being run down by going to a place of greater safety. The control of the situation had then passed entirely to the defendant; and it was his duty either to bring his car to an immediate stop or, seeing that there were no other

48

persons on the bridge, to take the other side and pass sufficiently far away from the horse to avoid the danger of collision. Instead of doing this, the defendant ran straight on until he was almost upon the horse. He was, we think, deceived into doing this by the fact that the horse had not yet exhibited fright. But in view of the known nature of horses, there was an appreciable risk that, if the animal in question was unacquainted with automobiles, he might get exited and jump under the conditions which here confronted him. When the defendant exposed the horse and rider to this danger he was, in our opinion, negligent in the eye of the law. The test by which to determine the existence of negligence in a particular case may be stated as follows: Did the defendant in doing the alleged negligent act use that person would have used in the same situation? If not, then he is guilty of negligence. The law here in effect adopts the standard supposed to be supplied by the imaginary conduct of the discreet paterfamilias of the Roman law. The existence of negligence in a given case is not determined by reference to the personal judgment of the actor in the situation before him. The law considers what would be reckless, blameworthy, or negligent in the man of ordinary intelligence and prudence and determines liability by that. The question as to what would constitute the conduct of a prudent man in a given situation must of course be always determined in the light of human experience and in view of the facts involved in the particular case. Abstract speculations cannot here be of much value but this much can be profitably said: Reasonable men govern their conduct by the circumstances which are before them or known to them. They are not, and are not supposed to be, omniscient of the future. Hence they can be expected to take care only when there is something before them to suggest or warn of danger. Could a prudent man, in the case under consideration, foresee harm as a result of the course actually pursued? If so, it was the duty of the actor to take precautions to guard against that harm. Reasonable foresight of harm, followed by ignoring of the suggestion born of this prevision, is always necessary before negligence can be held to exist. Stated in these terms, the proper criterion for determining the existence of negligence in a given case is this: Conduct is said to be negligent when a prudent man in the position of the tortfeasor would have foreseen that an effect harmful to another was sufficiently probable to warrant his foregoing conduct or guarding against its consequences. Applying this test to the conduct of the defendant in the present case we think that negligence is clearly established. A prudent man, placed in the position of the defendant, would in our opinion, have recognized that the course which he was pursuing was fraught with risk, and would therefore have foreseen harm to the horse and the rider as reasonable consequence of that course. Under these circumstances the law imposed on the defendant the duty to guard against the threatened harm.

It goes without saying that the plaintiff himself was not free from fault, for he was guilty of antecedent negligence in planting himself on the wrong side of the road. But as we have already stated, the defendant was also negligent; and in such case the problem always is to discover which agent is immediately and directly responsible. It will be noted that the negligent acts of the two parties were not contemporaneous, since the negligence of the defendant succeeded the negligence of the plaintiff by an appreciable interval. Under these circumstances the law is that the person who has the last fair chance to avoid the impending harm and fails to do so is chargeable with the consequences, without reference to the prior negligence of the other party. The decision in the case of Rkes vs. Atlantic, Gulf and Pacific Co. (7 Phil. Rep., 359) should perhaps be mentioned in this connection. This Court there held that while contributory negligence on the part of the person injured did not constitute a bar to recovery, it could be received in evidence to reduce the damages which would otherwise have been assessed wholly against the other party. The defendant company had there employed the plaintiff, as a laborer, to assist in transporting iron rails from a barge in Manila harbor to the company's yards located not far away. The rails were conveyed upon cars which were hauled along a narrow track. At certain spot near the water's edge the track gave way by reason of the combined effect of the weight of the car and the insecurity of the road bed. The car was in consequence upset; the rails slid off; and the plaintiff's leg was caught and broken. It appeared in evidence that the accident was due to the effects of the typhoon which had dislodged one of the supports of the track. The court found that the defendant company was negligent in having failed to repair the bed of the track and also that the plaintiff was, at the moment of the accident, guilty of contributory negligence in walking at the side of the car instead of being in front or behind. It was held that while the defendant was liable to the plaintiff by reason of its negligence in having failed to keep the track in proper repair nevertheless the amount of the damages should be reduced on account of the contributory negligence in the plaintiff. As will be seen the defendant's negligence in that case consisted in an omission only. The liability of the company arose from its responsibility for the dangerous condition of its track. In a case like the one now before us, where the defendant was actually present and operating the automobile which caused the damage, we do not feel constrained to attempt to weigh the negligence of the respective parties in order to apportion the damage according to the degree of their relative fault. It is enough to say that the negligence of the defendant was in this case the immediate and determining cause of the accident and that the antecedent negligence of the plaintiff was a more remote factor in the case. A point of minor importance in the case is indicated in the special defense pleaded in the defendant's answer, to the effect that the subject matter of the action had been previously adjudicated in the court of a justice of the peace. In this connection it appears that soon after the accident in question occurred, the plaintiff caused criminal proceedings

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to be instituted before a justice of the peace charging the defendant with the infliction of serious injuries (lesiones graves). At the preliminary investigation the defendant was discharged by the magistrate and the proceedings were dismissed. Conceding that the acquittal of the defendant at the trial upon the merits in a criminal prosecution for the offense mentioned would be res adjudicata upon the question of his civil liability arising from negligence -- a point upon which it is unnecessary to express an opinion -the action of the justice of the peace in dismissing the criminal proceeding upon the preliminary hearing can have no effect. (See U. S. vs. Banzuela and Banzuela, 31 Phil. Rep., 564.) From what has been said it results that the judgment of the lower court must be reversed, and judgment is her rendered that the plaintiff recover of the defendant the sum of two hundred pesos (P200), with costs of other instances. The sum here awarded is estimated to include the value of the horse, medical expenses of the plaintiff, the loss or damage occasioned to articles of his apparel, and lawful interest on the whole to the date of this recovery. The other damages claimed by the plaintiff are remote or otherwise of such character as not to be recoverable. So ordered. Arellano, C.J., Torres, Carson, Araullo, Avanceña, and Fisher, JJ., concur. Johnson, J., reserves his vote. Macawili v. Panay Mar 1,1956 (NF) Sy v. Malate Taxicab G.R. No. L-8937

Nov 29,1957 November 29, 1957

OLEGARIO BRITO SY, plaintiff-appellee, vs. MALATE TAXI CAB & GARAGE, INC., defendantappelant; MALATE TAXICAB & GARAGE, INC., third-party plaintiff-appellant, vs. JESUS DEQUITO Y DUPY, third-party defendantappellee. Paredes, Gaw and Acevedo for appellee. Diaz and Baizas for appellant. ENDENCIA, J.: On June 26, 1952, at Dewey Boulevard in front of the Selecta Restaurant, Olegario Brito Sy engaged a taxicab bearing plate No. Taxi-1130, owned and operated by Malate Taxicab and Garage, Inc. and driven by Catalino Ermino, to take him to his place of business at Dencia's Restaurant on the Escolta where he was the general manager. Upon reaching the Rizal Monument he told the driver to turn to the right, but the latter did not heed him and instead countered that they better pass along Katigbak Drive. At the intersection of Dewey Bolevard and Katigbak Drive, the taxi collided with an army wagon with plate No. TPI-695 driven by Sgt. Jesus De quito, as a result of which

Olegario Brito Sy was jarred, jammed and jolted. He was taken to the Santa Isabel Hospital suffering from bruises and contusions as well as fractured right leg. Thereafter he was transferred to the Gonzales Orthopedic Clinic and was accordingly operated on. He spent some P2,266.45 for medical bills and hospitalization. On September 30, 1952, Sy filed action against the Malate Taxicab & Garage, Inc., based upon a contract of carriage, to recover the sums of P7,200 as actual or compensatory damages, P20,000 as moral damages, P15,000 as nominal and exemplary damages, and P3,000 a attorney's fees. On October 2, 1952, a copy of the complaint was served on and received by the defendant, but the latter filed its answer only on October 20, 1952, wherein it alleged that the collision subject of the complaint was not due to the negligence of its driver but to that of Sgt. Jesus Dequito, the driver of the army wagon; and, by way of counterclaim, sought to recover the sum of P1,000 as damages caused by the alleged malicious and frivolous action filed against it. The record reveals that upon plaintiff's motion filed on October 23, 1952, the lower court ordered on October 25, 1952 that the answer which was filed by defendant out of time be stricken out, and declared the Malate Taxicab & Garage, Inc. in default. Thereafter, on October 30, 1952, plaintiff presented his evidence, and on November 20, 1952 judgment was rendered awarding plaintiff the sum of P14.000 as actual, compensatory, moral, nominal and exemplary damages including attorney's fees and costs, with interest at the legal rate from the filing of the action. Defendant then filed a motion on December 17, 1952, for relief from the order of default and for new trial, which was granted. Hence, plaintiff filed his reply to defendant's answer and counterelaim, and by leave of court, the latter filed on February 24, 1953 a third-party complaint against Sgt. Jesus Dequito alleging that the cause of the collision between the taxicab and the army wagon was the negligence of the army sergeant, and praying that whatever amount the court may assess against it in the action filed by plaintiff, be paid to said third-party plaintiff, plus an additional amount of P1,000 representing attorney's fees. It appears, however, that the summons and copy of the thirdparty complaint were never served upon third-party defendant Dequito in view of his continued assignment from place to place in connection with his army duties, and for this reason the main case was set for trial on May 10, 1953, obviously for the sole purpose of disposing of the issue arising from plaintiffs complaint. On the day of the trial, defendant failed to appear, whereupon plaintiff presented his evidence, and judgment was rendered against the defendant in the total sum of P4,200 representing actual, compensatory and moral damages, as well as attorney's fees, with interest at the legal rate from the filing of the action, plus costs of suit. Aga nst said judgment defendant appealed to the Court of Appeals and assigned in its brief two errors of the lower court, namely: 1. The trial court erred in not finding that the thirdparty complaint involves a prejudicial question, and therefore, the main complaint cannot be decided until the third-party complaint is decided.

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2. The trial court erred in not deciding or making an express finding as to whether the defendant appellant Malate Taxicab & Garage, Inc. was responsible for the collision, and hence, civilly responsible to the plaintiffappellee. Finding the quoted assignment of errors as involving a purely question of law, the Court of Appeals, by virtue of the provisions of section 17, paragraph 6 of the judiciary Act of 1948, as amended, certified the case to this Court for adjudication, in its Resolution of February 7, 1955. We find no merit in the first assignment of error that the third-party complaint is a pre-judicial question. As enunciated by this Court in Berbari vs. Concepcion, 40 Phil. 837, "Pre-judicial question in understood in law to be that which precedes the criminal action, or that which requires a decision before final judgment is rendered in the principal action with which said question is closely connected. Not all previous questions are pre-judicial questions are necessarily previous", although all prejudicial questions are necessarily previous." In the present case, the third-party complaint is not a pre-judicial question, as the issue in the main action is not entirely dependent upon those in the third-party complaint; on the contrary, it is the third-party complaint that is dependent upon the main case at least in the amount of damages which defendant appellant seeks to be reimbursed in its third-party complaint. Furthermore, the complaint is based on a contractual obligation of transportation of passenger which defendant-appellant failed to carry out, and the action is entirely different and independent from that in the third-party complaint which is based an alleged tortious act committed by the third-party defendant Sgt. Dequito. The main case, therefore, is entirely severable and may be litigated independently. Moreover, whatever the outcome of the third-party complaint might be would not in any way affect or alter the contractual liability of the appellant to plaintiff. If the collision was due to the negligence of the third-party defendant, as alleged, then defendant appellant may file a separate civil action for damages based on tort ex-delicto or upon quasi-delict, as the case may be. Coming to the second assignment of error that the lower court erred in not making an express findings as to whether defendant appellant was responsible for the collision, we find the same to be unjustified. The pertinent, provisions of the new Civil Code under the heading Common Carriers, are the following: ART. 1733. Common carriers, from the nature of their business and for reason 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 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 articles 1755 and 1756.

ART. 1755. A common carrier is bound to carry the passengers to safety 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 of or injuries to passengers, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence as prescribed in articles 1733 and 1755. (Emphasis supplied.) Evidently, under these provisions of law, the court need not make an express finding of fault or negligence on the part of the defendant appellant in order to hold it responsible to pay the damages sought for by the plaintiff, for the action initiated therefor is based on a contract of carriage and not on tort. When plaintiff rode on defendant-appellant's taxicab, the latter assumed the express obligation to transport him to his destination safely, and to observe extraordinary diligence with a due regard for all the circumstances, and any injury that might be suffered by the passenger is right away attributable to the fault or negligence of the carrier (Article 1756, supra). This is an exception to the general rule that negligence must be proved, and it was therefore incumbent upon the carrier to prove that it has exercised extraordinary diligence as prescribed in Articles 1733 and 1755 of the new Civil Code. It is noteworthy, however, that at the hearing in the lower court defendant-appellant failed to appear and has not presented any evidence at all to overcome and overwhelm the presumption of negligence imposed upon it by law; hence, there was no need for the lower court to make an express finding thereon in view of the provisions of the aforequoted Article 1756 of the new Civil Code. Wherefore, the decision of the lower court is hereby affirmed with cost against the appellant. Paras, C. J., Bengzon, Montemayor, Bautista Angelo, Labrador, and Concepcion, JJ., concur,. Abeto v. PAL July 30,1982 G.R. No. L-28692 July 30, 1982 CONRADA VDA. DE ABETO, CARME0000LO ABETO, CECILIA ABETO, CONCEPCION ABETO, MARIA ABETO, ESTELA ABETO, PERLA ABETO, PATRIA ABETO and ALBERTO ABETO, plaintiffs-appellees, vs. PHILIPPINE AIR LINES, INCORPORATED, defendantappellant. Quijano, Arroyo & Padilla Law Offices for plaintiffsappellees. Siguion Reyna, Montecillo & Ongsiako, Belo and Associates for defendant-appellant.

RELOVA, J..

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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 it was bound to transport, …" and for the death of Judge Quirico Abeto, defendant- appellant was ordered 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 ¾) years at the rate of P7,200.00 per annum 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 Voucher Exhibit '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 pay the 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' PIC133 plane at the Mandurriao Airport, Iloilo City for Manila. He was listed as the No. 18 passenger in its Load Manifest (Exhibit A). The plane which would then take two hours from Iloilo to Manila did not reach its destination and the next day there was news that the plane was missing. After three weeks, it was ascertained that the plane crashed at Mt. Baco, Province of Mindoro. All the passengers, including Judge Abeto, must have been killed instantly and their remains were scattered all over the area. Among the articles recovered on the site of the crash was a leather bag with the name "Judge Quirico Abeto. " (Exhibit C.) Judge Abeto, prior to the plane crash, was a Technical Assistant in the Office of the President receiving an annual compensation of P7,200.00; and before that, has held the various positions in 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 Judge Abeto. The other plaintiffs-appellees are the children of the deceased. When they received the news of the plane crash, Mrs. Abeto was shocked and until it was ascertained that the plane had crashed three weeks after, she could not sleep and eat. She felt sick and was miserable after that. The members of the family also suffered.

Personal belongings which were lost amounted to P300.00. Burial expenses of the late judge was 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 of the pilot. The plane at the time of the crash was airworthy for the purpose of conveying passengers across the country as shown by the certificate of airworthiness issued by the Civil Aeronautics Administration (CAA). There was navigational error but no negligence or malfeasance on the part of the pilot. The plane had undergone 1,822 pre- flight checks, 364 thorough checks, 957 terminating checks and 501 after maintenance checks. These checks were part of the quality control operation of defendant airline Further, deviation from its prescribed route was due to the bad weather conditions between Mt. Baco and Romblon and strong winds which caused the plane to drift to Mt. Baco. Under the circumstances, appellant argues that the crash was a fortuitous event and, therefore, defendant-appellant cannot be held liable under the provisions of Article 1174 of the New Civil Code. Besides, appellant tried to prove 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 submitted by both parties has come into the conclusion that the evidence introduced by the plaintiffs have established the following significant facts which proved the negligence of the defendant's pilot of the plane on that flight- in question. 1st — That the Pilot of the plane disobeyed instruction given in not following the route of Amber 1 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 same took 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 on training as proved when his body was found on the plane's cockpit with its microphone hanging still on his left leg. Fourth — When the Pilot during the flight in question failed or did not report his position over or abeam Romblon which is a compulsory reporting point. These facts as established by the evidence of the plaintiff lead to the inevitable conclusion that the 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 indifference for the safety of the passengers that it was bound to transport. By

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the very evidence of the defendant, as shown by the deposition of one Jose Abanilla, dated December 13, 1963, Section Chief of the Actuarial Department of the Insular Life Insurance Company regarding life expectancy through American experience, the late Judge Abeto at the age of 79 would still live or have a life expectancy of 4.75 years. Appealing to this Court, defendant claimed that the trial court erred:

Baco. According to defendant'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 A1 there would have been no crash, obviously? A Yes, Your Honor

I ATTY. HILADO: ... in finding, contrary to the evidence, that the appellant was negligent;

(To the witness)

III

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

... in not finding that the appellant, in the conduct and operation of PI-C133, exercised its statutory obligation over the passengers of PI C133 of extraordinary diligence as far as human care and foresight can provide, using the utmost diligence of a very cautious person with due regard for all the circumstances and in not finding that the crash of PI-C133 was caused by fortuitous events;

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

... in awarding damages to the appellees; and

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

xxx

xxx

xxx

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

IV A Yes, sir. ... 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 its contract of carriage.

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

The provisions of the Civil Code on this question of liability are clear and explicit. Article 1733 binds common carriers, "from the nature of their business and by reasons of public policy, ... to observe extraordinary diligence in the vigilance ... for the safety of the passengers transported by them according to all the circumstances of each case." Article 1755 establishes the standard of care required of a common carrier, which is, "to carry the passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with due regard for all the circumstances." Article 1756 fixes the burden of proof by providing that "in case of death of or injuries to passengers, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extra-ordinary diligence as prescribed in Articles 1733 and 1755." Lastly, Article 1757 states that "the responsibility of a common carrier for the safety of passengers ... cannot be dispensed with or lessened by stipulation, by the posting of notices, by statements on tickets, or otherwise."

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

The prescribed airway of plane PI-C133 that afternoon of November 23, 1960, with Capt. de Mesa, as the pilot, was Iloilo-Romblon-Manila, denominated as airway "Amber l," and the prescribed elevation of the flight was 6,000 ft. The fact is, the plane did not take the designated route because it was some 30 miles to the west when it crashed at Mt.

It is clear that the pilot did not follow the designated route for his flight between Romblon and Manila. 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.

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

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xxx

xxx

At any rate, in the absence of a satisfactory explanation by appellant as to how the accident occurred, 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 fault or negligence on the part of the carrier in order to hold it responsible to pay the damages sought for by the passenger. By the contract of carriage, the carrier assumes the express obligation to transport the passenger to his destination safely and to observe extraordinary diligence with a due regard for all the circumstances, and any injury that might be suffered by the passenger is right away attributable to the fault or negligence of the carrier (Art. 1756, New Civil Code). This is an exception to the general rule that negligence must be proved. (Batangas Transportation Company vs. Caguimbal, 22 SCRA 171.) The total of the different items which the lower court adjudged herein appellant to pay the plaintiffs is P57,800.00. The judgment of the court a quo is modified in the sense that the defendant is hereby ordered to pay the said amount to the plaintiffs, with legal interest thereon from the finality of this judgment. With costs against defendant-appellant. Teehankee (Chairman), Makasiar, Melencio-Herrera, Plana and Vasquez, JJ., concur. Gutierrez, Jr., J., is on leave. PAL v. NLRC

Sep 2,1983 (PDF)

Bachelor Express v. CA July 231,1990 G.R. No. 85691 July 31, 1990 BACHELOR EXPRESS, INCORPORATED, and CRESENCIO RIVERA, petitioners, vs. THE HONORABLE COURT OF APPEALS (Sixth Division), RICARDO BETER, SERGIA BETER, TEOFILO RAUTRAUT and ZOETERA RAUTRAUT, respondents. Aquino W. Gambe for petitioners. Tranquilino O. Calo, Jr. for private respondents.

GUTIERREZ, JR., J.: This is a petition for review of the decision of the Court of Appeals which reversed and set aside the order of the Regional Trial Court, Branch I, Butuan City dismissing the private respondents' complaint for collection of "a sum of money" and finding the petitioners solidarily liable for damages in the total amount of One Hundred Twenty Thousand Pesos (P120,000.00). The petitioners also

question the appellate court's resolution denying a motion for reconsideration. On August 1, 1980, Bus No. 800 owned by Bachelor Express, Inc. and driven by Cresencio Rivera was the situs of a stampede which resulted in the death of passengers Ornominio Beter and Narcisa Rautraut. The evidence shows that the bus came from Davao City on its way to Cagayan de Oro City passing Butuan City; that while at Tabon-Tabon, Butuan City, the bus picked up a passenger; that about fifteen (15) minutes later, a passenger at the rear portion suddenly stabbed a PC soldier which caused commotion and panic among the passengers; that when the bus stopped, passengers Ornominio Beter and Narcisa Rautraut were found lying down the road, the former already dead as a result of head injuries and the latter also suffering from severe injuries which caused her death later. The passenger assailant alighted from the bus and ran toward the bushes but was killed by the police. Thereafter, the heirs of Ornominio Beter and Narcisa Rautraut, private respondents herein (Ricardo Beter and Sergia Beter are the parents of Ornominio while Teofilo Rautraut and Zoetera [should be Zotera] Rautraut are the parents of Narcisa) filed a complaint for "sum of money" against Bachelor Express, Inc. its alleged owner Samson Yasay and the driver Rivera. In their answer, the petitioners denied liability for the death of Ornominio Beter and Narcisa Rautraut. They alleged that ... the driver was able to transport his passengers safely to their respective places of destination except Ornominio Beter and Narcisa Rautraut who jumped off the bus without the knowledge and consent, much less, the fault of the driver and conductor and the defendants in this case; the defendant corporation had exercised due diligence in the choice of its employees to avoid as much as possible accidents; the incident on August 1, 1980 was not a traffic accident or vehicular accident; it was an incident or event very much beyond the control of the defendants; defendants were not parties to the incident complained of as it was an act of a third party who is not in any way connected with the defendants and of which the latter have no control and supervision; ..." (Rollo, pp. 112-113).i•t•c-aüsl After due trial, the trial court issued an order dated August 8, 1985 dismissing the complaint. Upon appeal however, the trial court's decision was reversed and set aside. The dispositive portion of the decision of the Court of Appeals states: WHEREFORE, the Decision appealed from is REVERSED and SET ASIDE and a new one entered finding the appellees jointly and solidarily liable to pay the plaintiffsappellants the following amounts: 1) To the heirs of Ornominio Beter, the amount of Seventy Five Thousand Pesos (P75,000.00) in loss of earnings and support, moral damages, straight death indemnity and attorney's fees; and,

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2) To the heirs of Narcisa Rautraut, the amount of Forty Five Thousand Pesos (P45,000.00) for straight death indemnity, moral damages and attorney's fees. Costs against appellees. (Rollo, pp. 71-72)

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.

The petitioners now pose the following questions

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 observed extraordinary diligence as prescribed in Articles 1733 and 1755.

What was the proximate cause of the whole incident? Why were the passengers on board the bus panicked (sic) and why were they shoving one another? Why did Narcisa Rautraut and Ornominio Beter jump off from the running bus? The petitioners opine that answers to these questions are material to arrive at "a fair, just and equitable judgment." (Rollo, p. 5) They claim that the assailed decision is based on a misapprehension of facts and its conclusion is grounded on speculation, surmises or conjectures.

There is no question that Bachelor Express, Inc. is a common carrier. Hence, from the nature of its business and for reasons of public policy Bachelor Express, Inc. is bound to carry its 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.

As regards the proximate cause of the death of Ornominio Beter and Narcisa Rautraut, the petitioners maintain that it was the act of the passenger who ran amuck and stabbed another passenger of the bus. They contend that the stabbing incident triggered off the commotion and panic among the passengers who pushed one another and that presumably out of fear and moved by that human instinct of self-preservation Beter and Rautraut jumped off the bus while the bus was still running resulting in their untimely death." (Rollo, p. 6) Under these circumstances, the petitioners asseverate that they were not negligent in the performance of their duties and that the incident was completely and absolutely attributable to a third person, the passenger who ran amuck, for without his criminal act, Beter and Rautraut could not have been subjected to fear and shock which compelled them to jump off the running bus. They argue that they should not be made liable for damages arising from acts of third persons over whom they have no control or supervision.

In the case at bar, Ornominio Beter and Narcisa Rautraut were passengers of a bus belonging to petitioner Bachelor Express, Inc. and, while passengers of the bus, suffered injuries which caused their death. Consequently, pursuant to Article 1756 of the Civil Code, petitioner Bachelor Express, Inc. is presumed to have acted negligently unless it can prove that it had observed extraordinary diligence in accordance with Articles 1733 and 1755 of the New Civil Code.

Furthermore, the petitioners maintain that the driver of the bus, before, during and after the incident was driving cautiously giving due regard to traffic rules, laws and regulations. The petitioners also argue that they are not insurers of their passengers as ruled by the trial court.

Article 1174 of the present Civil Code states:

The liability, if any, of the petitioners is anchored on culpa contractual or breach of contract of carriage. The applicable provisions of law under the New Civil Code are as follows: ART. 1732. Common carriers are persons, corporations, firms or associations engaged in the business of carrying or transporting passengers or goods or both by land, water, or air, for compensation, offering their services to the public. 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. xxx

xxx

Bachelor Express, Inc. denies liability for the death of Beter and Rautraut on its posture that the death of the said passengers was caused by a third person who was beyond its control and supervision. In effect, the petitioner, in order to overcome the presumption of fault or negligence under the law, states that the vehicular incident resulting in the death of passengers Beter and Rautraut was caused by force majeure or caso fortuito over which the common carrier did not have any control.

Except in cases expressly specified by law, or when it is otherwise declared by stipulations, or when the nature of the obligation requires the assumption of risk, no person shall be responsible for those events which could not be foreseen, or which though foreseen, were inevitable. The above-mentioned provision was substantially copied from Article 1105 of the old Civil Code which states" No one shall be liable for events which could not be foreseen or which, even if foreseen, were inevitable, with the exception of the cases in which the law expressly provides otherwise and those in which the obligation itself imposes liability. In the case of Lasam v. Smith (45 Phil. 657 [1924]), we defined "events" which cannot be foreseen and which, having been foreseen, are inevitable in the following manner:

xxx

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... The Spanish authorities regard the language employed as an effort to define the term 'caso fortuito' and hold that the two expressions are synonymous. (Manresa Comentarios al Codigo Civil Español, vol. 8, pp. 88 et seq.; Scaevola, Codigo Civil, vol. 19, pp. 526 et seq.) The antecedent to Article 1105 is found in Law II, Title 33, Partida 7, which defines caso fortuito as 'occasion que acaese por aventura de que non se puede ante ver. E son estos, derrivamientos de casas e fuego que enciende a so ora, e quebrantamiento de navio, fuerca de ladrones' (An event that takes place by incident and could not have been foreseen. Examples of this are destruction of houses, unexpected fire, shipwreck, violence of robbers ...) Escriche defines caso fortuito as an unexpected event or act of God which could neither be foreseen nor resisted, such as floods, torrents, shipwrecks, conflagrations, lightning, compulsion, insurrections, destruction of buildings by unforeseen accidents and other occurrences of a similar nature.

event or force majeure, and there was no negligence or lack of care and diligence on the part of the defendant company or its agents. (Tan Chiong Sian v. Inchausti & Co., 22 Phil. 152 [1912]; Emphasis supplied). This principle was reiterated in a more recent case, Batangas Laguna Tayabas Co. v. Intermediate Appellate Court (167 SCRA 379 [1988]), wherein we ruled: ... [F]or their defense of force majeure or act of God to prosper the accident must be due to natural causes and exclusively without human intervention. (Emphasis supplied) Therefore, the next question to be determined is whether or not the petitioner's common carrier observed extraordinary diligence to safeguard the lives of its passengers. In this regard the trial court and the appellate court arrived at conflicting factual findings. The trial court found the following facts:

In discussing and analyzing the term caso fortuito the Enciclopedia Juridica Española says: 'In a legal sense and, consequently, also in relation to contracts, a caso fortuito presents the following essential characteristics: (1) The cause of the unforeseen and unexpected occurrence, or of the failure of the debtor to comply with his obligation, must be independent of the human will. (2) It must be impossible to foresee the event which constitutes the caso fortuito, or if it can be foreseen, it must be impossible to avoid. (3) The occurrence must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner. And (4) the obligor (debtor) must be free from any participation in the aggravation of the injury resulting to the creditor. (5) Enciclopedia Juridica Española, 309) As will be seen, these authorities agree that some extraordinary circumstance independent of the will of the obligor or of his employees, is an essential element of a caso fortuito. ... The running amuck of the passenger was the proximate cause of the incident as it triggered off a commotion and panic among the passengers such that the passengers started running to the sole exit shoving each other resulting in the falling off the bus by passengers Beter and Rautraut causing them fatal injuries. The sudden act of the passenger who stabbed another passenger in the bus is within the context of force majeure. However, in order that a common carrier may be absolved from liability in case of force majeure, it is not enough that the accident was caused by force majeure. The common carrier must still prove that it was not negligent in causing the injuries resulting from such accident. Thus, as early as 1912, we ruled: From all the foregoing, it is concluded that the defendant is not liable for the loss and damage of the goods shipped on the lorcha Pilar by the Chinaman, Ong Bien Sip, inasmuch as such loss and damage were the result of a fortuitous

The parties presented conflicting evidence as to how the two deceased Narcisa Rautruat and Ornominio Beter met their deaths. However, from the evidence adduced by the plaintiffs, the Court could not see why the two deceased could have fallen off the bus when their own witnesses testified that when the commotion ensued inside the bus, the passengers pushed and shoved each other towards the door apparently in order to get off from the bus through the door. But the passengers also could not pass through the door because according to the evidence the door was locked. On the other hand, the Court is inclined to give credence to the evidence adduced by the defendants that when the commotion ensued inside the bus, the two deceased panicked and, in state of shock and fear, they jumped off from the bus by passing through the window. It is the prevailing rule and settled jurisprudence that transportation companies are not insurers of their passengers. The evidence on record does not show that defendants' personnel were negligent in their duties. The defendants' personnel have every right to accept passengers absent any manifestation of violence or drunkenness. If and when such passengers harm other passengers without the knowledge of the transportation company's personnel, the latter should not be faulted. (Rollo, pp. 46-47) A thorough examination of the records, however, show that there are material facts ignored by the trial court which were discussed by the appellate court to arrive at a different conclusion. These circumstances show that the petitioner common carrier was negligent in the provision of safety precautions so that its passengers may be transported safely to their destinations. The appellate court states: A critical eye must be accorded the lower court's conclusions of fact in its tersely written ratio decidendi.

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The lower court concluded that the door of the bus was closed; secondly, the passengers, specifically the two deceased, jumped out of the window. The lower court therefore concluded that the defendant common carrier is not liable for the death of the said passengers which it implicitly attributed to the unforeseen acts of the unidentified passenger who went amuck.

notably unreliable for lack of veracity. On direct examination, he testified: xxx

xxx

xxx

Q So what happened to the passengers inside your bus? A Some of the passengers jumped out of the window.

There is nothing in the record to support the conclusion that the solitary door of the bus was locked as to prevent the passengers from passing through. Leonila Cullano, testifying for the defense, clearly stated that the conductor opened the door when the passengers were shouting that the bus stop while they were in a state of panic. Sergia Beter categorically stated that she actually saw her son fall from the bus as the door was forced open by the force of the onrushing passengers. Pedro Collango, on the other hand, testified that he shut the door after the last passenger had boarded the bus. But he had quite conveniently neglected to say that when the passengers had panicked, he himself panicked and had gone to open the door. Portions of the testimony of Leonila Cullano, quoted below, are illuminating: xxx

xxx

xxx

Q When you said the conductor opened the door, the door at the front or rear portion of the bus? A

Front door.

Q And these two persons whom you said alighted, where did they pass, the fron(t) door or rear door?

COURT: Q While the bus was in motion? A Yes, your Honor, but the speed was slow because we have just picked up a passenger. Atty. Gambe: Q You said that at the time of the incident the bus was running slow because you have just picked up a passenger. Can you estimate what was your speed at that time? Atty. Calo: No basis, your Honor, he is neither a driver nor a conductor. COURT: Let the witness answer. Estimate only, the conductor experienced. Witness: Not less than 30 to 40 miles.

A

Front door.

xxx

xxx

COURT: xxx Kilometers or miles? (Tsn., p. 4, Aug. 8, 1984) A Miles. xxx

xxx

xxx Atty. Gambe:

Q What happened after there was a commotion at the rear portion of the bus? A When the commotion occurred, I stood up and I noticed that there was a passenger who was sounded (sic). The conductor panicked because the passengers were shouting 'stop, stop'. The conductor opened the bus.' (Tsn. p. 3, August 8, 1984). Accordingly, there is no reason to believe that the deceased passengers jumped from the window when it was entirely possible for them to have alighted through the door. The lower court's reliance on the testimony of Pedro Collango, as the conductor and employee of the common carrier, is unjustified, in the light of the clear testimony of Leonila Cullano as the sole uninterested eyewitness of the entire episode. Instead we find Pedro Collango's testimony to be infused by bias and fraught with inconsistencies, if not

Q That is only your estimate by your experience? A Yes, sir, estimate. (Tsn., pp. 4-5, Oct. 17, 1983). At such speed of not less than 30 to 40 miles ..., or about 48 to 65 kilometers per hour, the speed of the bus could scarcely be considered slow considering that according to Collango himself, the bus had just come from a full stop after picking a passenger (Tsn, p. 4, Id.) and that the bus was still on its second or third gear (Tsn., p. 12, Id.). In the light of the foregoing, the negligence of the common carrier, through its employees, consisted of the lack of extraordinary diligence required of common carriers, in exercising vigilance and utmost care of the safety of its passengers, exemplified by the driver's belated stop and the

57

reckless opening of the doors of the bus while the same was travelling at an appreciably fast speed. At the same time, the common carrier itself acknowledged, through its administrative officer, Benjamin Granada, that the bus was commissioned to travel and take on passengers and the public at large, while equipped with only a solitary door for a bus its size and loading capacity, in contravention of rules and regulations provided for under the Land Transportation and Traffic Code (RA 4136 as amended.) (Rollo, pp. 23-26) Considering the factual findings of the Court of Appealsthe bus driver did not immediately stop the bus at the height of the commotion; the bus was speeding from a full stop; the victims fell from the bus door when it was opened or gave way while the bus was still running; the conductor panicked and blew his whistle after people had already fallen off the bus; and the bus was not properly equipped with doors in accordance with law-it is clear that the petitioners have failed to overcome the presumption of fault and negligence found in the law governing common carriers. The petitioners' argument that the petitioners "are not insurers of their passengers" deserves no merit in view of the failure of the petitioners to prove that the deaths of the two passengers were exclusively due to force majeure and not to the failure of the petitioners to observe extraordinary diligence in transporting safely the passengers to their destinations as warranted by law. (See Batangas Laguna Tayabas Co. v. Intermediate Appellate Court, supra). The petitioners also contend that the private respondents failed to show to the court that they are the parents of Ornominio Beter and Narcisa Rautraut respectively and therefore have no legal personality to sue the petitioners. This argument deserves scant consideration. We find this argument a belated attempt on the part of the petitioners to avoid liability for the deaths of Beter and Rautraut. The private respondents were Identified as the parents of the victims by witnesses during the trial and the trial court recognized them as such. The trial court dismissed the complaint solely on the ground that the petitioners were not negligent. Finally, the amount of damages awarded to the heirs of Beter and Rautraut by the appellate court is supported by the evidence. The appellate court stated: Ornominio Beter was 32 years of age at the time of his death, single, in good health and rendering support and service to his mother. As far as Narcisa Rautraut is concerned, the only evidence adduced is to the effect that at her death, she was 23 years of age, in good health and without visible means of support. In accordance with Art. 1764 in conjunction with Art. 2206 of the Civil Code, and established jurisprudence, several factors may be considered in determining the award of damages, namely: 1) life expectancy (considering the state of health of the deceased and the mortality tables are deemed conclusive) and loss of earning capacity; (2) pecuniary loss, loss of support and service; and (3) moral

and mental suffering (Alcantara, et al. v. Surro, et al., 93 Phil. 470). In the case of People v. Daniel (No. L-66551, April 25, 1985, 136 SCRA 92, at page 104), the High Tribunal, reiterating the rule in Villa Rey Transit, Inc. v. Court of Appeals (31 SCRA 511), stated that the amount of loss of earring capacity is based mainly on two factors, namely, (1) the number of years on the basis of which the damages shall be computed; and (2) the rate at which the losses sustained by the heirs should be fixed. As the formula adopted in the case of Davila v. Philippine Air Lines, 49 SCRA 497, at the age of 30 one's normal life expectancy is 33-1/3 years based on the American Expectancy Table of Mortality (2/3 x 80-32).i•t•c-aüsl By taking into account the pace and nature of the life of a carpenter, it is reasonable to make allowances for these circumstances and reduce the life expectancy of the deceased Ornominio Beter to 25 years (People v. Daniel, supra). To fix the rate of losses it must be noted that Art. 2206 refers to gross earnings less necessary living expenses of the deceased, in other words, only net earnings are to be considered (People v. Daniel, supra; Villa Rey Transit, Inc. v. Court of Appeals, supra). Applying the foregoing rules with respect to Ornominio Beter, it is both just and reasonable, considering his social standing and position, to fix the deductible, living and incidental expenses at the sum of Four Hundred Pesos (P400.00) a month, or Four Thousand Eight Hundred Pesos (P4,800.00) annually. As to his income, considering the irregular nature of the work of a daily wage carpenter which is seasonal, it is safe to assume that he shall have work for twenty (20) days a month at Twenty Five Pesos (P150,000.00) for twenty five years. Deducting therefrom his necessary expenses, his heirs would be entitled to Thirty Thousand Pesos (P30,000.00) representing loss of support and service (P150,000.00 less P120,000.00). In addition, his heirs are entitled to Thirty Thousand Pesos (P30,000.00) as straight death indemnity pursuant to Article 2206 (People v. Daniel, supra). For damages for their moral and mental anguish, his heirs are entitled to the reasonable sum of P10,000.00 as an exception to the general rule against moral damages in case of breach of contract rule Art. 2200 (Necesito v. Paras, 104 Phil. 75). As attorney's fees, Beter's heirs are entitled to P5,000.00. All in all, the plaintiff-appellants Ricardo and Sergia Beter as heirs of their son Ornominio are entitled to an indemnity of Seventy Five Thousand Pesos (P75,000.00). In the case of Narcisa Rautraut, her heirs are entitled to a straight death indemnity of Thirty Thousand Pesos (P30,000.00), to moral damages in the amount of Ten Thousand Pesos (P10,000.00) and Five Thousand Pesos (P5,000.00) as attorney's fees, or a total of Forty Five Thousand Pesos (P45,000.00) as total indemnity for her death in the absence of any evidence that she had visible means of support. (Rollo, pp. 30-31) WHEREFORE, the instant petition is DISMISSED. The questioned decision dated May 19, 1988 and the resolution

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dated August 1, 1988 of the Court of Appeals are AFFIRMED.

amounts as may be fixed by the trial court for exemplary damages and attorney’s fees.

SO ORDERED.

The trial court found that the proximate cause of the collision was the negligence of Felix Angeles, driver of the Bulletin delivery van, considering the fact that the left front portion of the delivery truck driven by Felix Angeles hit and bumped the left rear portion of the passenger jeepney driven by Alfredo Mallari Jr. Hence, the trial court ordered BULLETIN and Felix Angeles to pay jointly and severally Claudia G. Reyes, widow of the deceased victim, the sums of P42,106.93 for medical expenses; P8,600.00 for funeral and burial expenses; P1,006,777.40 for loss of earning capacity; P5,000.00 for moral damages and P10,000.00 for attorney’s fees. The trial court also ordered N.V. Netherlands Insurance Company to indemnify Claudia G. Reyes P12,000.00 as death indemnity and P2,500.00 for funeral expenses which when paid should be deducted from the liabilities of respondent BULLETIN and its driver Felix Angeles to the plaintiff. It also dismissed the complaint against the other defendants Alfredo Mallari Sr. and Alfredo Mallari Jr.

Mallari v. CA Jan 31, 2000 [G.R. No. 128607. January 31, 2000] ALFREDO MALLARI SR. and ALFREDO MALLARI JR., petitioners, vs. COURT OF APPEALS and BULLETIN PUBLISHING CORPORATION, respondents. DECISION BELLOSILLO, J.: ALFREDO MALLARI SR. and ALFREDO MALLARI JR. in this petition for review on certiorari seek to set aside the Decision of the Court of Appeals[1] which reversed the court a quo and adjudged petitioners to be liable for damages due to negligence as a common carrier resulting in the death of a passenger. On 14 October 1987, at about 5:00 o'clock in the morning, the passenger jeepney driven by petitioner Alfredo Mallari Jr. and owned by his co-petitioner Alfredo Mallari Sr. collided with the delivery van of respondent Bulletin Publishing Corp. (BULLETIN, for brevity) along the National Highway in Barangay San Pablo, Dinalupihan, Bataan. Petitioner Mallari Jr. testified that he went to the left lane of the highway and overtook a Fiera which had stopped on the right lane. Before he passed by the Fiera, he saw the van of respondent BULLETIN coming from the opposite direction. It was driven by one Felix Angeles. The sketch of the accident showed that the collision occurred after Mallari Jr. overtook the Fiera while negotiating a curve in the highway. The points of collision were the left rear portion of the passenger jeepney and the left front side of the delivery van of BULLETIN. The two (2) right wheels of the delivery van were on the right shoulder of the road and pieces of debris from the accident were found scattered along the shoulder of the road up to a certain portion of the lane travelled by the passenger jeepney. The impact caused the jeepney to turn around and fall on its left side resulting in injuries to its passengers one of whom was Israel Reyes who eventually died due to the gravity of his injuries. Manikanä On 16 December 1987 Claudia G. Reyes, the widow of Israel M. Reyes, filed a complaint for damages with the Regional Trial Court of Olongapo City against Alfredo Mallari Sr. and Alfredo Mallari Jr., and also against BULLETIN, its driver Felix Angeles, and the N.V. Netherlands Insurance Company. The complaint alleged that the collision which resulted in the death of Israel Reyes was caused by the fault and negligence of both drivers of the passenger jeepney and the Bulletin Isuzu delivery van. The complaint also prayed that the defendants be ordered jointly and severally to pay plaintiff P1,006,777.40 in compensatory damages, P40,000.00 for hospital and medical expenses, P18,270.00 for burial expenses plus such

On appeal the Court of Appeals modified the decision of the trial court and found no negligence on the part of Angeles and consequently of his employer, respondent BULLETIN. Instead, the appellate court ruled that the collision was caused by the sole negligence of petitioner Alfredo Mallari Jr. who admitted that immediately before the collision and after he rounded a curve on the highway, he overtook a Fiera which had stopped on his lane and that he had seen the van driven by Angeles before overtaking the Fiera. The Court of Appeals ordered petitioners Mallari Jr. and Mallari Sr. to compensate Claudia G. Reyes P1,006,777.50 for loss of earning capacity, P50,000.00 as indemnity for death and P10,000.00 for attorney’s fees. It absolved from any liability respondent BULLETIN, Felix Angeles and N.V. Netherlands Insurance Company. Hence this petition. Oldmisâ o Petitioners contend that there is no evidence to show that petitioner Mallari Jr. overtook a vehicle at a curve on the road at the time of the accident and that the testimony of Angeles on the overtaking made by Mallari Jr. was not credible and unreliable. Petitioner also submits that the trial court was in a better position than the Court of Appeals to assess the evidence and observe the witnesses as well as determine their credibility; hence, its finding that the proximate cause of the collision was the negligence of respondent Angeles, driver of the delivery van owned by respondent BULLETIN, should be given more weight and consideration. We cannot sustain petitioners. Contrary to their allegation that there was no evidence whatsoever that petitioner Mallari Jr. overtook a vehicle at a curve on the road at the time of or before the accident, the same petitioner himself testified that such fact indeed did occur Q:.......And what was that accident all about?

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A:.......Well, what happened, sir, is that at about that time 5:00 o’clock in that morning of October 14 while I was negotiating on the highway at San Pablo, Dinalupihan, Bataan, I was then following a blue Ford Fierra and my distance behind was about twenty (20) feet and then I passed that blue Ford Fierra. I overtook and when I was almost on the right lane of the highway towards Olongapo City there was an oncoming delivery van of the Bulletin Publishing Corporation which bumped the left rear portion of the jeepney which I was driving and as a result of which the jeepney x x x turned around and fell on its left side and as a result of which some of my passengers including me were injured, sir x x x x Q:.......Before you overtook the Ford Fierra jeepney did you look x x x whether there was any vehicle coming towards you? A:.......Yes, sir. Q:.......Did you see the Bulletin van or the Press van coming towards you? A:.......Yes, sir. Q:.......At the moment the Ford Fierra xxx stop(ped) and in overtaking the Fierra, did you not have an option to stop and not to overtake the Ford Fierra? A:.......Well, at the time when the Ford Fierra stopped in front of me I slowed down with the intention of applying the brake, however, when I saw the oncoming vehicle which is the Press van is very far x x x which is 100 feet distance, x x x it is sufficient to overtake the Ford Fierra so I overt(ook) it x x x x Q:.......You said that you took into consideration the speed of the oncoming Press van but you also could not estimate the speed of the press van because it was dark at that time, which of these statements are true? Ncmâ A:.......What I wanted to say, I took into consideration the speed of the oncoming vehicle, the Press van, although at the moment I could not estimate the speed of the oncoming vehicle x x x x[2] The Court of Appeals correctly found, based on the sketch and spot report of the police authorities which were not disputed by petitioners, that the collision occurred immediately after petitioner Mallari Jr. overtook a vehicle in front of it while traversing a curve on the highway.[3] This act of overtaking was in clear violation of Sec. 41, pars. (a) and (b), of RA 4136 as amended, otherwise known as The Land Transportation and Traffic Code which provides: Sec. 41. Restrictions on overtaking and passing. - (a) The driver of a vehicle shall not drive to the left side of the center line of a highway in overtaking or passing another vehicle proceeding in the same direction, unless such left side is clearly visible and is free of oncoming traffic for a

sufficient distance ahead to permit such overtaking or passing to be made in safety. (b) The driver of a vehicle shall not overtake or pass another vehicle proceeding in the same direction when approaching the crest of a grade, nor upon a curve in the highway, where the driver’s view along the highway is obstructed within a distance of five hundred feet ahead except on a highway having two or more lanes for movement of traffic in one direction where the driver of a vehicle may overtake or pass another vehicle: Provided That on a highway, within a business or residential district, having two or more lanes for movement of traffic in one direction, the driver of a vehicle may overtake or pass another vehicle on the right. The rule is settled that a driver abandoning his proper lane for the purpose of overtaking another vehicle in an ordinary situation has the duty to see to it that the road is clear and not to proceed if he cannot do so in safety.[4] When a motor vehicle is approaching or rounding a curve, there is special necessity for keeping to the right side of the road and the driver does not have the right to drive on the left hand side relying upon having time to turn to the right if a car approaching from the opposite direction comes into view.[5] NcmmisÓ In the instant case, by his own admission, petitioner Mallari Jr. already saw that the BULLETIN delivery van was coming from the opposite direction and failing to consider the speed thereof since it was still dark at 5:00 o'clock in the morning mindlessly occupied the left lane and overtook two (2) vehicles in front of it at a curve in the highway. Clearly, the proximate cause of the collision resulting in the death of Israel Reyes, a passenger of the jeepney, was the sole negligence of the driver of the passenger jeepney, petitioner Alfredo Mallari Jr., who recklessly operated and drove his jeepney in a lane where overtaking was not allowed by traffic rules. Under Art. 2185 of the Civil Code, unless there is proof to the contrary, it is presumed that a person driving a motor vehicle has been negligent if at the time of the mishap he was violating a traffic regulation. As found by the appellate court, petitioners failed to present satisfactory evidence to overcome this legal presumption. The negligence and recklessness of the driver of the passenger jeepney is binding against petitioner Mallari Sr., who admittedly was the owner of the passenger jeepney engaged as a common carrier, considering the fact that in an action based on contract of carriage, the court need not make an express finding of fault or negligence on the part of the carrier in order to hold it responsible for the payment of damages sought by the passenger. Under Art. 1755 of the Civil Code, 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 due regard for all the circumstances. Moreover, under Art. 1756 of the Civil Code, in case of death or injuries to passengers, a common carrier is presumed to have been at fault or to have acted negligently, unless it proves that it observed extraordinary diligence. Further, pursuant to Art.

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1759 of the same Code, it is liable for the death of or injuries to passengers through the negligence or willful acts of the former’s employees. This liability of the common carrier does not cease upon proof that it exercised all the diligence of a good father of a family in the selection of its employees. Clearly, by the contract of carriage, the carrier jeepney owned by Mallari Sr. assumed the express obligation to transport the passengers to their destination safely and to observe extraordinary diligence with due regard for all the circumstances, and any injury or death that might be suffered by its passengers is right away attributable to the fault or negligence of the carrier. Scncä m The monetary award ordered by the appellate court to be paid by petitioners to the widow of the deceased passenger Israel M. Reyes of P1,006,777.50 for loss of earning capacity, P50,000.00 as civil indemnity for death, and P10,000.00 for attorney’s fees, all of which were not disputed by petitioners, is a factual matter binding and conclusive upon this Court. WHEREFORE, the Petition is DENIED and the Decision of the Court of Appeals dated 20 September 1995 reversing the decision of the trial court being in accord with law and evidence is AFFIRMED. Consequently, petitioners are ordered jointly and severally to pay Claudia G. Reyes P1,006,777.50 for loss of earning capacity, P50,000.00 as civil indemnity for death, and P10,000.00 for attorney’s fees. Costs against petitioners. SO ORDERED.

C

Breach of Contract of Carriage

Singson v. CA Nov 18, 1997, GR 119995 [G.R. No. 119995. November 18, 1997] CARLOS SINGSON, petitioner, vs. COURT OF APPEALS and CATHAY PACIFIC AIRWAYS, INC., respondents. DECISION BELLOSILLO, J.: A contract of air carriage is a peculiar one. Imbued with public interest, common carriers are required by law to carry passengers safely as far as human care and foresight can provide, using the utmost diligence of a very cautious person, with due regard for all the circumstances.[1] A contract to transport passengers is quite different in kind and degree from any other contractual relation. And this because its business is mainly with the traveling public. It invites people to avail of the comforts and advantages it offers. The contract of carriage, therefore, generates a relation attended with a public duty.[2] Failure of the carrier to observe this high degree of care and extraordinary diligence renders it liable for any damage that may be sustained by its passengers. The instant case is an illustration of the exacting standard demanded by the law of common carriers: On 24 May 1988 CARLOS SINGSON and his cousin Crescentino

Tiongson bought from Cathay Pacific Airways, Ltd. (CATHAY), at its Metro Manila ticket outlet two (2) opendated, identically routed, round trip plane tickets for the purpose of spending their vacation in the United States. Each ticket consisted of six (6) flight coupons corresponding to this itinerary: flight coupon no. 1 Manila to Hongkong; flight coupon no. 2 - Hongkong to San Francisco; flight coupon no. 3 - San Francisco to Los Angeles; flight coupon no. 4 - Los Angeles back to San Francisco; flight coupon no. 5 - San Francisco to Hongkong; and, finally, flight coupon no. 6 - Hongkong to Manila. The procedure was that at the start of each leg of the trip a flight coupon corresponding to the particular sector of the travel would be removed from the ticket booklet so that at the end of the trip no more coupon would be left in the ticket booklet. On 6 June 1988 CARLOS SINGSON and Crescentino Tiongson left Manila on board CATHAY’s Flight No. 902. They arrived safely in Los Angeles and after staying there for about three (3) weeks they decided to return to the Philippines. On 30 June 1988 they arranged for their return flight at CATHAY’s Los Angeles Office and chose 1 July 1988, a Friday, for their departure. While Tiongson easily got a booking for the flight, SINGSON was not as lucky. It was discovered that his ticket booklet did not have flight coupon no. 5 corresponding to the San FranciscoHongkong leg of the trip. Instead, what was in his ticket was flight coupon no. 3 - San Francisco to Los Angeles which was supposed to have been used and removed from the ticket booklet. It was not until 6 July 1988 that CATHAY was finally able to arrange for his return flight to Manila. On 26 August 1988 SINGSON commenced an action for damages against CATHAY before the Regional Trial Court of Vigan, Ilocos Sur.[3] He claimed that he insisted on CATHAY’s confirmation of his return flight reservation because of very important and urgent business engagements in the Philippines. But CATHAY allegedly shrugged off his protestations and arrogantly directed him to go to San Francisco himself and do some investigations on the matter or purchase a new ticket subject to refund if it turned out that the missing coupon was still unused or subsisting. He remonstrated that it was the airline’s agent/representative who must have committed the mistake of tearing off the wrong flight coupon; that he did not have enough money to buy new tickets; and, CATHAY could conclude the investigation in a matter of minutes because of its facilities. CATHAY, allegedly in scornful insolence, simply dismissed him like an impertinent "brown pest." Thus he and his cousin Tiongson, who deferred his own flight to accompany him, were forced to leave for San Francisco on the night of 1 July 1988 to verify the missing ticket. CATHAY denied these allegations and averred that since petitioner was holding an "open-dated" ticket, which meant that he was not booked on a specific flight on a particular date, there was no contract of carriage yet existing such that CATHAY’s refusal to immediately book him could not be construed as breach of contract of carriage. Moreover, the

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coupon had been missing for almost a month hence CATHAY must first verify its status, i.e., whether the ticket was still valid and outstanding, before it could issue a replacement ticket to petitioner. For that purpose, it sent a request by telex on the same day, 1 July 1988, to its Hongkong Headquarters where such information could be retrieved.[4] However, due to the time difference between Los Angeles and Hongkong, no response from the Hongkong office was immediately received. Besides, since 2 and 3 July 1988 were a Saturday and a Sunday, respectively, and 4 July 1988 was an official holiday being U.S. Independence Day, the telex response of CATHAY Hongkong was not read until 5 July 1988. Lastly, CATHAY denied having required SINGSON to make a trip back to San Francisco; on the other hand, it was the latter who informed CATHAY that he was making a side trip to San Francisco. Hence, CATHAY advised him that the response of Hongkong would be copied in San Francisco so that he could conveniently verify thereat should he wish to.

death of a passenger and (b) it is proved that the carrier was guilty of fraud and bad faith even if death does not result x x x x In disallowing the trial court’s award of moral damages, the Court takes appropriate note of the necessity for the appellant’s verification of the status of the missing flight coupon as well as the justifiable delay thereto attendant x x x x Contrary to the appellee’s allegation that he was peremptorily refused confirmation of his flight, and arrogantly told to verify the missing flight coupon on his own, the record shows that the appellant adopted such measures as were reasonably required under the circumstances. Even the testimonies offered by the appellee and his witnesses collectively show no trace of fraud or bad faith as would justify the trial court’s award of moral damages.

The trial court rendered a decision in favor of petitioner herein holding that CATHAY was guilty of gross negligence amounting to malice and bad faith for which it was adjudged to pay petitioner P20,000.00 for actual damages with interest at the legal rate of twelve percent (12%) per annum from 26 August 1988 when the complaint was filed until fully paid, P500,000.00 for moral damages, P400,000.00 for exemplary damages, P100,000.00 for attorney’s fees, and, to pay the costs.

Petitioner's subsequent motion for reconsideration having been denied for lack of merit and for being pro forma he came to us for review. He claims that the trial court found CATHAY guilty of gross negligence amounting to malice and bad faith in: (a) detaching the wrong coupon; (b) using that error to deny confirmation of his return flight; and, (c) directing petitioner to prematurely return to San Francisco to verify his missing coupon. He also underscores the scornful and demeaning posture of CATHAY’s employees toward him. He argues that since findings of fact of the trial court are entitled to the highest degree of respect from the appellate courts, especially when they were supported by evidence, it was erroneous for the Court of Appeals to strike out the award of moral and exemplary damages as well as attorney’s fees allegedly for lack of basis.

On appeal by CATHAY, the Court of Appeals reversed the trial court’s finding that there was gross negligence amounting to bad faith or fraud and, accordingly, modified its judgment by deleting the awards for moral and exemplary damages, and the attorney’s fees as well. Reproduced hereunder are the pertinent portions of the decision of the appellate court[5] There is enough merit in this appeal to strike down the trial court’s award of moral and exemplary damages and attorney’s fees x x x x In this material respect, the appellant correctly underscores the fact that the appellee held an open dated ticket for his return flight from San Francisco to Manila via Hongkong and that, as a consequence, the latter was not actually confirmed on the July 1, 1988 flight or, for that matter, any of the appellant’s flights x x x x The appellant certainly committed no breach of contract of carriage when it refused the appellee the booking he requested on the said July 1, 1988 flight. As a "chance passenger," the latter had no automatic right to fly on that flight and on that date. Even assuming arguendo that a breach of contract of carriage may be attributed the appellant, the appellee’s travails were directly traceable to the mistake in detaching the San Francisco-Hongkong flight coupon of his plane ticket which led to the appellant’s refusal to honor his plane ticket. While that may constitute negligence on the part of the air carrier, the same cannot serve as basis for an award of moral damages. The rule is that moral damages are recoverable in a damage suit predicated upon a breach of contract of carriage only where (a) the mishap results in the

The basis for the award of moral damages discounted, there exists little or no reason to allow the exemplary damages and attorney’s fees adjudicated in favor of the appellee.

In its Comment, CATHAY firmly maintains that it did not breach its contract of carriage with petitioner. It argues that it is only when a passenger is confirmed on a particular flight and on a particular date specifically stated in his ticket that its refusal to board the passenger will result in a breach of contract. And even assuming that there was breach of contract, there was no fraud or bad faith on the part of CATHAY as to justify the award of moral and exemplary damages plus attorney’s fees in favor of petitioner. There are two (2) main issues that confront the Court: first, whether a breach of contract was committed by CATHAY when it failed to confirm the booking of petitioner for its 1 July 1988 flight; and, second, whether the carrier was liable not only for actual damages but also for moral and exemplary damages, and attorney’s fees for failing to book petitioner on his return flight to the Philippines. We find merit in the petition. CATHAY undoubtedly committed a breach of contract when it refused to confirm petitioner's flight reservation back to the Philippines on account of his missing flight coupon. Its contention that there was no contract of carriage that was breached because petitioner’s ticket was open-dated is untenable. To begin with, the round trip ticket issued by the carrier to the

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passenger was in itself a complete written contract by and between the carrier and the passenger. It had all the elements of a complete written contract, to wit: (a) the consent of the contracting parties manifested by the fact that the passenger agreed to be transported by the carrier to and from Los Angeles via San Francisco and Hongkong back to the Philippines, and the carrier’s acceptance to bring him to his destination and then back home; (b) cause or consideration, which was the fare paid by the passenger as stated in his ticket; and, (c) object, which was the transportation of the passenger from the place of departure to the place of destination and back, which are also stated in his ticket.[6] In fact, the contract of carriage in the instant case was already partially executed as the carrier complied with its obligation to transport the passenger to his destination, i.e., Los Angeles. Only the performance of the other half of the contract - which was to transport the passenger back to the Philippines - was left to be done Moreover, Timothy Remedios, CATHAY’s reservation and ticketing agent, unequivocally testified that petitioner indeed had reservations booked for travel Q: Were you able to grant what they wanted, if not, please state why? A: I was able to obtain a record of Mr. Singson’s computer profile from my flight reservations computer. I verified that Mr. Singson did indeed have reservations booked for travel: Los Angeles to San Francisco, San Francisco to Hongkong to Manila. I then proceeded to revalidate their tickets but was surprised to observe that Mr. Singson’s ticket did not contain a flight coupon for San Francisco to Hongkong. His ticket did, however, contain a flight coupon for San Francisco to Los Angeles which was supposed to have been utilized already, that is, supposed to have been removed by U.S. Air when he checked in San Francisco for his flight from San Francisco to Los Angeles[7] (underscoring supplied). Clearly therefore petitioner was not a mere "chance passenger with no superior right to be boarded on a specific flight," as erroneously claimed by CATHAY and sustained by the appellate court. Interestingly, it appears that CATHAY was responsible for the loss of the ticket. One of two (2) things may be surmised from the circumstances of this case: first, US Air (CATHAY’s agent) had mistakenly detached the San Francisco-Hongkong flight coupon thinking that it was the San Francisco-Los Angeles portion; or, second, petitioner’s booklet of tickets did not from issuance include a San Francisco-Hongkong flight coupon. In either case, the loss of the coupon was attributable to the negligence of CATHAY’s agents and was the proximate cause of the nonconfirmation of petitioner's return flight on 1 July 1988. It virtually prevented petitioner from demanding the fulfillment of the carrier’s obligations under the contract. Had CATHAY’s agents been diligent in double checking the coupons they were supposed to detach from the passengers’ tickets, there would have been no reason for CATHAY not to confirm petitioner’s booking as exemplified in the case of his cousin and flight companion

Tiongson whose ticket booklet was found to be in order. Hence, to hold that no contractual breach was committed by CATHAY and totally absolve it from any liability would in effect put a premium on the negligence of its agents, contrary to the policy of the law requiring common carriers to exercise extraordinary diligence. With regard to the second issue, we are of the firm view that the appellate court seriously erred in disallowing moral and exemplary damages. Although the rule is that moral damages predicated upon a breach of contract of carriage may only be recoverable in instances where the mishap results in the death of a passenger,[8] or where the carrier is guilty of fraud or bad faith,[9] there are situations where the negligence of the carrier is so gross and reckless as to virtually amount to bad faith, in which case, the passenger likewise becomes entitled to recover moral damages.[10] In the instant case, the following circumstances attended the breach of contract by CATHAY, to wit: First, as heretofore discussed, the ticket coupon corresponding to the San Francisco-Hongkong flight was missing either due to the negligence of CATHAY’s agents in improperly detaching petitioner’s flight coupons or failing to issue the flight coupon for San Francisco-Hongkong in the ticket booklet; second, petitioner and his cousin presented their respective ticket booklets bearing identical itineraries to prove that there had been a mistake in removing the coupons of petitioner. Furthermore, CATHAY's Timothy Remedios testified that he was able to ascertain from his flight reservations computer that petitioner indeed had reservations booked for travel on their return flight, but CATHAY apparently ignored the clear evidential import of these facts and peremptorily refused to confirm petitioner’s flight - while ready to confirm his traveling companion’s identically routed plane ticket - on the lame and flimsy excuse that the existence and validity of the missing ticket must first be verified; third, petitioner was directed by CATHAY to go to its San Francisco office and make the necessary verification concerning the lost coupon himself. This, notwithstanding the fact that CATHAY was responsible for the loss of the ticket and had all the necessary equipment, e.g., computers, fax and telex machines and telephones which could facilitate the verification right there at its Los Angeles Office. CATHAY’s allegation that it never required petitioner to go to San Francisco is unpersuasive. Petitioner categorically testified that a lady employee of CATHAY in Los Angeles "insisted that we take the matter (up) with their office in San Francisco."[11] In fact, it even appeared from the evidence that it was the San Francisco office which arranged for his return flight to the Philippines and not the Los Angeles office.[12] Moreover, due deference must be accorded the trial court’s finding that petitioner was indeed sent by CATHAY to its San Francisco office to verify. For good and sound reasons, this Court has consistently affirmed that review of the findings of fact of the trial court is not a function that appellate courts ordinarily undertake, such findings being as a rule binding and conclusive.[13] It is true that certain exceptions have become familiar. However, nothing in the records warrants a review based

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on any of these well-recognized exceptions; and, fourth, private respondent endeavored to show that it undertook the verification of the lost coupon by sending a telex to its Hongkong Office. It likewise tried to justify the five (5) days delay in completing the verification process, claiming that it was due to the time difference between Hongkong and Los Angeles and the coinciding non-working days in the United States. The following dialogue between Consul Cortez and Cathay's reservation and ticketing agent Timothy Remedios can be enlightening Q: What official action did you in turn take? A: While Mr. Singson was still in my office I sent a telex out at approximately 10:00 a.m. on 30 June 1988 to Hongkong Accounting Office and copied San Francisco ticket office since Mr. Singson advised he might not be able to return to my office but would be going to San Francisco. 10:00 a.m. on 30 June 1988 in Los Angeles is however 2:00 a.m. on 1 July 1988 in Hongkong and since office hours start at 9:00 a.m. in Hongkong, no reply was instantly sent back to me. The response was sent out from Hongkong on 2 July 1988 at approximately 12:00 noon (Hongkong time) and was received immediately by the Los Angeles telex machine. However, 12:00 noon 2 July 1988 Hongkong time was 8:00 p.m. 1 July 1988 in Los Angeles where office hours close at 5:00 p.m. The Los Angeles office was closed on 2 and 3 July 1988 being Saturday and Sunday and also closed 4 July 1988 for a public holiday (Independence day) so the reply from Hongkong was not read until 5 July 1988, 8:30 Los Angeles time.[14] But far from helping private respondent’s cause, the foregoing testimony only betrayed another act of negligence committed by its employees in Hongkong. It will be observed that CATHAY’s Hongkong Office received the telex from Los Angeles on 1 July 1988 at approximately 2:00 a.m. (Hongkong time) and sent out their response only on 2 July 1988 at 12:00 noon. In spite of the fact that they had access to all records and facilities that would enable them to verify in a matter of minutes, it strangely took them more than twenty-four (24) hours to complete the verification process and to send their reply to Los Angeles. The inevitable conclusion is that CATHAY’s Hongkong personnel never acted promptly and timely on the request for verification. Besides, to be stranded for five (5) days in a foreign land because of an air carrier’s negligence is too exasperating an experience for a plane passenger. For sure, petitioner underwent profound distress and anxiety, not to mention the worries brought about by the thought that he did not have enough money to sustain himself, and the embarrassment of having been forced to seek the generosity of relatives and friends.

independent acts of negligence above-enumerated. Taken together, they indubitably signify more than ordinary inadvertence or inattention and thus constitute a radical departure from the extraordinary standard of care required of common carriers. Put differently, these circumstances reflect the carrier’s utter lack of care and sensitivity to the needs of its passengers, clearly constitutive of gross negligence, recklessness and wanton disregard of the rights of the latter, acts evidently indistinguishable or no different from fraud, malice and bad faith. As the rule now stands, where in breaching the contract of carriage the defendant airline is shown to have acted fraudulently, with malice or in bad faith, the award of moral and exemplary damages, in addition to actual damages, is proper.[15] However, the P500,000.00 moral damages and P400,000.00 exemplary damages awarded by the trial court have to be reduced. The well-entrenched principle is that the grant of moral damages depends upon the discretion of the court based on the circumstances of each case.[16] This discretion is limited by the principle that the "amount awarded should not be palpably and scandalously excessive" as to indicate that it was the result of prejudice or corruption on the part of the trial court.[17] Damages are not intended to enrich the complainant at the expense of the defendant. They are awarded only to alleviate the moral suffering that the injured party had undergone by reason of the defendant's culpable action.[18] There is no hard-andfast rule in the determination of what would be a fair amount of moral damages since each case must be governed by its own peculiar facts. In the instant case, the injury suffered by petitioner is not so serious or extensive as to warrant an award amounting to P900,000.00. The assessment of P200,000.00 as moral damages and P50,000.00 as exemplary damages in his favor is, in our view, reasonable and realistic. On the issue of actual damages, we agree with the Court of Appeals that the amount of P20,000.00 granted by the trial court to petitioner should not be disturbed. Petitioner categorically testified that he incurred the amount during the period of his delay in departing from the United States Q: Will you kindly tell the Court what expenses if any did you incur for these x x x days from July 1 until you were able to leave on July 6, 1988? A: Well, it is true we stayed in the house of my nephew but still we had to spend for our food and I left him some around five hundred dollars for our stay for around five days. Q: How about your meals? A: For our meals, we have to eat outside.

Anent the accusation that private respondent’s personnel were rude and arrogant, petitioner failed to adduce sufficient evidence to substantiate his claim. Nonetheless, such fact will not in any manner affect the disposition of this case. Private respondent’s mistake in removing the wrong coupon was compounded by several other

Q: Will you tell, more or less, how much you spent for your meals? xxxx

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A: For every meal we spend around thirty dollars each.

Business Class has priority for upgrading to First Class if the Business Class Section is fully booked.

Q: And this is for how many days? A: From July 1, up to the 6th in the morning, sir. Q: So more or less how many in pesos did you spend for this period of waiting from July 1 to 6?

Respondents-spouses Dr. Daniel Earnshaw Vazquez and Maria Luisa Madrigal Vazquez are frequent flyers of Cathay and are Gold Card members of its Marco Polo Club. On 24 September 1996, the Vazquezes, together with their maid and two friends Pacita Cruz and Josefina Vergel de Dios, went to Hongkong for pleasure and business.

A: Twenty thousand pesos, sir [19] In the absence of any countervailing evidence from private respondent, and in view of the negligence attributable to it, the foregoing testimony suffices as basis for actual damages as determined by the court a quo. As regards attorney's fees, they may be awarded when the defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest. It was therefore erroneous for the Court of Appeals to delete the award made by the trial court; consequently, petitioner should be awarded attorney's fees and the amount of P25,000.00, instead of P100,000.00 earlier awarded, may be considered rational, fair and reasonable. WHEREFORE, the petition is GRANTED and the 14 July 1994 Decision of the Court of Appeals is REVERSED. Private respondent is ordered to pay petitioner P20,000.00 for actual damages as fixed by the trial court, plus P200,000.00 for moral damages, P50,000.00 for exemplary damages and P25,000.00 for attorney's fees. No costs. SO ORDERED. Cathay Pacific v. Vazquez Mar 14, 2003, GR#150843 [G.R. No. 150843. March 14, 2003] CATHAY PACIFIC AIRWAYS, LTD., petitioner, vs. SPOUSES DANIEL VAZQUEZ and MARIA LUISA MADRIGAL VAZQUEZ, respondents. DECISION DAVIDE, JR., C.J.: Is an involuntary upgrading of an airline passenger’s accommodation from one class to a more superior class at no extra cost a breach of contract of carriage that would entitle the passenger to an award of damages? This is a novel question that has to be resolved in this case. The facts in this case, as found by the Court of Appeals and adopted by petitioner Cathay Pacific Airways, Ltd., (hereinafter Cathay) are as follows: Cathay is a common carrier engaged in the business of transporting passengers and goods by air. Among the many routes it services is the Manila-Hongkong-Manila course. As part of its marketing strategy, Cathay accords its frequent flyers membership in its Marco Polo Club. The members enjoy several privileges, such as priority for upgrading of booking without any extra charge whenever an opportunity arises. Thus, a frequent flyer booked in the

For their return flight to Manila on 28 September 1996, they were booked on Cathay’s Flight CX-905, with departure time at 9:20 p.m. Two hours before their time of departure, the Vazquezes and their companions checked in their luggage at Cathay’s check-in counter at Kai Tak Airport and were given their respective boarding passes, to wit, Business Class boarding passes for the Vazquezes and their two friends, and Economy Class for their maid. They then proceeded to the Business Class passenger lounge. When boarding time was announced, the Vazquezes and their two friends went to Departure Gate No. 28, which was designated for Business Class passengers. Dr. Vazquez presented his boarding pass to the ground stewardess, who in turn inserted it into an electronic machine reader or computer at the gate. The ground stewardess was assisted by a ground attendant by the name of Clara Lai Han Chiu. When Ms. Chiu glanced at the computer monitor, she saw a message that there was a “seat change” from Business Class to First Class for the Vazquezes. Ms. Chiu approached Dr. Vazquez and told him that the Vazquezes’ accommodations were upgraded to First Class. Dr. Vazquez refused the upgrade, reasoning that it would not look nice for them as hosts to travel in First Class and their guests, in the Business Class; and moreover, they were going to discuss business matters during the flight. He also told Ms. Chiu that she could have other passengers instead transferred to the First Class Section. Taken aback by the refusal for upgrading, Ms. Chiu consulted her supervisor, who told her to handle the situation and convince the Vazquezes to accept the upgrading. Ms. Chiu informed the latter that the Business Class was fully booked, and that since they were Marco Polo Club members they had the priority to be upgraded to the First Class. Dr. Vazquez continued to refuse, so Ms. Chiu told them that if they would not avail themselves of the privilege, they would not be allowed to take the flight. Eventually, after talking to his two friends, Dr. Vazquez gave in. He and Mrs. Vazquez then proceeded to the First Class Cabin. Upon their return to Manila, the Vazquezes, in a letter of 2 October 1996 addressed to Cathay’s Country Manager, demanded that they be indemnified in the amount of P1million for the “humiliation and embarrassment” caused by its employees. They also demanded “a written apology from the management of Cathay, preferably a responsible person with a rank of no less than the Country Manager, as well as the apology from Ms. Chiu” within fifteen days from receipt of the letter.

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In his reply of 14 October 1996, Mr. Larry Yuen, the assistant to Cathay’s Country Manager Argus Guy Robson, informed the Vazquezes that Cathay would investigate the incident and get back to them within a week’s time. On 8 November 1996, after Cathay’s failure to give them any feedback within its self-imposed deadline, the Vazquezes instituted before the Regional Trial Court of Makati City an action for damages against Cathay, praying for the payment to each of them the amounts of P250,000 as temperate damages; P500,000 as moral damages; P500,000 as exemplary or corrective damages; and P250,000 as attorney’s fees. In their complaint, the Vazquezes alleged that when they informed Ms. Chiu that they preferred to stay in Business Class, Ms. Chiu “obstinately, uncompromisingly and in a loud, discourteous and harsh voice threatened” that they could not board and leave with the flight unless they go to First Class, since the Business Class was overbooked. Ms. Chiu’s loud and stringent shouting annoyed, embarrassed, and humiliated them because the incident was witnessed by all the other passengers waiting for boarding. They also claimed that they were unjustifiably delayed to board the plane, and when they were finally permitted to get into the aircraft, the forward storage compartment was already full. A flight stewardess instructed Dr. Vazquez to put his roll-on luggage in the overhead storage compartment. Because he was not assisted by any of the crew in putting up his luggage, his bilateral carpal tunnel syndrome was aggravated, causing him extreme pain on his arm and wrist. The Vazquezes also averred that they “belong to the uppermost and absolutely top elite of both Philippine Society and the Philippine financial community, [and that] they were among the wealthiest persons in the Philippine[s].” In its answer, Cathay alleged that it is a practice among commercial airlines to upgrade passengers to the next better class of accommodation, whenever an opportunity arises, such as when a certain section is fully booked. Priority in upgrading is given to its frequent flyers, who are considered favored passengers like the Vazquezes. Thus, when the Business Class Section of Flight CX-905 was fully booked, Cathay’s computer sorted out the names of favored passengers for involuntary upgrading to First Class. When Ms. Chiu informed the Vazquezes that they were upgraded to First Class, Dr. Vazquez refused. He then stood at the entrance of the boarding apron, blocking the queue of passengers from boarding the plane, which inconvenienced other passengers. He shouted that it was impossible for him and his wife to be upgraded without his two friends who were traveling with them. Because of Dr. Vazquez’s outburst, Ms. Chiu thought of upgrading the traveling companions of the Vazquezes. But when she checked the computer, she learned that the Vazquezes’ companions did not have priority for upgrading. She then tried to book the Vazquezes again to their original seats. However, since the Business Class Section was already fully booked, she politely informed Dr. Vazquez of such fact and explained that the upgrading was in recognition of their status as Cathay’s valued passengers. Finally, after talking to their

guests, the Vazquezes eventually decided to take the First Class accommodation. Cathay also asserted that its employees at the Hong Kong airport acted in good faith in dealing with the Vazquezes; none of them shouted, humiliated, embarrassed, or committed any act of disrespect against them (the Vazquezes). Assuming that there was indeed a breach of contractual obligation, Cathay acted in good faith, which negates any basis for their claim for temperate, moral, and exemplary damages and attorney’s fees. Hence, it prayed for the dismissal of the complaint and for payment of P100,000 for exemplary damages and P300,000 as attorney’s fees and litigation expenses. During the trial, Dr. Vazquez testified to support the allegations in the complaint. His testimony was corroborated by his two friends who were with him at the time of the incident, namely, Pacita G. Cruz and Josefina Vergel de Dios. For its part, Cathay presented documentary evidence and the testimonies of Mr. Yuen; Ms. Chiu; Norma Barrientos, Comptroller of its retained counsel; and Mr. Robson. Yuen and Robson testified on Cathay’s policy of upgrading the seat accommodation of its Marco Polo Club members when an opportunity arises. The upgrading of the Vazquezes to First Class was done in good faith; in fact, the First Class Section is definitely much better than the Business Class in terms of comfort, quality of food, and service from the cabin crew. They also testified that overbooking is a widely accepted practice in the airline industry and is in accordance with the International Air Transport Association (IATA) regulations. Airlines overbook because a lot of passengers do not show up for their flight. With respect to Flight CX-905, there was no overall overbooking to a degree that a passenger was bumped off or downgraded. Yuen and Robson also stated that the demand letter of the Vazquezes was immediately acted upon. Reports were gathered from their office in Hong Kong and immediately forwarded to their counsel Atty. Remollo for legal advice. However, Atty. Remollo begged off because his services were likewise retained by the Vazquezes; nonetheless, he undertook to solve the problem in behalf of Cathay. But nothing happened until Cathay received a copy of the complaint in this case. For her part, Ms. Chiu denied that she shouted or used foul or impolite language against the Vazquezes. Ms. Barrientos testified on the amount of attorney’s fees and other litigation expenses, such as those for the taking of the depositions of Yuen and Chiu. In its decision[1] of 19 October 1998, the trial court found for the Vazquezes and decreed as follows: WHEREFORE, finding preponderance of evidence to sustain the instant complaint, judgment is hereby rendered in favor of plaintiffs Vazquez spouses and against defendant Cathay Pacific Airways, Ltd., ordering the latter to pay each plaintiff the following: a) Nominal damages in the amount of P100,000.00 for each plaintiff;

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b) Moral damages in the amount of P2,000,000.00 for each plaintiff; c) Exemplary damages in the amount of P5,000,000.00 for each plaintiff; d) Attorney’s fees and expenses of litigation in the amount of P1,000,000.00 for each plaintiff; and e)

Costs of suit.

