G.R. No. 112287 December 12, 1997 3. Costs of suit.

NATIONAL STEEL CORPORATION, petitioner, SO ORDERED. 2

vs.
COURT OF APPEALS AND VLASONS SHIPPING, INC., respondents. On the other hand, the Court of Appeals ruled:

G.R. No. 112350 December 12, 1997 WHEREFORE, premises considered, the decision appealed from is modified
by reducing the award for demurrage to P44,000.00 and deleting the award for
VLASONS SHIPPING, INC., petitioner, attorney's fees and expenses of litigation. Except as thus modified, the
vs. decision is AFFIRMED. There is no pronouncement as to costs.
COURT OF APPEALS AND NATIONAL STEEL
CORPORATION, respondents. SO ORDERED. 3

The Facts

PANGANIBAN, J.: The MV Vlasons I is a vessel which renders tramping service and, as such,
does not transport cargo or shipment for the general public. Its services are
The Court finds occasion to apply the rules on the seaworthiness available only to specific persons who enter into a special contract of charter
of private carrier, its owner's responsibility for damage to the cargo and its party with its owner. It is undisputed that the ship is a private carrier. And it is in
liability for demurrage and attorney's fees. The Court also reiterates the well- the capacity that its owner, Vlasons Shipping, Inc., entered into a contract of
known rule that findings of facts of trial courts, when affirmed by the Court of affreightment or contract of voyage charter hire with National Steel
Appeals, are binding on this Court. Corporation.

The Case The facts as found by Respondent Court of Appeals are as follows:

Before us are two separate petitions for review filed by National Steel (1) On July 17, 1974, plaintiff National Steel Corporation (NSC) as Charterer
Corporation (NSC) and Vlasons Shipping, Inc. (VSI), both of which assail the and defendant Vlasons Shipping, Inc. (VSI) as Owner, entered into a Contract
August 12, 1993 Decision of the Court of Appeals.  The Court of Appeals
1
of Voyage Charter Hire (Exhibit "B"; also Exhibit "1") whereby NSC hired VSI's
modified the decision of the Regional Trial Court of Pasig, Metro Manila, vessel, the MV "VLASONS I" to make one (1) voyage to load steel products at
Branch 163 in Civil Case No. 23317. The RTC disposed as follows: Iligan City and discharge them at North Harbor, Manila, under the following
terms and conditions, viz:
WHEREFORE, judgment is hereby rendered in favor of defendant and against
the plaintiff dismissing the complaint with cost against plaintiff, and ordering 1. . . .
plaintiff to pay the defendant on the counterclaim as follows:
2. Cargo: Full cargo of steel products of not less than 2,500 MT, 10% more or
1. The sum of P75,000.00 as unpaid freight and P88,000.00 as demurrage less at Master's option.
with interest at the legal rate on both amounts from April 7, 1976 until the same
shall have been fully paid; 3. . . .

2. Attorney's fees and expenses of litigation in the sum of P100,000.00; and 4. Freight/Payment: P30.00/metric ton, FIOST basis. Payment upon
presentation of Bill of Lading within fifteen (15) days.
5. Laydays/Cancelling: July 26, 1974/Aug. 5, 1974. discoverable by due diligence; any other cause arising without the actual fault
or privity of Owners or without the fault of the agents or servants of owners."
6. Loading/Discharging Rate: 750 tons per WWDSHINC. (Weather Working
Day of 24 consecutive hours, Sundays and Holidays Included). Paragraph 12 of said NANYOZAI Charter Party also provides that "(o)wners
shall not be responsible for split, chafing and/or any damage unless caused by
7. Demurrage/Dispatch: P8,000.00/P4,000.00 per day. the negligence or default of the master and crew."

8. . . . (2) On August 6, 7 and 8, 1974, in accordance with the Contract of Voyage

Charter Hire, the MV "VLASONS I" loaded at plaintiffs pier at Iligan City, the
9. Cargo Insurance: Charterer's and/or Shipper's must insure the cargoes. NSC's shipment of 1,677 skids of tinplates and 92 packages of hot rolled
Shipowners not responsible for losses/damages except on proven willful sheets or a total of 1,769 packages with a total weight of about 2,481.19 metric
negligence of the officers of the vessel. tons for carriage to Manila. The shipment was placed in the three (3) hatches
of the ship. Chief Mate Gonzalo Sabando, acting as agent of the vessel[,]
acknowledged receipt of the cargo on board and signed the corresponding bill
10. Other terms: (a) All terms/conditions of NONYAZAI C/P [sic] or other
of lading, B.L.P.P. No. 0233 (Exhibit "D") on August 8, 1974.
internationally recognized Charter Party Agreement shall form part of this
Contract.
(3) The vessel arrived with the cargo at Pier 12, North Harbor, Manila, on
August 12, 1974. The following day, August 13, 1974, when the vessel's three
xxx xxx xxx
(3) hatches containing the shipment were opened by plaintiff's agents, nearly
all the skids of tinplates and hot rolled sheets were allegedly found to be wet
The terms "F.I.O.S.T." which is used in the shipping business is a standard and rusty. The cargo was discharged and unloaded by stevedores hired by the
provision in the NANYOZAI Charter Party which stands for "Freight In and Out Charterer. Unloading was completed only on August 24, 1974 after incurring a
including Stevedoring and Trading", which means that the handling, loading delay of eleven (11) days due to the heavy rain which interrupted the unloading
and unloading of the cargoes are the responsibility of the Charterer. Under operations. (Exhibit "E")
Paragraph 5 of the NANYOZAI Charter Party, it states, "Charterers to load,
stow and discharge the cargo free of risk and expenses to owners. . . .
(4) To determine the nature and extent of the wetting and rusting, NSC called
(Emphasis supplied).
for a survey of the shipment by the Manila Adjusters and Surveyors Company
(MASCO). In a letter to the NSC dated March 17, 1975 (Exhibit "G"), MASCO
Under paragraph 10 thereof, it is provided that "(o)wners shall, before and at made a report of its ocular inspection conducted on the cargo, both while it
the beginning of the voyage, exercise due diligence to make the vessel was still on board the vessel and later at the NDC warehouse in Pureza St.,
seaworthy and properly manned, equipped and supplied and to make the Sta. Mesa, Manila where the cargo was taken and stored. MASCO reported
holds and all other parts of the vessel in which cargo is carried, fit and safe for that it found wetting and rusting of the packages of hot rolled sheets and metal
its reception, carriage and preservation. Owners shall not be liable for loss of covers of the tinplates; that tarpaulin hatch covers were noted torn at various
or damage of the cargo arising or resulting from: unseaworthiness unless extents; that container/metal casings of the skids were rusting all over.
caused by want of due diligence on the part of the owners to make the vessel MASCO ventured the opinion that "rusting of the tinplates was caused by
seaworthy, and to secure that the vessel is properly manned, equipped and contact with SEA WATER sustained while still on board the vessel as a
supplied and to make the holds and all other parts of the vessel in which cargo consequence of the heavy weather and rough seas encountered while en
is carried, fit and safe for its reception, carriage and preservation; . . . ; perils, route to destination (Exhibit "F"). It was also reported that MASCO's surveyors
dangers and accidents of the sea or other navigable waters; . . . ; wastage in drew at random samples of bad order packing materials of the tinplates and
bulk or weight or any other loss or damage arising from inherent defect, quality delivered the same to the M.I.T. Testing Laboratories for analysis. On August
or vice of the cargo; insufficiency of packing; . . . ; latent defects not 31, 1974, the M.I.T. Testing Laboratories issued Report No. 1770 (Exhibit "I")
which in part, states, "The analysis of bad order samples of packing materials . warehouse after discharge from the vessel; and that plaintiff's claim was highly
. . shows that wetting was caused by contact with SEA WATER". speculative and grossly exaggerated and that the small stain marks or sweat
marks on the edges of the tinplates were magnified and considered total loss
(5) On September 6, 1974, on the basis of the aforesaid Report No. 1770, of the cargo. Finally, defendant claimed that it had complied with all its duties
plaintiff filed with the defendant its claim for damages suffered due to the and obligations under the Voyage Charter Hire Contract and had no
downgrading of the damaged tinplates in the amount of P941,145.18. Then on responsibility whatsoever to plaintiff. In turn, it alleged the following
October 3, 1974, plaintiff formally demanded payment of said claim but counterclaim:
defendant VSI refused and failed to pay. Plaintiff filed its complaint against
defendant on April 21, 1976 which was docketed as Civil Case No. 23317, CFI, (a) That despite the full and proper performance by defendant of its obligations
Rizal. under the Voyage Charter Hire Contract, plaintiff failed and refused to pay the
agreed charter hire of P75,000.00 despite demands made by defendant;
(6) In its complaint, plaintiff claimed that it sustained losses in the aforesaid
amount of P941,145.18 as a result of the act, neglect and default of the master (b) That under their Voyage Charter Hire Contract, plaintiff had agreed to pay
and crew in the management of the vessel as well as the want of due diligence defendant the sum of P8,000.00 per day for demurrage. The vessel was on
on the part of the defendant to make the vessel seaworthy and to make the demurrage for eleven (11) days in Manila waiting for plaintiff to discharge its
holds and all other parts of the vessel in which the cargo was carried, fit and cargo from the vessel. Thus, plaintiff was liable to pay defendant demurrage in
safe for its reception, carriage and preservation — all in violation of the total amount of P88,000.00.
defendant's undertaking under their Contract of Voyage Charter Hire.
(c) For filing a clearly unfounded civil action against defendant, plaintiff should
(7) In its answer, defendant denied liability for the alleged damage claiming be ordered to pay defendant attorney's fees and all expenses of litigation in the
that the MV "VLASONS I" was seaworthy in all respects for the carriage of amount of not less than P100,000.00.
plaintiff's cargo; that said vessel was not a "common carrier" inasmuch as she
was under voyage charter contract with the plaintiff as charterer under the (8) From the evidence presented by both parties, the trial court came out with
charter party; that in the course of the voyage from Iligan City to Manila, the the following findings which were set forth in its decision:
MV "VLASONS I" encountered very rough seas, strong winds and adverse
weather condition, causing strong winds and big waves to continuously pound (a) The MV "VLASONS I" is a vessel of Philippine registry engaged in the
against the vessel and seawater to overflow on its deck and hatch covers, that tramping service and is available for hire only under special contracts of
under the Contract of Voyage Charter Hire, defendant shall not be responsible charter party as in this particular case.
for losses/damages except on proven willful negligence of the officers of the
vessel, that the officers of said MV "VLASONS I" exercised due diligence and
(b) That for purposes of the voyage covered by the Contract of Voyage Charter
proper seamanship and were not willfully negligent; that furthermore the
Hire (Exh. "1"), the MV VLASONS I" was covered by the required
Voyage Charter Party provides that loading and discharging of the cargo was
seaworthiness certificates including the Certification of Classification issued by
on FIOST terms which means that the vessel was free of risk and expense in
an international classification society, the NIPPON KAIJI KYOKAI (Exh. "4");
connection with the loading and discharging of the cargo; that the damage, if
Coastwise License from the Board of Transportation (Exh. "5"); International
any, was due to the inherent defect, quality or vice of the cargo or to the
Loadline Certificate from the Philippine Coast Guard (Exh. "6"); Cargo Ship
insufficient packing thereof or to latent defect of the cargo not discoverable by
Safety Equipment Certificate also from the Philippine Coast Guard (Exh. "7");
due diligence or to any other cause arising without the actual fault or privity of
Ship Radio Station License (Exh. "8"); Certificate of Inspection by the
defendant and without the fault of the agents or servants of defendant;
Philippine Coast Guard (Exh. "12"); and Certificate of Approval for Conversion
consequently, defendant is not liable; that the stevedores of plaintiff who
issued by the Bureau of Customs (Exh. "9"). That being a vessel engaged in
discharged the cargo in Manila were negligent and did not exercise due care in
both overseas and coastwise trade, the MV "VLASONS I" has a higher degree
the discharge of the cargo; land that the cargo was exposed to rain and
of seaworthiness and safety.
seawater spray while on the pier or in transit from the pier to plaintiff's
(c) Before it proceeded to Iligan City to perform the voyage called for by the defendant carrier has no liability for whatever damage may occur or maybe
Contract of Voyage Charter Hire, the MV "VLASONS I" underwent drydocking [sic] caused to the cargo in the process.
in Cebu and was thoroughly inspected by the Philippine Coast Guard. In fact,
subject voyage was the vessel's first voyage after the drydocking. The (g) It was also established that the vessel encountered rough seas and bad
evidence shows that the MV "VLASONS I" was seaworthy and properly weather while en route from Iligan City to Manila causing sea water to splash
manned, equipped and supplied when it undertook the voyage. It has all the on the ship's deck on account of which the master of the vessel (Mr. Antonio
required certificates of seaworthiness. C. Dumlao) filed a "Marine Protest" on August 13, 1974 (Exh. "15"); which can
be invoked by defendant as a force majeure that would exempt the defendant
(d) The cargo/shipment was securely stowed in three (3) hatches of the ship. from liability.
The hatch openings were covered by hatchboards which were in turn covered
by two or double tarpaulins. The hatch covers were water tight. Furthermore, (h) Plaintiff did not comply with the requirement prescribed in paragraph 9 of
under the hatchboards were steel beams to give support. the Voyage Charter Hire contract that it was to insure the cargo because it did
not. Had plaintiff complied with the requirement, then it could have recovered
(e) The claim of the plaintiff that defendant violated the contract of carriage is its loss or damage from the insurer. Plaintiff also violated the charter party
not supported by evidence. The provisions of the Civil Code on common contract when it loaded not only "steel products", i.e. steel bars, angular bars
carriers pursuant to which there exists a presumption of negligence in case of and the like but also tinplates and hot rolled sheets which are high grade cargo
loss or damage to the cargo are not applicable. As to the damage to the commanding a higher freight. Thus plaintiff was able to ship grade cargo at a
tinplates which was allegedly due to the wetting and rusting thereof, there is lower freight rate.
unrebutted testimony of witness Vicente Angliongto that tinplates "sweat" by
themselves when packed even without being in contract (sic) with water from (i) As regards defendant's counterclaim, the contract of voyage charter hire
outside especially when the weather is bad or raining. The trust caused by under Paragraph 4 thereof, fixed the freight at P30.00 per metric ton payable to
sweat or moisture on the tinplates may be considered as a loss or damage but defendant carrier upon presentation of the bill of lading within fifteen (15) days.
then, defendant cannot be held liable for it pursuant to Article 1734 of the Civil Plaintiff has not paid the total freight due of P75,000.00 despite demands. The
Case which exempts the carrier from responsibility for loss or damage arising evidence also showed that the plaintiff was required and bound under
from the "character of the goods . . ." All the 1,769 skids of the tinplates could paragraph 7 of the same Voyage Charter Hire contract to pay demurrage of
not have been damaged by water as claimed by plaintiff. It was shown as P8,000.00 per day of delay in the unloading of the cargoes. The delay
claimed by plaintiff that the tinplates themselves were wrapped in kraft paper amounted to eleven (11) days thereby making plaintiff liable to pay defendant
lining and corrugated cardboards could not be affected by water from outside. for demurrage in the amount of P88,000.00.

