Transportation Laws Case Digest Midterms - Actions and Damages

November 21, 2017 | Author: Patrick Gallito | Category: Damages, Joint And Several Liability, Negligence, Punitive Damages, Cargo
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Actions and Damages Solidary Liability 1. Construction Dev’t. Corp. of the Phil. (CDCP) v Estrella et al., September 8, 2006 Facts Estrella and her granddaughter boarded in a BLTB bus. En route to Pasay City their bus was rammed from behind by a tractor-truck of CDCP. Estrella and her daughter suffered injuries which led to the filing of the complaint for damages against CDCP and BLTB alleging, among others, that 1) negligence and non-compliance with traffic laws, 2) failure to exercise the diligence of a good father of a family in the selection and supervision of their employees. The trial court found CDCP and BLTB jointly and severally liable for damages. CDCP and BLTB’s MR was denied. On appeal, the CA affirmed the trial court. Hence, the present petition brought by CDCP arguing that BLTB and its driver should be solely liable. Issue Whether CDCP is jointly and severally liable to BLTB Ruling The case filed against CDCP is an action for culpa aquiliana. An action based on quasidelict may be instituted against the employer for an employee’s act or omission. The liability is direct and primary, but is subject to the defense of due diligence in the selection and supervision of the employee, a defense that CDCP failed to prove. It was shown that CDCP’s driver was driving recklessly by the skid marks. 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. 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. 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. 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 so long as private respondent and her coplaintiffs do not recover twice for the same injury. Joint tort feasors are jointly and severally liable for the tort which they commit. The persons injured may sue all of them or any number less than all. Each is liable for the whole damages caused by all, and all together are jointly liable for the whole damage. It is no defense for one sued alone, that the others who participated in the wrongful act are not joined with him as defendants; nor is it any excuse for him that his participation in the tort was insignificant as compared to that of the others.


Loadmasters Customs Services, Inc. v Glodel Brokerage Corporation and R&B Insurance, January 10, 2011 Facts R&B Insurance insured the shipment of Columbia Wire and Cable Corporation’s shipment of 132 bundles of electric copper cathodes against “All Risks”. Columbia engaged the services of Glodel for the release and withdrawal of the cargoes and the delivery to its warehouses. Glodel, in turn, engaged the services of Loadmasters for the use of its delivery trucks to transport the cargoes to Columbia’s warehouses. Of the 6 trucks of Loadmaster en route to deliver the cargoes to Columbia’s Bulacan Warehouse, only 5 reached the destination. One truck, loaded with 11 bundles or 232 pieces of copper cathodes, failed to deliver its cargo. Later, the said truck was recovered but without the missing cargo. R&B paid the insurance indemnity. R&B filed a complaint for damages against both Loadmasters and Glodel.

The RTC held Glodel liable for the loss of the cargo. Both R&B Insurance and Glodel appealed to the CA. The CA held Loadmasters jointly and severally liable with Glodel. Hence, the present petition. Loadmasters argues that it cannot be considered an agent of Glodel because it never represented the latter in its dealings with the consignee. At any rate, it further contends that Glodel has no recourse against it for its failure to file a cross-claim Issue Who, between Glodel and Loadmasters, is liable to pay R&B Insurance for the amount of the indemnity it paid Columbia Ruling Loadmasters and Glodel, being both common carriers, are mandated from the nature of their business and for reasons of public policy, to observe the extraordinary diligence in the vigilance over the goods transported by them according to all the circumstances of such case, as required by Article 1733 of the Civil Code. The Court is of the view that both Loadmasters and Glodel are jointly and severally liable to R & B Insurance for the loss of the subject cargo. Under Article 2194 of the New Civil Code, "the responsibility of two or more persons who are liable for a quasi-delict is solidary." Loadmasters may not be a privy to the contract with Columbia but Article 2176 of the Civil Code provides that ‘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 preexisting contractual relation between the parties, is called a quasi-delict and is governed by the provisions of this Chapter.’ A tort may arise despite the absence of a contractual relationship. The cargo was lost while in the custody of Loadmasters whose employees were instrumental in the hijacking or robbery. As employer, Loadmasters should be made answerable for the damages caused by its employees who acted within the scope of their assigned task. Loadmasters failed to rebut the presumption of negligence in the selection or supervision of its employees. Glodel is also liable because of its failure to exercise extraordinary diligence. It failed to ensure that Loadmasters would fully comply with the undertaking to safely transport the subject cargo to the designated destination. It should have been more prudent in entrusting the goods to Loadmasters by taking precautionary measures, such as providing escorts to accompany the trucks in delivering the cargoes. Accordingly, there can be no contract of agency between the parties. Loadmasters never represented Glodel. Neither was it ever authorized to make such representation. It is a settled rule that the basis for agency is representation, that is, the agent acts for and on behalf of the principal on matters within the scope of his authority and said acts have the same legal effect as if they were personally executed by the principal. On the part of the principal, there must be an actual intention to appoint or an intention naturally inferable from his words or actions, while on the part of the agent, there must be an intention to accept the appointment and act on it. Such mutual intent is not obtaining in this case. Where several causes producing an injury are concurrent and each is an efficient cause without which the injury would not have happened, the injury may be attributed to all or any of the causes and recovery may be had against any or all of the responsible persons although under the circumstances of the case, it may appear that one of them was more culpable, and that the duty owed by them to the injured person was not the same. No actor's negligence ceases to be a proximate cause merely because it does not exceed the negligence of other actors. Each wrongdoer is responsible for the entire result and is liable as though his acts were the sole cause of the injury. Glodel cannot seek judicial sanction against Loadmasters because it did not file a cross-claim against the latter.