SO ORDERED. According to the trial court, Cathay offers various classes of seats from which passengers are allowed to choose regardless of their reasons or motives, whether it be due to budgetary constraints or whim. The choice imposes a clear obligation on Cathay to transport the passengers in the class chosen by them. The carrier cannot, without exposing itself to liability, force a passenger to involuntarily change his choice. The upgrading of the Vazquezes’ accommodation over and above their vehement objections was due to the overbooking of the Business Class. It was a pretext to pack as many passengers as possible into the plane to maximize Cathay’s revenues. Cathay’s actuations in this case displayed deceit, gross negligence, and bad faith, which entitled the Vazquezes to awards for damages. On appeal by the petitioners, the Court of Appeals, in its decision of 24 July 2001,[2] deleted the award for exemplary damages; and it reduced the awards for moral and nominal damages for each of the Vazquezes to P250,000 and P50,000, respectively, and the attorney’s fees and litigation expenses to P50,000 for both of them. The Court of Appeals ratiocinated that by upgrading the Vazquezes to First Class, Cathay novated the contract of carriage without the former’s consent. There was a breach of contract not because Cathay overbooked the Business Class Section of Flight CX-905 but because the latter pushed through with the upgrading despite the objections of the Vazquezes. However, the Court of Appeals was not convinced that Ms. Chiu shouted at, or meant to be discourteous to, Dr. Vazquez, although it might seemed that way to the latter, who was a member of the elite in Philippine society and was not therefore used to being harangued by anybody. Ms. Chiu was a Hong Kong Chinese whose fractured Chinese was difficult to understand and whose manner of speaking might sound harsh or shrill to Filipinos because of cultural differences. But the Court of Appeals did not find her to have acted with deliberate malice, deceit, gross negligence, or bad faith. If at all, she was negligent in not offering the First Class accommodations to other passengers. Neither can the flight stewardess in the First Class Cabin be said to have been in bad faith when she failed to assist Dr. Vazquez in lifting his baggage into the overhead storage bin. There is no proof that he asked for help and was refused even after saying that he was suffering from “bilateral carpal tunnel syndrome.” Anent the delay of Yuen in responding

to the demand letter of the Vazquezes, the Court of Appeals found it to have been sufficiently explained. The Vazquezes and Cathay separately filed motions for a reconsideration of the decision, both of which were denied by the Court of Appeals. Cathay seasonably filed with us this petition in this case. Cathay maintains that the award for moral damages has no basis, since the Court of Appeals found that there was no “wanton, fraudulent, reckless and oppressive” display of manners on the part of its personnel; and that the breach of contract was not attended by fraud, malice, or bad faith. If any damage had been suffered by the Vazquezes, it was damnum absque injuria, which is damage without injury, damage or injury inflicted without injustice, loss or damage without violation of a legal right, or a wrong done to a man for which the law provides no remedy. Cathay also invokes our decision in United Airlines, Inc. v. Court of Appeals[3] where we recognized that, in accordance with the Civil Aeronautics Board’s Economic Regulation No. 7, as amended, an overbooking that does not exceed ten percent cannot be considered deliberate and done in bad faith. We thus deleted in that case the awards for moral and exemplary damages, as well as attorney’s fees, for lack of proof of overbooking exceeding ten percent or of bad faith on the part of the airline carrier. On the other hand, the Vazquezes assert that the Court of Appeals was correct in granting awards for moral and nominal damages and attorney’s fees in view of the breach of contract committed by Cathay for transferring them from the Business Class to First Class Section without prior notice or consent and over their vigorous objection. They likewise argue that the issuance of passenger tickets more than the seating capacity of each section of the plane is in itself fraudulent, malicious and tainted with bad faith. The key issues for our consideration are whether (1) by upgrading the seat accommodation of the Vazquezes from Business Class to First Class Cathay breached its contract of carriage with the Vazquezes; (2) the upgrading was tainted with fraud or bad faith; and (3) the Vazquezes are entitled to damages. We resolve the first issue in the affirmative. A contract is a meeting of minds between two persons whereby one agrees to give something or render some service to another for a consideration. There is no contract unless the following requisites concur: (1) consent of the contracting parties; (2) an object certain which is the subject of the contract; and (3) the cause of the obligation which is established.[4] Undoubtedly, a contract of carriage existed between Cathay and the Vazquezes. They voluntarily and freely gave their consent to an agreement whose object was the transportation of the Vazquezes from Manila to Hong Kong and back to Manila, with seats in the Business Class Section of the aircraft, and whose cause or consideration was the fare paid by the Vazquezes to Cathay.

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The only problem is the legal effect of the upgrading of the seat accommodation of the Vazquezes. Did it constitute a breach of contract? Breach of contract is defined as the “failure without legal reason to comply with the terms of a contract.”[5] It is also defined as the “[f]ailure, without legal excuse, to perform any promise which forms the whole or part of the contract.”[6] In previous cases, the breach of contract of carriage consisted in either the bumping off of a passenger with confirmed reservation or the downgrading of a passenger’s seat accommodation from one class to a lower class. In this case, what happened was the reverse. The contract between the parties was for Cathay to transport the Vazquezes to Manila on a Business Class accommodation in Flight CX905. After checking-in their luggage at the Kai Tak Airport in Hong Kong, the Vazquezes were given boarding cards indicating their seat assignments in the Business Class Section. However, during the boarding time, when the Vazquezes presented their boarding passes, they were informed that they had a seat change from Business Class to First Class. It turned out that the Business Class was overbooked in that there were more passengers than the number of seats. Thus, the seat assignments of the Vazquezes were given to waitlisted passengers, and the Vazquezes, being members of the Marco Polo Club, were upgraded from Business Class to First Class. We note that in all their pleadings, the Vazquezes never denied that they were members of Cathay’s Marco Polo Club. They knew that as members of the Club, they had priority for upgrading of their seat accommodation at no extra cost when an opportunity arises. But, just like other privileges, such priority could be waived. The Vazquezes should have been consulted first whether they wanted to avail themselves of the privilege or would consent to a change of seat accommodation before their seat assignments were given to other passengers. Normally, one would appreciate and accept an upgrading, for it would mean a better accommodation. But, whatever their reason was and however odd it might be, the Vazquezes had every right to decline the upgrade and insist on the Business Class accommodation they had booked for and which was designated in their boarding passes. They clearly waived their priority or preference when they asked that other passengers be given the upgrade. It should not have been imposed on them over their vehement objection. By insisting on the upgrade, Cathay breached its contract of carriage with the Vazquezes. We are not, however, convinced that the upgrading or the breach of contract was attended by fraud or bad faith. Thus, we resolve the second issue in the negative. Bad faith and fraud are allegations of fact that demand clear and convincing proof. They are serious accusations that can be so conveniently and casually invoked, and that is why they are never presumed. They amount to mere slogans or mudslinging unless convincingly substantiated by whoever is alleging them.

Fraud has been defined to include an inducement through insidious machination. Insidious machination refers to a deceitful scheme or plot with an evil or devious purpose. Deceit exists where the party, with intent to deceive, conceals or omits to state material facts and, by reason of such omission or concealment, the other party was induced to give consent that would not otherwise have been given. [7] Bad faith does not simply connote bad judgment or negligence; it imports a dishonest purpose or some moral obliquity and conscious doing of a wrong, a breach of a known duty through some motive or interest or ill will that partakes of the nature of fraud.[8] We find no persuasive proof of fraud or bad faith in this case. The Vazquezes were not induced to agree to the upgrading through insidious words or deceitful machination or through willful concealment of material facts. Upon boarding, Ms. Chiu told the Vazquezes that their accommodations were upgraded to First Class in view of their being Gold Card members of Cathay’s Marco Polo Club. She was honest in telling them that their seats were already given to other passengers and the Business Class Section was fully booked. Ms. Chiu might have failed to consider the remedy of offering the First Class seats to other passengers. But, we find no bad faith in her failure to do so, even if that amounted to an exercise of poor judgment. Neither was the transfer of the Vazquezes effected for some evil or devious purpose. As testified to by Mr. Robson, the First Class Section is better than the Business Class Section in terms of comfort, quality of food, and service from the cabin crew; thus, the difference in fare between the First Class and Business Class at that time was $250.[9] Needless to state, an upgrading is for the better condition and, definitely, for the benefit of the passenger. We are not persuaded by the Vazquezes’ argument that the overbooking of the Business Class Section constituted bad faith on the part of Cathay. Section 3 of the Economic Regulation No. 7 of the Civil Aeronautics Board, as amended, provides: Sec 3. Scope. – This regulation shall apply to every Philippine and foreign air carrier with respect to its operation of flights or portions of flights originating from or terminating at, or serving a point within the territory of the Republic of the Philippines insofar as it denies boarding to a passenger on a flight, or portion of a flight inside or outside the Philippines, for which he holds confirmed reserved space. Furthermore, this Regulation is designed to cover only honest mistakes on the part of the carriers and excludes deliberate and willful acts of non-accommodation. Provided, however, that overbooking not exceeding 10% of the seating capacity of the aircraft shall not be considered as a deliberate and willful act of non-accommodation. It is clear from this section that an overbooking that does not exceed ten percent is not considered deliberate and

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therefore does not amount to bad faith.[10] Here, while there was admittedly an overbooking of the Business Class, there was no evidence of overbooking of the plane beyond ten percent, and no passenger was ever bumped off or was refused to board the aircraft. Now we come to the third issue on damages. The Court of Appeals awarded each of the Vazquezes moral damages in the amount of P250,000. Article 2220 of the Civil Code provides: Article 2220. Willful injury to property may be a legal ground for awarding moral damages if the court should find that, under the circumstances, such damages are justly due. The same rule applies to breaches of contract where the defendant acted fraudulently or in bad faith. Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury. Although incapable of pecuniary computation, moral damages may be recovered if they are the proximate result of the defendant’s wrongful act or omission.[11] Thus, case law establishes the following requisites for the award of moral damages: (1) there must be an injury clearly sustained by the claimant, whether physical, mental or psychological; (2) there must be a culpable act or omission factually established; (3) the wrongful act or omission of the defendant is the proximate cause of the injury sustained by the claimant; and (4) the award for damages is predicated on any of the cases stated in Article 2219 of the Civil Code.[12] Moral damages predicated upon a breach of contract of carriage may only be recoverable in instances where the carrier is guilty of fraud or bad faith or where the mishap resulted in the death of a passenger.[13] Where in breaching the contract of carriage the airline is not shown to have acted fraudulently or in bad faith, liability for damages is limited to the natural and probable consequences of the breach of the obligation which the parties had foreseen or could have reasonably foreseen. In such a case the liability does not include moral and exemplary damages.[14] In this case, we have ruled that the breach of contract of carriage, which consisted in the involuntary upgrading of the Vazquezes’ seat accommodation, was not attended by fraud or bad faith. The Court of Appeals’ award of moral damages has, therefore, no leg to stand on. The deletion of the award for exemplary damages by the Court of Appeals is correct. It is a requisite in the grant of exemplary damages that the act of the offender must be accompanied by bad faith or done in wanton, fraudulent or malevolent manner.[15] Such requisite is absent in this case. Moreover, to be entitled thereto the claimant must first establish his right to moral, temperate, or compensatory damages.[16] Since the Vazquezes are not entitled to any of these damages, the award for exemplary damages has no legal basis. And where the awards for

moral and exemplary damages are eliminated, so must the award for attorney’s fees.[17] The most that can be adjudged in favor of the Vazquezes for Cathay’s breach of contract is an award for nominal damages under Article 2221 of the Civil Code, which reads as follows: Article 2221 of the Civil Code provides: Article 2221. Nominal damages are adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered by him. Worth noting is the fact that in Cathay’s Memorandum filed with this Court, it prayed only for the deletion of the award for moral damages. It deferred to the Court of Appeals’ discretion in awarding nominal damages; thus: As far as the award of nominal damages is concerned, petitioner respectfully defers to the Honorable Court of Appeals’ discretion. Aware as it is that somehow, due to the resistance of respondents-spouses to the normallyappreciated gesture of petitioner to upgrade their accommodations, petitioner may have disturbed the respondents-spouses’ wish to be with their companions (who traveled to Hong Kong with them) at the Business Class on their flight to Manila. Petitioner regrets that in its desire to provide the respondents-spouses with additional amenities for the one and one-half (1 1/2) hour flight to Manila, unintended tension ensued.[18] Nonetheless, considering that the breach was intended to give more benefit and advantage to the Vazquezes by upgrading their Business Class accommodation to First Class because of their valued status as Marco Polo members, we reduce the award for nominal damages to P5,000. Before writing finis to this decision, we find it well-worth to quote the apt observation of the Court of Appeals regarding the awards adjudged by the trial court: We are not amused but alarmed at the lower court’s unbelievable alacrity, bordering on the scandalous, to award excessive amounts as damages. In their complaint, appellees asked for P1 million as moral damages but the lower court awarded P4 million; they asked for P500,000.00 as exemplary damages but the lower court cavalierly awarded a whooping P10 million; they asked for P250,000.00 as attorney’s fees but were awarded P2 million; they did not ask for nominal damages but were awarded P200,000.00. It is as if the lower court went on a rampage, and why it acted that way is beyond all tests of reason. In fact the excessiveness of the total award invites the suspicion that it was the result of “prejudice or corruption on the part of the trial court.”

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The presiding judge of the lower court is enjoined to hearken to the Supreme Court’s admonition in Singson vs. CA (282 SCRA 149 [1997]), where it said: The well-entrenched principle is that the grant of moral damages depends upon the discretion of the court based on the circumstances of each case. This discretion is limited by the principle that the amount awarded should not be palpably and scandalously excessive as to indicate that it was the result of prejudice or corruption on the part of the trial court…. and in Alitalia Airways vs. CA (187 SCRA 763 [1990], where it was held: Nonetheless, we agree with the injunction expressed by the Court of Appeals that passengers must not prey on international airlines for damage awards, like “trophies in a safari.” After all neither the social standing nor prestige of the passenger should determine the extent to which he would suffer because of a wrong done, since the dignity affronted in the individual is a quality inherent in him and not conferred by these social indicators. [19] We adopt as our own this observation of the Court of Appeals. WHEREFORE, the instant petition is hereby partly GRANTED. The Decision of the Court of Appeals of 24 July 2001 in CA-G.R. CV No. 63339 is hereby MODIFIED, and as modified, the awards for moral damages and attorney’s fees are set aside and deleted, and the award for nominal damages is reduced to P5,000. No pronouncement on costs. SO ORDERED. Singapore Airlines v. Andion Dec 10, 2003, GR142305 [G.R. No. 142305. December 10, 2003] SINGAPORE AIRLINES LIMITED, ANDION FERNANDEZ, respondent. DECISION CALLEJO, SR., J.:

petitioner,

vs.

This is a petition for review on certiorari assailing the Decision[1] of the Court of Appeals which affirmed in toto the decision[2] of the Regional Trial Court of Pasig City, Branch 164 in Civil Case No. 60985 filed by the respondent for damages. The Case for the Respondent Respondent Andion Fernandez is an acclaimed soprano here in the Philippines and abroad. At the time of the incident, she was availing an educational grant from the Federal Republic of Germany, pursuing a Master’s Degree in Music majoring in Voice.[3]

engagement, an airline passage ticket was purchased from petitioner Singapore Airlines which would transport her to Manila from Frankfurt, Germany on January 28, 1991. From Manila, she would proceed to Malaysia on the next day.[4] It was necessary for the respondent to pass by Manila in order to gather her wardrobe; and to rehearse and coordinate with her pianist her repertoire for the aforesaid performance. The petitioner issued the respondent a Singapore Airlines ticket for Flight No. SQ 27, leaving Frankfurt, Germany on January 27, 1991 bound for Singapore with onward connections from Singapore to Manila. Flight No. SQ 27 was scheduled to leave Frankfurt at 1:45 in the afternoon of January 27, 1991, arriving at Singapore at 8:50 in the morning of January 28, 1991. The connecting flight from Singapore to Manila, Flight No. SQ 72, was leaving Singapore at 11:00 in the morning of January 28, 1991, arriving in Manila at 2:20 in the afternoon of the same day. [5] On January 27, 1991, Flight No. SQ 27 left Frankfurt but arrived in Singapore two hours late or at about 11:00 in the morning of January 28, 1991. By then, the aircraft bound for Manila had left as scheduled, leaving the respondent and about 25 other passengers stranded in the Changi Airport in Singapore.[6] Upon disembarkation at Singapore, the respondent approached the transit counter who referred her to the nightstop counter and told the lady employee thereat that it was important for her to reach Manila on that day, January 28, 1991. The lady employee told her that there were no more flights to Manila for that day and that respondent had no choice but to stay in Singapore. Upon respondent’s persistence, she was told that she can actually fly to Hong Kong going to Manila but since her ticket was nontransferable, she would have to pay for the ticket. The respondent could not accept the offer because she had no money to pay for it.[7] Her pleas for the respondent to make arrangements to transport her to Manila were unheeded.[8] The respondent then requested the lady employee to use their phone to make a call to Manila. Over the employees’ reluctance, the respondent telephoned her mother to inform the latter that she missed the connecting flight. The respondent was able to contact a family friend who picked her up from the airport for her overnight stay in Singapore. [9] The next day, after being brought back to the airport, the respondent proceeded to petitioner’s counter which says: “Immediate Attention To Passengers with Immediate Booking.” There were four or five passengers in line. The respondent approached petitioner’s male employee at the counter to make arrangements for immediate booking only to be told: “Can’t you see I am doing something.” She explained her predicament but the male employee uncaringly retorted: “It’s your problem, not ours.”[10]

She was invited to sing before the King and Queen of Malaysia on February 3 and 4, 1991. For this singing

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The respondent never made it to Manila and was forced to take a direct flight from Singapore to Malaysia on January 29, 1991, through the efforts of her mother and travel agency in Manila. Her mother also had to travel to Malaysia bringing with her respondent’s wardrobe and personal things needed for the performance that caused them to incur an expense of about P50,000.[11]

II

As a result of this incident, the respondent’s performance before the Royal Family of Malaysia was below par. Because of the rude and unkind treatment she received from the petitioner’s personnel in Singapore, the respondent was engulfed with fear, anxiety, humiliation and embarrassment causing her to suffer mental fatigue and skin rashes. She was thereby compelled to seek immediate medical attention upon her return to Manila for “acute urticaria.”[12]

THE HONORABLE COURT OF APPEALS ERRED IN DISMISSING THE PETITIONER’S COUNTERCLAIMS. [15]

On June 15, 1993, the RTC rendered a decision with the following dispositive portion: ACCORDINGLY and as prayed for, defendant Singapore Airlines is ordered to pay herein plaintiff Andion H. Fernandez the sum of: 1. FIFTY THOUSAND (P50,000.00) PESOS as compensatory or actual damages; 2. TWO HUNDRED and FIFTY THOUSAND (P250,000.00) PESOS as moral damages considering plaintiff’s professional standing in the field of culture at home and abroad; 3. ONE HUNDRED THOUSAND (P100,000.00) PESOS as exemplary damages; 4. SEVENTY-FIVE THOUSAND (P75,000.00) PESOS as attorney’s fees; and 5.

To pay the costs of suit.

SO ORDERED.[13] The petitioner appealed the decision to the Court of Appeals. On June 10, 1998, the CA promulgated the assailed decision finding no reversible error in the appealed decision of the trial court.[14] Forthwith, the petitioner filed the instant petition for review, raising the following errors:

THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE PETITIONER ACTED IN BAD FAITH. III

The petitioner assails the award of damages contending that it exercised the extraordinary diligence required by law under the given circumstances. The delay of Flight No. SQ 27 from Frankfurt to Singapore on January 28, 1991 for more than two hours was due to a fortuitous event and beyond petitioner’s control. Inclement weather prevented the petitioner’s plane coming from Copenhagen, Denmark to arrive in Frankfurt on time on January 27, 1991. The plane could not take off from the airport as the place was shrouded with fog. This delay caused a “snowball effect” whereby the other flights were consequently delayed. The plane carrying the respondent arrived in Singapore two (2) hours behind schedule.[16] The delay was even compounded when the plane could not travel the normal route which was through the Middle East due to the raging Gulf War at that time. It had to pass through the restricted Russian airspace which was more congested.[17] Under these circumstances, petitioner therefore alleged that it cannot be faulted for the delay in arriving in Singapore on January 28, 1991 and causing the respondent to miss her connecting flight to Manila. The petitioner further contends that it could not also be held in bad faith because its personnel did their best to look after the needs and interests of the passengers including the respondent. Because the respondent and the other 25 passengers missed their connecting flight to Manila, the petitioner automatically booked them to the flight the next day and gave them free hotel accommodations for the night. It was respondent who did not take petitioner’s offer and opted to stay with a family friend in Singapore. The petitioner also alleges that the action of the respondent was baseless and it tarnished its good name and image earned through the years for which, it was entitled to damages in the amount of P1,000,000; exemplary damages of P500,000; and attorney’s fees also in the amount of P500,000.[18] The petition is barren of merit.

I THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING IN TOTO THE DECISION OF THE TRIAL COURT THAT AWARDED DAMAGES TO RESPONDENT FOR THE ALLEGED FAILURE OF THE PETITIONER TO EXERCISE EXTRAORDINARY DILIGENCE.

When an airline issues a ticket to a passenger, confirmed for a particular flight on a certain date, a contract of carriage arises. The passenger then has every right to expect that he be transported on that flight and on that date. If he does not, then the carrier opens itself to a suit for a breach of contract of carriage.[19]

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The contract of air carriage is a peculiar one. Imbued with public interest, the law requires common carriers to carry the passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons with due regard for all the circumstances.[20] In an action for breach of contract of carriage, the aggrieved party does not have to prove that the common carrier was at fault or was negligent. All that is necessary to prove is the existence of the contract and the fact of its nonperformance by the carrier.[21] In the case at bar, it is undisputed that the respondent carried a confirmed ticket for the two-legged trip from Frankfurt to Manila: 1) Frankfurt-Singapore; and 2) Singapore-Manila. In her contract of carriage with the petitioner, the respondent certainly expected that she would fly to Manila on Flight No. SQ 72 on January 28, 1991. Since the petitioner did not transport the respondent as covenanted by it on said terms, the petitioner clearly breached its contract of carriage with the respondent. The respondent had every right to sue the petitioner for this breach. The defense that the delay was due to fortuitous events and beyond petitioner’s control is unavailing. In PAL vs. CA,[22] we held that: .... Undisputably, PAL’s diversion of its flight due to inclement weather was a fortuitous event. Nonetheless, such occurrence did not terminate PAL’s contract with its passengers. Being in the business of air carriage and the sole one to operate in the country, PAL is deemed to be equipped to deal with situations as in the case at bar. What we said in one case once again must be stressed, i.e., the relation of carrier and passenger continues until the latter has been landed at the port of destination and has left the carrier’s premises. Hence, PAL necessarily would still have to exercise extraordinary diligence in safeguarding the comfort, convenience and safety of its stranded passengers until they have reached their final destination... ... “...If the cause of non-fulfillment of the contract is due to a fortuitous event, it has to be the sole and only cause (Art. 1755 C.C., Art. 1733 C.C.). Since part of the failure to comply with the obligation of common carrier to deliver its passengers safely to their destination lay in the defendant’s failure to provide comfort and convenience to its stranded passengers using extraordinary diligence, the cause of nonfulfillment is not solely and exclusively due to fortuitous event, but due to something which defendant airline could have prevented, defendant becomes liable to plaintiff.” Indeed, in the instant case, petitioner was not without recourse to enable it to fulfill its obligation to transport the respondent safely as scheduled as far as human care and foresight can provide to her destination. Tagged as a premiere airline as it claims to be and with the complexities of air travel, it was certainly well-equipped to be able to foresee and deal with such situation. The petitioner’s indifference and negligence by its absence and insensitivity was exposed by the trial court, thus:

(a) Under Section 9.1 of its Traffic Manual (Exhibit 4) “…flights can be delayed to await the uplift of connecting cargo and passengers arriving on a late in-bound flight…” As adverted to by the trial court,…“Flight SQ-27/28 maybe delayed for about half an hour to transfer plaintiff to her connecting flight. As pointed out above, delay is normal in commercial air transportation” (RTC Decision, p. 22); or (b) Petitioner airlines could have carried her on one of its flights bound for Hongkong and arranged for a connecting flight from Hongkong to Manila all on the same date. But then the airline personnel who informed her of such possibility told her that she has to pay for that flight. Regrettably, respondent did not have sufficient funds to pay for it. (TSN, 30 March 1992, pp.8-9; RTC Decision, pp. 22-23) Knowing the predicament of the respondent, petitioner did not offer to shoulder the cost of the ticket for that flight; or (c) As noted by the trial court from the account of petitioner’s witness, Bob Khkimyong, that “a passenger such as the plaintiff could have been accommodated in another international airline such as Lufthansa to bring the plaintiff to Singapore early enough from Frankfurt provided that there was prior communication from that station to enable her to catch the connecting flight to Manila because of the urgency of her business in Manila… (RTC Decision, p. 23) The petitioner’s diligence in communicating to its passengers the consequences of the delay in their flights was wanting. As elucidated by the trial court: It maybe that delay in the take off and arrival of commercial aircraft could not be avoided and may be caused by diverse factors such as those testified to by defendant’s pilot. However, knowing fully well that even before the plaintiff boarded defendant’s Jumbo aircraft in Frankfurt bound for Singapore, it has already incurred a delay of two hours. Nevertheless, defendant did not take the trouble of informing plaintiff, among its other passengers of such a delay and that in such a case, the usual practice of defendant airline will be that they have to stay overnight at their connecting airport; and much less did it inquire from the plaintiff and the other 25 passengers bound for Manila whether they are amenable to stay overnight in Singapore and to take the connecting flight to Manila the next day. Such information should have been given and inquiries made in Frankfurt because even the defendant airline’s manual provides that in case of urgency to reach his or her destination on the same date, the head office of defendant in Singapore must be informed by telephone or telefax so as the latter may make certain arrangements with other airlines in Frankfurt to bring such a passenger with urgent business to Singapore in such a manner that the latter can catch up with her connecting flight such as S-27/28 without spending the night in Singapore…[23] The respondent was not remiss in conveying her apprehension about the delay of the flight when she was still in Frankfurt. Upon the assurance of petitioner’s

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personnel in Frankfurt that she will be transported to Manila on the same date, she had every right to expect that obligation fulfilled. She testified, to wit: Q: Now, since you were late, when the plane that arrived from Frankfurt was late, did you not make arrangements so that your flight from Singapore to Manila would be adjusted?

Japan Airlines v. Asuncion Jan 28, 2005, GR#161730 G.R. No. 161730 January 28, 2005 JAPAN AIRLINES, petitioner, vs. MICHAEL ASUNCION and JEANETTE ASUNCION, respondents. DECISION

A: I asked the lady at the ticket counter, the one who gave the boarding pass in Frankfurt and I asked her, “Since my flight going to Singapore would be late, what would happen to my Singapore-Manila flight?” and then she said, “Don’t worry, Singapore Airlines would be responsible to bring you to Manila on the same date.” And then they have informed the name of the officer, or whatever, that our flight is going to be late.[24] When a passenger contracts for a specific flight, he has a purpose in making that choice which must be respected. This choice, once exercised, must not be impaired by a breach on the part of the airline without the latter incurring any liability.[25] For petitioner’s failure to bring the respondent to her destination, as scheduled, we find the petitioner clearly liable for the breach of its contract of carriage with the respondent. We are convinced that the petitioner acted in bad faith. Bad faith means a breach of known duty through some motive of interest or ill will. Self-enrichment or fraternal interest, and not personal ill will, may well have been the motive; but it is malice nevertheless.[26] Bad faith was imputed by the trial court when it found that the petitioner’s employees at the Singapore airport did not accord the respondent the attention and treatment allegedly warranted under the circumstances. The lady employee at the counter was unkind and of no help to her. The respondent further alleged that without her threats of suing the company, she was not allowed to use the company’s phone to make long distance calls to her mother in Manila. The male employee at the counter where it says: “Immediate Attention to Passengers with Immediate Booking” was rude to her when he curtly retorted that he was busy attending to other passengers in line. The trial court concluded that this inattentiveness and rudeness of petitioner’s personnel to respondent’s plight was gross enough amounting to bad faith. This is a finding that is generally binding upon the Court which we find no reason to disturb. Article 2232 of the Civil Code provides that in a contractual or quasi-contractual relationship, exemplary damages may be awarded only if the defendant had acted in a “wanton, fraudulent, reckless, oppressive or malevolent manner.” In this case, petitioner’s employees acted in a wanton, oppressive or malevolent manner. The award of exemplary damages is, therefore, warranted in this case. WHEREFORE, the Petition is DENIED. The Decision of the Court of Appeals is AFFIRMED. SO ORDERED.

YNARES-SANTIAGO, J.: This petition for review seeks to reverse and set aside the October 9, 2002 decision1 of the Court of Appeals and its January 12, 2004 resolution,2 which affirmed in toto the June 10, 1997 decision of the Regional Trial Court of Makati City, Branch 61 in Civil Case No. 92-3635.3 On March 27, 1992, respondents Michael and Jeanette Asuncion left Manila on board Japan Airlines’ (JAL) Flight 742 bound for Los Angeles. Their itinerary included a stopover in Narita and an overnight stay at Hotel Nikko Narita. Upon arrival at Narita, Mrs. Noriko Etou-Higuchi of JAL endorsed their applications for shore pass and directed them to the Japanese immigration official.4 A shore pass is required of a foreigner aboard a vessel or aircraft who desires to stay in the neighborhood of the port of call for not more than 72 hours. During their interview, the Japanese immigration official noted that Michael appeared shorter than his height as indicated in his passport. Because of this inconsistency, respondents were denied shore pass entries and were brought instead to the Narita Airport Rest House where they were billeted overnight. The immigration official also handed Mrs. Higuchi a Notice5 where it was stated that respondents were to be "watched so as not to escape". Mr. Atsushi Takemoto of the International Service Center (ISC), the agency tasked by Japan’s Immigration Department to handle passengers who were denied shore pass entries, brought respondents to the Narita Airport Rest House where they stayed overnight until their departure the following day for Los Angeles. Respondents were charged US$400.00 each for their accommodation, security service and meals. On December 12, 1992, respondents filed a complaint for damages6 claiming that JAL did not fully apprise them of their travel requirements and that they were rudely and forcibly detained at Narita Airport. JAL denied the allegations of respondents. It maintained that the refusal of the Japanese immigration authorities to issue shore passes to respondents is an act of state which JAL cannot interfere with or prevail upon. Consequently, it cannot impose upon the immigration authorities that respondents be billeted at Hotel Nikko instead of the airport resthouse.7

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On June 10, 1997, the trial court rendered its decision, the dispositive portion of which reads: WHEREFORE PREMISES CONSIDERED, judgment is hereby rendered in favor of plaintiffs ordering defendant JAL to pay plaintiffs as follows: 1. the sum of US$800.00 representing the expenses incurred at the Narita Airport with interest at 12% per annum from March 27, 1992 until the sum is fully paid; 2. the sum of P200,000.00 for each plaintiff as moral damages; 3. the amount of P100,000.00 for each plaintiff as exemplary damages;

their overnight stay. Respondents’ mother, Mrs. Imelda Asuncion, insisted though that Ms. Linda Villavicencio of JAL assured her that her children would be granted the passes.12 This assertion was satisfactorily refuted by Ms. Villavicencio’s testimony during the cross examination, to wit: ATTY. GONZAGA: Q I will show to you Exh. 9 which is the TIM and on page 184 hereof, particularly number 10, and I quote, "Those holding tickets with confirmed seats and other documents for their onward journey and continuing their journey to a third country provided that they obtain an indorsement with an application of shore pass or transit pass from the airline ground personnel before clearing the immigration formality?"

4. the amount of P100,000.00 as attorney’s fees; and WITNESS: 5. costs of suit. A Yes, Sir. SO ORDERED.8 Q Did you tell this provision to Mrs. Asuncion? The trial court dismissed JAL’s counterclaim for litigation expenses, exemplary damages and attorney’s fees.

A Yes, Sir. I did.

On October 9, 2002, the Court of Appeals affirmed in toto the decision of the trial court. Its motion for reconsideration having been denied,9 JAL now files the instant petition.

Q Are you sure?

The basic issue for resolution is whether JAL is guilty of breach of contract.

Q Did you give a copy?

Under Article 1755 of the Civil Code, a common carrier such as JAL is bound to carry its passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with due regard for all the circumstances. When an airline issues a ticket to a passenger, confirmed for a particular flight on a certain date, a contract of carriage arises. The passenger has every right to expect that he be transported on that flight and on that date and it becomes the carrier’s obligation to carry him and his luggage safely to the agreed destination.10 If the passenger is not so transported or if in the process of transporting he dies or is injured, the carrier may be held liable for a breach of contract of carriage.11 We find that JAL did not breach its contract of carriage with respondents. It may be true that JAL has the duty to inspect whether its passengers have the necessary travel documents, however, such duty does not extend to checking the veracity of every entry in these documents. JAL could not vouch for the authenticity of a passport and the correctness of the entries therein. The power to admit or not an alien into the country is a sovereign act which cannot be interfered with even by JAL. This is not within the ambit of the contract of carriage entered into by JAL and herein respondents. As such, JAL should not be faulted for the denial of respondents’ shore pass applications. Prior to their departure, respondents were aware that upon arrival in Narita, they must secure shore pass entries for

A Yes, Sir.

A No, Sir, I did not give a copy but verbally I explained to her the procedure they have to undergo when they get to narita airport. …. Q And you read the contents of this [TIM]? A No, Sir, I did not read it to her but I explained to her the procedure that each passenger has to go through before when they get to narita airport before they line up in the immigration counter. Q In other words, you told Mrs. Asuncion the responsibility of securing shore passes bears solely on the passengers only? A Yes, Sir. Q That the airline has no responsibility whatsoever with regards (sic) to the application for shore passes? A Yes, Sir.13 Next, respondents claimed that petitioner breached its contract of carriage when it failed to explain to the immigration authorities that they had overnight vouchers at the Hotel Nikko Narita. They imputed that JAL did not exhaust all means to prevent the denial of their shore pass entry applications.

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To reiterate, JAL or any of its representatives have no authority to interfere with or influence the immigration authorities. The most that could be expected of JAL is to endorse respondents’ applications, which Mrs. Higuchi did immediately upon their arrival in Narita. As Mrs. Higuchi stated during her deposition: ATTY. QUIMBO Q: Madam Witness, what assistance did you give, if any, to the plaintiffs during this interview? A: No, I was not present during their interview. I cannot assist. Q: Why not? A: It is forbidden for a civilian personnel to interfere with the Immigration agent’s duties.14 …. Q: During the time that you were in that room and you were given this notice for you to sign, did you tell the immigration agent that Michael and Jeanette Asuncion should be allowed to stay at the Hotel Nikko Narita because, as passengers of JAL, and according to the plaintiff, they had vouchers to stay in that hotel that night? A: No, I couldn’t do so. Q: Why not? A: This notice is evidence which shows the decision of immigration authorities. It shows there that the immigration inspector also designated Room 304 of the Narita Airport Resthouse as the place where the passengers were going to wait for their outbound flight.1awphi1.nét I cannot interfere with that decision.15

malevolent manner. Attorney’s fees are allowed when exemplary damages are awarded and when the party to a suit is compelled to incur expenses to protect his interest.17 There being no breach of contract nor proof that JAL acted in wanton, fraudulent or malevolent manner, there is no basis for the award of any form of damages. Neither should JAL be held liable to reimburse respondents the amount of US$800.00. It has been sufficiently proven that the amount pertained to ISC, an agency separate and distinct from JAL, in payment for the accommodations provided to respondents. The payments did not in any manner accrue to the benefit of JAL. However, we find that the Court of Appeals correctly dismissed JAL’s counterclaim for litigation expenses, exemplary damages and attorney’s fees. The action was filed by respondents in utmost good faith and not manifestly frivolous. Respondents honestly believed that JAL breached its contract. A person’s right to litigate should not be penalized by holding him liable for damages. This is especially true when the filing of the case is to enforce what he believes to be his rightful claim against another although found to be erroneous.18 WHEREFORE, in view of the foregoing, the instant petition is PARTLY GRANTED. The October 9, 2002 decision of the Court of Appeals and its January 12, 2004 resolution in CA-G.R. CV No. 57440, are REVERSED and SET ASIDE insofar as the finding of breach on the part of petitioner and the award of damages, attorney’s fees and costs of the suit in favor of respondents is concerned. Accordingly, there being no breach of contract on the part of petitioner, the award of actual, moral and exemplary damages, as well as attorney’s fees and costs of the suit in favor of respondents Michael and Jeanette Asuncion, is DELETED for lack of basis. However, the dismissal for lack of merit of petitioner’s counterclaim for litigation expenses, exemplary damages and attorney’s fees, is SUSTAINED. No pronouncement as to costs. SO ORDERED.

Mrs. Higuchi did all she could to assist the respondents. Upon being notified of the denial of respondents’ applications, Mrs. Higuchi immediately made reservations for respondents at the Narita Airport Rest House which is really more a hotel than a detention house as claimed by respondents.16

Northwest v. Chiong Jan 31, 2008, GR 155550 NORTHWEST AIRLINES, INC., Petitioner,

More importantly, nowhere in respondent Michael’s testimony did he state categorically that Mrs. Higuchi or any other employee of JAL treated them rudely or exhibited improper behavior throughout their stay. We therefore find JAL not remiss in its obligations as a common carrier.1awphi1.nét Moral damages may be recovered in cases where one willfully causes injury to property, or in cases of breach of contract where the other party acts fraudulently or in bad faith. Exemplary damages are imposed by way of example or correction for the public good, when the party to a contract acts in wanton, fraudulent, oppressive or

- versus -

STEVEN P. CHIONG, Respondent. G.R. No. 155550

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Present: YNARES-SANTIAGO, J., Chairperson, AUSTRIA-MARTINEZ, CORONA,* NACHURA, and REYES, JJ. Promulgated: January 31, 2008 x-----------------------------------------------------------------------------------x

DECISION NACHURA, J.:

Before us is a petition for review on certiorari under Rule 45 of the Rules of Court seeking the reversal of the Court of Appeals (CA) Decision[1] in CA-G.R. CV No. 50308[2] which affirmed in toto the Regional Trial Court (RTC) Decision[3] holding petitioner Northwest Airlines, Inc. (Northwest) liable for breach of contract of carriage. On March 14, 1989, Philimare Shipping and Seagull Maritime Corporation (Philimare), as the authorized Philippine agent of TransOcean Lines (TransOcean), hired respondent Steven Chiong as Third Engineer of TransOcean’s vessel M/V Elbia at the San Diego, California Port. Under the service crew agreement, Chiong was guaranteed compensation at a monthly salary of US$440.00 and a monthly overtime pay of US$220.00, or a total of US$7,920.00 for one year. Subsequently, on March 27, 1989, Philimare dispatched a Letter of Guarantee to CL Hutchins & Co., Inc., TransOcean’s agent at the San Diego Port, confirming Chiong’s arrival thereat in time to board the M/V Elbia which was set to sail on April 1, 1989 (California, United States time). For this purpose, Philimare purchased for Chiong a Northwest plane ticket for San Diego, California with a departure date of April 1, 1989 from Manila. Ten (10) days before his scheduled departure, Chiong fetched his entire family from Samar and brought them to Manila to see him off at the airport.

Calvo, Philimare’s Liaison Officer, met Chiong at the departure gate, and the two proceeded to the Philippine Coast Guard (PCG) Counter to present Chiong’s seaman service record book for clearance. Thereafter, Chiong’s passport was duly stamped, after complying with government requirements for departing seafarers. Calvo remained at the PCG Counter while Chiong proceeded to queue at the Northwest check-in counter. When it was Chiong’s turn, the Northwest personnel[5] informed him that his name did not appear in the computer’s list of confirmed departing passengers. Chiong was then directed to speak to a “man in barong” standing outside Northwest’s counters from whom Chiong could allegedly obtain a boarding pass. Posthaste, Chiong approached the “man in barong” who demanded US$100.00 in exchange therefor. Without the said amount, and anxious to board the plane, Chiong queued a number of times at Northwest’s Check-in Counter and presented his ticket. However, the Northwest personnel at the counter told him to simply wait and that he was being a pest. Frustrated, Chiong went to Calvo at the PCG counter and inquired if she had money so he could obtain a boarding pass from the “man in barong.” Calvo, who already saw that something was amiss, insisted that Chiong’s plane ticket was confirmed and as such, he could check-in smoothly and board the plane without shelling out US$100.00 for a boarding pass. Ultimately, Chiong was not allowed to board Northwest Flight No. 24 bound for San Diego that day and, consequently, was unable to work at the M/V Elbia by April 1, 1989 (California, U.S.A. time). It appears that Chiong’s name was crossed out and substituted with “W. Costine” in Northwest’s Air Passenger Manifest.[6] In a letter dated April 3, 1989, Chiong’s counsel demanded as recompense: (1) the amount equivalent to Chiong’s salary under the latter’s Crew Agreement[7] with TransOcean; (2) P15,000.00 for Chiong’s expenses in fetching and bringing his family from Samar to Manila; (3) P500,000.00 as moral damages; and (4) P500,000.00 as legal fees.[8] Northwest demurred. Thus, on May 24, 1989, Chiong filed a Complaint for breach of contract of carriage before the RTC. Northwest filed a Motion to Dismiss[9] the complaint citing the trial court’s lack of jurisdiction over the subject matter of the case, but the trial court denied the same.[10] In its Answer,[11] Northwest contradicted the claim that it breached its contract of carriage with Chiong, reiterating that Chiong had no cause of action against it because per its records, Chiong was a “no-show” passenger for Northwest Flight No. 24 on April 1, 1989.

On April 1, 1989, Chiong arrived at the Manila International Airport[4] (MIA), at about 6:30 a.m., three (3) hours before the scheduled time of departure. Marilyn

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In the RTC’s Pre-trial Order[12] based on the parties’ respective Pre-trial Briefs,[13] the triable issues were limited to the following: (a) Whether [Chiong] was bumped-off by [Northwest] from Flight NW 24 or whether [Chiong] “noshowed” for said flight. (b) If defendant is found guilty of having breached its contract of carriage with plaintiff, what damages are awardable to plaintiff and how much.

In the course of proceedings, Northwest, on September 14, 1990, filed a separate criminal complaint for False Testimony[14] against Chiong based on the latter’s testimony that he did not leave the Philippines after April 1, 1989 contrary to the notations in his seaman service record book that he had left the country on April 17, 1989, and returned on October 5 of the same year. Chiong did not participate in the preliminary investigation; thus, on December 14, 1990, the City Prosecutor of Manila filed an Information against Chiong with the RTC Manila, Branch 54, docketed as Criminal Case No. 90-89722. In the meantime, after a flurry of motions filed by Northwest in the civil case were denied by the RTC, Northwest filed a Petition for Certiorari before the CA imputing grave abuse of discretion to the RTC.[15] Correlatively, Northwest moved for a suspension of the proceedings before the trial court. However, both the Petition for Certiorari and Motion for Suspension of the proceedings were denied by the CA and RTC, respectively. [16] After trial, the RTC rendered a Decision finding preponderance of evidence in favor of Chiong, and holding Northwest liable for breach of contract of carriage. The RTC ruled that the evidence adduced by the parties supported the conclusion that Chiong was deliberately prevented from checking-in and his boarding pass unjustifiably withheld to accommodate an American passenger by the name of W. Costine. The dispositive portion of the RTC decision reads: WHEREFORE, premises considered, in consideration of all the foregoing, judgment is hereby rendered, ordering the defendant liable to plaintiff in damages by reason of the latter’s inability to take defendant’s NW Flight No. 24 on April 1, 1989, for the following amounts: 1) U.S.$8,447.00[17] or its peso equivalent at the time of finality of this judgment with legal interests until fully paid, representing compensatory damages due to plaintiff’s loss of income for one (1) year as a direct result of defendant’s breach of contract of carriage; 2) P15,000.00, Philippine Currency, representing plaintiff’s actual incurred damages as a consequence of his

failure to avail of defendant’s Flight No. 24 on April 1, 1989; 3) P200,000.00, Philippine Currency, representing moral damages suffered and sustained by the plaintiff as a result of defendant’s breach of contract of carriage; 4) P200,000.00, Philippine Currency, representing exemplary or punitive damages due to plaintiff from defendant, owing to the latter’s breach of contract of carriage with malice and fraud; and 5) P200,000.00, Philippine Currency, for and as attorney’s fees, plus costs of suit. SO ORDERED.

On appeal, the CA affirmed in toto the ruling of the RTC. Identical to the RTC’s findings, those of the CA were as follows: on April 1, 1989, Chiong was at the MIA three hours before the 10:15 a.m. departure time for Northwest Flight No. 24. Contrary to Northwest’s claim that Chiong was a “no-show” passenger, the CA likewise concluded, as the RTC did, that Chiong was not allowed to check-in and was not issued a boarding pass at the Northwest check-in counter to accommodate a certain W. Costine. As for Northwest’s defense that Chiong had left the country after April 1, 1989 and worked for M/V Elbia, the CA ruled that Northwest’s failure to raise this defense in its Answer or Motion to Dismiss is equivalent to a waiver thereof. The CA declared that, in any event, Northwest failed to present any evidence to prove that Chiong had worked under the original crew agreement. Hence, this recourse. Northwest ascribes grievous errors to the CA when the appellate court ruled that: (1) Northwest breached the contract of carriage with Chiong who was present at the MIA on April 1, 1989 to board Northwest’s Flight No. 24; (2) As a result of the breach, Northwest is liable to Chiong for compensatory, actual, moral and exemplary damages, attorney’s fees, and costs of suit; and (3) Northwest’s Exhibits “2” and “3,” the Flight Manifest and the Passenger Name Record, respectively, were hearsay evidence and ought to be excluded from the records. The petition must fail. We are in complete accord with the common ruling of the lower courts that Northwest breached the contract of carriage with Chiong, and as such, he is entitled to compensatory, actual, moral and exemplary damages, attorney’s fees and costs of suit. Northwest contends that Chiong, as a “no-show” passenger on April 1, 1989, already defaulted in his obligation to abide by the terms and conditions of the

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contract of carriage;[18] and thus, Northwest could not have been in breach of its reciprocal obligation to transport Chiong. In sum, Northwest insists that Chiong’s testimony is a complete fabrication, supposedly demonstrated by the following: (1) Chiong’s seaman service record book reflects that he left the Philippines after April 1, 1989, specifically on April 17, 1989, to board the M/V Elbia, and was discharged therefrom upon his personal request; (2) the Information filed against Chiong for False Testimony; and (3) the Flight Manifest and the Passenger Name Record both indicate that he was a “no-show” passenger. We are not convinced. The records reveal that Chiong, as plaintiff in the trial court, satisfied the burden of proof required in civil cases, i.e., preponderance of evidence. Section 1 of Rule 133 provides: SECTION 1. Preponderance of evidence, how determined. – In civil cases, the party having the burden of proof must establish his case by a preponderance of evidence. In determining where the preponderance or superior weight of evidence on the issues involved lies, the court may consider all the facts and circumstance of the case, the witnesses’ manner of testifying, their intelligence, their means and opportunity of knowing the facts to which they are testifying, the nature of the facts to which they testify, the probability or improbability of their testimony, their interest or want of interest, and also their personal credibility so far as the same may legitimately appear upon the trial. The court may also consider the number of witnesses, though preponderance is not necessarily with the greater number.

In this regard, the Court notes that, in addition to his testimony, Chiong’s evidence consisted of a Northwest ticket for the April 1, 1989 Flight No. 24, Chiong’s passport and seaman service record book duly stamped at the PCG counter, and the testimonies of Calvo, Florencio Gomez, [19] and Philippine Overseas Employment and Administration (POEA) personnel who all identified the signature and stamp of the PCG on Chiong’s passport. We have scoured the records, and found no reason to depart from the well-settled rule that factual findings of the lower courts deserve the utmost respect and are not to be disturbed on appeal.[20] Indeed, Chiong’s Northwest ticket for Flight No. 24 on April 1, 1989, coupled with the PCG stamps on his passport showing the same date, is direct evidence that he was present at MIA on said date as he intended to fly to the United States on board that flight. As testified to by POEA personnel and officers, the PCG stamp indicates that a departing seaman has passed through the PCG counter at the airport, surrendered the exit pass, and complied with government requirements for departing seafarers. Calvo, Philimare’s liaison officer tasked to assist Chiong at the airport, corroborated Chiong’s testimony on the latter’s presence at the MIA and his check-in at the PCG

counter without a hitch. Calvo further testified that she purposely stayed at the PCG counter to confirm that Chiong was able to board the plane, as it was part of her duties as Philimare’s liaison officer, to confirm with their principal, TransOcean in this case, that the seafarer had left the country and commenced travel to the designated port where the vessel is docked.[21] Thus, she had observed that Chiong was unable to check-in and board Northwest Flight No. 24, and was actually being given the run-around by Northwest personnel. It is of no moment that Chiong’s witnesses – who all corroborated his testimony on his presence at the airport on, and flight details for, April 1, 1989, and that he was subsequently bumped-off – are, likewise, employees of Philimare which may have an interest in the outcome of this case. We intoned in Philippine Airlines, Inc. v. Court of Appeals,[22] thus: (T)his Court has repeatedly held that a witness’ relationship to the victim does not automatically affect the veracity of his or her testimony. While this principle is often applied in criminal cases, we deem that the same principle may apply in this case, albeit civil in nature. If a witness’ relationship with a party does not ipso facto render him a biased witness in criminal cases where the quantum of evidence required is proof beyond reasonable doubt, there is no reason why the same principle should not apply in civil cases where the quantum of evidence is only preponderance of evidence.

The foregoing documentary and testimonial evidence, taken together, amply establish the fact that Chiong was present at MIA on April 1, 1989, passed through the PCG counter without delay, proceeded to the Northwest check-in counter, but when he presented his confirmed ticket thereat, he was not issued a boarding pass, and ultimately barred from boarding Northwest Flight No. 24 on that day. In stark contrast is Northwest’s bare-faced claim that Chiong was a “no-show” passenger, and was scheduled to leave the country only on April 17, 1989. As previously discussed, the records belie this assertion. It is also noteworthy that Northwest did not present any evidence to support its belated defense that Chiong departed from the Philippines on April 17, 1989 to work as Third Engineer on board M/V Elbia under the original crew agreement. It is true that Chiong’s passport and seaman service record book indicate that he had left the country on April 17, 1989 and come back on October 5 of the same year. However, this evidence fails to debunk the facts established to have transpired on April 1, 1989, more particularly, Chiong’s presence at the airport and his subsequent bumping-off by Northwest despite a confirmed ticket. Although initially, the burden of proof was with Chiong to prove that there was a breach of contract of carriage, the burden of evidence shifted to Northwest when Chiong adduced sufficient evidence to prove the facts he had alleged. At that point, Northwest had the burden of going

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forward[23] to controvert Chiong’s prima facie case. As the party asserting that Chiong was a “no-show” passenger, Northwest then had the burden of evidence to establish its claim. Regrettably, Northwest failed to do so. Furthermore, it has not escaped our attention that Northwest, despite the declaration in its Pre-Trial Brief, did not present as a witness their check-in agent on that contentious date.[24] This omission was detrimental to Northwest’s case considering its claim that Chiong did not check-in at their counters on said date. It simply insisted that Chiong was a “no-show” passenger and totally relied on the Flight Manifest, which, curiously, showed a horizontal line drawn across Chiong’s name, and the name W. Costine written above it. The reason for the insertion, or for Chiong’s allegedly being a “no-show” passenger, is not even recorded on the remarks column of the Flight Manifest beside the Passenger Name column. Clearly, the categorical declaration of Chiong and his other witnesses, coupled with the PCG stamp on his passport and seaman service record book, prevails over Northwest’s evidence, particularly the Flight Manifest. Thus, we are perplexed why, despite the evidence presented by Chiong, and the RTC’s specific order to Northwest’s counsel to present the person(s) who prepared the Flight Manifest and Passenger Name Record for a proper identification of, and to testify on, those documents, Northwest still insisted on presenting Gonofredo Mendoza and Amelia Meris who were, admittedly, not competent to testify thereon.[25] In its desperate attempt to evade liability for the breach, Northwest claims that Chiong worked at M/V Elbia when he left the Philippines on April 17, 1989. The argument was not only belatedly raised, as we have repeatedly stated, but is off-tangent. On this point, we uphold the RTC’s and CA’s ruling that the failure of Northwest to raise the foregoing defense in its Motion to Dismiss or Answer constituted a waiver thereof. Section 1, Rule 9 of the Rules of Court provides: SECTION 1. Defenses and objections not pleaded. — Defenses and objections not pleaded either in a motion to dismiss or in the answer are deemed waived. However, when it appears from the pleadings or the evidence on record that the court has no jurisdiction over the subject matter, that there is another action pending between the same parties for the same cause, or that the action is barred by a prior judgment or by statute of limitations, the court shall dismiss the claim. (Emphasis supplied)

Similarly, Section 8, Rule 15 of the Rules of Court reads: SECTION 8. Omnibus Motion.— Subject to the provisions of section 1 of Rule 9, a motion attacking a pleading, order, judgment, or proceeding shall include all objections then available, and all objections not so included shall be deemed waived.

Moreover, Northwest paints a scenario that ostensibly transpired on a different date. Even if Chiong left the Philippines on April 17, 1989, it would not necessarily prove that Chiong was a “no-show” on April 1, 1989. Neither does it negate the already established fact that Chiong had a confirmed ticket for April 1, 1989, and first passed through the PCG counter without delay, then reached and was at the Northwest check-in counters on time for the scheduled flight. Essentially, Northwest argues that Chiong was a “noshow” passenger on two (2) separate occasions, March 28 and April 1, 1989 because he was actually scheduled to depart for the US on April 17, 1989 as ostensibly evidenced by his passport and seaman record book. Had this new matter alleged been proven by Northwest, it would prevent or bar recovery by Chiong. Unfortunately, Northwest was unsuccessful in proving not only the “no-show” claim, but that Chiong, likewise, worked under the original crew agreement. Northwest likewise insists – now that there is a pending criminal case for False Testimony against Chiong – that a falsified part of Chiong’s testimony would indicate the falsity of his entire testimony, consistent with the “falsus in uno, falsus in omnibus”[26] doctrine. Following Northwest’s flawed logic, this would invariably lead to the conclusion that the corroborating testimonies of Chiong’s witnesses are also false. The legal maxim falsus in uno, falsus in omnibus, cited by Northwest, is not a positive rule of law and is not strictly applied in this jurisdiction. Before this maxim can be applied, the witness must be shown to have willfully falsified the truth on one or more material points. The principle presupposes the existence of a positive testimony on a material point contrary to subsequent declarations in the testimony. However, the records show that Chiong’s testimony did not contain inconsistencies on what occurred on April 1, 1989. Yet, Northwest never even attempted to explain or impugn the evidence that Chiong passed through the PCG counter on April 1, 1989, and that his passport was accordingly stamped, obviously for purposes of his departure on that day. As to the criminal case, it is well to note that there is no final determination, as yet, of Chiong’s guilt by the courts. But even if Chiong is adjudged guilty, it will have little effect on the outcome of this case. As we held in Leyson v. Lawa:[27] The testimony of a witness must be considered in its entirety instead of in truncated parts. The technique in deciphering a testimony is not to consider only its isolated parts and anchor a conclusion on the basis of said parts. In ascertaining the facts established by a witness, everything stated by him on direct, cross and redirect examinations must be calibrated and considered.

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It must be stressed that facts imperfectly or erroneously stated in answer to one question may be supplied or explained as qualified by his answer to other question. The principle falsus in uno, falsus in omnibus is not strictly applied in this jurisdiction. The doctrine deals only with the weight of evidence and is not a positive rule of law, and the same is not an inflexible one of universal application. The testimony of a witness can be believed as to some facts and disbelieved as to others:

xxxx Professor Wigmore gives the following enlightening commentary: It may be said, once for all, that the maxim is in itself worthless— first, in point of validity, because in one form it merely contains in loose fashion a kernel of truth which no one needs to be told, and in the others, it is absolutely false as a maxim of life; and secondly, in point of utility, because it merely tells the jury what they may do in any event, not what they must do or must not do, and therefore it is a superfluous form of words. It is also in practice pernicious, first, because there is frequently a misunderstanding of its proper force, and secondly, because it has become in the hands of many counsel a mere instrument for obtaining new trials upon points wholly unimportant in themselves.

From the foregoing disquisition, the ineluctable conclusion is that Northwest breached its contract of carriage with Chiong. Time and again, we have declared that a contract of carriage, in this case, air transport, is primarily intended to serve the traveling public and thus, imbued with public interest. The law governing common carriers consequently imposes an exacting standard of conduct. As the aggrieved party, Chiong only had to prove the existence of the contract and the fact of its non-performance by Northwest, as carrier, in order to be awarded compensatory and actual damages. We reiterate that Northwest failed to prove its claim that Chiong worked on M/V Elbia from April 17 to October 5, 1989 under the original crew agreement. Accordingly, we affirm the lower court’s finding on Chiong’s entitlement to actual and compensatory damages. We, likewise, uphold the findings of both courts on Northwest’s liability for moral and exemplary damages, and attorney’s fees. Under Article 2220 of the Civil Code of the Philippines, an award of moral damages, in breaches of contract, is in order upon a showing that the defendant acted fraudulently or in bad faith. Bad faith does not simply connote bad judgment or negligence.[28] It imports a

dishonest purpose or some moral obliquity and conscious doing of a wrong.[29] It means breach of a known duty through some motive, interest or ill will that partakes of the nature of fraud.[30] Bad faith is in essence a question of intention.[31] In the case at bench, the courts carefully examined the evidence as to the conduct and outward acts of Northwest indicative of its inward motive. It is borne out by the records that Chiong was given the run-around at the Northwest check-in counter, instructed to deal with a “man in barong” to obtain a boarding pass, and eventually barred from boarding Northwest Flight No. 24 to accommodate an American, W. Costine, whose name was merely inserted in the Flight Manifest, and did not even personally check-in at the counter.[32] Under the foregoing circumstances, the award of exemplary damages is also correct given the evidence that Northwest acted in an oppressive manner towards Chiong. [33] As for the award of attorney’s fees, while we recognize that it is sound policy not to set a premium on the right to litigate,[34] we sustain the lower courts’ award thereof. Attorney’s fees may be awarded when a party is compelled to litigate or incur expenses to protect his interest,[35] or where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff’s plainly valid, just and demandable claim.[36] In the case at bench, Northwest deliberately breached its contract of carriage with Chiong and then repeatedly refused to satisfy Chiong’s valid, just and demandable claim. This unjustified refusal constrained Chiong to not only lose income under the crew agreement, but to further incur expenses and exert effort for almost two (2) decades in order to protect his interests and vindicate his right. Therefore, this Court deems it just and equitable to grant Chiong P200,000.00 as attorney’s fees. The award is reasonable in view of the time it has taken for this case to be resolved.[37] Finally, the issue of the exclusion of Northwest’s Exhibits “2” and “3” need not detain us long. Suffice it to state that the RTC and CA correctly excluded these documents as hearsay evidence. We quote with favor the CA’s holding thereon, thus: As a rule, “entries made at, or near the time of the transactions to which they refer, by a person deceased, or unable to testify, who was in a position to know the facts therein stated, may be received as prima facie evidence, if such person made the entries in his professional capacity or in the performance of a duty and in the ordinary or regular course of business or duty”. [Rule 130, Section 43, Revised Rules of Court] Otherwise stated, in order to be admissible as entries in the course of business, it is necessary that: (a) the

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person who made the entry must be dead or unable to testify; (b) the entries were made at or near the time of the transactions to which they refer; (c) the entrant was in a position to know the facts stated in the entries; (d) the entries were made in his professional capacity or in the performance of a duty; and (e) the entries were made in the ordinary or regular course of business or duty. Tested by these requirements, we find the manifest and passenger name record to be mere hearsay evidence. While there is no necessity to bring into court all the employees who individually made the entries, it is sufficient that the person who supervised them while they were making the entries testify that the account was prepared under his supervision and that the entries were regularly entered in the ordinary course of business. In the case at bench, while MENDOZA was the supervisor onduty on April 1, 1989, he has no personal knowledge of the entries in the manifest since he did not supervise the preparation thereof. More importantly, no evidence was presented to prove that the employee who made the entries was dead nor did the defendant-appellant set forth the circumstances that would show the employee’s inability to testify.[38]

WHEREFORE, premises considered, the petition is hereby DENIED. The ruling of the Court of Appeals in CA-G.R. CV No. 50308 is hereby AFFIRMED. Costs against the petitioner.

SO ORDERED. Vector Shipping v. Macasa Jul 21, 2008, GR 160219 VECTOR SHIPPING CORPORATION and FRANCISCO SORIANO, Petitioners,

- versus -

ADELFO B. MACASA, EMELIA B. MACASA, TIMOTEO B. MACASA, CORNELIO B. MACASA, JR., and ROSARIO C. MACASA, SULPICIO LINES, INC., GO GUIOC SO, ENRIQUE S. GO, EUSEBIO S. GO, RICARDO S. GO, VICTORIANO S. GO, EDWARD S. GO, ARTURO S. GO, EDGAR S. GO and EDMUNDO S. GO, Respondents. G.R. No. 160219

Present:

QUISUMBING, J.* YNARES-SANTIAGO, Chairperson, CARPIO,** NACHURA, and REYES, JJ.

Promulgated: July 21, 2008 x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - --------------------x DECISION NACHURA, J.:

Before this Court is a Petition for Review on Certiorari[1] under Rule 45 of the Rules of Civil Procedure seeking the reversal of the Court of Appeals (CA) Decision[2] dated September 24, 2003, which affirmed with modification the Decision[3] of the Regional Trial Court (RTC), Branch 17 of Davao City, dated May 5, 1995. The Facts

On December 19, 1987, spouses Cornelio (Cornelio) and Anacleta Macasa (Anacleta), together with their eightyear-old grandson, Ritchie Macasa, (Ritchie) boarded the MV Doña Paz, owned and operated by respondent Sulpicio Lines, Inc. (Sulpicio Lines), at Tacloban, Leyte bound for Manila. On the fateful evening of December 20, 1987, MV Doña Paz collided with the MT Vector, an oil tanker owned and operated by petitioners Vector Shipping Corporation (Vector Shipping) and Francisco Soriano (Soriano), which at the time was loaded with 860,000 gallons of gasoline and other petroleum products, in the vicinity of Dumali Point, Tablas Strait, between Marinduque and Oriental Mindoro. Only twenty-six persons survived: 24 passengers of MV Doña Paz and 2 crew members of MT Vector. Both vessels were never retrieved. Worse, only a few of the victims’ bodies, who either drowned or were burned alive, were recovered. Cornelio, Anacleta and Ritchie were among the victims whose bodies have yet to be recovered up to this day. Respondents Adelfo, Emilia, Timoteo, and Cornelio, Jr., all surnamed Macasa, are the children of Cornelio and Anacleta. On the other hand, Timoteo and his wife, respondent Rosario Macasa, are the parents of Ritchie (the Macasas). Some of the Macasas went to the North Harbor in Manila to await the arrival of Cornelio, Anacleta and Ritchie. When they heard the news that MV Doña Paz was rammed at sea by another vessel, bewildered, the Macasas

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went to the office of Sulpicio Lines to check on the veracity of the news, but the latter denied that such an incident occurred. According to the Macasas, Sulpicio Lines was uncooperative and was reluctant to entertain their inquiries. Later, they were forced to rely on their own efforts to search for the bodies of their loved ones, but to no avail. The Macasas manifested that before they filed a case in court, Sulpicio Lines, through counsel, intimated its intention to settle, and offered the amount of P250,000.00 for the death of Cornelio, Anacleta and Ritchie. The Macasas rejected the said offer. Thus, on October 2, 1991, the Macasas filed a Complaint for Damages arising out of breach of contract of carriage against Sulpicio Lines before the RTC. The complaint imputed negligence to Sulpicio Lines because it was remiss in its obligations as a common carrier. The Macasas prayed for civil indemnity in the amount of P800,000.00 for the death of Cornelio, Anacleta and Ritchie, as well as for Cornelio’s and Anacleta’s alleged unearned income since they were both working as vocational instructors before their demise. The Macasas also claimed P100,000.00 as actual and compensatory damages for the lost cash, checks, jewelries and other personal belongings of the latter, P600,000.00 in moral damages, P100,000.00 by way of exemplary damages, and P100,000.00 as costs and attorney’s fees. Sulpicio Lines traversed the complaint, alleging, among others that (1) MV Doña Paz was seaworthy in all aspects; (2) it exercised extraordinary diligence in transporting their passengers and goods; (3) it acted in good faith as it gave immediate assistance to the survivors and kin of the victims; (4) the sinking of MV Doña Paz was without contributory negligence on its part; and (5) the collision was MT Vector’s fault since it was allowed to sail with an expired coastwise license, expired certificate of inspection and it was manned by unqualified and incompetent crew members per findings of the Board of Marine Inquiry (BMI) in BMI Case No. 653-87 which had exonerated Sulpicio Lines from liability. Thus, Sulpicio Lines filed a Third-Party Complaint against Vector Shipping, Soriano and Caltex Philippines Inc. (Caltex), the charterer of MT Vector. Trial on the merits ensued. The RTC’s Ruling In its Decision[4] dated May 5, 1995, the RTC awarded P200,000.00 as civil indemnity for the death of Cornelio, Anacleta and Ritchie; P100,000.00 as actual damages; P500,000.00 as moral damages; P100,000.00 as exemplary damages; and P50,000.00 as attorney’s fees. The case was disposed of in this wise: Accordingly, as a result of this decision, on plaintiffs’ complaint against third-party (sic) defendant Sulpicio Lines Inc., third-party defendant Caltex Philippines, Inc. and third-party defendant MT Vector Shipping Corporation and/or Francisco Soriano, are liable against defendant third-

party plaintiff, Sulpicio Lines, for reimbursement, subrogation and indemnity on all amounts, defendant Sulpicio Lines was ordered liable against plaintiffs, by way of actual, moral, exemplary damages and attorney’s fee, MT Vector Shipping Lines and/or Francisco Soriano, thirdparty defendants, are ordered jointly and severally, liable to pay third-party plaintiff, Sulpicio Lines, by way of reimbursement, subrogation and indemnity, of all the above amounts, ordered against defendant Sulpicio Lines, Inc., to pay in favor of plaintiff, with interest and cost of suit. SO ORDERED.[5]

Aggrieved, Sulpicio Lines, Caltex, Vector Shipping and Soriano appealed to the CA. The CA’s Ruling

In the assailed Decision[6] dated September 24, 2003, the CA held:

WHEREFORE, all premises considered, the assailed decision is hereby modified in that third-party defendant-appellant Caltex Phils., Inc. is hereby exonerated from liability. The P100,000 actual damages is deleted while the indemnity for (sic) is reduced to P150,000. All other aspects of the appealed judgment are perforce affirmed. SO ORDERED.[7] The Issues Hence, this Petition raising the following issues: 1) May the decision of the Board Marine Inquiry (BMI) which, to date, is still pending with the Department of National Defense (DND) and, therefore, deemed vacated as it is not yet final and executory, be binding upon the court? 2) In the absence of clear, convincing, solid, and concrete proof of including, but not limited to, absence of eyewitnesses on that tragic maritime incident on 20 December 1987, will it be in consonance with law, logic, principles of physics, and/or allied science, to hold that MT VECTOR is the vessel solely at fault and responsible for the collision? How about MV DOÑA PAZ, a bigger ship of 2,324.08 gross tonnage (5-deck cargo passenger vessel, then cruising at 16.5 knots)? As compared to MT VECTOR of 629.82 gross tonner tanker, then cruising at 4.5 knots? May it be considered that, as between the two vessels, MV DOÑA PAZ could ha[ve] avoid[ed] such collision had there been an official on the bridge, and that MV DOÑA PAZ could had been earlier alarmed by its radar for an approaching vessel? 3) May VECTOR and SORIANO be held liable to indemnify/reimburse SULPICIO the amounts it is ordered to pay the MACASA’s because SULPICIO’s liability arises from breach of contract of carriage, inasmuch as in “culpa

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contractual” it is sufficient to prove the existence of the contract, because carrier is presumed to be at fault or to have acted negligently it being its duty to exercise extraordinary diligence, and cannot make the [safety] of its passengers dependent upon the diligence of VECTOR and SORIANO? 4) Will it be in accord with existing law and/or jurisprudence that both vessels (MV DOÑA PAZ and MT VECTOR) be declared mutually at fault and, therefore, each must [bear] its own loss? In the absence of CLEAR and CONVINCING proof[,] who is solely at fault?[8]

Petitioners posit that the factual findings of the BMI are not binding on the Court as such is limited to administrative liabilities and does not absolve the common carrier from its failure to observe extraordinary diligence; that this Court’s ruling in Caltex (Philippines), Inc. v. Sulpicio Lines, Inc.[9] is not res adjudicata to this case, since there were several other cases which did not reach this Court but, however, attained finality, previously holding that petitioners and Sulpicio Lines are jointly and severally liable to the victims;[10] that the collision was solely due to the fault of MV Doña Paz as it was guilty of navigational fault and negligence; that due to the absence of the ship captain and other competent officers who were not at the bridge at the time of collision, and running at a speed of 16.5 knots, it was the MV Doña Paz which rammed MT Vector; and that it was improbable for a slower vessel like MT Vector which, at the time, was running at a speed of merely 4.5 knots to ram a much faster vessel like the MV Doña Paz.[11] On the other hand, Sulpicio Lines claims that this Court’s ruling in Caltex (Philippines), Inc. v. Sulpicio Lines, Inc.[12] is res adjudicata to this case being of similar factual milieu and that the same is the law of the case on the matter; that the BMI proceedings are administrative in nature and can proceed independently of any civil action filed with the regular courts; that the BMI findings, as affirmed by the Philippine Coast Guard, holding that MT Vector was solely at fault at the time of collision, were based on substantial evidence and by reason of its special knowledge and technical expertise, the BMI’s findings of facts are generally accorded respect by the courts; and that, as such, said BMI factual findings cannot be the subject of the instant petition for review asking this Court to look again into the pieces of evidence already presented. Thus, Sulpicio Lines prays that the instant Petition be denied for lack of merit.[13] In their memorandum, the Macasas manifest that they are basically concerned with their claims against Sulpicio Lines for breach of contract of carriage. The Macasas opine that the arguments raised by Sulpicio Lines in its attempt to avoid liability to the Macasas are without basis in fact and in law because the RTC’s Decision is supported by applicable provisions of law and settled jurisprudence on contract of carriage. However, they disagree with the CA on the deletion of the RTC’s award of

P100,000.00 actual damages. The CA’s simple justification that if indeed the victims had such huge amount of money, they could have traveled by plane instead of taking the MV Doña Paz, according to the Macasas, is unjust, misplaced and adds insult to injury. They insist that the claim for actual damages was duly established in the hearings before the RTC by ample proof that Cornelio and Anacleta were both professionals; that they were in possession of personal effects and jewelries; and that since it was the Christmas season, the spouses intended a vacation in Manila and buy things to bring home as gifts. The Macasas also appeal that the reduction of the civil indemnity for the death of Cornelio, Anacleta and Ritchie from P200,000.00 to P150,000.00 be reconsidered. Thus, the Macasas pray that the RTC Decision be affirmed in toto and/or the CA Decision be modified with respect to the deleted award of actual damages and the reduced civil indemnity for the death of the victims.[14] This Court’s Ruling The instant Petition lacks merit. It is a well-established doctrine that in petitions for review on certiorari under Rule 45 of the Rules of Civil Procedure, only questions of law may be raised by the parties and passed upon by this Court. This Court defined a question of law, as distinguished from a question of fact, to wit: A question of law arises when there is doubt as to what the law is on a certain state of facts, while there is a question of fact when the doubt arises as to the truth or falsity of the alleged facts. For a question to be one of law, the same must not involve an examination of the probative value of the evidence presented by the litigants or any of them. The resolution of the issue must rest solely on what the law provides on the given set of circumstances. Once it is clear that the issue invites a review of the evidence presented, the question posed is one of fact. Thus, the test of whether a question is one of law or of fact is not the appellation given to such question by the party raising the same; rather, it is whether the appellate court can determine the issue raised without reviewing or evaluating the evidence, in which case, it is a question of law; otherwise it is a question of fact.[15] Petitioners’ insistence that MV Doña Paz was at fault at the time of the collision will entail this Court’s review and determination of the weight, credence, and probative value of the evidence presented. This Court is being asked to evaluate the pieces of evidence which were adequately passed upon by both the RTC and the CA. Without doubt, this matter is essentially factual in character and, therefore, outside the ambit of a petition for review on certiorari under Rule 45 of the Rules of Civil Procedure. Petitioners ought to remember that this Court is not a trier of facts. It is not for this Court to weigh these pieces of evidence all over again.[16] Likewise, we take judicial notice[17] of our decision in Caltex (Philippines), Inc. v. Sulpicio Lines, Inc.[18] In that case, while Caltex was exonerated from any third-party

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liability, this Court sustained the CA ruling that Vector Shipping and Soriano are liable to reimburse and indemnify Sulpicio Lines for whatever damages, attorney’s fees and costs the latter is adjudged to pay the victims therein. Petitioners’ invocation of the pendency before this Court of Francisco Soriano v. Sulpicio Lines, Inc.[19] along with Vector Shipping Corporation and Francisco Soriano v. American Home Assurance Co. and Sulpicio Lines, Inc. [20] is unavailing. It may be noted that in a Resolution dated February 13, 2006, this Court denied the petition in Francisco Soriano v. Sulpicio Lines, Inc. for its failure to sufficiently show that the CA committed any reversible error in the challenged decision as to warrant the exercise of this Court’s discretionary appellate jurisdiction. As a result, the CA decision[21] dated November 17, 2003 holding that Sulpicio Lines has a right to reimbursement and indemnification from the third-party defendants Soriano and Vector Shipping, who are the same petitioners in this case, was sustained by this Court. Considering that in the cases which have reached this Court, we have consistently upheld the third-party liability of petitioners, we see no cogent reason to deviate from this ruling. Moreover, in Caltex (Philippines), Inc. v. Sulpicio Lines, Inc.,[22] we held that MT Vector fits the definition of a common carrier under Article 1732[23] of the New Civil Code. Our ruling in that case is instructive: Thus, the carriers are deemed to warrant impliedly the seaworthiness of the ship. For a vessel to be seaworthy, it must be adequately equipped for the voyage and manned with a sufficient number of competent officers and crew. The failure of a common carrier to maintain in seaworthy condition the vessel involved in its contract of carriage is a clear breach of its duty prescribed in Article 1755 of the Civil Code. The provisions owed their conception to the nature of the business of common carriers. This business is impressed with a special public duty. The public must of necessity rely on the care and skill of common carriers in the vigilance over the goods and safety of the passengers, especially because with the modern development of science and invention, transportation has become more rapid, more complicated and somehow more hazardous. For these reasons, a passenger or a shipper of goods is under no obligation to conduct an inspection of the ship and its crew, the carrier being obliged by law to impliedly warrant its seaworthiness. Thus, we are disposed to agree with the findings of the CA when it aptly held: We are not swayed by the lengthy disquisition of MT Vector and Francisco Soriano urging this Court to absolve them from liability. All evidence points to the fact that it was MT Vector’s negligent officers and crew which caused it to ram into MV Doña Paz. More so, MT Vector was found to be carrying expired coastwise license and permits and was not properly manned. As the records would also disclose, there is a defect in the ignition system of the vessel, and it was not convincingly shown whether

the necessitated repairs were in fact undertaken before the said ship had set to sea. In short, MT Vector was unseaworthy at the time of the mishap. That the said vessel was allowed to set sail when it was, to everyone in the group’s knowledge, not fit to do so translates into rashness and imprudence.[24]

We reiterate, anew, the rule that findings of fact of the CA are generally binding and conclusive on this Court. [25] While this Court has recognized several exceptions[26] to this rule, none of these exceptions finds application in this case. It bears emphasis also that this Court accords respect to the factual findings of the trial court, especially if affirmed by the CA on appeal. Unless the trial court overlooked substantial matters that would alter the outcome of the case, this Court will not disturb such findings. In any event, we have meticulously reviewed the records of the case and found no reason to depart from the rule.[27] Lastly, we cannot turn a blind eye to this gruesome maritime tragedy which is now a dark page in our nation’s history. We commiserate with all the victims, particularly with the Macasas who were denied justice for almost two decades in this case. To accept petitioners’ submission that this Court, along with the RTC and the CA, should await the review by the Department of National Defense of the BMI findings, would, in effect, limit the courts’ jurisdiction to expeditiously try, hear and decide cases filed before them. It would not only prolong the Macasas’ agony but would result in yet another tragedy at the expense of speedy justice. This, we cannot allow. WHEREFORE, the instant Petition is DENIED. The assailed Court of Appeals Decision dated September 24, 2003 is hereby AFFIRMED. Costs against petitioners.