(f) The stevedores hired by the plaintiff to discharge the cargo of tinplates were Appealing the RTC decision to the Court of Appeals, NSC alleged six errors:
negligent in not closing the hatch openings of the MV "VLASONS I" when rains
occurred during the discharging of the cargo thus allowing rainwater to enter I
the hatches. It was proven that the stevedores merely set up temporary tents
to cover the hatch openings in case of rain so that it would be easy for them to
The trial court erred in finding that the MV "VLASONS I" was seaworthy,
resume work when the rains stopped by just removing the tent or canvas.
properly manned, equipped and supplied, and that there is no proof of willful
Because of this improper covering of the hatches by the stevedores during the
negligence of the vessel's officers.
discharging and unloading operations which were interrupted by rains,
rainwater drifted into the cargo through the hatch openings. Pursuant to
paragraph 5 of the NANYOSAI [sic] Charter Party which was expressly made II
part of the Contract of Voyage Charter Hire, the loading, stowing and
discharging of the cargo is the sole responsibility of the plaintiff charterer and The trial court erred in finding that the rusting of NSC's tinplates was due to the
inherent nature or character of the goods and not due to contact with seawater.
III 3. Whether or not a charterer's failure to insure its cargo exempts the
shipowner from liability for cargo damage.
The trial court erred in finding that the stevedores hired by NSC were negligent
in the unloading of NSC's shipment. Questions of Fact

IV 1. Whether or not the vessel was seaworthy and cargo-worthy;

The trial court erred in exempting VSI from liability on the ground of force 2. Whether or not vessel's officers and crew were negligent in handling and
majeure. caring for NSC's cargo;

V 3. Whether or not NSC's cargo of tinplates did sweat during the voyage and,
hence, rusted on their own; and
The trial court erred in finding that NSC violated the contract of voyage charter
hire. 4. Whether or not NSC's stevedores were negligent and caused the
wetting[/]rusting of NSC's tinplates.
VI
In its separate petition,  VSI submits for the consideration of this Court the
9

The trial court erred in ordering NSC to pay freight, demurrage and attorney's following alleged errors of the CA:
fees, to VSI.4

A. The respondent Court of Appeals committed an error of law in reducing the

As earlier stated, the Court of Appeals modified the decision of the trial court award of demurrage from P88,000.00 to P44,000.00.
by reducing the demurrage from P88,000.00 to P44,000.00 and deleting the
award of attorneys fees and expenses of litigation. NSC and VSI filed separate B. The respondent Court of Appeals committed an error of law in deleting the
motions for reconsideration. In a Resolution  dated October 20, 1993, the
5
award of P100,000 for attorney's fees and expenses of litigation.
appellate court denied both motions. Undaunted, NSC and VSI filed their
respective petitions for review before this Court. On motion of VSI, the Court Amplifying the foregoing, VSI raises the following issues in its memorandum: 10

ordered on February 14, 1994 the consolidation of these petitions. 6

I. Whether or not the provisions of the Civil Code of the Philippines on common
The Issues carriers pursuant to which there exist[s] a presumption of negligence against
the common carrier in case of loss or damage to the cargo are applicable to a
In its petition  and memorandum,  NSC raises the following questions of law
7 8
private carrier.
and fact:
II. Whether or not the terms and conditions of the Contract of Voyage Charter
Questions of Law Hire, including the Nanyozai Charter, are valid and binding on both contracting
parties.
1. Whether or not a charterer of a vessel is liable for demurrage due to cargo
unloading delays caused by weather interruption; The foregoing issues raised by the parties will be discussed under the
following headings:
2. Whether or not the alleged "seaworthiness certificates" (Exhibits "3", "4", "5",
"6", "7", "8", "9", "11" and "12") were admissible in evidence and constituted 1. Questions of Fact
evidence of the vessel's seaworthiness at the beginning of the voyages; and
2. Effect of NSC's Failure to Insure the Cargo Inc., vs. Court of Appeals and Seven Brothers Shipping Corporation,  the 16

Court ruled:
3. Admissibility of Certificates Proving Seaworthiness
. . . in a contract of private carriage, the parties may freely stipulate their duties
4. Demurrage and Attorney's Fees. and obligations which perforce would be binding on them. Unlike in a contract
involving a common carrier, private carriage does not involve the general
The Court's Ruling public. Hence, the stringent provisions of the Civil Code on common carriers
protecting the general public cannot justifiably be applied to a ship transporting
commercial goods as a private carrier. Consequently, the public policy
The Court affirms the assailed Decision of the Court of Appeals, except in
embodied therein is not contravened by stipulations in a charter party that
respect of the demurrage.
lessen or remove the protection given by law in contracts involving common
carriers.
17

Preliminary Matter: Common Carrier or Private Carrier?

Extent of VSI's Responsibility and
At the outset, it is essential to establish whether VSI contracted with NSC as a Liability Over NSC's Cargo
common carrier or as a private carrier. The resolution of this preliminary
question determines the law, standard of diligence and burden of proof
It is clear from the parties' Contract of Voyage Charter Hire, dated July 17,
applicable to the present case.
1974, that VSI "shall not be responsible for losses except on proven willful
negligence of the officers of the vessel." The NANYOZAI Charter Party, which
Article 1732 of the Civil Code defines a common carrier as "persons, was incorporated in the parties' contract of transportation further provided that
corporations, firms or associations engaged in the business of carrying or the shipowner shall not be liable for loss of or a damage to the cargo arising or
transporting passengers or goods or both, by land, water, or air, for resulting from unseaworthiness, unless the same was caused by its lack of due
compensation, offering their services to the public." It has been held that the diligence to make the vessel seaworthy or to ensure that the same was
true test of a common carrier is the carriage of passengers or goods, provided "properly manned, equipped and supplied," and to "make the holds and all
it has space, for all who opt to avail themselves of its transportation service for other parts of the vessel in which cargo [was] carried, fit and safe for its
a fee.  A carrier which does not qualify under the above test is deemed a
11
reception, carriage and preservation."  The NANYOZAI Charter Party also
18

private carrier. "Generally, private carriage is undertaken by special agreement provided that "[o]wners shall not be responsible for split, chafing and/or any
and the carrier does not hold himself out to carry goods for the general public. damage unless caused by the negligence or default of the master or crew." 19

The most typical, although not the only form of private carriage, is the charter
party, a maritime contract by which the charterer, a party other than the
Burden of Proof
shipowner, obtains the use and service of all or some part of a ship for a period
of time or a voyage or voyages." 12