Notice of Claim

1. Phil. Charter Insurance (PCI) v Chemoil Lighterage, June 29, 2005 Facts Samkyung Co. shipped 62 tons of Dioctyl Phthalate (DOP) under one bill of lading on board MT Tahibana and another 436 tons of DOP under another bill to the Philippines. The consignee was Plastic Group Phil. (PGP). PGP insured the cargo with PCI against all risks. The ocean tanker unloaded the cargo to a Tanker Barge of Chemoil, which shall transport the same to Del Pan Bridge in Pasig River. It would be unloaded to tanker trucks, also owned by Chemoil, and deliver it to PGP’s storage tanks. Upon delivery, PGP saw that the shipment showed discoloration, demonstrating damage. PGP sent a letter to PCI for insurance claim for the loss it sustained due to contamination. The inspection showed that the manhole covers of ballast tanks’ ceilings were loosely secured and that the rubber gaskets of the covers re-acted to the chemical causing shrinkage thus, loosening the covers and cargo ingress to the rusty ballast tanks. PCI paid PGP. PGP filed an action for damages against Chemoil. The latter averred that PGP’s representative inspected the barge before loading and found it to be clean and dry and fit for loading. That said representative supervised the entire loading and unloading of the shipment and that the contract expressly stipulated waiver of liability from all claims arising from contamination, loss of cargo or part thereof; that the consignee accepted the cargo without any protest or notice; and it exercised extraordinary diligence in handling the cargo. The trial court order Chemoil to pay PCI. On appeal, the CA gave credit to Chemoil’s assertion that a phone call is not the required notice of claim by the Code of Commerse, and reversed the trial court. Hence, the present petition. Issue Whether or not the notice of claim was filed within the required period Ruling Art. 366 of the Code of Commerce provides that ‘Within twenty-four hours following the receipt of the merchandise a claim may be made against the carrier on account of damage or average found upon opening the packages, provided that the indications of the damage or average giving rise to the claim cannot be ascertained from the exterior of said packages, in which case said claim shall only be admitted at the time of the receipt of the packages.’ After the periods mentioned have elapsed, or after the transportation charges have been paid, no claim whatsoever shall be admitted against the carrier with regard to the condition in which the goods transported were delivered. A telephone call was made by Chan to Abastillas, informing the latter of the contamination. However, nothing in the trial court’s decision stated that the notice of claim was relayed or filed with the respondent-carrier immediately or within a period of twenty-four hours from the time the goods were received. The Court of Appeals made the same finding. Having examined the entire records of the case, we cannot find a shred of evidence that will precisely and ultimately point to the conclusion that the notice of claim was timely relayed or filed. Chan had no personal knowledge that the drivers of the respondent were informed of the contamination. This protects the carrier by affording it an opportunity to make an investigation of a claim while the matter is fresh and easily investigated so as to safeguard itself from false and fraudulent claims. The filing of a claim with the carrier within the time limitation therefore actually constitutes a condition precedent to the accrual of a right of action against a carrier for loss of, or damage to, the goods. The shipper or consignee must allege and prove the fulfillment of the condition. If it fails to do so, no right of action against the carrier can accrue in favor of the former. It is not only when the period to make a claim has elapsed that no claim whatsoever shall be admitted, as no claim may similarly be admitted after the transportation charges have been paid. In this case, there is no question that the transportation charges have been paid, as admitted by the petitioner, and the corresponding official receipt duly issued.

2. Aboitiz Shipping Corp. v Insurance Company of North America (ICNA), August 6, 2008 Facts MSAS procured an “all risk” marine insurance policy from ICNA for transshipment of certain wooden work tools and workbenches purchased for consignee Science Teaching Improvement Project (STIP). The cargo, packed inside a container van, was shipped “freight prepaid” from Germany on board M/S Katsuragi. A clean bill of lading was issued by Hapag-Lloyd which stated the consignee to be STIP, Cebu City. The container van was off-loaded at Singapore and transshipped on board M/S Vigour Singapore. When the ship arrived and docked at Manila, the container van was again off-loaded. The cargo was received by Aboitiz, which issued a bill of lading containing the notation “grounded outside warehouse.” The container van was stripped and transferred to another crate/container van without any notation on the condition of the cargo on the Stuffing/Stripping Report. The container van was loaded on board Aboitiz’s vessel en route to Cebu. The shipment arrived in Cebu City and discharged. It was brought to the Cebu Bonded Warehousing Corporation pending clearance from the Customs. In the Stripping Report, Aboitiz’s checker noted that the crates were slightly broken or cracked at the bottom. The cargo was withdrawn by STIP and delivered to Don Bosco High School, and received by Mr. Willig. Two days later, Willig, through a telephone call, informed Perez, the Claims Head of Aboitiz, that the cargo sustained water damage. Perez inspected the contrainer and found that the container van and other cargoes were completely dry. Perez found that except for the bottom of the crate which was slightly broken, the crate itself appeared to be completely dry and had no water marks. But he confirmed that the tools which were stored inside the crate were already corroded. He further explained that the "grounded outside warehouse" notation in the bill of lading referred only to the container van bearing the cargo. STIP filed insurance claims with ICNA. The inspection showed the goods sustained water damage, molds, and corrosion which were discovered upon delivery to consignee. STIP filed a formal claim with Aboitiz. A supplemental report showed that PAGASA reported heavy rains that caused water damage to the shipment, which were placed outside the warehouse of the Pier in Manila as can be gleaned from the bill of lading which contained the notation “grounded outside warehouse.” It was only 4 days after that the shipment was stuffed inside another container van for shipment to Cebu. ICNA paid the amount, and formally advised Aboitiz of the claim, which the latter did not settle. The RTC rendered judgment against ICNA ruling that it failed to prove personality to sue because it was ICNA UK who issued the policy not ICNA Phils. ICNA failed to produce evidence that it was a foreign corporation duly licensed to do business in the Philippines. Thus, it lacked the capacity to sue before Philippine Courts. On appeal, the CA reversed the RTC ruling holding that the right of subrogation accrues simply upon payment by the insurance company of the insurance claim. As subrogee, ICNA is entitled to reimbursement from Aboitiz, even assuming that it is an unlicensed foreign corporation. The CA ruled that the presumption that the carrier was at fault or that it acted negligently was not overcome by any countervailing evidence. Hence, Aboitiz brought the present petition. Issue Was there a timely filing of the notice of claim as required under Article 366 of the Code of Commerce Ruling The giving of notice of loss or injury is a condition precedent to the action for loss or injury or the right to enforce the carrier's liability. Circumstances peculiar to this case lead Us to conclude that the notice requirement was complied with.