SO ORDERED. Japan Airlines v. Simangan Apr 22, 2008 JAPAN AIRLINES, G.R. No. 170141 Petitioner, Present: - versus SANTIAGO, J.,

YNARESChairperso

n, MARTINEZ, CHICO-NAZARIO, NACHURA, and REYES, JJ. Promulgated: JESUS SIMANGAN, Respondent. April 22, 2008 x-------------------------------------------------x

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DECISION

REYES, R.T., J.:

WHEN an airline issues a ticket to a passenger confirmed on a particular flight on a certain date, a contract of carriage arises, and the passenger has every right to expect that he would fly on that flight and on that date. If he does not, then the carrier opens itself to a suit for breach of contract of carriage.[1] The power to admit or not an alien into the country is a sovereign act which cannot be interfered with even by Japan Airlines (JAL).[2] In this petition for review on certiorari,[3] petitioner JAL appeals the: (1) Decision[4] dated May 31, 2005 of the Court of Appeals (CA) ordering it to pay respondent Jesus Simangan moral and exemplary damages; and (2) Resolution[5] of the same court dated September 28, 2005 denying JAL’s motion for reconsideration. The Facts In 1991, respondent Jesus Simangan decided to donate a kidney to his ailing cousin, Loreto Simangan, in UCLA School of Medicine in Los Angeles, California, U.S.A. Upon request of UCLA, respondent undertook a series of laboratory tests at the National Kidney Institute in Quezon City to verify whether his blood and tissue type are compatible with Loreto’s.[6] Fortunately, said tests proved that respondent’s blood and tissue type were well-matched with Loreto’s.[7] Respondent needed to go to the United States to complete his preliminary work-up and donation surgery. Hence, to facilitate respondent’s travel to the United States, UCLA wrote a letter to the American Consulate in Manila to arrange for his visa. In due time, respondent was issued an emergency U.S. visa by the American Embassy in Manila. [8] Having obtained an emergency U.S. visa, respondent purchased a round trip plane ticket from petitioner JAL for US$1,485.00 and was issued the corresponding boarding pass.[9] He was scheduled to a particular flight bound for Los Angeles, California, U.S.A. via Narita, Japan.[10] On July 29, 1992, the date of his flight, respondent went to Ninoy Aquino International Airport in the company of several relatives and friends.[11] He was allowed to check-in at JAL’s counter.[12] His plane ticket, boarding pass, travel authority and personal articles were subjected to rigid immigration and security routines.[13] After passing through said immigration and security procedures, respondent was allowed by JAL to enter its airplane.[14]

While inside the airplane, JAL’s airline crew suspected respondent of carrying a falsified travel document and imputed that he would only use the trip to the United States as a pretext to stay and work in Japan.[15] The stewardess asked respondent to show his travel documents. Shortly after, the stewardess along with a Japanese and a Filipino haughtily ordered him to stand up and leave the plane.[16] Respondent protested, explaining that he was issued a U.S. visa. Just to allow him to board the plane, he pleaded with JAL to closely monitor his movements when the aircraft stops over in Narita.[17] His pleas were ignored. He was then constrained to go out of the plane.[18] In a nutshell, respondent was bumped off the flight. Respondent went to JAL’s ground office and waited there for three hours. Meanwhile, the plane took off and he was left behind.[19] Afterwards, he was informed that his travel documents were, indeed, in order.[20] Respondent was refunded the cost of his plane ticket less the sum of US$500.00 which was deducted by JAL.[21] Subsequently, respondent’s U.S. visa was cancelled.[22]

Displeased by the turn of events, respondent filed an action for damages against JAL with the Regional Trial Court (RTC) in Valenzuela City, docketed as Civil Case No. 4195-V-93. He claimed he was not able to donate his kidney to Loreto; and that he suffered terrible embarrassment and mental anguish.[23] He prayed that he be awarded P3 million as moral damages, P1.5 million as exemplary damages and P500,000.00 as attorney’s fees. [24] JAL denied the material allegations of the complaint. It argued, among others, that its failure to allow respondent to fly on his scheduled departure was due to “a need for his travel documents to be authenticated by the United States Embassy”[25] because no one from JAL’s airport staff had encountered a parole visa before.[26] It posited that the authentication required additional time; that respondent was advised to take the flight the following day, July 30, 1992. JAL alleged that respondent agreed to be rebooked on July 30, 1992.[27] JAL also lodged a counterclaim anchored on respondent’s alleged wrongful institution of the complaint. It prayed for litigation expenses, exemplary damages and attorney’s fees. [28] On September 21, 2000, the RTC presided by Judge Floro P. Alejo rendered its decision in favor of respondent (plaintiff), disposing as follows: WHEREFORE, judgment is hereby rendered ordering the defendant to pay the plaintiff the amount of P1,000,000.00 as moral damages, the amount of P500,000.00 as exemplary damages and the amount of P250,000.00 as attorney’s fees, plus the cost of suit.[29]

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The RTC explained: In summarily and insolently ordering the plaintiff to disembark while the latter was already settled in his assigned seat, the defendant violated the contract of carriage; that when the plaintiff was ordered out of the plane under the pretext that the genuineness of his travel documents would be verified it had caused him embarrassment and besmirched reputation; and that when the plaintiff was finally not allowed to take the flight, he suffered more wounded feelings and social humiliation for which the plaintiff was asking to be awarded moral and exemplary damages as well as attorney’s fees. The reason given by the defendant that what prompted them to investigate the genuineness of the travel documents of the plaintiff was that the plaintiff was not then carrying a regular visa but just a letter does not appear satisfactory. The defendant is engaged in transporting passengers by plane from country to country and is therefore conversant with the travel documents. The defendant should not be allowed to pretend, to the prejudice of the plaintiff not to know that the travel documents of the plaintiff are valid documents to allow him entry in the United States. The foregoing act of the defendant in ordering the plaintiff to deplane while already settled in his assigned seat clearly demonstrated that the defendant breached its contract of carriage with the plaintiff as passenger in bad faith and as such the plaintiff is entitled to moral and exemplary damages as well as to an award of attorney’s fees.[30] Disagreeing with the RTC judgment, JAL appealed to the CA contending that it is not guilty of breach of contract of carriage, hence, not liable for damages.[31] It posited that it is the one entitled to recover on its counterclaim.[32] CA Ruling In a Decision[33] dated May 31, 2005, the CA affirmed the decision of the RTC with modification in that it lowered the amount of moral and exemplary damages and deleted the award of attorney’s fees. The fallo of the CA decision reads:

“shouted at him to stand up and arrogantly asked him to produce his travel papers, without the least courtesy every human being is entitled to”;[38] and that “he was compelled to deplane on the grounds that his papers were fake.”[39] The CA ratiocinated: While the protection of passengers must take precedence over convenience, the implementation of security measures must be attended by basic courtesies. In fact, breach of the contract of carriage creates against the carrier a presumption of liability, by a simple proof of injury, relieving the injured passenger of the duty to establish the fault of the carrier or of his employees; and placing on the carrier the burden to prove that it was due to an unforeseen event or to force majeure. That appellee possessed bogus travel documents and that he might stay illegally in Japan are allegations without substantiation. Also, appellant’s attempt to rebook appellee the following day was too late and did not relieve it from liability. The damage had been done. Besides, its belated theory of novation, i.e., that appellant’s original obligation to carry appellee to Narita and Los Angeles on July 29, 1992 was extinguished by novation when appellant and appellant agreed that appellee will instead take appellant’s flight to Narita on the following day, July 30, 1992, deserves little attention. It is inappropriate at bar. Questions not taken up during the trial cannot be raised for the first time on appeal.[40] (Underscoring ours and citations were omitted) Citing Ortigas, Jr. v. Lufthansa German Airlines,[41] the CA declared that “(i)n contracts of common carriage, inattention and lack of care on the part of the carrier resulting in the failure of the passenger to be accommodated in the class contracted for amounts to bad faith or fraud which entitles the passengers to the award of moral damages in accordance with Article 2220 of the Civil Code.”[42] Nevertheless, the CA modified the damages awarded by the RTC. It explained:

WHEREFORE, the appealed Decision is AFFIRMED with MODIFICATION. Appellant JAPAN AIR LINES is ordered to pay appellee JESUS SIMANGAN the reduced sums, as follows: Five Hundred Thousand Pesos (P500,000.00) as moral damages, and Two Hundred Fifty Thousand Pesos (P250,000.00) as exemplary damages. The award of attorney’s fees is hereby DELETED.[34]

Fundamental in the law on damages is that one injured by a breach of a contract, or by a wrongful or negligent act or omission shall have a fair and just compensation commensurate to the loss sustained as consequence of the defendant’s act. Being discretionary on the court, the amount, however, should not be palpably and scandalously excessive.

The CA elucidated that since JAL issued to respondent a round trip plane ticket for a lawful consideration, “there arose a perfected contract between them.”[35] It found that respondent was “haughtily ejected”[36] by JAL and that “he was certainly embarrassed and humiliated”[37] when, in the presence of other passengers, JAL’s airline staff

Here, the trial court’s award of P1,000,000.00 as moral damages appears to be overblown. No other proof of appellee’s social standing, profession, financial capabilities was presented except that he was single and a businessman. To Us, the sum of 500,000.00 is just and fair. For, moral damages are emphatically not intended to enrich a

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complainant at the expense of the defendant. They are awarded only to enable the injured party to obtain means, diversion or amusements that will serve to alleviate the moral suffering he has undergone, by reason of the defendant’s culpable action. Moreover, the grant of P500,000.00 as exemplary damages needs to be reduced to a reasonable level. The award of exemplary damages is designed to permit the courts to mould behavior that has socially deleterious consequences and its imposition is required by public policy to suppress the wanton acts of the offender. Hence, the sum of P250,000.00 is adequate under the circumstances. The award of P250,000.00 as attorney’s fees lacks factual basis. Appellee was definitely compelled to litigate in protecting his rights and in seeking relief from appellant’s misdeeds. Yet, the record is devoid of evidence to show the cost of the services of his counsel and/or the actual expenses incurred in prosecuting his action.[43] (Citations were omitted)

WANTON, FRAUDULENT, RECKLESS, OPPRESSIVE OR MALEVOLENT CONDUCT. B. ASSUMING ARGUENDO THAT JAL WAS GUILTY OF BREACH, JAL DID NOT ACT IN A WANTON FRAUDULENT, RECKLESS, OPPRESSIVE OR MALEVOLENT MANNER AS TO ENTITLE RESPONDENT TO EXEMPLARY DAMAGES. III. ASSUMING ARGUENDO THAT RESPONDENT WAS ENTITLED TO AN AWARD OF DAMAGES, WHETHER OR NOT THE COURT OF APPEALS AWARD OF P750,000 IN DAMAGES WAS EXCESSIVE AND UNPRECEDENTED. IV. WHETHER OR NOT THE COURT OF APPEALS ERRED IN NOT FINDING FOR JAL ON ITS COUNTERCLAIM.[44] (Underscoring Ours)

Issues

Basically, there are three (3) issues to resolve here: (1) whether or not JAL is guilty of contract of carriage; (2) whether or not respondent is entitled to moral and exemplary damages; and (3) whether or not JAL is entitled to its counterclaim for damages.

JAL poses the following issues –

Our Ruling

I. WHETHER OR NOT THE COURT OF APPEALS ERRED IN RULING THAT RESPONDENT WAS ENTITLED TO MORAL DAMAGES, CONSIDERING THAT:

This Court is not a trier of facts.

When JAL’s motion for reconsideration was denied, it resorted to the petition at bar.

A. JAL WAS NOT GUILTY OF BREACH OF CONTRACT. B. MORAL DAMAGES MAY BE AWARDED IN BREACH OF CONTRACT CASES ONLY WHEN THE BREACH IS ATTENDED BY FRAUD OR BAD FAITH. ASSUMING ARGUENDO THAT JAL WAS GUILTY OF BREACH, JAL DID NOT ACT FRAUDULENTLY OR IN BAD FAITH AS TO ENTITLE RESPONDENT TO MORAL DAMAGES. C. THE LAW DISTINGUISHES A CONTRACTUAL BREACH EFFECTED IN GOOD FAITH FROM ONE ATTENDED BY BAD FAITH. II. WHETHER OR NOT THE COURT OF APPEALS ERRED IN RULING THAT RESPONDENT WAS ENTITLED TO EXEMPLARY DAMAGES CONSIDERING THAT: A. EXEMPLARY DAMAGES ARE NOT RECOVERABLE IN BREACH OF CONTRACT OF CARRIAGE UNLESS THE CARRIER IS GUILTY OF

Chiefly, the issues are factual. The RTC findings of facts were affirmed by the CA. The CA also gave its nod to the reasoning of the RTC except as to the awards of damages, which were reduced, and that of attorney’s fees, which was deleted. We are not a trier of facts. We generally rely upon, and are bound by, the conclusions on this matter of the lower courts, which are better equipped and have better opportunity to assess the evidence first-hand, including the testimony of the witnesses.[45] We have repeatedly held that the findings of fact of the CA are final and conclusive and cannot be reviewed on appeal to the Supreme Court provided they are based on substantial evidence.[46] We have no jurisdiction, as a rule, to reverse their findings.[47] Among the exceptions to this rule are: (a) when the conclusion is a finding grounded entirely on speculations, surmises or conjectures; (b) when the inference made is manifestly mistaken, absurd or impossible; (c) where there is grave abuse of discretion; (d) when the judgment is based on a misapprehension of facts; (e) when the findings of facts are conflicting; (f) when the CA, in making its findings, went beyond the issues of the case and the same is contrary to the admissions of both appellant and appellee.[48] The said exceptions, which are being invoked by JAL, are not found here. There is no indication that the findings of

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the CA are contrary to the evidence on record or that vital testimonies of JAL’s witnesses were disregarded. Neither did the CA commit misapprehension of facts nor did it fail to consider relevant facts. Likewise, there was no grave abuse of discretion in the appreciation of facts or mistaken and absurd inferences.

freely consented to be rebooked the next day. In short, he did not agree to the alleged novation. Since novation implies a waiver of the right the creditor had before the novation, such waiver must be express.[58] It cannot be supposed, without clear proof, that respondent had willingly done away with his right to fly on July 29, 1992.

We thus sustain the coherent facts as established by the courts below, there being no sufficient showing that the said courts committed reversible error in reaching their conclusions.

Moreover, the reason behind the bumping off incident, as found by the RTC and CA, was that JAL personnel imputed that respondent would only use the trip to the United States as a pretext to stay and work in Japan.[59]

JAL is guilty of breach of contract of carriage.

Apart from the fact that respondent’s plane ticket, boarding pass, travel authority and personal articles already passed the rigid immigration and security routines,[60] JAL, as a common carrier, ought to know the kind of valid travel documents respondent carried. As provided in Article 1755 of the New Civil Code: “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.”[61] Thus, We find untenable JAL’s defense of “verification of respondent’s documents” in its breach of contract of carriage.

That respondent purchased a round trip plane ticket from JAL and was issued the corresponding boarding pass is uncontroverted.[49] His plane ticket, boarding pass, travel authority and personal articles were subjected to rigid immigration and security procedure.[50] After passing through said immigration and security procedure, he was allowed by JAL to enter its airplane to fly to Los Angeles, California, U.S.A. via Narita, Japan.[51] Concisely, there was a contract of carriage between JAL and respondent. Nevertheless, JAL made respondent get off the plane on his scheduled departure on July 29, 1992. He was not allowed by JAL to fly. JAL thus failed to comply with its obligation under the contract of carriage.

JAL justifies its action by arguing that there was “a need to verify the authenticity of respondent’s travel document.”[52] It alleged that no one from its airport staff had encountered a parole visa before.[53] It further contended that respondent agreed to fly the next day so that it could first verify his travel document, hence, there was novation.[54] It maintained that it was not guilty of breach of contract of carriage as respondent was not able to travel to the United States due to his own voluntary desistance. [55] We cannot agree. JAL did not allow respondent to fly. It informed respondent that there was a need to first check the authenticity of his travel documents with the U.S. Embassy. [56] As admitted by JAL, “the flight could not wait for Mr. Simangan because it was ready to depart.”[57] Since JAL definitely declared that the flight could not wait for respondent, it gave respondent no choice but to be left behind. The latter was unceremoniously bumped off despite his protestations and valid travel documents and notwithstanding his contract of carriage with JAL. Damage had already been done when respondent was offered to fly the next day on July 30, 1992. Said offer did not cure JAL’s default. Considering that respondent was forced to get out of the plane and left behind against his will, he could not have

It bears repeating that the power to admit or not an alien into the country is a sovereign act which cannot be interfered with even by JAL.[62] In an action for breach of contract of carriage, all that is required of plaintiff is to prove the existence of such contract and its non-performance by the carrier through the latter’s failure to carry the passenger safely to his destination.[63] Respondent has complied with these twin requisites. Respondent is entitled to moral and exemplary damages and attorney’s fees plus legal interest. With reference to moral damages, JAL alleged that they are not recoverable in actions ex contractu except only when the breach is attended by fraud or bad faith. It is contended that it did not act fraudulently or in bad faith towards respondent, hence, it may not be held liable for moral damages. As a general rule, moral damages are not recoverable in actions for damages predicated on a breach of contract for it is not one of the items enumerated under Article 2219 of the Civil Code.[64] As an exception, such damages are recoverable: (1) in cases in which the mishap results in the death of a passenger, as provided in Article 1764, in relation to Article 2206(3) of the Civil Code; and (2) in the cases in which the carrier is guilty of fraud or bad faith, as provided in Article 2220.[65] The acts committed by JAL against respondent amounts to bad faith. As found by the RTC, JAL breached its contract of carriage with respondent in bad faith. JAL personnel summarily and insolently ordered respondent to disembark

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while the latter was already settled in his assigned seat. He was ordered out of the plane under the alleged reason that the genuineness of his travel documents should be verified.

right to be treated by the carrier’s employees with kindness, respect, courtesy and due consideration and are entitled to be protected against personal misconduct, injurious language, indignities and abuses from such employees.[70]

These findings of facts were upheld by the CA, to wit: x x x he was haughtily ejected by appellant. He was certainly embarrassed and humiliated when, in the presence of other passengers, the appellant’s airline staff shouted at him to stand up and arrogantly asked him to produce his travel papers, without the least courtesy every human being is entitled to. Then, he was compelled to deplane on the grounds that his papers were fake. His protestation of having been issued a U.S. visa coupled with his plea to appellant to closely monitor his movements when the aircraft stops over in Narita, were ignored. Worse, he was made to wait for many hours at the office of appellant only to be told later that he has valid travel documents.[66] (Underscoring ours)

Clearly, JAL is liable for moral damages. It is firmly settled that moral damages are recoverable in suits predicated on breach of a contract of carriage where it is proved that the carrier was guilty of fraud or bad faith, as in this case. Inattention to and lack of care for the interests of its passengers who are entitled to its utmost consideration, particularly as to their convenience, amount to bad faith which entitles the passenger to an award of moral damages. What the law considers as bad faith which may furnish the ground for an award of moral damages would be bad faith in securing the contract and in the execution thereof, as well as in the enforcement of its terms, or any other kind of deceit.[67] JAL is also liable for exemplary damages as its abovementioned acts constitute wanton, oppressive and malevolent acts against respondent. Exemplary damages, which are awarded by way of example or correction for the public good, may be recovered in contractual obligations, as in this case, if defendant acted in wanton, fraudulent, reckless, oppressive, or malevolent manner.[68] Exemplary damages are designed by our civil law to permit the courts to reshape behaviour that is socially deleterious in its consequence by creating negative incentives or deterrents against such behaviour. In requiring compliance with the standard of extraordinary diligence, a standard which is, in fact, that of the highest possible degree of diligence, from common carriers and in creating a presumption of negligence against them, the law seeks to compel them to control their employees, to tame their reckless instincts and to force them to take adequate care of human beings and their property.[69]

The assessment of P500,000.00 as moral damages and P100,000.00 as exemplary damages in respondent’s favor is, in Our view, reasonable and realistic. This award is reasonably sufficient to indemnify him for the humiliation and embarrassment he suffered. This also serves as an example to discourage the repetition of similar oppressive acts. With respect to attorney's fees, they may be awarded when defendant’s act or omission has compelled plaintiff to litigate with third persons or to incur expenses to protect his interest.[71] The Court, in Construction Development Corporation of the Philippines v. Estrella,[72] citing Traders Royal Bank Employees Union-Independent v. National Labor Relations Commission,[73] elucidated thus: There are two commonly accepted concepts of attorney’s fees, the so-called ordinary and extraordinary. In its ordinary concept, an attorney’s fee is the reasonable compensation paid to a lawyer by his client for the legal services he has rendered to the latter. The basis of this compensation is the fact of his employment by and his agreement with the client. In its extraordinary concept, an attorney’s fee is an indemnity for damages ordered by the court to be paid by the losing party in a litigation. The basis of this is any of the cases provided by law where such award can be made, such as those authorized in Article 2208, Civil Code, and is payable not to the lawyer but to the client, unless they have agreed that the award shall pertain to the lawyer as additional compensation or as part thereof.[74]

It was therefore erroneous for the CA to delete the award of attorney’s fees on the ground that the record is devoid of evidence to show the cost of the services of respondent’s counsel. The amount is actually discretionary upon the Court so long as it passes the test of reasonableness. They may be recovered as actual or compensatory damages when exemplary damages are awarded and whenever the court deems it just and equitable,[75] as in this case. Considering the factual backdrop of this case, attorney’s fees in the amount of P200,000.00 is reasonably modest. The above liabilities of JAL in the total amount of P800,000.00 earn legal interest pursuant to the Court’s ruling in Construction Development Corporation of the Philippines v. Estrella,[76] citing Eastern Shipping Lines, Inc. v. Court of Appeals,[77] to wit:

Neglect or malfeasance of the carrier’s employees could give ground for an action for damages. Passengers have a

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Regarding the imposition of legal interest at the rate of 6% from the time of the filing of the complaint, we held in Eastern Shipping Lines, Inc. v. Court of Appeals, that when an obligation, regardless of its source, i.e., law, contracts, quasi-contracts, delicts or quasi-delicts is breached, the contravenor can be held liable for payment of interest in the concept of actual and compensatory damages, subject to the following rules, to wit – 1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance of money, the interest due should be that which may have been stipulated in writing. Furthermore, the interest due shall itself earn legal interest from the time it is judicially demanded. In the absence of stipulation, the rate of interest shall be 12% per annum to be computed from default, i.e., from judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code. 2. When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated claims or damages except when or until the demand can be established with reasonable certainty. Accordingly, where the demand is established with reasonable certainty, the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code) but when such certainty cannot be so reasonably established at the time the demand is made, the interest shall begin to run only from the date the judgment of the court is made (at which time the quantification of damages may be deemed to have been reasonably ascertained). The actual base for the computation of legal interest shall, in any case, be on the amount finally adjudged. 3. When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be 12% per annum from such finality until its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit.[78] (Emphasis supplied and citations omitted) Accordingly, in addition to the said total amount of P800,000.00, JAL is liable to pay respondent legal interest. Pursuant to the above ruling of the Court, the legal interest is 6% and it shall be reckoned from September 21, 2000 when the RTC rendered its judgment. From the time this Decision becomes final and executory, the interest rate shall be 12% until its satisfaction. JAL is not entitled to its counterclaim for damages. The counterclaim of JAL in its Answer[79] is a compulsory counterclaim for damages and attorney’s fees arising from the filing of the complaint. There is no mention of any other counter claims.

This compulsory counterclaim of JAL arising from the filing of the complaint may not be granted inasmuch as the complaint against it is obviously not malicious or unfounded. It was filed by respondent precisely to claim his right to damages against JAL. Well-settled is the rule that the commencement of an action does not per se make the action wrongful and subject the action to damages, for the law could not have meant to impose a penalty on the right to litigate.[80] We reiterate case law that if damages result from a party’s exercise of a right, it is damnum absque injuria.[81] Lawful acts give rise to no injury. Walang perhuwisyong maaring idulot ang paggamit sa sariling karapatan. During the trial, however, JAL presented a witness who testified that JAL suffered further damages. Allegedly, respondent caused the publications of his subject complaint against JAL in the newspaper for which JAL suffered damages.[82] Although these additional damages allegedly suffered by JAL were not incorporated in its Answer as they arose subsequent to its filing, JAL’s witness was able to testify on the same before the RTC.[83] Hence, although these issues were not raised by the pleadings, they shall be treated in all respects as if they had been raised in the pleadings. As provided in Section 5, Rule 10 of the Rules of Court, “(w)hen issues not raised by the pleadings are tried with the express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings.” Nevertheless, JAL’s counterclaim cannot be granted. JAL is a common carrier. JAL’s business is mainly with the traveling public. It invites people to avail themselves of the comforts and advantages it offers.[84] Since JAL deals with the public, its bumping off of respondent without a valid reason naturally drew public attention and generated a public issue. The publications involved matters about which the public has the right to be informed because they relate to a public issue. This public issue or concern is a legitimate topic of a public comment that may be validly published. Assuming that respondent, indeed, caused the publication of his complaint, he may not be held liable for damages for it. The constitutional guarantee of freedom of the speech and of the press includes fair commentaries on matters of public interest. This is explained by the Court in Borjal v. Court of Appeals,[85] to wit: To reiterate, fair commentaries on matters of public interest are privileged and constitute a valid defense in an action for libel or slander. The doctrine of fair comment means that while in general every discreditable imputation publicly

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made is deemed false, because every man is presumed innocent until his guilt is judicially proved, and every false imputation is deemed malicious, nevertheless, when the discreditable imputation is directed against a public person in his public capacity, it is not necessarily actionable. In order that such discreditable imputation to a public official may be actionable, it must either be a false allegation of fact or a comment based on a false supposition. If the comment is an expression of opinion, based on established facts, then it is immaterial that the opinion happens to be mistaken, as long as it might reasonably be inferred from the facts.[86] (Citations omitted and underscoring ours) Even though JAL is not a public official, the rule on privileged commentaries on matters of public interest applies to it. The privilege applies not only to public officials but extends to a great variety of subjects, and includes matters of public concern, public men, and candidates for office.[87]

Hence, pursuant to the Borjal case, there must be an actual malice in order that a discreditable imputation to a public person in his public capacity or to a public official may be actionable. To be considered malicious, the libelous statements must be shown to have been written or published with the knowledge that they are false or in reckless disregard of whether they are false or not.[88]

COURT OF APPEALS and SPOUSES MANUEL S. BUNCIO and AURORA R. BUNCIO, Minors DEANNA R. BUNCIO and NIKOLAI R. BUNCIO, assisted by their Father, MANUEL S. BUNCIO, and JOSEFA REGALADO, represented by her Attorney-in-Fact, MANUEL S. BUNCIO, Respondents. G.R. No. 123238

Present: YNARES-SANTIAGO, J., Chairperson, AUSTRIA-MARTINEZ, CHICO-NAZARIO, NACHURA, and REYES, JJ.

Promulgated:

September 22, 2008 x---------------------------------------- - - - - - - - - -x

Considering that the published articles involve matters of public interest and that its expressed opinion is not malicious but based on established facts, the imputations against JAL are not actionable. Therefore, JAL may not claim damages for them.

DECISION

WHEREFORE, the petition is DENIED. The appealed Decision of the Court of Appeals is AFFIRMED WITH MODIFICATION. As modified, petitioner Japan Airlines is ordered to pay respondent Jesus Simangan the following: (1) P500,000.00 as moral damages; (2) P100,000.00 as exemplary damages; and (3) P200,000.00 as attorney’s fees.

Before Us is a Petition for Review[1] on Certiorari under Rule 45 of the Rules of Court seeking to set aside the Decision,[2] dated 20 December 1995, of the Court of Appeals in CA-G.R. CV No. 26921 which affirmed in toto the Decision,[3] dated 2 April 1990, of the Quezon City Regional Trial Court (RTC), Branch 90, in Civil Case No. Q-33893.

The total amount adjudged shall earn legal interest at the rate of 6% per annum from the date of judgment of the Regional Trial Court on September 21, 2000 until the finality of this Decision. From the time this Decision becomes final and executory, the unpaid amount, if any, shall earn legal interest at the rate of 12% per annum until its satisfaction.

The undisputed facts are as follows:

SO ORDERED. Philippine Airlines v. CA Sep 22, 2008 PHILIPPINE AIRLINES, INCORPORATED, Petitioner, - versus –

CHICO-NAZARIO, J.:

Sometime before 2 May 1980, private respondents spouses Manuel S. Buncio and Aurora R. Buncio purchased from petitioner Philippine Airlines, Incorporated, two plane tickets[4] for their two minor children, Deanna R. Buncio (Deanna), then 9 years of age, and Nikolai R. Buncio (Nikolai), then 8 years old. Since Deanna and Nikolai will travel as unaccompanied minors, petitioner required private respondents to accomplish, sign and submit to it an indemnity bond.[5] Private respondents complied with this requirement. For the purchase of the said two plane tickets, petitioner agreed to transport Deanna and Nikolai on 2 May 1980 from Manila to San Francisco, California, United States of America (USA), through one of its planes, Flight 106. Petitioner also agreed that upon the arrival of Deanna

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and Nikolai in San Francisco Airport on 3 May 1980, it would again transport the two on that same day through a connecting flight from San Francisco, California, USA, to Los Angeles, California, USA, via another airline, United Airways 996. Deanna and Nikolai then will be met by their grandmother, Mrs. Josefa Regalado (Mrs. Regalado), at the Los Angeles Airport on their scheduled arrival on 3 May 1980. On 2 May 1980, Deanna and Nikolai boarded Flight 106 in Manila. On 3 May 1980, Deanna and Nikolai arrived at the San Francisco Airport. However, the staff of United Airways 996 refused to take aboard Deanna and Nikolai for their connecting flight to Los Angeles because petitioner’s personnel in San Francisco could not produce the indemnity bond accomplished and submitted by private respondents. The said indemnity bond was lost by petitioner’s personnel during the previous stop-over of Flight 106 in Honolulu, Hawaii. Deanna and Nikolai were then left stranded at the San Francisco Airport. Subsequently, Mr. Edwin Strigl (Strigl), then the Lead Traffic Agent of petitioner in San Francisco, California, USA, took Deanna and Nikolai to his residence in San Francisco where they stayed overnight. Meanwhile, Mrs. Regalado and several relatives waited for the arrival of Deanna and Nikolai at the Los Angeles Airport. When United Airways 996 landed at the Los Angeles Airport and its passengers disembarked, Mrs. Regalado sought Deanna and Nikolai but she failed to find them. Mrs. Regalado asked a stewardess of the United Airways 996 if Deanna and Nikolai were on board but the stewardess told her that they had no minor passengers. Mrs. Regalado called private respondents and informed them that Deanna and Nikolai did not arrive at the Los Angeles Airport. Private respondents inquired about the location of Deanna and Nikolai from petitioner’s personnel, but the latter replied that they were still verifying their whereabouts. On the morning of 4 May 1980, Strigl took Deanna and Nikolai to San Francisco Airport where the two boarded a Western Airlines plane bound for Los Angeles. Later that day, Deanna and Nikolai arrived at the Los Angeles Airport where they were met by Mrs. Regalado. Petitioner’s personnel had previously informed Mrs. Regalado of the late arrival of Deanna and Nikolai on 4 May 1980. On 17 July 1980, private respondents, through their lawyer, sent a letter[6] to petitioner demanding payment of 1 million pesos as damages for the gross negligence and inefficiency of its employees in transporting Deanna and Nikolai. Petitioner did not heed the demand. On 20 November 1981, private respondents filed a complaint[7] for damages against petitioner before the RTC. Private respondents impleaded Deanna, Nikolai and Mrs. Regalado as their co-plaintiffs. Private respondents

alleged that Deanna and Nikolai were not able to take their connecting flight from San Francisco to Los Angeles as scheduled because the required indemnity bond was lost on account of the gross negligence and malevolent conduct of petitioner’s personnel. As a consequence thereof, Deanna and Nikolai were stranded in San Francisco overnight, thereby exposing them to grave danger. This dilemma caused Deanna, Nikolai, Mrs. Regalado and private respondents to suffer serious anxiety, mental anguish, wounded feelings, and sleepless nights. Private respondents prayed the RTC to render judgment ordering petitioner: (1) to pay Deanna and Nikolai P100,000.00 each, or a total of P200,000.00, as moral damages; (2) to pay private respondents P500,000.00 each, or a total of P1,000,000,00, as moral damages; (3) to pay Mrs. Regalado P100,000.00 as moral damages; (4) to pay Deanna, Nikolai, Mrs. Regalado and private respondents P50,000.00 each, or a total of P250,000.00 as exemplary damages; and (5) to pay attorney’s fees equivalent to 25% of the total amount of damages mentioned plus costs of suit. In its answer[8] to the complaint, petitioner admitted that Deanna and Nikolai were not allowed to take their connecting flight to Los Angeles and that they were stranded in San Francisco. Petitioner, however, denied that the loss of the indemnity bond was caused by the gross negligence and malevolent conduct of its personnel. Petitioner averred that it always exercised the diligence of a good father of the family in the selection, supervision and control of its employees. In addition, Deanna and Nikolai were personally escorted by Strigl, and the latter exerted efforts to make the connecting flight of Deanna and Nikolai to Los Angeles possible. Further, Deanna and Nikolai were not left unattended from the time they were stranded in San Francisco until they boarded Western Airlines for a connecting flight to Los Angeles. Petitioner asked the RTC to dismiss the complaint based on the foregoing averments. After trial, the RTC rendered a Decision on 2 April 1990 holding petitioner liable for damages for breach of contract of carriage. It ruled that petitioner should pay moral damages for its inattention and lack of care for the welfare of Deanna and Nikolai which, in effect, amounted to bad faith, and for the agony brought by the incident to private respondents and Mrs. Regalado. It also held that petitioner should pay exemplary damages by way of example or correction for the public good under Article 2229 and 2232 of the Civil Code, plus attorney’s fees and costs of suit. In sum, the RTC ordered petitioner: (1) to pay Deanna and Nikolai P50,000.00 each as moral damages and P25,000.00 each as exemplary damages; (2) to pay private respondent Aurora R. Buncio, as mother of Deanna and Nikolai, P75,000.00 as moral damages; (3) to pay Mrs. Regalado, as grandmother of Deanna and Nikolai, P30,000.00 as moral damages; and (4) to pay an amount of P38,250.00 as attorney’s fees and the costs of suit. Private respondent Manuel S. Buncio was not awarded damages because his court testimony was disregarded, as he failed to appear during his scheduled cross-examination. The dispositive portion of the RTC Decision reads:

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ACCORDINGLY, judgment is hereby rendered: 1. Ordering defendant Philippines Airlines, Inc. to pay Deanna R. Buncio and Nikolai R. Buncio the amount of P50,000.00 each as moral damages; and the amount of P25,000.00 each as exemplary damages; 2. Ordering said defendant to pay the amount of P75,000.00 to Aurora R. Buncio, mother of Deanna and Nikolai, as moral damages; and the amount of P30,000.00 to Josefa Regalado, grandmother of Deanna and Nikolai, as moral damages; and 3. Ordering said defendant to pay P38,250.00 as attorney’s fees and also the costs of the suit.[9]

Petitioner appealed to the Court of Appeals. On 20 December 1995, the appellate court promulgated its Decision affirming in toto the RTC Decision, thus: WHEREFORE, the decision appealed is hereby AFFIRMED in toto and the instant appeal DISMISSED. [10]

Petitioner filed the instant petition before us assigning the following errors[11]: I. THE COURT OF APPEALS ERRED IN SUSTAINING THE RTC AWARD OF MORAL DAMAGES. II. THE COURT OF APPEALS ERRED IN SUSTAINING THE RTC AWARD OF EXEMPLARY DAMAGES. III. THE COURT OF APPEALS ERRED IN SUSTAINING THE RTC AWARD OF ATTORNEY’S FEES AND ORDER FOR PAYMENT OF COSTS.

Anent the first assigned error, petitioner maintains that moral damages may be awarded in a breach of contract of air carriage only if the mishap results in death of a passenger or if the carrier acted fraudulently or in bad faith, that is, by breach of a known duty through some motive of interest or ill will, some dishonest purpose or conscious doing of wrong; if there was no finding of fraud or bad faith on its part; if, although it lost the indemnity bond, there was no finding that such loss was attended by ill will, or some motive of interest, or any dishonest purpose; and if

there was no finding that the loss was deliberate, intentional or consciously done.[12] Petitioner also claims that it cannot be entirely blamed for the loss of the indemnity bond; that during the stop-over of Flight 106 in Honolulu, Hawaii, USA, it gave the indemnity bond to the immigration office therein as a matter of procedure; that the indemnity bond was in the custody of the said immigration office when Flight 106 left Honolulu, Hawaii, USA; that the said immigration office failed to return the indemnity bond to petitioner’s personnel before Flight 106 left Honolulu, Hawaii, USA; and that even though it was negligent in overlooking the indemnity bond, there was still no liability on its part because mere carelessness of the carrier does not per se constitute or justify an inference of malice or bad faith.[13] When an airline issues a ticket to a passenger, confirmed for a particular flight on a certain date, a contract of carriage arises. The passenger has every right to expect that he be transported on that flight and on that date, and it becomes the airline’s obligation to carry him and his luggage safely to the agreed destination without delay. If the passenger is not so transported or if in the process of transporting, he dies or is injured, the carrier may be held liable for a breach of contract of carriage.[14] Private respondents and petitioner entered into a contract of air carriage when the former purchased two plane tickets from the latter. Under this contract, petitioner obliged itself (1) to transport Deanna and Nikolai, as unaccompanied minors, on 2 May 1980 from Manila to San Francisco through one of its planes, Flight 106; and (2) upon the arrival of Deanna and Nikolai in San Francisco Airport on 3 May 1980, to transport them on that same day from San Francisco to Los Angeles via a connecting flight on United Airways 996. As it was, petitioner failed to transport Deanna and Nikolai from San Francisco to Los Angeles on the day of their arrival at San Francisco. The staff of United Airways 996 refused to take aboard Deanna and Nikolai for their connecting flight to Los Angeles because petitioner’s personnel in San Francisco could not produce the indemnity bond accomplished and submitted by private respondents. Thus, Deanna and Nikolai were stranded in San Francisco and were forced to stay there overnight. It was only on the following day that Deanna and Nikolai were able to leave San Francisco and arrive at Los Angeles via another airline, Western Airlines. Clearly then, petitioner breached its contract of carriage with private respondents. In breach of contract of air carriage, moral damages may be recovered where (1) the mishap results in the death of a passenger; or (2) where the carrier is guilty of fraud or bad faith; or (3) where the negligence of the carrier is so gross and reckless as to virtually amount to bad faith.[15] Gross negligence implies a want or absence of or failure to exercise even slight care or diligence, or the entire absence of care. It evinces a thoughtless disregard of consequences without exerting any effort to avoid them.[16]

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In Singson v. Court of Appeals,[17] we ruled that a carrier’s utter lack of care for and sensitivity to the needs of its passengers constitutes gross negligence and is no different from fraud, malice or bad faith. Likewise, in Philippine Airlines, Inc. v. Court of Appeals,[18] we held that a carrier’s inattention to, and lack of care for, the interest of its passengers who are entitled to its utmost consideration, particularly as to their convenience, amount to bad faith and entitles the passenger to an award of moral damages. It was established in the instant case that since Deanna and Nikolai would travel as unaccompanied minors, petitioner required private respondents to accomplish, sign and submit to it an indemnity bond. Private respondents complied with this requirement. Petitioner gave a copy of the indemnity bond to one of its personnel on Flight 106, since it was required for the San Francisco-Los Angeles connecting flight of Deanna and Nikolai. Petitioner’s personnel lost the indemnity bond during the stop-over of Flight 106 in Honolulu, Hawaii. Thus, Deanna and Nikolai were not allowed to take their connecting flight. Evidently, petitioner was fully aware that Deanna and Nikolai would travel as unaccompanied minors and, therefore, should be specially taken care of considering their tender age and delicate situation. Petitioner also knew well that the indemnity bond was required for Deanna and Nikolai to make a connecting flight from San Francisco to Los Angeles, and that it was its duty to produce the indemnity bond to the staff of United Airways 996 so that Deanna and Nikolai could board the connecting flight. Yet, despite knowledge of the foregoing, it did not exercise utmost care in handling the indemnity bond resulting in its loss in Honolulu, Hawaii. This was the proximate cause why Deanna and Nikolai were not allowed to take the connecting flight and were thus stranded overnight in San Francisco. Further, petitioner discovered that the indemnity bond was lost only when Flight 106 had already landed in San Francisco Airport and when the staff of United Airways 996 demanded the indemnity bond. This only manifests that petitioner did not check or verify if the indemnity bond was in its custody before leaving Honolulu, Hawaii for San Francisco. The foregoing circumstances reflect petitioner’s utter lack of care for and inattention to the welfare of Deanna and Nikolai as unaccompanied minor passengers. They also indicate petitioner’s failure to exercise even slight care and diligence in handling the indemnity bond. Clearly, the negligence of petitioner was so gross and reckless that it amounted to bad faith. It is worth emphasizing that petitioner, as a common carrier, is bound by law to exercise extraordinary diligence and utmost care in ensuring for the safety and welfare of its passengers with due regard for all the circumstances.[19] The negligent acts of petitioner signified more than inadvertence or inattention and thus constituted a radical departure from the extraordinary standard of care required of common carriers.

Petitioner’s claim that it cannot be entirely blamed for the loss of the indemnity bond because it gave the indemnity bond to the immigration office of Honolulu, Hawaii, as a matter of procedure during the stop-over, and the said immigration office failed to return the indemnity bond to petitioner’s personnel before Flight 106 left Honolulu, Hawaii, deserves scant consideration. It was petitioner’s obligation to ensure that it had the indemnity bond in its custody before leaving Honolulu, Hawaii for San Francisco. Petitioner should have asked for the indemnity bond from the immigration office during the stop-over instead of partly blaming the said office later on for the loss of the indemnity bond. Petitioner’s insensitivity on this matter indicates that it fell short of the extraordinary care that the law requires of common carriers. Petitioner, nonetheless, insists that the following circumstances negate gross negligence on its part: (1) Strigl requested the staff of United Airways 996 to allow Deanna and Nikolai to board the plane even without the indemnity bond; (2) Strigl took care of the two and brought them to his house upon refusal of the staff of the United Airways 996 to board Deanna and Nikolai; (3) private respondent Aurora R. Buncio and Mrs. Regalado were duly informed of Deanna and Nikolai’s predicament; and (4) Deanna and Nikolai were able to make a connecting flight via an alternative airline, Western Airlines.[20] We do not agree. It was petitioner’s duty to provide assistance to Deanna and Nikolai for the inconveniences of delay in their transportation. These actions are deemed part of their obligation as a common carrier, and are hardly anything to rave about.[21] Apropos the second and third assigned error, petitioner argues that it was not liable for exemplary damages because there was no wanton, fraudulent, reckless, oppressive, or malevolent manner on its part. Further, exemplary damages may be awarded only if it is proven that the plaintiff is entitled to moral damages. Petitioner contends that since there was no proof that private respondents were entitled to moral damages, then they are also not entitled to exemplary damages.[22] Petitioner also contends that no premium should be placed on the right to litigate; that an award of attorney’s fees and order of payment of costs must be justified in the text of the decision; that such award cannot be imposed by mere conclusion without supporting explanation; and that the RTC decision does not provide any justification for the award of attorney’s fees and order of payment of costs.[23] Article 2232 of the Civil Code provides that exemplary damages may be awarded in a breach of contract if the defendant acted in a wanton, fraudulent, reckless, oppressive or malevolent manner. In addition, Article 2234 thereof states that the plaintiff must show that he is entitled to moral damages before he can be awarded exemplary damages.

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As we have earlier found, petitioner breached its contract of carriage with private respondents, and it acted recklessly and malevolently in transporting Deanna and Nikolai as unaccompanied minors and in handling their indemnity bond. We have also ascertained that private respondents are entitled to moral damages because they have sufficiently established petitioner’s gross negligence which amounted to bad faith. This being the case, the award of exemplary damages is warranted. Current jurisprudence[24] instructs that in awarding attorney’s fees, the trial court must state the factual, legal, or equitable justification for awarding the same, bearing in mind that the award of attorney’s fees is the exception, not the general rule, and it is not sound public policy to place a penalty on the right to litigate; nor should attorney’s fees be awarded every time a party wins a lawsuit. The matter of attorney’s fees cannot be dealt with only in the dispositive portion of the decision. The text of the decision must state the reason behind the award of attorney’s fees. Otherwise, its award is totally unjustified.[25] In the instant case, the award of attorney’s fees was merely cited in the dispositive portion of the RTC decision without the RTC stating any legal or factual basis for said award. Hence, the Court of Appeals erred in sustaining the RTC’s award of attorney’s fees. Since we have already resolved that the RTC and Court of Appeals were correct in awarding moral and exemplary damages, we shall now determine whether their corresponding amounts were proper. The purpose of awarding moral damages is to enable the injured party to obtain means, diversion or amusement that will serve to alleviate the moral suffering he has undergone by reason of defendant’s culpable action.[26] On the other hand, the aim of awarding exemplary damages is to deter serious wrongdoings.[27] Article 2216 of the Civil Code provides that assessment of damages is left to the discretion of the court according to the circumstances of each case. This discretion is limited by the principle that the amount awarded should not be palpably excessive as to indicate that it was the result of prejudice or corruption on the part of the trial court.[28] Simply put, the amount of damages must be fair, reasonable and proportionate to the injury suffered. The RTC and the Court of Appeals ordered petitioner to pay Deanna and Nikolai P50,000.00 each as moral damages. This amount is reasonable considering the harrowing experience they underwent at their tender age and the danger they were exposed to when they were stranded in San Francisco. Both of them testified that they were afraid and were not able to eat and sleep during the time they were stranded in San Francisco.[29] Likewise, the award of P25,000.00 each to Deanna and Nikolai as exemplary damages is fair so as to deter petitioner and

other common carriers from committing similar or other serious wrongdoings. Both courts also directed petitioner to pay private respondent Aurora R. Buncio P75,000.00 as moral damages. This is equitable and proportionate considering the serious anxiety and mental anguish she experienced as a mother when Deanna and Nikolai were not allowed to take the connecting flight as scheduled and the fact that they were stranded in a foreign country and in the company of strangers. Private respondent Aurora R. Buncio testified that she was very fearful for the lives of Deanna and Nikolai when they were stranded in San Francisco, and that by reason thereof she suffered emotional stress and experienced upset stomach.[30] Also, the award of P30,000.00 as moral damages to Mrs. Regalado is appropriate because of the serious anxiety and wounded feelings she felt as a grandmother when Deanna and Nikolai, whom she was to meet for the first time, did not arrive at the Los Angeles Airport. Mrs. Regalado testified that she was seriously worried when Deanna and Nikolai did not arrive in Los Angeles on 3 May 1980, and she was hurt when she saw the two crying upon arriving in Los Angeles on 4 May 1980.[31] The omission of award of damages to private respondent Manuel S. Buncio was proper for lack of basis. His court testimony was rightly disregarded by the RTC because he failed to appear in his scheduled cross-examination.[32] On another point, we held in Eastern Shipping Lines, Inc. v. Court of Appeals,[33] that when an obligation, not constituting a loan or forbearance of money is breached, an interest on the amount of damages awarded may be imposed at the rate of 6% per annum. We further declared that when the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, whether it is a loan/forbearance of money or not, shall be 12% per annum from such finality until its satisfaction, this interim period being deemed to be then equivalent to a forbearance of credit. In the instant case, petitioner’s obligation arose from a contract of carriage and not from a loan or forbearance of money. Thus, an interest of 6% per annum should be imposed on the damages awarded, to be computed from the time of the extra-judicial demand on 17 July 1980 up to the finality of this Decision. In addition, the interest shall become 12% per annum from the finality of this Decision up to its satisfaction. Finally, the records[34] show that Mrs. Regalado died on 1 March 1995 at the age of 74, while Deanna passed away on 8 December 2003 at the age of 32. This being the case, the foregoing award of damages plus interests in their favor should be given to their respective heirs. WHEREFORE, the Petition is PARTLY GRANTED. The Decision of the Court of Appeals, dated 20 December 1995, in CA-G.R. CV No. 26921, is hereby AFFIRMED with the following MODIFICATIONS: (1) the award of attorney’s fees is deleted; (2) an interest of 6% per annum is imposed

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on the damages awarded, to be computed from 17 July 1980 up to the finality of this Decision; and (3) an interest of 12% per annum is also imposed from the finality of this Decision up to its satisfaction. The damages and interests granted in favor of deceased Mrs. Regalado and deceased Deanna are hereby awarded to their respective heirs. Costs against petitioner.

plaintiffs-appellees is hereby REVERSED and SET ASIDE. Defendant-appellant’s counterclaim is DENIED. Costs against plaintiffs-appellees. SO ORDERED.2

SO ORDERED. Northwest v. Hashan

Feb 3, 2010 (NF-internet)

Spouses Villoria v. Continental SPOUSES FERNANDO and LOURDES VILORIA, Petitioners,

Jan 16, 2012

- versus -

CONTINENTAL AIRLINES, INC., Respondent. G.R. No. 188288 Present: CARPIO, J., Chairperson, PEREZ, SERENO, REYES, and BERNABE, JJ.  Promulgated: January 16, 2012 x-----------------------------------------------------------------------------------x DECISION REYES, J.: This is a petition for review under Rule 45 of the Rules of Court from the January 30, 2009 Decision1 of the Special Thirteenth Division of the Court of Appeals (CA) in CAG.R. CV No. 88586 entitled “Spouses Fernando and Lourdes Viloria v. Continental Airlines, Inc.,” the dispositive portion of which states: WHEREFORE, the Decision of the Regional Trial Court, Branch 74, dated 03 April 2006, awarding US$800.00 or its peso equivalent at the time of payment, plus legal rate of interest from 21 July 1997 until fully paid, [P]100,000.00 as moral damages, [P]50,000.00 as exemplary damages, [P]40,000.00 as attorney’s fees and costs of suit to

On April 3, 2006, the Regional Trial Court of Antipolo City, Branch 74 (RTC) rendered a Decision, giving due course to the complaint for sum of money and damages filed by petitioners Fernando Viloria (Fernando) and Lourdes Viloria (Lourdes), collectively called Spouses Viloria, against respondent Continental Airlines, Inc. (CAI). As culled from the records, below are the facts giving rise to such complaint. On or about July 21, 1997 and while in the United States, Fernando purchased for himself and his wife, Lourdes, two (2) round trip airline tickets from San Diego, California to Newark, New Jersey on board Continental Airlines. Fernando purchased the tickets at US$400.00 each from a travel agency called “Holiday Travel” and was attended to by a certain Margaret Mager (Mager). According to Spouses Viloria, Fernando agreed to buy the said tickets after Mager informed them that there were no available seats at Amtrak, an intercity passenger train service provider in the United States. Per the tickets, Spouses Viloria were scheduled to leave for Newark on August 13, 1997 and return to San Diego on August 21, 1997. Subsequently, Fernando requested Mager to reschedule their flight to Newark to an earlier date or August 6, 1997. Mager informed him that flights to Newark via Continental Airlines were already fully booked and offered the alternative of a round trip flight via Frontier Air. Since flying with Frontier Air called for a higher fare of US$526.00 per passenger and would mean traveling by night, Fernando opted to request for a refund. Mager, however, denied his request as the subject tickets are nonrefundable and the only option that Continental Airlines can offer is the re-issuance of new tickets within one (1) year from the date the subject tickets were issued. Fernando decided to reserve two (2) seats with Frontier Air. As he was having second thoughts on traveling via Frontier Air, Fernando went to the Greyhound Station where he saw an Amtrak station nearby. Fernando made inquiries and was told that there are seats available and he can travel on Amtrak anytime and any day he pleased. Fernando then purchased two (2) tickets for Washington, D.C. From Amtrak, Fernando went to Holiday Travel and confronted Mager with the Amtrak tickets, telling her that she had misled them into buying the Continental Airlines tickets by misrepresenting that Amtrak was already fully booked. Fernando reiterated his demand for a refund but Mager was firm in her position that the subject tickets are non-refundable.

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Upon returning to the Philippines, Fernando sent a letter to CAI on February 11, 1998, demanding a refund and alleging that Mager had deluded them into purchasing the subject tickets.3 In a letter dated February 24, 1998, Continental Micronesia informed Fernando that his complaint had been referred to the Customer Refund Services of Continental Airlines at Houston, Texas.4 In a letter dated March 24, 1998, Continental Micronesia denied Fernando’s request for a refund and advised him that he may take the subject tickets to any Continental ticketing location for the re-issuance of new tickets within two (2) years from the date they were issued. Continental Micronesia informed Fernando that the subject tickets may be used as a form of payment for the purchase of another Continental ticket, albeit with a re-issuance fee.5 On June 17, 1999, Fernando went to Continental’s ticketing office at Ayala Avenue, Makati City to have the subject tickets replaced by a single round trip ticket to Los Angeles, California under his name. Therein, Fernando was informed that Lourdes’ ticket was non-transferable, thus, cannot be used for the purchase of a ticket in his favor. He was also informed that a round trip ticket to Los Angeles was US$1,867.40 so he would have to pay what will not be covered by the value of his San Diego to Newark round trip ticket. In a letter dated June 21, 1999, Fernando demanded for the refund of the subject tickets as he no longer wished to have them replaced. In addition to the dubious circumstances under which the subject tickets were issued, Fernando claimed that CAI’s act of charging him with US$1,867.40 for a round trip ticket to Los Angeles, which other airlines priced at US$856.00, and refusal to allow him to use Lourdes’ ticket, breached its undertaking under its March 24, 1998 letter.6

which are made part hereof (and are available on application at the offices of carrier), except in transportation between a place in the United States or Canada and any place outside thereof to which tariffs in force in those countries apply.8 According to CAI, one of the conditions attached to their contract of carriage is the non-transferability and nonrefundability of the subject tickets. The RTC’s Ruling Following a full-blown trial, the RTC rendered its April 3, 2006 Decision, holding that Spouses Viloria are entitled to a refund in view of Mager’s misrepresentation in obtaining their consent in the purchase of the subject tickets.9 The relevant portion of the April 3, 2006 Decision states: Continental Airlines agent Ms. Mager was in bad faith when she was less candid and diligent in presenting to plaintiffs spouses their booking options. Plaintiff Fernando clearly wanted to travel via AMTRAK, but defendant’s agent misled him into purchasing Continental Airlines tickets instead on the fraudulent misrepresentation that Amtrak was fully booked. In fact, defendant Airline did not specifically denied (sic) this allegation. Plainly, plaintiffs spouses, particularly plaintiff Fernando, were tricked into buying Continental Airline tickets on Ms. Mager’s misleading misrepresentations. Continental Airlines agent Ms. Mager further relied on and exploited plaintiff Fernando’s need and told him that they must book a flight immediately or risk not being able to travel at all on the couple’s preferred date. Unfortunately, plaintiffs spouses fell prey to the airline’s and its agent’s unethical tactics for baiting trusting customers.”10

On September 8, 2000, Spouses Viloria filed a complaint against CAI, praying that CAI be ordered to refund the money they used in the purchase of the subject tickets with legal interest from July 21, 1997 and to pay P1,000,000.00 as moral damages, P500,000.00 as exemplary damages and P250,000.00 as attorney’s fees.7

Citing Articles 1868 and 1869 of the Civil Code, the RTC ruled that Mager is CAI’s agent, hence, bound by her bad faith and misrepresentation. As far as the RTC is concerned, there is no issue as to whether Mager was CAI’s agent in view of CAI’s implied recognition of her status as such in its March 24, 1998 letter.

CAI interposed the following defenses: (a) Spouses Viloria have no right to ask for a refund as the subject tickets are non-refundable; (b) Fernando cannot insist on using the ticket in Lourdes’ name for the purchase of a round trip ticket to Los Angeles since the same is non-transferable; (c) as Mager is not a CAI employee, CAI is not liable for any of her acts; (d) CAI, its employees and agents did not act in bad faith as to entitle Spouses Viloria to moral and exemplary damages and attorney’s fees. CAI also invoked the following clause printed on the subject tickets:

The act of a travel agent or agency being involved here, the following are the pertinent New Civil Code provisions on agency:

3. To the extent not in conflict with the foregoing carriage and other services performed by each carrier are subject to: (i) provisions contained in this ticket, (ii) applicable tariffs, (iii) carrier’s conditions of carriage and related regulations

Art. 1868. By the contract of agency a person binds himself to render some service or to do something in representation or on behalf of another, with the consent or authority of the latter. Art. 1869. Agency may be express, or implied from the acts of the principal, from his silence or lack of action, or his failure to repudiate the agency, knowing that another person is acting on his behalf without authority.

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Agency may be oral, unless the law requires a specific form. As its very name implies, a travel agency binds itself to render some service or to do something in representation or on behalf of another, with the consent or authority of the latter. This court takes judicial notice of the common services rendered by travel agencies that represent themselves as such, specifically the reservation and booking of local and foreign tours as well as the issuance of airline tickets for a commission or fee. The services rendered by Ms. Mager of Holiday Travel agency to the plaintiff spouses on July 21, 1997 were no different from those offered in any other travel agency. Defendant airline impliedly if not expressly acknowledged its principal-agent relationship with Ms. Mager by its offer in the letter dated March 24, 1998 – an obvious attempt to assuage plaintiffs spouses’ hurt feelings.11 Furthermore, the RTC ruled that CAI acted in bad faith in reneging on its undertaking to replace the subject tickets within two (2) years from their date of issue when it charged Fernando with the amount of US$1,867.40 for a round trip ticket to Los Angeles and when it refused to allow Fernando to use Lourdes’ ticket. Specifically: Tickets may be reissued for up to two years from the original date of issue. When defendant airline still charged plaintiffs spouses US$1,867.40 or more than double the then going rate of US$856.00 for the unused tickets when the same were presented within two (2) years from date of issue, defendant airline exhibited callous treatment of passengers.12 The Appellate Court’s Ruling On appeal, the CA reversed the RTC’s April 3, 2006 Decision, holding that CAI cannot be held liable for Mager’s act in the absence of any proof that a principalagent relationship existed between CAI and Holiday Travel. According to the CA, Spouses Viloria, who have the burden of proof to establish the fact of agency, failed to present evidence demonstrating that Holiday Travel is CAI’s agent. Furthermore, contrary to Spouses Viloria’s claim, the contractual relationship between Holiday Travel and CAI is not an agency but that of a sale. Plaintiffs-appellees assert that Mager was a sub-agent of Holiday Travel who was in turn a ticketing agent of Holiday Travel who was in turn a ticketing agent of Continental Airlines. Proceeding from this premise, they contend that Continental Airlines should be held liable for the acts of Mager. The trial court held the same view. We do not agree. By the contract of agency, a person binds him/herself to render some service or to do something in representation or on behalf of another, with the consent or authority of the latter. The elements of agency are: (1) consent, express or implied, of the parties to establish the

relationship; (2) the object is the execution of a juridical act in relation to a third person; (3) the agent acts as a representative and not for him/herself; and (4) the agent acts within the scope of his/her authority. As the basis of agency is representation, there must be, on the part of the principal, an actual intention to appoint, an intention naturally inferable from the principal’s words or actions. In the same manner, there must be an intention on the part of the agent to accept the appointment and act upon it. Absent such mutual intent, there is generally no agency. It is likewise a settled rule that persons dealing with an assumed agent are bound at their peril, if they would hold the principal liable, to ascertain not only the fact of agency but also the nature and extent of authority, and in case either is controverted, the burden of proof is upon them to establish it. Agency is never presumed, neither is it created by the mere use of the word in a trade or business name. We have perused the evidence and documents so far presented. We find nothing except bare allegations of plaintiffs-appellees that Mager/Holiday Travel was acting in behalf of Continental Airlines. From all sides of legal prism, the transaction in issue was simply a contract of sale, wherein Holiday Travel buys airline tickets from Continental Airlines and then, through its employees, Mager included, sells it at a premium to clients.13 The CA also ruled that refund is not available to Spouses Viloria as the word “non-refundable” was clearly printed on the face of the subject tickets, which constitute their contract with CAI. Therefore, the grant of their prayer for a refund would violate the proscription against impairment of contracts. Finally, the CA held that CAI did not act in bad faith when they charged Spouses Viloria with the higher amount of US$1,867.40 for a round trip ticket to Los Angeles. According to the CA, there is no compulsion for CAI to charge the lower amount of US$856.00, which Spouses Viloria claim to be the fee charged by other airlines. The matter of fixing the prices for its services is CAI’s prerogative, which Spouses Viloria cannot intervene. In particular: It is within the respective rights of persons owning and/or operating business entities to peg the premium of the services and items which they provide at a price which they deem fit, no matter how expensive or exhorbitant said price may seem vis-à-vis those of the competing companies. The Spouses Viloria may not intervene with the business judgment of Continental Airlines.14 The Petitioners’ Case In this Petition, this Court is being asked to review the findings and conclusions of the CA, as the latter’s reversal of the RTC’s April 3, 2006 Decision allegedly lacks factual and legal bases. Spouses Viloria claim that CAI acted in bad faith when it required them to pay a higher amount for a round trip ticket to Los Angeles considering CAI’s undertaking to re-issue new tickets to them within the

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period stated in their March 24, 1998 letter. CAI likewise acted in bad faith when it disallowed Fernando to use Lourdes’ ticket to purchase a round trip to Los Angeles given that there is nothing in Lourdes’ ticket indicating that it is non-transferable. As a common carrier, it is CAI’s duty to inform its passengers of the terms and conditions of their contract and passengers cannot be bound by such terms and conditions which they are not made aware of. Also, the subject contract of carriage is a contract of adhesion; therefore, any ambiguities should be construed against CAI. Notably, the petitioners are no longer questioning the validity of the subject contracts and limited its claim for a refund on CAI’s alleged breach of its undertaking in its March 24, 1998 letter.

c. Assuming that CAI is bound by the acts of Holiday Travel’s agents and employees, can the representation of Mager as to unavailability of seats at Amtrak be considered fraudulent as to vitiate the consent of Spouse Viloria in the purchase of the subject tickets? d. Is CAI justified in insisting that the subject tickets are non-transferable and non-refundable? e. Is CAI justified in pegging a different price for the round trip ticket to Los Angeles requested by Fernando? f. Alternatively, did CAI act in bad faith or renege its obligation to Spouses Viloria to apply the value of the subject tickets in the purchase of new ones when it refused to allow Fernando to use Lourdes’ ticket and in charging a higher price for a round trip ticket to Los Angeles?

The Respondent’s Case

This Court’s Ruling

In its Comment, CAI claimed that Spouses Viloria’s allegation of bad faith is negated by its willingness to issue new tickets to them and to credit the value of the subject tickets against the value of the new ticket Fernando requested. CAI argued that Spouses Viloria’s sole basis to claim that the price at which CAI was willing to issue the new tickets is unconscionable is a piece of hearsay evidence – an advertisement appearing on a newspaper stating that airfares from Manila to Los Angeles or San Francisco cost US$818.00.15 Also, the advertisement pertains to airfares in September 2000 and not to airfares prevailing in June 1999, the time when Fernando asked CAI to apply the value of the subject tickets for the purchase of a new one.16 CAI likewise argued that it did not undertake to protect Spouses Viloria from any changes or fluctuations in the prices of airline tickets and its only obligation was to apply the value of the subject tickets to the purchase of the newly issued tickets.

I. A principal-agent relationship exists between CAI and Holiday Travel.

With respect to Spouses Viloria’s claim that they are not aware of CAI’s restrictions on the subject tickets and that the terms and conditions that are printed on them are ambiguous, CAI denies any ambiguity and alleged that its representative informed Fernando that the subject tickets are non-transferable when he applied for the issuance of a new ticket. On the other hand, the word “non-refundable” clearly appears on the face of the subject tickets. CAI also denies that it is bound by the acts of Holiday Travel and Mager and that no principal-agency relationship exists between them. As an independent contractor, Holiday Travel was without capacity to bind CAI.

With respect to the first issue, which is a question of fact that would require this Court to review and re-examine the evidence presented by the parties below, this Court takes exception to the general rule that the CA’s findings of fact are conclusive upon Us and our jurisdiction is limited to the review of questions of law. It is well-settled to the point of being axiomatic that this Court is authorized to resolve questions of fact if confronted with contrasting factual findings of the trial court and appellate court and if the findings of the CA are contradicted by the evidence on record.17 According to the CA, agency is never presumed and that he who alleges that it exists has the burden of proof. Spouses Viloria, on whose shoulders such burden rests, presented evidence that fell short of indubitably demonstrating the existence of such agency. We disagree. The CA failed to consider undisputed facts, discrediting CAI’s denial that Holiday Travel is one of its agents. Furthermore, in erroneously characterizing the contractual relationship between CAI and Holiday Travel as a contract of sale, the CA failed to apply the fundamental civil law principles governing agency and differentiating it from sale. In Rallos v. Felix Go Chan & Sons Realty Corporation,18 this Court explained the nature of an agency and spelled out the essential elements thereof:

Issues To determine the propriety of disturbing the CA’s January 30, 2009 Decision and whether Spouses Viloria have the right to the reliefs they prayed for, this Court deems it necessary to resolve the following issues: a. Does a principal-agent relationship exist between CAI and Holiday Travel? b. Assuming that an agency relationship exists between CAI and Holiday Travel, is CAI bound by the acts of Holiday Travel’s agents and employees such as Mager?

Out of the above given principles, sprung the creation and acceptance of the relationship of agency whereby one party, called the principal (mandante), authorizes another, called the agent (mandatario), to act for and in his behalf in transactions with third persons. The essential elements of agency are: (1) there is consent, express or implied of the parties to establish the relationship; (2) the object is the execution of a juridical act in relation to a third person; (3) the agent acts as a representative and not for himself, and (4) the agent acts within the scope of his authority.

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Agency is basically personal, representative, and derivative in nature. The authority of the agent to act emanates from the powers granted to him by his principal; his act is the act of the principal if done within the scope of the authority. Qui facit per alium facit se. "He who acts through another acts himself."19 Contrary to the findings of the CA, all the elements of an agency exist in this case. The first and second elements are present as CAI does not deny that it concluded an agreement with Holiday Travel, whereby Holiday Travel would enter into contracts of carriage with third persons on CAI’s behalf. The third element is also present as it is undisputed that Holiday Travel merely acted in a representative capacity and it is CAI and not Holiday Travel who is bound by the contracts of carriage entered into by Holiday Travel on its behalf. The fourth element is also present considering that CAI has not made any allegation that Holiday Travel exceeded the authority that was granted to it. In fact, CAI consistently maintains the validity of the contracts of carriage that Holiday Travel executed with Spouses Viloria and that Mager was not guilty of any fraudulent misrepresentation. That CAI admits the authority of Holiday Travel to enter into contracts of carriage on its behalf is easily discernible from its February 24, 1998 and March 24, 1998 letters, where it impliedly recognized the validity of the contracts entered into by Holiday Travel with Spouses Viloria. When Fernando informed CAI that it was Holiday Travel who issued to them the subject tickets, CAI did not deny that Holiday Travel is its authorized agent. Prior to Spouses Viloria’s filing of a complaint against it, CAI never refuted that it gave Holiday Travel the power and authority to conclude contracts of carriage on its behalf. As clearly extant from the records, CAI recognized the validity of the contracts of carriage that Holiday Travel entered into with Spouses Viloria and considered itself bound with Spouses Viloria by the terms and conditions thereof; and this constitutes an unequivocal testament to Holiday Travel’s authority to act as its agent. This Court cannot therefore allow CAI to take an altogether different position and deny that Holiday Travel is its agent without condoning or giving imprimatur to whatever damage or prejudice that may result from such denial or retraction to Spouses Viloria, who relied on good faith on CAI’s acts in recognition of Holiday Travel’s authority. Estoppel is primarily based on the doctrine of good faith and the avoidance of harm that will befall an innocent party due to its injurious reliance, the failure to apply it in this case would result in gross travesty of justice.20 Estoppel bars CAI from making such denial. As categorically provided under Article 1869 of the Civil Code, “[a]gency may be express, or implied from the acts of the principal, from his silence or lack of action, or his failure to repudiate the agency, knowing that another person is acting on his behalf without authority.”

had branded the contractual relationship between CAI and Holiday Travel as one of sale. The distinctions between a sale and an agency are not difficult to discern and this Court, as early as 1970, had already formulated the guidelines that would aid in differentiating the two (2) contracts. In Commissioner of Internal Revenue v. Constantino,21 this Court extrapolated that the primordial differentiating consideration between the two (2) contracts is the transfer of ownership or title over the property subject of the contract. In an agency, the principal retains ownership and control over the property and the agent merely acts on the principal’s behalf and under his instructions in furtherance of the objectives for which the agency was established. On the other hand, the contract is clearly a sale if the parties intended that the delivery of the property will effect a relinquishment of title, control and ownership in such a way that the recipient may do with the property as he pleases. Since the company retained ownership of the goods, even as it delivered possession unto the dealer for resale to customers, the price and terms of which were subject to the company's control, the relationship between the company and the dealer is one of agency, tested under the following criterion: “The difficulty in distinguishing between contracts of sale and the creation of an agency to sell has led to the establishment of rules by the application of which this difficulty may be solved. The decisions say the transfer of title or agreement to transfer it for a price paid or promised is the essence of sale. If such transfer puts the transferee in the attitude or position of an owner and makes him liable to the transferor as a debtor for the agreed price, and not merely as an agent who must account for the proceeds of a resale, the transaction is a sale; while the essence of an agency to sell is the delivery to an agent, not as his property, but as the property of the principal, who remains the owner and has the right to control sales, fix the price, and terms, demand and receive the proceeds less the agent's commission upon sales made. 1 Mechem on Sales, Sec. 43; 1 Mechem on Agency, Sec. 48; Williston on Sales, 1; Tiedeman on Sales, 1.” (Salisbury v. Brooks, 94 SE 117, 118-119)22 As to how the CA have arrived at the conclusion that the contract between CAI and Holiday Travel is a sale is certainly confounding, considering that CAI is the one bound by the contracts of carriage embodied by the tickets being sold by Holiday Travel on its behalf. It is undisputed that CAI and not Holiday Travel who is the party to the contracts of carriage executed by Holiday Travel with third persons who desire to travel via Continental Airlines, and this conclusively indicates the existence of a principalagent relationship. That the principal is bound by all the obligations contracted by the agent within the scope of the authority granted to him is clearly provided under Article 1910 of the Civil Code and this constitutes the very notion of agency.