In view of the aforementioned contractual stipulations, NSC must prove that

the damage to its shipment was caused by VSI's willful negligence or failure to
In the instant case, it is undisputed that VSI did not offer its services to the
exercise due diligence in making MV Vlasons I seaworthy and fit for holding,
general public. As found by the Regional Trial Court, it carried passengers or
carrying and safekeeping the cargo. Ineluctably, the burden of proof was
goods only for those it chose under a "special contract of charter party."   As
13

placed on NSC by the parties' agreement.

correctly concluded by the Court of Appeals, the MV Vlasons I "was not a
common but a private carrier."  Consequently, the rights and obligations of VSI
14

and NSC, including their respective liability for damage to the cargo, are This view finds further support in the Code of Commerce which pertinently
determined primarily by stipulations in their contract of private carriage or provides:
charter party.  Recently, in Valenzuela Hardwood and Industrial Supply,
15

Art. 361. Merchandise shall be transported at the risk and venture of the

shipper, if the contrary has not been expressly stipulated.
Therefore, the damage and impairment suffered by the goods during the cause of the damage rests on plaintiff, and proof that the goods were lost or
transportation, due to fortuitous event, force majeure, or the nature and damaged while in the carrier's possession does not cast on it the burden of
inherent defect of the things, shall be for the account and risk of the shipper. proving seaworthiness. . . . Where the contract of carriage exempts the carrier
from liability for unseaworthiness not discoverable by due diligence, the carrier
The burden of proof of these accidents is on the carrier. has the preliminary burden of proving the exercise of due diligence to make the
vessel seaworthy. 20

Art. 362. The carrier, however, shall be liable for damages arising from the
cause mentioned in the preceding article if proofs against him show that they In the instant case, the Court of Appeals correctly found the NSC "has not
occurred on account of his negligence or his omission to take the precautions taken the correct position in relation to the question of who has the burden of
usually adopted by careful persons, unless the shipper committed fraud in the proof. Thus, in its brief (pp. 10-11), after citing Clause 10 and Clause 12 of the
bill of lading, making him to believe that the goods were of a class or quality NANYOZAI Charter Party (incidentally plaintiff-appellant's [NSC's]
different from what they really were. interpretation of Clause 12 is not even correct), it argues that 'a careful
examination of the evidence will show that VSI miserably failed to comply with
Because the MV Vlasons I was a private carrier, the shipowner's obligations any of these obligation's as if defendant-appellee [VSI] had the burden of
are governed by the foregoing provisions of the Code of Commerce and not by proof."
21

the Civil Code which, as a general rule, places the prima facie presumption of

negligence on a common carrier. It is a hornbook doctrine that: First Issue: Questions of Fact

In an action against a private carrier for loss of, or injury to, cargo, the burden Based on the foregoing, the determination of the following factual questions is
is on the plaintiff to prove that the carrier was negligent or unseaworthy, and manifestly relevant: (1) whether VSI exercised due diligence in making MV
the fact that the goods were lost or damaged while in the carrier's custody Vlasons I seaworthy for the intended purpose under the charter party; (2)
does not put the burden of proof on the carrier. whether the damage to the cargo should be attributed to the willful negligence
of the officers and crew of the vessel or of the stevedores hired by NSC; and
Since . . . a private carrier is not an insurer but undertakes only to exercise due (3) whether the rusting of the tinplates was caused by its own "sweat" or by
care in the protection of the goods committed to its care, the burden of proving contact with seawater.
negligence or a breach of that duty rests on plaintiff and proof of loss of, or
damage to, cargo while in the carrier's possession does not cast on it the These questions of fact were threshed out and decided by the trial court, which
burden of proving proper care and diligence on its part or that the loss had the firsthand opportunity to hear the parties' conflicting claims and to
occurred from an excepted cause in the contract or bill of lading. However, in carefully weigh their respective evidence. The findings of the trial court were
discharging the burden of proof, plaintiff is entitled to the benefit of the subsequently affirmed by the Court of Appeals. Where the factual findings of
presumptions and inferences by which the law aids the bailor in an action both the trial court and the Court of Appeals coincide, the same are binding on
against a bailee, and since the carrier is in a better position to know the cause this Court.  We stress that, subject to some exceptional instances,  only
22 23

of the loss and that it was not one involving its liability, the law requires that it questions of law — not questions of fact — may be raised before this Court in
come forward with the information available to it, and its failure to do so a petition for review under Rule 45 of the Rules of Court. After a thorough
warrants an inference or presumption of its liability. However, such inferences review of the case at bar, we find no reason to disturb the lower court's factual
and presumptions, while they may affect the burden of coming forward with findings, as indeed NSC has not successfully proven the application of any of
evidence, do not alter the burden of proof which remains on plaintiff, and, the aforecited exceptions.
where the carrier comes forward with evidence explaining the loss or damage,
the burden of going forward with the evidence is again on plaintiff. Was MV Vlasons I Seaworthy?

Where the action is based on the shipowner's warranty of seaworthiness, the In any event, the records reveal that VSI exercised due diligence to make the
burden of proving a breach thereof and that such breach was the proximate ship seaworthy and fit for the carriage of NSC's cargo of steel and tinplates.
This is shown by the fact that it was drylocked and inspected by the Philippine caused the first layer of the canvass covering to give way while the new
Coast Guard before it proceeded to Iligan City for its voyage to Manila under canvass covering still holding on;
the contract of voyage charter hire.  The vessel's voyage from Iligan to Manila
24

was the vessel's first voyage after drydocking. The Philippine Coast Guard That the weather condition improved when we reached Dumali Point protected
Station in Cebu cleared it as seaworthy, fitted and equipped; it met all by Mindoro; that we re-secured the canvass covering back to position; that in
requirements for trading as cargo vessel.  The Court of Appeals itself
25
the afternoon of August 10, 1974, while entering Maricaban Passage, we were
sustained the conclusion of the trial court that MV Vlasons I was seaworthy. again exposed to moderate seas and heavy rains; that while approaching
We find no reason to modify or reverse this finding of both the trial and the Fortune Island, we encountered again rough seas, strong winds and big waves
appellate courts. which caused the same canvass to give way and leaving the new canvass
holding on;
Who Were Negligent:
Seamen or Stevedores? xxx xxx xxx  28

As noted earlier, the NSC had the burden of proving that the damage to the And the relevant portions of Jose Pascua's deposition are as follows:
cargo was caused by the negligence of the officers and the crew of MV
Vlasons I in making their vessel seaworthy and fit for the carriage of tinplates. q What is the purpose of the canvas cover?
NSC failed to discharge this burden.
a So that the cargo would not be soaked with water.
Before us, NSC relies heavily on its claim that MV Vlasons I had used an old
and torn tarpaulin or canvas to cover the hatches through which the cargo was
q And will you describe how the canvas cover was secured on the hatch
loaded into the cargo hold of the ship. It faults the Court of Appeals for failing
opening?
to consider such claim as an "uncontroverted fact"  and denies that MV
26

Vlasons I "was equipped with new canvas covers in tandem with the old ones
as indicated in the Marine Protest . . ."  We disagree.
27 WITNESS

The records sufficiently support VSI's contention that the ship used the old a It was placed flat on top of the hatch cover, with a little canvas flowing over
tarpaulin, only in addition to the new one used primarily to make the ship's the sides and we place[d] a flat bar over the canvas on the side of the hatches
hatches watertight. The foregoing are clear from the marine protest of the and then we place[d] a stopper so that the canvas could not be removed.
master of the MV Vlasons I, Antonio C. Dumlao, and the deposition of the
ship's boatswain, Jose Pascua. The salient portions of said marine protest ATTY DEL ROSARIO
read:
q And will you tell us the size of the hatch opening? The length and the width
. . . That the M/V "VLASONS I" departed Iligan City or about 0730 hours of of the hatch opening.
August 8, 1974, loaded with approximately 2,487.9 tons of steel plates and tin
plates consigned to National Steel Corporation; that before departure, the a Forty-five feet by thirty-five feet, sir.
vessel was rigged, fully equipped and cleared by the authorities; that on or
about August 9, 1974, while in the vicinity of the western part of Negros and x x x           x x x          x x x
Panay, we encountered very rough seas and strong winds and Manila office
was advised by telegram of the adverse weather conditions encountered; that q How was the canvas supported in the middle of the hatch opening?
in the morning of August 10, 1974, the weather condition changed to worse
and strong winds and big waves continued pounding the vessel at her port side a There is a hatch board.
causing sea water to overflow on deck andhatch (sic) covers and which
ATTY DEL ROSARIO a Very tight, sir.

q What is the hatch board made of? q Now, on top of the hatch boards, according to you, is the canvass cover.
How many canvas covers?
a It is made of wood, with a handle.
a Two, sir. 29

q And aside from the hatch board, is there any other material there to cover the
hatch? That due diligence was exercised by the officers and the crew of the MV
Vlasons I was further demonstrated by the fact that, despite encountering
a There is a beam supporting the hatch board. rough weather twice, the new tarpaulin did not give way and the ship's hatches
and cargo holds remained waterproof. As aptly stated by the Court of Appeals,
q What is this beam made of? ". . . we find no reason not to sustain the conclusion of the lower court based
on overwhelming evidence, that the MV 'VLASONS I' was seaworthy when it
undertook the voyage on August 8, 1974 carrying on board thereof plaintiff-
a It is made of steel, sir.
appellant's shipment of 1,677 skids of tinplates and 92 packages of hot rolled
sheets or a total of 1,769 packages from NSC's pier in Iligan City arriving
q Is the beam that was placed in the hatch opening covering the whole hatch safely at North Harbor, Port Area, Manila, on August 12, 1974; . . .30

opening?
Indeed, NSC failed to discharge its burden to show negligence on the part of
a No, sir. the officers and the crew of MV Vlasons I. On the contrary, the records reveal
that it was the stevedores of NSC who were negligent in unloading the cargo
q How many hatch beams were there placed across the opening? from the ship.

a There are five beams in one hatch opening. The stevedores employed only a tent-like material to cover the hatches when
strong rains occasioned by a passing typhoon disrupted the unloading of the
ATTY DEL ROSARIO cargo. This tent-like covering, however, was clearly inadequate for keeping
rain and seawater away from the hatches of the ship. Vicente Angliongto, an
q And on top of the beams you said there is a hatch board. How many pieces officer of VSI, testified thus:
of wood are put on top?
ATTY ZAMORA:
a Plenty, sir, because there are several pieces on top of the hatch beam.
Q Now, during your testimony on November 5, 1979, you stated on August 14
q And is there a space between the hatch boards? you went on board the vessel upon notice from the National Steel Corporation
in order to conduct the inspection of the cargo. During the course of the
a There is none, sir. investigation, did you chance to see the discharging operation?

q They are tight together? WITNESS:

a Yes, sir. A Yes, sir, upon my arrival at the vessel, I saw some of the tinplates already
discharged on the pier but majority of the tinplates were inside the hall, all the
q How tight? hatches were opened.
Q In connection with these cargoes which were unloaded, where is the place. A No, sir, at the time they were discharging the cargo, there was a typhoon
passing by and the hatch tent was not good enough to hold all of it to prevent
A At the Pier. the water soaking through the canvass and enter the cargo.