The shipment was delivered on August 11, 1993. Although the letter informing the carrier of the damage was dated August 15, 1993, that letter, together with the notice of claim, was received by petitioner only on September 21, 1993. But petitioner admits that even before it received the written notice of claim, Mr. Mayo B. Perez, Claims Head of the company, was informed by telephone sometime in August 13, 1993. Mr. Perez then immediately went to the warehouse and to the delivery site to inspect the goods in behalf of petitioner. There are peculiar circumstances in the instant case that constrain Us to rule differently from the PCIC case, albeit this ruling is being made pro hac vice, not to be made a precedent for other cases. Provisions specifying a time to give notice of damage to common carriers are ordinarily to be given a reasonable and practical, rather than a strict construction.37 We give due consideration to the fact that the final destination of the damaged cargo was a school institution where authorities are bound by rules and regulations governing their actions. Understandably, when the goods were delivered, the necessary clearance had to be made before the package was opened. Upon opening and discovery of the damaged condition of the goods, a report to this effect had to pass through the proper channels before it could be finalized and endorsed by the institution to the claims department of the shipping company. The call to petitioner was made two days from delivery, a reasonable period considering that the goods could not have corroded instantly overnight such that it could only have sustained the damage during transit. Moreover, petitioner was able to immediately inspect the damage while the matter was still fresh. In so doing, the main objective of the prescribed time period was fulfilled. Thus, there was substantial compliance with the notice requirement in this case. Petitioner failed to overturn this presumption of negligence when it failed to explain where the cargo was stored during the time rain fell on Manila and the bill of lading contained the notation “grounded outside warehouse.”


1. Victory Liner, Inc. v Rosalito Gammad, et al., November 25, 2004 Facts Gammad showed that his wife Marie Grace was on board a Victory Liner bus running at high speed when it fell on a ravine, which resulted to her death and physical injuries to other passengers. The heirs of the deceased filed a complaint for damages arising from culpa contractual. the petitioner claimed that the incident was purely accidental and that it has always exercised extraordinary diligence. The trial court ordered Victory Liner to pay actual damages, death indemnity, exemplary and moral damages, compensatory damages, attorney’s fees and cost of the suit. The CA affirmed the trial court’s decision but reduced the actual and exemplary damages. The CA denied the MR. Hence, the present petition wherein VL argues that the award of damages were without basis and should be deleted. Issue Whether the award of damages was proper Ruling Petitioner was correctly found liable for breach of contract of carriage. A common carrier 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 to 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.

There is no evidence to rebut the statutory presumption that the proximate cause of Marie Grace’s death was the negligence of petitioner. Nevertheless, the award of damages should be modified. Article 1764 in relation to Article 2206 of the Civil Code, holds the common carrier in breach of its contract of carriage that results in the death of a passenger liable to pay the following: (1) indemnity for death, (2) indemnity for loss of earning capacity, and (3) moral damages. In the present case, respondent heirs of the deceased are entitled to indemnity for the death of Marie Grace which under current jurisprudence is fixed at P50,000. The award of compensatory damages for the loss of the deceased’s earning capacity should be deleted for lack of basis. As a rule, documentary evidence should be presented to substantiate the claim for damages for loss of earning capacity. By way of exception, damages for loss of earning capacity may be awarded despite the absence of documentary evidence when (1) the deceased is self-employed earning less than the minimum wage under current labor laws, and judicial notice may be taken of the fact that in the deceased’s line of work no documentary evidence is available; or (2) the deceased is employed as a daily wage worker earning less than the minimum wage under current labor laws. Rosalito did not present evidence attesting to Marie Grace’s earning capacity as BIR Section Chief. However, the fact of loss having been established, temperate damages in the amount of P500,000.00 should be awarded to respondents. Under Article 2224 of the Civil Code, temperate or moderate damages, which are more than nominal but less than compensatory damages, may be recovered when the court finds that some pecuniary loss has been suffered but its amount cannot, from the nature of the case, be proved with certainty. Anent the award of moral damages, the same cannot be lumped with exemplary damages because they are based on different jural foundations. These damages are different in nature and require separate determination. In culpa contractual or breach of contract, moral damages may be recovered when the defendant acted in bad faith or was guilty of gross negligence (amounting to bad faith) or in wanton disregard of contractual obligations and, as in this case, when the act of breach of contract itself constitutes the tort that results in physical injuries. By special rule in Article 1764 in relation to Article 2206 of the Civil Code, moral damages may also be awarded in case the death of a passenger results from a breach of carriage. On the other hand, exemplary damages, which are awarded by way of example or correction for the public good may be recovered in contractual obligations if the defendant acted in wanton, fraudulent, reckless, oppressive, or malevolent manner. Respondents in the instant case should be awarded moral damages to compensate for the grief caused by the death of the deceased resulting from the petitioner’s breach of contract of carriage. Furthermore, the petitioner failed to prove that it exercised the extraordinary diligence required for common carriers, it is presumed to have acted recklessly. Thus, the award of exemplary damages is proper. Under the circumstances, we find it reasonable to award respondents the amount of P100,000.00 as moral damages and P100,000.00 as exemplary damages. These amounts are not excessive. Actual damages should be further reduced to P78,160.00, which was the amount supported by official receipts. Pursuant to Article 2208 of the Civil Code, attorney’s fees may also be recovered in the case at bar where exemplary damages are awarded. The Court finds the award of attorney’s fees equivalent to 10% of the total amount adjudged against petitioner reasonable. In the instant case, petitioner should be held liable for payment of interest as damages for breach of contract of carriage. Considering that the amounts payable by petitioner has been determined with certainty only in the instant petition, the interest due shall be computed upon the finality of this decision at the rate of 12% per annum until satisfaction 2. Spouses Ong v CA, Inland Railways, Inc. and Philtranco, January 21, 1999 Facts