Considering that the fundamental hallmarks of an agency are present, this Court finds it rather peculiar that the CA

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II. In actions based on quasi-delict, a principal can only be held liable for the tort committed by its agent’s employees if it has been established by preponderance of evidence that the principal was also at fault or negligent or that the principal exercise control and supervision over them. Considering that Holiday Travel is CAI’s agent, does it necessarily follow that CAI is liable for the fault or negligence of Holiday Travel’s employees? Citing China Air Lines, Ltd. v. Court of Appeals, et al.,23 CAI argues that it cannot be held liable for the actions of the employee of its ticketing agent in the absence of an employeremployee relationship. An examination of this Court’s pronouncements in China Air Lines will reveal that an airline company is not completely exonerated from any liability for the tort committed by its agent’s employees. A prior determination of the nature of the passenger’s cause of action is necessary. If the passenger’s cause of action against the airline company is premised on culpa aquiliana or quasi-delict for a tort committed by the employee of the airline company’s agent, there must be an independent showing that the airline company was at fault or negligent or has contributed to the negligence or tortuous conduct committed by the employee of its agent. The mere fact that the employee of the airline company’s agent has committed a tort is not sufficient to hold the airline company liable. There is no vinculum juris between the airline company and its agent’s employees and the contractual relationship between the airline company and its agent does not operate to create a juridical tie between the airline company and its agent’s employees. Article 2180 of the Civil Code does not make the principal vicariously liable for the tort committed by its agent’s employees and the principal-agency relationship per se does not make the principal a party to such tort; hence, the need to prove the principal’s own fault or negligence. On the other hand, if the passenger’s cause of action for damages against the airline company is based on contractual breach or culpa contractual, it is not necessary that there be evidence of the airline company’s fault or negligence. As this Court previously stated in China Air Lines and reiterated in Air France vs. Gillego,24 “in an action based on a breach of contract of carriage, the aggrieved party does not have to prove that the common carrier was at fault or was negligent. All that he has to prove is the existence of the contract and the fact of its nonperformance by the carrier.” Spouses Viloria’s cause of action on the basis of Mager’s alleged fraudulent misrepresentation is clearly one of tort or quasi-delict, there being no pre-existing contractual relationship between them. Therefore, it was incumbent upon Spouses Viloria to prove that CAI was equally at fault. However, the records are devoid of any evidence by which CAI’s alleged liability can be substantiated. Apart from their claim that CAI must be held liable for Mager’s supposed fraud because Holiday Travel is CAI’s agent,

Spouses Viloria did not present evidence that CAI was a party or had contributed to Mager’s complained act either by instructing or authorizing Holiday Travel and Mager to issue the said misrepresentation. It may seem unjust at first glance that CAI would consider Spouses Viloria bound by the terms and conditions of the subject contracts, which Mager entered into with them on CAI’s behalf, in order to deny Spouses Viloria’s request for a refund or Fernando’s use of Lourdes’ ticket for the reissuance of a new one, and simultaneously claim that they are not bound by Mager’s supposed misrepresentation for purposes of avoiding Spouses Viloria’s claim for damages and maintaining the validity of the subject contracts. It may likewise be argued that CAI cannot deny liability as it benefited from Mager’s acts, which were performed in compliance with Holiday Travel’s obligations as CAI’s agent. However, a person’s vicarious liability is anchored on his possession of control, whether absolute or limited, on the tortfeasor. Without such control, there is nothing which could justify extending the liability to a person other than the one who committed the tort. As this Court explained in Cangco v. Manila Railroad Co.:25 With respect to extra-contractual obligation arising from negligence, whether of act or omission, it is competent for the legislature to elect — and our Legislature has so elected — to limit such liability to cases in which the person upon whom such an obligation is imposed is morally culpable or, on the contrary, for reasons of public policy, to extend that liability, without regard to the lack of moral culpability, so as to include responsibility for the negligence of those persons whose acts or omissions are imputable, by a legal fiction, to others who are in a position to exercise an absolute or limited control over them. The legislature which adopted our Civil Code has elected to limit extracontractual liability — with certain well-defined exceptions — to cases in which moral culpability can be directly imputed to the persons to be charged. This moral responsibility may consist in having failed to exercise due care in one's own acts, or in having failed to exercise due care in the selection and control of one's agent or servants, or in the control of persons who, by reasons of their status, occupy a position of dependency with respect to the person made liable for their conduct.26 (emphasis supplied) It is incumbent upon Spouses Viloria to prove that CAI exercised control or supervision over Mager by preponderant evidence. The existence of control or supervision cannot be presumed and CAI is under no obligation to prove its denial or nugatory assertion. Citing Belen v. Belen,27 this Court ruled in Jayme v. Apostol,28 that: In Belen v. Belen, this Court ruled that it was enough for defendant to deny an alleged employment relationship. The defendant is under no obligation to prove the negative averment. This Court said:

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“It is an old and well-settled rule of the courts that the burden of proving the action is upon the plaintiff, and that if he fails satisfactorily to show the facts upon which he bases his claim, the defendant is under no obligation to prove his exceptions. This [rule] is in harmony with the provisions of Section 297 of the Code of Civil Procedure holding that each party must prove his own affirmative allegations, etc.”29 (citations omitted) Therefore, without a modicum of evidence that CAI exercised control over Holiday Travel’s employees or that CAI was equally at fault, no liability can be imposed on CAI for Mager’s supposed misrepresentation. Even on the assumption that CAI may be held liable for the acts of Mager, still, Spouses Viloria are not entitled to a refund. Mager’s statement cannot be considered a causal fraud that would justify the annulment of the subject contracts that would oblige CAI to indemnify Spouses Viloria and return the money they paid for the subject tickets. Article 1390, in relation to Article 1391 of the Civil Code, provides that if the consent of the contracting parties was obtained through fraud, the contract is considered voidable and may be annulled within four (4) years from the time of the discovery of the fraud. Once a contract is annulled, the parties are obliged under Article 1398 of the same Code to restore to each other the things subject matter of the contract, including their fruits and interest. On the basis of the foregoing and given the allegation of Spouses Viloria that Fernando’s consent to the subject contracts was supposedly secured by Mager through fraudulent means, it is plainly apparent that their demand for a refund is tantamount to seeking for an annulment of the subject contracts on the ground of vitiated consent. Whether the subject contracts are annullable, this Court is required to determine whether Mager’s alleged misrepresentation constitutes causal fraud. Similar to the dispute on the existence of an agency, whether fraud attended the execution of a contract is factual in nature and this Court, as discussed above, may scrutinize the records if the findings of the CA are contrary to those of the RTC. Under Article 1338 of the Civil Code, there is fraud when, through insidious words or machinations of one of the contracting parties, the other is induced to enter into a contract which, without them, he would not have agreed to. In order that fraud may vitiate consent, it must be the causal (dolo causante), not merely the incidental (dolo incidente), inducement to the making of the contract.30 In Samson v. Court of Appeals,31 causal fraud was defined as “a deception employed by one party prior to or simultaneous to the contract in order to secure the consent of the other.”32 Also, fraud must be serious and its existence must be established by clear and convincing evidence. As ruled by

this Court in Sierra v. Hon. Court of Appeals, et al.,33 mere preponderance of evidence is not adequate: Fraud must also be discounted, for according to the Civil Code: Art. 1338. There is fraud when, through insidious words or machinations of one of the contracting parties, the other is induced to enter into a contract which without them, he would not have agreed to. Art. 1344. In order that fraud may make a contract voidable, it should be serious and should not have been employed by both contracting parties. To quote Tolentino again, the “misrepresentation constituting the fraud must be established by full, clear, and convincing evidence, and not merely by a preponderance thereof. The deceit must be serious. The fraud is serious when it is sufficient to impress, or to lead an ordinarily prudent person into error; that which cannot deceive a prudent person cannot be a ground for nullity. The circumstances of each case should be considered, taking into account the personal conditions of the victim.”34 After meticulously poring over the records, this Court finds that the fraud alleged by Spouses Viloria has not been satisfactorily established as causal in nature to warrant the annulment of the subject contracts. In fact, Spouses Viloria failed to prove by clear and convincing evidence that Mager’s statement was fraudulent. Specifically, Spouses Viloria failed to prove that (a) there were indeed available seats at Amtrak for a trip to New Jersey on August 13, 1997 at the time they spoke with Mager on July 21, 1997; (b) Mager knew about this; and (c) that she purposely informed them otherwise. This Court finds the only proof of Mager’s alleged fraud, which is Fernando’s testimony that an Amtrak had assured him of the perennial availability of seats at Amtrak, to be wanting. As CAI correctly pointed out and as Fernando admitted, it was possible that during the intervening period of three (3) weeks from the time Fernando purchased the subject tickets to the time he talked to said Amtrak employee, other passengers may have cancelled their bookings and reservations with Amtrak, making it possible for Amtrak to accommodate them. Indeed, the existence of fraud cannot be proved by mere speculations and conjectures. Fraud is never lightly inferred; it is good faith that is. Under the Rules of Court, it is presumed that "a person is innocent of crime or wrong" and that "private transactions have been fair and regular."35 Spouses Viloria failed to overcome this presumption. IV. Assuming the contrary, Spouses Viloria are nevertheless deemed to have ratified the subject contracts. Even assuming that Mager’s representation is causal fraud, the subject contracts have been impliedly ratified when Spouses Viloria decided to exercise their right to use the

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subject tickets for the purchase of new ones. Under Article 1392 of the Civil Code, “ratification extinguishes the action to annul a voidable contract.” Ratification of a voidable contract is defined under Article 1393 of the Civil Code as follows:

Considering that the subject contracts are not annullable on the ground of vitiated consent, the next question is: “Do Spouses Viloria have the right to rescind the contract on the ground of CAI’s supposed breach of its undertaking to issue new tickets upon surrender of the subject tickets?” Article 1191, as presently worded, states:

Art. 1393. Ratification may be effected expressly or tacitly. It is understood that there is a tacit ratification if, with knowledge of the reason which renders the contract voidable and such reason having ceased, the person who has a right to invoke it should execute an act which necessarily implies an intention to waive his right. Implied ratification may take diverse forms, such as by silence or acquiescence; by acts showing approval or adoption of the contract; or by acceptance and retention of benefits flowing therefrom.36 Simultaneous with their demand for a refund on the ground of Fernando’s vitiated consent, Spouses Viloria likewise asked for a refund based on CAI’s supposed bad faith in reneging on its undertaking to replace the subject tickets with a round trip ticket from Manila to Los Angeles. In doing so, Spouses Viloria are actually asking for a rescission of the subject contracts based on contractual breach. Resolution, the action referred to in Article 1191, is based on the defendant’s breach of faith, a violation of the reciprocity between the parties37 and in Solar Harvest, Inc. v. Davao Corrugated Carton Corporation,38 this Court ruled that a claim for a reimbursement in view of the other party’s failure to comply with his obligations under the contract is one for rescission or resolution. However, annulment under Article 1390 of the Civil Code and rescission under Article 1191 are two (2) inconsistent remedies. In resolution, all the elements to make the contract valid are present; in annulment, one of the essential elements to a formation of a contract, which is consent, is absent. In resolution, the defect is in the consummation stage of the contract when the parties are in the process of performing their respective obligations; in annulment, the defect is already present at the time of the negotiation and perfection stages of the contract. Accordingly, by pursuing the remedy of rescission under Article 1191, the Vilorias had impliedly admitted the validity of the subject contracts, forfeiting their right to demand their annulment. A party cannot rely on the contract and claim rights or obligations under it and at the same time impugn its existence or validity. Indeed, litigants are enjoined from taking inconsistent positions.39 V. Contracts cannot be rescinded for a slight or casual breach. CAI cannot insist on the non-transferability of the subject tickets.

The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not comply with what is incumbent upon him. The injured party may choose between the fulfilment and the rescission of the obligation, with the payment of damages in either case. He may also seek rescission, even after he has chosen fulfillment, if the latter should become impossible. The court shall decree the rescission claimed, unless there be just cause authorizing the fixing of a period. This is understood to be without prejudice to the rights of third persons who have acquired the thing, in accordance with articles 1385 and 1388 and the Mortgage Law. According to Spouses Viloria, CAI acted in bad faith and breached the subject contracts when it refused to apply the value of Lourdes’ ticket for Fernando’s purchase of a round trip ticket to Los Angeles and in requiring him to pay an amount higher than the price fixed by other airline companies. In its March 24, 1998 letter, CAI stated that “nonrefundable tickets may be used as a form of payment toward the purchase of another Continental ticket for $75.00, per ticket, reissue fee ($50.00, per ticket, for tickets purchased prior to October 30, 1997).” Clearly, there is nothing in the above-quoted section of CAI’s letter from which the restriction on the nontransferability of the subject tickets can be inferred. In fact, the words used by CAI in its letter supports the position of Spouses Viloria, that each of them can use the ticket under their name for the purchase of new tickets whether for themselves or for some other person. Moreover, as CAI admitted, it was only when Fernando had expressed his interest to use the subject tickets for the purchase of a round trip ticket between Manila and Los Angeles that he was informed that he cannot use the ticket in Lourdes’ name as payment. Contrary to CAI’s claim, that the subject tickets are nontransferable cannot be implied from a plain reading of the provision printed on the subject tickets stating that “[t]o the extent not in conflict with the foregoing carriage and other services performed by each carrier are subject to: (a) provisions contained in this ticket, x x x (iii) carrier’s conditions of carriage and related regulations which are made part hereof (and are available on application at the offices of carrier) x x x.” As a common carrier whose

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business is imbued with public interest, the exercise of extraordinary diligence requires CAI to inform Spouses Viloria, or all of its passengers for that matter, of all the terms and conditions governing their contract of carriage. CAI is proscribed from taking advantage of any ambiguity in the contract of carriage to impute knowledge on its passengers of and demand compliance with a certain condition or undertaking that is not clearly stipulated. Since the prohibition on transferability is not written on the face of the subject tickets and CAI failed to inform Spouses Viloria thereof, CAI cannot refuse to apply the value of Lourdes’ ticket as payment for Fernando’s purchase of a new ticket. CAI’s refusal to accept Lourdes’ ticket for the purchase of a new ticket for Fernando is only a casual breach. Nonetheless, the right to rescind a contract for nonperformance of its stipulations is not absolute. The general rule is that rescission of a contract will not be permitted for a slight or casual breach, but only for such substantial and fundamental violations as would defeat the very object of the parties in making the agreement.40 Whether a breach is substantial is largely determined by the attendant circumstances.41 While CAI’s refusal to allow Fernando to use the value of Lourdes’ ticket as payment for the purchase of a new ticket is unjustified as the non-transferability of the subject tickets was not clearly stipulated, it cannot, however be considered substantial. The endorsability of the subject tickets is not an essential part of the underlying contracts and CAI’s failure to comply is not essential to its fulfillment of its undertaking to issue new tickets upon Spouses Viloria’s surrender of the subject tickets. This Court takes note of CAI’s willingness to perform its principal obligation and this is to apply the price of the ticket in Fernando’s name to the price of the round trip ticket between Manila and Los Angeles. CAI was likewise willing to accept the ticket in Lourdes’ name as full or partial payment as the case may be for the purchase of any ticket, albeit under her name and for her exclusive use. In other words, CAI’s willingness to comply with its undertaking under its March 24, 1998 cannot be doubted, albeit tainted with its erroneous insistence that Lourdes’ ticket is non-transferable. Moreover, Spouses Viloria’s demand for rescission cannot prosper as CAI cannot be solely faulted for the fact that their agreement failed to consummate and no new ticket was issued to Fernando. Spouses Viloria have no right to insist that a single round trip ticket between Manila and Los Angeles should be priced at around $856.00 and refuse to pay the difference between the price of the subject tickets and the amount fixed by CAI. The petitioners failed to allege, much less prove, that CAI had obliged itself to issue to them tickets for any flight anywhere in the world upon their surrender of the subject tickets. In its March 24, 1998 letter, it was clearly stated that “[n]on-refundable tickets may be used as a form of payment toward the purchase of another Continental ticket”42 and there is nothing in it suggesting that CAI had obliged itself to protect Spouses

Viloria from any fluctuation in the prices of tickets or that the surrender of the subject tickets will be considered as full payment for any ticket that the petitioners intend to buy regardless of actual price and destination. The CA was correct in holding that it is CAI’s right and exclusive prerogative to fix the prices for its services and it may not be compelled to observe and maintain the prices of other airline companies.43 The conflict as to the endorsability of the subject tickets is an altogether different matter, which does not preclude CAI from fixing the price of a round trip ticket between Manila and Los Angeles in an amount it deems proper and which does not provide Spouses Viloria an excuse not to pay such price, albeit subject to a reduction coming from the value of the subject tickets. It cannot be denied that Spouses Viloria had the concomitant obligation to pay whatever is not covered by the value of the subject tickets whether or not the subject tickets are transferable or not. There is also no showing that Spouses Viloria were discriminated against in bad faith by being charged with a higher rate. The only evidence the petitioners presented to prove that the price of a round trip ticket between Manila and Los Angeles at that time was only $856.00 is a newspaper advertisement for another airline company, which is inadmissible for being “hearsay evidence, twice removed.” Newspaper clippings are hearsay if they were offered for the purpose of proving the truth of the matter alleged. As ruled in Feria v. Court of Appeals,:44 [N]ewspaper articles amount to “hearsay evidence, twice removed” and are therefore not only inadmissible but without any probative value at all whether objected to or not, unless offered for a purpose other than proving the truth of the matter asserted. In this case, the news article is admissible only as evidence that such publication does exist with the tenor of the news therein stated.45 (citations omitted) The records of this case demonstrate that both parties were equally in default; hence, none of them can seek judicial redress for the cancellation or resolution of the subject contracts and they are therefore bound to their respective obligations thereunder. As the 1st sentence of Article 1192 provides: Art. 1192. In case both parties have committed a breach of the obligation, the liability of the first infractor shall be equitably tempered by the courts. If it cannot be determined which of the parties first violated the contract, the same shall be deemed extinguished, and each shall bear his own damages. (emphasis supplied) Therefore, CAI’s liability for damages for its refusal to accept Lourdes’ ticket for the purchase of Fernando’s round trip ticket is offset by Spouses Viloria’s liability for their refusal to pay the amount, which is not covered by the subject tickets. Moreover, the contract between them remains, hence, CAI is duty bound to issue new tickets for a destination chosen by Spouses Viloria upon their surrender of the subject tickets and Spouses Viloria are

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obliged to pay whatever amount is not covered by the value of the subject tickets.

are insufficient while the latter denies all liability for any damages whatever.

This Court made a similar ruling in Central Bank of the Philippines v. Court of Appeals.46 Thus:

It appears from the evidence that on February 27, 1918, the defendant was the owner of a public garage in the town of San Fernando, La Union, and engaged in the business of carrying passengers for hire from the one point to another in the Province of La Union and the surrounding provinces. On the date mentioned, he undertook to convey the plaintiffs from San Fernando to Currimao, Ilocos Norte, in a Ford automobile. On leaving San Fernando, the automobile was operated by a licensed chauffeur, but after having reached the town of San Juan, the chauffeur allowed his assistant, Remigio Bueno, to drive the car. Bueno held no driver's license, but had some experience in driving, and with the exception of some slight engine trouble while passing through the town of Luna, the car functioned well until after the crossing of the Abra River in Tagudin, when, according to the testimony of the witnesses for the plaintiffs, defects developed in the steering gear so as to make accurate steering impossible, and after zigzagging for a distance of about half a kilometer, the car left the road and went down a steep embankment.

Since both parties were in default in the performance of their respective reciprocal obligations, that is, Island Savings Bank failed to comply with its obligation to furnish the entire loan and Sulpicio M. Tolentino failed to comply with his obligation to pay his P17,000.00 debt within 3 years as stipulated, they are both liable for damages. Article 1192 of the Civil Code provides that in case both parties have committed a breach of their reciprocal obligations, the liability of the first infractor shall be equitably tempered by the courts. WE rule that the liability of Island Savings Bank for damages in not furnishing the entire loan is offset by the liability of Sulpicio M. Tolentino for damages, in the form of penalties and surcharges, for not paying his overdue P17,000.00 debt. x x x.47 Another consideration that militates against the propriety of holding CAI liable for moral damages is the absence of a showing that the latter acted fraudulently and in bad faith. Article 2220 of the Civil Code requires evidence of bad faith and fraud and moral damages are generally not recoverable in culpa contractual except when bad faith had been proven.48 The award of exemplary damages is likewise not warranted. Apart from the requirement that the defendant acted in a wanton, oppressive and malevolent manner, the claimant must prove his entitlement to moral damages.49 WHEREFORE, premises considered, the instant Petition is DENIED. SO ORDERED.

D

Fortuitous Event as a Defense

Lasam v. Smith February 2, 1924

45 PHIL 657, Feb 2, 1924

G.R. No. 19495 HONORIO LASAM, ET AL., plaintiffs-appellants, vs. FRANK SMITH, JR., defendant-appellant. Palma and Leuterio for plaintiffs-appellants. Mariano Alisangco for defendant-appellant. OSTRAND, J.: The plaintiff are husband and wife and this action is brought to recover damages in the sum of P20,000 for physical injuries sustained by them in an automobile accident. The trial court rendered a judgment in their favor for the sum of P1,254.10, with legal interest from the date of the judgment. Both the plaintiffs and the defendant appeal, the former maintaining that the damages awarded

The defendant, in his testimony, maintains that there was no defect in the steering gear, neither before nor after the accident, and expresses the opinion that the swaying or zigzagging of the car must have been due to its having been driven at an excessive rate of speed. This may possibly be true, but it is, from our point of view, immaterial whether the accident was caused by negligence on the part of the defendant's employees, or whether it was due to defects in the automobile; the result would be practically the same in either event. In going over the bank of the road, the automobile was overturned and the plaintiffs pinned down under it. Mr. Lasam escaped with a few contusions and a "dislocated" rib , but his wife, Joaquina Sanchez, received serious injuries, among which was a compound fracture of one of the bones in her left wrist. She also appears to have suffered a nervous breakdown from which she had not fully recovered at the time of the trial. The complaint in the case was filed about a year and a half after the occurrence above related. It alleges, among other things, that the accident was due to defects in the automobile as well as to the incompetence and negligence of the chauffeur, and the case appears to have been tried largely upon the theory that it sounds in tort and that the liability of the defendant is governed by article 1903 of the Civil Code. The trial court held, however, that the cause of action rests on the defendant's breach of the contract of carriage and that, consequently, articles 1101-1107 of the Civil Code, and not article 1903, are applicable. The court further found that the breach of the contract was not due to fortuitous events and that, therefore, the defendant was liable in damages. In our opinion, the conclusions of the court below are entirely correct. That upon the facts stated the defendant's liability, if any, is contractual, is well settled by previous

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decisions of the court, beginning with the case of Rakes vs. Atlantic, Gulf & Pacific Co. (7 Phil., 359), and the distinction between extra-contractual liability and contractual liability has been so ably and exhaustively discussed in various other cases, that nothing further need here be said upon that subject. (See Cangco vs. Manila Railroad Co., 38 Phil., 768; Manila Railroad Co. vs. Compania Trasatlantica and Atlantic, Gulf & Pacific Co., 38 Phil., 875; De Guia vs. Manila Electric Railroad & Light Co., 40 Phil., 706.) It is sufficient to reiterate that the source of the defendant's legal liability is the contract of carriage; that by entering into that contract he bound himself to carry the plaintiffs safely and securely to their destination; and that having failed to do so he is liable in damages unless he shows that the failure to fulfill his obligation was due to causes mentioned in article 1105 of the Civil Code, which reads as follows: No one shall be liable for events which could not be foreseen or which, even if foreseen, were inevitable, with the exception of the cases in which the law expressly provides otherwise and those in which the obligation itself imposes such liability. This brings us to the principal question in the case: What is meant by "events which cannot be foreseen and which, having been foreseen, are inevitable?" The Spanish authorities regard the language employed as an effort to define the term caso fortuito and hold that the two expressions are synonymous. (Manresa, Comentarios al Codigo Civil Español, vol. 8, pp. 88 et seq.; Scævola, Codigo Civil, vol. 19, pp. 526 et seq.) The antecedent to article 1105 is found in Law 11, Title 33, Partida 7, which defines caso fortuito as "occasion que a case por aventura de que non se puede ante ver. E son estos, derrivamientos de casas e fuego que se enciende a so ora, e quebrantamiento de navio, fuerca de ladrones. . . . (An event that takes place by accident and could not have been foreseen. Examples of this are destruction of houses, unexpected fire, shipwreck, violence of robbers. . . .)" Escriche defines caso fortuito as "an unexpected event or act of God which could either be foreseen nor resisted, such as floods, torrents, shipwrecks, conflagrations, lightning, compulsion, insurrections, destructions, destruction of buildings by unforseen accidents and other occurrences of a similar nature." In discussing and analyzing the term caso fortuito the Enciclopedia Juridica Española says: "In a legal sense and, consequently, also in relation to contracts, a caso fortuito presents the following essential characteristics: (1) The cause of the unforeseen and unexpected occurrence, or of the failure of the debtor to comply with his obligation, must be independent of the human will. (2) It must be impossible to foresee the event which constitutes the caso fortuito, or if it can be foreseen, it must be impossible to avoid. (3) The occurrence must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner. And (4) the obligor (debtor) must be free from any participation in

the aggravation of the injury resulting to the creditor." (5 Enciclopedia Juridica Española, 309.) As will be seen, these authorities agree that some extraordinary circumstance independent of the will of the obligor, or of his employees, is an essential element of a caso fortuito. Turning to the present case, it is at once apparent that this element is lacking. It is not suggested that the accident in question was due to an act of God or to adverse road conditions which could not have been foreseen. As far as the records shows, the accident was caused either by defects in the automobile or else through the negligence of its driver. That is not a caso fortuito. We agree with counsel that neither under the American nor Spanish law is a carrier of passengers an absolute insurer against the risks of travel from which the passenger may protect himself by exercising ordinary care and diligence. The case of Alba vs. Sociedad Anonima de Tranvias, Jurisprudencia Civil, vol. 102, p. 928, cited by the defendant in support of his contentions, affords a good illustration of the application of this principle. In that case Alba, a passenger on a street car, was standing on the platform of the car while it was in motion. The car rounded a curve causing Alba to lose his balance and fall off the platform, sustaining severe injuries. In an action brought by him to recover damages, the supreme court of Spain held that inasmuch as the car at the time of the accident was travelling at a moderate rate of speed and there was no infraction of the regulations, and the plaintiff was exposed to no greater danger than that inherent in that particular mode of travel, the plaintiff could not recover, especially so since he should have been on his guard against a contingency as natural as that of losing his balance to a greater or less extent when the car rounded the curve. But such is not the present case; here the passengers had no means of avoiding the danger or escaping the injury. The plaintiffs maintain that the evidence clearly establishes that they are entitled to damages in the sum of P7,832.80 instead of P1,254.10 as found by the trial court, and their assignments of error relate to this point only. There can be no doubt that the expenses incurred by the plaintiffs as a result of the accident greatly exceeded the amount of the damages awarded. But bearing in mind that in determining the extent of the liability for losses or damages resulting from negligence in the fulfillment of a contractual obligation, the courts have "a discretionary power to moderate the liability according to the circumstances" (De Guia vs. Manila Electric Railroad & Light Co., 40 Phil., 706; art. 1103, Civil Code), we do not think that the evidence is such as to justify us in interfering with the discretion of the court below in this respect. As pointed out by that court in its well-reasoned and wellconsidered decision, by far the greater part of the damages claimed by the plaintiffs resulted from the fracture of a bone in the left wrist of Joaquina Sanchez and from her objections to having a decaying splinter of the bone removed by a surgical operation. As a consequence of her refusal to submit such an operation, a series of infections

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ensued and which required constant and expensive medical treatment for several years. We agree with the court below that the defendant should not be charged with these expenses. For the reasons stated, the judgment appealed from is affirmed, without costs in this instance. So ordered. Necesito v. Paras

104 SCRA 84, Jun 30, 1958 (NF)

Juntilla v. Fontanar May 31, 1985 G.R. No. L-45637 May 31, 1985 ROBERTO JUNTILLA, petitioner, vs. CLEMENTE FONTANAR, FERNANDO BANZON and BERFOL CAMORO, respondents. Valentin A. Zozobrado for petitioner. Ruperto N. Alfarara for respondents.

GUTIERREZ, JR., J.: This is a petition for review, on questions of law, of the decision of the Court of First Instance of Cebu which reversed the decision of the City Court of Cebu and exonerated the respondents from any liability arising from a vehicular accident. The background facts which led to the filing of a complaint for breach of contract and damages against the respondents are summarized by the Court of First Instance of Cebu as follows: The facts established after trial show that the plaintiff was a passenger of the public utility jeepney bearing plate No. PUJ-71-7 on the course of the trip from Danao City to Cebu City. The jeepney was driven by defendant Berfol Camoro. It was registered under the franchise of defendant Clemente Fontanar but was actually owned by defendant Fernando Banzon. When the jeepney reached Mandaue City, the right rear tire exploded causing the vehicle to turn turtle. In the process, the plaintiff who was sitting at the front seat was thrown out of the vehicle. Upon landing on the ground, the plaintiff momentarily lost consciousness. When he came to his senses, he found that he had a lacerated wound on his right palm. Aside from this, he suffered injuries on his left arm, right thigh and on his back. (Exh. "D"). Because of his shock and injuries, he went back to Danao City but on the way, he discovered that his "Omega" wrist watch was lost. Upon his arrival in Danao City, he immediately entered the Danao City Hospital to attend to his injuries, and also requested his father-in-law to proceed immediately to the place of the accident and look for the watch. In spite of the efforts of his father-in-law, the wrist watch, which he bought for P 852.70 (Exh. "B") could no longer be found. xxx

xxx

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Petitioner Roberto Juntilla filed Civil Case No. R-17378 for breach of contract with damages before the City Court of Cebu City, Branch I against Clemente Fontanar, Fernando Banzon and Berfol Camoro. The respondents filed their answer, alleging inter alia that the accident that caused losses to the petitioner was beyond the control of the respondents taking into account that the tire that exploded was newly bought and was only slightly used at the time it blew up. After trial, Judge Romulo R. Senining of the Civil Court of Cebu rendered judgment in favor of the petitioner and against the respondents. The dispositive portion of the decision reads: WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendants and the latter are hereby ordered, jointly and severally, to pay the plaintiff the sum of P750.00 as reimbursement for the lost Omega wrist watch, the sum of P246.64 as unrealized salary of the plaintiff from his employer, the further sum of P100.00 for the doctor's fees and medicine, an additional sum of P300.00 for attorney's fees and the costs. The respondents appealed to the Court of First Instance of Cebu, Branch XIV. Judge Leonardo B. Canares reversed the judgment of the City Court of Cebu upon a finding that the accident in question was due to a fortuitous event. The dispositive portion of the decision reads: WHEREFORE, judgment is hereby rendered exonerating the defendants from any liability to the plaintiff without pronouncement as to costs. A motion for reconsideration was denied by the Court of First Instance. The petitioner raises the following alleged errors committed by the Court of First Instance of Cebu on appeal — a. The Honorable Court below committed grave abuse of discretion in failing to take cognizance of the fact that defendants and/or their employee failed to exercise "utmost and/or extraordinary diligence" required of common carriers contemplated under Art. 1755 of the Civil Code of the Philippines. b. The Honorable Court below committed grave abuse of discretion by deciding the case contrary to the doctrine laid down by the Honorable Supreme Court in the case of Necesito et al. v. Paras, et al. We find the petition impressed with merit. The City Court and the Court of First Instance of Cebu found that the right rear tire of the passenger jeepney in which the petitioner was riding blew up causing the vehicle

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to fall on its side. The petitioner questions the conclusion of the respondent court drawn from this finding of fact.

passengers in the front seat and fourteen (14) passengers in the rear.

The Court of First Instance of Cebu erred when it absolved the carrier from any liability upon a finding that the tire blow out is a fortuitous event. The Court of First Instance of Cebu ruled that:

While it may be true that the tire that blew-up was still good because the grooves of the tire were still visible, this fact alone does not make the explosion of the tire a fortuitous event. No evidence was presented to show that the accident was due to adverse road conditions or that precautions were taken by the jeepney driver to compensate for any conditions liable to cause accidents. The sudden blowing-up, therefore, could have been caused by too much air pressure injected into the tire coupled by the fact that the jeepney was overloaded and speeding at the time of the accident.

After reviewing the records of the case, this Court finds that the accident in question was due to a fortuitous event. A tire blow-out, such as what happened in the case at bar, is an inevitable accident that exempts the carrier from liability, there being absence of a showing that there was misconduct or negligence on the part of the operator in the operation and maintenance of the vehicle involved. The fact that the right rear tire exploded, despite being brand new, constitutes a clear case of caso fortuito which can be a proper basis for exonerating the defendants from liability. ... The Court of First Instance relied on the ruling of the Court of Appeals in Rodriguez v. Red Line Transportation Co., CA G.R. No. 8136, December 29, 1954, where the Court of Appeals ruled that: A tire blow-out does not constitute negligence unless the tire was already old and should not have been used at all. Indeed, this would be a clear case of fortuitous event. The foregoing conclusions of the Court of First Instance of Cebu are based on a misapprehension of overall facts from which a conclusion should be drawn. The reliance of the Court of First Instance on the Rodriguez case is not in order. In La Mallorca and Pampanga Bus Co. v. De Jesus, et al. (17 SCRA 23), we held that: Petitioner maintains that a tire blow-out is a fortuitous event and gives rise to no liability for negligence, citing the rulings of the Court of Appeals in Rodriguez v. Red Line Transportation Co., CA G.R. No. 8136, December 29, 1954, and People v. Palapad, CA-G.R. No. 18480, June 27, 1958. These rulings, however, not only are not binding on this Court but were based on considerations quite different from those that obtain in the case at bar. The appellate court there made no findings of any specific acts of negligence on the part of the defendants and confined itself to the question of whether or not a tire blow-out, by itself alone and without a showing as to the causative factors, would generate liability. ... In the case at bar, there are specific acts of negligence on the part of the respondents. The records show that the passenger jeepney turned turtle and jumped into a ditch immediately after its right rear tire exploded. The evidence shows that the passenger jeepney was running at a very fast speed before the accident. We agree with the observation of the petitioner that a public utility jeep running at a regular and safe speed will not jump into a ditch when its right rear tire blows up. There is also evidence to show that the passenger jeepney was overloaded at the time of the accident. The petitioner stated that there were three (3)

In Lasam v. Smith (45 Phil. 657), we laid down the following essential characteristics of caso fortuito: xxx

xxx

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... In a legal sense and, consequently, also in relation to contracts, a caso fortuito presents the following essential characteristics: (1) The cause of the unforeseen and unexpected occurrence, or of the failure of the debtor to comply with his obligation, must be independent of the human will. (2) It must be impossible to foresee the event which constitutes the caso fortuito, or if it can be foreseen, it must be impossible to avoid. (3) The occurrence must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner. And (4) the obligor (debtor) must be free from any participation in the aggravation of the injury resulting to the creditor. (5 Encyclopedia Juridica Espanola, 309.) In the case at bar, the cause of the unforeseen and unexpected occurrence was not independent of the human will. The accident was caused either through the negligence of the driver or because of mechanical defects in the tire. Common carriers should teach their drivers not to overload their vehicles, not to exceed safe and legal speed limits, and to know the correct measures to take when a tire blows up thus insuring the safety of passengers at all times. Relative to the contingency of mechanical defects, we held in Necesito, et al. v. Paras, et al. (104 Phil. 75), that: ... The preponderance of authority is in favor of the doctrine that a passenger is entitled to recover damages from a carrier for an injury resulting from a defect in an appliance purchased from a manufacturer, whenever it appears that the defect would have been discovered by the carrier if it had exercised the degree of care which under the circumstances was incumbent upon it, with regard to inspection and application of the necessary tests. For the purposes of this doctrine, the manufacturer is considered as being in law the agent or servant of the carrier, as far as regards the work of constructing the appliance. According to this theory, the good repute of the manufacturer will not relieve the carrier from liability' (10 Am. Jur. 205, s, 1324; see also Pennsylvania R. Co. v. Roy, 102 U.S. 451; 20 L. Ed. 141; Southern R. Co. v. Hussey, 74 ALR 1172; 42 Fed. 2d 70; and Ed Note, 29 ALR 788.: Ann. Cas. 1916E 929).

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The rationale of the carrier's liability is the fact that the passenger has neither choice nor control over the carrier in the selection and use of the equipment and appliances in use by the carrier. Having no privity whatever with the manufacturer or vendor of the defective equipment, the passenger has no remedy against him, while the carrier usually has. It is but logical, therefore, that the carrier, while not an insurer of the safety of his passengers, should nevertheless be held to answer for the flaws of his equipment if such flaws were at all discoverable. ... It is sufficient to reiterate that the source of a common carrier's legal liability is the contract of carriage, and by entering into the said contract, it binds itself to carry the passengers safely as far as human care and foresight can provide, using the utmost diligence of a very cautious person, with a due regard for all the circumstances. The records show that this obligation was not met by the respondents. The respondents likewise argue that the petitioner cannot recover any amount for failure to prove such damages during the trial. The respondents submit that if the petitioner was really injured, why was he treated in Danao City and not in Mandaue City where the accident took place. The respondents argue that the doctor who issued the medical certificate was not presented during the trial, and hence not cross-examined. The respondents also claim that the petitioner was not wearing any wrist watch during the accident. It should be noted that the City Court of Cebu found that the petitioner had a lacerated wound on his right palm aside from injuries on his left arm, right thigh and on his back, and that on his way back to Danao City, he discovered that his "Omega" wrist watch was lost. These are findings of facts of the City Court of Cebu which we find no reason to disturb. More so when we consider the fact that the Court of First Instance of Cebu impliedly concurred in these matters when it confined itself to the question of whether or not the tire blow out was a fortuitous event. WHEREFORE, the decision of the Court of First Instance of Cebu, Branch IV appealed from is hereby REVERSED and SET ASIDE, and the decision of the City Court of Cebu, Branch I is REINSTATED, with the modification that the damages shall earn interest at 12% per annum and the attorney's fees are increased to SIX HUNDRED PESOS (P600.00). Damages shall earn interests from January 27, 1975. SO ORDERED. Yobido v. CA Oct 17, 1997 [G.R. No. 113003. October 17, 1997] ALBERTA YOBIDO and CRESENCIO YOBIDO, petitioners, vs. COURT OF APPEALS, LENY TUMBOY, ARDEE TUMBOY and JASMIN TUMBOY, respondents. DECISION ROMERO, J.:

In this petition for review on certiorari of the decision of the Court of Appeals, the issue is whether or not the explosion of a newly installed tire of a passenger vehicle is a fortuitous event that exempts the carrier from liability for the death of a passenger. On April 26, 1988, spouses Tito and Leny Tumboy and their minor children named Ardee and Jasmin, boarded at Mangagoy, Surigao del Sur, a Yobido Liner bus bound for Davao City. Along Picop Road in Km. 17, Sta. Maria, Agusan del Sur, the left front tire of the bus exploded. The bus fell into a ravine around three (3) feet from the road and struck a tree. The incident resulted in the death of 28year-old Tito Tumboy and physical injuries to other passengers. On November 21, 1988, a complaint for breach of contract of carriage, damages and attorney’s fees was filed by Leny and her children against Alberta Yobido, the owner of the bus, and Cresencio Yobido, its driver, before the Regional Trial Court of Davao City. When the defendants therein filed their answer to the complaint, they raised the affirmative defense of caso fortuito. They also filed a thirdparty complaint against Philippine Phoenix Surety and Insurance, Inc. This third-party defendant filed an answer with compulsory counterclaim. At the pre-trial conference, the parties agreed to a stipulation of facts.[1] Upon a finding that the third party defendant was not liable under the insurance contract, the lower court dismissed the third party complaint. No amicable settlement having been arrived at by the parties, trial on the merits ensued. The plaintiffs asserted that violation of the contract of carriage between them and the defendants was brought about by the driver’s failure to exercise the diligence required of the carrier in transporting passengers safely to their place of destination. According to Leny Tumboy, the bus left Mangagoy at 3:00 o’clock in the afternoon. The winding road it traversed was not cemented and was wet due to the rain; it was rough with crushed rocks. The bus which was full of passengers had cargoes on top. Since it was “running fast,” she cautioned the driver to slow down but he merely stared at her through the mirror. At around 3:30 p.m., in Trento, she heard something explode and immediately, the bus fell into a ravine. For their part, the defendants tried to establish that the accident was due to a fortuitous event. Abundio Salce, who was the bus conductor when the incident happened, testified that the 42-seater bus was not full as there were only 32 passengers, such that he himself managed to get a seat. He added that the bus was running at a speed of “60 to 50” and that it was going slow because of the zigzag road. He affirmed that the left front tire that exploded was a “brand new tire” that he mounted on the bus on April 21, 1988 or only five (5) days before the incident. The Yobido Liner secretary, Minerva Fernando, bought the new Goodyear tire from Davao Toyo Parts on April 20, 1988 and she was present when it was mounted on the bus by Salce. She stated that all driver applicants in Yobido Liner underwent actual driving tests before they were employed.

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Defendant Cresencio Yobido underwent such test and submitted his professional driver’s license and clearances from the barangay, the fiscal and the police. On August 29, 1991, the lower court rendered a decision[2] dismissing the action for lack of merit. On the issue of whether or not the tire blowout was a caso fortuito, it found that “the falling of the bus to the cliff was a result of no other outside factor than the tire blow-out.” It held that the ruling in the La Mallorca and Pampanga Bus Co. v. De Jesus[3] that a tire blowout is “a mechanical defect of the conveyance or a fault in its equipment which was easily discoverable if the bus had been subjected to a more thorough or rigid check-up before it took to the road that morning” is inapplicable to this case. It reasoned out that in said case, it was found that the blowout was caused by the established fact that the inner tube of the left front tire “was pressed between the inner circle of the left wheel and the rim which had slipped out of the wheel.” In this case, however, “the cause of the explosion remains a mystery until at present.” As such, the court added, the tire blowout was “a caso fortuito which is completely an extraordinary circumstance independent of the will” of the defendants who should be relieved of “whatever liability the plaintiffs may have suffered by reason of the explosion pursuant to Article 1174[4] of the Civil Code.” Dissatisfied, the plaintiffs appealed to the Court of Appeals. They ascribed to the lower court the following errors: (a) finding that the tire blowout was a caso fortuito; (b) failing to hold that the defendants did not exercise utmost and/or extraordinary diligence required of carriers under Article 1755 of the Civil Code, and (c) deciding the case contrary to the ruling in Juntilla v. Fontanar,[5] and Necesito v. Paras.[6] On August 23, 1993, the Court of Appeals rendered the Decision[7] reversing that of the lower court. It held that: “To Our mind, the explosion of the tire is not in itself a fortuitous event. The cause of the blow-out, if due to a factory defect, improper mounting, excessive tire pressure, is not an unavoidable event. On the other hand, there may have been adverse conditions on the road that were unforeseeable and/or inevitable, which could make the blow-out a caso fortuito. The fact that the cause of the blow-out was not known does not relieve the carrier of liability. Owing to the statutory presumption of negligence against the carrier and its obligation to exercise the utmost diligence of very cautious persons to carry the passenger safely as far as human care and foresight can provide, it is the burden of the defendants to prove that the cause of the blow-out was a fortuitous event. It is not incumbent upon the plaintiff to prove that the cause of the blow-out is not caso-fortuito. Proving that the tire that exploded is a new Goodyear tire is not sufficient to discharge defendants’ burden. As enunciated in Necesito vs. Paras, the passenger has neither choice nor control over the carrier in the selection and use of its equipment, and the good repute of the manufacturer will not necessarily relieve the carrier from liability.

Moreover, there is evidence that the bus was moving fast, and the road was wet and rough. The driver could have explained that the blow-out that precipitated the accident that caused the death of Toto Tumboy could not have been prevented even if he had exercised due care to avoid the same, but he was not presented as witness.” The Court of Appeals thus disposed of the appeal as follows: “WHEREFORE, the judgment of the court a quo is set aside and another one entered ordering defendants to pay plaintiffs the sum of P50,000.00 for the death of Tito Tumboy, P30,000.00 in moral damages, and P7,000.00 for funeral and burial expenses. SO ORDERED.” The defendants filed a motion for reconsideration of said decision which was denied on November 4, 1993 by the Court of Appeals. Hence, the instant petition asserting the position that the tire blowout that caused the death of Tito Tumboy was a caso fortuito. Petitioners claim further that the Court of Appeals, in ruling contrary to that of the lower court, misapprehended facts and, therefore, its findings of fact cannot be considered final which shall bind this Court. Hence, they pray that this Court review the facts of the case. The Court did re-examine the facts and evidence in this case because of the inapplicability of the established principle that the factual findings of the Court of Appeals are final and may not be reviewed on appeal by this Court. This general principle is subject to exceptions such as the one present in this case, namely, that the lower court and the Court of Appeals arrived at diverse factual findings.[8] However, upon such re-examination, we found no reason to overturn the findings and conclusions of the Court of Appeals. As a rule, when a passenger boards a common carrier, he takes the risks incidental to the mode of travel he has taken. After all, a carrier is not an insurer of the safety of its passengers and is not bound absolutely and at all events to carry them safely and without injury.[9] However, when a passenger is injured or dies while travelling, the law presumes that the common carrier is negligent. Thus, the Civil Code provides: “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.” Article 1755 provides that “(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.” Accordingly, in culpa contractual, once a passenger dies or is injured, the carrier is presumed to have

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been at fault or to have acted negligently. This disputable presumption may only be overcome by evidence that the carrier had observed extraordinary diligence as prescribed by Articles 1733,[10] 1755 and 1756 of the Civil Code or that the death or injury of the passenger was due to a fortuitous event.[11] Consequently, the court need not make an express finding of fault or negligence on the part of the carrier to hold it responsible for damages sought by the passenger.[12] In view of the foregoing, petitioners’ contention that they should be exempt from liability because the tire blowout was no more than a fortuitous event that could not have been foreseen, must fail. A fortuitous event is possessed of the following characteristics: (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 the caso 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.[13] As Article 1174 provides, no person shall be responsible for a fortuitous event which could not be foreseen, or which, though foreseen, was inevitable. In other words, there must be an entire exclusion of human agency from the cause of injury or loss.[14] Under the circumstances of this case, the explosion of the new tire may not be considered a fortuitous event. There are human factors involved in the situation. The fact that the tire was new did not imply that it was entirely free from manufacturing defects or that it was properly mounted on the vehicle. Neither may the fact that the tire bought and used in the vehicle is of a brand name noted for quality, resulting in the conclusion that it could not explode within five days’ use. Be that as it may, it is settled that an accident caused either by defects in the automobile or through the negligence of its driver is not a caso fortuito that would exempt the carrier from liability for damages. [15] Moreover, a common carrier may not be absolved from liability in case of force majeure or fortuitous event alone. The common carrier must still prove that it was not negligent in causing the death or injury resulting from an accident.[16] This Court has had occasion to state: “While it may be true that the tire that blew-up was still good because the grooves of the tire were still visible, this fact alone does not make the explosion of the tire a fortuitous event. No evidence was presented to show that the accident was due to adverse road conditions or that precautions were taken by the jeepney driver to compensate for any conditions liable to cause accidents. The sudden blowing-up, therefore, could have been caused by too much air pressure injected into the tire coupled by the fact that the jeepney was overloaded and speeding at the time of the accident.”[17]

It is interesting to note that petitioners proved through the bus conductor, Salce, that the bus was running at “60-50” kilometers per hour only or within the prescribed lawful speed limit. However, they failed to rebut the testimony of Leny Tumboy that the bus was running so fast that she cautioned the driver to slow down. These contradictory facts must, therefore, be resolved in favor of liability in view of the presumption of negligence of the carrier in the law. Coupled with this is the established condition of the road – rough, winding and wet due to the rain. It was incumbent upon the defense to establish that it took precautionary measures considering partially dangerous condition of the road. As stated above, proof that the tire was new and of good quality is not sufficient proof that it was not negligent. Petitioners should have shown that it undertook extraordinary diligence in the care of its carrier, such as conducting daily routinary check-ups of the vehicle’s parts. As the late Justice J.B.L. Reyes said: “It may be impracticable, as appellee argues, to require of carriers to test the strength of each and every part of its vehicles before each trip; but we are of the opinion that a due regard for the carrier’s obligations toward the traveling public demands adequate periodical tests to determine the condition and strength of those vehicle portions the failure of which may endanger the safety of the passengers.”[18] Having failed to discharge its duty to overthrow the presumption of negligence with clear and convincing evidence, petitioners are hereby held liable for damages. Article 1764[19] in relation to Article 2206[20] of the Civil Code prescribes the amount of at least three thousand pesos as damages for the death of a passenger. Under prevailing jurisprudence, the award of damages under Article 2206 has been increased to fifty thousand pesos (P50,000.00). [21] Moral damages are generally not recoverable in culpa contractual except when bad faith had been proven. However, the same damages may be recovered when breach of contract of carriage results in the death of a passenger,[22] as in this case. Exemplary damages, awarded by way of example or correction for the public good when moral damages are awarded,[23] may likewise be recovered in contractual obligations if the defendant acted in wanton, fraudulent, reckless, oppressive, or malevolent manner.[24] Because petitioners failed to exercise the extraordinary diligence required of a common carrier, which resulted in the death of Tito Tumboy, it is deemed to have acted recklessly.[25] As such, private respondents shall be entitled to exemplary damages. WHEREFORE, the Decision of the Court of Appeals is hereby AFFIRMED subject to the modification that petitioners shall, in addition to the monetary awards therein, be liable for the award of exemplary damages in the amount of P20,000.00. Costs against petitioners. SO ORDERED. Gacal v. PAL 183 SCRA 189 G.R. No. L-55300 March 15, 1990

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FRANKLIN G. GACAL and CORAZON M. GACAL, the latter assisted by her husband, FRANKLIN G. GACAL, petitioners, vs. PHILIPPINE AIR LINES, INC., and THE HONORABLE PEDRO SAMSON C. ANIMAS, in his capacity as PRESIDING JUDGE of the COURT OF FIRST INSTANCE OF SOUTH COTABATO, BRANCH I, respondents. Vicente A. Mirabueno for petitioners. Siguion Reyna, Montecillo & Ongsiako for private respondent.

PARAS, J.: This is a, petition for review on certiorari of the decision of the Court of First Instance of South Cotabato, Branch 1, * promulgated on August 26, 1980 dismissing three (3) consolidated cases for damages: Civil Case No. 1701, Civil Case No. 1773 and Civil Case No. 1797 (Rollo, p. 35). The facts, as found by respondent court, are as follows: Plaintiffs Franklin G. Gacal and his wife, Corazon M. Gacal, Bonifacio S. Anislag and his wife, Mansueta L. Anislag, and the late Elma de Guzman, were then passengers boarding defendant's BAC 1-11 at Davao Airport for a flight to Manila, not knowing that on the same flight, Macalinog, Taurac Pendatum known as Commander Zapata, Nasser Omar, Liling Pusuan Radia, Dimantong Dimarosing and Mike Randa, all of Marawi City and members of the Moro National Liberation Front (MNLF), were their co-passengers, three (3) armed with grenades, two (2) with .45 caliber pistols, and one with a .22 caliber pistol. Ten (10) minutes after take off at about 2:30 in the afternoon, the hijackers brandishing their respective firearms announced the hijacking of the aircraft and directed its pilot to fly to Libya. With the pilot explaining to them especially to its leader, Commander Zapata, of the inherent fuel limitations of the plane and that they are not rated for international flights, the hijackers directed the pilot to fly to Sabah. With the same explanation, they relented and directed the aircraft to land at Zamboanga Airport, Zamboanga City for refueling. The aircraft landed at 3:00 o'clock in the afternoon of May 21, 1976 at Zamboanga Airport. When the plane began to taxi at the runway, it was met by two armored cars of the military with machine guns pointed at the plane, and it stopped there. The rebels thru its commander demanded that a DC-aircraft take them to Libya with the President of the defendant company as hostage and that they be given $375,000 and six (6) armalites, otherwise they will blow up the plane if their demands will not be met by the government and Philippine Air Lines. Meanwhile, the passengers were not served any food nor water and it was only on May 23, a Sunday, at about 1:00 o'clock in the afternoon that they were served 1/4 slice of a sandwich and 1/10 cup of PAL

water. After that, relatives of the hijackers were allowed to board the plane but immediately after they alighted therefrom, an armored car bumped the stairs. That commenced the battle between the military and the hijackers which led ultimately to the liberation of the surviving crew and the passengers, with the final score of ten (10) passengers and three (3) hijackers dead on the spot and three (3) hijackers captured. City Fiscal Franklin G. Gacal was unhurt. Mrs. Corazon M. Gacal suffered injuries in the course of her jumping out of the plane when it was peppered with bullets by the army and after two (2) hand grenades exploded inside the plane. She was hospitalized at General Santos Doctors Hospital, General Santos City, for two (2) days, spending P245.60 for hospital and medical expenses, Assistant City Fiscal Bonifacio S. Anislag also escaped unhurt but Mrs. Anislag suffered a fracture at the radial bone of her left elbow for which she was hospitalized and operated on at the San Pedro Hospital, Davao City, and therefore, at Davao Regional Hospital, Davao City, spending P4,500.00. Elma de Guzman died because of that battle. Hence, the action of damages instituted by the plaintiffs demanding the following damages, to wit: Civil Case No. 1701 — City Fiscal Franklin G. Gacal and Mrs. Corazon M. Gacal — actual damages: P245.60 for hospital and medical expenses of Mrs Gacal; P8,995.00 for their personal belongings which were lost and not recovered; P50,000.00 each for moral damages; and P5,000.00 for attorney's fees, apart from the prayer for an award of exemplary damages (Record, pp. 4-6, Civil Case No. 1701). Civil Case No. 1773 — xxx

xxx

xxx

Civil Case No. 1797 — xxx

xxx

xxx

The trial court, on August 26, 1980, dismissed the complaints finding that all the damages sustained in the premises were attributed to force majeure. On September 12, 1980 the spouses Franklin G. Gacal and Corazon M. Gacal, plaintiffs in Civil Case No. 1701, filed a notice of appeal with the lower court on pure questions of law (Rollo, p. 55) and the petition for review on certiorari was filed with this Court on October 20, 1980 (Rollo, p. 30). The Court gave due course to the petition (Rollo, p. 147) and both parties filed their respective briefs but petitioner failed to file reply brief which was noted by the Court in the resolution dated May 3, 1982 (Rollo, p. 183). Petitioners alleged that the main cause of the unfortunate incident is the gross, wanton and inexcusable negligence of respondent Airline personnel in their failure to frisk the

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passengers adequately in order to discover hidden weapons in the bodies of the six (6) hijackers. They claimed that despite the prevalence of skyjacking, PAL did not use a metal detector which is the most effective means of discovering potential skyjackers among the passengers (Rollo, pp. 6-7). Respondent Airline averred that in the performance of its obligation to safely transport passengers as far as human care and foresight can provide, it has exercised the utmost diligence of a very cautious person with due regard to all circumstances, but the security checks and measures and surveillance precautions in all flights, including the inspection of baggages and cargo and frisking of passengers at the Davao Airport were performed and rendered solely by military personnel who under appropriate authority had assumed exclusive jurisdiction over the same in all airports in the Philippines. Similarly, the negotiations with the hijackers were a purely government matter and a military operation, handled by and subject to the absolute and exclusive jurisdiction of the military authorities. Hence, it concluded that the accident that befell RP-C1161 was caused by fortuitous event, force majeure and other causes beyond the control of the respondent Airline. The determinative issue in this case is whether or not hijacking or air piracy during martial law and under the circumstances obtaining herein, is a caso fortuito or force majeure which would exempt an aircraft from payment of damages to its passengers whose lives were put in jeopardy and whose personal belongings were lost during the incident. Under the Civil Code, common carriers are required to exercise extraordinary diligence in their vigilance over the goods and for the safety of passengers transported by them, according to all the circumstances of each case (Article 1733). They are presumed at fault or to have acted negligently whenever a passenger dies or is injured (Philippine Airlines, Inc. v. National Labor Relations Commission, 124 SCRA 583 [1983]) or for the loss, destruction or deterioration of goods in cases other than those enumerated in Article 1734 of the Civil Code (Eastern Shipping Lines, Inc. v. Intermediate Appellate Court, 150 SCRA 463 [1987]). The source of a common carrier's legal liability is the contract of carriage, and by entering into said contract, it binds itself to carry the passengers safely as far as human care and foresight can provide. There is breach of this obligation if it fails to exert extraordinary diligence according to all the circumstances of the case in exercise of the utmost diligence of a very cautious person (Isaac v. Ammen Transportation Co., 101 Phil. 1046 [1957]; Juntilla v. Fontanar, 136 SCRA 624 [1985]). It is the duty of a common carrier to overcome the presumption of negligence (Philippine National Railways v. Court of Appeals, 139 SCRA 87 [1985]) and it must be shown that the carrier had observed the required

extraordinary diligence of a very cautious person as far as human care and foresight can provide or that the accident was caused by a fortuitous event (Estrada v. Consolacion, 71 SCRA 523 [1976]). Thus, as ruled by this Court, no person shall be responsible for those "events which could not be foreseen or which though foreseen were inevitable. (Article 1174, Civil Code). The term is synonymous with caso fortuito (Lasam v. Smith, 45 Phil. 657 [1924]) which is of the same sense as "force majeure" (Words and Phrases Permanent Edition, Vol. 17, p. 362). In order to constitute a caso fortuito or force majeure that would exempt a person from liability under Article 1174 of the Civil Code, it is necessary that the following elements must concur: (a) the cause of the breach of the obligation must be independent of the human will (the will of the debtor or the obligor); (b) the event must be either unforeseeable or unavoidable; (c) the event must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner; and (d) the debtor must be free from any participation in, or aggravation of the injury to the creditor (Lasam v. Smith, 45 Phil. 657 [1924]; Austria v. Court of Appeals, 39 SCRA 527 [1971]; Estrada v. Consolacion, supra; Vasquez v. Court of Appeals, 138 SCRA 553 [1985]; Juan F. Nakpil & Sons v. Court of Appeals, 144 SCRA 596 [1986]). Caso fortuito or force majeure, by definition, are extraordinary events not foreseeable or avoidable, events that could not be foreseen, or which, though foreseen, are 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. The mere difficulty to foresee the happening is not impossibility to foresee the same (Republic v. Luzon Stevedoring Corporation, 21 SCRA 279 [1967]). Applying the above guidelines to the case at bar, the failure to transport petitioners safely from Davao to Manila was due to the skyjacking incident staged by six (6) passengers of the same plane, all members of the Moro National Liberation Front (MNLF), without any connection with private respondent, hence, independent of the will of either the PAL or of its passengers. Under normal circumstances, PAL might have foreseen the skyjacking incident which could have been avoided had there been a more thorough frisking of passengers and inspection of baggages as authorized by R.A. No. 6235. But the incident in question occurred during Martial Law where there was a military take-over of airport security including the frisking of passengers and the inspection of their luggage preparatory to boarding domestic and international flights. In fact military take-over was specifically announced on October 20, 1973 by General Jose L. Rancudo, Commanding General of the Philippine Air Force in a letter to Brig. Gen. Jesus Singson, then Director of the Civil Aeronautics Administration (Rollo, pp. 71-72) later confirmed shortly before the hijacking incident of May 21, 1976 by Letter of Instruction No. 399 issued on April 28, 1976 (Rollo, p. 72).

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Otherwise stated, these events rendered it impossible for PAL to perform its obligations in a nominal manner and obviously it cannot be faulted with negligence in the performance of duty taken over by the Armed Forces of the Philippines to the exclusion of the former. Finally, there is no dispute that the fourth element has also been satisfied. Consequently the existence of force majeure has been established exempting respondent PAL from the payment of damages to its passengers who suffered death or injuries in their persons and for loss of their baggages. PREMISES CONSIDERED, the petition is hereby DISMISSED for lack of merit and the decision of the Court of First Instance of South Cotabato, Branch I is hereby AFFIRMED. SO ORDERED. Pilapil v. CA G.R. No. 52159

Dec 22, 1989 December 22, 1989

JOSE PILAPIL, petitioner, vs. HON. COURT OF APPEALS and ALATCO TRANSPORTATION COMPANY, INC., respondents. Martin Badong, Jr. for petitioner.

he was treated for another week. Since there was no improvement in his left eye's vision, petitioner went to V. Luna Hospital, Quezon City where he was treated by Dr. Capulong. Despite the treatment accorded to him by Dr. Capulong, petitioner lost partially his left eye's vision and sustained a permanent scar above the left eye. Thereupon, petitioner instituted before the Court of First Instance of Camarines Sur, Branch I an action for recovery of damages sustained as a result of the stone-throwing incident. After trial, the court a quo rendered judgment with the following dispositive part: Wherefore, judgment is hereby entered: 1. Ordering defendant transportation company to pay plaintiff Jose Pilapil the sum of P 10,000.00, Philippine Currency, representing actual and material damages for causing a permanent scar on the face and injuring the eyesight of the plaintiff; 2. Ordering further defendant transportation company to pay the sum of P 5,000.00, Philippine Currency, to the plaintiff as moral and exemplary damages; 3. Ordering furthermore, defendant transportation company to reimburse plaintiff the sum of P 300.00 for his medical expenses and attorney's fees in the sum of P 1,000.00, Philippine Currency; and

Eufronio K. Maristela for private respondent. 4.

To pay the costs.

SO ORDERED 1 PADILLA, J.: This is a petition to review on certiorari the decision* rendered by the Court of Appeals dated 19 October 1979 in CA-G.R. No. 57354-R entitled "Jose Pilapil, plaintiffappellee versus Alatco Transportation Co., Inc., defendantappellant," which reversed and set aside the judgment of the Court of First Instance of Camarines Sur in Civil Case No. 7230 ordering respondent transportation company to pay to petitioner damages in the total sum of sixteen thousand three hundred pesos (P 16,300.00). The record discloses the following facts: Petitioner-plaintiff Jose Pilapil, a paying passenger, boarded respondent-defendant's bus bearing No. 409 at San Nicolas, Iriga City on 16 September 1971 at about 6:00 P.M. While said bus No. 409 was in due course negotiating the distance between Iriga City and Naga City, upon reaching the vicinity of the cemetery of the Municipality of Baao, Camarines Sur, on the way to Naga City, an unidentified man, a bystander along said national highway, hurled a stone at the left side of the bus, which hit petitioner above his left eye. Private respondent's personnel lost no time in bringing the petitioner to the provincial hospital in Naga City where he was confined and treated.

From the judgment, private respondent appealed to the Court of Appeals where the appeal was docketed as CAG.R. No. 57354R. On 19 October 1979, the Court of Appeals, in a Special Division of Five, rendered judgment reversing and setting aside the judgment of the court a quo. Hence the present petition. In seeking a reversal of the decision of the Court of Appeals, petitioner contends that said court has decided the issue not in accord with law. Specifically, petitioner argues that the nature of the business of a transportation company requires the assumption of certain risks, and the stoning of the bus by a stranger resulting in injury to petitionerpassenger is one such risk from which the common carrier may not exempt itself from liability. We do not agree. In consideration of the right granted to it by the public to engage in the business of transporting passengers and goods, a common carrier does not give its consent to become an insurer of any and all risks to passengers and goods. It merely undertakes to perform certain duties to the public as the law imposes, and holds itself liable for any breach thereof.

Considering that the sight of his left eye was impaired, petitioner was taken to Dr. Malabanan of Iriga City where

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Under Article 1733 of the Civil Code, common carriers are required to observe extraordinary diligence for the safety of the passenger transported by them, according to all the circumstances of each case. The requirement of extraordinary diligence imposed upon common carriers is restated in Article 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 due regard for all the circumstances." Further, in case of death of or injuries to passengers, the law presumes said common carriers to be at fault or to have acted negligently. 2 While the law requires the highest degree of diligence from common carriers in the safe transport of their passengers and creates a presumption of negligence against them, it does not, however, make the carrier an insurer of the absolute safety of its passengers. 3 Article 1755 of the Civil Code qualifies the duty of extraordinary care, vigilance and precaution in the carriage of passengers by common carriers to only such as human care and foresight can provide. what constitutes compliance with said duty is adjudged with due regard to all the circumstances. Article 1756 of the Civil Code, in creating a presumption of fault or negligence on the part of the common carrier when its passenger is injured, merely relieves the latter, for the time being, from introducing evidence to fasten the negligence on the former, because the presumption stands in the place of evidence. Being a mere presumption, however, the same is rebuttable by proof that the common carrier had exercised extraordinary diligence as required by law in the performance of its contractual obligation, or that the injury suffered by the passenger was solely due to a fortuitous event. 4 In fine, we can only infer from the law the intention of the Code Commission and Congress to curb the recklessness of drivers and operators of common carriers in the conduct of their business. Thus, it is clear that neither the law nor the nature of the business of a transportation company makes it an insurer of the passenger's safety, but that its liability for personal injuries sustained by its passenger rests upon its negligence, its failure to exercise the degree of diligence that the law requires. 5 Petitioner contends that respondent common carrier failed to rebut the presumption of negligence against it by proof on its part that it exercised extraordinary diligence for the safety of its passengers. We do not agree. First, as stated earlier, the presumption of fault or negligence against the carrier is only a disputable presumption. It gives in where contrary facts are established proving either that the carrier had exercised the degree of diligence required by law or the injury suffered

by the passenger was due to a fortuitous event. Where, as in the instant case, the injury sustained by the petitioner was in no way due to any defect in the means of transport or in the method of transporting or to the negligent or willful acts of private respondent's employees, and therefore involving no issue of negligence in its duty to provide safe and suitable cars as well as competent employees, with the injury arising wholly from causes created by strangers over which the carrier had no control or even knowledge or could not have prevented, the presumption is rebutted and the carrier is not and ought not to be held liable. To rule otherwise would make the common carrier the insurer of the absolute safety of its passengers which is not the intention of the lawmakers. Second, while as a general rule, common carriers are bound to exercise extraordinary diligence in the safe transport of their passengers, it would seem that this is not the standard by which its liability is to be determined when intervening acts of strangers is to be determined directly cause the injury, while the contract of carriage Article 1763 governs: Article 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 carrier's employees through the exercise of the diligence of a good father of a family could have prevented or stopped the act or omission. Clearly under the above provision, a tort committed by a stranger which causes injury to a passenger does not accord the latter a cause of action against the carrier. The negligence for which a common carrier is held responsible is the negligent omission by the carrier's employees to prevent the tort from being committed when the same could have been foreseen and prevented by them. Further, under the same provision, it is to be noted that when the violation of the contract is due to the willful acts of strangers, as in the instant case, the degree of care essential to be exercised by the common carrier for the protection of its passenger is only that of a good father of a family. Petitioner has charged respondent carrier of negligence on the ground that the injury complained of could have been prevented by the common carrier if something like meshwork grills had covered the windows of its bus. We do not agree. Although the suggested precaution could have prevented the injury complained of, the rule of ordinary care and prudence is not so exacting as to require one charged with its exercise to take doubtful or unreasonable precautions to guard against unlawful acts of strangers. The carrier is not charged with the duty of providing or maintaining vehicles as to absolutely prevent any and all injuries to passengers. Where the carrier uses cars of the most approved type, in general use by others engaged in the same occupation, and exercises a high degree of care in maintaining them in suitable condition, the carrier cannot be charged with negligence in this respect. 6

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Finally, petitioner contends that it is to the greater interest of the State if a carrier were made liable for such stonethrowing incidents rather than have the bus riding public lose confidence in the transportation system. Sad to say, we are not in a position to so hold; such a policy would be better left to the consideration of Congress which is empowered to enact laws to protect the public from the increasing risks and dangers of lawlessness in society. WHEREFORE, the judgment appealed from is hereby AFFIRMED. SO ORDERED. Fortune Express v. CA 305 SCRA 14, Mar 18, 1999 [G.R. No. 119756. March 18, 1999] FORTUNE EXPRESS, INC., petitioner, vs. COURT OF APPEALS, PAULIE U. CAORONG, and minor children YASSER KING CAORONG, ROSE HEINNI and PRINCE ALEXANDER, all surnamed CAORONG, and represented by their mother PAULIE U. CAORONG, respondents. DECISION MENDOZA, J.: This is an appeal by petition for review on certiorari of the decision, dated July 29, 1994, of the Court of Appeals, which reversed the decision of the Regional Trial Court, Branch VI, Iligan City. The aforesaid decision of the trial court dismissed the complaint of private respondents against petitioner for damages for breach of contract of carriage filed on the ground that petitioner had not exercised the required degree of diligence in the operation of one of its buses. Atty. Talib Caorong, whose heirs are private respondents herein, was a passenger of the bus and was killed in the ambush involving said bus. The facts of the instant case are as follows: Petitioner is a bus company in northern Mindanao. Private respondent Paulie Caorong is the widow of Atty. Caorong, while private respondents Yasser King, Rose Heinni, and Prince Alexander are their minor children. On November 18, 1989, a bus of petitioner figured in an accident with a jeepney in Kauswagan, Lanao del Norte, resulting in the death of several passengers of the jeepney, including two Maranaos. Crisanto Generalao, a volunteer field agent of the Constabulary Regional Security Unit No. X, conducted an investigation of the accident. He found that the owner of the jeepney was a Maranao residing in Delabayan, Lanao del Norte and that certain Maranaos were planning to take revenge on the petitioner by burning some of its buses. Generalao rendered a report on his findings to Sgt. Reynaldo Bastasa of the Philippine Constabulary Regional Hearquarters at Cagayan de Oro. Upon the instruction of Sgt. Bastasa, he went to see Diosdado Bravo, operations manager of petitioner, at its main office in Cagayan de Oro City. Bravo assured him that the necessary precautions to insure the safety of lives and property would be taken.[1]

At about 6:45 P.M. on November 22, 1989, three armed Maranaos who pretended to be passengers, seized a bus of petitioner at Linamon, Lanao del Norte while on its way to Iligan City. Among the passengers of the bus was Atty. Caorong. The leader of the Maranaos, identified as one Bashier Mananggolo, ordered the driver, Godofredo Cabatuan, to stop the bus on the side of the highway. Mananggolo then shot Cabatuan on the arm, which caused him to slump on the steering wheel. Then one of the companions of Mananggolo started pouring gasoline inside the bus, as the other held the passengers at bay with a handgun. Mananggolo then ordered the passengers to get off the bus. The passengers, including Atty. Caorong, stepped out of the bus and went behind the bushes in a field some distance from the highway.[2] However, Atty. Caorong returned to the bus to retrieve something from the overhead rack. At that time, one of the armed men was pouring gasoline on the head of the driver. Cabatuan, who had meantime regained consciousness, heard Atty. Caorong pleading with the armed men to spare the driver as he was innocent of any wrong doing and was only trying to make a living. The armed men were, however, adamant as they repeated their warning that they were going to burn the bus along with its driver. During this exchange between Atty. Caorong and the assailants, Cabatuan climbed out of the left window of the bus and crawled to the canal on the opposite side of the highway. He heard shots from inside the bus. Larry de la Cruz, one of the passengers, saw that Atty. Caorong was hit. Then the bus was set on fire. Some of the passengers were able to pull Atty. Caorong out of the burning bus and rush him to the Mercy Community Hospital in Iligan City, but he died while undergoing operation.[3] The private respondents brought this suit for breach of contract of carriage in the Regional Trial Court, Branch VI, Iligan City. In his decision, dated December 28, 1990, the trial court dismissed the complaint, holding as follows: The fact that defendant, through Operations Manager Diosdado Bravo, was informed of the “rumors” that the Moslems intended to take revenge by burning five buses of defendant is established since the latter also utilized Crisanto Generalaos as a witness. Yet despite this information, the plaintiffs charge, defendant did not take proper precautions. . . . Consequently, plaintiffs now fault the defendant for ignoring the report. Their position is that the defendant should have provided its buses with security guards. Does the law require common carriers to install security guards in its buses for the protection and safety of its passengers? Is the failure to post guards an omission of the duty to “exercise the diligence of a good father of the family” which could have prevented the killing of Atty. Caorong? To our mind, the diligence demanded by law does not include the posting of security guards in buses. It is an obligation that properly belongs to the State. Besides, will the presence of one or two security guards suffice to deter a determined assault of the lawless and thus prevent the injury complained of? Maybe so, but again, perhaps not. In other words, the presence of a security guard is not

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a guarantee that the killing of Atty. Caorong would have been definitely avoided. …. Accordingly, the failure of defendant to accord faith and credit to the report of Mr. Generalao and the fact that it did not provide security to its buses cannot, in the light of the circumstances, be characterized as negligence. Finally, the evidence clearly shows that the assailants did not have the least intention of harming any of the passengers. They ordered all the passengers to alight and set fire on the bus only after all the passengers were out of danger. The death of Atty. Caorong was an unexpected and unforseen occurrence over which defendant had no control. Atty. Caorong performed an act of charity and heroism in coming to the succor of the driver even in the face of danger. He deserves the undying gratitude of the driver whose life he saved. No one should blame him for an act of extraordinary charity and altruism which cost his life. But neither should any blame be laid on the doorstep of defendant. His death was solely due to the willful acts of the lawless which defendant could neither prevent nor stop. …. WHEREFORE, in view of the foregoing, the complaint is hereby dismissed. For lack of merit, the counter-claim is likewise dismissed. No cost.[4] On appeal, however, the Court of Appeals reversed. It held: In the case at bench, how did defendant-appellee react to the tip or information that certain Maranao hotheads were planning to burn five of its buses out of revenge for the deaths of two Maranaos in an earlier collision involving appellee’s bus? Except for the remarks of appellee’s operations manager that “we will have our action . . . . and I’ll be the one to settle it personally,” nothing concrete whatsoever was taken by appellee or its employees to prevent the execution of the threat. Defendant-appellee never adopted even a single safety measure for the protection of its paying passengers. Were there available safeguards? Of course, there were: one was frisking passengers particularly those en route to the area where the threats were likely to be carried out such as where the earlier accident occurred or the place of influence of the victims or their locality. If frisking was resorted to, even temporarily, . . . . appellee might be legally excused from liability. Frisking of passengers picked up along the route could have been implemented by the bus conductor; for those boarding at the bus terminal, frisking could have been conducted by him and perhaps by additional personnel of defendant-appellee. On hindsight, the handguns and especially the gallon of gasoline used by the felons all of which were brought inside the bus would have been discovered, thus preventing the burning of the bus and the fatal shooting of the victim.

Appellee’s argument that there is no law requiring it to provide guards on its buses and that the safety of citizens is the duty of the government, is not well taken. To be sure, appellee is not expected to assign security guards on all of its buses; if at all, it has the duty to post guards only on its buses plying predominantly Maranao areas. As discussed in the next preceding paragraph, the least appellee could have done in response to the report was to adopt a system of verification such as frisking of passengers boarding its buses. Nothing, and to repeat, nothing at all, was done by defendant-appellee to protect its innocent passengers from the danger arising from the “Maranao threats.” It must be observed that frisking is not a novelty as a safety measure in our society. Sensitive places – in fact, nearly all important places – have applied this method of security enhancement. Gadgets and devices are available in the market for this purpose. It would not have weighed much against the budget of the bus company if such items were made available to its personnel to cope up with situations such as the “Maranao threats.” In view of the constitutional right to personal privacy, our pronouncement in this decision should not be construed as an advocacy of mandatory frisking in all public conveyances. What we are saying is that given the circumstances obtaining in the case at bench that: (a) two Maranaos died because of a vehicular collision involving one of appellee’s vehicles; (b) appellee received a written report from a member of the Regional Security Unit, Constabulary Security Group, that the tribal/ethnic group of the two deceased were planning to burn five buses of appellee out of revenge; and (c) appellee did nothing – absolutely nothing – for the safety of its passengers travelling in the area of influence of the victims, appellee has failed to exercise the degree of diligence required of common carriers. Hence, appellee must be adjudged liable. …. WHEREFORE, the decision appealed from is hereby REVERSED and another rendered ordering defendantappellee to pay plaintiffs-appellants the following: 1) P3,399,649.20 as death indemnity; 2) P50,000.00 and P500.00 per appearance as attorney’s fees; and Costs against defendant-appellee.[5] Hence, this appeal. Petitioner contends: (A) THAT PUBLIC RESPONDENT ERRED IN REVERSING THE DECISION OF THE REGIONAL TRIAL COURT DATED DECEMBER 28, 1990 DISMISSING THE COMPLAINT AS WELL AS THE COUNTERCLAIM, AND FINDING FOR PRIVATE RESPONDENTS BY ORDERING PETITIONER TO PAY THE GARGANTUAN SUM OF P3,449,649.20 PLUS P500.00 PER APPEARANCE AS ATTORNEY’S FEES, AS WELL AS DENYING PETITIONER’S MOTION FOR RECONSIDERATION AND THE SUPPLEMENT TO

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SAID MOTION, WHILE HOLDING, AMONG OTHERS, THAT PETITIONER BREACHED THE CONTRACT OF CARIAGE BY ITS FAILURE TO EXERCISE THE REQUIRED DEGREE OF DILIGENCE; (B) THAT THE ACTS OF THE MARANAO OUTLAWS WERE SO GRAVE, IRRESISTIBLE, VIOLENT, AND FORCEFUL, AS TO BE REGARDED AS CASO FORTUITO; AND (C) THAT PUBLIC RESPONDENT COURT OF APPEALS SERIOUSLY ERRED IN HOLDING THAT PETITIONER COULD HAVE PROVIDED ADEQUATE SECURITY IN PREDOMINANTLY MUSLIM AREAS AS PART OF ITS DUTY TO OBSERVE EXTRAORDINARY DILIGENCE AS A COMMON CARRIER. The instant petition has no merit. First. Petitioner’s Breach of the Contract of Carriage Art. 1763 of the Civil Code provides that a common carrier is responsible for injuries suffered by a passenger on account of the wilful acts of other passengers, if the employees of the common carrier could have prevented the act the exercise of the diligence of a good father of a family. In the present case, it is clear that because of the negligence of petitioner’s employees, the seizure of the bus by Mananggolo and his men was made possible. Despite warning by the Philippine Constabulary at Cagayan de Oro that the Maranaos were planning to take revenge on the petitioner by burning some of its buses and the assurance of petitioner’s operation manager, Diosdado Bravo, that the necessary precautions would be taken, petitioner did nothing to protect the safety of its passengers. Had petitioner and its employees been vigilant they would not have failed to see that the malefactors had a large quantity of gasoline with them. Under the circumstances, simple precautionary measures to protect the safety of passengers, such as frisking passengers and inspecting their baggages, preferably with non-intrusive gadgets such as metal detectors, before allowing them on board could have been employed without violating the passenger’s constitutional rights. As this Court intimated in Gacal v. Philippine Air Lines, Inc.,[6] a common carrier can be held liable for failing to prevent a hijacking by frisking passengers and inspecting their baggages. From the foregoing, it is evident that petitioner’s employees failed to prevent the attack on one of petitioner’s buses because they did not exercise the diligence of a good father of a family. Hence, petitioner should be held liable for the death of Atty. Caorong. Second. Seizure of Petitioner’s Bus not a Case of Force Majeure The petitioner contends that the seizure of its bus by the armed assailants was a fortuitous event for which it could not be held liable.