Q What was used to protect the same from weather? Q In the course of your inspection, Mr. Anglingto [sic], did you see in fact the
water enter and soak into the canvass and tinplates.
ATTY LOPEZ:
A Yes, sir, the second time I went there, I saw it.
We object, your Honor, this question was already asked. This particular
matter . . . the transcript of stenographic notes shows the same was covered in Q As owner of the vessel, did you not advise the National Steel Corporation
the direct examination. [of] the procedure adopted by its stevedores in discharging the cargo
particularly in this tent covering of the hatches?
ATTY ZAMORA:
A Yes, sir, I did the first time I saw it, I called the attention of the stevedores but
Precisely, your Honor, we would like to go on detail, this is the serious part of the stevedores did not mind at all, so, called the attention of the representative
the testimony. of the National Steel but nothing was done, just the same. Finally, I wrote a
letter to them.31

COURT:
NSC attempts to discredit the testimony of Angliongto by questioning his failure
to complain immediately about the stevedores' negligence on the first day of
All right, witness may answer.
unloading, pointing out that he wrote his letter to petitioner only seven days
later.  The Court is not persuaded. Angliongto's candid answer in his
32

ATTY LOPEZ: aforequoted testimony satisfactorily explained the delay. Seven days lapsed
because he first called the attention of the stevedores, then the NSC's
Q What was used in order to protect the cargo from the weather? representative, about the negligent and defective procedure adopted in
unloading the cargo. This series of actions constitutes a reasonable response
A A base of canvas was used as cover on top of the tin plates, and tents were in accord with common sense and ordinary human experience. Vicente
built at the opening of the hatches. Angliongto could not be blamed for calling the stevedores' attention first and
then the NSC's representative on location before formally informing NSC of the
Q You also stated that the hatches were already opened and that there were negligence he had observed, because he was not responsible for the
tents constructed at the opening of the hatches to protect the cargo from the stevedores or the unloading operations. In fact, he was merely expressing
rain. Now, will you describe [to] the Court the tents constructed. concern for NSC which was ultimately responsible for the stevedores it had
hired and the performance of their task to unload the cargo.
A The tents are just a base of canvas which look like a tent of an Indian camp
raise[d] high at the middle with the whole side separated down to the hatch, We see no reason to reverse the trial and the appellate courts' findings and
the size of the hatch and it is soaks [sic] at the middle because of those conclusions on this point, viz:
weather and this can be used only to temporarily protect the cargo from getting
wet by rains. In the THIRD assigned error, [NSC] claims that the trial court erred in finding
that the stevedores hired by NSC were negligent in the unloading of NSC's
Q Now, is this procedure adopted by the stevedores of covering tents proper? shipment. We do not think so. Such negligence according to the trial court is
evident in the stevedores hired by [NSC], not closing the hatch of MV
'VLASONS I' when rains occurred during the discharging of the cargo thus
allowing rain water and seawater spray to enter the hatches and to drift to and The obligation of NSC to insure the cargo stipulated in the Contract of Voyage
fall on the cargo. It was proven that the stevedores merely set up temporary Charter Hire is totally separate and distinct from the contractual or statutory
tents or canvas to cover the hatch openings when it rained during the responsibility that may be incurred by VSI for damage to the cargo caused by
unloading operations so that it would be easier for them to resume work after the willful negligence of the officers and the crew of MV Vlasons I. Clearly,
the rains stopped by just removing said tents or canvass. It has also been therefore, NSC's failure to insure the cargo will not affect its right, as owner
shown that on August 20, 1974, VSI President Vicente Angliongto wrote [NSC] and real party in interest, to file an action against VSI for damages caused by
calling attention to the manner the stevedores hired by [NSC] were discharging the latter's willful negligence. We do not find anything in the charter party that
the cargo on rainy days and the improper closing of the hatches which allowed would make the liability of VSI for damage to the cargo contingent on or
continuous heavy rain water to leak through and drip to the tinplates' covers affected in any manner by NSC's obtaining an insurance over the cargo.
and [Vicente Angliongto] also suggesting that due to four (4) days continuos
rains with strong winds that the hatches be totally closed down and covered Third Issue: Admissibility of Certificates
with canvas and the hatch tents lowered. (Exh. "13"). This letter was received Proving Seaworthiness
by [NSC] on 22 August 1974 while discharging operations were still going on
(Exhibit "13-A").33
NSC's contention that MV Vlasons I was not seaworthy is anchored on the
alleged inadmissibility of the certificates of seaworthiness offered in evidence
The fact that NSC actually accepted and proceeded to remove the cargo from by VSI. The said certificates include the following:
the ship during unfavorable weather will not make VSI liable for any damage
caused thereby. In passing, it may be noted that the NSC may seek 1. Certificate of Inspection of the Philippines Coast Guard at Cebu
indemnification, subject to the laws on prescription, from the stevedoring
company at fault in the discharge operations. "A stevedore company engaged
2. Certificate of Inspection from the Philippine Coast Guard
in discharging cargo . . . has the duty to load the cargo . . . in a prudent
manner, and it is liable for injury to, or loss of, cargo caused by its
negligence . . . and where the officers and members and crew of the vessel do 3. International Load Line Certificate from the Philippine Coast Guard
nothing and have no responsibility in the discharge of cargo by stevedores . . .
the vessel is not liable for loss of, or damage to, the cargo caused by the 4. Coastwise License from the Board of Transportation
negligence of the
stevedores . . ."  as in the instant case.
34 5. Certificate of Approval for Conversion issued by the Bureau of Customs 36

Do Tinplates "Sweat"? NSC argues that the certificates are hearsay for not having been presented in
accordance with the Rules of Court. It points out that Exhibits 3, 4 and 11
The trial court relied on the testimony of Vicente Angliongto in finding that ". . . allegedly are "not written records or acts of public officers"; while Exhibits 5, 6,
tinplates 'sweat' by themselves when packed even without being in contact 7, 8, 9, 11 and 12 are not "evidenced by official publications or certified true
with water from outside especially when the weather is bad or copies" as required by Sections 25 and 26, Rule 132, of the Rules of Court. 37

raining . . ."  The Court of Appeals affirmed the trial court's finding.
35

After a careful examination of these exhibits, the Court rules that Exhibits 3, 4,
A discussion of this issue appears inconsequential and unnecessary. As 5, 6, 7, 8, 9 and 12 are inadmissible, for they have not been properly offered as
previously discussed, the damage to the tinplates was occasioned not by evidence. Exhibits 3 and 4 are certificates issued by private parties, but they
airborne moisture but by contact with rain and seawater which the stevedores have not been proven by one who saw the writing executed, or by evidence of
negligently allowed to seep in during the unloading. the genuineness of the handwriting of the maker, or by a subscribing witness.
Exhibits, 5, 6, 7, 8, 9, and 12 are photocopies, but their admission under the
Second Issue: Effect of NSC's Failure to best evidence rule have not been demonstrated.
Insure the Cargo
We find, however, that Exhibit 11 is admissible under a well-settled exception is given to compensate the shipowner for the nonuse of the vessel. On the
to the hearsay rule per Section 44 of Rule 130 of the Rules of Court, which other hand, the following is well-settled:
provides that "(e)ntries in official records made in the performance of a duty by
a public officer of the Philippines, or by a person in the performance of a duty Laytime runs according to the particular clause of the charter party. . . . If
specially enjoined by law, are prima facie evidence of the facts therein laytime is expressed in "running days," this means days when the ship would
stated."  Exhibit 11 is an original certificate of the Philippine Coast Guard in
38
be run continuously, and holidays are not excepted. A qualification of "weather
Cebu issued by Lieutenant Junior Grade Noli C. Flores to the effect that "the permitting" excepts only those days when bad weather reasonably prevents
vessel 'VLASONS I' was drydocked . . . and PCG Inspectors were sent on the work contemplated. 41

board for inspection . . . After completion of drydocking and duly inspected by

PCG Inspectors, the vessel 'VLASONS I', a cargo vessel, is in seaworthy In this case, the contract of voyage charter hire provided for a four-day laytime;
condition, meets all requirements, fitted and equipped for trading as a cargo it also qualified laytime as WWDSHINC or weather working days Sundays and
vessel was cleared by the Philippine Coast Guard and sailed for Cebu Port on holidays included.  The running of laytime was thus made subject to the
42

July 10, 1974." (sic) NSC's claim, therefore, is obviously misleading and weather, and would cease to run in the event unfavorable weather interfered
erroneous. with the unloading of cargo.  Consequently, NSC may not be held liable for
43

demurrage as the four-day laytime allowed it did not lapse, having been tolled
At any rate, it should be stressed that NSC has the burden of proving that MV by unfavorable weather condition in view of the WWDSHINC qualification
Vlasons I was not seaworthy. As observed earlier, the vessel was a private agreed upon by the parties. Clearly, it was error for the trial court and the Court
carrier and, as such, it did not have the obligation of a common carrier to show of Appeals to have found and affirmed respectively that NSC incurred eleven
that it was seaworthy. Indeed, NSC glaringly failed to discharge its duty of days of delay in unloading the cargo. The trial court arrived at this erroneous
proving the willful negligence of VSI in making the ship seaworthy resulting in finding by subtracting from the twelve days, specifically August 13, 1974 to
damage to its cargo. Assailing the genuineness of the certificate of August 24, 1974, the only day of unloading unhampered by unfavorable
seaworthiness is not sufficient proof that the vessel was not seaworthy. weather or rain, which was August 22, 1974. Based on our previous
discussion, such finding is a reversible error. As mentioned, the respondent
Fourth Issue: Demurrage and Attorney's Fees appellate court also erred in ruling that NSC was liable to VSI for demurrage,
even if it reduced the amount by half.
The contract of voyage charter hire provides inter alia:
Attorney's Fees
xxx xxx xxx
VSI assigns as error of law the Court of Appeals' deletion of the award of
2. Cargo: Full cargo of steel products of not less than 2,500 MT, 10% more or attorney's fees. We disagree. While VSI was compelled to litigate to protect its
less at Master's option. rights, such fact by itself will not justify an award of attorney's fees under
Article 2208 of the Civil Code when ". . . no sufficient showing of bad faith
xxx xxx xxx would be reflected in a party's persistence in a case other than an erroneous
conviction of the righteousness of his cause . . ."  Moreover, attorney's fees
44

may not be awarded to a party for the reason alone that the judgment rendered
6. Loading/Discharging Rate: 750 tons per WWDSHINC.
was favorable to the latter, as this is tantamount to imposing a premium on
one's right to litigate or seek judicial redress of legitimate grievances.
45