The Ongs boarded an Inland bus under a lease agreement with Philtranco, driven by Coronel. When the bus slowed down to avoid a stalled cargo truck, it was bumped from the rear by another bus, owned and operated by Philtranco and driven by Miralles. The spouses suffered injuries and were brought to a hospital for treatment and were confined for 9 days. Later, the Ongs filed an action against Philtranco and Inland alleging that they suffered injuries, preventing Francia from operating a sari-sari store and Renato from continuing his work as an OCW. The also claimed moral, exemplary and corrective damages, compensatory damages, medical and miscellaneous expenses, and attorney’s fees. They presented various documentary evidence. Philtranco answered that the Inland bus was owned by the latter and that they had an agreement that Inland would be solely liable for all claims and liabilities arising from the operation of said bus. With respect to its own bus, it exercised the diligence of a good father of a family in the selection and supervision of its drivers, and that the proximate cause of the accident was the negligence of either the cargo truck or the Inland bus which collided with said cargo truck. Inland answered that the Police Report showed that Miralles was at fault and that Coronel exercised extraordinary diligence as testified to by its passengers. The trial court absolved Inland and found Philtranco liable for damages against the spouses Ong. It ruled that the proximate cause of the accident was the bumping form behind by the Philtranco bus. On appeal, the CA resolved that Philtranco should be absolved from liability because the Police Report was not offered as evidence, hence, had no probative value. Instead it was Inland who should be made liable on the basis of culpa contractual. Further, it reduced Inland’s liability based on the records and disallowed the award for unearned income and the amount of moral damages was likewise reduced. Hence, the present petition. Issue 1.

Whether the Police Report, which was not formally offered in evidence, could be used to establish a claim against Philtranco based on culpa aquiliana

2. Whether the reduction in the amounts of damages awarded was proper Ruling A formal offer is necessary, since judges are required to base their findings of fact and their judgment solely and strictly upon the evidence offered by the parties at the trial. To allow parties to attach any document to their pleadings and then expect the court to consider it as evidence, even without formal offer and admission, may draw unwarranted consequences. Opposing parties will be deprived of their chance to examine the document and to object to its admissibility. On the other hand, the appellate court will have difficulty reviewing documents not previously scrutinized the court below. Granting arguendo that there was an agreement to submit the case for decision based on the pleadings, this does not necessarily imply that petitioners are entitled to the award of damages. The fundamental principle of the law on damages is that one injured by a breach of contract or by a wrongful or negligent act or omission shall have a fair and just compensation, commensurate with the loss sustained as a consequence of the defendant's acts. Hence, actual pecuniary compensation is the general rule, except where the circumstances warrant the allowance of other kinds of damages. To be recoverable, actual damages must be pleaded and proven in Court. In no instance may the trial judge award more than those so pleaded and proven. Damages cannot be presumed. The award thereof must be based on the evidence presented, not on the personal knowledge of the court. Damages, after all, are not intended to enrich the complainant at the expense of the defendant. In the case at bar, it was sufficiently shown during the trial that Francia's right arm could not function in a normal manner and that, as a result, she suffered mental anguish and anxiety. Thus, an increase in the amount of moral damages awarded, from P30,000 to P50,000, appears to be

reasonable and justified. Renato also suffered mental anxiety and anguish from the accident. Thus, he should be separately awarded P30,000 as moral damages. In the case at bar, petitioner failed to present evidence regarding the feasibility or practicability and the cost of a restorative medical operation on her arm. Thus, there is no basis to grant her P48,000 for such expense. The appellate court was correct in deleting the award for unrealized income, because of petitioner's utter failure to substantiate her claim. The bare and unsubstantiated assertion of Francia that she usually earned P200 a day from her market stall is not the best evidence to prove her claim of unrealized income for the eight-month period that her arm was in plaster cast.