Art. 1174 of the Civil Code defines a fortuitous even as an occurrence which could not be foreseen or which though foreseen, is inevitable. In Yobido v. Court of Appeals,[7] we held that to be considered as force majeure, it is necessary that: (1) the cause of the breach of the obligation must be independent of the human will; (2) the event must be either unforeseeable or unavoidable; (3) the occurrence must be such as to render it impossible for the debtor to fulfill the obligation in a normal manner; and (4) the obligor must be free of participation in, or aggravation of, the injury to the creditor. The absence of any of the requisites mentioned above would prevent the obligor from being excused from liability. Thus, in Vasquez v. Court of Appeals,[8] it was held that the common carrier was liable for its failure to take the necessary precautions against an approaching typhoon, of which it was warned, resulting in the loss of the lives of several passengers. The event was foreseeable, and, thus, the second requisite mentioned above was not fulfilled. This ruling applies by analogy to the present case. Despite the report of PC agent Generalao that the Maranaos were going to attack its buses, petitioner took no steps to safeguard the lives and properties of its passengers. The seizure of the bus of the petitioner was foreseeable and, therefore, was not a fortuitous event which would exempt petitioner from liability. Petitioner invokes the ruling in Pilapil v. Court of Appeals[9] and De Guzman v. Court of Appeals[10] in support of its contention that the seizure of its bus by the assailants constitutes force majeure. In Pilapil v. Court of Appeals,[11] it was held that a common carrier is not liable for failing to install window grills on its buses to protect passengers from injuries caused by rocks hurled at the bus by lawless elements. On the other hand, in De Guzman v. Court of Appeals,[12] it was ruled that a common carrier is not responsible for goods lost as a result of a robbery which is attended by grave or irresistible threat, violence, or force. It is clear that the cases of Pilapil and De Guzman do not apply to the present case. Art. 1755 of the Civil Code provides that “a common carrier is bound to carry the passengers as far as human care and foresight can provide, using the utmost diligence of very cautious person, with due regard for all the circumstances.” Thus, we held in Pilapil and De Guzman that the respondents therein were not negligent in failing to take special precautions against threats to the safety of passengers which could not be foreseen, such as tortious or criminal acts of third persons. In the present case, this factor of unforeseeablility (the second requisite for an event to be considered force majeure) is lacking. As already stated, despite the report of PC agent Generalao that the Maranaos were planning to burn some of petitioner’s buses and the assurance of petitioner’s operations manager (Diosdado Bravo) that the necessary precautions would be taken, nothing was really done by petitioner to protect the safety of passengers. Third. Deceased not Guilty of Contributory Negligence

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The petitioner contends that Atty. Caorong was guilty of contributory negligence in returning to the bus to retrieve something. But Atty. Caorong did not act recklessly. It should be pointed out that the intended targets of the violence were petitioner and its employees, not its passengers. The assailant’s motive was to retaliate for the loss of life of two Maranaos as a result of the collision between petitioner’s bus and the jeepney in which the two Maranaos were riding. Mananggolo, the leader of the group which had hijacked the bus, ordered the passengers to get off the bus as they intended to burn it and its driver. The armed men actually allowed Atty. Caorong to retrieve something from the bus. What apparently angered them was his attempt to help the driver of the bus by pleading for his life. He was playing the role of the good Samaritan. Certainly, this act cannot be considered an act of negligence, let alone recklessness.

case, the petitioner acted in a wanton and reckless manner. Despite warning that the Maranaos were planning to take revenge against the petitioner by burning some of its buses, and contrary to the assurance made by its operations manager that the necessary precautions would be taken, the petitioner and its employees did nothing to protect the safety of passengers. Under the circumstances, we deem it reasonable to award private respondents exemplary damages in the amount of P100,000.00.[17]

Fourth. Petitioner Liable to Private Respondents for Damages

Compensation for Loss of Earning Capacity. Art. 1764 of the Civil Code, in relation to Art. 2206 thereof, provides that in addition to the indemnity for death arising from the breach of contract of carriage by a common carrier, the “defendant shall be liable for the loss of the earning capacity of the deceased, and the indemnity shall be paid to the heirs of the latter.” The formula established in decided cases for computing net earning capacity is as follows:[19]

We now consider the question of damages that the heirs of Atty. Caorong, private respondents herein, are entitled to recover from the petitioner. Indemnity for Death. Art. 1764 of the Civil Code, in relation to Art. 2206 thereof, provides for the payment of indemnity for the death of passengers caused by the breached of contract of carriage by a common carrier. Initially fixed in Art. 2206 at P3,000.00, the amount of the said indemnity for death has through the years been gradually increased in view of the declining value of the peso. It is presently fixed at P50,000.00.[13] Private respondents are entitled to this amount. Actual damages. Art. 2199 provides that “Except as provided by law or by stipulation, one is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved.” The trial court found that the private respondents spent P30,000.00 for the wake and burial of Atty. Caorong.[14] Since petitioner does not question this finding of the trial court, it is liable to private respondents in the said amount as actual damages. Moral Damages. Under Art. 2206, the “spouse, legitimate and illegitimate descendants and ascendants of the deceased may demand moral damages for mental anguish by reason of the death of the deceased.” The trial court found that private respondent Paulie Caorong suffered pain from the death of her husband and worry on how to provide support for their minor children, private respondents Yasser King, Rose Heinni, and Prince Alexander.[15] The petitioner likewise does not question this finding of the trial court. Thus, in accordance with recent decisions of this Court,[16] we hold that the petitioner is liable to the private respondents in the amount of P100,000.00 as moral damages for the death of Atty. Caorong. Exemplary Damages. Art. 2232 provides that “in contracts and quasi-contracts, the court may award exemplary damages if the defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner.” In the present

Attorney’s Fees. Pursuant to Art. 2208, attorney’s fees may be recovered when, as in the instant case, exemplary damages are awarded. In the recent case of Sulpicio Lines, Inc. v. Court of Appeals,[18] we held an award of P50,000.00 as attorney’s fees to be reasonable. Hence, the private respondents are entitled to attorney’s fees in that amount.

Gross Necessary Net earning = Life x Annual - Living Capacity Expectancy Income Expenses Life expectancy is equivalent to two thirds (2/3) multiplied by the difference of eighty (80) and the age of the deceased. [20] Since Atty. Caorong was 37 years old at the time of his death,[21] he had a life expectancy of 28 2/3 more years. [22] His projected gross annual income, computed based on his monthly salary of P11,385.00[23] as a lawyer in the Department of Agrarian Reform at the time of his death, was P148,005.00.[24] allowing for necessary living expenses of fifty percent (50%)[25]of his projected gross annual income, his total earning capacity amounts to P2,121,404.90.[26] Hence, the petitioner is liable to the private respondents in the said amount as compensation for loss of earning capacity. WHEREFORE, the decision, dated July 29, 1994, of the Court of Appeals is hereby AFFIRMED with the MODIFICATION that petitioner Fortune Express, Inc. is ordered to pay the following amounts to private respondents Paulie, Yasser King, Rose Heinni, and Prince Alexander Caorong: 1. death indemnity in the amount of fifty thousand pesos (P50,000.00); 2. actual damages in the amount of thirty thousand pesos (P30,000.00); 3. moral damages in the amount of one hundred thousand pesos(P100,000.00);

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4. exemplary damages in the amount of one hundred thousand pesos (P100,000.00); 5. attorney’s fees in the amount of fifty thousand pesos (P50,000.00); 6. compensation for loss of earning capacity in the amount of two million one hundred twenty-one thousand four hundred four pesos and ninety centavos (P2,121,404.90); and 7) costs of suits. SO ORDERED. JAL v. CA Aug 7, 1998 [G.R. No. 118664. August 7, 1998] JAPAN AIRLINES, petitioner, vs. THE COURT OF APPEALS ENRIQUE AGANA, MARIA ANGELA NINA AGANA, ADALIA B. FRANCISCO and JOSE MIRANDA, respondents. DECISION ROMERO, J.: Before us is an appeal by certiorari filed by petitioner Japan Airlines, Inc. (JAL) seeking the reversal of the decision of the Court of Appeals,[1] which affirmed with modification the award of damages made by the trial court in favor of herein private respondents Enrique Agana, Maria Angela Nina Agana, Adelia Francisco and Jose Miranda. On June 13, 1991, private respondent Jose Miranda boarded JAL flight No. JL 001 in San Francisco, California bound for Manila. Likewise, on the same day private respondents Enrique Agana, Maria Angela Nina Agana and Adelia Francisco left Los Angeles, California for Manila via JAL flight No. JL 061. As an incentive for travelling on the said airline, both flights were to make an overnight stopover at Narita, Japan, at the airlines’ expense, thereafter proceeding to Manila the following day. Upon arrival at Narita, Japan on June 14, 1991, private respondents were billeted at Hotel Nikko Narita for the night. The next day, private respondents, on the final leg of their journey, went to the airport to take their flight to Manila. However, due to the Mt. Pinatubo eruption, unrelenting ashfall blanketed Ninoy Aquino International Airport (NAIA), rendering it inaccessible to airline traffic. Hence, private respondents’ trip to Manila was cancelled indefinitely. To accommodate the needs of its stranded passengers, JAL rebooked all the Manila-bound passengers on flight No. 741 due to depart on June 16, 1991 and also paid for the hotel expenses for their unexpected overnight stay. On June 16, 1991, much to the dismay of the private respondents, their long anticipated flight to Manila was again cancelled due to NAIA’s indefinite closure. At this point, JAL informed the private respondents that it would no longer defray their hotel and accommodation expense during their stay in Narita.

Since NAIA was only reopened to airline traffic on June 22, 1991, private respondents were forced to pay for their accommodations and meal expenses from their personal funds from June 16 to June 21, 1991. Their unexpected stay in Narita ended on June 22, 1991 when they arrived in Manila on board JL flight No. 741. Obviously, still reeling from the experience, private respondents, on July 25, 1991, commenced an action for damages against JAL before the Regional Trial Court of Quezon City, Branch 104.[2] To support their claim, private respondents asserted that JAL failed to live up to its duty to provide care and comfort to its stranded passengers when it refused to pay for their hotel and accommodation expenses from June 16 to 21, 1991 at Narita, Japan. In other words, they insisted that JAL was obligated to shoulder their expenses as long as they were still stranded in Narita. On the other hand, JAL denied this allegation and averred that airline passengers have no vested right to these amenities in case a flight is cancelled due to “force majeure.” On June 18, 1992, the trial court rendered its judgment in favor of private respondents holding JAL liable for damages, viz.: “WHEREFORE, judgment is rendered in favor of plaintiffs ordering the defendant Japan Airlines to pay the plaintiffs Enrique Agana, Adalia B. Francisco and Maria Angela Nina Agana the sum of One million Two Hundred forty-six Thousand Nine Hundred Thirty-Six Pesos (P1,246,936.00) and Jose Miranda the sum of Three Hundred Twenty Thousand Six Hundred sixteen and 31/100 (P320,616.31) as actual, moral and exemplary damages and pay attorney’s fees in the amount of Two Hundred Thousand Pesos (P200,000.00), and to pay the costs of suit.” Undaunted, JAL appealed the decision before the Court of Appeals, which, however, with the exception of lowering the damages awarded affirmed the trial court’s finding,[3] thus: “Thus, the award of moral damages should be as it is hereby reduced to P200,000.00 for each of the plaintiffs, the exemplary damages to P300,000.00 and the attorney’s fees to P100,000.00 plus the costs. WHEREFORE, with the foregoing Modification, the judgment appealed from is hereby AFFIRMED in all other respects.” JAL filed a motion for reconsideration which proved futile and unavailing.[4] Failing in its bid to reconsider the decision, JAL has now filed this instant petition. The issue to be resolved is whether JAL, as a common carrier has the obligation to shoulder the hotel and meal expenses of its stranded passengers until they have reached

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their final destination, even if the delay were caused by “force majeure.” To begin with, there is no dispute that the Mt. Pinatubo eruption prevented JAL from proceeding to Manila on schedule. Likewise, private respondents concede that such event can be considered as “force majeure” since their delayed arrival in Manila was not imputable to JAL.[5] However, private respondents contend that while JAL cannot be held responsible for the delayed arrival in Manila, it was nevertheless liable for their living expenses during their unexpected stay in Narita since airlines have the obligation to ensure the comfort and convenience of its passengers. While we sympathize with the private respondents’ plight, we are unable to accept this contention. We are not unmindful of the fact that in a plethora of cases we have consistently ruled that a contract to transport passengers is quite different in kind and degree from any other contractual relation. It is safe to conclude that it is a relationship imbued with public interest. Failure on the part of the common carrier to live up to the exacting standards of care and diligence renders it liable for any damages that may be sustained by its passengers. However, this is not to say that common carriers are absolutely responsible for all injuries or damages even if the same were caused by a fortuitous event. To rule otherwise would render the defense of “force majeure,” as an exception from any liability, illusory and ineffective. Accordingly, there is no question that when a party is unable to fulfill his obligation because of “force majeure,” the general rule is that he cannot be held liable for damages for non-performance.[6] Corollarily, when JAL was prevented from resuming its flight to Manila due to the effects of Mt. Pinatubo eruption, whatever losses or damages in the form of hotel and meal expenses the stranded passengers incurred, cannot be charged to JAL. Yet it is undeniable that JAL assumed the hotel expenses of respondents for their unexpected overnight stay on June 15, 1991. Admittedly, to be stranded for almost a week in a foreign land was an exasperating experience for the private respondents. To be sure, they underwent distress and anxiety during their unanticipated stay in Narita, but their predicament was not due to the fault or negligence of JAL but the closure of NAIA to international flights. Indeed, to hold JAL, in the absence of bad faith or negligence, liable for the amenities of its stranded passengers by reason of a fortuitous event is too much of a burden to assume. Furthermore, it has been held that airline passengers must take such risks incident to the mode of travel.[7] In this regard, adverse weather conditions or extreme climatic changes are some of the perils involved in air travel, the consequences of which the passenger must assume or expect. After all, common carriers are not the insurer of all risks.[8]

Paradoxically, the Court of Appeals, despite the presence of “force majeure,” still ruled against JAL relying in our decision in PAL v. Court of Appeals,[9] thus: “The position taken by PAL in this case clearly illustrates its failure to grasp the exacting standard required by law. Undisputably, PAL’s diversion of its flight due to inclement weather was a fortuitous event. Nonetheless, such occurrence did not terminate PAL’s contract with its passengers. Being in the business of air carriage and the sole one to operate in the country, PAL is deemed equipped to deal with situations as in the case at bar. What we said in one case once again must be stressed, i.e., the relation of carrier and passenger continues until the latter has been landed at the port of destination and has left the carrier’s premises. Hence, PAL necessarily would still have to exercise extraordinary diligence in safeguarding the comfort, convenience and safety of its stranded passengers until they have reached their final destination. On this score, PAL grossly failed considering the then ongoing battle between government forces and Muslim rebels in Cotabato City and the fact that the private respondent was a stranger to the place.” The reliance is misplaced. The factual background of the PAL case is different from the instant petition. In that case there was indeed a fortuitous event resulting in the diversion of the PAL flight. However, the unforeseen diversion was worsened when “private respondents (passenger) was left at the airport and could not even hitch a ride in a Ford Fiera loaded with PAL personnel,”[10] not to mention the apparent apathy of the PAL station manager as to the predicament of the stranded passengers.[11] In light of these circumstances, we held that if the fortuitous event was accompanied by neglect and malfeasance by the carrier’s employees, an action for damages against the carrier is permissible. Unfortunately, for private respondents, none of these conditions are present in the instant petition. We are not prepared, however, to completely absolve petitioner JAL from any liability. It must be noted that private respondents bought tickets from the United States with Manila as their final destination. While JAL was no longer required to defray private respondents’ living expenses during their stay in Narita on account of the fortuitous event, JAL had the duty to make the necessary arrangements to transport private respondents on the first available connecting flight to Manila. Petitioner JAL reneged on its obligation to look after the comfort and convenience of its passengers when it declassified private respondents from “transit passengers” to “new passengers” as a result of which private respondents were obliged to make the necessary arrangements themselves for the next flight to Manila. Private respondents were placed on the waiting list from June 20 to June 24. To assure themselves of a seat on an available flight, they were compelled to stay in the airport the whole day of June 22, 1991 and it was only at 8:00 p.m. of the aforesaid date that they were advised that they could be accommodated in said flight which flew at about 9:00 a.m. the next day.

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We are not oblivious to the fact that the cancellation of JAL flights to Manila from June 15 to June 21, 1991 caused considerable disruption in passenger booking and reservation. In fact, it would be unreasonable to expect, considering NAIA’s closure, that JAL flight operations would be normal on the days affected. Nevertheless, this does not excuse JAL from its obligation to make the necessary arrangements to transport private respondents on its first available flight to Manila. After all, it had a contract to transport private respondents from the United States to Manila as their final destination. Consequently, the award of nominal damages is in order. Nominal damages are adjudicated in order that a right of a plaintiff, which has been violated or invaded by the defendant, may be vindicated or recognized and not for the purpose of indemnifying any loss suffered by him.[12] The court may award nominal damages in every obligation arising from any source enumerated in Article 1157, or in every case where any property right has been invaded.[13] WHEREFORE, in view of the foregoing, the decision of the Court of Appeals dated December 22, 1993 is hereby MODIFIED. The award of actual, moral and exemplary damages is hereby DELETED. Petitioner JAL is ordered to pay each of the private respondents nominal damages in the sum of P100,000.00 each including attorney’s fees of P50,000.00 plus costs. SO ORDERED. Singapore Airlines v. Andion Dec 10, 2003, GR142305 [G.R. No. 142305. December 10, 2003] SINGAPORE AIRLINES LIMITED, ANDION FERNANDEZ, respondent. DECISION CALLEJO, SR., J.:

petitioner,

vs.

This is a petition for review on certiorari assailing the Decision[1] of the Court of Appeals which affirmed in toto the decision[2] of the Regional Trial Court of Pasig City, Branch 164 in Civil Case No. 60985 filed by the respondent for damages. The Case for the Respondent Respondent Andion Fernandez is an acclaimed soprano here in the Philippines and abroad. At the time of the incident, she was availing an educational grant from the Federal Republic of Germany, pursuing a Master’s Degree in Music majoring in Voice.[3] She was invited to sing before the King and Queen of Malaysia on February 3 and 4, 1991. For this singing engagement, an airline passage ticket was purchased from petitioner Singapore Airlines which would transport her to Manila from Frankfurt, Germany on January 28, 1991. From Manila, she would proceed to Malaysia on the next day.[4] It was necessary for the respondent to pass by Manila in order to gather her wardrobe; and to rehearse and

coordinate with her pianist her repertoire for the aforesaid performance. The petitioner issued the respondent a Singapore Airlines ticket for Flight No. SQ 27, leaving Frankfurt, Germany on January 27, 1991 bound for Singapore with onward connections from Singapore to Manila. Flight No. SQ 27 was scheduled to leave Frankfurt at 1:45 in the afternoon of January 27, 1991, arriving at Singapore at 8:50 in the morning of January 28, 1991. The connecting flight from Singapore to Manila, Flight No. SQ 72, was leaving Singapore at 11:00 in the morning of January 28, 1991, arriving in Manila at 2:20 in the afternoon of the same day. [5] On January 27, 1991, Flight No. SQ 27 left Frankfurt but arrived in Singapore two hours late or at about 11:00 in the morning of January 28, 1991. By then, the aircraft bound for Manila had left as scheduled, leaving the respondent and about 25 other passengers stranded in the Changi Airport in Singapore.[6] Upon disembarkation at Singapore, the respondent approached the transit counter who referred her to the nightstop counter and told the lady employee thereat that it was important for her to reach Manila on that day, January 28, 1991. The lady employee told her that there were no more flights to Manila for that day and that respondent had no choice but to stay in Singapore. Upon respondent’s persistence, she was told that she can actually fly to Hong Kong going to Manila but since her ticket was nontransferable, she would have to pay for the ticket. The respondent could not accept the offer because she had no money to pay for it.[7] Her pleas for the respondent to make arrangements to transport her to Manila were unheeded.[8] The respondent then requested the lady employee to use their phone to make a call to Manila. Over the employees’ reluctance, the respondent telephoned her mother to inform the latter that she missed the connecting flight. The respondent was able to contact a family friend who picked her up from the airport for her overnight stay in Singapore. [9] The next day, after being brought back to the airport, the respondent proceeded to petitioner’s counter which says: “Immediate Attention To Passengers with Immediate Booking.” There were four or five passengers in line. The respondent approached petitioner’s male employee at the counter to make arrangements for immediate booking only to be told: “Can’t you see I am doing something.” She explained her predicament but the male employee uncaringly retorted: “It’s your problem, not ours.”[10] The respondent never made it to Manila and was forced to take a direct flight from Singapore to Malaysia on January 29, 1991, through the efforts of her mother and travel agency in Manila. Her mother also had to travel to Malaysia bringing with her respondent’s wardrobe and personal things needed for the performance that caused them to incur an expense of about P50,000.[11]

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As a result of this incident, the respondent’s performance before the Royal Family of Malaysia was below par. Because of the rude and unkind treatment she received from the petitioner’s personnel in Singapore, the respondent was engulfed with fear, anxiety, humiliation and embarrassment causing her to suffer mental fatigue and skin rashes. She was thereby compelled to seek immediate medical attention upon her return to Manila for “acute urticaria.”[12] On June 15, 1993, the RTC rendered a decision with the following dispositive portion: ACCORDINGLY and as prayed for, defendant Singapore Airlines is ordered to pay herein plaintiff Andion H. Fernandez the sum of: 1. FIFTY THOUSAND (P50,000.00) PESOS as compensatory or actual damages; 2. TWO HUNDRED and FIFTY THOUSAND (P250,000.00) PESOS as moral damages considering plaintiff’s professional standing in the field of culture at home and abroad; 3. ONE HUNDRED THOUSAND (P100,000.00) PESOS as exemplary damages; 4. SEVENTY-FIVE THOUSAND (P75,000.00) PESOS as attorney’s fees; and 5.

To pay the costs of suit.

SO ORDERED.[13] The petitioner appealed the decision to the Court of Appeals. On June 10, 1998, the CA promulgated the assailed decision finding no reversible error in the appealed decision of the trial court.[14] Forthwith, the petitioner filed the instant petition for review, raising the following errors:

THE HONORABLE COURT OF APPEALS ERRED IN DISMISSING THE PETITIONER’S COUNTERCLAIMS. [15] The petitioner assails the award of damages contending that it exercised the extraordinary diligence required by law under the given circumstances. The delay of Flight No. SQ 27 from Frankfurt to Singapore on January 28, 1991 for more than two hours was due to a fortuitous event and beyond petitioner’s control. Inclement weather prevented the petitioner’s plane coming from Copenhagen, Denmark to arrive in Frankfurt on time on January 27, 1991. The plane could not take off from the airport as the place was shrouded with fog. This delay caused a “snowball effect” whereby the other flights were consequently delayed. The plane carrying the respondent arrived in Singapore two (2) hours behind schedule.[16] The delay was even compounded when the plane could not travel the normal route which was through the Middle East due to the raging Gulf War at that time. It had to pass through the restricted Russian airspace which was more congested.[17] Under these circumstances, petitioner therefore alleged that it cannot be faulted for the delay in arriving in Singapore on January 28, 1991 and causing the respondent to miss her connecting flight to Manila. The petitioner further contends that it could not also be held in bad faith because its personnel did their best to look after the needs and interests of the passengers including the respondent. Because the respondent and the other 25 passengers missed their connecting flight to Manila, the petitioner automatically booked them to the flight the next day and gave them free hotel accommodations for the night. It was respondent who did not take petitioner’s offer and opted to stay with a family friend in Singapore. The petitioner also alleges that the action of the respondent was baseless and it tarnished its good name and image earned through the years for which, it was entitled to damages in the amount of P1,000,000; exemplary damages of P500,000; and attorney’s fees also in the amount of P500,000.[18] The petition is barren of merit.

I THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING IN TOTO THE DECISION OF THE TRIAL COURT THAT AWARDED DAMAGES TO RESPONDENT FOR THE ALLEGED FAILURE OF THE PETITIONER TO EXERCISE EXTRAORDINARY DILIGENCE. II THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE PETITIONER ACTED IN BAD FAITH. III

When an airline issues a ticket to a passenger, confirmed for a particular flight on a certain date, a contract of carriage arises. The passenger then has every right to expect that he be transported on that flight and on that date. If he does not, then the carrier opens itself to a suit for a breach of contract of carriage.[19] The contract of air carriage is a peculiar one. Imbued with public interest, the law requires common carriers to carry the passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons with due regard for all the circumstances.[20] In an action for breach of contract of carriage, the aggrieved party does not have to prove that the common carrier was at fault or was negligent. All that is necessary to prove is the

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existence of the contract and the fact of its nonperformance by the carrier.[21] In the case at bar, it is undisputed that the respondent carried a confirmed ticket for the two-legged trip from Frankfurt to Manila: 1) Frankfurt-Singapore; and 2) Singapore-Manila. In her contract of carriage with the petitioner, the respondent certainly expected that she would fly to Manila on Flight No. SQ 72 on January 28, 1991. Since the petitioner did not transport the respondent as covenanted by it on said terms, the petitioner clearly breached its contract of carriage with the respondent. The respondent had every right to sue the petitioner for this breach. The defense that the delay was due to fortuitous events and beyond petitioner’s control is unavailing. In PAL vs. CA,[22] we held that: .... Undisputably, PAL’s diversion of its flight due to inclement weather was a fortuitous event. Nonetheless, such occurrence did not terminate PAL’s contract with its passengers. Being in the business of air carriage and the sole one to operate in the country, PAL is deemed to be equipped to deal with situations as in the case at bar. What we said in one case once again must be stressed, i.e., the relation of carrier and passenger continues until the latter has been landed at the port of destination and has left the carrier’s premises. Hence, PAL necessarily would still have to exercise extraordinary diligence in safeguarding the comfort, convenience and safety of its stranded passengers until they have reached their final destination... ... “...If the cause of non-fulfillment of the contract is due to a fortuitous event, it has to be the sole and only cause (Art. 1755 C.C., Art. 1733 C.C.). Since part of the failure to comply with the obligation of common carrier to deliver its passengers safely to their destination lay in the defendant’s failure to provide comfort and convenience to its stranded passengers using extraordinary diligence, the cause of nonfulfillment is not solely and exclusively due to fortuitous event, but due to something which defendant airline could have prevented, defendant becomes liable to plaintiff.” Indeed, in the instant case, petitioner was not without recourse to enable it to fulfill its obligation to transport the respondent safely as scheduled as far as human care and foresight can provide to her destination. Tagged as a premiere airline as it claims to be and with the complexities of air travel, it was certainly well-equipped to be able to foresee and deal with such situation. The petitioner’s indifference and negligence by its absence and insensitivity was exposed by the trial court, thus: (a) Under Section 9.1 of its Traffic Manual (Exhibit 4) “…flights can be delayed to await the uplift of connecting cargo and passengers arriving on a late in-bound flight…” As adverted to by the trial court,…“Flight SQ-27/28 maybe delayed for about half an hour to transfer plaintiff to her connecting flight. As pointed out above, delay is normal in commercial air transportation” (RTC Decision, p. 22); or

(b) Petitioner airlines could have carried her on one of its flights bound for Hongkong and arranged for a connecting flight from Hongkong to Manila all on the same date. But then the airline personnel who informed her of such possibility told her that she has to pay for that flight. Regrettably, respondent did not have sufficient funds to pay for it. (TSN, 30 March 1992, pp.8-9; RTC Decision, pp. 22-23) Knowing the predicament of the respondent, petitioner did not offer to shoulder the cost of the ticket for that flight; or (c) As noted by the trial court from the account of petitioner’s witness, Bob Khkimyong, that “a passenger such as the plaintiff could have been accommodated in another international airline such as Lufthansa to bring the plaintiff to Singapore early enough from Frankfurt provided that there was prior communication from that station to enable her to catch the connecting flight to Manila because of the urgency of her business in Manila… (RTC Decision, p. 23) The petitioner’s diligence in communicating to its passengers the consequences of the delay in their flights was wanting. As elucidated by the trial court: It maybe that delay in the take off and arrival of commercial aircraft could not be avoided and may be caused by diverse factors such as those testified to by defendant’s pilot. However, knowing fully well that even before the plaintiff boarded defendant’s Jumbo aircraft in Frankfurt bound for Singapore, it has already incurred a delay of two hours. Nevertheless, defendant did not take the trouble of informing plaintiff, among its other passengers of such a delay and that in such a case, the usual practice of defendant airline will be that they have to stay overnight at their connecting airport; and much less did it inquire from the plaintiff and the other 25 passengers bound for Manila whether they are amenable to stay overnight in Singapore and to take the connecting flight to Manila the next day. Such information should have been given and inquiries made in Frankfurt because even the defendant airline’s manual provides that in case of urgency to reach his or her destination on the same date, the head office of defendant in Singapore must be informed by telephone or telefax so as the latter may make certain arrangements with other airlines in Frankfurt to bring such a passenger with urgent business to Singapore in such a manner that the latter can catch up with her connecting flight such as S-27/28 without spending the night in Singapore…[23] The respondent was not remiss in conveying her apprehension about the delay of the flight when she was still in Frankfurt. Upon the assurance of petitioner’s personnel in Frankfurt that she will be transported to Manila on the same date, she had every right to expect that obligation fulfilled. She testified, to wit: Q: Now, since you were late, when the plane that arrived from Frankfurt was late, did you not make arrangements so that your flight from Singapore to Manila would be adjusted?

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A: I asked the lady at the ticket counter, the one who gave the boarding pass in Frankfurt and I asked her, “Since my flight going to Singapore would be late, what would happen to my Singapore-Manila flight?” and then she said, “Don’t worry, Singapore Airlines would be responsible to bring you to Manila on the same date.” And then they have informed the name of the officer, or whatever, that our flight is going to be late.[24] When a passenger contracts for a specific flight, he has a purpose in making that choice which must be respected. This choice, once exercised, must not be impaired by a breach on the part of the airline without the latter incurring any liability.[25] For petitioner’s failure to bring the respondent to her destination, as scheduled, we find the petitioner clearly liable for the breach of its contract of carriage with the respondent. We are convinced that the petitioner acted in bad faith. Bad faith means a breach of known duty through some motive of interest or ill will. Self-enrichment or fraternal interest, and not personal ill will, may well have been the motive; but it is malice nevertheless.[26] Bad faith was imputed by the trial court when it found that the petitioner’s employees at the Singapore airport did not accord the respondent the attention and treatment allegedly warranted under the circumstances. The lady employee at the counter was unkind and of no help to her. The respondent further alleged that without her threats of suing the company, she was not allowed to use the company’s phone to make long distance calls to her mother in Manila. The male employee at the counter where it says: “Immediate Attention to Passengers with Immediate Booking” was rude to her when he curtly retorted that he was busy attending to other passengers in line. The trial court concluded that this inattentiveness and rudeness of petitioner’s personnel to respondent’s plight was gross enough amounting to bad faith. This is a finding that is generally binding upon the Court which we find no reason to disturb. Article 2232 of the Civil Code provides that in a contractual or quasi-contractual relationship, exemplary damages may be awarded only if the defendant had acted in a “wanton, fraudulent, reckless, oppressive or malevolent manner.” In this case, petitioner’s employees acted in a wanton, oppressive or malevolent manner. The award of exemplary damages is, therefore, warranted in this case. WHEREFORE, the Petition is DENIED. The Decision of the Court of Appeals is AFFIRMED. SO ORDERED.

E

Duration of Responsibility

Bataclan v. Medina Oct 22, 1957 .R. No. L-10126 October 22, 1957 SALUD VILLANUEVA VDA. DE BATACLAN and the minors NORMA, LUZVIMINDA, ELENITA, OSCAR and

ALFREDO BATACLAN, represented by their Natural guardian, SALUD VILLANUEVA VDA. DE BATACLAN, plaintiffs-appellants, vs. MARIANO MEDINA, defendant-appellant. Lope E. Adriano, Emmanuel Andamo and Jose R. Francisco for plaintiffs-appellants. Fortunato Jose for defendant and appellant. MONTEMAYOR, J.: Shortly after midnight, on September 13, 1952 bus no. 30 of the Medina Transportation, operated by its owner defendant Mariano Medina under a certificate of public convenience, left the town of Amadeo, Cavite, on its way to Pasay City, driven by its regular chauffeur, Conrado Saylon. There were about eighteen passengers, including the driver and conductor. Among the passengers were Juan Bataclan, seated beside and to the right of the driver, Felipe Lara, sated to the right of Bataclan, another passenger apparently from the Visayan Islands whom the witnesses just called Visaya, apparently not knowing his name, seated in the left side of the driver, and a woman named Natalia Villanueva, seated just behind the four last mentioned. At about 2:00 o'clock that same morning, while the bus was running within the jurisdiction of Imus, Cavite, one of the front tires burst and the vehicle began to zig-zag until it fell into a canal or ditch on the right side of the road and turned turtle. Some of the passengers managed to leave the bus the best way they could, others had to be helped or pulled out, while the three passengers seated beside the driver, named Bataclan, Lara and the Visayan and the woman behind them named Natalia Villanueva, could not get out of the overturned bus. Some of the passengers, after they had clambered up to the road, heard groans and moans from inside the bus, particularly, shouts for help from Bataclan and Lara, who said they could not get out of the bus. There is nothing in the evidence to show whether or not the passengers already free from the wreck, including the driver and the conductor, made any attempt to pull out or extricate and rescue the four passengers trapped inside the vehicle, but calls or shouts for help were made to the houses in the neighborhood. After half an hour, came about ten men, one of them carrying a lighted torch made of bamboo with a wick on one end, evidently fueled with petroleum. These men presumably approach the overturned bus, and almost immediately, a fierce fire started, burning and all but consuming the bus, including the four passengers trapped inside it. It would appear that as the bus overturned, gasoline began to leak and escape from the gasoline tank on the side of the chassis, spreading over and permeating the body of the bus and the ground under and around it, and that the lighted torch brought by one of the men who answered the call for help set it on fire. That same day, the charred bodies of the four deemed passengers inside the bus were removed and duly identified that of Juan Bataclan. By reason of his death, his widow, Salud Villanueva, in her name and in behalf of her five minor children, brought the present suit to recover from Mariano Medina compensatory, moral, and exemplary

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damages and attorney's fees in the total amount of P87,150. After trial, the Court of First Instance of Cavite awarded P1,000 to the plaintiffs plus P600 as attorney's fee, plus P100, the value of the merchandise being carried by Bataclan to Pasay City for sale and which was lost in the fire. The plaintiffs and the defendants appealed the decision to the Court of Appeals, but the latter endorsed the appeal to us because of the value involved in the claim in the complaint. Our new Civil Code amply provides for the responsibility of common carrier to its passengers and their goods. For purposes of reference, we are reproducing the pertinent codal provisions: 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 the vigilance over the goods is further expressed in articles 1734, 1735, and 1745, Nos. 5, 6, and 7, while the extra ordinary diligence for the safety of the passengers is further set forth in articles 1755 and 1756. 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 of or injuries to passengers, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence as prescribed in articles 1733 and 1755 ART. 1759. Common carriers are liable for the death of or injuries to passengers through the negligence or willful acts of the former's employees, although such employees may have acted beyond the scope of their authority or in violation of the order 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 responsible for injuries suffered by a passenger on account of the willful acts or negligence of other passengers or of strangers, if the common carrier's employees through the exercise of the diligence of a good father of a family could have prevented or stopped the act or omission. We agree with the trial court that the case involves a breach of contract of transportation for hire, the Medina Transportation having undertaken to carry Bataclan safely to his destination, Pasay City. We also agree with the trial court that there was negligence on the part of the defendant, through his agent, the driver Saylon. There is evidence to

show that at the time of the blow out, the bus was speeding, as testified to by one of the passengers, and as shown by the fact that according to the testimony of the witnesses, including that of the defense, from the point where one of the front tires burst up to the canal where the bus overturned after zig-zaging, there was a distance of about 150 meters. The chauffeur, after the blow-out, must have applied the brakes in order to stop the bus, but because of the velocity at which the bus must have been running, its momentum carried it over a distance of 150 meters before it fell into the canal and turned turtle. There is no question that under the circumstances, the defendant carrier is liable. The only question is to what degree. The trial court was of the opinion that the proximate cause of the death of Bataclan was not the overturning of the bus, but rather, the fire that burned the bus, including himself and his co-passengers who were unable to leave it; that at the time the fire started, Bataclan, though he must have suffered physical injuries, perhaps serious, was still alive, and so damages were awarded, not for his death, but for the physical injuries suffered by him. We disagree. A satisfactory definition of proximate cause is found in Volume 38, pages 695-696 of American jurisprudence, cited by plaintiffs-appellants in their brief. It is as follows: . . . 'that cause, which, in natural and continuous sequence, unbroken by any efficient intervening cause, produces the injury, and without which the result would not have occurred.' And more comprehensively, 'the proximate legal cause is that acting first and producing the injury, either immediately or by setting other events in motion, all constituting a natural and continuous chain of events, each having a close causal connection with its immediate predecessor, the final event in the chain immediately effecting the injury as a natural and probable result of the cause which first acted, under such circumstances that the person responsible for the first event should, as an ordinary prudent and intelligent person, have reasonable ground to expect at the moment of his act or default that an injury to some person might probably result therefrom. It may be that ordinarily, when a passenger bus overturns, and pins down a passenger, merely causing him physical injuries, if through some event, unexpected and extraordinary, the overturned bus is set on fire, say, by lightning, or if some highwaymen after looting the vehicle sets it on fire, and the passenger is burned to death, one might still contend that the proximate cause of his death was the fire and not the overturning of the vehicle. But in the present case under the circumstances obtaining in the same, we do not hesitate to hold that the proximate cause was the overturning of the bus, this for the reason that when the vehicle turned not only on its side but completely on its back, the leaking of the gasoline from the tank was not unnatural or unexpected; that the coming of the men with a lighted torch was in response to the call for help, made not only by the passengers, but most probably, by the driver and the conductor themselves, and that because it was dark (about 2:30 in the morning), the rescuers had to carry a light with them, and coming as they did from a rural area

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where lanterns and flashlights were not available; and what was more natural than that said rescuers should innocently approach the vehicle to extend the aid and effect the rescue requested from them. In other words, the coming of the men with a torch was to be expected and was a natural sequence of the overturning of the bus, the trapping of some of its passengers and the call for outside help. What is more, the burning of the bus can also in part be attributed to the negligence of the carrier, through is driver and its conductor. According to the witness, the driver and the conductor were on the road walking back and forth. They, or at least, the driver should and must have known that in the position in which the overturned bus was, gasoline could and must have leaked from the gasoline tank and soaked the area in and around the bus, this aside from the fact that gasoline when spilled, specially over a large area, can be smelt and directed even from a distance, and yet neither the driver nor the conductor would appear to have cautioned or taken steps to warn the rescuers not to bring the lighted torch too near the bus. Said negligence on the part of the agents of the carrier come under the codal provisions above-reproduced, particularly, Articles 1733, 1759 and 1763.

whose testimony he was banking to support the complaint, either failed or appear or were reluctant to testify. But the record of the case before us shows the several witnesses, passengers, in that bus, willingly and unhesitatingly testified in court to the effect of the said driver was negligent. In the public interest the prosecution of said erring driver should be pursued, this, not only as a matter of justice, but for the promotion of the safety of passengers on public utility buses. Let a copy of this decision be furnished the Department of Justice and the Provincial Fiscal of Cavite.

As regard the damages to which plaintiffs are entitled, considering the earning capacity of the deceased, as well as the other elements entering into a damage award, we are satisfied that the amount of SIX THOUSAND (P6,000) PESOS would constitute satisfactory compensation, this to include compensatory, moral, and other damages. We also believe that plaintiffs are entitled to attorney's fees, and assessing the legal services rendered by plaintiffs' attorneys not only in the trial court, but also in the course of the appeal, and not losing sight of the able briefs prepared by them, the attorney's fees may well be fixed at EIGHT HUNDRED (P800) PESOS for the loss of merchandise carried by the deceased in the bus, is adequate and will not be disturbed.

La Mallorca v. CA July 27, 1966 G.R. No. L-20761 July 27, 1966

There is one phase of this case which disturbs if it does not shock us. According to the evidence, one of the passengers who, because of the injuries suffered by her, was hospitalized, and while in the hospital, she was visited by the defendant Mariano Medina, and in the course of his visit, she overheard him speaking to one of his bus inspectors, telling said inspector to have the tires of the bus changed immediately because they were already old, and that as a matter of fact, he had been telling the driver to change the said tires, but that the driver did not follow his instructions. If this be true, it goes to prove that the driver had not been diligent and had not taken the necessary precautions to insure the safety of his passengers. Had he changed the tires, specially those in front, with new ones, as he had been instructed to do, probably, despite his speeding, as we have already stated, the blow out would not have occurred. All in all, there is reason to believe that the driver operated and drove his vehicle negligently, resulting in the death of four of his passengers, physical injuries to others, and the complete loss and destruction of their goods, and yet the criminal case against him, on motion of the fiscal and with his consent, was provisionally dismissed, because according to the fiscal, the witnesses on

In view of the foregoing, with the modification that the damages awarded by the trial court are increased from ONE THOUSAND (P1,000) PESOS TO SIX THOUSAND (P6,000) PESOS, and from SIX HUNDRED PESOS TO EIGHT HUNDRED (P800) PESOS, for the death of Bataclan and for the attorney's fees, respectively, the decision appealed is from hereby affirmed, with costs. Paras, C. J., Bengzon, Padilla, Reyes, A., Bautista Angelo, Labrador, Concepcion, Reyes, J. B. L., Endencia, and Felix, JJ., concur.

LA MALLORCA, petitioner, vs. HONORABLE COURT OF APPEALS, MARIANO BELTRAN, ET AL., respondents. G. E. Yabut, R. Monterey and M.C. Lagman for petitioner. Ahmed Garcia for respondents. BARRERA, J.: La Mallorca seeks the review of the decision of the Court of Appeals in CA-G.R. No. 23267-R, holding it liable for quasi-delict and ordering it to pay to respondents Mariano Beltran, et al., P6,000.00 for the death of his minor daughter Raquel Beltran, plus P400.00 as actual damages. The facts of the case as found by the Court of Appeals, briefly are: On December 20, 1953, at about noontime, plaintiffs, husband and wife, together with their minor daughters, namely, Milagros, 13 years old, Raquel, about 4½ years old, and Fe, over 2 years old, boarded the Pambusco Bus No. 352, bearing plate TPU No. 757 (1953 Pampanga), owned and operated by the defendant, at San Fernando, Pampanga, bound for Anao, Mexico, Pampanga. At the time, they were carrying with them four pieces of baggages containing their personal belonging. The conductor of the bus, who happened to be a half-brother of plaintiff Mariano Beltran, issued three tickets (Exhs. A, B, & C) covering the full fares of the plaintiff and their eldest child, Milagros. No fare was charged on Raquel and Fe, since both were below the height at which fare is charged in accordance with the appellant's rules and regulations.

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After about an hour's trip, the bus reached Anao whereat it stopped to allow the passengers bound therefor, among whom were the plaintiffs and their children to get off. With respect to the group of the plaintiffs, Mariano Beltran, then carrying some of their baggages, was the first to get down the bus, followed by his wife and his children. Mariano led his companions to a shaded spot on the left pedestrians side of the road about four or five meters away from the vehicle. Afterwards, he returned to the bus in controversy to get his other bayong, which he had left behind, but in so doing, his daughter Raquel followed him, unnoticed by her father. While said Mariano Beltran was on the running board of the bus waiting for the conductor to hand him his bayong which he left under one of its seats near the door, the bus, whose motor was not shut off while unloading, suddenly started moving forward, evidently to resume its trip, notwithstanding the fact that the conductor has not given the driver the customary signal to start, since said conductor was still attending to the baggage left behind by Mariano Beltran. Incidentally, when the bus was again placed into a complete stop, it had travelled about ten meters from the point where the plaintiffs had gotten off. Sensing that the bus was again in motion, Mariano Beltran immediately jumped from the running board without getting his bayong from the conductor. He landed on the side of the road almost in front of the shaded place where he left his wife and children. At that precise time, he saw people beginning to gather around the body of a child lying prostrate on the ground, her skull crushed, and without life. The child was none other than his daughter Raquel, who was run over by the bus in which she rode earlier together with her parents. For the death of their said child, the plaintiffs commenced the present suit against the defendant seeking to recover from the latter an aggregate amount of P16,000 to cover moral damages and actual damages sustained as a result thereof and attorney's fees. After trial on the merits, the court below rendered the judgment in question. On the basis of these facts, the trial court found defendant liable for breach of contract of carriage and sentenced it to pay P3,000.00 for the death of the child and P400.00 as compensatory damages representing burial expenses and costs. On appeal to the Court of Appeals, La Mallorca claimed that there could not be a breach of contract in the case, for the reason that when the child met her death, she was no longer a passenger of the bus involved in the incident and, therefore, the contract of carriage had already terminated. Although the Court of Appeals sustained this theory, it nevertheless found the defendant-appellant guilty of quasidelict and held the latter liable for damages, for the negligence of its driver, in accordance with Article 2180 of the Civil Code. And, the Court of Appeals did not only find the petitioner liable, but increased the damages awarded the plaintiffs-appellees to P6,000.00, instead of P3,000.00 granted by the trial court.

In its brief before us, La Mallorca contends that the Court of Appeals erred (1) in holding it liable for quasi-delict, considering that respondents complaint was one for breach of contract, and (2) in raising the award of damages from P3,000.00 to P6,000.00 although respondents did not appeal from the decision of the lower court. Under the facts as found by the Court of Appeals, we have to sustain the judgement holding petitioner liable for damages for the death of the child, Raquel Beltran. It may be pointed out that although it is true that respondent Mariano Beltran, his wife, and their children (including the deceased child) had alighted from the bus at a place designated for disembarking or unloading of passengers, it was also established that the father had to return to the vehicle (which was still at a stop) to get one of his bags or bayong that was left under one of the seats of the bus. There can be no controversy that as far as the father is concerned, when he returned to the bus for his bayong which was not unloaded, the relation of passenger and carrier between him and the petitioner remained subsisting. For, the relation of carrier and passenger does not necessarily cease where the latter, after alighting from the car, aids the carrier's servant or employee in removing his baggage from the car.1 The issue to be determined here is whether as to the child, who was already led by the father to a place about 5 meters away from the bus, the liability of the carrier for her safety under the contract of carriage also persisted. It has been recognized as a rule that the relation of carrier and passenger does not cease at the moment the passenger alights from the carrier's vehicle at a place selected by the carrier at the point of destination, but continues until the passenger has had a reasonable time or a reasonable opportunity to leave the carrier's premises. And, what is a reasonable time or a reasonable delay within this rule is to be determined from all the circumstances. Thus, a person who, after alighting from a train, walks along the station platform is considered still a passenger.2 So also, where a passenger has alighted at his destination and is proceeding by the usual way to leave the company's premises, but before actually doing so is halted by the report that his brother, a fellow passenger, has been shot, and he in good faith and without intent of engaging in the difficulty, returns to relieve his brother, he is deemed reasonably and necessarily delayed and thus continues to be a passenger entitled as such to the protection of the railroad and company and its agents.3 In the present case, the father returned to the bus to get one of his baggages which was not unloaded when they alighted from the bus. Raquel, the child that she was, must have followed the father. However, although the father was still on the running board of the bus awaiting for the conductor to hand him the bag or bayong, the bus started to run, so that even he (the father) had to jump down from the moving vehicle. It was at this instance that the child, who must be near the bus, was run over and killed. In the circumstances, it cannot be claimed that the carrier's agent had exercised the "utmost diligence" of a "very cautions person" required by Article 1755 of the Civil Code to be

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observed by a common carrier in the discharge of its obligation to transport safely its passengers. In the first place, the driver, although stopping the bus, nevertheless did not put off the engine. Secondly, he started to run the bus even before the bus conductor gave him the signal to go and while the latter was still unloading part of the baggages of the passengers Mariano Beltran and family. The presence of said passengers near the bus was not unreasonable and they are, therefore, to be considered still as passengers of the carrier, entitled to the protection under their contract of carriage. But even assuming arguendo that the contract of carriage has already terminated, herein petitioner can be held liable for the negligence of its driver, as ruled by the Court of Appeals, pursuant to Article 2180 of the Civil Code. Paragraph 7 of the complaint, which reads — That aside from the aforesaid breach of contract, the death of Raquel Beltran, plaintiffs' daughter, was caused by the negligence and want of exercise of the utmost diligence of a very cautious person on the part of the defendants and their agent, necessary to transport plaintiffs and their daughter safely as far as human care and foresight can provide in the operation of their vehicle. is clearly an allegation for quasi-delict. The inclusion of this averment for quasi-delict, while incompatible with the other claim under the contract of carriage, is permissible under Section 2 of Rule 8 of the New Rules of Court, which allows a plaintiff to allege causes of action in the alternative, be they compatible with each other or not, to the end that the real matter in controversy may be resolved and determined.4

plaintiffs have pointed out in their brief the inadequacy of the award, or that the inclusion of the figure P3,000.00 was merely a clerical error, in order that the matter may be treated as an exception to the general rule.5 Herein petitioner's contention, therefore, that the Court of Appeals committed error in raising the amount of the award for damages is, evidently, meritorious.1äwphï1.ñët Wherefore, the decision of the Court of Appeals is hereby modified by sentencing, the petitioner to pay to the respondents Mariano Beltran, et al., the sum of P3,000.00 for the death of the child, Raquel Beltran, and the amount of P400.00 as actual damages. No costs in this instance. So ordered. Concepcion, C.J., Reyes, J.B.L., Dizon, Regala, Bengzon, J.P., Zaldivar, Sanchez and Castro, JJ., concur. Makalintal, J., concurs in the result. Phil. Rabbit v. IAC Aug 30, 1990 G.R. Nos. 66102-04 August 30, 1990 PHILIPPINE RABBIT BUS LINES, INC., petitioner, vs. THE HONORABLE INTERMEDIATE APPELLATE COURT AND CASIANO PASCUA, ET AL., respondents. Santiago & Santiago for petitioner. Federico R. Vinluan for private respondents.

MEDIALDEA, J.:

The plaintiffs sufficiently pleaded the culpa or negligence upon which the claim was predicated when it was alleged in the complaint that "the death of Raquel Beltran, plaintiffs' daughter, was caused by the negligence and want of exercise of the utmost diligence of a very cautious person on the part of the defendants and their agent." This allegation was also proved when it was established during the trial that the driver, even before receiving the proper signal from the conductor, and while there were still persons on the running board of the bus and near it, started to run off the vehicle. The presentation of proof of the negligence of its employee gave rise to the presumption that the defendant employer did not exercise the diligence of a good father of the family in the selection and supervision of its employees. And this presumption, as the Court of Appeals found, petitioner had failed to overcome. Consequently, petitioner must be adjudged peculiarily liable for the death of the child Raquel Beltran.

This is a petition for review on certiorari of the decision of the Intermediate Appellate Court (now Court of Appeals) dated July 29, 1983 in AC-G.R. Nos. CV-65885, CV-65886 and CV-65887 which reversed the decision of the Court of First Instance (now Regional Trial Court) of Pangasinan dated December 27, 1978; and its resolution dated November 28, 1983 denying the motion for reconsideration.

The increase of the award of damages from P3,000.00 to P6,000.00 by the Court of Appeals, however, cannot be sustained. Generally, the appellate court can only pass upon and consider questions or issues raised and argued in appellant's brief. Plaintiffs did not appeal from that portion of the judgment of the trial court awarding them on P3,000.00 damages for the death of their daughter. Neither does it appear that, as appellees in the Court of Appeals,

The antecedent facts are as follows:

It is an established principle that the factual findings of the Court of Appeals are final and may not be reviewed by this Court on appeal. However, this principle is subject to certain exceptions. One of these is when the findings of the appellate court are contrary to those of the trial court (see Sabinosa v. The Honorable Court of Appeals, et al., G.R. No. L-47981, July 24, 1989) in which case, a reexamination of the facts and evidence may be undertaken. This is Our task now.

About 11:00 o'clock in the morning on December 24, 1966, Catalina Pascua, Caridad Pascua, Adelaida Estomo, Erlinda Meriales, Mercedes Lorenzo, Alejandro Morales and Zenaida Parejas boarded the jeepney owned by spouses Isidro Mangune and Guillerma Carreon and driven by Tranquilino Manalo at Dau, Mabalacat, Pampanga bound

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for Carmen, Rosales, Pangasinan to spend Christmas at their respective homes. Although they usually ride in buses, they had to ride in a jeepney that day because the buses were full. Their contract with Manalo was for them to pay P24.00 for the trip. The private respondents' testimonial evidence on this contractual relationship was not controverted by Mangune, Carreon and Manalo, nor by Filriters Guaranty Assurance Corporation, Inc., the insurer of the jeepney, with contrary evidence. Purportedly riding on the front seat with Manalo was Mercedes Lorenzo. On the left rear passenger seat were Caridad Pascua, Alejandro Morales and Zenaida Parejas. On the right rear passenger seat were Catalina Pascua, Adelaida Estomo, and Erlinda Meriales. After a brief stopover at Moncada, Tarlac for refreshment, the jeepney proceeded towards Carmen, Rosales, Pangasinan.

multiple lacerations of the left lower lobe of the lungs; contusions on the left lower lobe of the lungs; and simple fractures of the 2nd, 3rd, 4th, 5th, 6th, 7th, and 8th ribs, left. The forcible impact of the jeep caused the above injuries which resulted in her death. . . .

Upon reaching barrio Sinayoan, San Manuel, Tarlac, the right rear wheel of the jeepney was detached, so it was running in an unbalanced position. Manalo stepped on the brake, as a result of which, the jeepney which was then running on the eastern lane (its right of way) made a Uturn, invading and eventually stopping on the western lane of the road in such a manner that the jeepney's front faced the south (from where it came) and its rear faced the north (towards where it was going). The jeepney practically occupied and blocked the greater portion of the western lane, which is the right of way of vehicles coming from the north, among which was Bus No. 753 of petitioner Philippine Rabbit Bus Lines, Inc. (Rabbit) driven by Tomas delos Reyes. Almost at the time when the jeepney made a sudden U-turn and encroached on the western lane of the highway as claimed by Rabbit and delos Reyes, or after stopping for a couple of minutes as claimed by Mangune, Carreon and Manalo, the bus bumped from behind the right rear portion of the jeepney. As a result of the collision, three passengers of the jeepney (Catalina Pascua, Erlinda Meriales and Adelaida Estomo) died while the other jeepney passengers sustained physical injuries. What could have been a festive Christmas turned out to be tragic.

The police investigators of Tacpal and policemen of San Manuel, Tarlac, Tarlac, upon arrival at the scene of the mishap, prepared a sketch (common exhibit "K" for private respondents "19" for Rabbit) showing the relative positions of the two vehicles as well as the alleged point of impact (p. 100, Record on Appeal):

The causes of the death of the three jeepney passengers were as follows (p. 101, Record on Appeal): The deceased Catalina Pascua suffered the following injuries, to wit: fracture of the left parietal and temporal regions of the skull; fracture of the left mandible; fracture of the right humenous; compound fracture of the left radious and ullma middle third and lower third; fracture of the upper third of the right tibia and fillnea; avulsion of the head, left internal; and multiple abrasions. The cause of her death was shock, secondary to fracture and multiple hemorrhage. The fractures were produced as a result of the hitting of the victim by a strong force. The abrasions could be produced when a person falls from a moving vehicles (sic) and rubs parts of her body against a cement road pavement. . . . Erlinda Mariles (sic) sustained external lesions such as contusion on the left parietal region of the skull; hematoma on the right upper lid; and abrasions (sic) on the left knee. Her internal lesions were: hematoma on the left thorax;

The cause of death of Erlinda or Florida Estomo (also called as per autopsy of Dr. Panlasiqui was due to shock due to internal hemorrhage, ruptured spleen and trauma. . . . Caridad Pascua suffered physical injuries as follows (p. 101, Record on Appeal): . . . lacerated wound on the forehead and occipital region, hematoma on the forehead, multiple abrasions on the forearm, right upper arm, back and right leg. . . .

. . . The point of collision was a cement pave-portion of the Highway, about six (6) meters wide, with narrow shoulders with grasses beyond which are canals on both sides. The road was straight and points 200 meters north and south of the point of collision are visible and unobstructed. Purportedly, the point of impact or collision (Exh. "K-4", Pascua on the sketch Exh. "K"-Pascua) was on the western lane of the highway about 3 feet (or one yard) from the center line as shown by the bedris (sic), dirt and soil (obviously from the undercarriage of both vehicles) as well as paint, marron (sic) from the Rabbit bus and greenish from the jeepney. The point of impact encircled and marked with the letter "X" in Exh. "K"-4 Pascua, had a diameter of two meters, the center of which was about two meters from the western edge of cement pavement of the roadway. Pictures taken by witness Bisquera in the course of the investigation showed the relative positions of the point of impact and center line (Exh. "P"-Pascua) the back of the Rabbit bus (Exh. "P"-1-Pascua"), the lifeless body of Catalina Pascua (Exh. "P-2 Pascua"), and the damaged front part of the Rabbit bus (Exh. "P-3 Pascua"). No skid marks of the Rabbit bus was found in the vicinity of the collision, before or after the point of impact. On the other hand, there was a skid mark about 45 meters long purportedly of the jeepney from the eastern shoulder of the road south of, and extending up to the point of impact. At the time and in the vicinity of the accident, there were no vehicles following the jeepney, neither were there oncoming vehicles except the bus. The weather condition of that day was fair. After conducting the investigation, the police filed with the Municipal Court of San Manuel, Tarlac, a criminal complaint against the two drivers for Multiple Homicide. At the preliminary investigation, a probable cause was found with respect to the case of Manalo, thus, his case was elevated to the Court of First Instance. However, finding no

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sufficiency of evidence as regards the case of delos Reyes, the Court dismissed it. Manalo was convicted and sentenced to suffer imprisonment. Not having appealed, he served his sentence. Complaints for recovery of damages were then filed before the Court of First Instance of Pangasinan. In Civil Case No. 1136, spouses Casiano Pascua and Juana Valdez sued as heirs of Catalina Pascua while Caridad Pascua sued in her behalf. In Civil Case No. 1139, spouses Manuel Millares and Fidencia Arcica sued as heirs of Erlinda Meriales. In Civil Case No. 1140, spouses Mariano Estomo and Dionisia Sarmiento also sued as heirs of Adelaida Estomo. In all three cases, spouses Mangune and Carreon, Manalo, Rabbit and delos Reyes were all impleaded as defendants. Plaintiffs anchored their suits against spouses Mangune and Carreon and Manalo on their contractual liability. As against Rabbit and delos Reyes, plaintiffs based their suits on their culpability for a quasi-delict. Filriters Guaranty Assurance Corporation, Inc. was also impleaded as additional defendant in Civil Case No. 1136 only. For the death of Catalina Pascua, plaintiffs in Civil Case No. 1136 sought to collect the aggregate amount of P70,060.00 in damages, itemized as follows: P500.00 for burial expenses; P12,000.00 for loss of wages for 24 years; P10,000.00 for exemplary damages; P10,000.00 for moral damages; and P3,000.00 for attorney's fees. In the same case, plaintiff Caridad Pascua claimed P550.00 for medical expenses; P240.00 for loss of wages for two months; P2,000.00 for disfigurement of her face; P3,000.00 for physical pain and suffering; P2,500.00 as exemplary damages and P2,000.00 for attorney's fees and expenses of litigation. In Civil Case No. 1139, plaintiffs demanded P500.00 for burial expenses; P6,000.00 for the death of Erlinda, P63,000.00 for loss of income; P10,000.00 for moral damages and P3,000.00 for attorney's fees or total of P80,000.00. In Civil Case No. 1140, plaintiffs claimed P500.00 for burial expenses; P6,000.00 for the death of Adelaide, P56,160.00 for loss of her income or earning capacity; P10,000.00 for moral damages; and P3,000.00 for attorney's fees. Rabbit filed a cross-claim in the amount of P15,000.00 for attorney's fees and expenses of litigation. On the other hand, spouses Mangune and Carreon filed a cross-claim in the amount of P6,168.00 for the repair of the jeepney and P3,000.00 for its non-use during the period of repairs. On December 27, 1978, the trial court rendered its decision finding Manalo negligent, the dispositive portion of which reads (pp. 113-114, Record on Appeal): PREMISES CONSIDERED, this Court is of the opinion and so holds:

1) That defendants Isidro Mangune, Guillerma Carreon and Tranquilino Manalo thru their negligence, breached contract of carriage with their passengers the plaintiffs' and/or their heirs, and this Court renders judgment ordering said defendants, jointly and severally, to pay the plaintiffs — a) In Civil Case No. 1136, for the death of Catalina Pascua, to pay her heirs the amounts of P12,000.00 for indemnity for loss of her life; P41,760.00 for loss of earnings; P324.40 for actual expenses and P2,000.00 for moral damages; b) In the same Civil Case No.1136 for the injuries of Caridad Pascua, to pay her the amounts of P240.00 for loss of wages, P328.20 for actual expenses and P500.00 for moral damages; c) In Civil Case No.1139 for the death of Erlinda Meriales, to pay her heirs (the plaintiffs) the amount of P12,000.00 — for indemnity for loss of her life; P622.00 for actual expenses, P60,480.00 for loss of wages or income and P2,000.00 for moral damages; d) In Civil Case No. 1140, for the death of Erlinda (also called Florida or Adelaida Estomo), to pay her heirs (the plaintiff the amount of P12,000.00 for indemnity for the loss of her life; P580.00 for actual expenses; P53,160.00 for loss of wages or income and P2,000.00 for moral damages. 2) The defendant Filriters Guaranty Insurance Co., having contracted to ensure and answer for the obligations of defendants Mangune and Carreon for damages due their passengers, this Court renders judgment against the said defendants Filriters Guaranty Insurance Co., jointly and severally with said defendants (Mangune and Carreon) to pay the plaintiffs the amount herein above adjudicated in their favor in Civil Case No. 1136 only. All the amounts awarded said plaintiff, as set forth in paragraph one (1) hereinabove; 3) On the cross claim of Phil. Rabbit Bus Lines, Inc. ordering the defendant, Isidro Mangune, Guillerma Carreon and Tranquilino Manalo, to pay jointly and severally, crossclaimant Phil. Rabbit Bus Lines, Inc., the amounts of P216.27 as actual damages to its Bus No. 753 and P2,173.60 for loss of its earning. All of the above amount, shall bear legal interest from the filing of the complaints. Costs are adjudged against defendants Mangune, Carreon and Manalo and Filriters Guaranty. SO ORDERED On appeal, the Intermediate Appellate Court reversed the above-quoted decision by finding delos Reyes negligent, the dispositive portion of which reads (pp. 55-57, Rollo):

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WHEREFORE, PREMISES CONSIDERED, the lower court's decision is hereby REVERSED as to item No. 3 of the decision which reads:

a)

Indemnity for loss of life P12,000.00

3) On the cross claim of Philippine Rabbit Bus Lines, Inc. ordering the defendants Isidro Mangune, Guillerma Carreon and Tranquilino Manalo, to pay jointly and severally, the amounts of P216.27 as actual damages to its Bus No. 753 and P2,173.60 for loss of its earnings.

b)

Loss of Salary or Earning Capacity 20,000.00



c)

Actual damages (burial expenses) 500.00



and another judgment is hereby rendered in favor of plaintiffs-appellants Casiana Pascua, Juan Valdez and Caridad Pascua, ordering the Philippine Rabbit Bus Lines, Inc. and its driver Tomas delos Reyes to pay the former jointly and severally damages in amounts awarded as follows:

d)

Moral damages

e)

Exemplary damages



f)

Attorney's fees

3,000.00







15,000.00 15,000.00

————— For the death of Catalina Pascua, the parents and/or heirs are awarded

Total

Civil Case No. 1136 —

For the death of Florida Sarmiento Estomo:

a)

Indemnity for the loss of life — P12,000.00

Civil Case No. 1140

b)

Loss of Salaries or earning capacity 14,000.00



c)

Actual damages (burial expenses) 800.00



d)

For moral damages —

10,000.00

e)

Exemplary damages



f)

For attorney's fees —

3,000.00

3,000.00

————— Total



P38,200.00 (sic)



P65,500.00

a)

Indemnity for loss of life P12,000.00

b)

Loss of Salary or Earning capacity 20,000.00



c)

Actual damages (burial expenses) 500.00



d)

Moral damages

e)

Exemplary damages



f)

Attorney's fees

3,000.00







3,000.00 3,000.00

—————

For the physical injuries suffered by Caridad Pascua:

Total

Civil Case No. 1136

With costs against the Philippine Rabbit Bus Lines, Inc.

a)

Actual —

damages P550.00

b)

Moral damages (disfigurement of the

face and physical suffering c)

(hospitalization



Exemplary damages

expenses)



SO ORDERED.

The issue is who is liable for the death and physical injuries suffered by the passengers of the jeepney? 2,000.00 The trial court, in declaring that Manalo was negligent, considered the following (p. 106, Record on Appeal):

————— Total

P41,500.00

The motion for reconsideration was denied. Hence, the present petition.

8,000.00 —



P10,550.00

For the death of Erlinda Arcega Meriales. the parents and/or heirs: Civil Case No. 1139

(1) That the unrebutted testimony of his passenger plaintiff Caridad Pascua that a long ways (sic) before reaching the point of collision, the Mangune jeepney was "running fast" that his passengers cautioned driver Manalo to slow down but did not heed the warning: that the right rear wheel was detached causing the jeepney to run to the

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eastern shoulder of the road then back to the concrete pavement; that driver Manalo applied the brakes after which the jeepney made a U-turn (half-turn) in such a manner that it inverted its direction making it face South instead of north; that the jeepney stopped on the western lane of the road on the right of way of the oncoming Phil. Rabbit Bus where it was bumped by the latter;

21354, May 20, 1966, 17 SCRA 224. 1 Thus, the respondent court erred in applying said doctrine.

(2) The likewise unrebutted testimony of Police Investigator Tacpal of the San Manuel (Tarlac) Police who, upon responding to the reported collission, found the real evidence thereat indicate in his sketch (Exh. K, Pascua ), the tracks of the jeepney of defendant Mangune and Carreon running on the Eastern shoulder (outside the concrete paved road) until it returned to the concrete road at a sharp angle, crossing the Eastern lane and the (imaginary) center line and encroaching fully into the western lane where the collision took place as evidenced by the point of impact;

. . . the jeepney had already executed a complete turnabout and at the time of impact was already facing the western side of the road. Thus the jeepney assumed a new frontal position vis a vis, the bus, and the bus assumed a new role of defensive driving. The spirit behind the presumption of guilt on one who bumps the rear end of another vehicle is for the driver following a vehicle to be at all times prepared of a pending accident should the driver in front suddenly come to a full stop, or change its course either through change of mind of the front driver, mechanical trouble, or to avoid an accident. The rear vehicle is given the responsibility of avoiding a collision with the front vehicle for it is the rear vehicle who has full control of the situation as it is in a position to observe the vehicle in front of it.

(3) The observation of witness Police Corporal Cacalda also of the San Manuel Police that the path of the jeepney they found on the road and indicated in the sketch (Exh. K-Pascua) was shown by skid marks which he described as "scratches on the road caused by the iron of the jeep, after its wheel was removed;" (4) His conviction for the crime of Multiple Homicide and Multiple Serious Physical Injuries with Damage to Property thru Reckless Imprudence by the Court of First Instance of Tarlac (Exh. 24-Rabbit) upon the criminal Information by the Provincial Fiscal of Tarlac (Exh. 23-Rabbit), as a result of the collision, and his commitment to prison and service of his sentence (Exh. 25Rabbit) upon the finality of the decision and his failure to appeal therefrom; and (5) The application of the doctrine of res-ipsa loquitar (sic) attesting to the circumstance that the collision occured (sic) on the right of way of the Phil. Rabbit Bus. The respondent court had a contrary opinion. Applying primarily (1) the doctrine of last clear chance, (2) the presumption that drivers who bump the rear of another vehicle guilty and the cause of the accident unless contradicted by other evidence, and (3) the substantial factor test. concluded that delos Reyes was negligent. The misappreciation of the facts and evidence and the misapplication of the laws by the respondent court warrant a reversal of its questioned decision and resolution. We reiterate that "[t]he principle about "the last clear" chance, would call for application in a suit between the owners and drivers of the two colliding vehicles. It does not arise where a passenger demands responsibility from the carrier to enforce its contractual obligations. For it would be inequitable to exempt the negligent driver of the jeepney and its owners on the ground that the other driver was likewise guilty of negligence." This was Our ruling in Anuran, et al. v. Buño et al., G.R. Nos. L-21353 and L-

On the presumption that drivers who bump the rear of another vehicle guilty and the cause of the accident, unless contradicted by other evidence, the respondent court said (p. 49, Rollo):

The above discussion would have been correct were it not for the undisputed fact that the U-turn made by the jeepney was abrupt (Exhibit "K," Pascua). The jeepney, which was then traveling on the eastern shoulder, making a straight, skid mark of approximately 35 meters, crossed the eastern lane at a sharp angle, making a skid mark of approximately 15 meters from the eastern shoulder to the point of impact (Exhibit "K" Pascua). Hence, delos Reyes could not have anticipated the sudden U-turn executed by Manalo. The respondent court did not realize that the presumption was rebutted by this piece of evidence. With regard to the substantial factor test, it was the opinion of the respondent court that (p. 52, Rollo): . . . It is the rule under the substantial factor test that if the actor's conduct is a substantial factor in bringing about harm to another, the fact that the actor neither foresaw nor should have foreseen the extent of the harm or the manner in which it occurred does not prevent him from being liable (Restatement, Torts, 2d). Here, We find defendant bus running at a fast speed when the accident occurred and did not even make the slightest effort to avoid the accident, . . . . The bus driver's conduct is thus a substantial factor in bringing about harm to the passengers of the jeepney, not only because he was driving fast and did not even attempt to avoid the mishap but also because it was the bus which was the physical force which brought about the injury and death to the passengers of the jeepney. The speed of the bus was calculated by respondent court as follows (pp. 54-55, Rollo): According to the record of the case, the bus departed from Laoag, Ilocos Norte, at 4:00 o'clock A.M. and the accident took place at approximately around 12:30 P.M., after travelling roughly for 8 hours and 30 minutes. Deduct from this the actual stopover time of two Hours (computed from the testimony of the driver that he made three 40-minute

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stop-overs), We will have an actual travelling time of 6 hours and 30 minutes. Under the circumstances, We calculate that the LaoagTarlac route (365 kms.) driving at an average of 56 km. per hour would take 6 hours and 30 minutes. Therefore, the average speed of the bus, give and take 10 minutes, from the point of impact on the highway with excellent visibility factor would be 80 to 90 kms. per hour, as this is the place where buses would make up for lost time in traversing busy city streets. Still, We are not convinced. It cannot be said that the bus was travelling at a fast speed when the accident occurred because the speed of 80 to 90 kilometers per hour, assuming such calculation to be correct, is yet within the speed limit allowed in highways. We cannot even fault delos Reyes for not having avoided the collision. As aforestated, the jeepney left a skid mark of about 45 meters, measured from the time its right rear wheel was detached up to the point of collision. Delos Reyes must have noticed the perilous condition of the jeepney from the time its right rear wheel was detached or some 90 meters away, considering that the road was straight and points 200 meters north and south of the point of collision, visible and unobstructed. Delos Reyes admitted that he was running more or less 50 kilometers per hour at the time of the accident. Using this speed, delos Reyes covered the distance of 45 meters in 3.24 seconds. If We adopt the speed of 80 kilometers per hour, delos Reyes would have covered that distance in only 2.025 seconds. Verily, he had little time to react to the situation. To require delos Reyes to avoid the collision is to ask too much from him. Aside from the time element involved, there were no options available to him. As the trial court remarked (pp. 107-108, Record on Appeal): . . . They (plaintiffs) tried to impress this Court that defendant de los Reyes, could have taken either of two options: (1) to swerve to its right (western shoulder) or (2) to swerve to its left (eastern lane), and thus steer clear of the Mangune jeepney. This Court does not so believe, considering the existing exigencies of space and time. As to the first option, Phil. Rabbit's evidence is convincing and unrebutted that the Western shoulder of the road was narrow and had tall grasses which would indicate that it was not passable. Even plaintiffs own evidence, the pictures (Exhs. P and P-2, Pascua) are mute confirmation of such fact. Indeed, it can be noticed in the picture (Exh. P-2, Pascua) after the Rabbit bus came to a full stop, it was tilted to right front side, its front wheels resting most probably on a canal on a much lower elevation that of the shoulder or paved road. It too shows that all of the wheels of the Rabbit bus were clear of the roadway except the outer left rear wheel. These observation appearing in said picture (Exh P-2, Pascua) clearly shows coupled with the finding the Rabbit bus came to a full stop only five meters from the point of impact (see sketch, Exh. K-Pascua) clearly show that driver de los Reyes veered his Rabbit bus to the right attempt to avoid hitting the Mangune's jeepney. That it was not successful in fully clearing the Mangune

jeepney as its (Rabbit's) left front hit said jeepney (see picture Exh. 10-A-Rabbit) must have been due to limitations of space and time. Plaintiffs alternatively claim that defendant delos Reyes of the Rabbit bus could also have swerved to its left (eastern lane) to avoid bumping the Mangune jeepney which was then on the western lane. Such a claim is premised on the hypothesis (sic) that the eastern lane was then empty. This claim would appear to be good copy of it were based alone on the sketch made after the collision. Nonetheless, it loses force it one were to consider the time element involved, for moments before that, the Mangune jeepney was crossing that very eastern lane at a sharp angle. Under such a situation then, for driver delos Reyes to swerve to the eastern lane, he would run the greater risk of running smack in the Mangune jeepney either head on or broadside. After a minute scrutiny of the factual matters and duly proven evidence, We find that the proximate cause of the accident was the negligence of Manalo and spouses Mangune and Carreon. They all failed to exercise the precautions that are needed precisely pro hac vice. In culpa contractual, the moment a passenger dies or is injured, the carrier is presumed to have been at fault or to have acted negligently, and this disputable presumption may only be overcome by evidence that he had observed extra-ordinary diligence as prescribed in Articles 1733, 1755 and 1756 of the New Civil Code 2 or that the death or injury of the passenger was due to a fortuitous event 3 (Lasam v. Smith, Jr., 45 Phil. 657). The negligence of Manalo was proven during the trial by the unrebutted testimonies of Caridad Pascua, Police Investigator Tacpal, Police Corporal Cacalda, his (Manalo's) conviction for the crime of Multiple Homicide and Multiple Serious Injuries with Damage to Property thru Reckless Imprudence, and the application of the doctrine of res ipsa loquitur supra. The negligence of spouses Mangune and Carreon was likewise proven during the trial (p. 110, Record on Appeal): To escape liability, defendants Mangune and Carreon offered to show thru their witness Natalio Navarro, an alleged mechanic, that he periodically checks and maintains the jeepney of said defendants, the last on Dec. 23, the day before the collision, which included the tightening of the bolts. This notwithstanding the right rear wheel of the vehicle was detached while in transit. As to the cause thereof no evidence was offered. Said defendant did not even attempt to explain, much less establish, it to be one caused by a caso fortuito. . . . In any event, "[i]n an action for damages against the carrier for his failure to safely carry his passenger to his destination, an accident caused either by defects in the automobile or through the negligence of its driver, is not a caso fortuito which would avoid the carriers liability for damages (Son v. Cebu Autobus Company, 94 Phil. 892 citing Lasam, et al. v. Smith, Jr., 45 Phil. 657; Necesito, etc. v. Paras, et al., 104 Phil. 75).