7. Demurrage/Dispatch: P8,000.00/P4,000.00 per day. 39

Epilogue
The Court defined demurrage in its strict sense as the compensation provided
for in the contract of affreightment for the detention of the vessel beyond the
At bottom, this appeal really hinges on a factual issue: when, how and who
laytime or that period of time agreed on for loading and unloading of cargo.  It
40

caused the damage to the cargo? Ranged against NSC are two formidable
truths. First, both lower courts found that such damage was brought about This petition for review on certiorari assails the Decision of the Court of
during the unloading process when rain and seawater seeped through the Appeals dated November 29, 1995, in CA-G.R. SP No. 36801, affirming the
cargo due to the fault or negligence of the stevedores employed by it. Basic is decision of the Regional Trial Court of Batangas City, Branch 84, in Civil Case
the rule that factual findings of the trial court, when affirmed by the Court of No. 4293, which dismissed petitioners' complaint for a business tax refund
Appeals, are binding on the Supreme Court. Although there are settled imposed by the City of Batangas.
exceptions, NSC has not satisfactorily shown that this case is one of them.
Second, the agreement between the parties — the Contract of Voyage Charter Petitioner is a grantee of a pipeline concession under Republic Act No. 387, as
Hire — placed the burden of proof for such loss or damage upon the shipper, amended, to contract, install and operate oil pipelines. The original pipeline
not upon the shipowner. Such stipulation, while disadvantageous to NSC, is concession was granted in 1967  and renewed by the Energy Regulatory
1

valid because the parties entered into a contract of private charter, not one of Board in 1992. 2

common carriage. Basic too is the doctrine that courts cannot relieve a parry
from the effects of a private contract freely entered into, on the ground that it is Sometime in January 1995, petitioner applied for a mayor's permit with the
allegedly one-sided or unfair to the plaintiff. The charter party is a normal Office of the Mayor of Batangas City. However, before the mayor's permit
commercial contract and its stipulations are agreed upon in consideration of could be issued, the respondent City Treasurer required petitioner to pay a
many factors, not the least of which is the transport price which is determined local tax based on its gross receipts for the fiscal year 1993 pursuant to the
not only by the actual costs but also by the risks and burdens assumed by the Local Government Code . The respondent City Treasurer assessed a business
3

shipper in regard to possible loss or damage to the cargo. In recognition of tax on the petitioner amounting to P956,076.04 payable in four installments
such factors, the parties even stipulated that the shipper should insure the based on the gross receipts for products pumped at GPS-1 for the fiscal year
cargo to protect itself from the risks it undertook under the charter party. That 1993 which amounted to P181,681,151.00. In order not to hamper its
NSC failed or neglected to protect itself with such insurance should not operations, petitioner paid the tax under protest in the amount of P239,019.01
adversely affect VSI, which had nothing to do with such failure or neglect. for the first quarter of 1993.

WHEREFORE, premises considered, the instant consolidated petitions are On January 20, 1994, petitioner filed a letter-protest addressed to the
hereby DENIED. The questioned Decision of the Court of Appeals is respondent City Treasurer, the pertinent portion of which reads:
AFFIRMED with the MODIFICATION that the demurrage awarded to VSI is
deleted. No pronouncement as to costs.
Please note that our Company (FPIC) is a pipeline operator with a government
concession granted under the Petroleum Act. It is engaged in the business of
SO ORDERED. transporting petroleum products from the Batangas refineries, via pipeline, to
Sucat and JTF Pandacan Terminals. As such, our Company is exempt from
Narvasa, C.J., Romero, Melo and Francisco, JJ., concur. paying tax on gross receipts under Section 133 of the Local Government Code
of 1991 . . . .
G.R. No. 125948 December 29, 1998
Moreover, Transportation contractors are not included in the enumeration of
FIRST PHILIPPINE INDUSTRIAL CORPORATION, petitioner, contractors under Section 131, Paragraph (h) of the Local Government Code.
vs. Therefore, the authority to impose tax "on contractors and other independent
COURT OF APPEALS, HONORABLE PATERNO V. TAC-AN, BATANGAS contractors" under Section 143, Paragraph (e) of the Local Government Code
CITY and ADORACION C. ARELLANO, in her official capacity as City does not include the power to levy on transportation contractors.
Treasurer of Batangas, respondents.
The imposition and assessment cannot be categorized as a mere fee
authorized under Section 147 of the Local Government Code. The said section
limits the imposition of fees and charges on business to such amounts as may
MARTINEZ, J.: be commensurate to the cost of regulation, inspection, and licensing. Hence,
assuming arguendo that FPIC is liable for the license fee, the imposition being the lifeblood of the government. Exemption may therefore be granted
thereof based on gross receipts is violative of the aforecited provision. The only by clear and unequivocal provisions of law.
amount of P956,076.04 (P239,019.01 per quarter) is not commensurate to the
cost of regulation, inspection and licensing. The fee is already a revenue Plaintiff claims that it is a grantee of a pipeline concession under Republic Act
raising measure, and not a mere regulatory imposition. 4
387. (Exhibit A) whose concession was lately renewed by the Energy
Regulatory Board (Exhibit B). Yet neither said law nor the deed of concession
On March 8, 1994, the respondent City Treasurer denied the protest grant any tax exemption upon the plaintiff.
contending that petitioner cannot be considered engaged in transportation
business, thus it cannot claim exemption under Section 133 (j) of the Local Even the Local Government Code imposes a tax on franchise holders under
Government Code. 5
Sec. 137 of the Local Tax Code. Such being the situation obtained in this case
(exemption being unclear and equivocal) resort to distinctions or other
On June 15, 1994, petitioner filed with the Regional Trial Court of Batangas considerations may be of help:
City a complaint  for tax refund with prayer for writ of preliminary injunction
6

against respondents City of Batangas and Adoracion Arellano in her capacity 1. That the exemption granted under Sec. 133 (j) encompasses only common
as City Treasurer. In its complaint, petitioner alleged, inter alia, that: (1) the carriers so as not to overburden the riding public or commuters with
imposition and collection of the business tax on its gross receipts violates taxes. Plaintiff is not a common carrier, but a special carrier extending its
Section 133 of the Local Government Code; (2) the authority of cities to services and facilities to a single specific or "special customer" under a "special
impose and collect a tax on the gross receipts of "contractors and independent contract."
contractors" under Sec. 141 (e) and 151 does not include the authority to
collect such taxes on transportation contractors for, as defined under Sec. 131 2. The Local Tax Code of 1992 was basically enacted to give more and
(h), the term "contractors" excludes transportation contractors; and, (3) the City effective local autonomy to local governments than the previous enactments,
Treasurer illegally and erroneously imposed and collected the said tax, thus to make them economically and financially viable to serve the people and
meriting the immediate refund of the tax paid. 7
discharge their functions with a concomitant obligation to accept certain
devolution of powers, . . . So, consistent with this policy even franchise
Traversing the complaint, the respondents argued that petitioner cannot be grantees are taxed (Sec. 137) and contractors are also taxed under Sec. 143
exempt from taxes under Section 133 (j) of the Local Government Code as (e) and 151 of the Code. 9

said exemption applies only to "transportation contractors and persons

engaged in the transportation by hire and common carriers by air, land and Petitioner assailed the aforesaid decision before this Court via a petition for
water." Respondents assert that pipelines are not included in the term review. On February 27, 1995, we referred the case to the respondent Court of
"common carrier" which refers solely to ordinary carriers such as trucks, trains, Appeals for consideration and adjudication.   On November 29, 1995, the
10

ships and the like. Respondents further posit that the term "common carrier" respondent court rendered a decision   affirming the trial court's dismissal of
11

under the said code pertains to the mode or manner by which a product is petitioner's complaint. Petitioner's motion for reconsideration was denied on
delivered to its destination.8
July 18, 1996. 12

On October 3, 1994, the trial court rendered a decision dismissing the Hence, this petition. At first, the petition was denied due course in a Resolution
complaint, ruling in this wise: dated November 11, 1996.   Petitioner moved for a reconsideration which was
13

granted by this Court in a Resolution   of January 22, 1997. Thus, the petition
14

. . . Plaintiff is either a contractor or other independent contractor. was reinstated.

. . . the exemption to tax claimed by the plaintiff has become unclear. It is a Petitioner claims that the respondent Court of Appeals erred in holding that (1)
rule that tax exemptions are to be strictly construed against the taxpayer, taxes the petitioner is not a common carrier or a transportation contractor, and (2)
the exemption sought for by petitioner is not clear under the law.
There is merit in the petition. unscheduled basis. Neither does Article 1732 distinguish between a carrier
offering its services to the "general public," i.e., the general community or
A "common carrier" may be defined, broadly, as one who holds himself out to population, and one who offers services or solicits business only from a narrow
the public as engaged in the business of transporting persons or property from segment of the general population. We think that Article 1877 deliberately
place to place, for compensation, offering his services to the public generally. refrained from making such distinctions.

Art. 1732 of the Civil Code defines a "common carrier" as "any person, So understood, the concept of "common carrier" under Article 1732 may be
corporation, firm or association engaged in the business of carrying or seen to coincide neatly with the notion of "public service," under the Public
transporting passengers or goods or both, by land, water, or air, for Service Act (Commonwealth Act No. 1416, as amended) which at least
compensation, offering their services to the public." partially supplements the law on common carriers set forth in the Civil Code.
Under Section 13, paragraph (b) of the Public Service Act, "public service"
The test for determining whether a party is a common carrier of goods is: includes:

1. He must be engaged in the business of carrying goods for others as a public every person that now or hereafter may own, operate. manage, or control in
employment, and must hold himself out as ready to engage in the the Philippines, for hire or compensation, with general or limited clientele,
transportation of goods for person generally as a business and not as a casual whether permanent, occasional or accidental, and done for general business
occupation; purposes, any common carrier, railroad, street railway, traction railway,
subway motor vehicle, either for freight or passenger, or both, with or without
fixed route and whatever may be its classification, freight or carrier service of
2. He must undertake to carry goods of the kind to which his business is
any class, express service, steamboat, or steamship line, pontines, ferries and
confined;
water craft, engaged in the transportation of passengers or freight or both,
shipyard, marine repair shop, wharf or dock, ice plant, ice-refrigeration plant,
3. He must undertake to carry by the method by which his business is canal, irrigation system gas, electric light heat and power, water supply
conducted and over his established roads; and and power petroleum, sewerage system, wire or wireless communications
systems, wire or wireless broadcasting stations and other similar public
4. The transportation must be for hire. 
15
services. (Emphasis Supplied)