3. Northwest Airlines v Chiong, January 31, 2008 Facts Philimare, as the authorized Philippine agent of TransOcean, hired Chiong as third engineer of TransOcean’s vessel M/V Elbia. Subsequently, Philmare dispatched a letter of guarantee to CL Hutchins and Co., TranOcean’s agent at the San Diego Port, confirming Chiong’s arrival in time to board the vessel. For this purpose, Philimare purchased for Chiong a Northwest plane ticket for San Diego from Manila. Chiong, on queue at the check-in counter, was informed that his name did not appear in the list of confirmed departing passengers. He was directed to speak to a man standing outside the Northwest’s counters from whom Chiong could allegedly obtain a boarding pass. Posthaste, Chiong approached the man but having no $100 to pay for the boarding pass he went on queue at the check-in counter again and presented his ticket where he was made to wait. When Chiong approached Calvo if she had money for the boarding pass, the latter found something amiss because his plane ticket was already confirmed. Ultimately, Chiong was not allowed to board the flight and was unable to work at the M/V Elbia. It appears that Chiong’s name was crossed out and substituted with "W. Costine" in Northwest’s Air Passenger Manifest. Chiong demanded as recompense: (1) the amount equivalent to Chiong’s salary under the latter’s Crew Agreement with TransOcean; (2) P15,000 for Chiong’s expenses in fetching and bringing his family from Samar to Manila; (3) P500,000 as moral damages; and (4) P500,000 as legal fees. When Northwest demurred, Chiong filed a complaint for breach of contract of carriage. 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 "noshow" passenger. 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 CA affirmed the RTC ruling. Issue Whether Northwest breached its contract of carriage with Chiong and if so, whether it is liable for compensatory, actual, moral and exemplary damages, attorney’s fees, and costs of suit Ruling In addition to his testimony, Chiong’s evidence consisted of a Northwest ticket, Chiong’s passport and seaman service record book duly stamped at the PCG counter, and the testimonies of Calvo, Florencio Gomez, and Philippine Overseas Employment and Administration (POEA) personnel who all identified the signature and stamp of the PCG on Chiong’s passport. 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. Its bare-faced claim that Chiong was a no-show passenger was belied by the records.

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. 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 nonperformance by Northwest, as carrier, in order to be awarded compensatory and actual damages. 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. It imports a dishonest purpose or some moral obliquity and conscious doing of a wrong. It means breach of a known duty through some motive, interest or ill will that partakes of the nature of fraud. The award of exemplary damages is also correct given the evidence that Northwest acted in an oppressive manner towards Chiong. Attorney’s fees may be awarded when a party is compelled to litigate or incur expenses to protect his interest, or where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff’s plainly valid, just and demandable claim.

4. Japan Airlines, Inc. v Simangan, September 22, 2008 Facts Simangan decided to donate a kidney to his ailing cousin Loreto, in California. Simangan needed to go to the US to complete his preliminary work-up and donation surgery. Upon UCLA’s request, Simangan was issued an emergency US visa by the American Embassy in Manila. Respondent purchased a round trip plane ticket from petitioner JAL and was issued the corresponding boarding pass. On the date of the flight, he went to the airport and was allowed to check-in at JAL’s counter. His plane ticket, boarding pass, travel authority and personal articles were subjected to rigid immigration and security routines. Respondent was then allowed to board the airplane. While inside the airplane, JAL’s crew suspected Simangan of carrying a falsified travel document and imputed that he would only use the trip to the US as a pretext to stay and work in Japan. Later, he was ordered to leave the plane. Respondent protested, explaining that he was issued a US visa. His pleas were ignored and was bumped off. Respondent went to JAL's ground office and waited there for three hours. Meanwhile, the plane took off and he was left behind. Afterwards, he was informed that his travel documents were, indeed, in order. Respondent was refunded the cost of his plane ticket less the sum of US$500.00 which was deducted by JAL. Subsequently, respondent's U.S. visa was cancelled. Respondent filed an action for damages against JAL. The latter denied the material allegations of the complaint. The RTC ordered JAL to pay Simangan moral, exemplary damages and attorney’s fees, plus the cost of suit. The CA affirmed the RTC’s decision but lowered the amount of moral and exemplary damages and deleted the award of attorney’s fees. Hence, the present petition. Issue Whether JAL is guilty of breach of contract of carriage, and if so liable for moral and exemplary damages Ruling 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. 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. Apart from the fact that respondent's plane ticket, boarding pass, travel authority and personal articles already passed the rigid immigration and security routines, 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." Thus, We find untenable JAL's defense of "verification of respondent's documents" in its breach of contract of carriage. The power to admit or not an alien into the country is a sovereign act which cannot be interfered with even by JAL. 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. Respondent has complied with these twin requisites. 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. 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. JAL breached its contract of carriage with respondent in bad faith. JAL personnel summarily and insolently ordered respondent to disembark while the latter was already settled in his assigned seat. 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. 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. JAL is also liable for exemplary damages as its above-mentioned 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. 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, as in this case.

5. PAL v CA and Spouses Buncio, September 22, 2008 Facts The spouses Buncio purchased from PAL two plane tickets for their 2 minor children. Since they will travel as unaccompanied minors, PAL required the Buncios accomplished an indemnity bond as required. PAL agreed to transport the minors from Manila to San Francisco, and upon arrival in SF, to transport through a connecting flight to Los Angeles, via United Airways where they will be met by their grandmother at the LAX. When the children arrived at SF airport, United Airways refused to take them aboard because PAL’s personnel in SF could not produce the indemnity bond submitted by the Buncios, which was lost by PAL’s personnel during the previous stop-over in Honolulu. Subsequently, Mr. Strigl, Lead Traffic Agent of PAL in SF, took the children to his residence where they stayed overnight.