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BELLOSILLO, J.: The trial court was therefore right in finding that Manalo and spouses Mangune and Carreon were negligent. However, its ruling that spouses Mangune and Carreon are jointly and severally liable with Manalo is erroneous The driver cannot be held jointly and severally liable with the carrier in case of breach of the contract of carriage. The rationale behind this is readily discernible. Firstly, the contract of carriage is between the carrier and the passenger, and in the event of contractual liability, the carrier is exclusively responsible therefore to the passenger, even if such breach be due to the negligence of his driver (see Viluan v. The Court of Appeals, et al., G.R. Nos. L21477-81, April 29, 1966, 16 SCRA 742). In other words, the carrier can neither shift his liability on the contract to his driver nor share it with him, for his driver's negligence is his. 4 Secondly, if We make the driver jointly and severally liable with the carrier, that would make the carrier's liability personal instead of merely vicarious and consequently, entitled to recover only the share which corresponds to the driver, 5 contradictory to the explicit provision of Article 2181 of the New Civil Code. 6 We affirm the amount of damages adjudged by the trial court, except with respect to the indemnity for loss of life. Under Article 1764 in relation to Article 2206 of the New Civil Code, the amount of damages for the death of a passenger is at least three thousand pesos (P3,000.00). The prevailing jurisprudence has increased the amount of P3,000.00 to P30,000.00 (see Heirs of Amparo delos Santos, et al. v. Honorable Court of Appeals, et al., G.R. No. 51165, June 21, 1990 citing De Lima v. Laguna Tayabas Co., G.R. Nos. L-35697-99, April 15, 1988, 160 SCRA 70). ACCORDINGLY, the petition is hereby GRANTED. The decision of the Intermediate Appellate Court dated July 29, 1983 and its resolution dated November 28, 1983 are SET ASIDE. The decision of the Court of First Instance dated December 27, 1978 is REINSTATED MODIFICATION that only Isidro Mangune, Guillerma Carreon and Filriters Guaranty Assurance Corporation, Inc. are liable to the victims or their heirs and that the amount of indemnity for loss of life is increased to thirty thousand pesos (P30,000.00). SO ORDERED. PAL v. CA Sep 15, 1993 G.R. No. L-82619 September 15, 1993 PHILIPPINE AIRLINES, INC., petitioner, vs. COURT OF APPEALS and PEDRO respondents. Leighton R. Liazon for petitioner. Balmes L. Ocampo for private respondent.

ZAPATOS,

This petition for review in certiorari seeks to annul and set aside the decision of the then Intermediate Appellant Court, 1 now Court of Appeals, dated 28 February 1985, in ACG.R. CV No. 69327 ("Pedro Zapatos v. Philippine Airlines, Inc.") affirming the decision of the then Court of first Instance, now Regional Trial Court, declaring Philippine Airlines, Inc., liable in damages for breach of contract. On 25 November 1976, private respondent filed a complaint for damages for breach of contract of carriage 2 against Philippine Airlines, Inc. (PAL), before the then Court of First Instance, now Regional Trial Court, of Misamis Occidental, at Ozamiz City. According to him, on 2 August 1976, he was among the twenty-one (21) passengers of PAL Flight 477 that took off from Cebu bound for Ozamiz City. The routing of this flight was Cebu-Ozamiz-Cotabato. While on flight and just about fifteen (15) minutes before landing at Ozamiz City, the pilot received a radio message that the airport was closed due to heavy rains and inclement weather and that he should proceed to Cotabato City instead. Upon arrival at Cotabato City, the PAL Station Agent informed the passengers of their options to return to Cebu on flight 560 of the same day and thence to Ozamiz City on 4 August 1975, or take the next flight to Cebu the following day, or remain at Cotabato and take the next available flight to Ozamiz City on 5 August 1975. 3 The Station Agent likewise informed them that Flight 560 bound for Manila would make a stop-over at Cebu to bring some of the diverted passengers; that there were only six (6) seats available as there were already confirmed passengers for Manila; and, that the basis for priority would be the checkin sequence at Cebu. Private respondent chose to return to Cebu but was not accommodated because he checked-in as passenger No. 9 on Flight 477. He insisted on being given priority over the confirmed passengers in the accommodation, but the Station Agent refused private respondent's demand explaining that the latter's predicament was not due to PAL's own doing but to be a force majeure. 4 Private respondent tried to stop the departure of Flight 560 as his personal belongings, including a package containing a camera which a certain Miwa from Japan asked him to deliver to Mrs. Fe Obid of Gingoog City, were still on board. His plea fell on deaf ears. PAL then issued to private respondent a free ticket to Iligan city, which the latter received under protest. 5 Private respondent was left at the airport and could not even hitch a ride in the Ford Fiera loaded with PAL personnel. 6 PAL neither provided private respondent with transportation from the airport to the city proper nor food and accommodation for his stay in Cotabato City. The following day, private respondent purchased a PAL ticket to Iligan City. He informed PAL personnel that he would not use the free ticket because he was filing a case against PAL. 7 In Iligan City, private respondent hired a car

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from the airport to Kolambugan, Lanao del Norte, reaching Ozamiz City by crossing the bay in a launch. 8 His personal effects including the camera, which were valued at P2,000.00 were no longer recovered. On 13 January 1977, PAL filed its answer denying that it unjustifiably refused to accommodate private respondent. 9 It alleged that there was simply no more seat for private respondent on Flight 560 since there were only six (6) seats available and the priority of accommodation on Flight 560 was based on the check-in sequence in Cebu; that the first six (6) priority passengers on Flight 477 chose to take Flight 560; that its Station Agent explained in a courteous and polite manner to all passengers the reason for PAL's inability to transport all of them back to Cebu; that the stranded passengers agreed to avail of the options and had their respective tickets exchanged for their onward trips; that it was only the private respondent who insisted on being given priority in the accommodation; that pieces of checked-in baggage and had carried items of the Ozamiz City passengers were removed from the aircraft; that the reason for their pilot's inability to land at Ozamis City airport was because the runway was wet due to rains thus posing a threat to the safety of both passengers and aircraft; and, that such reason of force majeure was a valid justification for the pilot to bypass Ozamiz City and proceed directly to Cotabato City. On 4 June 1981, the trial court rendered its decision 10 the dispositive portion of which states: WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendant Philippine AirLines, Inc. ordering the latter to pay: (1) As actual damages, the sum of Two Hundred Pesos (P200.00) representing plaintiff's expenses for transportation, food and accommodation during his stranded stay at Cotabato City; the sum of Forty-Eight Pesos (P48.00) representing his flight fare from Cotabato City to Iligan city; the sum of Five Hundred Pesos (P500.00) representing plaintiff's transportation expenses from Iligan City to Ozamiz City; and the sum of Five Thousand Pesos (P5,000.00) as loss of business opportunities during his stranded stay in Cotabato City; (2) As moral damages, the sum of Fifty Thousand Pesos (P50,000.00) for plaintiff's hurt feelings, serious anxiety, mental anguish and unkind and discourteous treatment perpetrated by defendant's employees during his stay as stranded passenger in Cotabato City; (3) As exemplary damages, the sum of Ten Thousand Pesos (P10,000.00) to set a precedent to the defendant airline that it shall provide means to give comfort and convenience to stranded passengers;

PAL appealed to the Court of Appeals which on 28 February 1985, finding no reversible error, affirmed the judgment of the court a quo. 11 PAL then sought recourse to this Court by way of a petition for review on certiorari 12 upon the following issues: (1) Can the Court of Appeals render a decision finding petitioner (then defendant-appellant in the court below) negligent and, consequently, liable for damages on a question of substance which was neither raised on a question nor proved at the trial? (2) Can the Court of Appeals award actual and moral damages contrary to the evidence and established jurisprudence? 13 An assiduous examination of the records yields no valid reason for reversal of the judgment on appeal; only a modification of its disposition. In its petition, PAL vigorously maintains that private respondent's principal cause of action was its alleged denial of private respondent's demand for priority over the confirmed passengers on Flight 560. Likewise, PAL points out that the complaint did not impute to PAL neglect in failing to attend to the needs of the diverted passengers; and, that the question of negligence was not and never put in issue by the pleadings or proved at the trial. Contrary to the above arguments, private respondent's amended complaint touched on PAL's indifference and inattention to his predicament. The pertinent portion of the amended complaint 14 reads: 10. That by virtue of the refusal of the defendant through its agent in Cotabato to accommodate (sic) and allow the plaintiff to take and board the plane back to Cebu, and by accomodating (sic) and allowing passengers from Cotabato for Cebu in his stead and place, thus forcing the plaintiff against his will, to be left and stranded in Cotabato, exposed to the peril and danger of muslim rebels plundering at the time, the plaintiff, as a consequence, (have) suffered mental anguish, mental torture, social humiliation, bismirched reputation and wounded feeling, all amounting to a conservative amount of thirty thousand (P30,000.00) Pesos. To substantiate this aspect of apathy, private respondent testified 15 A I did not even notice that I was I think the last passenger or the last person out of the PAL employees and army personnel that were left there. I did not notice that when I was already outside of the building after our conversation. Q

What did you do next?

(4) The sum of Three Thousand Pesos (P3,000.00) as attorney's fees;

A I banished (sic) because it seems that there was a war not far from the airport. The sound of guns and the soldiers were plenty.

(5)

Q

To pay the costs of this suit.

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After that what did you do?

A I tried to look for a transportation that could bring me down to the City of Cotabato.

Q Are you not aware that one fellow passenger even claimed that he was given Hotel accommodation because they have no money?

Q

xxx

Were you able to go there?

A I was at about 7:00 o'clock in the evening more or less and it was a private jeep that I boarded. I was even questioned why I and who am (sic) I then. Then I explained my side that I am (sic) stranded passenger. Then they brought me downtown at Cotabato. Q During your conversation with the Manager were you not offered any vehicle or transportation to Cotabato airport downtown? A In fact I told him (Manager) now I am by-passed passenger here which is not my destination what can you offer me. Then they answered, "it is not my fault. Let us forget that." Q In other words when the Manager told you that offer was there a vehicle ready? A Not yet. Not long after that the Ford Fiera loaded with PAL personnel was passing by going to the City of Cotabato and I stopped it to take me a ride because there was no more available transportation but I was not accommodated. Significantly, PAL did not seem to mind the introduction of evidence which focused on its alleged negligence in caring for its stranded passengers. Well-settled is the rule in evidence that the protest or objection against the admission of evidence should be presented at the time the evidence is offered, and that the proper time to make protest or objection to the admissibility of evidence is when the question is presented to the witness or at the time the answer thereto is given. 16 There being no objection, such evidence becomes property of the case and all the parties are amenable to any favorable or unfavorable effects resulting from the evidence. 17 PAL instead attempted to rebut the aforequoted testimony. In the process, it failed to substantiate its counter allegation for want of concrete proof 18 —

xxx

xxx

A No, sir, that was never offered to me. I said, I tried to stop them but they were already riding that PAL pick-up jeep, and I was not accommodated. Having joined in the issue over the alleged lack of care it exhibited towards its passengers, PAL cannot now turn around and feign surprise at the outcome of the case. When issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings. 19 With regard to the award of damages affirmed by the appellate court, PAL argues that the same is unfounded. It asserts that it should not be charged with the task of looking after the passengers' comfort and convenience because the diversion of the flight was due to a fortuitous event, and that if made liable, an added burden is given to PAL which is over and beyond its duties under the contract of carriage. It submits that granting arguendo that negligence exists, PAL cannot be liable in damages in the absence of fraud or bad faith; that private respondent failed to apprise PAL of the nature of his trip and possible business losses; and, that private respondent himself is to be blamed for unreasonably refusing to use the free ticket which PAL issued. The contract of air carriage is a peculiar one. Being imbued with public interest, the law requires common carriers to carry the passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with due regard for all the circumstances. 20 In Air France v. Carrascoso, 21 we held that — A contract to transport passengers is quite different in kind and degree from any other contractual relation. And this, because of the relation which an air carrier sustains with the public. Its business is mainly with the travelling public. It invites people to avail of the comforts and advantages it offers. The contract of air carriage, therefore, generates a relation attended with a public duty . . . . ( emphasis supplied).

Atty. Rubin O. Rivera — PAL's counsel: Q You said PAL refused to help you when you were in Cotabato, is that right? Private respondent: A

Yes.

Q Did you ask them to help you regarding any offer of transportation or of any other matter asked of them? A Yes, he (PAL PERSONNEL) said what is? It is not our fault.

The position taken by PAL in this case clearly illustrates its failure to grasp the exacting standard required by law. Undisputably, PAL's diversion of its flight due to inclement weather was a fortuitous event. Nonetheless, such occurrence did not terminate PAL's contract with its passengers. Being in the business of air carriage and the sole one to operate in the country, PAL is deemed equipped to deal with situations as in the case at bar. What we said in one case once again must be stressed, i.e., the relation of carrier and passenger continues until the latter has been landed at the port of destination and has left the carrier's premises. 22 Hence, PAL necessarily would still have to exercise extraordinary diligence in safeguarding the comfort, convenience and safety of its stranded passengers

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until they have reached their final destination. On this score, PAL grossly failed considering the then ongoing battle between government forces and Muslim rebels in Cotabato City and the fact that the private respondent was a stranger to the place. As the appellate court correctly ruled — While the failure of plaintiff in the first instance to reach his destination at Ozamis City in accordance with the contract of carriage was due to the closure of the airport on account of rain and inclement weather which was radioed to defendant 15 minutes before landing, it has not been disputed by defendant airline that Ozamis City has no allweather airport and has to cancel its flight to Ozamis City or by-pass it in the event of inclement weather. Knowing this fact, it becomes the duty of defendant to provide all means of comfort and convenience to its passengers when they would have to be left in a strange place in case of such by-passing. The steps taken by defendant airline company towards this end has not been put in evidence, especially for those 7 others who were not accommodated in the return trip to Cebu, only 6 of the 21 having been so accommodated. It appears that plaintiff had to leave on the next flight 2 days later. If the cause of non-fulfillment of the contract is due to a fortuitous event, it has to be the sole and only cause (Art. 1755 CC., Art. 1733 C.C.) Since part of the failure to comply with the obligation of common carrier to deliver its passengers safely to their destination lay in the defendant's failure to provide comfort and convenience to its stranded passengers using extra-ordinary diligence, the cause of non-fulfillment is not solely and exclusively due to fortuitous event, but due to something which defendant airline could have prevented, defendant becomes liable to plaintiff. 23 While we find PAL remiss in its duty of extending utmost care to private respondent while being stranded in Cotabato City, there is no sufficient basis to conclude that PAL failed to inform him about his non-accommodation on Flight 560, or that it was inattentive to his queries relative thereto.

Aforesaid Report being an entry in the course of business is prima facie evidence of the facts therein stated. Private respondent, apart from his testimony, did not offer any controverting evidence. If indeed PAL omitted to give information about the options available to its diverted passengers, it would have been deluged with complaints. But, only private respondent complained — Atty. Rivera (for PAL) Q I understand from you Mr. Zapatos that at the time you were waiting at Cotabato Airport for the decision of PAL, you were not informed of the decision until after the airplane left is that correct? A COURT: Q What do you mean by "yes"? You meant you were not informed? A Yes, I was not informed of their decision, that they will only accommodate few passengers. Q Aside from you there were many other stranded passengers? A

3. Of the fifteen stranded passengers two pax elected to take F478 on August 05, three pax opted to take F442 August 03. The remaining ten (10) including subject requested that they be instead accommodated (sic) on F446 CBO-IGN the following day where they intended to take the surface transportation to OZC. Mr. Pedro Zapatos had by then been very vocal and boiceterous (sic) at the counter and we tactfully managed to steer him inside the Station Agent's office. Mr. Pedro Zapatos then adamantly insisted that all the diverted passengers should have been given priority over the originating passengers of F560 whether confirmed or otherwise. We explained our policies and after awhile he seemed pacified and thereafter took his ticket (inlieued (sic) to CBO-IGN, COCON basis), at the counter in the presence of five other passengers who were waiting for their tickets too. The rest of the diverted pax had left earlier after being assured their tickets will be ready the following day. 24

I believed, yes.

Q And you want us to believe that PAL did not explain (to) any of these passengers about the decision regarding those who will board the aircraft back to Cebu? A

No, Sir.

Q Despite these facts Mr. Zapatos did any of the other passengers complained (sic) regarding that incident? xxx

On 3 August 1975, the Station Agent reported to his Branch Manager in Cotabato City that —

Yes.

xxx

xxx

A There were plenty of argument and I was one of those talking about my case. Q Did you hear anybody complained (sic) that he has not been informed of the decision before the plane left for Cebu? A

No. 25

Admittedly, private respondent's insistence on being given priority in accommodation was unreasonable considering the fortuitous event and that there was a sequence to be observed in the booking, i.e., in the order the passengers checked-in at their port of origin. His intransigence in fact was the main cause for his having to stay at the airport longer than was necessary. Atty. Rivera:

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Q And, you were saying that despite the fact that according to your testimony there were at least 16 passengers who were stranded there in Cotabato airport according to your testimony, and later you said that there were no other people left there at that time, is that correct? A Yes, I did not see anyone there around. I think I was the only civilian who was left there. Q place?

Why is it that it took you long time to leave that

A 26

Because I was arguing with the PAL personnel.

Anent the plaint that PAL employees were disrespectful and inattentive toward private respondent, the records are bereft of evidence to support the same. Thus, the ruling of respondent Court of Appeals in this regard is without basis. 27 On the contrary, private respondent was attended to not only by the personnel of PAL but also by its Manager." 28

Trans-Asia Shipping v. CA Mar 4, 1996 [G.R. No. 118126. March 4, 1996] TRANS-ASIA SHIPPING LINES, INC., petitioner, vs. COURT OF APPEALS and ATTY. RENATO T. ARROYO, respondents. DECISION DAVIDE, JR., J.: As formulated by the petitioner, the issue in this petition for review on certiorari under Rule 45 of the Rules of Court is as follows: In case of interruption of a vessel’s voyage and the consequent delay in that vessel’s arrival at its port of destination, is the right of a passenger affected thereby to be determined and governed by the vague Civil Code provision on common carriers, or shall it be, in the absence of a specific provision thereon, governed by Art. 698 of the Code of Commerce?[1] The petitioner considers it a “novel question of law.”

In the light of these findings, we find the award of moral damages of Fifty Thousand Pesos (P50,000.00) unreasonably excessive; hence, we reduce the same to Ten Thousand Pesos (P10,000.00). Conformably herewith, the award of exemplary damages is also reduced to five Thousand Pesos (5,000.00). Moral damages are not intended to enrich the private respondent. They are awarded only to enable the injured party to obtain means, diversion or amusements that will serve to alleviate the moral suffering he has undergone by reason of the defendant's culpable action. 29 With regard to the award of actual damages in the amount of P5,000.00 representing private respondent's alleged business losses occasioned by his stay at Cotabato City, we find the same unwarranted. Private respondent's testimony that he had a scheduled business "transaction of shark liver oil supposedly to have been consummated on August 3, 1975 in the morning" and that "since (private respondent) was out for nearly two weeks I missed to buy about 10 barrels of shark liver oil," 30 are purely speculative. Actual or compensatory damages cannot be presumed but must be duly proved with reasonable degree of certainty. A court cannot rely on speculation, conjecture or guesswork as to the fact and amount of damages, but must depend upon competent proof that they have suffered and on evidence of the actual amount thereof. 31 WHEREFORE the decision appealed from is AFFIRMED with modification however that the award of moral damages of Fifty Thousand Pesos (P50,000.00) is reduced to Ten Thousand Pesos (P10,000.00) while the exemplary damages of Ten Thousand Pesos (P10,000.00) is also reduced to Five Thousand Pesos (P5,000.00). The award of actual damages in the amount Five Thousand Pesos (P5,000.00) representing business losses occasioned by private respondent's being stranded in Cotabato City is deleted.

Upon a closer evaluation, however, of the challenged decision of the Court of Appeals of 23 November 1994,[2] vis-a-vis, the decision of 29 June 1992 in Civil Case No. 91-491 of the Regional Trial Court (RTC) of Cagayan de Oro City, Branch 24,[3] as well as the allegations and arguments adduced by the parties, we find the petitioner’s formulation of the issue imprecise. As this Court sees it, what stands for resolution is a common carrier’s liability for damages to a passenger who disembarked from the vessel upon its return to the port of origin, after it suffered engine trouble and had to stop at sea, having commenced the contracted voyage on one engine. The antecedents are summarized by the Court of Appeals as follows: Plaintiff [herein private respondent Atty. Renato Arroyo], a public attorney, bought a ticket [from] defendant [herein petitioner], a corporation engaged in x x x inter-island shipping, for the voyage of M/V Asia Thailand vessel to Cagayan de Oro City from Cebu City on November 12, 1991. At around 5:30 in the evening of November 12, 1991, plaintiff boarded the M/V Asia Thailand vessel. At that instance, plaintiff noticed that some repair works [sic] were being undertaken on the engine of the vessel. The vessel departed at around 11:00 in the evening with only one (1) engine running. After an hour of slow voyage, the vessel stopped near Kawit Island and dropped its anchor thereat. After half an hour of stillness, some passengers demanded that they should be allowed to return to Cebu City for they were no longer willing to continue their voyage to Cagayan de Oro City. The captain acceded [sic] to their request and thus the vessel headed back to Cebu City.

SO ORDERED.

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At Cebu City, plaintiff together with the other passengers who requested to be brought back to Cebu City, were allowed to disembark. Thereafter, the vessel proceeded to Cagayan de Oro City. Plaintiff, the next day, boarded the M/V Asia Japan for its voyage to Cagayan de Oro City, likewise a vessel of defendant. On account of this failure of defendant to transport him to the place of destination on November 12, 1991, plaintiff filed before the trial court a complaint for damages against defendant.[4] In his complaint, docketed as Civil Case No. 91-491, plaintiff (hereinafter private respondent) alleged that the engines of the M/V Asia Thailand conked out in the open sea, and for more than an hour it was stalled and at the mercy of the waves, thus causing fear in the passengers. It sailed back to Cebu City after it regained power, but for unexplained reasons, the passengers, including the private respondent, were arrogantly told to ‘disembark without the necessary precautions against possible injury to them. They were thus unceremoniously dumped, which only exacerbated the private respondent’s mental distress. He further alleged that by reason of the petitioner’s wanton, reckless, and willful acts, he was unnecessarily exposed to danger and, having been stranded in Cebu City for a day, incurred additional expenses and loss of income. He then prayed that he be awarded P1,100.00, P50,000.00, and P25,000.00 as compensatory, moral, and exemplary damages, respectively.[5] In his pre-trial brief, the private respondent asserted that his complaint was “an action for damage&arising from bad faith, breach of contract and from tort,” with the former arising from the petitioner’s “failure to carry [him] to his place of destination as contracted,” while the latter from the “conduct of the [petitioner] resulting [in] the infliction of emotional distress” to the private respondent.[6] After due trial, the trial court rendered its decision[7] and ruled that the action was only for breach of contract, with Articles 1170, 1172, and 1173 of the Civil Code as applicable law - not Article 2180 of the same Code. It was of the opinion that Article 1170 made a person liable for damages if, in the performance of his obligation, he was guilty of fraud, negligence, or delay, or in any manner contravened the tenor thereof; moreover, pursuant to Article 2201 of the same Code, to be entitled to damages, the non-performance of the obligation must have been tainted not only by fraud, negligence, or delay, but also bad faith, malice, and wanton attitude. It then disposed of the case as follows: WHEREFORE, it not appearing from the evidence that plaintiff was left in the Port of Cebu because of the fault, negligence, malice or wanton attitude of defendant’s employees, the complaint is DISMISSED. Defendant’s counterclaim is likewise dismissed it not appearing also that filing of the case by plaintiff was motivated by malice or bad faith.[8]

The trial court made the following findings to support its disposition: In the light of the evidence adduced by the parties and of the above provisions of the New Civil Code, the issue to be resolved, in the resolution of this case is whether or not, defendant thru its employee in [sic] the night of November 12, 1991, committed fraud, negligence, bad faith or malice when it left plaintiff in the Port of Cebu when it sailed back to Cagayan de Oro City after it has [sic] returned from Kawit Island. Evaluation of the evidence of the parties tended to show nothing that defendant committed fraud. As early as 3:00 p.m. of November 12, 1991, defendant did not hide the fact that the cylinder head cracked. Plaintiff even saw during its repair. If he had doubts as to the vessel’s capacity to sail, he had time yet to take another boat. The ticket could be returned to defendant and corresponding cash [would] be returned to him. Neither could negligence, bad faith or malice on the part of defendant be inferred from the evidence of the parties. When the boat arrived at [the] Port of Cebu after it returned from Kawit Island, there was an announcement that passengers who would like to disembark were given ten (10) minutes only to do so. By this announcement, it could be inferred that the boat will [sic] proceed to Cagayan de Oro City. If plaintiff entertained doubts, he should have asked a member of the crew of the boat or better still, the captain of the boat. But as admitted by him, he was of the impression only that the boat will not proceed to Cagayan de Oro that evening so he disembarked. He was instead, the ones [sic] negligent. Had he been prudent, with the announcement that those who will disembark were given ten minutes only, he should have lingered a little by staying in his cot and inquired whether the boat will proceed to Cagayan de Oro City or not. Defendant cannot be expected to be telling [sic] the reasons to each passenger. Announcement by microphone was enough. The court is inclined to believe that the story of defendant that the boat returned to the Port of Cebu because of the request of the passengers in view of the waves. That it did not return because of the defective engines as shown by the fact that fifteen (15) minutes after the boat docked [at] the Port of Cebu and those who wanted to proceed to Cagayan de Oro disembarked, it left for Cagayan de Oro City. The defendant got nothing when the boat returned to Cebu to let those who did not want to proceed to Cagayan de Oro City including plaintiff disembarked. On the contrary, this would mean its loss instead because it will have to refund their tickets or they will use it the next trip without paying anymore. It is hard therefore, to imagine how defendant by leaving plaintiff in Cebu could have acted in bad faith, negligently, want only and with malice. If plaintiff, therefore, was not able to [m]ake the trip that night of November 12, 1991, it was not because defendant maliciously did it to exclude him [from] the trip. If he was left, it was because of his fault or negligence.[9]

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Unsatisfied, the private respondent appealed to the Court of Appeals (CA-G.R. CV No. 39901) and submitted for its determination the following assignment of errors: (1) the trial court erred in not finding that the defendant-appellee was guilty of fraud, delay, negligence, and bad faith; and (2) the trial court erred in not awarding moral and exemplary damages.[10] In its decision of 23 November 1994,[11] the Court of Appeals reversed the trial court’s decision by applying Article 1755 in relation to Articles 2201, 2208, 2217, and 2232 of the Civil Code and, accordingly, awarded compensatory, moral, and exemplary damages as follows: WHEREFORE, premises considered, the appealed decision is hereby REVERSED and SET ASIDE and another one is rendered ordering defendant-appellee to pay plaintiffappellant: 1. 2. 3. 4.

P20,000.00 as moral damages; P10,000.00 as exemplary damages; P5,000.00 as attorney’s fees; Cost of suit.

SO ORDERED.[12] It did not, however, allow the grant of damages for the delay in the performance of the petitioner’s obligation as the requirement of demand set forth in Article 1169 of the Civil Code had not been met by the private respondent. Besides, it found that the private respondent offered no evidence to prove that his contract of carriage with the petitioner provided for liability in case of delay in departure, nor that a designation of the time of departure was the controlling motive for the establishment of the contract. On the latter, the court a quo observed that the private respondent even admitted he was unaware of the vessel’s departure time, and it was only when he boarded the vessel that he became aware of such. Finally, the respondent Court found no reasonable basis for the private respondent’s belief that demand was useless because the petitioner had rendered it beyond its power to perform its obligation; on the contrary, he even admitted that the petitioner had been assuring the passengers that the vessel would leave on time, and that it could still perform its obligation to transport them as scheduled. To justify its award of damages, the Court of Appeals ratiocinated as follows: It is an established and admitted fact that the vessel before the voyage had undergone some repair work on the cylinder head of the engine. It is likewise admitted by defendant-appellee that it left the port of Cebu City with only one engine running. Defendant-appellee averred: x x x The dropping of the vessel’s anchor after running slowly on only one engine when it departed earlier must have alarmed some nervous passengers x x x

The entries in the logbook which defendant-appellee itself offered as evidence categorically stated therein that the vessel stopped at Kawit Island because of engine trouble. It reads: 2330 HRS STBD ENGINE EMERGENCY STOP 2350 HRS DROP ANCHOR DUE TO. ENGINE TROUBLE, 2 ENGINE STOP. The stoppage was not to start and synchronized [sic] the engines of the vessel as claimed by defendant-appellee. It was because one of the engines of the vessel broke down; it was because of the disability of the vessel which from the very beginning of the voyage was known to defendantappellee. Defendant-appellee from the very start of the voyage knew for a fact that the vessel was not yet in its sailing condition because the second engine was still being repaired. Inspite of this knowledge, defendant-appellee still proceeded to sail with only one engine running. Defendant-appellee at that instant failed to exercise the diligence which all common carriers should exercise in transporting or carrying passengers. The law does not merely require extraordinary diligence in the performance of the obligation. The law mandates that common carrier[s] should exercise utmost diligence in the transport of passengers. Article 1755 of the New Civil Code provides: 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. Utmost diligence of a VERY CAUTIOUS person dictates that defendant-appellee should have pursued the voyage only when its vessel was already fit to sail. Defendantappellee should have made certain that the vessel [could] complete the voyage before starting [to] sail. Anything less than this, the vessel [could not] sail x x x with so many passengers on board it. However, defendant-appellant [sic] in complete disregard of the safety of the passengers, chose to proceed with its voyage even if only one engine was running as the second engine was still being repaired during the voyage. Defendant-appellee disregarded the not very remote possibility that because of the disability of the vessel, other problems might occur which would endanger the lives of the passengers sailing with a disabled vessel. As expected, x x x engine trouble occurred. Fortunate[ly] for defendant-appellee, such trouble only necessitated the stoppage of the vessel and did not cause the vessel to capsize. No wonder why some passengers requested to be brought back to Cebu City. Common carriers which are mandated to exercise utmost diligence should not be taking these risks.

141

On this premise, plaintiff-appellant should not be faulted why he chose to disembark from the vessel with the other passengers when it returned back to Cebu City. Defendantappellee may call him a very “panicky passenger” or a “nervous person,” but this will not relieve defendantappellee from the liability it incurred for its failure to exercise utmost diligence.[13] xxx

xxx

xxx

As to the second assigned error, we find that plaintiffappellant is entitled to the award of moral and exemplary damages for the breach committed by defendant-appellee. As discussed, defendant-appellee in sailing to Cagayan de Oro City with only one engine and with full knowledge of the true condition of the vessel, acted in bad faith with malice, in complete disregard for the safety of the passengers and only for its own personal advancement/interest. The Civil Code provides: Art 2201. xxx

xxx

xxx

In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for all damages which may be reasonably attributed to the non-performance of the obligation. Plaintiff-appellant is entitled to moral damages for the mental anguish, fright and serious anxiety he suffered during the voyage when the vessel’s engine broke down and when he disembarked from the vessel during the wee hours of the morning at Cebu City when it returned.[14] Moral damages are recoverable in a damage suit predicated upon a breach of contract of carriage where it is proved that the carrier was guilty of fraud or bad faith even if death does not result.[15] Fraud and bad faith by defendant-appellee having been established, the award of moral damages is in order.[16] To serve as a deterrent to the commission of similar acts in the future, exemplary damages should be imposed upon defendant-appellee.[17] Exemplary damages are designed by our civil law to permit the courts to reshape behavior that is socially deleterious in its consequence by creating x x x negative incentives or deterrents against such behavior. [18] Moral damages having been awarded, exemplary damages maybe properly awarded. When entitlement to moral damages has been established, the award of exemplary damages is proper.[19] The petitioner then instituted this petition and submitted the question of law earlier adverted to.

Undoubtedly, there was, between the petitioner and the private respondent, a contract of common carriage. The laws of primary application then are the provisions on common carriers under Section 4, Chapter 3, Title VIII, Book IV of the Civil Code, while for all other matters not regulated thereby, the Code of Commerce and special laws. [20] Under Article 1733 of the Civil Code, the petitioner was bound to observe extraordinary diligence in ensuring the safety of the private respondent. That meant that the petitioner was, pursuant to Article 1755 of the said Code, bound to carry the private respondent safely as far as human care and foresight could provide, using the utmost diligence of very cautious persons, with due regard for all the circumstances. In this case, we are in full accord with the Court of Appeals that the petitioner failed to discharge this obligation. Before commencing the contracted voyage, the petitioner undertook some repairs on the cylinder head of one of the vessel’s engines. But even before it could finish these repairs, it allowed the vessel to leave the port of origin on only one functioning engine, instead of two. Moreover, even the lone functioning engine was not in perfect condition as sometime after it had run its course, it conked out. This caused the vessel to stop and remain adrift at sea, thus in order to prevent the ship from capsizing, it had to drop anchor. Plainly, the vessel was unseaworthy even before the voyage began. For a vessel to be seaworthy, it must be adequately equipped for the voyage and manned with a sufficient number of competent officers and crew. [21] The failure of a common carrier to maintain in seaworthy condition its vessel involved in a contract of carriage is a clear breach of is duty prescribed in Article 1755 of the Civil Code. As to its liability for damages to the private respondent, Article 1764 of the Civil Code expressly provides: ART. 1764. Damages in cases comprised in this Section shall be awarded in accordance with Title XVIII of this Book, concerning Damages. Article 2206 shall also apply to the death of a passenger caused by the breach of contract by common carrier. The damages comprised in Title XVIII of the Civil Code are actual or compensatory, moral, nominal, temperate or moderate, liquidated, and exemplary. In his complaint, the private respondent claims actual or compensatory, moral, and exemplary damages. Actual or compensatory damages represent the adequate compensation for pecuniary loss suffered and for profits the obligee failed to obtain.[22] In contracts or quasi-contracts, the obligor is liable for all the damages which may be reasonably attributed to the non-performance of the obligation if he is guilty of fraud, bad faith, malice, or wanton attitude.[23]

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Moral damages include moral suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, or similar injury. They may be recovered in the cases enumerated in Article 2219 of the Civil Code, likewise, if they are the proximate result of, as in this case, the petitioner’s breach of the contract of carriage.[24] Anent a breach of a contract of common carriage, moral damages may be awarded if the common carrier, like the petitioner, acted fraudulently or in bad faith.[25] Exemplary damages are imposed by way of example or correction for the public good, in addition to moral, temperate, liquidated or compensatory damages.[26] In contracts and quasi-contracts, exemplary damages may be awarded if the defendant acted in a wanton fraudulent, reckless, oppressive or malevolent manner.[27] It cannot, however, be considered as a matter of right; the court having to decide whether or not they should be adjudicated. [28] Before the court may consider an award for exemplary damages, the plaintiff must first show that he is entitled to moral, temperate or compensatory damages; but it is not necessary that he prove the monetary value thereof.[29] The Court of Appeals did not grant the private respondent actual or compensatory damages, reasoning that no delay was incurred since there was no demand, as required by Article 1169 of the Civil Code. This article, however, finds no application in this case because, as found by the respondent Court, there was in fact no delay in the commencement of the contracted voyage. If any delay was incurred, it was after the commencement of such voyage, more specifically, when the voyage was subsequently interrupted when the vessel had to stop near Kawit Island after the only functioning engine conked out. As to the rights and duties of the parties strictly arising out of such delay, the Civil Code is silent. However, as correctly pointed out by the petitioner, Article 698 of the Code of Commerce specifically provides for such a situation. It reads:

together with Articles 2199, 2200, 2201, and 2208 in relation to Article 21 of the Civil Code. So read, it means that the petitioner is liable for any pecuniary loss or loss of profits which the private respondent may have suffered by reason thereof. For the private respondent, such would be the loss of income if unable to report to his office on the day he was supposed to arrive were it not for the delay. This, however, assumes that he stayed on the vessel and was with it when it thereafter resumed its voyage; but he did not. As he and some passengers resolved not to complete the voyage, the vessel had to return to its port of origin and allow them to disembark. The private respondent then took the petitioner’s other vessel the following day, using the ticket he had purchased for the previous day’s voyage. Any further delay then in the private respondent’s arrival at the port of destination was caused by his decision to disembark. Had he remained on the first vessel, he would have reached his destination at noon of 13 November 1991, thus been able to report to his office in the afternoon. He, therefore, would have lost only the salary for half of a day. But actual or compensatory damages must be proved,[30] which the private respondent failed to do. There is no convincing evidence that he did not receive his salary for 13 November 1991 nor that his absence was not excused. We likewise fully agree with the Court of Appeals that the petitioner is liable for moral and exemplary damages. In allowing its unseaworthy M/V Asia Thailand to leave the port of origin and undertake the contracted voyage, with full awareness that it was exposed to perils of the sea, it deliberately disregarded its solemn duty to exercise extraordinary diligence and obviously acted with bad faith and in a wanton and reckless manner. On this score, however, the petitioner asserts that the safety of the vessel and passengers was never at stake because the sea was “calm” in the vicinity where it stopped as faithfully recorded in the vessel’s log book (Exhibit “4”). Hence, the petitioner concludes, the private respondent was merely ‘over-reacting” to the situation obtaining then.[31]

This article applies suppletorily pursuant to Article 1766 of the Civil Code.

We hold that the petitioner’s defense cannot exculpate it nor mitigate its liability. On the contrary, such a claim demonstrates beyond cavil the petitioner’s lack of genuine concern for the safety of its passengers. It was, perhaps, only providential that the sea happened to be calm. Even so, the petitioner should not expect its passengers to act in the manner it desired. The passengers were not stoics; becoming alarmed, anxious, or frightened at the stoppage of a vessel at sea in an unfamiliar zone at nighttime is not the sole prerogative of the faint-hearted. More so in the light of the many tragedies at sea resulting in the loss of lives of hopeless passengers and damage to property simply because common carriers failed in their duty to exercise extraordinary diligence in the performance of their obligations.

Of course, this does not suffice for a resolution of the case at bench for, as earlier stated, the cause of the delay or interruption was the petitioner’s failure to observe extraordinary diligence. Article 698 must then be read

We cannot, however, give our affirmance to the award of attorney’s fees. Under Article 2208 of the Civil Code, these are recoverable only in the concept of actual damages,[32] not as moral damages[33] nor judicial costs.[34] Hence, to

In case a voyage already begun should be interrupted, the passengers shall be obliged to pay the fare in proportion to the distance covered, without right to recover for losses and damages if the interruption is due to fortuitous event or force majeure, but with a right to indemnity if the interruption should have been caused by the captain exclusively. If the interruption should be caused by the disability of the vessel and a passenger should agree to await the repairs, he may not be required to pay any increased price of passage, but his living expenses during the stay shall be for his own account.

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merit such an award, it is settled that the amount thereof must be proven.[35] Moreover, such must be specifically prayed for - as was not done in this case - and may not be deemed incorporated within a general prayer for “such other relief and remedy as this court may deem just and equitable.”[36] Finally, it must be noted that aside from the following, the body of the respondent Court’s decision was devoid of any statement regarding attorney’s fees: Plaintiff-appellant was forced to litigate in order that he can claim moral and exemplary damages for the suffering he encurred [sic]. He is entitled to attorney’s fees pursuant to Article 2208 of the Civil Code. It states: Article 2208. In the absence of stipulation, attorney’ s fees and expenses of litigation, other than judicial costs cannot be recovered except:

of fault or negligence on the part of the common carrier. This statutory presumption may only be overcome by evidence that the carrier exercised extraordinary diligence as prescribed in Articles 1733 and 1755 of the Civil Code. The records are bereft of any proof to show that Baliwag exercised extraordinary diligence. On the contrary, the evidence demonstrates its driver's recklessness. Leticia Garcia testified that the bus was running at a very high speed despite the drizzle and the darkness of the highway. The passengers pleaded for its driver to slow down, but their plea was ignored. Leticia also revealed that the driver was smelling of liquor. She could smell him as she was seated right behind the driver. Another passenger, Felix Cruz testified that immediately before the collision, the bus driver was conversing with a co-employee. All these prove the bus driver's wanton disregard for the physical safety of his passengers, which make Baliwag as a common carrier liable for damages under Article 1759 of the Civil Code.

1. When exemplary damages are awarded; 2. When the defendant’s act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest. This Court holds that the above does not satisfy the benchmark of “factual, legal and equitable justification” needed as basis for an award of attorney’s fees.[37] In sum, for lack of factual and legal basis, the award of attorney’s fees must be deleted. WHEREFORE, the instant petition is DENIED and the challenged decision of the Court of Appeals in CA-G.R. CV No. 39901 is AFFIRMED subject to the modification as to the award for attorney’s fees which is hereby SET ASIDE. Costs against the petitioner. SO ORDERED. Baliwag Transit v. CA May 15, 1996 [G.R. No. 116110. May 15,1996] BALIWAG TRANSIT, INC., petitioner, vs. COURT OF APPEALS, SPOUSES ANTONIO GARCIA & LETICIA GARCIA, A & J TRADING, AND JULIO RECONTIQUE, respondents. SYLLABUS 1. CIVIL LAW; CONTRACTS; SPECIAL CONTRACTS; COMMON CARRIERS; LIABILITY FOR DAMAGES; ESTABLISHED IN CASE AT BAR. – As a common carrier, Baliwag breached its contract of carriage when it failed to deliver its passengers, Leticia and Allan Garcia to their destination safe and sound. A common carrier is bound to carry its passengers safely as far as human care and foresight can provide, using the utmost diligence of a very cautious person, with due regard for all the circumstances. In a contract of carriage, it is presumed that the common carrier was at fault or was negligent when a passenger dies or is injured. Unless the presumption is rebutted, the court need not even make an express finding

2. ID.; ID.; ID.; ID.; LAND TRANSPORTATION AND TRAFFIC CODE; SECTION 34(g) THEREOF; SUBSTANTIALLY COMPLIED WITH IN CASE AT BAR. – Baliwag cannot evade its liability by insisting that the accident was caused solely by the negligence of A & J Trading and Julio Recontique. It harps on their alleged non use of early warning device as testified to by Col. Demetrio dela Cruz, the station commander of Gapan, Nueva Ecija who investigated the incident, and Francisco Romano, the bus conductor. The records do not bear out Baliwag's 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 Transportation Office. However, the evidence shows that Recontique and Ecala placed a kerosene lamp or torch at the edge of the road, near the rear portion of the truck to serve as an early warning device. This substantially complies with Section 34 (g) of the Land Transportation and Traffic Code, to wit: "(g) lights and reflector when parked or disabled. – Appropriate parking lights or flares visible one hundred meters away shall be displayed at the corner of the vehicle whenever such vehicle is parked on highways or in places that are not well-lighted or, is placed in such manner as to endanger passing traffic. Furthermore, every motor vehicle shall be provided at all times with built-in reflectors or other similar warning devices either pasted, painted or attached at its front and back which shall likewise be visible at night at least one hundred meters away. No vehicle not provided with any of the requirements mentioned in this subsection shall be registered." Baliwag's argument that the kerosene lamp or torch does not substantially comply with the law is untenable. The aforequoted law clearly allows the use not only of an early warning device of the triangular reflectorized plates variety but also parking lights or flares visible one hundred meters away. Indeed, Col. dela Cruz himself admitted that a kerosene lamp is an acceptable substitute for the reflectorized plates. No negligence, therefore, may be imputed to A & J Trading and its driver, Recontique. 3. ID.; DAMAGES; To PROVE ACTUAL DAMAGES, THE BEST EVIDENCE AVAILABLE TO THE PARTIES

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MUST BE PRESENTED. – The propriety of the amount awarded as hospitalization and medical fees. The award of P25,000.00 is not supported by the evidence on record. The Garcias presented receipts marked as Exhibits "B-1 " to "B-42" but their total amounted only to P5,017.74. To be sure, Leticia testified as to the extra amount spent for her medical needs but without more reliable evidence, her lone testimony cannot justify the award of P25,000.00. To prove actual damages, the best evidence available to the injured party must be presented. The court cannot rely on uncorroborated testimony whose truth is suspect, but must depend upon competent proof that damages have been actually suffered. Thus, we reduce the actual damages for medical and hospitalization expenses to P5,017.74. 4. ID.; ID.; MORAL DAMAGES; RECOVERABLE IF THE CARRIER THROUGH ITS AGENT, ACTED FRAUDULENTLY OR IN BAD FAITH. – The award of moral damages is in accord with law. In a breach of contract of carriage, moral damages are recoverable if the carrier, through its agent, acted fraudulently or in bad faith. The evidence shows the gross negligence of the driver of Baliwag bus which amounted to bad faith. Without doubt, Leticia and Allan experienced physical suffering, mental anguish and serious anxiety by reason of the accident. APPEARANCES OF COUNSEL Leopoldo C. Sta. Maria for Baliwag Transit, Inc. Arturo D. Vallar for Sps. Antonio & Leticia Garcia. Allan A. Leynes for A & J Trading, and Julio Recontique. DECISION PUNO, J.: This is a petition for certiorari to review the Decision[1] of the Court of Appeals in CA-G.R. CV-31246 awarding damages in favor of the spouses Antonio and Leticia Garcia for breach of contract of carriage.[2] filed by the spouses Garcia questioning the same Court of Appeals' Decision which reduced their award of damages. On November 13, 1995, we denied their petition for review. The records show that on July 31, 1980, Leticia Garcia, and her five-year old son, Allan Garcia, boarded Baliwag Transit Bus No. 2036 bound for Cabanatuan City driven by Jaime Santiago. They took the seat behind the driver. At about 7:30 in the evening, in Malimba, Gapan, Nueva Ecija, the bus passengers saw a cargo truck parked at the shoulder of the national highway. Its left rear portion jutted to the outer lane, the shoulder of the road was too narrow to accommodate the whole truck. A kerosene lamp appeared at the edge of the road obviously to serve as a warning device. The truck driver, Julio Recontique, and his helper, Arturo Escala, were then replacing a flat tire. The truck is owned by respondent A & J Trading. Bus driver Santiago was driving at an inordinately fast speed and failed to notice the truck and the kerosene lamp at the edge of the road. Santiago's passengers urged him to slow down but he paid them no heed. Santiago even

carried animated conversations with his co-employees while driving. When the danger of collision became imminent, the bus passengers shouted "Babangga tayo!". Santiago stepped on the brake, but it was too late. His bus rammed into the stalled cargo truck. It caused the instant death of Santiago and Escala, and injury to several others. Leticia and Allan Garcia were among the injured passengers. Leticia suffered a fracture in her pelvis and right leg. They rushed her to the provincial hospital in Cabanatuan City where she was given emergency treatment. After three days, she was transferred to the National Orthopedic Hospital where she was confined for more than a month.[3] She underwent an operation for partial hip prosthesis.[4] Allan, on the other hand, broke a leg. He was also given emergency treatment at the provincial hospital. Spouses Antonio and Leticia Garcia sued Baliwag Transit, Inc., A & J Trading and Julio Recontique for damages in the Regional Trial Court of Bulacan.[5] Leticia sued as an injured passenger of Baliwag and as mother of Allan. At the time of the complaint, Allan was a minor, hence, the suit initiated by his parents in his favor. Baliwag, A & J Trading and Recontique disclaimed responsibility for the mishap. Baliwag alleged that the accident was caused solely by the fault and negligence of A & J Trading and its driver, Recontique. Baliwag charged that Recontigue failed to place an early warning device at the corner of the disabled cargo truck to warn oncoming vehicles.[6] On the other hand, A & J Trading and Recontique alleged that the accident was the result of the negligence and reckless driving of Santiago, bus driver of Baliwag.[7] After hearing, the trial court found all the defendants liable, thus: xxx

xxx

xxx

"In view thereof, the Court holds that both defendants should be held liable; the defendant Baliwag Transit, Inc. for having failed to deliver the plaintiff and her son to their point of destination safely in violation of plaintiff's and defendant Baliwag Transit's contractual relation. The defendant A & J and Julio Recontique for failure to provide its cargo truck with an early warning device in violation of the Motor Vehicle Law."[8] The trial court ordered Baliwag, A & J Trading and Recontique to pay jointly and severally the Garcia spouses the following: (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 attorney's fee.[9] On appeal, the Court of Appeals modified the trial court's Decision by absolving A & J Trading from liability and by

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reducing the award of attorney's fees to P10,000.00 and loss of earnings to P300,000.00, respectively.[10] Baliwag filed the present petition for review raising the following issues: “1. Did the Court of Appeals err in absolving A & J Trading from liability and holding Baliwag solely liable for the injuries suffered by Leticia and Allan Garcia in the accident? 2. Is the amount of damages awarded by the Court of Appeals to the Garcia spouses correct?” We affirm the factual findings of the Court of Appeals. I As a common carrier, Baliwag breached its contract of carriage when it failed to deliver its passengers, Leticia and Allan Garcia to their destination safe and sound. A common carrier is bound to carry its passengers safely as far as human care and foresight can provide, using the utmost diligence of a very cautious person, with due regard for all the circumstances.[11] In a contract of carriage, it is presumed that the common carrier was at fault or was negligent when a passenger dies or is injured. Unless the presumption is rebutted, the court need not even make an express finding of fault or negligence on the part of the common carrier. This statutory presumption may only be overcome by evidence that the carrier exercised extraordinary diligence as prescribed in Articles 1733 and 1755 of the Civil Code.[12]

Baliwag cannot evade its liability by insisting that the accident was caused solely by the negligence of A & J Trading and Julio Recontique. It harps on their alleged non use of an early warning device as testified to by Col. Demetrio dela Cruz, the station commander of Gapan, Nueva Ecija who investigated the incident, and Francisco Romano, the bus conductor. The records do not bear out Baliwag's contention. Col. dela Cruz and Romano testified that they did not see any early warning device at the scene of the accident.[16] They were referring to the triangular reflectorized plates in red and yellow issued by the Land Transportation Office. However, the evidence shows that Recontique and Ecala placed a kerosene lamp or torch at the edge of the road, near the rear portion of the truck to serve as an early warning device.[17] This substantially complies with Section 34 (g) of the Land Transportation and Traffic Code, to wit: “(g) Lights and reflector when parked or disabled. – Appropriate parking lights or flares visible one hundred meters away shall be displayed at the corner of the vehicle whenever such vehicle is parked on highways or in places that are not well-lighted or, is placed in such manner as to endanger passing traffic. Furthermore, every motor vehicle shall be provided at all times with built-in reflectors or other similar warning devices either pasted, painted or attached at its front and back which shall likewise be visible at night at least one hundred meters away. No vehicle not provided with any of the requirements mentioned in this subsection shall be registered. (Italics supplied)”

The records are bereft of any proof to show that Baliwag exercised extraordinary diligence. On the contrary, the evidence demonstrates its driver's recklessness. Leticia Garcia testified that the bus was running at a very high speed despite the drizzle and the darkness of the highway. The passengers pleaded for its driver to slow down, but their plea was ignored.[13] Leticia also revealed that the driver was smelling of liquor.[14] She could smell him as she was seated right behind the driver. Another passenger, Felix Cruz testified that immediately before the collision, the bus driver was conversing with a co-employee.[15] All these prove the bus driver's wanton disregard for the physical safety of his passengers, which makes Baliwag as a common carrier liable for damages under Article 1759 of the Civil Code:

Baliwag's argument that the kerosene lamp or torch does not substantially comply with the law is untenable. The aforequoted law clearly allows the use not only of an early warning device of the triangular reflectorized plates variety but also parking lights or flares visible one hundred meters away. Indeed, Col. dela Cruz himself admitted that a kerosene lamp is an acceptable substitute for the reflectorized plates.[18] No negligence, therefore, may be imputed to A & J Trading and its driver, Recontique.

“Art. 1759. Common carriers are liable for the death of or injuries to passengers through the negligence or willfull acts of the former's employees, although such employees may have acted beyond the scope of their authority or in violation of the orders of the common carriers.

“In the case at bar, both the injured passengers of the Baliwag involved in the accident testified that they saw some sort of kerosene or a torch on the rear portion of the truck before the accident. Baliwag Transit's conductor attempted to defeat such testimony by declaring that he noticed no early warning device in front of the truck.

This liability of the common carriers do not cease upon proof that they exercised all the diligence of a good father of a family in the selection or supervision of their employees.”

Anent this factual issue, the analysis of evidence made by the Court of Appeals deserves our concurrence, viz: xxx

xxx

xxx

Among the testimonies offered by the witnesses who were present at the scene of the accident, we rule to uphold the affirmative testimonies given by the two injured passengers and give less credence to the testimony of the bus

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conductor who solely testified that no such early warning device exists.

actually suffered[20] Thus, we reduce the actual damages for medical and hospitalization expenses to P5,017.74.

The testimonies of injured passengers who may well be considered as disinterested witness appear to be natural and more probable than the testimony given by Francisco Romano who is undoubtedly interested in the outcome of the case, being the conductor of the defendant-appellant Baliwag Transit Inc.

Second, we find as reasonable the award of P300,000.00 representing Leticia's lost earnings. Before the accident, Leticia was engaged in embroidery, earning P5,000.00 per month.[21] Her injuries forced her to stop working. Considering the nature and extent of her injuries and the length of time it would take her to recover,[22] we find it proper that Baliwag should compensate her lost income for five (5) years.[23]

It must be borne in mind that the situation then prevailing at the time of the accident was admittedly drizzly and all dark. This being so, it would be improbable and perhaps impossible on the part of the truck helper without the torch nor the kerosene to remove the flat tires of the truck. Moreover, witness including the bits conductor himself admitted that the passengers shouted, that they are going to bump before the collision which consequently caused the bus driver to apply the brake 3 to 4 meters away from the truck. Again, without the kerosene nor the torch in front of the truck, it would be improbable for the driver, more so the passengers to notice the truck to be bumped by the bus considering the darkness of the place at the time of the accident. xxx x

xxx

xx

While it is true that the investigating officer testified that he found no early warning device at the time of his investigation, We rule to give less credence to such testimony insofar as he himself admitted on cross examination that he did not notice the presence of any kerosene lamp at the back of the truck because when he arrived at the scene of the accident, there were already many people surrounding the place (TSN, Aug, 22, 1989, p. 13). He further admitted that there exists a probability that the lights of the truck may have been smashed by the bus at the time of the accident considering the location of the truck where its rear portion was connected with the front portion of the bus (TSN, March 29, 1985, pp. 11-13). Investigator's testimony therefore did not confirm nor deny the existence of such warning device, making his testimony of little probative value.”[19] II We now review the amount of damages awarded to the Garcia spouses. First, the propriety of the amount awarded as hospitalization and medical fees. The award of P25,000.00 is not supported by the evidence on record. The Garcias presented receipts marked as Exhibits “B-1” to “B –42” but their total amounted only to P5,017.74. To be sure, Leticia testified as to the extra amount spent for her medical needs but without more reliable evidence, her lone testimony cannot justify the award of P25,000.00. To prove actual damages, the best evidence available to the injured party must be presented. The court cannot rely on uncorroborated testimony whose truth is suspect, but must depend upon competent proof that damages have been

Third, the award of moral damages is in accord with law. In a breach of contract of carriage, moral damages are recoverable if the carrier, through its agent, acted fraudulently or in bad faith.[24] The evidence shows the gross negligence of the driver of Baliwag bus which amounted to bad faith. Without doubt, Leticia and Allan experienced physical suffering, mental anguish and serious anxiety by reason of the accident. Leticia underwent an operation to replace her broken hip bone with a metal plate. She was confined at the National Orthopedic Hospital for 45 days. The young Allan was also confined in the hospital for his foot injury. Contrary to the contention of Baliwag, the decision of the trial court as affirmed by the Court of Appeals awarded moral damages to Antonio and Leticia Garcia not in their capacity as parents of Allan. Leticia was given moral damages as an injured party. Allan was also granted moral damages as an injured party but because of his minority, the award in his favor has to be given to his father who represented him in the suit. Finally, we find the award of attorney's fees justified. The complaint for damages was instituted by the Garcia spouses on December 15, 1982, following the unjustified refusal of Baliwag to settle their claim. The Decision was promulgated by the trial court only on January 29, 1991 or about nine years later. Numerous pleadings were filed before the trial court, the appellate court and to this Court. Given the complexity of the case and the amount of damages involved,[25] the award of attorney's fee for P10,000.00 is just and reasonable. IN VIEW WHEREOF, the Decision of the respondent Court of Appeals in CA-G.R. CV-31246 is AFFIRMED with the MODIFICATION reducing the actual damages for hospitalization and medical fees to P5,017.74. No costs. SO ORDERED. Negros NavigationCo., v. CA Nov 7, 1997 [G.R. No. 110398. November 7, 1997] NEGROS NAVIGATION CO., INC., petitioner, vs. THE COURT OF APPEALS, RAMON MIRANDA, SPS. RICARDO and VIRGINIA DE LA VICTORIA, respondents. DECISION MENDOZA, J.: This is a petition for review on certiorari of the decision of the Court of Appeals affirming with modification the

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Regional Trial Court’s award of damages to private respondents for the death of relatives as a result of the sinking of petitioner’s vessel. In April of 1980, private respondent Ramon Miranda purchased from the Negros Navigation Co., Inc. four special cabin tickets (#74411, 74412, 74413 and 74414) for his wife, daughter, son and niece who were going to Bacolod City to attend a family reunion. The tickets were for Voyage No. 457-A of the M/V Don Juan, leaving Manila at 1:00 p.m. on April 22, 1980. The ship sailed from the port of Manila on schedule. At about 10:30 in the evening of April 22, 1980, the Don Juan collided off the Tablas Strait in Mindoro, with the M/T Tacloban City, an oil tanker owned by the Philippine National Oil Company (PNOC) and the PNOC Shipping and Transport Corporation (PNOC/STC). As a result, the M/V Don Juan sank. Several of her passengers perished in the sea tragedy. The bodies of some of the victims were found and brought to shore, but the four members of private respondents’ families were never found.

WHEREFORE, in view of the foregoing, judgment is hereby rendered in favor of the plaintiffs, ordering all the defendants to pay jointly and severally to the plaintiffs damages as follows: To Ramon Miranda: P42,025.00 for actual damages; P152,654.55 as compensatory damages for loss of earning capacity of his wife; P90,000.00 as compensatory damages for wrongful death of three (3) victims; P300,000.00 as moral damages; P50,000.00 as exemplary damages, all in the total amount of P634,679.55; and P40,000.00 as attorney’s fees. To Spouses Ricardo and Virginia de la Victoria:

Private respondents filed a complaint on July 16, 1980 in the Regional Trial Court of Manila, Branch 34, against the Negros Navigation, the Philippine National Oil Company (PNOC), and the PNOC Shipping and Transport Corporation (PNOC/STC), seeking damages for the death of Ardita de la Victoria Miranda, 48, Rosario V. Miranda, 19, Ramon V. Miranda, Jr., 16, and Elfreda de la Victoria, 26.

P12,000.00 for actual damages;

In its answer, petitioner admitted that private respondents purchased ticket numbers 74411, 74412, 74413 and 74414; that the ticket numbers were listed in the passenger manifest; and that the Don Juan left Pier 2, North Harbor, Manila on April 22, 1980 and sank that night after being rammed by the oil tanker M/T Tacloban City, and that, as a result of the collision, some of the passengers of the M/V Don Juan died. Petitioner, however, denied that the four relatives of private respondents actually boarded the vessel as shown by the fact that their bodies were never recovered. Petitioner further averred that the Don Juan was seaworthy and manned by a full and competent crew, and that the collision was entirely due to the fault of the crew of the M/T Tacloban City.

P20,000.00 as exemplary damages, all in the total amount of P320,899.00; and

On January 20, 1986, the PNOC and petitioner Negros Navigation Co., Inc. entered into a compromise agreement whereby petitioner assumed full responsibility for the payment and satisfaction of all claims arising out of or in connection with the collision and releasing the PNOC and the PNOC/STC from any liability to it. The agreement was subsequently held by the trial court to be binding upon petitioner, PNOC and PNOC/STC. Private respondents did not join in the agreement. After trial, the court rendered judgment on February 21, 1991, the dispositive portion of which reads as follows:

P158,899.00 earning capacity;

as compensatory damages for loss of

P30,000.00 as compensatory damages for wrongful death; P100,000.00 as moral damages;

P15,000.00 as attorney’s fees. On appeal, the Court of Appeals[1] affirmed the decision of the Regional Trial Court with modification – 1. Ordering and sentencing defendants-appellants, jointly and severally, to pay plaintiff-appellee Ramon Miranda the amount of P23,075.00 as actual damages instead of P42,025.00; 2. Ordering and sentencing defendants-appellants, jointly and severally, to pay plaintiff-appellee Ramon Miranda the amount of P150,000.00, instead of P90,000.00, as compensatory damages for the death of his wife and two children; 3. Ordering and sentencing defendants-appellants, jointly and severally, to pay plaintiffs-appellees Dela Victoria spouses the amount of P50,000.00, instead of P30,000.00, as compensatory damages for the death of their daughter Elfreda Dela Victoria; Hence this petition, raising the following issues: (1) whether the members of private respondents’ families were actually passengers of the Don Juan;

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(2) whether the ruling in Mecenas v. Court of Appeals,[2] finding the crew members of petitioner to be grossly negligent in the performance of their duties, is binding in this case; (3) whether the total loss of the M/V Don Juan extinguished petitioner’s liability; and (4) whether the damages awarded by the appellate court are excessive, unreasonable and unwarranted. First. The trial court held that the fact that the victims were passengers of the M/V Don Juan was sufficiently proven by private respondent Ramon Miranda, who testified that he purchased tickets numbered 74411, 74412, 74413, and 74414 at P131.30 each from the Makati office of petitioner for Voyage No. 47-A of the M/V Don Juan, which was leaving Manila on April 22, 1980. This was corroborated by the passenger manifest (Exh. E) on which the numbers of the tickets and the names of Ardita Miranda and her children and Elfreda de la Victoria appear. Petitioner contends that the purchase of the tickets does not necessarily mean that the alleged victims actually took the trip. Petitioner asserts that it is common knowledge that passengers purchase tickets in advance but do not actually use them. Hence, private respondent should also prove the presence of the victims on the ship. The witnesses who affirmed that the victims were on the ship were biased and unreliable. This contention is without merit. Private respondent Ramon Miranda testified that he personally took his family and his niece to the vessel on the day of the voyage and stayed with them on the ship until it was time for it to leave. There is no reason he should claim members of his family to have perished in the accident just to maintain an action. People do not normally lie about so grave a matter as the loss of dear ones. It would be more difficult for private respondents to keep the existence of their relatives if indeed they are alive than it is for petitioner to show the contrary. Petitioner’s only proof is that the bodies of the supposed victims were not among those recovered from the site of the mishap. But so were the bodies of the other passengers reported missing not recovered, as this Court noted in the Mecenas[3] case. Private respondent Miranda’s testimony was corroborated by Edgardo Ramirez. Ramirez was a seminarian and one of the survivors of the collision. He testified that he saw Mrs. Miranda and Elfreda de la Victoria on the ship and that he talked with them. He knew Mrs. Miranda who was his teacher in the grade school. He also knew Elfreda who was his childhood friend and townmate. Ramirez said he was with Mrs. Miranda and her children and niece from 7:00 p.m. until 10:00 p.m. when the collision happened and that he in fact had dinner with them. Ramirez said he and Elfreda stayed on the deck after dinner and it was there where they were jolted by the collision of the two vessels. Recounting the moments after the collision, Ramirez testified that Elfreda ran to fetch Mrs. Miranda. He

escorted her to the room and then tried to go back to the deck when the lights went out. He tried to return to the cabin but was not able to do so because it was dark and there was a stampede of passengers from the deck. Petitioner casts doubt on Ramirez’ testimony, claiming that Ramirez could not have talked with the victims for about three hours and not run out of stories to tell, unless Ramirez had a “storehouse” of stories. But what is incredible about acquaintances thrown together on a long journey staying together for hours on end, in idle conversation precisely to while the hours away? Petitioner also points out that it took Ramirez three (3) days before he finally contacted private respondent Ramon Miranda to tell him about the fate of his family. But it is not improbable that it took Ramirez three days before calling on private respondent Miranda to tell him about the last hours of Mrs. Miranda and her children and niece, in view of the confusion in the days following the collision as rescue teams and relatives searched for survivors. Indeed, given the facts of this case, it is improper for petitioner to even suggest that private respondents’ relatives did not board the ill-fated vessel and perish in the accident simply because their bodies were not recovered. Second. In finding petitioner guilty of negligence and in failing to exercise the extraordinary diligence required of it in the carriage of passengers, both the trial court and the appellate court relied on the findings of this Court in Mecenas v. Intermediate Appellate Court,[4] which case was brought for the death of other passengers. In that case it was found that although the proximate cause of the mishap was the negligence of the crew of the M/T Tacloban City, the crew of the Don Juan was equally negligent as it found that the latter’s master, Capt. Rogelio Santisteban, was playing mahjong at the time of collision, and the officer on watch, Senior Third Mate Rogelio De Vera, admitted that he failed to call the attention of Santisteban to the imminent danger facing them. This Court found that Capt. Santisteban and the crew of the M/V Don Juan failed to take steps to prevent the collision or at least delay the sinking of the ship and supervise the abandoning of the ship. Petitioner Negros Navigation was found equally negligent in tolerating the playing of mahjong by the ship captain and other crew members while on board the ship and failing to keep the M/V Don Juan seaworthy so much so that the ship sank within 10 to 15 minutes of its impact with the M/T Tacloban City. In addition, the Court found that the Don Juan was overloaded. The Certificate of Inspection, dated August 27, 1979, issued by the Philippine Coast Guard Commander at Iloilo City stated that the total number of persons allowed on the ship was 864, of whom 810 are passengers, but there were actually 1,004 on board the vessel when it sank, 140 persons more than the maximum number that could be safely carried by it.

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Taking these circumstances together, and the fact that the M/V Don Juan, as the faster and better-equipped vessel, could have avoided a collision with the PNOC tanker, this Court held that even if the Tacloban City had been at fault for failing to observe an internationally-recognized rule of navigation, the Don Juan was guilty of contributory negligence. Through Justice Feliciano, this Court held: The grossness of the negligence of the “Don Juan” is underscored when one considers the foregoing circumstances in the context of the following facts: Firstly, the “Don Juan” was more than twice as fast as the “Tacloban City.” The “Don Juan’s” top speed was 17 knots; while that of the “Tacloban City” was 6.3. knots. Secondly, the “Don Juan” carried the full complement of officers and crew members specified for a passenger vessel of her class. Thirdly, the “Don Juan” 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 still four (4) nautical miles away. Visual confirmation of radar contact was established by the “Don Juan” while the “Tacloban City” was still 2.7 miles away. In the total set of circumstances which existed in the instant case, the “Don Juan,” had it taken seriously its duty of extraordinary diligence, could have easily avoided the collision with the “Tacloban City.” Indeed, the “Don Juan” 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 Road which requires two (2) power-driven vessels meeting end on or nearly end on each to alter her course to starboard (right) so that each vessel may pass on the port side (left) of the other. The “Tacloban City,” when the two (2) vessels were only threetenths (0.3) of a mile apart, turned (for the second time) 15o to port side while the “Don Juan” veered hard to starboard. . . . [But] “route observance” of the International Rules of the Road will not relieve a vessel from responsibility if the collision could have been avoided by proper care and skill on her part or even by a departure from the rules. In the petition at bar, the “Don Juan” having sighted the “Tacloban City” when it was still a long way 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 no necessity for passing so near to the “Tacloban City” as to create that hazard or inevitability, for the “Don Juan” could choose its own distance. It is noteworthy that the “Tacloban City,” upon turning hard to port shortly before the moment of collision, signalled its intention to do so by giving two (2) short blasts with its horn. The “Don Juan” gave no answering horn blast to signal its own intention and proceeded to turn hard to starboard. We conclude that Capt. Santisteban and Negros Navigation are properly held liable for gross negligence 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. . . .[5]

Petitioner criticizes the lower court’s reliance on the Mecenas case, arguing that, although this case arose out of the same incident as that involved in Mecenas, the parties are different and trial was conducted separately. Petitioner contends that the decision in this case should be based on the allegations and defenses pleaded and evidence adduced in it or, in short, on the record of this case. The contention is without merit. What petitioner contends may be true with respect to the merits of the individual claims against petitioner but not as to the cause of the sinking of its ship on April 22, 1980 and its liability for such accident, of which there can only be one truth. Otherwise, one would be subscribing to the sophistry: truth on one side of the Pyrenees, falsehood on the other! Adherence to the Mecenas case is dictated by this Court’s policy of maintaining stability in jurisprudence in accordance with the legal maxim “stare decisis et non quieta movere” (Follow past precedents and do not disturb what has been settled.) Where, as in this case, the same questions relating to the same event have been put forward by parties similarly situated as in a previous case litigated and decided by a competent court, the rule of stare decisis is a bar to any attempt to relitigate the same issue.[6] In Woulfe v. Associated Realties Corporation,[7] the Supreme Court of New Jersey held that where substantially similar cases to the pending case were presented and applicable principles declared in prior decisions, the court was bound by the principle of stare decisis. Similarly, in State ex rel. Tollinger v. Gill,[8] it was held that under the doctrine of stare decisis a ruling is final even as to parties who are strangers to the original proceeding and not bound by the judgment under the res judicata doctrine. The Philadelphia court expressed itself in this wise: “Stare decisis simply declares that, for the sake of certainty, a conclusion reached in one case should be applied to those which follow, if the facts are substantially the same, even though the parties may be different.”[9] Thus, in J. M. Tuason v. Mariano, supra, this Court relied on its rulings in other cases involving different parties in sustaining the validity of a land title on the principle of “stare decisis et non quieta movere.” Indeed, the evidence presented in this case was the same as those presented in the Mecenas case, to wit: Document This case Decision of Commandant Exh. 11-B-NN/X Phil. Coast Guard in BMI Case No. 415-80 dated 3/26/81 Decision of the Minister Exh. ZZ of National Defense dated 3/12/82 Resolution on the motion Exh. AAA for reconsideration (private respondents)

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Mecenas case Exh. 10[10]

Exh. 11[11] Exh. 13[12] of

the

decision of the Minister of National Defense dated 7/24/84 Certificate of inspection Exh. 19-NN dated 8/27/79 Certificate of Stability Exh. 19-D-NN dated 12/16/76

Mr. and Mrs. de la Victoria is likewise reasonable and should be affirmed. Exh. 1-A[13] Exh. 6-A[14]

Nor is it true that the trial court merely based its decision on the Mecenas case. The trial court made its own independent findings on the basis of the testimonies of witnesses, such as Senior Third Mate Rogelio de Vera, who incidentally gave substantially the same testimony on petitioner’s behalf before the Board of Marine Inquiry. The trial court agreed with the conclusions of the then Minister of National Defense finding both vessels to be negligent. Third. The next issue is whether petitioner is liable to pay damages notwithstanding the total loss of its ship. The issue is not one of first impression. The rule is wellentrenched in our jurisprudence that a shipowner may be held liable for injuries to passengers notwithstanding the exclusively real and hypothecary nature of maritime law if fault can be attributed to the shipowner.[15] In Mecenas, this Court found petitioner guilty of negligence in (1) allowing or tolerating the ship captain and crew members in playing mahjong during the voyage, (2) in failing to maintain the vessel seaworthy and (3) in allowing the ship to carry more passengers than it was allowed to carry. Petitioner is, therefore, clearly liable for damages to the full extent. Fourth. Petitioner contends that, assuming that the Mecenas case applies, private respondents should be allowed to claim only P43,857.14 each as moral damages because in the Mecenas case, the amount of P307,500.00 was awarded to the seven children of the Mecenas couple. Under petitioner’s formula, Ramon Miranda should receive P43,857.14, while the De la Victoria spouses should receive P97,714.28. Here is where the principle of stare decisis does not apply in view of differences in the personal circumstances of the victims. For that matter, differentiation would be justified even if private respondents had joined the private respondents in the Mecenas case. The doctrine of stare decisis works as a bar only against issues litigated in a previous case. Where the issue involved was not raised nor presented to the court and not passed upon by the court in the previous case, the decision in the previous case is not stare decisis of the question presently presented.[16] The decision in the Mecenas case relates to damages for which petitioner was liable to the claimants in that case. In the case at bar, the award of P300,000.00 for moral damages is reasonable considering the grief petitioner Ramon Miranda suffered as a result of the loss of his entire family. As a matter of fact, three months after the collision, he developed a heart condition undoubtedly caused by the strain of the loss of his family. The P100,000.00 given to

As for the amount of civil indemnity awarded to private respondents, the appellate court’s award of P50,000.00 per victim should be sustained. The amount of P30,000.00 formerly set in De Lima v. Laguna Tayabas Co.,[17] Heirs of Amparo delos Santos v. Court of Appeals,[18] and Philippine Rabbit Bus Lines, Inc. v. Intermediate Appellate Court[19] as benchmark was subsequently increased to P50,000.00 in the case of Sulpicio Lines, Inc. v. Court of Appeals,[20] which involved the sinking of another interisland ship on October 24, 1988. We now turn to the determination of the earning capacity of the victims. With respect to Ardita Miranda, the trial court awarded damages computed as follows:[21] In the case of victim Ardita V. Miranda whose age at the time of the accident was 48 years, her life expectancy was computed to be 21.33 years, and therefore, she could have lived up to almost 70 years old. Her gross earnings for 21.33 years based on P10,224.00 per annum, would be P218,077.92. Deducting therefrom 30% as her living expenses, her net earnings would be P152,654.55, to which plaintiff Ramon Miranda is entitled to compensatory damages for the loss of earning capacity of his wife. In considering 30% as the living expenses of Ardita Miranda, the Court takes into account the fact that plaintiff and his wife were supporting their daughter and son who were both college students taking Medicine and Law respectively. In accordance with the ruling in Villa-Rey Transit, Inc. v. Court of Appeals,[22] we think the life expectancy of Ardita Miranda was correctly determined to be 21.33 years, or up to age 69. Petitioner contends, however, that Mrs. Miranda would have retired from her job as a public school teacher at 65, hence her loss of earning capacity should be reckoned up to 17.33 years only. The accepted formula for determining life expectancy is 2/3 multiplied by (80 minus the age of the deceased). It may be that in the Philippines the age of retirement generally is 65 but, in calculating the life expectancy of individuals for the purpose of determining loss of earning capacity under Art. 2206(1) of the Civil Code, it is assumed that the deceased would have earned income even after retirement from a particular job. In this case, the trial court took into account the fact that Mrs. Miranda had a master’s degree and a good prospect of becoming principal of the school in which she was teaching. There was reason to believe that her income would have increased through the years and she could still earn more after her retirement, e.g., by becoming a consultant, had she not died. The gross earnings which Mrs. Miranda could reasonably be expected to earn were it not for her untimely death was, therefore, correctly computed by the trial court to be P218,077.92 (given a gross annual income of P10,224.00 and life expectancy of 21.33 years). Petitioner contends that from the amount of gross earnings, 60% should be deducted as necessary living expenses, not

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merely 30% as the trial court allowed. Petitioner contends that 30% is unrealistic, considering that Mrs. Miranda’s earnings would have been subject to taxes, social security deductions and inflation. We agree with this contention. In Villa-Rey Transit, Inc. v. Court of Appeals,[23] the Court allowed a deduction of P1,184.00 for living expenses from the P2,184.00 annual salary of the victim, which is roughly 54.2% thereof. The deceased was 29 years old and a training assistant in the Bacnotan Cement Industries. In People v. Quilaton,[24] the deceased was a 26-year old laborer earning a daily wage. The court allowed a deduction of P120,000.00 which was 51.3% of his annual gross earnings of P234,000.00. In People v. Teehankee,[25] the court allowed a deduction of P19,800.00, roughly 42.4% thereof from the deceased’s annual salary of P46,659.21. The deceased, Maureen Hultman, was 17 years old and had just received her first paycheck as a secretary. In the case at bar, we hold that a deduction of 50% from Mrs. Miranda’s gross earnings (P218,077.92) would be reasonable, so that her net earning capacity should be P109,038.96. There is no basis for supposing that her living expenses constituted a smaller percentage of her gross income than the living expenses in the decided cases. To hold that she would have used only a small part of her income for herself, a larger part going to the support of her children would be conjectural and unreasonable. As for Elfreda de la Victoria, the trial court found that, at the time of her death, she was 26 years old, a teacher in a private school in Malolos, Bulacan, earning P6,192.00 per annum. Although a probationary employee, she had already been working in the school for two years at the time of her death and she had a general efficiency rating of 92.85% and it can be presumed that, if not for her untimely death, she would have become a regular teacher. Hence, her loss of earning capacity is P111,456.00, computed as follows: net earning capacity (x) = life expectancy x [ gross annual income less reasonable & necessary living expenses (50%) ] x P3,096.00]

=

[ 2 (80-26) ]

x

[P6,192.00

-

3 = =

36

x

3,096.00

P111,456.00

On the other hand, the award of actual damages in the amount of P23,075.00 was determined by the Court of Appeals on the basis of receipts submitted by private respondents. This amount is reasonable considering the expenses incurred by private respondent Miranda in organizing three search teams to look for his family, spending for transportation in going to places such as Batangas City and Iloilo, where survivors and the bodies of other victims were found, making long distance calls,

erecting a monument in honor of the four victims, spending for obituaries in the Bulletin Today and for food, masses and novenas. Petitioner’s contention that the expenses for the erection of a monument and other expenses for memorial services for the victims should be considered included in the indemnity for death awarded to private respondents is without merit. Indemnity for death is given to compensate for violation of the rights of the deceased, i.e., his right to life and physical integrity.[26] On the other hand, damages incidental to or arising out of such death are for pecuniary losses of the beneficiaries of the deceased. As for the award of attorney’s fees, we agree with the Court of Appeals that the amount of P40,000.00 for private respondent Ramon Miranda and P15,000.00 for the de la Victoria spouses is justified. The appellate court correctly held: The Mecenas case cannot be made the basis for determining the award for attorney’s fees. The award would naturally vary or differ in each case. While it is admitted that plaintiff-appellee Ramon Miranda who is himself a lawyer, represented also plaintiffs-appellees Dela Victoria spouses, we note that separate testimonial evidence were adduced by plaintiff-appellee Ramon Miranda (TSN, February 26, 1982, p. 6) and plaintiffs-appellees spouses Dela Victoria (TSN, August 13, 1981, p. 43). Considering the amount of work and effort put into the case as indicated by the voluminous transcripts of stenographic notes, we find no reason to disturb the award of P40,000.00 for plaintiff-appellee Ramon Miranda and P15,000.00 for plaintiffs-appellees Dela Victoria spouses.[27] The award of exemplary damages should be increased to P300,000.00 for Ramon Miranda and P100,000.00 for the de la Victoria spouses in accordance with our ruling in the Mecenas case: Exemplary damages are designed by our civil law to permit the courts to reshape behaviour that is socially deleterious in its consequence by creating negative incentives or deterrents against such behaviour. In requiring compliance with the standard of extraordinary diligence, a standard which is in fact that of the highest possible degree of diligence, from common carriers and in creating a presumption of negligence against them, the law seeks to compel them to control their employees, to tame their reckless instincts and to force them to take adequate care of human beings and their property. The Court will take judicial notice of the dreadful regularity with which grievous maritime disasters occur in our waters with massive loss of life. The bulk of our population is too poor to afford domestic air transportation. So it is that notwithstanding the frequent sinking of passenger vessels in our waters, crowds of people continue to travel by sea. This Court is prepared to use the instruments given to it by the law for securing the ends of law and public policy. One of those instruments is the institution of exemplary damages; one of those ends, of special importance in an

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archipelagic state like the Philippines, is the safe and reliable carriage of people and goods by sea.[28] WHEREFORE, the decision of the Court of Appeals is AFFIRMED with modification and petitioner is ORDERED to pay private respondents damages as follows: To private respondent Ramon Miranda: P23,075.00

for actual damages;

P109,038.96 as compensatory damages for loss of earning capacity of his wife; P150,000.00 as compensatory damages for wrongful death of three (3) victims; P300,000.00

as moral damages;

P300,000.00 as exemplary damages, all in the total amount of P882,113.96; and P40,000.00

as attorney’s fees.