Based on the above definitions and requirements, there is no doubt that Also, respondent's argument that the term "common carrier" as used in
petitioner is a common carrier. It is engaged in the business of transporting or Section 133 (j) of the Local Government Code refers only to common carriers
carrying goods, i.e. petroleum products, for hire as a public employment. It transporting goods and passengers through moving vehicles or vessels either
undertakes to carry for all persons indifferently, that is, to all persons who by land, sea or water, is erroneous.
choose to employ its services, and transports the goods by land and for
compensation. The fact that petitioner has a limited clientele does not exclude As correctly pointed out by petitioner, the definition of "common carriers" in the
it from the definition of a common carrier. In De Guzman vs. Court of Civil Code makes no distinction as to the means of transporting, as long as it is
Appeals   we ruled that:
16
by land, water or air. It does not provide that the transportation of the
passengers or goods should be by motor vehicle. In fact, in the United States,
The above article (Art. 1732, Civil Code) makes no distinction between one oil pipe line operators are considered common carriers.  17

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 Under the Petroleum Act of the Philippines (Republic Act 387), petitioner is
a "sideline"). Article 1732 . . . avoids making any distinction between a person considered a "common carrier." Thus, Article 86 thereof provides that:
or enterprise offering transportation service on a regular or scheduled
basis and one offering such service on an occasional, episodic or
Art. 86. Pipe line concessionaire as common carrier. — A pipe line shall have MR. AQUINO (A). Thank you, Mr. Speaker.
the preferential right to utilize installations for the transportation of petroleum
owned by him, but is obligated to utilize the remaining transportation capacity Mr. Speaker, we would like to proceed to page 95, line
pro rata for the transportation of such other petroleum as may be offered by
others for transport, and to charge without discrimination such rates as may 1. It states: "SEC. 121 [now Sec. 131]. Common Limitations on the Taxing
have been approved by the Secretary of Agriculture and Natural Resources. Powers of Local Government Units." . . .

Republic Act 387 also regards petroleum operation as a public utility. Pertinent MR. AQUINO (A.). Thank you Mr. Speaker.
portion of Article 7 thereof provides:
Still on page 95, subparagraph 5, on taxes on the business of transportation.
that everything relating to the exploration for and exploitation of petroleum . . . This appears to be one of those being deemed to be exempted from the taxing
and everything relating to the manufacture, refining, storage, or transportation powers of the local government units. May we know the reason why the
by special methods of petroleum, is hereby declared to be a public utility. transportation business is being excluded from the taxing powers of the local
(Emphasis Supplied) government units?

The Bureau of Internal Revenue likewise considers the petitioner a "common MR. JAVIER (E.). Mr. Speaker, there is an exception contained in Section 121
carrier." In BIR Ruling No. 069-83, it declared: (now Sec. 131), line 16, paragraph 5. It states that local government units may
not impose taxes on the business of transportation, except as otherwise
. . . since [petitioner] is a pipeline concessionaire that is engaged only in provided in this code.
transporting petroleum products, it is considered a common carrier under
Republic Act No. 387 . . . . Such being the case, it is not subject to withholding Now, Mr. Speaker, if the Gentleman would care to go to page 98 of Book II,
tax prescribed by Revenue Regulations No. 13-78, as amended. one can see there that provinces have the power to impose a tax on business
enjoying a franchise at the rate of not more than one-half of 1 percent of the
From the foregoing disquisition, there is no doubt that petitioner is a "common gross annual receipts. So, transportation contractors who are enjoying a
carrier" and, therefore, exempt from the business tax as provided for in Section franchise would be subject to tax by the province. That is the exception, Mr.
133 (j), of the Local Government Code, to wit: Speaker.

Sec. 133. Common Limitations on the Taxing Powers of Local Government What we want to guard against here, Mr. Speaker, is the imposition of taxes by
Units. — Unless otherwise provided herein, the exercise of the taxing powers local government units on the carrier business. Local government units may
of provinces, cities, municipalities, and barangays shall not extend to the levy impose taxes on top of what is already being imposed by the National Internal
of the following: Revenue Code which is the so-called "common carriers tax." We do not want a
duplication of this tax, so we just provided for an exception under Section 125
x x x           x x x          x x x [now Sec. 137] that a province may impose this tax at a specific rate.

(j) Taxes on the gross receipts of transportation contractors and persons MR. AQUINO (A.). Thank you for that clarification, Mr. Speaker. . . . 
18

engaged in the transportation of passengers or freight by hire and common

carriers by air, land or water, except as provided in this Code. It is clear that the legislative intent in excluding from the taxing power of the
local government unit the imposition of business tax against common carriers
The deliberations conducted in the House of Representatives on the Local is to prevent a duplication of the so-called "common carrier's tax."
Government Code of 1991 are illuminating:
Petitioner is already paying three (3%) percent common carrier's tax on its Prudential Guarantee and Assurance, Inc. against loss or damage
gross sales/earnings under the National Internal Revenue Code.   To tax 19
for P14,621,771.75 under Marine Cargo Risk Note RN 11859/90. 6
petitioner again on its gross receipts in its transportation of petroleum business
would defeat the purpose of the Local Government Code. On July 25, 1990, the carrying vessel arrived in Manila and the cargo was
transferred to the custody of the petitioner Asia Lighterage and Shipping, Inc.
WHEREFORE, the petition is hereby GRANTED. The decision of the The petitioner was contracted by the consignee as carrier to deliver the cargo
respondent Court of Appeals dated November 29, 1995 in CA-G.R. SP No. to consignee's warehouse at Bo. Ugong, Pasig City.
36801 is REVERSED and SET ASIDE.
On August 15, 1990, 900 metric tons of the shipment was loaded on barge
SO ORDERED. PSTSI III, evidenced by Lighterage Receipt No. 0364 7 for delivery to
consignee. The cargo did not reach its destination.
Bellosillo, Puno and Mendoza, JJ., concur.
It appears that on August 17, 1990, the transport of said cargo was suspended
due to a warning of an incoming typhoon. On August 22, 1990, the petitioner
proceeded to pull the barge to Engineering Island off Baseco to seek shelter
from the approaching typhoon. PSTSI III was tied down to other barges which
arrived ahead of it while weathering out the storm that night. A few days after,
the barge developed a list because of a hole it sustained after hitting an
unseen protuberance underneath the water. The petitioner filed a Marine
G.R. No. 147246            August 19, 2003 Protest on August 28, 1990. 8 It likewise secured the services of Gaspar
Salvaging Corporation which refloated the barge. 9 The hole was then patched
ASIA LIGHTERAGE AND SHIPPING, INC., petitioner, with clay and cement.
vs.
COURT OF APPEALS and PRUDENTIAL GUARANTEE AND ASSURANCE, The barge was then towed to ISLOFF terminal before it finally headed towards
INC., respondents. the consignee's wharf on September 5, 1990. Upon reaching the Sta. Mesa
spillways, the barge again ran aground due to strong current. To avoid the
PUNO, J.: complete sinking of the barge, a portion of the goods was transferred to three
other barges.10
On appeal is the Court of Appeals' May 11, 2000 Decision 1 in CA-G.R. CV No.
49195 and February 21, 2001 Resolution 2 affirming with modification the April The next day, September 6, 1990, the towing bits of the barge broke. It sank
6, 1994 Decision3 of the Regional Trial Court of Manila which found petitioner completely, resulting in the total loss of the remaining cargo. 11 A second Marine
liable to pay private respondent the amount of indemnity and attorney's fees. Protest was filed on September 7, 1990. 12

First, the facts. On September 14, 1990, a bidding was conducted to dispose of the damaged
wheat retrieved and loaded on the three other barges. 13 The total proceeds
from the sale of the salvaged cargo was P201,379.75.14
On June 13, 1990, 3,150 metric tons of Better Western White Wheat in bulk,
valued at US$423,192.354 was shipped by Marubeni American Corporation of
Portland, Oregon on board the vessel M/V NEO CYMBIDIUM V-26 for delivery On the same date, September 14, 1990, consignee sent a claim letter to the
to the consignee, General Milling Corporation in Manila, evidenced by Bill of petitioner, and another letter dated September 18, 1990 to the private
Lading No. PTD/Man-4.5 The shipment was insured by the private respondent respondent for the value of the lost cargo.
On January 30, 1991, the private respondent indemnified the consignee in the (2) THE COURT OF APPEALS DECIDED THE CASE A QUO IN A WAY NOT
amount of P4,104,654.22.15 Thereafter, as subrogee, it sought recovery of said IN ACCORD WITH LAW AND/OR WITH THE APPLICABLE DECISIONS OF
amount from the petitioner, but to no avail. THE SUPREME COURT WHEN IT AFFIRMED THE FINDING OF THE
LOWER COURT A QUO THAT ON THE BASIS OF THE PROVISIONS OF
On July 3, 1991, the private respondent filed a complaint against the petitioner THE CIVIL CODE APPLICABLE TO COMMON CARRIERS, "THE LOSS OF
for recovery of the amount of indemnity, attorney's fees and cost of THE CARGO IS, THEREFORE, BORNE BY THE CARRIER IN ALL CASES
suit.16 Petitioner filed its answer with counterclaim. 17 EXCEPT IN THE FIVE (5) CASES ENUMERATED."

The Regional Trial Court ruled in favor of the private respondent. The (3) THE COURT OF APPEALS DECIDED THE CASE A QUO IN A WAY NOT
dispositive portion of its Decision states: IN ACCORD WITH LAW AND/OR WITH THE APPLICABLE DECISIONS OF
THE SUPREME COURT WHEN IT EFFECTIVELY CONCLUDED THAT
WHEREFORE, premises considered, judgment is hereby rendered ordering PETITIONER FAILED TO EXERCISE DUE DILIGENCE AND/OR WAS
defendant Asia Lighterage & Shipping, Inc. liable to pay plaintiff Prudential NEGLIGENT IN ITS CARE AND CUSTODY OF THE CONSIGNEE'S CARGO.
Guarantee & Assurance Co., Inc. the sum of P4,104,654.22 with interest from
the date complaint was filed on July 3, 1991 until fully satisfied plus 10% of the The issues to be resolved are:
amount awarded as and for attorney's fees. Defendant's counterclaim is
hereby DISMISSED. With costs against defendant.18 (1) Whether the petitioner is a common carrier; and,

Petitioner appealed to the Court of Appeals insisting that it is not a common (2) Assuming the petitioner is a common carrier, whether it exercised
carrier. The appellate court affirmed the decision of the trial court with extraordinary diligence in its care and custody of the consignee's cargo.
modification. The dispositive portion of its decision reads:
On the first issue, we rule that petitioner is a common carrier.
WHEREFORE, the decision appealed from is hereby AFFIRMED with
modification in the sense that the salvage value of P201,379.75 shall be Article 1732 of the Civil Code defines common carriers as persons,
deducted from the amount of P4,104,654.22. Costs against appellant. corporations, firms or associations engaged in the business of carrying or
transporting passengers or goods or both, by land, water, or air, for
SO ORDERED. compensation, offering their services to the public.