When UA’s airplane landed in LAX, Mrs. Regalado, the grandmother, found no children and could not get any answer as to their whereabouts. Next day, the minors boarded a Western Airlines plane bound for LA where they were met by Mrs. Regalado. PAL’s personnel had previously informed her of the late arrival. The Buncios sent a demand for damages for the gross negligence and inefficiency of its employees, which went unheeded. Hence, a complaint was filed. Petitioner 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, the children were personally escorted by Strigl, and the latter exerted efforts to make the connecting flight of Deanna and Nikolai to Los Angeles possible. Further, they 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. The RTC held PAL liable for damages for breach of contract of carriage and awarded moral and exemplary damages plus attorney’s fees and costs of suit. The CA affirmed the RTC in toto. Hence, the present petition. Issue Whether PAL is liable for damages Ruling 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. 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. 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. Petitioner was fully aware that the children were travelling as unaccompanied minors and require special care. They also knew that the indemnity bond was required for the children to make the connecting flight. Yet, it did not exercise utmost care in handling the indemnity bond resulting in its loss. This was the proximate loss of the failure of the minors to make their connecting flight. This manifests that PAL did not check or verify if the indemnity bond was in its custody before leaving Honolulu. 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. 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 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.

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 text of the decision must state the reason behind the award of attorney’s fees. Otherwise, its award is totally unjustified. 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. The RTC and the Court of Appeals ordered petitioner to pay Deanna and Nikolai P50,000 each as moral damages. 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. 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. 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. 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. 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. 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.

6. Canada, under the name and style of Hi-Ball Freight Services v All Commodities Marketing Corporation (ACMC), October 17, 2008 Facts ACMC contracted Hi-Ball’s freight services to haul and deliver 1,000 sacks of sugar from Tondo to Pepsi Cola at Muntinlupa. The transaction was covered by two delivery receipts of All Star, but duly signed by Hi-Ball’s driver. Hi-Ball loaded the sacks into his 2 trucks; however, the same were never delivered to Pepsi. The drivers of the trucks, along with the helpers, had vanished. ACMC demanded payment of the value of the sugar, but the demand was not heeded. Consequently, a complaint was filed to recover the value of the lost sugar. Hi-Ball averred that the cargo were delivered to Pepsi. He rejected responsibility for the claim arguing that the loss of the goods was either due to respondent’s negligence or due to fortuitous event. By way of counterclaim, petitioner asserted his right to payment of P350,000, representing the value of the truck that was allegedly seized by respondent. The RTC ordered Hi-Ball to pay the value of the lost sugar, actual losses in terms of unearned income, cost of money and opportunity lost, exemplary damages, costs of suit, litigation expenses and attorney’s fees. The CA affirmed the RTC’s decision and rejected Hi-Ball’s totally new and never raised before argument that there was no contract of carriage with ACMC. Hence, the present petition where Hi-Ball passes responsibility to All Star, whose name appeared in the delivery receipt. Issue Whether Hi-Ball was in breach of the contract of carriage and liable for damages Ruling

At the trial court stage, petitioner insisted that the goods were delivered to the Pepsi Cola Plant. He further argued that the loss was either due to the fault of respondent or due to fortuitous event. After the RTC rendered an adverse decision, petitioner adopted a new theory, denying his contract with respondent and passing all the responsibility to All Star. Points of law, theories, issues and arguments not brought to the attention of the lower court ordinarily will not be considered by a reviewing court because they cannot be raised for the first time at that late stage. Petitioner had admitted his contract of carriage with respondent in the court a quo. Petitioner also admitted that the truck drivers and helpers who loaded the goods were his employees. He even tried to settle the case amicably, but negotiations for settlement had failed. These were unmistakable admissions of petitioner’s contractual relation with respondent. In the absence of a compelling reason to the contrary, petitioner’s admission of his contract with respondent is definitely binding on him. The exempting circumstance of caso fortuito may be availed of only when: (a) the cause of the unforeseen and unexpected occurrence was independent of the human will; (b) it was impossible to foresee the event which constituted the caso fortuito or, if it could be foreseen, it was impossible to avoid; (c) the occurrence must be such as to render it impossible to perform an obligation in a normal manner; and (d) the person tasked to perform the obligation must not have participated in any course of conduct that aggravated the accident. Other than petitioner’s barefaced assertion that the cargo were lost due to fortuitous event, no evidence was offered to substantiate it. It is elementary that to recover damages there must be pleading and proof of actual damages suffered. No actual damages can thus be awarded to respondent. Temperate damages may be allowed in cases where from the nature of the case, definite proof of pecuniary loss cannot be adduced, although the court is convinced that the aggrieved party suffered some pecuniary loss. Undoubtedly, pecuniary loss had been suffered by respondent in this case. But due to the insufficiency of evidence before us, we cannot establish the amount of such loss with certainty. In this regard, considering the attendant circumstances, we find the amount of P250,000 to be sufficient. The grant of temperate damages paves the way for the award of exemplary damages. Under Article 2234 of the Civil Code, a showing that the plaintiff is entitled to temperate damages allows the award of exemplary damages. Thus, we uphold the award of P50,000 as exemplary damages. We uphold respondent’s entitlement to attorney’s fees, but we fix the amount at P50,000.00.