To private respondents Spouses Ricardo and Virginia de la Victoria: P12,000.00

for actual damages;

P111,456.00 loss of earning capacity;

as compensatory damages for

P50,000.00 wrongful death;

as compensatory damages for

P100,000.00

as moral damages;

P100,000.00 as exemplary damages, all in the total amount of P373,456.00; and P15,000.00

as attorney’s fees.

AGANA, ADALIA B. MIRANDA, respondents. DECISION ROMERO, J.:

FRANCISCO

and

JOSE

Before us is an appeal by certiorari filed by petitioner Japan Airlines, Inc. (JAL) seeking the reversal of the decision of the Court of Appeals,[1] which affirmed with modification the award of damages made by the trial court in favor of herein private respondents Enrique Agana, Maria Angela Nina Agana, Adelia Francisco and Jose Miranda. On June 13, 1991, private respondent Jose Miranda boarded JAL flight No. JL 001 in San Francisco, California bound for Manila. Likewise, on the same day private respondents Enrique Agana, Maria Angela Nina Agana and Adelia Francisco left Los Angeles, California for Manila via JAL flight No. JL 061. As an incentive for travelling on the said airline, both flights were to make an overnight stopover at Narita, Japan, at the airlines’ expense, thereafter proceeding to Manila the following day. Upon arrival at Narita, Japan on June 14, 1991, private respondents were billeted at Hotel Nikko Narita for the night. The next day, private respondents, on the final leg of their journey, went to the airport to take their flight to Manila. However, due to the Mt. Pinatubo eruption, unrelenting ashfall blanketed Ninoy Aquino International Airport (NAIA), rendering it inaccessible to airline traffic. Hence, private respondents’ trip to Manila was cancelled indefinitely. To accommodate the needs of its stranded passengers, JAL rebooked all the Manila-bound passengers on flight No. 741 due to depart on June 16, 1991 and also paid for the hotel expenses for their unexpected overnight stay. On June 16, 1991, much to the dismay of the private respondents, their long anticipated flight to Manila was again cancelled due to NAIA’s indefinite closure. At this point, JAL informed the private respondents that it would no longer defray their hotel and accommodation expense during their stay in Narita.

Petitioners are further ordered to pay costs of suit. In the event the Philippine National Oil Company and/or the PNOC Shipping and Transport Corporation pay or are required to pay all or a portion of the amounts adjudged, petitioner Negros Navigation Co., Inc. shall reimburse either of them such amount or amounts as either may have paid, and in the event of failure of Negros Navigation Co., Inc., to make the necessary reimbursement, PNOC and/or PNOC/STC shall be entitled to a writ of execution without need of filing another action. SO ORDERED. JAL v. CA Aug 7, 1998 [G.R. No. 118664. August 7, 1998] JAPAN AIRLINES, petitioner, vs. THE COURT OF APPEALS ENRIQUE AGANA, MARIA ANGELA NINA

Since NAIA was only reopened to airline traffic on June 22, 1991, private respondents were forced to pay for their accommodations and meal expenses from their personal funds from June 16 to June 21, 1991. Their unexpected stay in Narita ended on June 22, 1991 when they arrived in Manila on board JL flight No. 741. Obviously, still reeling from the experience, private respondents, on July 25, 1991, commenced an action for damages against JAL before the Regional Trial Court of Quezon City, Branch 104.[2] To support their claim, private respondents asserted that JAL failed to live up to its duty to provide care and comfort to its stranded passengers when it refused to pay for their hotel and accommodation expenses from June 16 to 21, 1991 at Narita, Japan. In other words, they insisted that JAL was obligated to shoulder their expenses as long as they were still stranded in Narita. On the other hand, JAL denied this allegation and averred that airline passengers have no vested right to

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these amenities in case a flight is cancelled due to “force majeure.” On June 18, 1992, the trial court rendered its judgment in favor of private respondents holding JAL liable for damages, viz.: “WHEREFORE, judgment is rendered in favor of plaintiffs ordering the defendant Japan Airlines to pay the plaintiffs Enrique Agana, Adalia B. Francisco and Maria Angela Nina Agana the sum of One million Two Hundred forty-six Thousand Nine Hundred Thirty-Six Pesos (P1,246,936.00) and Jose Miranda the sum of Three Hundred Twenty Thousand Six Hundred sixteen and 31/100 (P320,616.31) as actual, moral and exemplary damages and pay attorney’s fees in the amount of Two Hundred Thousand Pesos (P200,000.00), and to pay the costs of suit.” Undaunted, JAL appealed the decision before the Court of Appeals, which, however, with the exception of lowering the damages awarded affirmed the trial court’s finding,[3] thus: “Thus, the award of moral damages should be as it is hereby reduced to P200,000.00 for each of the plaintiffs, the exemplary damages to P300,000.00 and the attorney’s fees to P100,000.00 plus the costs. WHEREFORE, with the foregoing Modification, the judgment appealed from is hereby AFFIRMED in all other respects.” JAL filed a motion for reconsideration which proved futile and unavailing.[4] Failing in its bid to reconsider the decision, JAL has now filed this instant petition. The issue to be resolved is whether JAL, as a common carrier has the obligation to shoulder the hotel and meal expenses of its stranded passengers until they have reached their final destination, even if the delay were caused by “force majeure.” To begin with, there is no dispute that the Mt. Pinatubo eruption prevented JAL from proceeding to Manila on schedule. Likewise, private respondents concede that such event can be considered as “force majeure” since their delayed arrival in Manila was not imputable to JAL.[5] However, private respondents contend that while JAL cannot be held responsible for the delayed arrival in Manila, it was nevertheless liable for their living expenses during their unexpected stay in Narita since airlines have the obligation to ensure the comfort and convenience of its passengers. While we sympathize with the private respondents’ plight, we are unable to accept this contention. We are not unmindful of the fact that in a plethora of cases we have consistently ruled that a contract to transport passengers is quite different in kind and degree from any other contractual relation. It is safe to conclude that it is a

relationship imbued with public interest. Failure on the part of the common carrier to live up to the exacting standards of care and diligence renders it liable for any damages that may be sustained by its passengers. However, this is not to say that common carriers are absolutely responsible for all injuries or damages even if the same were caused by a fortuitous event. To rule otherwise would render the defense of “force majeure,” as an exception from any liability, illusory and ineffective. Accordingly, there is no question that when a party is unable to fulfill his obligation because of “force majeure,” the general rule is that he cannot be held liable for damages for non-performance.[6] Corollarily, when JAL was prevented from resuming its flight to Manila due to the effects of Mt. Pinatubo eruption, whatever losses or damages in the form of hotel and meal expenses the stranded passengers incurred, cannot be charged to JAL. Yet it is undeniable that JAL assumed the hotel expenses of respondents for their unexpected overnight stay on June 15, 1991. Admittedly, to be stranded for almost a week in a foreign land was an exasperating experience for the private respondents. To be sure, they underwent distress and anxiety during their unanticipated stay in Narita, but their predicament was not due to the fault or negligence of JAL but the closure of NAIA to international flights. Indeed, to hold JAL, in the absence of bad faith or negligence, liable for the amenities of its stranded passengers by reason of a fortuitous event is too much of a burden to assume. Furthermore, it has been held that airline passengers must take such risks incident to the mode of travel.[7] In this regard, adverse weather conditions or extreme climatic changes are some of the perils involved in air travel, the consequences of which the passenger must assume or expect. After all, common carriers are not the insurer of all risks.[8] Paradoxically, the Court of Appeals, despite the presence of “force majeure,” still ruled against JAL relying in our decision in PAL v. Court of Appeals,[9] thus: “The position taken by PAL in this case clearly illustrates its failure to grasp the exacting standard required by law. Undisputably, PAL’s diversion of its flight due to inclement weather was a fortuitous event. Nonetheless, such occurrence did not terminate PAL’s contract with its passengers. Being in the business of air carriage and the sole one to operate in the country, PAL is deemed equipped to deal with situations as in the case at bar. What we said in one case once again must be stressed, i.e., the relation of carrier and passenger continues until the latter has been landed at the port of destination and has left the carrier’s premises. Hence, PAL necessarily would still have to exercise extraordinary diligence in safeguarding the comfort, convenience and safety of its stranded passengers until they have reached their final destination. On this score, PAL grossly failed considering the then ongoing battle between government forces and Muslim rebels in

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Cotabato City and the fact that the private respondent was a stranger to the place.” The reliance is misplaced. The factual background of the PAL case is different from the instant petition. In that case there was indeed a fortuitous event resulting in the diversion of the PAL flight. However, the unforeseen diversion was worsened when “private respondents (passenger) was left at the airport and could not even hitch a ride in a Ford Fiera loaded with PAL personnel,”[10] not to mention the apparent apathy of the PAL station manager as to the predicament of the stranded passengers.[11] In light of these circumstances, we held that if the fortuitous event was accompanied by neglect and malfeasance by the carrier’s employees, an action for damages against the carrier is permissible. Unfortunately, for private respondents, none of these conditions are present in the instant petition. We are not prepared, however, to completely absolve petitioner JAL from any liability. It must be noted that private respondents bought tickets from the United States with Manila as their final destination. While JAL was no longer required to defray private respondents’ living expenses during their stay in Narita on account of the fortuitous event, JAL had the duty to make the necessary arrangements to transport private respondents on the first available connecting flight to Manila. Petitioner JAL reneged on its obligation to look after the comfort and convenience of its passengers when it declassified private respondents from “transit passengers” to “new passengers” as a result of which private respondents were obliged to make the necessary arrangements themselves for the next flight to Manila. Private respondents were placed on the waiting list from June 20 to June 24. To assure themselves of a seat on an available flight, they were compelled to stay in the airport the whole day of June 22, 1991 and it was only at 8:00 p.m. of the aforesaid date that they were advised that they could be accommodated in said flight which flew at about 9:00 a.m. the next day. We are not oblivious to the fact that the cancellation of JAL flights to Manila from June 15 to June 21, 1991 caused considerable disruption in passenger booking and reservation. In fact, it would be unreasonable to expect, considering NAIA’s closure, that JAL flight operations would be normal on the days affected. Nevertheless, this does not excuse JAL from its obligation to make the necessary arrangements to transport private respondents on its first available flight to Manila. After all, it had a contract to transport private respondents from the United States to Manila as their final destination. Consequently, the award of nominal damages is in order. Nominal damages are adjudicated in order that a right of a plaintiff, which has been violated or invaded by the defendant, may be vindicated or recognized and not for the purpose of indemnifying any loss suffered by him.[12] The court may award nominal damages in every obligation arising from any source enumerated in Article 1157, or in every case where any property right has been invaded.[13]

WHEREFORE, in view of the foregoing, the decision of the Court of Appeals dated December 22, 1993 is hereby MODIFIED. The award of actual, moral and exemplary damages is hereby DELETED. Petitioner JAL is ordered to pay each of the private respondents nominal damages in the sum of P100,000.00 each including attorney’s fees of P50,000.00 plus costs. SO ORDERED.

F

Limited Liability; 1757; 1758

Lara v. Valencia G.R. No. L-9907

Validity

of

Stipulations

June 30, 1958 June 30, 1958

LOURDES J. LARA, ET AL., plaintiffs-appellants, vs. BRIGIDO R. VALENCIA, defendant-appellant. Castillo, Cervantes, Occeña, Lozano, Montana, Cunanan, Sison and Castillo and Eligio G. Lagman for defendantappellant. Donato C. Endriga and Emigdio Dakanay for plaintiffsappellants. BAUTISTA ANGELO, J.: This is an action for damages brought by plaintiffs against defendant in the Court of First Instance of Davao for the death of one Demetrio Lara, Sr. allegedly caused by the negligent act of defendant. Defendant denied the charge of negligence and set up certain affirmative defenses and a counterclaim. The court after hearing rendered judgment ordering defendant to pay the plaintiffs the following amount: (a) P10,000 as moral damages; (b) P3,000 as exemplary damages; and (c) P1,000 as attorney's fees, in addition to the costs of action. Both parties appealed to this Court because the damages claimed in the complaint exceed the sum of P50,000. In their appeal, plaintiffs claim that the court a quo erred in disregarding their claim of P41,400 as actual or compensatory damages and in awarding as attorneys' fees only the sum of P1,000 instead of P3,000 as agreed upon between plaintiffs and their counsel. Defendant, on the other hand, disputes the finding of the court a quo that the oath of Demetrio Lara, Sr. was due to the negligence of defendant and the portion of the judgment which orders dependant to pay to plaintiffs moral and exemplary damages as well as attorneys' fees, said defendant contending that the court should have declared that the death of Lara was due to unavoidable accident. The deceased was an inspector of the Bureau of Forestry stationed in Davao with an annual salary of P1,800. The defendant is engaged in the business of exporting logs from his lumber concession in Cotabato. Lara went to said concession upon instructions of his chief to classify the

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logs of defendant which were about to be loaded on a ship anchored in the port of Parang. The work Lara of lasted for six days during which he contracted malaria fever. In the morning of January 9, 1954, Lara who then in a hurry to return to Davao asked defendant if he could take him in his pick-up as there was then no other means of transportation, to which defendant agreed, and in that same morning the pick-up left Parang bound for Davao taking along six passengers, including Lara.

the Government. Defendant merely accommodated them and did not charge them any fee for the service. It was also their understanding that upon reaching barrio Samoay, the passengers would alight and transfer to a bus that regularly makes the trip to Davao but unfortunately there was none available at the time and so the same passengers, including Lara, again requested the defendant to drive them to Davao. Defendant again accommodated them and upon reaching Km. 96, Lara accidentally fell suffering fatal injuries.

The pick-up has a front seat where the driver and two passengers can be accommodated and the back has a steel flooring enclosed with a steel walling of 16 to 17 inches tall on the sides and with a 19 inches tall walling at the back. Before leaving Parang, the sitting arrangement was as follows: defendant was at the wheel and seated with him in the front seat were Mrs. Valencia and Nicanor Quinain; on the back of the pick-up were two improvised benches placed on each side, and seated on the right bench were Ricardo Alojipan and Antonio Lagahit, and on the left one Bernardo and Pastor Geronimo. A person by the name of Leoning was seated on a box located on the left side while in the middle Lara sat on a bag. Before leaving Parang, defendant invited Lara to sit with him on the front seat but Lara declined. It was their understanding that upon reaching barrio Samoay, Cotabato, the passengers were to alight and take a bus bound for Davao, but when they arrived at that place, only Bernardo alighted and the other passengers requested defendant to allow them to ride with him up to Davao because there was then no available bus that they could take in going to that place. Defendant again accommodated the passengers.

It therefore appears that the deceased, as well his companions who rode in the pick-up of defendant, were merely accommodation passengers who paid nothing for the service and so they can be considered as invited guests within the meaning of the law. As accommodation passengers or invited guests, defendant as owner and driver of the pick-up owes to them merely the duty to exercise reasonable care so that they may be transported safely to their destination. Thus, "The rule is established by the weight of authority that the owner or operator of an automobile owes the duty to an invited guest to exercise reasonable care in its operation, and not unreasonably to expose him to danger and injury by increasing the hazard of travel. This rule, as frequently stated by the courts, is that an owner of an automobile owes a guest the duty to exercise ordinary or reasonable care to avoid injuring him. Since one riding in an automobile is no less a guest because he asked for the privilege of doing so, the same obligation of care is imposed upon the driver as in the case of one expressly invited to ride" (5 Am. Jur., 626-627). Defendant, therefore, is only required to observe ordinary care, and is not in duty bound to exercise extraordinary diligence as required of a common carrier by our law (Articles 1755 and 1756, new Civil Code).

When they continued their trip, the sitting arrangement of the passengers remained the same, Lara being seated on a bag in the middle with his arms on a suitcase and his head cove red by a jacket. Upon reaching Km. 96, barrio Catidtuan, Lara accidentally fell from the pick-up and as a result he suffered serious injuries. Valencia stopped the pick-up to see what happened to Lara. He sought the help of the residents of that place and applied water to Lara but to no avail. They brought Lara to the nearest place where they could find a doctor and not having found any they took him to St. Joseph's Clinic of Kidapawan. But when Lara arrived he was already dead. From there they proceeded to Davao City and immediately notified the local authorities. An investigation was made regarding the circumstances surrounding the death of Lara but no criminal action was taken against defendant. It should be noted that the deceased went to the lumber concession of defendant in Parang, Cotabato upon instructions of his chief in order to classify the logs of defendant which were then ready to be exported and to be loaded on a ship anchored in the port of Parang. It took Lara six days to do his work during which he contracted malaria fever and for that reason he evinced a desire to return immediately to Davao. At that time, there was no available bus that could take him back to Davao and so he requested the defendant if he could take him in his own pick-up. Defendant agreed and, together with Lara, other passengers tagged along, most of them were employees of

The question that now arises is: Is there enough evidence to show that defendant failed to observe ordinary care or diligence in transporting the deceased from Parang to Davao on the date in question? The trial court answered the question in the affirmative but in so doing it took into account only the following facts: No debe perderse de vista el hecho, que los negocios de exportacion de trozos del demandado tiene un volumen de P1,200. Lara era empleado de la Oficina de Montes, asalariado por el gobierno, no pagado por el demandado para classificar los trozos exportados; debido a los trabajos de classificacion que duro 6 dias, en su ultimo dia Lara no durmio toda la noche, al dia siguiente, Lara fue atacado de malaria, tenia inflamada la cara y cuerpo, sufria dolores de cabeza con erupciones en la cara y cuerpo; que en la manana, del dia 2 de enero de 1954, fecha en que Lara salio de Davao para Parang, en aeroplano para clasificar los trozos del demandado, el automobil de este condujo a aquel al aerodromo de Davao. xxx

xxx

xxx

El viaje de Cotabato a Davao no es menos de 8 horas, su carretera esta en malas condiciones, desnivelada, con piedras salientes y baches, que hacen del vehiculo no

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estable en su marcha. Lara estaba enfermo de cierta gravedad, tenia el cuerpo y cara inflamados, atacado de malaria, con dolores de cabeza y con erupciones en la cara y cuerpo. A la vista de estos hechos, el demandado debia de saber que era sumamente peligroso llevar 5 pasajeros en la parte trasera del pick-up; particularmente, para la salud de Lara; el permitirlo, el demandado no ha tomado las precausiones, para evitar un posible accidente fatal. La negative de Lara de ocupar el asiento delantero del pick-up no constituye a juicio del Juzgado una defensa, pues el demendado conociendo el estado delicado de salud de Lara, no debio de haber permitido que aquel regrese a Davao en su pickup; si querria prestar a aquel un favor, debio de haver provisto a Lara de un automobil para su regrese a Davao, ya que el demendado es un millionario; si no podia prestar a aquel este favor, debio de haver dejado a Lara en Samuay para coger aquel un camion de pasajero de Cotabato a Davao. Even if we admit as true the facts found by the trial court, still we find that the same are not sufficient to show that defendant has failed to take the precaution necessary to conduct his passengers safely to their place of destination for there is nothing there to indicate that defendant has acted with negligence or without taking the precaution that an ordinary prudent man would have taken under similar circumstances. It should be noted that Lara went to the lumber concession of defendant in answer to a call of duty which he was bound to perform because of the requirement of his office and he contracted the malaria fever in the course of the performance of that duty. It should also be noted that defendant was not in duty bound to take the deceased in his own pick-up to Davao because from Parang to Cotabato there was a line of transportation that regularly makes trips for the public, and if defendant agreed to take the deceased in his own car, it was only to accommodate him considering his feverish condition and his request that he be so accommodated. It should also be noted that the passengers who rode in the pick-up of defendant took their respective seats therein at their own choice and not upon indication of defendant with the particularity that defendant invited the deceased to sit with him in the front seat but which invitation the deceased declined. The reason for this can only be attributed to his desire to be at the back so that he could sit on a bag and travel in a reclining position because such was more convenient for him due to his feverish condition. All the circumstances therefore clearly indicate that defendant had done what a reasonable prudent man would have done under the circumstances. There is every reason to believe that the unfortunate happening was only due to an unforeseen accident accused by the fact that at the time the deceased was half asleep and must have fallen from the pick-up when it ran into some stones causing it to jerk considering that the road was then bumpy, rough and full of stones. The finding of the trial court that the pick-up was running at more than 40 kilometers per hour is not supported by the evidence. This is a mere surmise made by the trial court

considering the time the pick-up left barrio Samoay and the time the accident occured in relation to the distance covered by the pick-up. And even if this is correct, still we say that such speed is not unreasonable considering that they were traveling on a national road and the traffic then was not heavy. We may rather attribute the incident to lack of care on the part of the deceased considering that the pick-up was open and he was then in a crouching position. Indeed, the law provides that "A passenger must observe the diligence of a good father of a family to avoid injury to himself" (Article 1761, new Civil Code), which means that if the injury to the passenger has been proximately caused by his own negligence, the carrier cannot be held liable. All things considered, we are persuaded to conclude that the accident occurred not due to the negligence of defendant but to circumstances beyond his control and so he should be exempt from liability. Wherefore, the decision appealed from is reversed, without pronouncement as to costs. Paras, C. J., Bengzon, Reyes, A., Concepcion, Reyes, J. B. L., Endencia and Felix, JJ., concur. Bataclan v. Medina Oct 22,1957 G.R. No. L-10126 October 22, 1957 SALUD VILLANUEVA VDA. DE BATACLAN and the minors NORMA, LUZVIMINDA, ELENITA, OSCAR and ALFREDO BATACLAN, represented by their Natural guardian, SALUD VILLANUEVA VDA. DE BATACLAN, plaintiffs-appellants, vs. MARIANO MEDINA, defendant-appellant. Lope E. Adriano, Emmanuel Andamo and Jose R. Francisco for plaintiffs-appellants. Fortunato Jose for defendant and appellant. MONTEMAYOR, J.: Shortly after midnight, on September 13, 1952 bus no. 30 of the Medina Transportation, operated by its owner defendant Mariano Medina under a certificate of public convenience, left the town of Amadeo, Cavite, on its way to Pasay City, driven by its regular chauffeur, Conrado Saylon. There were about eighteen passengers, including the driver and conductor. Among the passengers were Juan Bataclan, seated beside and to the right of the driver, Felipe Lara, sated to the right of Bataclan, another passenger apparently from the Visayan Islands whom the witnesses just called Visaya, apparently not knowing his name, seated in the left side of the driver, and a woman named Natalia Villanueva, seated just behind the four last mentioned. At about 2:00 o'clock that same morning, while the bus was running within the jurisdiction of Imus, Cavite, one of the front tires burst and the vehicle began to zig-zag until it fell into a canal or ditch on the right side of the road and turned turtle. Some of the passengers managed to leave the bus the best way they could, others had to be helped or pulled out, while the three passengers seated beside the driver, named

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Bataclan, Lara and the Visayan and the woman behind them named Natalia Villanueva, could not get out of the overturned bus. Some of the passengers, after they had clambered up to the road, heard groans and moans from inside the bus, particularly, shouts for help from Bataclan and Lara, who said they could not get out of the bus. There is nothing in the evidence to show whether or not the passengers already free from the wreck, including the driver and the conductor, made any attempt to pull out or extricate and rescue the four passengers trapped inside the vehicle, but calls or shouts for help were made to the houses in the neighborhood. After half an hour, came about ten men, one of them carrying a lighted torch made of bamboo with a wick on one end, evidently fueled with petroleum. These men presumably approach the overturned bus, and almost immediately, a fierce fire started, burning and all but consuming the bus, including the four passengers trapped inside it. It would appear that as the bus overturned, gasoline began to leak and escape from the gasoline tank on the side of the chassis, spreading over and permeating the body of the bus and the ground under and around it, and that the lighted torch brought by one of the men who answered the call for help set it on fire.

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 observed extraordinary diligence as prescribed in articles 1733 and 1755

That same day, the charred bodies of the four deemed passengers inside the bus were removed and duly identified that of Juan Bataclan. By reason of his death, his widow, Salud Villanueva, in her name and in behalf of her five minor children, brought the present suit to recover from Mariano Medina compensatory, moral, and exemplary damages and attorney's fees in the total amount of P87,150. After trial, the Court of First Instance of Cavite awarded P1,000 to the plaintiffs plus P600 as attorney's fee, plus P100, the value of the merchandise being carried by Bataclan to Pasay City for sale and which was lost in the fire. The plaintiffs and the defendants appealed the decision to the Court of Appeals, but the latter endorsed the appeal to us because of the value involved in the claim in the complaint.

We agree with the trial court that the case involves a breach of contract of transportation for hire, the Medina Transportation having undertaken to carry Bataclan safely to his destination, Pasay City. We also agree with the trial court that there was negligence on the part of the defendant, through his agent, the driver Saylon. There is evidence to show that at the time of the blow out, the bus was speeding, as testified to by one of the passengers, and as shown by the fact that according to the testimony of the witnesses, including that of the defense, from the point where one of the front tires burst up to the canal where the bus overturned after zig-zaging, there was a distance of about 150 meters. The chauffeur, after the blow-out, must have applied the brakes in order to stop the bus, but because of the velocity at which the bus must have been running, its momentum carried it over a distance of 150 meters before it fell into the canal and turned turtle.

Our new Civil Code amply provides for the responsibility of common carrier to its passengers and their goods. For purposes of reference, we are reproducing the pertinent codal provisions: 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 the vigilance over the goods is further expressed in articles 1734, 1735, and 1745, Nos. 5, 6, and 7, while the extra ordinary diligence for the safety of the passengers is further set forth in articles 1755 and 1756. 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. 1759. Common carriers are liable for the death of or injuries to passengers through the negligence or willful acts of the former's employees, although such employees may have acted beyond the scope of their authority or in violation of the order 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 responsible for injuries suffered by a passenger on account of the willful acts or negligence of other passengers or of strangers, if the common carrier's employees through the exercise of the diligence of a good father of a family could have prevented or stopped the act or omission.

There is no question that under the circumstances, the defendant carrier is liable. The only question is to what degree. The trial court was of the opinion that the proximate cause of the death of Bataclan was not the overturning of the bus, but rather, the fire that burned the bus, including himself and his co-passengers who were unable to leave it; that at the time the fire started, Bataclan, though he must have suffered physical injuries, perhaps serious, was still alive, and so damages were awarded, not for his death, but for the physical injuries suffered by him. We disagree. A satisfactory definition of proximate cause is found in Volume 38, pages 695-696 of American jurisprudence, cited by plaintiffs-appellants in their brief. It is as follows: . . . 'that cause, which, in natural and continuous sequence, unbroken by any efficient intervening cause, produces the injury, and without which the result would not have occurred.' And more comprehensively, 'the proximate legal cause is that acting first and producing the injury, either

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immediately or by setting other events in motion, all constituting a natural and continuous chain of events, each having a close causal connection with its immediate predecessor, the final event in the chain immediately effecting the injury as a natural and probable result of the cause which first acted, under such circumstances that the person responsible for the first event should, as an ordinary prudent and intelligent person, have reasonable ground to expect at the moment of his act or default that an injury to some person might probably result therefrom. It may be that ordinarily, when a passenger bus overturns, and pins down a passenger, merely causing him physical injuries, if through some event, unexpected and extraordinary, the overturned bus is set on fire, say, by lightning, or if some highwaymen after looting the vehicle sets it on fire, and the passenger is burned to death, one might still contend that the proximate cause of his death was the fire and not the overturning of the vehicle. But in the present case under the circumstances obtaining in the same, we do not hesitate to hold that the proximate cause was the overturning of the bus, this for the reason that when the vehicle turned not only on its side but completely on its back, the leaking of the gasoline from the tank was not unnatural or unexpected; that the coming of the men with a lighted torch was in response to the call for help, made not only by the passengers, but most probably, by the driver and the conductor themselves, and that because it was dark (about 2:30 in the morning), the rescuers had to carry a light with them, and coming as they did from a rural area where lanterns and flashlights were not available; and what was more natural than that said rescuers should innocently approach the vehicle to extend the aid and effect the rescue requested from them. In other words, the coming of the men with a torch was to be expected and was a natural sequence of the overturning of the bus, the trapping of some of its passengers and the call for outside help. What is more, the burning of the bus can also in part be attributed to the negligence of the carrier, through is driver and its conductor. According to the witness, the driver and the conductor were on the road walking back and forth. They, or at least, the driver should and must have known that in the position in which the overturned bus was, gasoline could and must have leaked from the gasoline tank and soaked the area in and around the bus, this aside from the fact that gasoline when spilled, specially over a large area, can be smelt and directed even from a distance, and yet neither the driver nor the conductor would appear to have cautioned or taken steps to warn the rescuers not to bring the lighted torch too near the bus. Said negligence on the part of the agents of the carrier come under the codal provisions above-reproduced, particularly, Articles 1733, 1759 and 1763. As regard the damages to which plaintiffs are entitled, considering the earning capacity of the deceased, as well as the other elements entering into a damage award, we are satisfied that the amount of SIX THOUSAND (P6,000) PESOS would constitute satisfactory compensation, this to include compensatory, moral, and other damages. We also believe that plaintiffs are entitled to attorney's fees, and assessing the legal services rendered by plaintiffs' attorneys

not only in the trial court, but also in the course of the appeal, and not losing sight of the able briefs prepared by them, the attorney's fees may well be fixed at EIGHT HUNDRED (P800) PESOS for the loss of merchandise carried by the deceased in the bus, is adequate and will not be disturbed. There is one phase of this case which disturbs if it does not shock us. According to the evidence, one of the passengers who, because of the injuries suffered by her, was hospitalized, and while in the hospital, she was visited by the defendant Mariano Medina, and in the course of his visit, she overheard him speaking to one of his bus inspectors, telling said inspector to have the tires of the bus changed immediately because they were already old, and that as a matter of fact, he had been telling the driver to change the said tires, but that the driver did not follow his instructions. If this be true, it goes to prove that the driver had not been diligent and had not taken the necessary precautions to insure the safety of his passengers. Had he changed the tires, specially those in front, with new ones, as he had been instructed to do, probably, despite his speeding, as we have already stated, the blow out would not have occurred. All in all, there is reason to believe that the driver operated and drove his vehicle negligently, resulting in the death of four of his passengers, physical injuries to others, and the complete loss and destruction of their goods, and yet the criminal case against him, on motion of the fiscal and with his consent, was provisionally dismissed, because according to the fiscal, the witnesses on whose testimony he was banking to support the complaint, either failed or appear or were reluctant to testify. But the record of the case before us shows the several witnesses, passengers, in that bus, willingly and unhesitatingly testified in court to the effect of the said driver was negligent. In the public interest the prosecution of said erring driver should be pursued, this, not only as a matter of justice, but for the promotion of the safety of passengers on public utility buses. Let a copy of this decision be furnished the Department of Justice and the Provincial Fiscal of Cavite. In view of the foregoing, with the modification that the damages awarded by the trial court are increased from ONE THOUSAND (P1,000) PESOS TO SIX THOUSAND (P6,000) PESOS, and from SIX HUNDRED PESOS TO EIGHT HUNDRED (P800) PESOS, for the death of Bataclan and for the attorney's fees, respectively, the decision appealed is from hereby affirmed, with costs. Paras, C. J., Bengzon, Padilla, Reyes, A., Bautista Angelo, Labrador, Concepcion, Reyes, J. B. L., Endencia, and Felix, JJ., concur. Maranan v. Perez June 26,1967 G.R. No. L-22272 June 26, 1967 ANTONIA MARANAN, plaintiff-appellant, vs. PASCUAL PEREZ, ET AL., defendants. PASCUAL PEREZ, defendant appellant.

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Pedro Panganiban for plaintiff-appellant. Magno T. Bueser for defendant-appellant.

assault can not be deemed in law a breach of Gillaco's contract of transportation by a servant or employee of the carrier. . . . (Emphasis supplied)

BENGZON, J.P., J.: Rogelio Corachea, on October 18, 1960, was a passenger in a taxicab owned and operated by Pascual Perez when he was stabbed and killed by the driver, Simeon Valenzuela. Valenzuela was prosecuted for homicide in the Court of First Instance of Batangas. Found guilty, he was sentenced to suffer imprisonment and to indemnify the heirs of the deceased in the sum of P6,000. Appeal from said conviction was taken to the Court of Appeals.1äwphï1.ñët On December 6 1961, while appeal was pending in the Court of Appeals, Antonia Maranan, Rogelio's mother, filed an action in the Court of First Instance of Batangas to recover damages from Perez and Valenzuela for the death of her son. Defendants asserted that the deceased was killed in self-defense, since he first assaulted the driver by stabbing him from behind. Defendant Perez further claimed that the death was a caso fortuito for which the carrier was not liable. The court a quo, after trial, found for the plaintiff and awarded her P3,000 as damages against defendant Perez. The claim against defendant Valenzuela was dismissed. From this ruling, both plaintiff and defendant Perez appealed to this Court, the former asking for more damages and the latter insisting on non-liability. Subsequently, the Court of Appeals affirmed the judgment of conviction earlier mentioned, during the pendency of the herein appeal, and on May 19, 1964, final judgment was entered therein. (Rollo, p. 33). Defendant-appellant relies solely on the ruling enunciated in Gillaco v. Manila Railroad Co., 97 Phil. 884, that the carrier is under no absolute liability for assaults of its employees upon the passengers. The attendant facts and controlling law of that case and the one at bar are very different however. In the Gillaco case, the passenger was killed outside the scope and the course of duty of the guilty employee. As this Court there found: x x x when the crime took place, the guard Devesa had no duties to discharge in connection with the transportation of the deceased from Calamba to Manila. The stipulation of facts is clear that when Devesa shot and killed Gillaco, Devesa was assigned to guard the Manila-San Fernando (La Union) trains, and he was at Paco Station awaiting transportation to Tutuban, the starting point of the train that he was engaged to guard. In fact, his tour of duty was to start at 9:00 two hours after the commission of the crime. Devesa was therefore under no obligation to safeguard the passengers of the Calamba-Manila train, where the deceased was riding; and the killing of Gillaco was not done in line of duty. The position of Devesa at the time was that of another would be passenger, a stranger also awaiting transportation, and not that of an employee assigned to discharge any of the duties that the Railroad had assumed by its contract with the deceased. As a result, Devesa's

Now here, the killing was perpetrated by the driver of the very cab transporting the passenger, in whose hands the carrier had entrusted the duty of executing the contract of carriage. In other words, unlike the Gillaco case, the killing of the passenger here took place in the course of duty of the guilty employee and when the employee was acting within the scope of his duties. Moreover, the Gillaco case was decided under the provisions of the Civil Code of 1889 which, unlike the present Civil Code, did not impose upon common carriers absolute liability for the safety of passengers against wilful assaults or negligent acts committed by their employees. The death of the passenger in the Gillaco case was truly a fortuitous event which exempted the carrier from liability. It is true that Art. 1105 of the old Civil Code on fortuitous events has been substantially reproduced in Art. 1174 of the Civil Code of the Philippines but both articles clearly remove from their exempting effect the case where the law expressly provides for liability in spite of the occurrence of force majeure. And herein significantly lies the statutory difference between the old and present Civil Codes, in the backdrop of the factual situation before Us, which further accounts for a different result in the Gillaco case. Unlike the old Civil Code, the new Civil Code of the Philippines expressly makes the common carrier liable for intentional assaults committed by its employees upon its passengers, by the wording of Art. 1759 which categorically states that Common carriers are liable for the death of or injuries to passengers through the negligence or willful acts of the former's employees, although such employees may have acted beyond the scope of their authority or in violation of the orders of the common carriers. The Civil Code provisions on the subject of Common Carriers1 are new and were taken from Anglo-American Law.2 There, the basis of the carrier's liability for assaults on passengers committed by its drivers rests either on (1) the doctrine of respondeat superior or (2) the principle that it is the carrier's implied duty to transport the passenger safely.3 Under the first, which is the minority view, the carrier is liable only when the act of the employee is within the scope of his authority and duty. It is not sufficient that the act be within the course of employment only.4 Under the second view, upheld by the majority and also by the later cases, it is enough that the assault happens within the course of the employee's duty. It is no defense for the carrier that the act was done in excess of authority or in disobedience of the carrier's orders.5 The carrier's liability here is absolute in the sense that it practically secures the passengers from assaults committed by its own employees.6

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As can be gleaned from Art. 1759, the Civil Code of the Philippines evidently follows the rule based on the second view. At least three very cogent reasons underlie this rule. As explained in Texas Midland R.R. v. Monroe, 110 Tex. 97, 216 S.W. 388, 389-390, and Haver v. Central Railroad Co., 43 LRA 84, 85: (1) the special undertaking of the carrier requires that it furnish its passenger that full measure of protection afforded by the exercise of the high degree of care prescribed by the law, inter alia from violence and insults at the hands of strangers and other passengers, but above all, from the acts of the carrier's own servants charged with the passenger's safety; (2) said liability of the carrier for the servant's violation of duty to passengers, is the result of the formers confiding in the servant's hands the performance of his contract to safely transport the passenger, delegating therewith the duty of protecting the passenger with the utmost care prescribed by law; and (3) as between the carrier and the passenger, the former must bear the risk of wrongful acts or negligence of the carrier's employees against passengers, since it, and not the passengers, has power to select and remove them. Accordingly, it is the carrier's strict obligation to select its drivers and similar employees with due regard not only to their technical competence and physical ability, but also, no less important, to their total personality, including their patterns of behavior, moral fibers, and social attitude. Applying this stringent norm to the facts in this case, therefore, the lower court rightly adjudged the defendant carrier liable pursuant to Art. 1759 of the Civil Code. The dismissal of the claim against the defendant driver was also correct. Plaintiff's action was predicated on breach of contract of carriage7 and the cab driver was not a party thereto. His civil liability is covered in the criminal case wherein he was convicted by final judgment. In connection with the award of damages, the court a quo granted only P3,000 to plaintiff-appellant. This is the minimum compensatory damages amount recoverable under Art. 1764 in connection with Art. 2206 of the Civil Code when a breach of contract results in the passenger's death. As has been the policy followed by this Court, this minimal award should be increased to P6,000. As to other alleged actual damages, the lower court's finding that plaintiff's evidence thereon was not convincing,8 should not be disturbed. Still, Arts. 2206 and 1764 award moral damages in addition to compensatory damages, to the parents of the passenger killed to compensate for the mental anguish they suffered. A claim therefor, having been properly made, it becomes the court's duty to award moral damages.9 Plaintiff demands P5,000 as moral damages; however, in the circumstances, We consider P3,000 moral damages, in addition to the P6,000 damages afore-stated, as sufficient. Interest upon such damages are also due to plaintiff-appellant. 10 Wherefore, with the modification increasing the award of actual damages in plaintiff's favor to P6,000, plus P3,000.00 moral damages, with legal interest on both from the filing of the complaint on December 6, 1961 until the

whole amount is paid, the judgment appealed from is affirmed in all other respects. No costs. So ordered. Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez and Castro, JJ., concur. Baliwag Transit v. CA May 5,1996 [G.R. No. 116110. May 15,1996] BALIWAG TRANSIT, INC., petitioner, vs. COURT OF APPEALS, SPOUSES ANTONIO GARCIA & LETICIA GARCIA, A & J TRADING, AND JULIO RECONTIQUE, respondents. SYLLABUS 1. CIVIL LAW; CONTRACTS; SPECIAL CONTRACTS; COMMON CARRIERS; LIABILITY FOR DAMAGES; ESTABLISHED IN CASE AT BAR. – As a common carrier, Baliwag breached its contract of carriage when it failed to deliver its passengers, Leticia and Allan Garcia to their destination safe and sound. A common carrier is bound to carry its passengers safely as far as human care and foresight can provide, using the utmost diligence of a very cautious person, with due regard for all the circumstances. In a contract of carriage, it is presumed that the common carrier was at fault or was negligent when a passenger dies or is injured. Unless the presumption is rebutted, the court need not even make an express finding of fault or negligence on the part of the common carrier. This statutory presumption may only be overcome by evidence that the carrier exercised extraordinary diligence as prescribed in Articles 1733 and 1755 of the Civil Code. The records are bereft of any proof to show that Baliwag exercised extraordinary diligence. On the contrary, the evidence demonstrates its driver's recklessness. Leticia Garcia testified that the bus was running at a very high speed despite the drizzle and the darkness of the highway. The passengers pleaded for its driver to slow down, but their plea was ignored. Leticia also revealed that the driver was smelling of liquor. She could smell him as she was seated right behind the driver. Another passenger, Felix Cruz testified that immediately before the collision, the bus driver was conversing with a co-employee. All these prove the bus driver's wanton disregard for the physical safety of his passengers, which make Baliwag as a common carrier liable for damages under Article 1759 of the Civil Code. 2. ID.; ID.; ID.; ID.; LAND TRANSPORTATION AND TRAFFIC CODE; SECTION 34(g) THEREOF; SUBSTANTIALLY COMPLIED WITH IN CASE AT BAR. – Baliwag cannot evade its liability by insisting that the accident was caused solely by the negligence of A & J Trading and Julio Recontique. It harps on their alleged non use of early warning device as testified to by Col. Demetrio dela Cruz, the station commander of Gapan, Nueva Ecija who investigated the incident, and Francisco Romano, the bus conductor. The records do not bear out Baliwag's 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 Transportation Office. However, the evidence shows that Recontique and

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Ecala placed a kerosene lamp or torch at the edge of the road, near the rear portion of the truck to serve as an early warning device. This substantially complies with Section 34 (g) of the Land Transportation and Traffic Code, to wit: "(g) lights and reflector when parked or disabled. – Appropriate parking lights or flares visible one hundred meters away shall be displayed at the corner of the vehicle whenever such vehicle is parked on highways or in places that are not well-lighted or, is placed in such manner as to endanger passing traffic. Furthermore, every motor vehicle shall be provided at all times with built-in reflectors or other similar warning devices either pasted, painted or attached at its front and back which shall likewise be visible at night at least one hundred meters away. No vehicle not provided with any of the requirements mentioned in this subsection shall be registered." Baliwag's argument that the kerosene lamp or torch does not substantially comply with the law is untenable. The aforequoted law clearly allows the use not only of an early warning device of the triangular reflectorized plates variety but also parking lights or flares visible one hundred meters away. Indeed, Col. dela Cruz himself admitted that a kerosene lamp is an acceptable substitute for the reflectorized plates. No negligence, therefore, may be imputed to A & J Trading and its driver, Recontique. 3. ID.; DAMAGES; To PROVE ACTUAL DAMAGES, THE BEST EVIDENCE AVAILABLE TO THE PARTIES MUST BE PRESENTED. – The propriety of the amount awarded as hospitalization and medical fees. The award of P25,000.00 is not supported by the evidence on record. The Garcias presented receipts marked as Exhibits "B-1 " to "B-42" but their total amounted only to P5,017.74. To be sure, Leticia testified as to the extra amount spent for her medical needs but without more reliable evidence, her lone testimony cannot justify the award of P25,000.00. To prove actual damages, the best evidence available to the injured party must be presented. The court cannot rely on uncorroborated testimony whose truth is suspect, but must depend upon competent proof that damages have been actually suffered. Thus, we reduce the actual damages for medical and hospitalization expenses to P5,017.74. 4. ID.; ID.; MORAL DAMAGES; RECOVERABLE IF THE CARRIER THROUGH ITS AGENT, ACTED FRAUDULENTLY OR IN BAD FAITH. – The award of moral damages is in accord with law. In a breach of contract of carriage, moral damages are recoverable if the carrier, through its agent, acted fraudulently or in bad faith. The evidence shows the gross negligence of the driver of Baliwag bus which amounted to bad faith. Without doubt, Leticia and Allan experienced physical suffering, mental anguish and serious anxiety by reason of the accident. APPEARANCES OF COUNSEL Leopoldo C. Sta. Maria for Baliwag Transit, Inc. Arturo D. Vallar for Sps. Antonio & Leticia Garcia. Allan A. Leynes for A & J Trading, and Julio Recontique. DECISION PUNO, J.:

This is a petition for certiorari to review the Decision[1] of the Court of Appeals in CA-G.R. CV-31246 awarding damages in favor of the spouses Antonio and Leticia Garcia for breach of contract of carriage.[2] filed by the spouses Garcia questioning the same Court of Appeals' Decision which reduced their award of damages. On November 13, 1995, we denied their petition for review. The records show that on July 31, 1980, Leticia Garcia, and her five-year old son, Allan Garcia, boarded Baliwag Transit Bus No. 2036 bound for Cabanatuan City driven by Jaime Santiago. They took the seat behind the driver. At about 7:30 in the evening, in Malimba, Gapan, Nueva Ecija, the bus passengers saw a cargo truck parked at the shoulder of the national highway. Its left rear portion jutted to the outer lane, the shoulder of the road was too narrow to accommodate the whole truck. A kerosene lamp appeared at the edge of the road obviously to serve as a warning device. The truck driver, Julio Recontique, and his helper, Arturo Escala, were then replacing a flat tire. The truck is owned by respondent A & J Trading. Bus driver Santiago was driving at an inordinately fast speed and failed to notice the truck and the kerosene lamp at the edge of the road. Santiago's passengers urged him to slow down but he paid them no heed. Santiago even carried animated conversations with his co-employees while driving. When the danger of collision became imminent, the bus passengers shouted "Babangga tayo!". Santiago stepped on the brake, but it was too late. His bus rammed into the stalled cargo truck. It caused the instant death of Santiago and Escala, and injury to several others. Leticia and Allan Garcia were among the injured passengers. Leticia suffered a fracture in her pelvis and right leg. They rushed her to the provincial hospital in Cabanatuan City where she was given emergency treatment. After three days, she was transferred to the National Orthopedic Hospital where she was confined for more than a month.[3] She underwent an operation for partial hip prosthesis.[4] Allan, on the other hand, broke a leg. He was also given emergency treatment at the provincial hospital. Spouses Antonio and Leticia Garcia sued Baliwag Transit, Inc., A & J Trading and Julio Recontique for damages in the Regional Trial Court of Bulacan.[5] Leticia sued as an injured passenger of Baliwag and as mother of Allan. At the time of the complaint, Allan was a minor, hence, the suit initiated by his parents in his favor. Baliwag, A & J Trading and Recontique disclaimed responsibility for the mishap. Baliwag alleged that the accident was caused solely by the fault and negligence of A & J Trading and its driver, Recontique. Baliwag charged that Recontigue failed to place an early warning device at the corner of the disabled cargo truck to warn oncoming vehicles.[6] On the other hand, A & J Trading and Recontique alleged that the accident was the result of the

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negligence and reckless driving of Santiago, bus driver of Baliwag.[7] After hearing, the trial court found all the defendants liable, thus: xxx

xxx

xxx

"In view thereof, the Court holds that both defendants should be held liable; the defendant Baliwag Transit, Inc. for having failed to deliver the plaintiff and her son to their point of destination safely in violation of plaintiff's and defendant Baliwag Transit's contractual relation. The defendant A & J and Julio Recontique for failure to provide its cargo truck with an early warning device in violation of the Motor Vehicle Law."[8] The trial court ordered Baliwag, A & J Trading and Recontique to pay jointly and severally the Garcia spouses the following: (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 attorney's fee.[9] On appeal, the Court of Appeals modified the trial court's Decision by absolving A & J Trading from liability and by reducing the award of attorney's fees to P10,000.00 and loss of earnings to P300,000.00, respectively.[10] Baliwag filed the present petition for review raising the following issues: “1. Did the Court of Appeals err in absolving A & J Trading from liability and holding Baliwag solely liable for the injuries suffered by Leticia and Allan Garcia in the accident? 2. Is the amount of damages awarded by the Court of Appeals to the Garcia spouses correct?” We affirm the factual findings of the Court of Appeals. I As a common carrier, Baliwag breached its contract of carriage when it failed to deliver its passengers, Leticia and Allan Garcia to their destination safe and sound. A common carrier is bound to carry its passengers safely as far as human care and foresight can provide, using the utmost diligence of a very cautious person, with due regard for all the circumstances.[11] In a contract of carriage, it is presumed that the common carrier was at fault or was negligent when a passenger dies or is injured. Unless the presumption is rebutted, the court need not even make an express finding of fault or negligence on the part of the common carrier. This statutory presumption may only be overcome by evidence that the carrier exercised extraordinary diligence as prescribed in Articles 1733 and 1755 of the Civil Code.[12]

The records are bereft of any proof to show that Baliwag exercised extraordinary diligence. On the contrary, the evidence demonstrates its driver's recklessness. Leticia Garcia testified that the bus was running at a very high speed despite the drizzle and the darkness of the highway. The passengers pleaded for its driver to slow down, but their plea was ignored.[13] Leticia also revealed that the driver was smelling of liquor.[14] She could smell him as she was seated right behind the driver. Another passenger, Felix Cruz testified that immediately before the collision, the bus driver was conversing with a co-employee.[15] All these prove the bus driver's wanton disregard for the physical safety of his passengers, which makes Baliwag as a common carrier liable for damages under Article 1759 of the Civil Code: “Art. 1759. Common carriers are liable for the death of or injuries to passengers through the negligence or willfull acts of the former's 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 do not cease upon proof that they exercised all the diligence of a good father of a family in the selection or supervision of their employees.” Baliwag cannot evade its liability by insisting that the accident was caused solely by the negligence of A & J Trading and Julio Recontique. It harps on their alleged non use of an early warning device as testified to by Col. Demetrio dela Cruz, the station commander of Gapan, Nueva Ecija who investigated the incident, and Francisco Romano, the bus conductor. The records do not bear out Baliwag's contention. Col. dela Cruz and Romano testified that they did not see any early warning device at the scene of the accident.[16] They were referring to the triangular reflectorized plates in red and yellow issued by the Land Transportation Office. However, the evidence shows that Recontique and Ecala placed a kerosene lamp or torch at the edge of the road, near the rear portion of the truck to serve as an early warning device.[17] This substantially complies with Section 34 (g) of the Land Transportation and Traffic Code, to wit: “(g) Lights and reflector when parked or disabled. – Appropriate parking lights or flares visible one hundred meters away shall be displayed at the corner of the vehicle whenever such vehicle is parked on highways or in places that are not well-lighted or, is placed in such manner as to endanger passing traffic. Furthermore, every motor vehicle shall be provided at all times with built-in reflectors or other similar warning devices either pasted, painted or attached at its front and back which shall likewise be visible at night at least one hundred meters away. No vehicle not provided with any of the requirements mentioned in this subsection shall be registered. (Italics supplied)”

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Baliwag's argument that the kerosene lamp or torch does not substantially comply with the law is untenable. The aforequoted law clearly allows the use not only of an early warning device of the triangular reflectorized plates variety but also parking lights or flares visible one hundred meters away. Indeed, Col. dela Cruz himself admitted that a kerosene lamp is an acceptable substitute for the reflectorized plates.[18] No negligence, therefore, may be imputed to A & J Trading and its driver, Recontique.

many people surrounding the place (TSN, Aug, 22, 1989, p. 13). He further admitted that there exists a probability that the lights of the truck may have been smashed by the bus at the time of the accident considering the location of the truck where its rear portion was connected with the front portion of the bus (TSN, March 29, 1985, pp. 11-13). Investigator's testimony therefore did not confirm nor deny the existence of such warning device, making his testimony of little probative value.”[19] II

Anent this factual issue, the analysis of evidence made by the Court of Appeals deserves our concurrence, viz: xxx

xxx

xxx

“In the case at bar, both the injured passengers of the Baliwag involved in the accident testified that they saw some sort of kerosene or a torch on the rear portion of the truck before the accident. Baliwag Transit's conductor attempted to defeat such testimony by declaring that he noticed no early warning device in front of the truck. Among the testimonies offered by the witnesses who were present at the scene of the accident, we rule to uphold the affirmative testimonies given by the two injured passengers and give less credence to the testimony of the bus conductor who solely testified that no such early warning device exists. The testimonies of injured passengers who may well be considered as disinterested witness appear to be natural and more probable than the testimony given by Francisco Romano who is undoubtedly interested in the outcome of the case, being the conductor of the defendant-appellant Baliwag Transit Inc. It must be borne in mind that the situation then prevailing at the time of the accident was admittedly drizzly and all dark. This being so, it would be improbable and perhaps impossible on the part of the truck helper without the torch nor the kerosene to remove the flat tires of the truck. Moreover, witness including the bits conductor himself admitted that the passengers shouted, that they are going to bump before the collision which consequently caused the bus driver to apply the brake 3 to 4 meters away from the truck. Again, without the kerosene nor the torch in front of the truck, it would be improbable for the driver, more so the passengers to notice the truck to be bumped by the bus considering the darkness of the place at the time of the accident. xxx x

We now review the amount of damages awarded to the Garcia spouses.

xxx

xx

While it is true that the investigating officer testified that he found no early warning device at the time of his investigation, We rule to give less credence to such testimony insofar as he himself admitted on cross examination that he did not notice the presence of any kerosene lamp at the back of the truck because when he arrived at the scene of the accident, there were already

First, the propriety of the amount awarded as hospitalization and medical fees. The award of P25,000.00 is not supported by the evidence on record. The Garcias presented receipts marked as Exhibits “B-1” to “B –42” but their total amounted only to P5,017.74. To be sure, Leticia testified as to the extra amount spent for her medical needs but without more reliable evidence, her lone testimony cannot justify the award of P25,000.00. To prove actual damages, the best evidence available to the injured party must be presented. The court cannot rely on uncorroborated testimony whose truth is suspect, but must depend upon competent proof that damages have been actually suffered[20] Thus, we reduce the actual damages for medical and hospitalization expenses to P5,017.74. Second, we find as reasonable the award of P300,000.00 representing Leticia's lost earnings. Before the accident, Leticia was engaged in embroidery, earning P5,000.00 per month.[21] Her injuries forced her to stop working. Considering the nature and extent of her injuries and the length of time it would take her to recover,[22] we find it proper that Baliwag should compensate her lost income for five (5) years.[23] Third, the award of moral damages is in accord with law. In a breach of contract of carriage, moral damages are recoverable if the carrier, through its agent, acted fraudulently or in bad faith.[24] The evidence shows the gross negligence of the driver of Baliwag bus which amounted to bad faith. Without doubt, Leticia and Allan experienced physical suffering, mental anguish and serious anxiety by reason of the accident. Leticia underwent an operation to replace her broken hip bone with a metal plate. She was confined at the National Orthopedic Hospital for 45 days. The young Allan was also confined in the hospital for his foot injury. Contrary to the contention of Baliwag, the decision of the trial court as affirmed by the Court of Appeals awarded moral damages to Antonio and Leticia Garcia not in their capacity as parents of Allan. Leticia was given moral damages as an injured party. Allan was also granted moral damages as an injured party but because of his minority, the award in his favor has to be given to his father who represented him in the suit. Finally, we find the award of attorney's fees justified. The complaint for damages was instituted by the Garcia spouses on December 15, 1982, following the unjustified refusal of

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Baliwag to settle their claim. The Decision was promulgated by the trial court only on January 29, 1991 or about nine years later. Numerous pleadings were filed before the trial court, the appellate court and to this Court. Given the complexity of the case and the amount of damages involved,[25] the award of attorney's fee for P10,000.00 is just and reasonable. IN VIEW WHEREOF, the Decision of the respondent Court of Appeals in CA-G.R. CV-31246 is AFFIRMED with the MODIFICATION reducing the actual damages for hospitalization and medical fees to P5,017.74. No costs. SO ORDERED. Fabre v. CA July 26,1996 [G.R. No. 111127. July 26, 1996] MR. & MRS. ENGRACIO FABRE, JR.* and PORFIRIO CABIL, petitioners, vs. COURT OF APPEALS, THE WORD FOR THE WORLD CHRISTIAN FELLOWSHIP, INC., AMYLINE ANTONIO, JOHN RICHARDS, GONZALO GONZALES, VICENTE V. QUE, JR., ICLI CORDOVA, ARLENE GOJOCCO, ALBERTO ROXAS CORDERO, RICHARD BAUTISTA, JOCELYN GARCIA, YOLANDA CORDOVA, NOEL ROQUE, EDWARD TAN, ERNESTO NARCISO, ENRIQUETA LOCSIN, FRANCIS NORMAN O. LOPEZ, JULIUS CAESAR GARCIA, ROSARIO MA. V. ORTIZ, MARIETTA C. CLAVO, ELVIE SENIEL, ROSARIO MARA-MARA, TERESITA REGALA, MELINDA TORRES, MARELLA MIJARES, JOSEFA CABATINGAN, MARA NADOC, DIANE MAYO, TESS PLATA, MAYETTE JOCSON, ARLENE Y. MORTIZ, LIZA MAYO, CARLOS RANARIO, ROSAMARIA T. RADOC and BERNADETTE FERRER, respondents. DECISION MENDOZA, J.: This is a petition for review on certiorari of the decision of the Court of Appeals[1] in CA-GR No. 28245, dated September 30, 1992, which affirmed with modification the decision of the Regional Trial Court of Makati, Branch 58, ordering petitioners jointly and severally to pay damages to private respondent Amyline Antonio, and its resolution which denied petitioners’ motion for reconsideration for lack of merit. Petitioners Engracio Fabre, Jr. and his wife were owners of a 1982 model Mazda minibus. They used the bus principally in connection with a bus service for school children which they operated in Manila. The couple had a driver, Porfirio J. Cabil, whom they hired in 1981, after trying him out for two weeks. His job was to take school children to and from the St. Scholastica’s College in Malate, Manila. On November 2, 1984 private respondent Word for the World Christian Fellowship Inc. (WWCF) arranged with petitioners for the transportation of 33 members of its Young Adults Ministry from Manila to La Union and back

in consideration of which private respondent paid petitioners the amount of P3,000.00. The group was scheduled to leave on November 2, 1984, at 5:00 o’clock in the afternoon. However, as several members of the party were late, the bus did not leave the Tropical Hut at the corner of Ortigas Avenue and EDSA until 8:00 o’clock in the evening. Petitioner Porfirio Cabil drove the minibus. The usual route to Caba, La Union was through Carmen, Pangasinan. However, the bridge at Carmen was under repair, so that petitioner Cabil, who was unfamiliar with the area (it being his first trip to La Union), was forced to take a detour through the town of Ba-ay in Lingayen, Pangasinan. At 11:30 that night, petitioner Cabil came upon a sharp curve on the highway, running on a south to east direction, which he described as “siete.” The road was slippery because it was raining, causing the bus, which was running at the speed of 50 kilometers per hour, to skid to the left road shoulder. The bus hit the left traffic steel brace and sign along the road and rammed the fence of one Jesus Escano, then turned over and landed on its left side, coming to a full stop only after a series of impacts. The bus came to rest off the road. A coconut tree which it had hit fell on it and smashed its front portion. Several passengers were injured. Private respondent Amyline Antonio was thrown on the floor of the bus and pinned down by a wooden seat which came off after being unscrewed. It took three persons to safely remove her from this position. She was in great pain and could not move. The driver, petitioner Cabil, claimed he did not see the curve until it was too late. He said he was not familiar with the area and he could not have seen the curve despite the care he took in driving the bus, because it was dark and there was no sign on the road. He said that he saw the curve when he was already within 15 to 30 meters of it. He allegedly slowed down to 30 kilometers per hour, but it was too late. The Lingayen police investigated the incident the next day, November 3, 1984. On the basis of their finding they filed a criminal complaint against the driver, Porfirio Cabil. The case was later filed with the Lingayen Regional Trial Court. Petitioners Fabre paid Jesus Escano P1,500.00 for the damage to the latter’s fence. On the basis of Escano’s affidavit of desistance the case against petitioners Fabre was dismissed. Amyline Antonio, who was seriously injured, brought this case in the RTC of Makati, Metro Manila. As a result of the accident, she is now suffering from paraplegia and is permanently paralyzed from the waist down. During the trial she described the operations she underwent and adduced evidence regarding the cost of her treatment and therapy. Immediately after the accident, she was taken to the Nazareth Hospital in Ba-ay, Lingayen. As this hospital was not adequately equipped, she was transferred to the Sto. Niño Hospital, also in the town of Ba-ay, where she was given sedatives. An x-ray was taken and the damage to

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her spine was determined to be too severe to be treated there. She was therefore brought to Manila, first to the Philippine General Hospital and later to the Makati Medical Center where she underwent an operation to correct the dislocation of her spine. In its decision dated April 17, 1989, the trial court found that: No convincing evidence was shown that the minibus was properly checked for travel to a long distance trip and that the driver was properly screened and tested before being admitted for employment. Indeed, all the evidence presented have shown the negligent act of the defendants which ultimately resulted to the accident subject of this case. Accordingly, it gave judgment for private respondents holding: Considering that plaintiffs Word for the World Christian Fellowship, Inc. and Ms. Amyline Antonio were the only ones who adduced evidence in support of their claim for damages, the Court is therefore not in a position to award damages to the other plaintiffs.

5) P10,000.00 as attorney’s fees; and 6) Costs of suit. The Court of Appeals sustained the trial court’s finding that petitioner Cabil failed to exercise due care and precaution in the operation of his vehicle considering the time and the place of the accident. The Court of Appeals held that the Fabres were themselves presumptively negligent. Hence, this petition. Petitioners raise the following issues: I. WHETHER OR NOT PETITIONERS WERE NEGLIGENT. II. WHETHER OR NOT PETITIONERS WERE LIABLE FOR THE INJURIES SUFFERED BY PRIVATE RESPONDENTS. III. WHETHER OR NOT DAMAGES CAN BE AWARDED AND IN THE POSITIVE, UP TO WHAT EXTENT.

1) P93,657.11 as compensatory and actual damages;

Petitioners challenge the propriety of the award of compensatory damages in the amount of P600,000.00. It is insisted that, on the assumption that petitioners are liable, an award of P600,000.00 is unconscionable and highly speculative. Amyline Antonio testified that she was a casual employee of a company called “Suaco,” earning P1,650.00 a month, and a dealer of Avon products, earning an average of P1,000.00 monthly. Petitioners contend that as casual employees do not have security of tenure, the award of P600,000.00, considering Amyline Antonio’s earnings, is without factual basis as there is no assurance that she would be regularly earning these amounts.

2) P500,000.00 as the reasonable amount of loss of earning capacity of plaintiff Amyline Antonio;

With the exception of the award of damages, the petition is devoid of merit.

3) P20,000.00 as moral damages;

First, it is unnecessary for our purpose to determine whether to decide this case on the theory that petitioners are liable for breach of contract of carriage or culpa contractual or on the theory of quasi delict or culpa aquiliana as both the Regional Trial Court and the Court of Appeals held, for although the relation of passenger and carrier is “contractual both in origin and nature,” nevertheless “the act that breaks the contract may be also a tort.”[2] In either case, the question is whether the bus driver, petitioner Porfirio Cabil, was negligent.

WHEREFORE, premises considered, the Court hereby renders judgment against defendants Mr. & Mrs. Engracio Fabre, Jr. and Porfirio Cabil y Jamil pursuant to articles 2176 and 2180 of the Civil Code of the Philippines and said defendants are ordered to pay jointly and severally to the plaintiffs the following amount:

4) P20,000.00 as exemplary damages; and 5) 25% of the recoverable amount as attorney’s fees; 6) Costs of suit. SO ORDERED. The Court of Appeals affirmed the decision of the trial court with respect to Amyline Antonio but dismissed it with respect to the other plaintiffs on the ground that they failed to prove their respective claims. The Court of Appeals modified the award of damages as follows: 1) P93,657.11 as actual damages; 2) P600,000.00 as compensatory damages; 3) P50,000.00 as moral damages; 4) P20,000.00 as exemplary damages;

The finding that Cabil drove his bus negligently, while his employer, the Fabres, who owned the bus, failed to exercise the diligence of a good father of the family in the selection and supervision of their employee is fully supported by the evidence on record. These factual findings of the two courts we regard as final and conclusive, supported as they are by the evidence. Indeed, it was admitted by Cabil that on the night in question, it was raining, and, as a consequence, the road was slippery, and it was dark. He averred these facts to justify his failure to see that there lay a sharp curve ahead. However, it is undisputed that Cabil drove his bus at the speed of 50 kilometers per hour and only slowed down when he noticed the curve some 15 to 30

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meters ahead.[3] By then it was too late for him to avoid falling off the road. Given the conditions of the road and considering that the trip was Cabil’s first one outside of Manila, Cabil should have driven his vehicle at a moderate speed. There is testimony[4] that the vehicles passing on that portion of the road should only be running 20 kilometers per hour, so that at 50 kilometers per hour, Cabil was running at a very high speed.

by the negligence either of the locomotive engineer or the automobile driver.[9]

Considering the foregoing ¾ the fact that it was raining and the road was slippery, that it was dark, that he drove his bus at 50 kilometers an hour when even on a good day the normal speed was only 20 kilometers an hour, and that he was unfamiliar with the terrain, Cabil was grossly negligent and should be held liable for the injuries suffered by private respondent Amyline Antonio.

Art. 1732. Common carriers are persons, corporations, firms or associations engaged in the business of carrying or transporting passengers or goods or both, by land, water, or air for compensation, offering their services to the public.

Pursuant to Arts. 2176 and 2180 of the Civil Code his negligence gave rise to the presumption that his employers, the Fabres, were themselves negligent in the selection and supervision of their employee. Due diligence in selection of employees is not satisfied by finding that the applicant possessed a professional driver’s license. The employer should also examine the applicant for his qualifications, experience and record of service.[5] Due diligence in supervision, on the other hand, requires the formulation of rules and regulations for the guidance of employees and the issuance of proper instructions as well as actual implementation and monitoring of consistent compliance with the rules.[6] In the case at bar, the Fabres, in allowing Cabil to drive the bus to La Union, apparently did not consider the fact that Cabil had been driving for school children only, from their homes to the St. Scholastica’s College in Metro Manila.[7] They had hired him only after a two-week apprenticeship. They had tested him for certain matters, such as whether he could remember the names of the children he would be taking to school, which were irrelevant to his qualification to drive on a long distance travel, especially considering that the trip to La Union was his first. The existence of hiring procedures and supervisory policies cannot be casually invoked to overturn the presumption of negligence on the part of an employer.[8] Petitioners argue that they are not liable because (1) an earlier departure (made impossible by the congregation’s delayed meeting) could have averted the mishap and (2) under the contract, the WWCF was directly responsible for the conduct of the trip. Neither of these contentions hold water. The hour of departure had not been fixed. Even if it had been, the delay did not bear directly on the cause of the accident. With respect to the second contention, it was held in an early case that: [A] person who hires a public automobile and gives the driver directions as to the place to which he wishes to be conveyed, but exercises no other control over the conduct of the driver, is not responsible for acts of negligence of the latter or prevented from recovering for injuries suffered from a collision between the automobile and a train, caused

As already stated, this case actually involves a contract of carriage. Petitioners, the Fabres, did not have to be engaged in the business of public transportation for the provisions of the Civil Code on common carriers to apply to them. As this Court has held:[10]

The above article makes no distinction between one whose principal business activity is the carrying of persons or goods or both, and one who does such carrying only as an ancillary activity (in local idiom, as “a sideline”). Article 1732 also carefully avoids making any distinction between a person or enterprise offering transportation service on a regular or scheduled basis and one offering such service on an occasional, episodic or unscheduled basis. Neither does Article 1732 distinguish between a carrier offering its services to the “general public,” i.e., the general community or population, and one who offers services or solicits business only from a narrow segment of the general population. We think that Article 1732 deliberately refrained from making such distinctions. As common carriers, the Fabres were bound to exercise “extraordinary diligence” for the safe transportation of the passengers to their destination. This duty of care is not excused by proof that they exercised the diligence of a good father of the family in the selection and supervision of their employee. As Art. 1759 of the Code provides: Common carriers are liable for the death of or injuries to passengers through the negligence or wilful acts of the former’s employees, although such employees may have acted beyond the scope of their authority or in violation of the orders of the common carriers. This liability of the common carriers does not cease upon proof that they exercised all the diligence of a good father of a family in the selection and supervision of their employees. The same circumstances detailed above, supporting the finding of the trial court and of the appellate court that petitioners are liable under Arts. 2176 and 2180 for quasi delict, fully justify finding them guilty of breach of contract of carriage under Arts. 1733, 1755 and 1759 of the Civil Code. Secondly, we sustain the award of damages in favor of Amyline Antonio. However, we think the Court of Appeals erred in increasing the amount of compensatory damages because private respondents did not question this award as inadequate.[11] To the contrary, the award of P500,000.00 for compensatory damages which the Regional Trial Court made is reasonable considering the contingent nature of her income as a casual employee of a company and as

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distributor of beauty products and the fact that the possibility that she might be able to work again has not been foreclosed. In fact she testified that one of her previous employers had expressed willingness to employ her again. With respect to the other awards, while the decisions of the trial court and the Court of Appeals do not sufficiently indicate the factual and legal basis for them, we find that they are nevertheless supported by evidence in the records of this case. Viewed as an action for quasi delict, this case falls squarely within the purview of Art. 2219(2) providing for the payment of moral damages in cases of quasi delict. On the theory that petitioners are liable for breach of contract of carriage, the award of moral damages is authorized by Art. 1764, in relation to Art. 2220, since Cabil’s gross negligence amounted to bad faith.[12] Amyline Antonio’s testimony, as well as the testimonies of her father and co-passengers, fully establish the physical suffering and mental anguish she endured as a result of the injuries caused by petitioners’ negligence. The award of exemplary damages and attorney’s fees was also properly made. However, for the same reason that it was error for the appellate court to increase the award of compensatory damages, we hold that it was also error for it to increase the award of moral damages and reduce the award of attorney’s fees, inasmuch as private respondents, in whose favor the awards were made, have not appealed. [13] As above stated, the decision of the Court of Appeals can be sustained either on the theory of quasi delict or on that of breach of contract. The question is whether, as the two courts below held, petitioners, who are the owners and driver of the bus, may be made to respond jointly and severally to private respondent. We hold that they may be. In Dangwa Trans. Co. Inc. v. Court of Appeals,[14] on facts similar to those in this case, this Court held the bus company and the driver jointly and severally liable for damages for injuries suffered by a passenger. Again, in Bachelor Express, Inc. v. Court of Appeals[15] a driver found negligent in failing to stop the bus in order to let off passengers when a fellow passenger ran amuck, as a result of which the passengers jumped out of the speeding bus and suffered injuries, was held also jointly and severally liable with the bus company to the injured passengers. The same rule of liability was applied in situations where the negligence of the driver of the bus on which plaintiff was riding concurred with the negligence of a third party who was the driver of another vehicle, thus causing an accident. In Anuran v. Buño,[16] Batangas Laguna Tayabas Bus Co. v. Intermediate Appellate Court,[17] and Metro Manila Transit Corporation v. Court of Appeals,[18] the bus company, its driver, the operator of the other vehicle and the driver of the vehicle were jointly and severally held liable to the injured passenger or the latter’s heirs. The basis of this allocation of liability was explained in Viluan v. Court of Appeals,[19] thus:

Nor should it make any difference that the liability of petitioner [bus owner] springs from contract while that of respondents [owner and driver of other vehicle] arises from quasi-delict. As early as 1913, we already ruled in Gutierrez vs. Gutierrez, 56 Phil. 177, that in case of injury to a passenger due to the negligence of the driver of the bus on which he was riding and of the driver of another vehicle, the drivers as well as the owners of the two vehicles are jointly and severally liable for damages. Some members of the Court, though, are of the view that under the circumstances they are liable on quasi-delict.[20] It is true that in Philippine Rabbit Bus Lines, Inc. v. Court of Appeals[21] this Court exonerated the jeepney driver from liability to the injured passengers and their families while holding the owners of the jeepney jointly and severally liable, but that is because that case was expressly tried and decided exclusively on the theory of culpa contractual. As this Court there explained: The trial court was therefore right in finding that Manalo [the driver] and spouses Mangune and Carreon [the jeepney owners] were negligent. However, its ruling that spouses Mangune and Carreon are jointly and severally liable with Manalo is erroneous. The driver cannot be held jointly and severally liable with the carrier in case of breach of the contract of carriage. The rationale behind this is readily discernible. Firstly, the contract of carriage is between the carrier and the passenger, and in the event of contractual liability, the carrier is exclusively responsible therefore to the passenger, even if such breach be due to the negligence of his driver (see Viluan v. The Court of Appeals, et al., G.R. Nos. L-21477-81, April 29, 1966, 16 SCRA 742) . . . [22] As in the case of BLTB, private respondents in this case and her co-plaintiffs did not stake out their claim against the carrier and the driver exclusively on one theory, much less on that of breach of contract alone. After all, it was permitted for them to allege alternative causes of action and join as many parties as may be liable on such causes of action[23] so long as private respondent and her coplaintiffs do not recover twice for the same injury. What is clear from the cases is the intent of the plaintiff there to recover from both the carrier and the driver, thus justifying the holding that the carrier and the driver were jointly and severally liable because their separate and distinct acts concurred to produce the same injury. WHEREFORE, the decision of the Court of Appeals is AFFIRMED with MODIFICATION as to the award of damages. Petitioners are ORDERED to PAY jointly and severally the private respondent Amyline Antonio the following amounts: 1) P93,657.11 as actual damages; 2) P500,000.00 as the reasonable amount of loss of earning capacity of plaintiff Amyline Antonio; 3) P20,000.00 as moral damages;

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4) P20,000.00 as exemplary damages; 5) 25% of the recoverable amount as attorney’s fees; and

compensatory damages, P40,000.00 for hospital and medical expenses, P18,270.00 for burial expenses plus such amounts as may be fixed by the trial court for exemplary damages and attorney’s fees.