Petitioner's Motion for Reconsideration dated June 3, 2000 was likewise Petitioner contends that it is not a common carrier but a private carrier.
denied by the appellate court in a Resolution promulgated on February 21, Allegedly, it has no fixed and publicly known route, maintains no terminals, and
2001. issues no tickets. It points out that it is not obliged to carry indiscriminately for
any person. It is not bound to carry goods unless it consents. In short, it does
Hence, this petition. Petitioner submits the following errors allegedly committed not hold out its services to the general public.20
by the appellate court, viz:19
We disagree.
(1) THE COURT OF APPEALS DECIDED THE CASE A QUO IN A WAY NOT
IN ACCORD WITH LAW AND/OR WITH THE APPLICABLE DECISIONS OF In De Guzman vs. Court of Appeals,21 we held that the definition of common
THE SUPREME COURT WHEN IT HELD THAT PETITIONER IS A COMMON carriers in Article 1732 of the Civil Code makes no distinction between one
CARRIER. whose principal business activity is the carrying of persons or goods or both,
and one who does such carrying only as an ancillary activity. We also did not
distinguish between a person or enterprise offering transportation service on a
regular or scheduled basis and one offering such service on an occasional, Art. 1734. Common carriers are responsible for the loss, destruction, or
episodic or unscheduled basis. Further, we ruled that Article 1732 does not deterioration of the goods, unless the same is due to any of the following
distinguish between a carrier offering its services to the general public, and causes only:
one who offers services or solicits business only from a narrow segment of the
general population. (1) Flood, storm, earthquake, lightning, or other natural disaster or calamity;

In the case at bar, the principal business of the petitioner is that of lighterage (2) Act of the public enemy in war, whether international or civil;
and drayage22 and it offers its barges to the public for carrying or transporting
goods by water for compensation. Petitioner is clearly a common carrier. In De (3) Act or omission of the shipper or owner of the goods;
Guzman, supra,23 we considered private respondent Ernesto Cendaña to be a
common carrier even if his principal occupation was not the carriage of goods
(4) The character of the goods or defects in the packing or in the containers;
for others, but that of buying used bottles and scrap metal in Pangasinan and
selling these items in Manila.
(5) Order or act of competent public authority.
We therefore hold that petitioner is a common carrier whether its carrying of
goods is done on an irregular rather than scheduled manner, and with an only In the case at bar, the barge completely sank after its towing bits broke,
limited clientele. A common carrier need not have fixed and publicly known resulting in the total loss of its cargo. Petitioner claims that this was caused by
routes. Neither does it have to maintain terminals or issue tickets. a typhoon, hence, it should not be held liable for the loss of the cargo.
However, petitioner failed to prove that the typhoon is the proximate and only
cause of the loss of the goods, and that it has exercised due diligence before,
To be sure, petitioner fits the test of a common carrier as laid down in Bascos
during and after the occurrence of the typhoon to prevent or minimize the
vs. Court of Appeals.24 The test to determine a common carrier is "whether
loss.30 The evidence show that, even before the towing bits of the barge broke,
the given undertaking is a part of the business engaged in by the carrier which
it had already previously sustained damage when it hit a sunken object while
he has held out to the general public as his occupation rather than the quantity
docked at the Engineering Island. It even suffered a hole. Clearly, this could
or extent of the business transacted." 25 In the case at bar, the petitioner
not be solely attributed to the typhoon. The partly-submerged vessel was
admitted that it is engaged in the business of shipping and lighterage, 26 offering
refloated but its hole was patched with only clay and cement. The patch work
its barges to the public, despite its limited clientele for carrying or transporting
was merely a provisional remedy, not enough for the barge to sail safely. Thus,
goods by water for compensation. 27
when petitioner persisted to proceed with the voyage, it recklessly exposed the
cargo to further damage. A portion of the cross-examination of Alfredo
On the second issue, we uphold the findings of the lower courts that petitioner Cunanan, cargo-surveyor of Tan-Gatue Adjustment Co., Inc., states:
failed to exercise extraordinary diligence in its care and custody of the
consignee's goods.
CROSS-EXAMINATION BY ATTY. DONN LEE:31
Common carriers are bound to observe extraordinary diligence in the vigilance
x x x           x x x           x x x
over the goods transported by them.28 They are presumed to have been at fault
or to have acted negligently if the goods are lost, destroyed or
deteriorated.29 To overcome the presumption of negligence in the case of loss, q     -     Can you tell us what else transpired after that incident?
destruction or deterioration of the goods, the common carrier must prove that it
exercised extraordinary diligence. There are, however, exceptions to this rule. a     -     After the first accident, through the initiative of the barge owners, they
Article 1734 of the Civil Code enumerates the instances when the presumption tried to pull out the barge from the place of the accident, and bring it to the
of negligence does not attach: anchor terminal for safety, then after deciding if the vessel is stabilized, they
tried to pull it to the consignee's warehouse, now while on route another
accident occurred, now this time the barge totally hitting something in the CROSS-EXAMINATION BY ATTY. IGNACIO:34
course.
x x x           x x x           x x x
q     -     You said there was another accident, can you tell the court the nature
of the second accident? q     -     And then from ISLOFF Terminal you proceeded to the premises of the
GMC? Am I correct?
a     -     The sinking, sir.
a     -     The next day, in the morning, we hired for additional two (2) tugboats
q     -     Can you tell the nature . . . can you tell the court, if you know what as I have stated.
caused the sinking?
q     -     Despite of the threats of an incoming typhoon as you testified a while
a     -     Mostly it was related to the first accident because there was already a ago?
whole (sic) on the bottom part of the barge.
a     -     It is already in an inner portion of Pasig River. The typhoon would be
x x x           x x x           x x x coming and it would be dangerous if we are in the vicinity of Manila Bay.

This is not all. Petitioner still headed to the consignee's wharf despite q     -     But the fact is, the typhoon was incoming? Yes or no?
knowledge of an incoming typhoon. During the time that the barge was
heading towards the consignee's wharf on September 5, 1990, typhoon a     -     Yes.
"Loleng" has already entered the Philippine area of responsibility. 32 A part of
the testimony of Robert Boyd, Cargo Operations Supervisor of the petitioner, q     -     And yet as a standard operating procedure of your Company, you
reveals: have to secure a sort of Certification to determine the weather condition, am I
correct?
DIRECT-EXAMINATION BY ATTY. LEE:33
a     -     Yes, sir.
x x x           x x x           x x x
q     -     So, more or less, you had the knowledge of the incoming typhoon,
q     -     Now, Mr. Witness, did it not occur to you it might be safer to just allow right?
the Barge to lie where she was instead of towing it?
a     -     Yes, sir.
a     -     Since that time that the Barge was refloated, GMC (General Milling
Corporation, the consignee) as I have said was in a hurry for their goods to be q     -     And yet you proceeded to the premises of the GMC?
delivered at their Wharf since they needed badly the wheat that was loaded in
PSTSI-3. It was needed badly by the consignee.
a     -     ISLOFF Terminal is far from Manila Bay and anytime even with the
typhoon if you are already inside the vicinity or inside Pasig entrance, it is a
q     -     And this is the reason why you towed the Barge as you did? safe place to tow upstream.

a     -     Yes, sir. Accordingly, the petitioner cannot invoke the occurrence of the typhoon as
force majeure to escape liability for the loss sustained by the private
x x x           x x x           x x x respondent. Surely, meeting a typhoon head-on falls short of due diligence
required from a common carrier. More importantly, the officers/employees
themselves of petitioner admitted that when the towing bits of the vessel broke respondent himself, while 600 cartons were placed on board the other truck
that caused its sinking and the total loss of the cargo upon reaching the Pasig which was driven by Manuel Estrada, respondent's driver and employee.
River, it was no longer affected by the typhoon. The typhoon then is not the
proximate cause of the loss of the cargo; a human factor, i.e., negligence had Only 150 boxes of Liberty filled milk were delivered to petitioner. The other 600
intervened. boxes never reached petitioner, since the truck which carried these boxes was
hijacked somewhere along the MacArthur Highway in Paniqui, Tarlac, by
IN VIEW THEREOF, the petition is DENIED. The Decision of the Court of armed men who took with them the truck, its driver, his helper and the cargo.
Appeals in CA-G.R. CV No. 49195 dated May 11, 2000 and its Resolution
dated February 21, 2001 are hereby AFFIRMED. Costs against petitioner. On 6 January 1971, petitioner commenced action against private respondent in
the Court of First Instance of Pangasinan, demanding payment of P 22,150.00,
SO ORDERED. the claimed value of the lost merchandise, plus damages and attorney's fees.
Petitioner argued that private respondent, being a common carrier, and having
Panganiban, and Sandoval-Gutierrez, JJ., concur. failed to exercise the extraordinary diligence required of him by the law, should
Corona, and Carpio-Morales, JJ., on official leave. be held liable for the value of the undelivered goods.

G.R. No. L-47822 December 22, 1988 In his Answer, private respondent denied that he was a common carrier and
argued that he could not be held responsible for the value of the lost goods,
PEDRO DE GUZMAN, petitioner, such loss having been due to force majeure.
vs.
COURT OF APPEALS and ERNESTO CENDANA, respondents. On 10 December 1975, the trial court rendered a Decision   finding private
1