7. UCPB General Insurance Co., Inc. v Aboitiz Shipping Corp., Eagle Express Lines, Damco Intermodal Services, Inc., and Pimentel Customs Brokerage Co., February 10, 2009 Facts San Miguel Corporation (SMC) purchased 3 units of waste water treatment plant from Super Max. The goods came from USA and arrived at the port of Manila. The same were then transported to Cebu on board MV Aboitiz Supercon II. After its arrival at the port of Cebu, the goods were delivered to and received by SMC at its plant site where it was then discovered that one electrical motor was damaged. Pursuant to an insurance agreement UCPB paid SMC. UCPB filed a complaint as subrogee against the defendants. The trial court ordered DAMCO, Eagle and Aboitiz solidarily liable to plaintiff. The CA reversed the decision and ruled that UCPB’s right of action did not accrue for failure to file a formal notice of claim within 24 hours from SMC’s receipt. UCPB claims that under the Carriage of Goods by Sea Act (COGSA), notice of loss need not be given if the condition of the cargo has been the subject of joint inspection such as, in this case, the inspection in the presence of the Eagle Express representative at the time the cargo was opened at the ICTSI. UCPB further claims that the issue of the applicability of Art. 366 of the Code of Commerce was never raised before the trial court and should, therefore, not have been considered by the Court of Appeals. Aboitiz argues that it obviously cannot be held liable for the damage to the cargo which, by UCPB’s admission, was incurred not during transshipment to Cebu on board one of Aboitiz’s

vessels, but was already existent at the time of unloading in Manila. Aboitiz also argues that Art. 366 is applicable. Issue Who is liable for the damage Ruling When the shipment was discharged and opened at the ICTSI in Manila in the presence of an Eagle Express representative, the cargo had already been found damaged. When the cargo was finally received by SMC at its Mandaue City warehouse, it was found in bad order, thereby confirming the damage already uncovered in Manila. Even by the exercise of extraordinary diligence, Aboitiz could not have undone the damage to the cargo that had already been there when the same was shipped on board its vessel. The claims were dated more than three months from receipt of the shipment and, at that, even after the extent of the loss had already been determined by SMC’s surveyor. The claim was, therefore, clearly filed beyond the 24-hour time frame prescribed by Art. 366 of the Code of Commerce. The notice in writing need not be given if the state of the goods has at the time of their receipt been the subject of joint survey or inspection. UCPB seizes upon the last paragraph which dispenses with the written notice if the state of the goods has been the subject of a joint survey which, in this case, was the opening of the shipment in the presence of an Eagle Express representative. It should be noted at this point that the applicability of the above-quoted provision of the COGSA was not raised as an issue by UCPB before the trial court and was only cited by UCPB in its Memorandum in this case. But Eagle Express had acted as the agent of the freight consolidator, not that of the carrier to whom the notice should have been made. UCPB’s misrepresentation that the applicability of the Code of Commerce was not raised as an issue before the trial court warrants the assessment of double costs of suit against it.

8. Sulpicio Lines, Inc. v Curso, March 17, 2010 Facts The MV Dona Marilyn sank at sea bound for Tacloban due to the inclement sea and weather conditions brought by typhoon Unsang. Dr. Curso died as a result, along with hundreds of other passengers. The surviving brothers and sisters of Dr. Curso filed a complaint for damages for breach of contract of carriage by sea, averring negligence. SLI denied liability, invoking force majeure, and that the vessel was seaworthy in all respects and was cleared by the PCG. The RTC dismissed the complaint finding that the sinking of the vessel was due to force majeure and that respondents failed to prove their claim for damages. The CA found SLI negligent for not having apprised themselves of the weather reports. The Court doubts the fitness of the ship for the voyage, since at the first sign of bad weather, the ship’s hydraulic system failed and had to be repaired mid-voyage. The fact that the stud bolts in the ships hydraulic system gave way while the ship was at sea discredits the theory that the appellee exercised due diligence in maintaining the seaworthy condition of the vessel. The CA ordered SLI to compensate the plaintiffs for moral damages, death indemnity, and loss of earning capacity, as well as costs of suit. Hence, the present petition where SLI insists that the brothers and sisters were not entitled to moral damages. Issue Whether the brothers and sisters of a deceased passenger in a case of breach of contract of carriage entitled to an award of moral damages against the carrier Ruling

Article 2206. The amount of damages for death caused by a crime or quasi-delict shall be at least three thousand pesos, even though there may have been mitigating circumstances. In addition: Xxx 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. The foregoing legal provisions set forth the persons entitled to moral damages. The omission from Article 2206 (3) of the brothers and sisters of the deceased passenger reveals the legislative intent to exclude them from the recovery of moral damages for mental anguish by reason of the death of the deceased. Inclusio unius est exclusio alterius. The solemn power and duty of the courts to interpret and apply the law do not include the power to correct the law by reading into it what is not written therein. Thus, the CA erred in awarding moral damages to the respondents. To be entitled to moral damages, the respondents must have a right based upon law. It is true that under Article 1003 of the Civil Code they succeeded to the entire estate of the late Dr. Curso in the absence of the latter’s descendants, ascendants, illegitimate children, and surviving spouse. However, they were not included among the persons entitled to recover moral damages. In fine, moral damages may be recovered in an action upon breach of contract of carriage only when: (a) where death of a passenger results, or (b) it is proved that the carrier was guilty of fraud and bad faith, even if death does not result. Article 2206 of the Civil Code entitles the descendants, ascendants, illegitimate children, and surviving spouse of the deceased passenger to demand moral damages for mental anguish by reason of the death of the deceased.