6) costs of suit. SO ORDERED. Mallari v. CA Jan 31,2000 [G.R. No. 128607. January 31, 2000] ALFREDO MALLARI SR. and ALFREDO MALLARI JR., petitioners, vs. COURT OF APPEALS and BULLETIN PUBLISHING CORPORATION, respondents. DECISION BELLOSILLO, J.: ALFREDO MALLARI SR. and ALFREDO MALLARI JR. in this petition for review on certiorari seek to set aside the Decision of the Court of Appeals[1] which reversed the court a quo and adjudged petitioners to be liable for damages due to negligence as a common carrier resulting in the death of a passenger. On 14 October 1987, at about 5:00 o'clock in the morning, the passenger jeepney driven by petitioner Alfredo Mallari Jr. and owned by his co-petitioner Alfredo Mallari Sr. collided with the delivery van of respondent Bulletin Publishing Corp. (BULLETIN, for brevity) along the National Highway in Barangay San Pablo, Dinalupihan, Bataan. Petitioner Mallari Jr. testified that he went to the left lane of the highway and overtook a Fiera which had stopped on the right lane. Before he passed by the Fiera, he saw the van of respondent BULLETIN coming from the opposite direction. It was driven by one Felix Angeles. The sketch of the accident showed that the collision occurred after Mallari Jr. overtook the Fiera while negotiating a curve in the highway. The points of collision were the left rear portion of the passenger jeepney and the left front side of the delivery van of BULLETIN. The two (2) right wheels of the delivery van were on the right shoulder of the road and pieces of debris from the accident were found scattered along the shoulder of the road up to a certain portion of the lane travelled by the passenger jeepney. The impact caused the jeepney to turn around and fall on its left side resulting in injuries to its passengers one of whom was Israel Reyes who eventually died due to the gravity of his injuries. Manikanä On 16 December 1987 Claudia G. Reyes, the widow of Israel M. Reyes, filed a complaint for damages with the Regional Trial Court of Olongapo City against Alfredo Mallari Sr. and Alfredo Mallari Jr., and also against BULLETIN, its driver Felix Angeles, and the N.V. Netherlands Insurance Company. The complaint alleged that the collision which resulted in the death of Israel Reyes was caused by the fault and negligence of both drivers of the passenger jeepney and the Bulletin Isuzu delivery van. The complaint also prayed that the defendants be ordered jointly and severally to pay plaintiff P1,006,777.40 in

The trial court found that the proximate cause of the collision was the negligence of Felix Angeles, driver of the Bulletin delivery van, considering the fact that the left front portion of the delivery truck driven by Felix Angeles hit and bumped the left rear portion of the passenger jeepney driven by Alfredo Mallari Jr. Hence, the trial court ordered BULLETIN and Felix Angeles to pay jointly and severally Claudia G. Reyes, widow of the deceased victim, the sums of P42,106.93 for medical expenses; P8,600.00 for funeral and burial expenses; P1,006,777.40 for loss of earning capacity; P5,000.00 for moral damages and P10,000.00 for attorney’s fees. The trial court also ordered N.V. Netherlands Insurance Company to indemnify Claudia G. Reyes P12,000.00 as death indemnity and P2,500.00 for funeral expenses which when paid should be deducted from the liabilities of respondent BULLETIN and its driver Felix Angeles to the plaintiff. It also dismissed the complaint against the other defendants Alfredo Mallari Sr. and Alfredo Mallari Jr. On appeal the Court of Appeals modified the decision of the trial court and found no negligence on the part of Angeles and consequently of his employer, respondent BULLETIN. Instead, the appellate court ruled that the collision was caused by the sole negligence of petitioner Alfredo Mallari Jr. who admitted that immediately before the collision and after he rounded a curve on the highway, he overtook a Fiera which had stopped on his lane and that he had seen the van driven by Angeles before overtaking the Fiera. The Court of Appeals ordered petitioners Mallari Jr. and Mallari Sr. to compensate Claudia G. Reyes P1,006,777.50 for loss of earning capacity, P50,000.00 as indemnity for death and P10,000.00 for attorney’s fees. It absolved from any liability respondent BULLETIN, Felix Angeles and N.V. Netherlands Insurance Company. Hence this petition. Oldmisâ o Petitioners contend that there is no evidence to show that petitioner Mallari Jr. overtook a vehicle at a curve on the road at the time of the accident and that the testimony of Angeles on the overtaking made by Mallari Jr. was not credible and unreliable. Petitioner also submits that the trial court was in a better position than the Court of Appeals to assess the evidence and observe the witnesses as well as determine their credibility; hence, its finding that the proximate cause of the collision was the negligence of respondent Angeles, driver of the delivery van owned by respondent BULLETIN, should be given more weight and consideration. We cannot sustain petitioners. Contrary to their allegation that there was no evidence whatsoever that petitioner Mallari Jr. overtook a vehicle at a curve on the road at the time of or before the accident, the same petitioner himself testified that such fact indeed did occur Q:.......And what was that accident all about?

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A:.......Well, what happened, sir, is that at about that time 5:00 o’clock in that morning of October 14 while I was negotiating on the highway at San Pablo, Dinalupihan, Bataan, I was then following a blue Ford Fierra and my distance behind was about twenty (20) feet and then I passed that blue Ford Fierra. I overtook and when I was almost on the right lane of the highway towards Olongapo City there was an oncoming delivery van of the Bulletin Publishing Corporation which bumped the left rear portion of the jeepney which I was driving and as a result of which the jeepney x x x turned around and fell on its left side and as a result of which some of my passengers including me were injured, sir x x x x Q:.......Before you overtook the Ford Fierra jeepney did you look x x x whether there was any vehicle coming towards you? A:.......Yes, sir. Q:.......Did you see the Bulletin van or the Press van coming towards you? A:.......Yes, sir. Q:.......At the moment the Ford Fierra xxx stop(ped) and in overtaking the Fierra, did you not have an option to stop and not to overtake the Ford Fierra? A:.......Well, at the time when the Ford Fierra stopped in front of me I slowed down with the intention of applying the brake, however, when I saw the oncoming vehicle which is the Press van is very far x x x which is 100 feet distance, x x x it is sufficient to overtake the Ford Fierra so I overt(ook) it x x x x Q:.......You said that you took into consideration the speed of the oncoming Press van but you also could not estimate the speed of the press van because it was dark at that time, which of these statements are true? Ncmâ A:.......What I wanted to say, I took into consideration the speed of the oncoming vehicle, the Press van, although at the moment I could not estimate the speed of the oncoming vehicle x x x x[2] The Court of Appeals correctly found, based on the sketch and spot report of the police authorities which were not disputed by petitioners, that the collision occurred immediately after petitioner Mallari Jr. overtook a vehicle in front of it while traversing a curve on the highway.[3] This act of overtaking was in clear violation of Sec. 41, pars. (a) and (b), of RA 4136 as amended, otherwise known as The Land Transportation and Traffic Code which provides: Sec. 41. Restrictions on overtaking and passing. - (a) The driver of a vehicle shall not drive to the left side of the center line of a highway in overtaking or passing another vehicle proceeding in the same direction, unless such left side is clearly visible and is free of oncoming traffic for a

sufficient distance ahead to permit such overtaking or passing to be made in safety. (b) The driver of a vehicle shall not overtake or pass another vehicle proceeding in the same direction when approaching the crest of a grade, nor upon a curve in the highway, where the driver’s view along the highway is obstructed within a distance of five hundred feet ahead except on a highway having two or more lanes for movement of traffic in one direction where the driver of a vehicle may overtake or pass another vehicle: Provided That on a highway, within a business or residential district, having two or more lanes for movement of traffic in one direction, the driver of a vehicle may overtake or pass another vehicle on the right. The rule is settled that a driver abandoning his proper lane for the purpose of overtaking another vehicle in an ordinary situation has the duty to see to it that the road is clear and not to proceed if he cannot do so in safety.[4] When a motor vehicle is approaching or rounding a curve, there is special necessity for keeping to the right side of the road and the driver does not have the right to drive on the left hand side relying upon having time to turn to the right if a car approaching from the opposite direction comes into view.[5] NcmmisÓ In the instant case, by his own admission, petitioner Mallari Jr. already saw that the BULLETIN delivery van was coming from the opposite direction and failing to consider the speed thereof since it was still dark at 5:00 o'clock in the morning mindlessly occupied the left lane and overtook two (2) vehicles in front of it at a curve in the highway. Clearly, the proximate cause of the collision resulting in the death of Israel Reyes, a passenger of the jeepney, was the sole negligence of the driver of the passenger jeepney, petitioner Alfredo Mallari Jr., who recklessly operated and drove his jeepney in a lane where overtaking was not allowed by traffic rules. Under Art. 2185 of the Civil Code, unless there is proof to the contrary, it is presumed that a person driving a motor vehicle has been negligent if at the time of the mishap he was violating a traffic regulation. As found by the appellate court, petitioners failed to present satisfactory evidence to overcome this legal presumption. The negligence and recklessness of the driver of the passenger jeepney is binding against petitioner Mallari Sr., who admittedly was the owner of the passenger jeepney engaged as a common carrier, considering the fact that in an action based on contract of carriage, the court need not make an express finding of fault or negligence on the part of the carrier in order to hold it responsible for the payment of damages sought by the passenger. Under Art. 1755 of the Civil Code, 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 due regard for all the circumstances. Moreover, under Art. 1756 of the Civil Code, in case of death or injuries to passengers, a common carrier is presumed to have been at fault or to have acted negligently, unless it proves that it observed extraordinary diligence. Further, pursuant to Art.

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1759 of the same Code, it is liable for the death of or injuries to passengers through the negligence or willful acts of the former’s employees. This liability of the common carrier does not cease upon proof that it exercised all the diligence of a good father of a family in the selection of its employees. Clearly, by the contract of carriage, the carrier jeepney owned by Mallari Sr. assumed the express obligation to transport the passengers to their destination safely and to observe extraordinary diligence with due regard for all the circumstances, and any injury or death that might be suffered by its passengers is right away attributable to the fault or negligence of the carrier. Scncä m The monetary award ordered by the appellate court to be paid by petitioners to the widow of the deceased passenger Israel M. Reyes of P1,006,777.50 for loss of earning capacity, P50,000.00 as civil indemnity for death, and P10,000.00 for attorney’s fees, all of which were not disputed by petitioners, is a factual matter binding and conclusive upon this Court. WHEREFORE, the Petition is DENIED and the Decision of the Court of Appeals dated 20 September 1995 reversing the decision of the trial court being in accord with law and evidence is AFFIRMED. Consequently, petitioners are ordered jointly and severally to pay Claudia G. Reyes P1,006,777.50 for loss of earning capacity, P50,000.00 as civil indemnity for death, and P10,000.00 for attorney’s fees. Costs against petitioners. SO ORDERED.

H 1762

Contributory Negligence of Pax

1761;

Cangco v. MRR Oct 14,1918 G.R. No. L-12191 October 14, 1918 JOSE CANGCO, plaintiff-appellant, vs. MANILA RAILROAD CO., defendant-appellee. Ramon Sotelo for appellant. Kincaid & Hartigan for appellee.

FISHER, J.: At the time of the occurrence which gave rise to this litigation the plaintiff, Jose Cangco, was in the employment of Manila Railroad Company in the capacity of clerk, with a monthly wage of P25. He lived in the pueblo of San Mateo, in the province of Rizal, which is located upon the line of the defendant railroad company; and in coming daily by train to the company's office in the city of Manila where he worked, he used a pass, supplied by the company, which entitled him to ride upon the company's trains free of charge. Upon the occasion in question, January 20, 1915,

the plaintiff arose from his seat in the second class-car where he was riding and, making, his exit through the door, took his position upon the steps of the coach, seizing the upright guardrail with his right hand for support. On the side of the train where passengers alight at the San Mateo station there is a cement platform which begins to rise with a moderate gradient some distance away from the company's office and extends along in front of said office for a distance sufficient to cover the length of several coaches. As the train slowed down another passenger, named Emilio Zuñiga, also an employee of the railroad company, got off the same car, alighting safely at the point where the platform begins to rise from the level of the ground. When the train had proceeded a little farther the plaintiff Jose Cangco stepped off also, but one or both of his feet came in contact with a sack of watermelons with the result that his feet slipped from under him and he fell violently on the platform. His body at once rolled from the platform and was drawn under the moving car, where his right arm was badly crushed and lacerated. It appears that after the plaintiff alighted from the train the car moved forward possibly six meters before it came to a full stop. The accident occurred between 7 and 8 o'clock on a dark night, and as the railroad station was lighted dimly by a single light located some distance away, objects on the platform where the accident occurred were difficult to discern especially to a person emerging from a lighted car. The explanation of the presence of a sack of melons on the platform where the plaintiff alighted is found in the fact that it was the customary season for harvesting these melons and a large lot had been brought to the station for the shipment to the market. They were contained in numerous sacks which has been piled on the platform in a row one upon another. The testimony shows that this row of sacks was so placed of melons and the edge of platform; and it is clear that the fall of the plaintiff was due to the fact that his foot alighted upon one of these melons at the moment he stepped upon the platform. His statement that he failed to see these objects in the darkness is readily to be credited. The plaintiff was drawn from under the car in an unconscious condition, and it appeared that the injuries which he had received were very serious. He was therefore brought at once to a certain hospital in the city of Manila where an examination was made and his arm was amputated. The result of this operation was unsatisfactory, and the plaintiff was then carried to another hospital where a second operation was performed and the member was again amputated higher up near the shoulder. It appears in evidence that the plaintiff expended the sum of P790.25 in the form of medical and surgical fees and for other expenses in connection with the process of his curation. Upon August 31, 1915, he instituted this proceeding in the Court of First Instance of the city of Manila to recover damages of the defendant company, founding his action upon the negligence of the servants and employees of the defendant in placing the sacks of melons upon the platform

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and leaving them so placed as to be a menace to the security of passenger alighting from the company's trains. At the hearing in the Court of First Instance, his Honor, the trial judge, found the facts substantially as above stated, and drew therefrom his conclusion to the effect that, although negligence was attributable to the defendant by reason of the fact that the sacks of melons were so placed as to obstruct passengers passing to and from the cars, nevertheless, the plaintiff himself had failed to use due caution in alighting from the coach and was therefore precluded form recovering. Judgment was accordingly entered in favor of the defendant company, and the plaintiff appealed. It can not be doubted that the employees of the railroad company were guilty of negligence in piling these sacks on the platform in the manner above stated; that their presence caused the plaintiff to fall as he alighted from the train; and that they therefore constituted an effective legal cause of the injuries sustained by the plaintiff. It necessarily follows that the defendant company is liable for the damage thereby occasioned unless recovery is barred by the plaintiff's own contributory negligence. In resolving this problem it is necessary that each of these conceptions of liability, to-wit, the primary responsibility of the defendant company and the contributory negligence of the plaintiff should be separately examined. It is important to note that the foundation of the legal liability of the defendant is the contract of carriage, and that the obligation to respond for the damage which plaintiff has suffered arises, if at all, from the breach of that contract by reason of the failure of defendant to exercise due care in its performance. That is to say, its liability is direct and immediate, differing essentially, in legal viewpoint from that presumptive responsibility for the negligence of its servants, imposed by article 1903 of the Civil Code, which can be rebutted by proof of the exercise of due care in their selection and supervision. Article 1903 of the Civil Code is not applicable to obligations arising ex contractu, but only to extra-contractual obligations — or to use the technical form of expression, that article relates only to culpa aquiliana and not to culpa contractual. Manresa (vol. 8, p. 67) in his commentaries upon articles 1103 and 1104 of the Civil Code, clearly points out this distinction, which was also recognized by this Court in its decision in the case of Rakes vs. Atlantic, Gulf and Pacific Co. (7 Phil. rep., 359). In commenting upon article 1093 Manresa clearly points out the difference between "culpa, substantive and independent, which of itself constitutes the source of an obligation between persons not formerly connected by any legal tie" and culpa considered as an accident in the performance of an obligation already existing . . . ." In the Rakes case (supra) the decision of this court was made to rest squarely upon the proposition that article 1903 of the Civil Code is not applicable to acts of negligence which constitute the breach of a contract.

The acts to which these articles [1902 and 1903 of the Civil Code] are applicable are understood to be those not growing out of pre-existing duties of the parties to one another. But where relations already formed give rise to duties, whether springing from contract or quasi-contract, then breaches of those duties are subject to article 1101, 1103, and 1104 of the same code. (Rakes vs. Atlantic, Gulf and Pacific Co., 7 Phil. Rep., 359 at 365.) This distinction is of the utmost importance. The liability, which, under the Spanish law, is, in certain cases imposed upon employers with respect to damages occasioned by the negligence of their employees to persons to whom they are not bound by contract, is not based, as in the English Common Law, upon the principle of respondeat superior — if it were, the master would be liable in every case and unconditionally — but upon the principle announced in article 1902 of the Civil Code, which imposes upon all persons who by their fault or negligence, do injury to another, the obligation of making good the damage caused. One who places a powerful automobile in the hands of a servant whom he knows to be ignorant of the method of managing such a vehicle, is himself guilty of an act of negligence which makes him liable for all the consequences of his imprudence. The obligation to make good the damage arises at the very instant that the unskillful servant, while acting within the scope of his employment causes the injury. The liability of the master is personal and direct. But, if the master has not been guilty of any negligence whatever in the selection and direction of the servant, he is not liable for the acts of the latter, whatever done within the scope of his employment or not, if the damage done by the servant does not amount to a breach of the contract between the master and the person injured. It is not accurate to say that proof of diligence and care in the selection and control of the servant relieves the master from liability for the latter's acts — on the contrary, that proof shows that the responsibility has never existed. As Manresa says (vol. 8, p. 68) the liability arising from extracontractual culpa is always based upon a voluntary act or omission which, without willful intent, but by mere negligence or inattention, has caused damage to another. A master who exercises all possible care in the selection of his servant, taking into consideration the qualifications they should possess for the discharge of the duties which it is his purpose to confide to them, and directs them with equal diligence, thereby performs his duty to third persons to whom he is bound by no contractual ties, and he incurs no liability whatever if, by reason of the negligence of his servants, even within the scope of their employment, such third person suffer damage. True it is that under article 1903 of the Civil Code the law creates a presumption that he has been negligent in the selection or direction of his servant, but the presumption is rebuttable and yield to proof of due care and diligence in this respect. The supreme court of Porto Rico, in interpreting identical provisions, as found in the Porto Rico Code, has held that these articles are applicable to cases of extra-contractual

Upon this point the Court said:

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culpa exclusively. (Carmona vs. Cuesta, 20 Porto Rico Reports, 215.) This distinction was again made patent by this Court in its decision in the case of Bahia vs. Litonjua and Leynes, (30 Phil. rep., 624), which was an action brought upon the theory of the extra-contractual liability of the defendant to respond for the damage caused by the carelessness of his employee while acting within the scope of his employment. The Court, after citing the last paragraph of article 1903 of the Civil Code, said: From this article two things are apparent: (1) That when an injury is caused by the negligence of a servant or employee there instantly arises a presumption of law that there was negligence on the part of the master or employer either in selection of the servant or employee, or in supervision over him after the selection, or both; and (2) that that presumption is juris tantum and not juris et de jure, and consequently, may be rebutted. It follows necessarily that if the employer shows to the satisfaction of the court that in selection and supervision he has exercised the care and diligence of a good father of a family, the presumption is overcome and he is relieved from liability. This theory bases the responsibility of the master ultimately on his own negligence and not on that of his servant. This is the notable peculiarity of the Spanish law of negligence. It is, of course, in striking contrast to the American doctrine that, in relations with strangers, the negligence of the servant in conclusively the negligence of the master. The opinion there expressed by this Court, to the effect that in case of extra-contractual culpa based upon negligence, it is necessary that there shall have been some fault attributable to the defendant personally, and that the last paragraph of article 1903 merely establishes a rebuttable presumption, is in complete accord with the authoritative opinion of Manresa, who says (vol. 12, p. 611) that the liability created by article 1903 is imposed by reason of the breach of the duties inherent in the special relations of authority or superiority existing between the person called upon to repair the damage and the one who, by his act or omission, was the cause of it. On the other hand, the liability of masters and employers for the negligent acts or omissions of their servants or agents, when such acts or omissions cause damages which amount to the breach of a contact, is not based upon a mere presumption of the master's negligence in their selection or control, and proof of exercise of the utmost diligence and care in this regard does not relieve the master of his liability for the breach of his contract. Every legal obligation must of necessity be extracontractual or contractual. Extra-contractual obligation has its source in the breach or omission of those mutual duties which civilized society imposes upon it members, or which arise from these relations, other than contractual, of certain members of society to others, generally embraced in the concept of status. The legal rights of each member of society constitute the measure of the corresponding legal

duties, mainly negative in character, which the existence of those rights imposes upon all other members of society. The breach of these general duties whether due to willful intent or to mere inattention, if productive of injury, give rise to an obligation to indemnify the injured party. The fundamental distinction between obligations of this character and those which arise from contract, rests upon the fact that in cases of non-contractual obligation it is the wrongful or negligent act or omission itself which creates the vinculum juris, whereas in contractual relations the vinculum exists independently of the breach of the voluntary duty assumed by the parties when entering into the contractual relation. With respect to extra-contractual obligation arising from negligence, whether of act or omission, it is competent for the legislature to elect — and our Legislature has so elected — whom such an obligation is imposed is morally culpable, or, on the contrary, for reasons of public policy, to extend that liability, without regard to the lack of moral culpability, so as to include responsibility for the negligence of those person who acts or mission are imputable, by a legal fiction, to others who are in a position to exercise an absolute or limited control over them. The legislature which adopted our Civil Code has elected to limit extra-contractual liability — with certain well-defined exceptions — to cases in which moral culpability can be directly imputed to the persons to be charged. This moral responsibility may consist in having failed to exercise due care in the selection and control of one's agents or servants, or in the control of persons who, by reason of their status, occupy a position of dependency with respect to the person made liable for their conduct. The position of a natural or juridical person who has undertaken by contract to render service to another, is wholly different from that to which article 1903 relates. When the sources of the obligation upon which plaintiff's cause of action depends is a negligent act or omission, the burden of proof rests upon plaintiff to prove the negligence — if he does not his action fails. But when the facts averred show a contractual undertaking by defendant for the benefit of plaintiff, and it is alleged that plaintiff has failed or refused to perform the contract, it is not necessary for plaintiff to specify in his pleadings whether the breach of the contract is due to willful fault or to negligence on the part of the defendant, or of his servants or agents. Proof of the contract and of its nonperformance is sufficient prima facie to warrant a recovery. As a general rule . . . it is logical that in case of extracontractual culpa, a suing creditor should assume the burden of proof of its existence, as the only fact upon which his action is based; while on the contrary, in a case of negligence which presupposes the existence of a contractual obligation, if the creditor shows that it exists and that it has been broken, it is not necessary for him to prove negligence. (Manresa, vol. 8, p. 71 [1907 ed., p. 76]). As it is not necessary for the plaintiff in an action for the breach of a contract to show that the breach was due to the negligent conduct of defendant or of his servants, even

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though such be in fact the actual cause of the breach, it is obvious that proof on the part of defendant that the negligence or omission of his servants or agents caused the breach of the contract would not constitute a defense to the action. If the negligence of servants or agents could be invoked as a means of discharging the liability arising from contract, the anomalous result would be that person acting through the medium of agents or servants in the performance of their contracts, would be in a better position than those acting in person. If one delivers a valuable watch to watchmaker who contract to repair it, and the bailee, by a personal negligent act causes its destruction, he is unquestionably liable. Would it be logical to free him from his liability for the breach of his contract, which involves the duty to exercise due care in the preservation of the watch, if he shows that it was his servant whose negligence caused the injury? If such a theory could be accepted, juridical persons would enjoy practically complete immunity from damages arising from the breach of their contracts if caused by negligent acts as such juridical persons can of necessity only act through agents or servants, and it would no doubt be true in most instances that reasonable care had been taken in selection and direction of such servants. If one delivers securities to a banking corporation as collateral, and they are lost by reason of the negligence of some clerk employed by the bank, would it be just and reasonable to permit the bank to relieve itself of liability for the breach of its contract to return the collateral upon the payment of the debt by proving that due care had been exercised in the selection and direction of the clerk? This distinction between culpa aquiliana, as the source of an obligation, and culpa contractual as a mere incident to the performance of a contract has frequently been recognized by the supreme court of Spain. (Sentencias of June 27, 1894; November 20, 1896; and December 13, 1896.) In the decisions of November 20, 1896, it appeared that plaintiff's action arose ex contractu, but that defendant sought to avail himself of the provisions of article 1902 of the Civil Code as a defense. The Spanish Supreme Court rejected defendant's contention, saying: These are not cases of injury caused, without any preexisting obligation, by fault or negligence, such as those to which article 1902 of the Civil Code relates, but of damages caused by the defendant's failure to carry out the undertakings imposed by the contracts . . . . A brief review of the earlier decision of this court involving the liability of employers for damage done by the negligent acts of their servants will show that in no case has the court ever decided that the negligence of the defendant's servants has been held to constitute a defense to an action for damages for breach of contract. In the case of Johnson vs. David (5 Phil. Rep., 663), the court held that the owner of a carriage was not liable for the damages caused by the negligence of his driver. In that case the court commented on the fact that no evidence had been adduced in the trial court that the defendant had been

negligent in the employment of the driver, or that he had any knowledge of his lack of skill or carefulness. In the case of Baer Senior & Co's Successors vs. Compania Maritima (6 Phil. Rep., 215), the plaintiff sued the defendant for damages caused by the loss of a barge belonging to plaintiff which was allowed to get adrift by the negligence of defendant's servants in the course of the performance of a contract of towage. The court held, citing Manresa (vol. 8, pp. 29, 69) that if the "obligation of the defendant grew out of a contract made between it and the plaintiff . . . we do not think that the provisions of articles 1902 and 1903 are applicable to the case." In the case of Chapman vs. Underwood (27 Phil. Rep., 374), plaintiff sued the defendant to recover damages for the personal injuries caused by the negligence of defendant's chauffeur while driving defendant's automobile in which defendant was riding at the time. The court found that the damages were caused by the negligence of the driver of the automobile, but held that the master was not liable, although he was present at the time, saying: . . . unless the negligent acts of the driver are continued for a length of time as to give the owner a reasonable opportunity to observe them and to direct the driver to desist therefrom. . . . The act complained of must be continued in the presence of the owner for such length of time that the owner by his acquiescence, makes the driver's acts his own. In the case of Yamada vs. Manila Railroad Co. and Bachrach Garage & Taxicab Co. (33 Phil. Rep., 8), it is true that the court rested its conclusion as to the liability of the defendant upon article 1903, although the facts disclosed that the injury complaint of by plaintiff constituted a breach of the duty to him arising out of the contract of transportation. The express ground of the decision in this case was that article 1903, in dealing with the liability of a master for the negligent acts of his servants "makes the distinction between private individuals and public enterprise;" that as to the latter the law creates a rebuttable presumption of negligence in the selection or direction of servants; and that in the particular case the presumption of negligence had not been overcome. It is evident, therefore that in its decision Yamada case, the court treated plaintiff's action as though founded in tort rather than as based upon the breach of the contract of carriage, and an examination of the pleadings and of the briefs shows that the questions of law were in fact discussed upon this theory. Viewed from the standpoint of the defendant the practical result must have been the same in any event. The proof disclosed beyond doubt that the defendant's servant was grossly negligent and that his negligence was the proximate cause of plaintiff's injury. It also affirmatively appeared that defendant had been guilty of negligence in its failure to exercise proper discretion in the direction of the servant. Defendant was, therefore, liable for the injury suffered by plaintiff, whether the breach of the duty were to be regarded as constituting culpa aquiliana or culpa contractual. As Manresa points out (vol.

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8, pp. 29 and 69) whether negligence occurs an incident in the course of the performance of a contractual undertaking or its itself the source of an extra-contractual undertaking obligation, its essential characteristics are identical. There is always an act or omission productive of damage due to carelessness or inattention on the part of the defendant. Consequently, when the court holds that a defendant is liable in damages for having failed to exercise due care, either directly, or in failing to exercise proper care in the selection and direction of his servants, the practical result is identical in either case. Therefore, it follows that it is not to be inferred, because the court held in the Yamada case that defendant was liable for the damages negligently caused by its servants to a person to whom it was bound by contract, and made reference to the fact that the defendant was negligent in the selection and control of its servants, that in such a case the court would have held that it would have been a good defense to the action, if presented squarely upon the theory of the breach of the contract, for defendant to have proved that it did in fact exercise care in the selection and control of the servant.

injury suffered by him could not have occurred. Defendant contends, and cites many authorities in support of the contention, that it is negligence per se for a passenger to alight from a moving train. We are not disposed to subscribe to this doctrine in its absolute form. We are of the opinion that this proposition is too badly stated and is at variance with the experience of every-day life. In this particular instance, that the train was barely moving when plaintiff alighted is shown conclusively by the fact that it came to stop within six meters from the place where he stepped from it. Thousands of person alight from trains under these conditions every day of the year, and sustain no injury where the company has kept its platform free from dangerous obstructions. There is no reason to believe that plaintiff would have suffered any injury whatever in alighting as he did had it not been for defendant's negligent failure to perform its duty to provide a safe alighting place.

The true explanation of such cases is to be found by directing the attention to the relative spheres of contractual and extra-contractual obligations. The field of noncontractual obligation is much more broader than that of contractual obligations, comprising, as it does, the whole extent of juridical human relations. These two fields, figuratively speaking, concentric; that is to say, the mere fact that a person is bound to another by contract does not relieve him from extra-contractual liability to such person. When such a contractual relation exists the obligor may break the contract under such conditions that the same act which constitutes the source of an extra-contractual obligation had no contract existed between the parties.

The test by which to determine whether the passenger has been guilty of negligence in attempting to alight from a moving railway train, is that of ordinary or reasonable care. It is to be considered whether an ordinarily prudent person, of the age, sex and condition of the passenger, would have acted as the passenger acted under the circumstances disclosed by the evidence. This care has been defined to be, not the care which may or should be used by the prudent man generally, but the care which a man of ordinary prudence would use under similar circumstances, to avoid injury." (Thompson, Commentaries on Negligence, vol. 3, sec. 3010.)

The contract of defendant to transport plaintiff carried with it, by implication, the duty to carry him in safety and to provide safe means of entering and leaving its trains (civil code, article 1258). That duty, being contractual, was direct and immediate, and its non-performance could not be excused by proof that the fault was morally imputable to defendant's servants. The railroad company's defense involves the assumption that even granting that the negligent conduct of its servants in placing an obstruction upon the platform was a breach of its contractual obligation to maintain safe means of approaching and leaving its trains, the direct and proximate cause of the injury suffered by plaintiff was his own contributory negligence in failing to wait until the train had come to a complete stop before alighting. Under the doctrine of comparative negligence announced in the Rakes case (supra), if the accident was caused by plaintiff's own negligence, no liability is imposed upon defendant's negligence and plaintiff's negligence merely contributed to his injury, the damages should be apportioned. It is, therefore, important to ascertain if defendant was in fact guilty of negligence. It may be admitted that had plaintiff waited until the train had come to a full stop before alighting, the particular

We are of the opinion that the correct doctrine relating to this subject is that expressed in Thompson's work on Negligence (vol. 3, sec. 3010) as follows:

Or, it we prefer to adopt the mode of exposition used by this court in Picart vs. Smith (37 Phil. rep., 809), we may say that the test is this; Was there anything in the circumstances surrounding the plaintiff at the time he alighted from the train which would have admonished a person of average prudence that to get off the train under the conditions then existing was dangerous? If so, the plaintiff should have desisted from alighting; and his failure so to desist was contributory negligence.1awph!l.net As the case now before us presents itself, the only fact from which a conclusion can be drawn to the effect that plaintiff was guilty of contributory negligence is that he stepped off the car without being able to discern clearly the condition of the platform and while the train was yet slowly moving. In considering the situation thus presented, it should not be overlooked that the plaintiff was, as we find, ignorant of the fact that the obstruction which was caused by the sacks of melons piled on the platform existed; and as the defendant was bound by reason of its duty as a public carrier to afford to its passengers facilities for safe egress from its trains, the plaintiff had a right to assume, in the absence of some circumstance to warn him to the contrary, that the platform was clear. The place, as we have already stated, was dark, or dimly lighted, and this also is proof of a failure upon the part of the defendant in the performance of a duty owing by it to the plaintiff; for if it were by any possibility concede

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that it had right to pile these sacks in the path of alighting passengers, the placing of them adequately so that their presence would be revealed. As pertinent to the question of contributory negligence on the part of the plaintiff in this case the following circumstances are to be noted: The company's platform was constructed upon a level higher than that of the roadbed and the surrounding ground. The distance from the steps of the car to the spot where the alighting passenger would place his feet on the platform was thus reduced, thereby decreasing the risk incident to stepping off. The nature of the platform, constructed as it was of cement material, also assured to the passenger a stable and even surface on which to alight. Furthermore, the plaintiff was possessed of the vigor and agility of young manhood, and it was by no means so risky for him to get off while the train was yet moving as the same act would have been in an aged or feeble person. In determining the question of contributory negligence in performing such act — that is to say, whether the passenger acted prudently or recklessly — the age, sex, and physical condition of the passenger are circumstances necessarily affecting the safety of the passenger, and should be considered. Women, it has been observed, as a general rule are less capable than men of alighting with safety under such conditions, as the nature of their wearing apparel obstructs the free movement of the limbs. Again, it may be noted that the place was perfectly familiar to the plaintiff as it was his daily custom to get on and of the train at this station. There could, therefore, be no uncertainty in his mind with regard either to the length of the step which he was required to take or the character of the platform where he was alighting. Our conclusion is that the conduct of the plaintiff in undertaking to alight while the train was yet slightly under way was not characterized by imprudence and that therefore he was not guilty of contributory negligence. The evidence shows that the plaintiff, at the time of the accident, was earning P25 a month as a copyist clerk, and that the injuries he has suffered have permanently disabled him from continuing that employment. Defendant has not shown that any other gainful occupation is open to plaintiff. His expectancy of life, according to the standard mortality tables, is approximately thirty-three years. We are of the opinion that a fair compensation for the damage suffered by him for his permanent disability is the sum of P2,500, and that he is also entitled to recover of defendant the additional sum of P790.25 for medical attention, hospital services, and other incidental expenditures connected with the treatment of his injuries. The decision of lower court is reversed, and judgment is hereby rendered plaintiff for the sum of P3,290.25, and for the costs of both instances. So ordered. Arellano, C.J., Torres, Street and Avanceña, JJ., concur. Del Prado v. MRR Mar 7, 1929 G.R. No. L-29462 March 7, 1929

vs. MANILA ELECTRIC CO., defendant-appellant. Ross, Lawrence and Selph and Antonio T. Carrascoso, jr., for appellant. Vicente Sotto for appellee. STREET, J.: This action was instituted in the Court of First Instance of Manila by Ignacio del Prado to recover damages in the amount of P50,000 for personal injuries alleged to have been caused by the negligence of te defendant, the Manila Electric Company, in the operation of one of its street cars in the City of Manila. Upon hearing the cause the trial court awarded to the plaintiff the sum of P10,000, as damages, with costs of suit, and the defendant appealed. The appellant, the Manila Electric Company, is engaged in operating street cars in the City for the conveyance of passengers; and on the morning of November 18, 1925, one Teodorico Florenciano, as appellant's motorman, was in charge of car No. 74 running from east to west on R. Hidalgo Street, the scene of the accident being at a point near the intersection of said street and Mendoza Street. After the car had stopped at its appointed place for taking on and letting off passengers, just east of the intersection, it resumed its course at a moderate speed under the guidance of the motorman. The car had proceeded only a short distance, however, when the plaintiff, Ignacio del Prado, ran across the street to catch the car, his approach being made from the left. The car was of the kind having entrance and exist at either end, and the movement of the plaintiff was so timed that he arrived at the front entrance of the car at the moment when the car was passing. The testimony of the plaintiff and of Ciriaco Guevara, one of his witnesses, tends to shows that the plaintiff, upon approaching the car, raised his hand as an indication to the motorman of his desire to board the car, in response to which the motorman eased up a little, without stopping. Upon this the plaintiff seized, with his hand, the front perpendicular handspot, at the same time placing his left foot upon the platform. However, before the plaintiff's position had become secure, and even before his raised right foot had reached the flatform, the motorman applied the power, with the result that the car gave a slight lurch forward. This sudden impulse to the car caused the plaintiff's foot to slip, and his hand was jerked loose from the handpost, He therefore fell to the ground, and his right foot was caught and crushed by the moving car. The next day the member had to be amputated in the hospital. The witness, Ciriaco Guevara, also stated that, as the plaintiff started to board the car, he grasped the handpost on either side with both right and left hand. The latter statement may possibly be incorrect as regards the use of his right hand by the plaintiff, but we are of the opinion that the finding of the trial court to the effect that the motorman slowed up slightly as the plaintiff was boarding the car that the plaintiff's fall was due in part at lease to a sudden forward movement at the moment when the plaintiff put his foot on

IGNACIO DEL PRADO, plaintiff-appellee,

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the platform is supported by the evidence and ought not to be disturbed by us. The motorman stated at the trial that he did not see the plaintiff attempting to board the car; that he did not accelerate the speed of the car as claimed by the plaintiff's witnesses; and that he in fact knew nothing of the incident until after the plaintiff had been hurt and some one called to him to stop. We are not convinced of the complete candor of this statement, for we are unable to see how a motorman operating this car could have failed to see a person boarding the car under the circumstances revealed in this case. It must be remembered that the front handpost which, as all witness agree, was grasped by the plaintiff in attempting to board the car, was immediately on the left side of the motorman. With respect to the legal aspects of the case we may observe at the outset that there is no obligation on the part of a street railway company to stop its cars to let on intending passengers at other points than those appointed for stoppage. In fact it would be impossible to operate a system of street cars if a company engage in this business were required to stop any and everywhere to take on people who were too indolent, or who imagine themselves to be in too great a hurry, to go to the proper places for boarding the cars. Nevertheless, although the motorman of this car was not bound to stop to let the plaintiff on, it was his duty to do act that would have the effect of increasing the plaintiff's peril while he was attempting to board the car. The premature acceleration of the car was, in our opinion, a breach of this duty. The relation between a carrier of passengers for hire and its patrons is of a contractual nature; and in failure on the part of the carrier to use due care in carrying its passengers safely is a breach of duty (culpa contructual) under articles 1101, 1103 and 1104 of the Civil Code. Furthermore, the duty that the carrier of passengers owes to its patrons extends to persons boarding the cars as well as to those alighting therefrom. The case of Cangco vs. Manila Railroad Co. (38 Phil., 768), supplies an instance of the violation of this duty with respect to a passenger who was getting off of a train. In that case the plaintiff stepped off of a moving train, while it was slowing down in a station, and at the time when it was too dark for him to see clearly where he was putting his feet. The employees of the company had carelessly left watermelons on the platform at the place where the plaintiff alighted, with the result that his feet slipped and he fell under the car, where his right arm badly injured. This court held that the railroad company was liable for breach positive duty (culpa contractual), and the plaintiff was awarded damages in the amount of P2,500 for the loss of his arm. In the opinion in that case the distinction is clearly drawn between a liability for negligence arising from breach of contructual duty and that arising articles 1902 and 1903 of the Civil Code (culpa aquiliana). The distiction between these two sorts of negligence is important in this jurisdiction, for the reason that where liability arises from a mere tort (culpa aquiliana), not

involving a breach of positive obligation, an employer, or master, may exculpate himself, under the last paragraph of article 1903 of the Civil Code, by providing that he had exercised due degligence to prevent the damage; whereas this defense is not available if the liability of the master arises from a breach of contrauctual duty (culpa contractual). In the case bfore us the company pleaded as a special defense that it had used all the deligence of a good father of a family to prevent the damage suffered by the plaintiff; and to establish this contention the company introduced testimony showing that due care had been used in training and instructing the motorman in charge of this car in his art. But this proof is irrelevant in view of the fact that the liability involved was derived from a breach of obligation under article 1101 of the Civil Code and related provisions. (Manila Railroad Co. vs. Compana Transatlantica and Atlantic, Gulf & Pacific Co., 38 Phil., 875, 887; De Guia vs. Manila Electric Railroad & Light Co., 40 Phil., 706, 710.) Another practical difference between liability for negligence arising under 1902 of the Civil Code and liability arising from negligence in the performance of a positive duty, under article 1101 and related provisions of the Civil Code, is that, in dealing with the latter form of negligence, the court is given a discretion to mitigate liability according to the circumstances of the case (art 1103). No such general discretion is given by the Code in dealing with liability arising under article 1902; although possibly the same end is reached by courts in dealing with the latter form of liability because of the latitude of the considerations pertinent to cases arising under this article. As to the contributory negligence of the plaintiff, we are of the opinion that it should be treated, as in Rakes vs. Atlantic, Gulf and Pacific Co. (7 Phil., 359), as a mitigating circumstance under article 1103 of the Civil Code. It is obvious that the plaintiff's negligence in attempting to board the moving car was not the proximate cause of the injury. The direct and proximate cause of the injury was the act of appellant's motorman in putting on the power prematurely. A person boarding a moving car must be taken to assume the risk of injury from boarding the car under the conditions open to his view, but he cannot fairly be held to assume the risk that the motorman, having the situation in view, will increase his peril by accelerating the speed of the car before he is planted safely on the platform. Again, the situation before us is one where the negligent act of the company's servant succeeded the negligent act of the plaintiff, and the negligence of the company must be considered the proximate cause of the injury. The rule here applicable seems to be analogous to, if not identical with that which is sometimes referred to as the doctrine of "the last clear chance." In accordance with this doctrine, the contributory negligence of the party injured will not defeat the action if it be shown that the defendant might, by the exercise of reasonable care and prudence, have avoided the consequences of the negligence of the injured party (20 R. C. L., p. 139; Carr vs. Interurban Ry. Co., 185 Iowa, 872; 171 N. W., 167). The negligence of the plaintiff was, however, contributory to the accident and must be considered as a mitigating circumstance.

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With respect to the effect of this injury upon the plaintiff's earning power, we note that, although he lost his foot, he is able to use an artificial member without great inconvenience and his earning capacity has probably not been reduced by more than 30 per centum. In view of the precedents found in our decisions with respect to the damages that ought to be awarded for the loss of limb, and more particularly Rakes vs. Atlantic, Gulf and Pacific Co. (7 Phil., 359); Cangco vs. Manila Railroad Co. (38 Phil., 768); and Borromeo vs. Manila Electric Railroad and Light Co. (44 Phil., 165), and in view of all the circumstances connected with the case, we are of the opinion that the plaintiff will be adequately compensated by an award of P2,500. It being understood, therefore, that the appealed judgment is modified by reducing the recovery to the sum of P2,500, the judgment, as thus modified, is affirmed. So ordered, with costs against the appellant. Malcolm, Villamor, Ostrand, Romualdez and Villa-Real, JJ., concur. Briñas v. People Nov 25,1983 G.R. No. L-30309 November 25, 1983 CLEMENTE BRIÑAS, petitioner, vs. THE PEOPLE OF THE PHILIPPINES and HONORABLE COURT OF APPEALS, respondents. Mariano R. Abad for petitioner. The Solicitor General for respondents.

GUTIERREZ, JR., J.: This is a petition to review the decision of respondent Court of Appeals, now Intermediate Appellate Court, affirming the decision of the Court of First Instance of Quezon, Ninth Judicial District, Branch 1, which found the accused Clemente Briñas guilty of the crime of DOUBLE HOMICIDE THRU RECKLESS IMPRUDENCE prior the deaths of Martina Bool and Emelita Gesmundo. The information charged the accused-appellant. and others as follows: That on or about the 6th day of January, 1957, in the Municipality of Tiaong, Province of Quezon, Philippines, and within the jurisdiction of this Hon. Court, the said accused Victor Milan, Clemente Briñas and Hermogenes Buencamino, being then persons in charge of passenger Train No. 522-6 of the Manila Railroad Company, then running from Tagkawayan to San Pablo City, as engine driver, conductor and assistant conductor, respectively, wilfully and unlawfully drove and operated the same in a negligent, careless and imprudent manner, without due regard to existing laws, regulations and ordinances, that

although there were passengers on board the passenger coach, they failed to provide lamps or lights therein, and failed to take the necessary precautions for the safety of passengers and to prevent accident to persons and damage to property, causing by such negligence, carelessness and imprudence, that when said passenger Train No. 522-6 was passing the railroad tracks in the Municipality of Tiaong, Quezon, two of its passengers, Martina Bool, an old woman, and Emelita Gesmundo, a child about three years of age, fell from the passenger coach of the said train, as a result of which, they were over run, causing their instantaneous death. " The facts established by the prosecution and accepted by the respondent court as basis for the decision are summarized as follows: The evidence of the prosecution tends to show that in the afternoon of January 6, 1957, Juanito Gesmundo bought a train ticket at the railroad station in Tagkawayan, Quezon for his 55-year old mother Martina Bool and his 3-year old daughter Emelita Gesmundo, who were bound for Barrio Lusacan, Tiaong, same province. At about 2:00 p.m., Train No. 522 left Tagkawayan with the old woman and her granddaughter among the passengers. At Hondagua the train's complement were relieved, with Victor Millan taking over as engineman, Clemente Briñas as conductor, and Hermogenes Buencamino as assistant conductor. Upon approaching Barrio Lagalag in Tiaong at about 8:00 p.m. of that same night, the train slowed down and the conductor shouted 'Lusacan', 'Lusacan'. Thereupon, the old woman walked towards the left front door facing the direction of Tiaong, carrying the child with one hand and holding her baggage with the other. When Martina and Emelita were near the door, the train suddenly picked up speed. As a result the old woman and the child stumbled and they were seen no more. It took three minutes more before the train stopped at the next barrio, Lusacan, and the victims were not among the passengers who disembarked thereat .têñ. £îhqw⣠Next morning, the Tiaong police received a report that two corpses were found along the railroad tracks at Barrio Lagalag. Repairing to the scene to investigate, they found the lifeless body of a female child, about 2 feet from the railroad tracks, sprawled to the ground with her belly down, the hand resting on the forehead, and with the back portion of the head crushed. The investigators also found the corpse of an old woman about 2 feet away from the railroad tracks with the head and both legs severed and the left hand missing. The head was located farther west between the rails. An arm was found midway from the body of the child to the body of the old woman. Blood, pieces of scattered brain and pieces of clothes were at the scene. Later, the bodies were Identified as those of Martina Bool and Emelita Gesmundo. Among the personal effects found on Martina was a train ticket (Exhibits "B"). On January 7, 1957, the bodies of the deceased were autopsied by Dr. Pastor Huertas, the Municipal Health Officer of Tiaong. Dr. Huertas testified on the cause of death of the victims as follows: têñ.£îhqwâ£

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FISCAL YNGENTE: Q What could have caused the death of those women? A

Shock.

Q What could have caused that shock? A

Traumatic injury.

Q

What could have caused traumatic injury?

A

The running over by the wheel of the train.

Q With those injuries, has a person a chance to survive?

hereby acquits them of the crime charged in the information and their bail bonds declared cancelled. As to the responsibility of the Manila Railroad Company in this case, this will be the subject of court determination in another proceeding. On appeal, the respondent Court of Appeals affirmed the judgment of the lower court. During the pendency of the criminal prosecution in the Court of First Instance of Quezon, the heirs of the deceased victims filed with the same court, a separate civil action for damages against the Manila Railroad Company entitled "Civil Case No. 5978, Manaleyo Gesmundo, et al., v. Manila Railroad Company". The separate civil action was filed for the recovery of P30,350.00 from the Manila Railroad Company as damages resulting from the accident.

A No chance to survive. Q

What would you say death would come?

The accused-appellant alleges that the Court of Appeals made the following errors in its decision:

A

Instantaneous.

I têñ.£îhqwâ£

Q How about the girl, the young girl about four years old, what could have caused the death? A

Shock too.

Q

What could have caused the shock?

THE HONORABLE COURT OF APPEALS ERRED IN CONVICTING PETITIONER-APPELLANT UNDER THE FACTS AS FOUND BY SAID COURT; and II têñ.£îhqwâ£

A Compound fracture of the skull and going out of the brain. Q What could have caused the fracture of the skull and the going out of the brain? A That is the impact against a steel object. (TSN., pp. 81-82, July 1, 1959) The Court of First Instance of Quezon convicted defendantappellant Clemente Briñas for double homicide thru reckless imprudence but acquitted Hermogenes Buencamino and Victor Millan The dispositive portion of the decision reads: têñ.£îhqw⣠WHEREFORE, the court finds the defendant Clemente Briñas guilty beyond doubt of the crime of double homicide thru reckless imprudence, defined and punished under Article 305 in connection with Article 249 of the Revised Penal Code, and sentences him to suffer six (6) months and one (1) day of prision correccional to indemnify the heirs of the deceased Martina Bool and Emelita Gesmundo in the amounts of P6,000 and P3,000, respectively, with subsidiary imprisonment in case of insolvency not to exceed one-third of the principal penalty, and to pay the costs. For lack of sufficient evidence against the defendant Hermogenes Buencamino and on the ground of reasonable doubt in the case of defendant Victor Millan the court

THE HONORABLE COURT OF APPEALS ERRED IN INCLUDING THE PAYMENT OF DEATH INDEMNITY BY THE PETITIONERAPPELLANT, WITH SUBSIDIARY IMPRISONMENT IN CASE OF INSOLVENCY, AFTER THE HEIRS OF THE DECEASED HAVE ALREADY COMMENCED A SEPARATE CIVIL ACTION FOR DAMAGES AGAINST THE RAILROAD COMPANY ARISING FROM THE SAME MISHAP. We see no error in the factual findings of the respondent court and in the conclusion drawn from those findings. It is undisputed that the victims were on board the second coach where the petitioner-appellant was assigned as conductor and that when the train slackened its speed and the conductor shouted "Lusacan, Lusacan", they stood up and proceeded to the nearest exit. It is also undisputed that the train unexpectedly resumed its regular speed and as a result "the old woman and the child stumbled and they were seen no more. In finding petitioner-appellant negligent, respondent Court têñ.£îhqw⣠xxx

xxx

xxx

The appellant's announcement was premature and erroneous, for it took a full three minutes more before the next barrio of Lusacan was reached. In making the erroneous and premature announcement, appellant was negligent. He ought to have known that train passengers

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invariably prepare to alight upon notice from the conductor that the destination was reached and that the train was about to stop. Upon the facts, it was the appellant's negligent act which led the victims to the door. Said acts virtually exposed the victims to peril, for had not the appellant mistakenly made the announcement, the victims would be safely ensconced in their seats when the train jerked while picking up speed, Although it might be argued that the negligent act of the appellant was not the immediate cause of, or the cause nearest in time to, the injury, for the train jerked before the victims stumbled, yet in legal contemplation appellant's negligent act was the proximate cause of the injury. As this Court held in Tucker v. Milan, CA G.R. No. 7059-R, June 3, 1953: 'The proximate cause of the injury is not necessarily the immediate cause of, or the cause nearest in time to, the injury. It is only when the causes are independent of each other that the nearest is to be charged with the disaster. So long as there is a natural, direct and continuous sequence between the negligent act the injury (sic) that it can reasonably be said that but for the act the injury could not have occurred, such negligent act is the proximate cause of the injury, and whoever is responsible therefore is liable for damages resulting therefrom. One who negligently creates a dangerous condition cannot escape liability for the natural and probable consequences thereof, although the act of a third person, or an act of God for which he is not responsible intervenes to precipitate the loss. xxx

xxx

xxx

It is a matter of common knowledge and experience about common carriers like trains and buses that before reaching a station or flagstop they slow down and the conductor announces the name of the place. It is also a matter of common experience that as the train or bus slackens its speed, some passengers usually stand and proceed to the nearest exit, ready to disembark as the train or bus comes to a full stop. This is especially true of a train because passengers feel that if the train resumes its run before they are able to disembark, there is no way to stop it as a bus may be stopped. It was negligence on the conductor's part to announce the next flag stop when said stop was still a full three minutes ahead. As the respondent Court of Appeals correctly observed, "the appellant's announcement was premature and erroneous. That the announcement was premature and erroneous is shown by the fact that immediately after the train slowed down, it unexpectedly accelerated to full speed. Petitionerappellant failed to show any reason why the train suddenly resumed its regular speed. The announcement was made while the train was still in Barrio Lagalag. The proximate cause of the death of the victims was the premature and erroneous announcement of petitioner' appelant Briñas. This announcement prompted the victims to stand and proceed to the nearest exit. Without said announcement, the victims would have been safely seated in their respective seats when the train jerked as it picked

up speed. The connection between the premature and erroneous announcement of petitioner-appellant and the deaths of the victims is direct and natural, unbroken by any intervening efficient causes. Petitioner-appellant also argues that it was negligence per se for Martina Bool to go to the door of the coach while the train was still in motion and that it was this negligence that was the proximate cause of their deaths. We have carefully examined the records and we agree with the respondent court that the negligence of petitionerappellant in prematurely and erroneously announcing the next flag stop was the proximate cause of the deaths of Martina Bool and Emelita Gesmundo. Any negligence of the victims was at most contributory and does not exculpate the accused from criminal liability. With respect to the second assignment of error, the petitioner argues that after the heirs of Martina Bool and Emelita Gesmundo had actually commenced the separate civil action for damages in the same trial court during the pendency of the criminal action, the said court had no more power to include any civil liability in its judgment of conviction. The source of the obligation sought to be enforced in Civil Case No. 5978 is culpa contractual, not an act or omission punishable by law. We also note from the appellant's arguments and from the title of the civil case that the party defendant is the Manila Railroad Company and not petitioner-appellant Briñas Culpa contractual and an act or omission punishable by law are two distinct sources of obligation. The petitioner-appellant argues that since the information did not allege the existence of any kind of damages whatsoever coupled by the fact that no private prosecutors appeared and the prosecution witnesses were not interrogated on the issue of damages, the trial court erred in awarding death indemnity in its judgment of conviction. A perusal of the records clearly shows that the complainants in the criminal action for double homicide thru reckless imprudence did not only reserve their right to file an independent civil action but in fact filed a separate civil action against the Manila Railroad Company. The trial court acted within its jurisdiction when, despite the filing with it of the separate civil action against the Manila Railroad Company, it still awarded death indemnity in the judgment of conviction against the petitionerappellant. It is well-settled that when death occurs as a result of the commission of a crime, the following items of damages may be recovered: (1) an indemnity for the death of the victim; (2) an indemnity for loss of earning capacity of the deceased; (3) moral damages; (4) exemplary damages; (5) attorney's fees and expenses of litigation, and (6) interest in proper cases.

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The indemnity for loss of earning capacity, moral damages, exemplary damages, attorney's fees, and interests are recoverable separately from and in addition to the fixed slim of P12,000.00 corresponding to the indemnity for the sole fact of death. This indemnity arising from the fact of death due to a crime is fixed whereas the others are still subject to the determination of the court based on the evidence presented. The fact that the witnesses were not interrogated on the issue of damages is of no moment because the death indemnity fixed for death is separate and distinct from the other forms of indemnity for damages.

Caloocan City, paying thereto the docket fee of one thousand two hundred fifty-two pesos (P1,252.00) and the legal research fee of two pesos (P2.00).[8] In particular, private respondent prayed for an award of P692,680.00, allegedly representing the value of the fishing nets, boat equipment and cargoes of M/V Maria Efigenia XV, with interest at the legal rate plus 25% thereof as attorney’s fees. Meanwhile, during the pendency of the case, petitioner PNOC Shipping and Transport Corporation sought to be substituted in place of LSC as it had already acquired ownership of the Petroparcel.[9]

WHEREFORE, the judgment appealed from is modified in that the award for death indemnity is increased to P12,000.00 for the death of Martina Bool instead of P6,000.00 and P12,000.00 for the death of Emelita Gesmundo instead of P3,000.00, but deleting the subsidiary imprisonment in case of insolvency imposed by the lower court. The judgment is AFFIRMED in all other respects.

For its part, private respondent later sought the amendment of its complaint on the ground that the original complaint failed to plead for the recovery of the lost value of the hull of M/V Maria Efigenia XV.[10] Accordingly, in the amended complaint, private respondent averred that M/V Maria Efigenia XV had an actual value of P800,000.00 and that, after deducting the insurance payment of P200,000.00, the amount of P600,000.00 should likewise be claimed. The amended complaint also alleged that inflation resulting from the devaluation of the Philippine peso had affected the replacement value of the hull of the vessel, its equipment and its lost cargoes, such that there should be a reasonable determination thereof. Furthermore, on account of the sinking of the vessel, private respondent supposedly incurred unrealized profits and lost business opportunities that would thereafter be proven.[11]

SO ORDERED.1äwphï1.ñët PNOC v. CA Oct 4,1985 [G.R. No. 107518. October 8, 1998] PNOC SHIPPING AND TRANSPORT CORPORATION, petitioner, vs. HONORABLE COURT OF APPEALS and MARIA EFIGENIA FISHING CORPORATION, respondents. DECISION ROMERO, J.: A party is entitled to adequate compensation only for such pecuniary loss actually suffered and duly proved.[1] Indeed, basic is the rule that to recover actual damages, the amount of loss must not only be capable of proof but must actually be proven with a reasonable degree of certainty, premised upon competent proof or best evidence obtainable of the actual amount thereof.[2] The claimant is duty-bound to point out specific facts that afford a basis for measuring whatever compensatory damages are borne.[3] A court cannot merely rely on speculations, conjectures, or guesswork as to the fact and amount of damages[4] as well as hearsay[5] or uncorroborated testimony whose truth is suspect.[6] Such are the jurisprudential precepts that the Court now applies in resolving the instant petition. The records disclose that in the early morning of September 21, 1977, the M/V Maria Efigenia XV, owned by private respondent Maria Efigenia Fishing Corporation, was navigating the waters near Fortune Island in Nasugbu, Batangas on its way to Navotas, Metro Manila when it collided with the vessel Petroparcel which at the time was owned by the Luzon Stevedoring Corporation (LSC). After investigation was conducted by the Board of Marine Inquiry, Philippine Coast Guard Commandant Simeon N. Alejandro rendered a decision finding the Petroparcel at fault. Based on this finding by the Board and after unsuccessful demands on petitioner,[7] private respondent sued the LSC and the Petroparcel captain, Edgardo Doruelo, before the then Court of First Instance of

Subsequently, the complaint was further amended to include petitioner as a defendant[12] which the lower court granted in its order of September 16, 1985.[13] After petitioner had filed its answer to the second amended complaint, on February 5, 1987, the lower court issued a pre-trial order[14] containing, among other things, a stipulations of facts, to wit: “1. On 21 September 1977, while the fishing boat `M/V MARIA EFIGENIA’ owned by plaintiff was navigating in the vicinity of Fortune Island in Nasugbu, Batangas, on its way to Navotas, Metro Manila, said fishing boat was hit by the LSCO tanker ‘Petroparcel’ causing the former to sink. 2. The Board of Marine Inquiry conducted an investigation of this marine accident and on 21 November 1978, the Commandant of the Philippine Coast Guard, the Honorable Simeon N. Alejandro, rendered a decision finding the cause of the accident to be the reckless and imprudent manner in which Edgardo Doruelo navigated the LSCO ‘Petroparcel’ and declared the latter vessel at fault. 3. On 2 April 1978, defendant Luzon Stevedoring Corporation (LUSTEVECO), executed in favor of PNOC Shipping and Transport Corporation a Deed of Transfer involving several tankers, tugboats, barges and pumping stations, among which was the LSCO Petroparcel. 4. On the same date on 2 April 1979 (sic), defendant PNOC STC again entered into an Agreement of Transfer with co-defendant Lusteveco whereby all the business properties and other assets appertaining to the tanker and bulk oil departments including the motor tanker LSCO

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Petroparcel of defendant Lusteveco were sold to PNOC STC. 5. The aforesaid agreement stipulates, among others, that PNOC-STC assumes, without qualifications, all obligations arising from and by virtue of all rights it obtained over the LSCO `Petroparcel’. 6. On 6 July 1979, another agreement between defendant LUSTEVECO and PNOC-STC was executed wherein Board of Marine Inquiry Case No. 332 (involving the sea accident of 21 September 1977) was specifically identified and assumed by the latter. 7. On 23 June 1979, the decision of Board of Marine Inquiry was affirmed by the Ministry of National Defense, in its decision dismissing the appeal of Capt. Edgardo Doruelo and Chief mate Anthony Estenzo of LSCO `Petroparcel’. 8. LSCO `Petroparcel’ is presently owned and operated by PNOC-STC and likewise Capt. Edgardo Doruelo is still in their employ. 9. As a result of the sinking of M/V Maria Efigenia caused by the reckless and imprudent manner in which LSCO Petroparcel was navigated by defendant Doruelo, plaintiff suffered actual damages by the loss of its fishing nets, boat equipments (sic) and cargoes, which went down with the ship when it sank the replacement value of which should be left to the sound discretion of this Honorable Court.” After trial, the lower court[15] rendered on November 18, 1989 its decision disposing of Civil Case No. C-9457 as follows: “WHEREFORE, and in view of the foregoing, judgment is hereby rendered in favor of the plaintiff and against the defendant PNOC Shipping & Transport Corporation, to pay the plaintiff: a. The sum of P6,438,048.00 representing the value of the fishing boat with interest from the date of the filing of the complaint at the rate of 6% per annum; b. and c.

The sum of P50,000.00 as and for attorney’s fees; The costs of suit.

private respondent per Exhibit A, a certificate of ownership issued by the Philippine Coast Guard showing that M/V Maria Efigenia XV was a wooden motor boat constructed in 1965 with 128.23 gross tonnage. According to him, at the time the vessel sank, it was then carrying 1,060 tubs (bañeras) of assorted fish the value of which was never recovered. Also lost with the vessel were two cummins engines (250 horsepower), radar, pathometer and compass. He further added that with the loss of his flagship vessel in his fishing fleet of fourteen (14) vessels, he was constrained to hire the services of counsel whom he paid P10,000 to handle the case at the Board of Marine Inquiry and P50,000.00 for commencing suit for damages in the lower court. As to the award of P6,438,048.00 in actual damages, the lower court took into account the following pieces of documentary evidence that private respondent proffered during trial: (a) Exhibit A – certified xerox copy of the certificate of ownership of M/V Maria Efigenia XV; (b) Exhibit B – a document titled “Marine Protest” executed by Delfin Villarosa, Jr. on September 22, 1977 stating that as a result of the collision, the M/V Maria Efigenia XV sustained a hole at its left side that caused it to sink with its cargo of 1,050 bañeras valued at P170,000.00; (c) Exhibit C – a quotation for the construction of a 95footer trawler issued by Isidoro A. Magalong of I. A. Magalong Engineering and Construction on January 26, 1987 to Del Rosario showing that construction of such trawler would cost P2,250,000.00; (d) Exhibit D – pro forma invoice No. PSPI-05/87-NAV issued by E.D. Daclan of Power Systems, Incorporated on January 20, 1987 to Del Rosario showing that two (2) units of CUMMINS Marine Engine model N855-M, 195 bhp. at 1800 rpm. would cost P1,160,000.00; (e) Exhibit E – quotation of prices issued by Scan Marine Inc. on January 20, 1987 to Del Rosario showing that a unit of Furuno Compact Daylight Radar, Model FR-604D, would cost P100,000.00 while a unit of Furuno Color Video Sounder, Model FCV-501 would cost P45,000.00 so that the two units would cost P145,000.00;

SO ORDERED.”

(f) Exhibit F – quotation of prices issued by Seafgear Sales, Inc. on January 21, 1987 to Del Rosario showing that two (2) rolls of nylon rope (5” cir. X 300fl.) would cost P140,000.00; two (2) rolls of nylon rope (3” cir. X 240fl.), P42,750.00; one (1) binocular (7 x 50), P1,400.00, one (1) compass (6”), P4,000.00 and 50 pcs. of floats, P9,000.00 or a total of P197, 150.00;

In arriving at the above disposition, the lower court cited the evidence presented by private respondent consisting of the testimony of its general manager and sole witness, Edilberto del Rosario. Private respondent’s witness testified that M/V Maria Efigenia XV was owned by

(g) Exhibit G – retainer agreement between Del Rosario and F. Sumulong Associates Law Offices stipulating an acceptance fee of P5,000.00, per appearance fee of P400.00, monthly retainer of P500.00, contingent fee of 20% of the total amount recovered and that attorney’s fee to

The counterclaim is hereby DISMISSED for lack of merit. Likewise, the case against defendant Edgardo Doruelo is hereby DISMISSED, for lack of jurisdiction.

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be awarded by the court should be given to Del Rosario; and (h) Exhibit H – price quotation issued by Seafgear Sales, Inc. dated April 10, 1987 to Del Rosario showing the cost of poly nettings as: 50 rolls of 400/18 3kts. 100md x 100mtrs., P70,000.00; 50 rolls of 400/18 5kts. 100md x 100mtrs., P81,500.00; 50 rolls of 400/18 8kts. 100md x 100mtrs., P116,000.00, and 50 rolls of 400/18 10kts. 100md x 100mtrs., P146,500 and banera (tub) at P65.00 per piece or a total of P414,065.00 The lower court held that the prevailing replacement value of P6,438,048.00 of the fishing boat and all its equipment would regularly increase at 30% every year from the date the quotations were given. On the other hand, the lower court noted that petitioner only presented Lorenzo Lazaro, senior estimator at PNOC Dockyard & Engineering Corporation, as sole witness and it did not bother at all to offer any documentary evidence to support its position. Lazaro testified that the price quotations submitted by private respondent were “excessive” and that as an expert witness, he used the quotations of his suppliers in making his estimates. However, he failed to present such quotations of prices from his suppliers, saying that he could not produce a breakdown of the costs of his estimates as it was “a sort of secret scheme.” For this reason, the lower court concluded: “Evidently, the quotation of prices submitted by the plaintiff relative to the replacement value of the fishing boat and its equipments in the tune of P6,438,048.00 which were lost due to the recklessness and imprudence of the herein defendants were not rebutted by the latter with sufficient evidence. The defendants through their sole witness Lorenzo Lazaro relied heavily on said witness’ bare claim that the amount afore-said is excessive or bloated, but they did not bother at all to present any documentary evidence to substantiate such claim. Evidence to be believed, must not only proceed from the mouth of the credible witness, but it must be credible in itself. (Vda. de Bonifacio vs. B. L. T. Bus Co., Inc. L-26810, August 31, 1970).” Aggrieved, petitioner filed a motion for the reconsideration of the lower court’s decision contending that: (1) the lower court erred in holding it liable for damages; that the lower court did not acquire jurisdiction over the case by paying only P1,252.00 as docket fee; (2) assuming that plaintiff was entitled to damages, the lower court erred in awarding an amount greater than that prayed for in the second amended complaint; and (3) the lower court erred when it failed to resolve the issues it had raised in its memorandum. [16] Petitioner likewise filed a supplemental motion for reconsideration expounding on whether the lower court acquired jurisdiction over the subject matter of the case despite therein plaintiff’s failure to pay the prescribed docket fee.[17] On January 25, 1990, the lower court declined reconsideration for lack of merit.[18] Apparently not

having received the order denying its motion for reconsideration, petitioner still filed a motion for leave to file a reply to private respondent’s opposition to said motion.[19] Hence, on February 12, 1990, the lower court denied said motion for leave to file a reply on the ground that by the issuance of the order of January 25, 1990, said motion had become moot and academic.[20] Unsatisfied with the lower court’s decision, petitioner elevated the matter to the Court of Appeals which, however, affirmed the same in toto on October 14, 1992. [21] On petitioner’s assertion that the award of P6,438,048.00 was not convincingly proved by competent and admissible evidence, the Court of Appeals ruled that it was not necessary to qualify Del Rosario as an expert witness because as the owner of the lost vessel, “it was well within his knowledge and competency to identify and determine the equipment installed and the cargoes loaded” on the vessel. Considering the documentary evidence presented as in the nature of market reports or quotations, trade journals, trade circulars and price lists, the Court of Appeals held, thus: “Consequently, until such time as the Supreme Court categorically rules on the admissibility or inadmissibility of this class of evidence, the reception of these documentary exhibits (price quotations) as evidence rests on the sound discretion of the trial court. In fact, where the lower court is confronted with evidence which appears to be of doubtful admissibility, the judge should declare in favor of admissibility rather than of non-admissibility (The Collector of Palakadhari, 124 [1899], p. 43, cited in Francisco, Revised Rules of Court, Evidence, Volume VII, Part I, 1990 Edition, p. 18). Trial courts are enjoined to observe the strict enforcement of the rules of evidence which crystallized through constant use and practice and are very useful and effective aids in the search for truth and for the effective administration of justice. But in connection with evidence which may appear to be of doubtful relevancy or incompetency or admissibility, it is the safest policy to be liberal, not rejecting them on doubtful or technical grounds, but admitting them unless plainly irrelevant, immaterial or incompetent, for the reason that their rejection places them beyond the consideration of the court. If they are thereafter found relevant or competent, can easily be remedied by completely discarding or ignoring them. (Banaria vs. Banaria, et al., C.A. No. 4142, May 31, 1950; cited in Francisco, Supra).” [Underscoring supplied]. Stressing that the alleged inadmissible documentary exhibits were never satisfactorily rebutted by appellant’s own sole witness in the person of Lorenzo Lazaro, the appellate court found that petitioner ironically situated itself in an “inconsistent posture by the fact that its own witness, admittedly an expert one, heavily relies on the very same pieces of evidence (price quotations) appellant has so vigorously objected to as inadmissible evidence.” Hence, it concluded: “x x x. The amount of P6,438,048.00 was duly established at the trial on the basis of appellee’s documentary exhibits

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(price quotations) which stood uncontroverted, and which already included the amount by way of adjustment as prayed for in the amended complaint. There was therefore no need for appellee to amend the second amended complaint in so far as to the claim for damages is concerned to conform with the evidence presented at the trial. The amount of P6,438,048.00 awarded is clearly within the relief prayed for in appellee’s second amended complaint.” On the issue of lack of jurisdiction, the respondent court held that following the ruling in Sun Insurance Ltd. v. Asuncion,[22] the additional docket fee that may later on be declared as still owing the court may be enforced as a lien on the judgment. Hence, the instant recourse. In assailing the Court of Appeals’ decision, petitioner posits the view that the award of P6,438,048 as actual damages should have been in light of these considerations, namely: (1) the trial court did not base such award on the actual value of the vessel and its equipment at the time of loss in 1977; (2) there was no evidence on extraordinary inflation that would warrant an adjustment of the replacement cost of the lost vessel, equipment and cargo; (3) the value of the lost cargo and the prices quoted in respondent’s documentary evidence only amount to P4,336,215.00; (4) private respondent’s failure to adduce evidence to support its claim for unrealized profit and business opportunities; and (5) private respondent’s failure to prove the extent and actual value of damages sustained as a result of the 1977 collision of the vessels.[23] Under Article 2199 of the Civil Code, actual or compensatory damages are those awarded in satisfaction of, or in recompense for, loss or injury sustained. They proceed from a sense of natural justice and are designed to repair the wrong that has been done, to compensate for the injury inflicted and not to impose a penalty.[24] In actions based on torts or quasi-delicts, actual damages include all the natural and probable consequences of the act or omission complained of.[25] There are two kinds of actual or compensatory damages: one is the loss of what a person already possesses (daño emergente), and the other is the failure to receive as a benefit that which would have pertained to him (lucro cesante).[26] Thus: “Where goods are destroyed by the wrongful act of the defendant the plaintiff is entitled to their value at the time of destruction, that is, normally, the sum of money which he would have to pay in the market for identical or essentially similar goods, plus in a proper case damages for the loss of use during the period before replacement. In other words, in the case of profit-earning chattels, what has to be assessed is the value of the chattel to its owner as a going concern at the time and place of the loss, and this means, at least in the case of ships, that regard must be had to existing and pending engagements.x x x. x x x. If the market value of the ship reflects the fact that it is in any case virtually certain of profitable employment,

then nothing can be added to that value in respect of charters actually lost, for to do so would be pro tanto to compensate the plaintiff twice over. On the other hand, if the ship is valued without reference to its actual future engagements and only in the light of its profit-earning potentiality, then it may be necessary to add to the value thus assessed the anticipated profit on a charter or other engagement which it was unable to fulfill. What the court has to ascertain in each case is the `capitalised value of the vessel as a profit-earning machine not in the abstract but in view of the actual circumstances,’ without, of course, taking into account considerations which were too remote at the time of the loss.”[27] [Underscoring supplied]. As stated at the outset, to enable an injured party to recover actual or compensatory damages, he is required to prove the actual amount of loss with reasonable degree of certainty premised upon competent proof and on the best evidence available.[28] The burden of proof is on the party who would be defeated if no evidence would be presented on either side. He must establish his case by a preponderance of evidence which means that the evidence, as a whole, adduced by one side is superior to that of the other.[29] In other words, damages cannot be presumed and courts, in making an award must point out specific facts that could afford a basis for measuring whatever compensatory or actual damages are borne.[30] In this case, actual damages were proven through the sole testimony of private respondent’s general manager and certain pieces of documentary evidence. Except for Exhibit B where the value of the 1,050 bañeras of fish were pegged at their September 1977 value when the collision happened, the pieces of documentary evidence proffered by private respondent with respect to items and equipment lost show similar items and equipment with corresponding prices in early 1987 or approximately ten (10) years after the collision. Noticeably, petitioner did not object to the exhibits in terms of the time index for valuation of the lost goods and equipment. In objecting to the same pieces of evidence, petitioner commented that these were not duly authenticated and that the witness (Del Rosario) did not have personal knowledge on the contents of the writings and neither was he an expert on the subjects thereof.[31] Clearly ignoring petitioner’s objections to the exhibits, the lower court admitted these pieces of evidence and gave them due weight to arrive at the award of P6,438,048.00 as actual damages. The exhibits were presented ostensibly in the course of Del Rosario’s testimony. Private respondent did not present any other witnesses especially those whose signatures appear in the price quotations that became the bases of the award. We hold, however, that the price quotations are ordinary private writings which under the Revised Rules of Court should have been proffered along with the testimony of the authors thereof. Del Rosario could not have testified on the veracity of the contents of the writings even though he was the seasoned owner of a fishing fleet because he was not the one who issued the price quotations. Section 36, Rule 130 of the Revised Rules of Court provides that a

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witness can testify only to those facts that he knows of his personal knowledge. For this reason, Del Rosario’s claim that private respondent incurred losses in the total amount of P6,438,048.00 should be admitted with extreme caution considering that, because it was a bare assertion, it should be supported by independent evidence. Moreover, because he was the owner of private respondent corporation[32] whatever testimony he would give with regard to the value of the lost vessel, its equipment and cargoes should be viewed in the light of his self-interest therein. We agree with the Court of Appeals that his testimony as to the equipment installed and the cargoes loaded on the vessel should be given credence[33] considering his familiarity th