9. Sps. Cruz v Sun Holidays, Inc., June 29, 2010 Facts Sps. Cruz filed a complaint for damages against Sun Holidays arising from their sons’s death who perished with his wife on board the boat M/B Coco Beach III that capsized en route to Batangas from Puerto Galera where the coupled had stayed at Coco Beach Island Resort owned by Sun, by virtue of a tour package-contract with the latter. Eight passengers, including petitioners’ son and his wife, died during the incident. Sun denied responsibility claiming fortuitous event. Petitioners allege that as a common carrier, Sun was negligent in allowing the boat to sail notwithstanding storm warning bulletins issued by PAGASA. Respondent denied being a common carrier, alleging that its boats are not available to the general public as they only ferry Resort guests and crew members. Nonetheless, it claimed that it exercised the utmost diligence in ensuring the safety of its passengers; contrary to petitioners’ allegation, there was no storm as the Coast Guard in fact cleared the voyage; and M/B Coco Beach III was not filled to capacity and had sufficient life jackets for its passengers The RTC dismissed the complaint. The CA denied the appeal holding that Sun is a private carrier which is only required to observe ordinary diligence. That respondent in fact observed extraordinary diligence in transporting its guests on board M/B Coco Beach III; and that the proximate cause of the incident was a squall, a fortuitous event. Hence, the present petition. Issue Whether Sun was guilty of breach of contract of carriage Ruling Respondent is a common carrier. Its ferry services are so intertwined with its main business as to be properly considered ancillary thereto. The constancy of respondent’s ferry services in its resort operations is underscored by its having its own Coco Beach boats. And the tour packages it offers, which include the ferry services, may be availed of by anyone who can afford to pay the same. These services are thus available to the public. The Court is aware of

the practice of beach resort operators offering tour packages to factor the transportation fee in arriving at the tour package price. The evidence shows that PAGASA issued 24-hour public weather forecasts and tropical cyclone warnings for shipping on September 10 and 11, 2000 advising of tropical depressions in Northern Luzon which would also affect the province of Mindoro. To fully free a common carrier from any liability, the fortuitous event must have been the proximate and only cause of the loss. And it should have exercised due diligence to prevent or minimize the loss before, during and after the occurrence of the fortuitous event. The occurrence of squalls was expected under the weather condition. Evidence shows that M/B Coco Beach III suffered engine trouble before it capsized and sank. The incident was, therefore, not completely free from human intervention. The Civil Code holds the common carrier in breach of its contract of carriage that results in the death of a passenger liable to pay the following: (1) indemnity for death, (2) indemnity for loss of earning capacity and (3) moral damages. Petitioners are entitled to indemnity for the death of Ruelito which is fixed at P50,000. As for damages representing unearned income, the formula for its computation is: Net Earning Capacity = life expectancy x (gross annual income - reasonable and necessary living expenses). Life expectancy is determined in accordance with the formula: 2/3 x [80 — age of deceased at the time of death] Respecting the award of moral damages, since respondent common carrier’s breach of contract of carriage resulted in the death of petitioners’ son, following Article 1764 vis-à-vis Article 2206 of the Civil Code, petitioners are entitled to moral damages. Since respondent failed to prove that it exercised the extraordinary diligence required of common carriers, it is presumed to have acted recklessly, thus warranting the award too of exemplary damages, which are granted in contractual obligations if the defendant acted in a wanton, fraudulent, reckless, oppressive or malevolent manner. Pursuant to Article 2208 of the Civil Code, attorney's fees may also be awarded where exemplary damages are awarded. The Court finds that 10% of the total amount adjudged against respondent is reasonable for the purpose.

10. Facts

Heirs of Jose Ochoa v G&S Transport Corporation, March 9, 2011

Jose died while on board an Avis taxicab owned and operated by G&S, which was cruising at high speed when it tried to overtake another vehicle, a ten-wheeler truck, which it failed to do and instead rammed the railing throwing itself off the fly-over. Jose’s wife and minor children demanded indemnity in the total amount of P15,000,000. Unheeded, Ruby filed a complaint for damages. G&S answered that the cab was bumped by an on-rushing van causing the taxicab to ram the railings and fall over. They posited that it was a fortuitous event and/or the fault or negligence of the driver of the van that hit the cab. It likewise claimed that it exercised the diligence required of a good father of a family in the selection and supervision of its employees The RTC found the driver of G&S to be negligent and the latter did not prove exercise of diligence of a good father of a family in the selection and supervision of its employees as insufficient. The heirs filed a motion for partial reconsideration asking for moral damages while G&S filed an appeal. The trial court declared them entitled to moral and exemplary damages. Because of this, G & S filed another Notice of Appeal. The CA ruled in favor of the heirs. With respect to the award of P6,537,244.96 for Jose’s loss of earning capacity, the CA declared the same unwarranted. It found the Certification issued by Jose’s employer, the USAID, as self-serving, unreliable, and biased. While said certification states that Jose Marcial was earning an annual salary of P450,844.49 at the time of his untimely demise, the CA noted that same is unsupported by competent evidence such as income tax returns or receipts. The

CA found the award of P300,000 excessive and thus reduced the same to P200,000 as to make it proportionate to the award of exemplary damages which is P50,000. Hence, the present petition filed by both G&S and the heirs. Issue Whether G&S is liable for damages Ruling Both the trial court and the CA found that the accident which led to Jose Marcial’s death was due to the reckless driving and gross negligence of G & S’ driver, Padilla, thereby holding G & S liable to the heirs of Jose Marcial for breach of contract of carriage. The action filed by the heirs is primarily for the recovery of damages arising from breach of contract of carriage allegedly committed by G & S. Clearly, it is an independent civil action arising from contract which is separate and distinct from the criminal action for reckless imprudence resulting in homicide filed by the heirs against Padilla by reason of the same incident. Hence, regardless of Padilla’s acquittal or conviction in said criminal case, same has no bearing in the resolution of the present case. The testimony of Jose’s wife that he was earning around P450,000 a year was corroborated by a Certification issued by the USAID. It is highly improbable that such an agency will issue a certification containing unreliable information regarding an employee’s income. Besides, there exists a presumption that official duty has been regularly performed. We thus find as sufficient and "somehow proportional to and in approximation of the suffering inflicted" an award of moral damages in an amount similar to that awarded in Victory which is P100,000.

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