respondent to be a common carrier and holding him liable for the value of the
Vicente D. Millora for petitioner. undelivered goods (P 22,150.00) as well as for P 4,000.00 as damages and P
2,000.00 as attorney's fees.
Jacinto Callanta for private respondent.
On appeal before the Court of Appeals, respondent urged that the trial court
had erred in considering him a common carrier; in finding that he had
habitually offered trucking services to the public; in not exempting him from
liability on the ground of force majeure; and in ordering him to pay damages
FELICIANO, J.: and attorney's fees.
Respondent Ernesto Cendana, a junk dealer, was engaged in buying up used bottles and scrap metal in
Pangasinan. Upon gathering sufficient quantities of such scrap material, respondent would bring such material The Court of Appeals reversed the judgment of the trial court and held that
to Manila for resale. He utilized two (2) six-wheeler trucks which he owned for hauling the material to Manila. respondent had been engaged in transporting return loads of freight "as a
On the return trip to Pangasinan, respondent would load his vehicles with cargo which various merchants
wanted delivered to differing establishments in Pangasinan. For that service, respondent charged freight rates casual
which were commonly lower than regular commercial rates. occupation — a sideline to his scrap iron business" and not as a common
carrier. Petitioner came to this Court by way of a Petition for Review assigning
Sometime in November 1970, petitioner Pedro de Guzman a merchant and as errors the following conclusions of the Court of Appeals:
authorized dealer of General Milk Company (Philippines), Inc. in Urdaneta,
Pangasinan, contracted with respondent for the hauling of 750 cartons of 1. that private respondent was not a common carrier;
Liberty filled milk from a warehouse of General Milk in Makati, Rizal, to
petitioner's establishment in Urdaneta on or before 4 December 1970. 2. that the hijacking of respondent's truck was force majeure; and
Accordingly, on 1 December 1970, respondent loaded in Makati the
merchandise on to his trucks: 150 cartons were loaded on a truck driven by
3. that respondent was not liable for the value of the undelivered cargo. (Rollo, power, water supply and power petroleum, sewerage system, wire or wireless
p. 111) communications systems, wire or wireless broadcasting stations and other
similar public services. ... (Emphasis supplied)
We consider first the issue of whether or not private respondent Ernesto
Cendana may, under the facts earlier set forth, be properly characterized as a It appears to the Court that private respondent is properly characterized as a
common carrier. common carrier even though he merely "back-hauled" goods for other
merchants from Manila to Pangasinan, although such back-hauling was done
The Civil Code defines "common carriers" in the following terms: on a periodic or occasional rather than regular or scheduled manner, and even
though private respondent's principal occupation was not the carriage of goods
Article 1732. Common carriers are persons, corporations, firms or associations for others. There is no dispute that private respondent charged his customers a
engaged in the business of carrying or transporting passengers or goods or fee for hauling their goods; that fee frequently fell below commercial freight
both, by land, water, or air for compensation, offering their services to the rates is not relevant here.
public.
The Court of Appeals referred to the fact that private respondent held no
The above article makes no distinction between one whose principal business certificate of public convenience, and concluded he was not a common carrier.
activity is the carrying of persons or goods or both, and one who does such This is palpable error. A certificate of public convenience is not a requisite for
carrying only as an ancillary activity (in local Idiom as "a sideline"). Article 1732 the incurring of liability under the Civil Code provisions governing common
also carefully avoids making any distinction between a person or enterprise carriers. That liability arises the moment a person or firm acts as a common
offering transportation service on a regular or scheduled basis and one offering carrier, without regard to whether or not such carrier has also complied with
such service on an occasional, episodic or unscheduled basis. Neither does the requirements of the applicable regulatory statute and implementing
Article 1732 distinguish between a carrier offering its services to the "general regulations and has been granted a certificate of public convenience or other
public," i.e., the general community or population, and one who offers services franchise. To exempt private respondent from the liabilities of a common
or solicits business only from a narrow segment of the general population. We carrier because he has not secured the necessary certificate of public
think that Article 1733 deliberaom making such distinctions. convenience, would be offensive to sound public policy; that would be to
reward private respondent precisely for failing to comply with applicable
statutory requirements. The business of a common carrier impinges directly
So understood, the concept of "common carrier" under Article 1732 may be
and intimately upon the safety and well being and property of those members
seen to coincide neatly with the notion of "public service," under the Public
of the general community who happen to deal with such carrier. The law
Service Act (Commonwealth Act No. 1416, as amended) which at least
imposes duties and liabilities upon common carriers for the safety and
partially supplements the law on common carriers set forth in the Civil Code.
protection of those who utilize their services and the law cannot allow a
Under Section 13, paragraph (b) of the Public Service Act, "public service"
common carrier to render such duties and liabilities merely facultative by
includes:
simply failing to obtain the necessary permits and authorizations.
... every person that now or hereafter may own, operate, manage, or control in
We turn then to the liability of private respondent as a common carrier.
the Philippines, for hire or compensation, with general or limited clientele,
whether permanent, occasional or accidental, and done for general business
purposes, any common carrier, railroad, street railway, traction railway, Common carriers, "by the nature of their business and for reasons of public
subway motor vehicle, either for freight or passenger, or both, with or without policy"   are held to a very high degree of care and diligence ("extraordinary
2

fixed route and whatever may be its classification, freight or carrier service of diligence") in the carriage of goods as well as of passengers. The specific
any class, express service, steamboat, or steamship line, pontines, ferries and import of extraordinary diligence in the care of goods transported by a common
water craft, engaged in the transportation of passengers or freight or both, carrier is, according to Article 1733, "further expressed in Articles 1734,1735
shipyard, marine repair shop, wharf or dock, ice plant, and 1745, numbers 5, 6 and 7" of the Civil Code.
ice-refrigeration plant, canal, irrigation system, gas, electric light, heat and
Article 1734 establishes the general rule that common carriers are responsible The precise issue that we address here relates to the specific requirements of
for the loss, destruction or deterioration of the goods which they carry, the duty of extraordinary diligence in the vigilance over the goods carried in the
"unless the same is due to any of the following causes only: specific context of hijacking or armed robbery.

(1) Flood, storm, earthquake, lightning or other natural disaster or calamity; As noted earlier, the duty of extraordinary diligence in the vigilance over goods
(2) Act of the public enemy in war, whether international or civil; is, under Article 1733, given additional specification not only by Articles 1734
(3) Act or omission of the shipper or owner of the goods; and 1735 but also by Article 1745, numbers 4, 5 and 6, Article 1745 provides in
(4) The character-of the goods or defects in the packing or-in the containers; relevant part:
and
(5) Order or act of competent public authority. Any of the following or similar stipulations shall be considered unreasonable,
unjust and contrary to public policy:
It is important to point out that the above list of causes of loss, destruction or
deterioration which exempt the common carrier for responsibility therefor, is a xxx xxx xxx
closed list. Causes falling outside the foregoing list, even if they appear to
constitute a species of force majeure fall within the scope of Article 1735, (5) that the common carrier shall not be responsible for the acts or omissions
which provides as follows: of his or its employees;

In all cases other than those mentioned in numbers 1, 2, 3, 4 and 5 of the (6) that the common carrier's liability for acts committed by thieves, or of
preceding article, if the goods are lost, destroyed or deteriorated, common robbers who do not act with grave or irresistible threat, violence or force, is
carriers are presumed to have been at fault or to have acted negligently, dispensed with or diminished; and
unless they prove that they observed extraordinary diligence as required in
Article 1733. (Emphasis supplied)
(7) that the common carrier shall not responsible for the loss, destruction or
deterioration of goods on account of the defective condition of the car vehicle,
Applying the above-quoted Articles 1734 and 1735, we note firstly that the ship, airplane or other equipment used in the contract of carriage. (Emphasis
specific cause alleged in the instant case — the hijacking of the carrier's truck supplied)
— does not fall within any of the five (5) categories of exempting causes listed
in Article 1734. It would follow, therefore, that the hijacking of the carrier's
Under Article 1745 (6) above, a common carrier is held responsible — and will
vehicle must be dealt with under the provisions of Article 1735, in other words,
not be allowed to divest or to diminish such responsibility — even for acts of
that the private respondent as common carrier is presumed to have been at
strangers like thieves or robbers, except where such thieves or robbers in fact
fault or to have acted negligently. This presumption, however, may be
acted "with grave or irresistible threat, violence or force." We believe and so
overthrown by proof of extraordinary diligence on the part of private
hold that the limits of the duty of extraordinary diligence in the vigilance over
respondent.
the goods carried are reached where the goods are lost as a result of a
robbery which is attended by "grave or irresistible threat, violence or force."
Petitioner insists that private respondent had not observed extraordinary
diligence in the care of petitioner's goods. Petitioner argues that in the
In the instant case, armed men held up the second truck owned by private
circumstances of this case, private respondent should have hired a security
respondent which carried petitioner's cargo. The record shows that an
guard presumably to ride with the truck carrying the 600 cartons of Liberty filled
information for robbery in band was filed in the Court of First Instance of
milk. We do not believe, however, that in the instant case, the standard of
Tarlac, Branch 2, in Criminal Case No. 198 entitled "People of the Philippines
extraordinary diligence required private respondent to retain a security guard to
v. Felipe Boncorno, Napoleon Presno, Armando Mesina, Oscar Oria and one
ride with the truck and to engage brigands in a firelight at the risk of his own life
John Doe." There, the accused were charged with willfully and unlawfully
and the lives of the driver and his helper.
taking and carrying away with them the second truck, driven by Manuel
Estrada and loaded with the 600 cartons of Liberty filled milk destined for REYNALDA GATCHALIAN, petitioner,
delivery at petitioner's store in Urdaneta, Pangasinan. The decision of the trial vs.
court shows that the accused acted with grave, if not irresistible, threat, ARSENIO DELIM and the HON. COURT OF APPEALS, respondents.
violence or force.  Three (3) of the five (5) hold-uppers were armed with
3

firearms. The robbers not only took away the truck and its cargo but also Pedro G. Peralta for petitioner.
kidnapped the driver and his helper, detaining them for several days and later
releasing them in another province (in Zambales). The hijacked truck was Florentino G. Libatique for private respondent.
subsequently found by the police in Quezon City. The Court of First Instance
convicted all the accused of robbery, though not of robbery in band.  4

In these circumstances, we hold that the occurrence of the loss must

reasonably be regarded as quite beyond the control of the common carrier and
properly regarded as a fortuitous event. It is necessary to recall that even FELICIANO, J.:
common carriers are not made absolute insurers against all risks of travel and
of transport of goods, and are not held liable for acts or events which cannot At noon time on 11 July 1973, petitioner Reynalda Gatchalian boarded, as a
be foreseen or are inevitable, provided that they shall have complied with the paying passenger, respondent's "Thames" mini bus at a point in San Eugenio,
rigorous standard of extraordinary diligence. 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
We, therefore, agree with the result reached by the Court of Appeals that snapping sound" was suddenly heard at one part of the bus and, shortly
private respondent Cendana is not liable for the value of the undelivered thereafter, the vehicle bumped a cement flower pot on the side of the road,
merchandise which was lost because of an event entirely beyond private went off the road, turned turtle and fell into a ditch. Several passengers,
respondent's control. 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
ACCORDINGLY, the Petition for Review on certiorari is hereby DENIED and on the leg, arm and forehead, specifically described as follows: lacerated
the Decision of the Court of Appeals dated 3 August 1977 is AFFIRMED. No wound, forehead; abrasion, elbow, left; abrasion, knee, left; abrasion, lateral
pronouncement as to costs. surface, leg, left.  1

SO ORDERED.

Fernan, C.J., Gutierrez, Jr., Bidin and Cortes, JJ., concur. 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 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:

G.R. No. L-56487 October 21, 1991 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;
That after a thorough investigation the said Thames met the accident due to mechanical defect and went off the road and turned turtle to We are not in accord, therefore, of (sic) the ground of the trial court's dismissal of the complaint, although we conform to the trial court's
the east canal of the road into a creek causing physical injuries to us; disposition of the case — its dismissal.

x x x           x x x          x x x 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.

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. Without special pronouncement as to costs.

xxx xxx xxx 2 SO ORDERED. 3

(Emphasis supplied) 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:

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 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

her with a conspicuous white scar measuring 1 by 1/2 inches on the forehead, generating mental suffering and an inferiority complex on 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.

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 (Emphasis supplied)

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.

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

In defense, respondent averred that the vehicular mishap was due to force majeure, and that petitioner had already been paid and  A waiver may not casually be attributed to a person when the terms thereof
him. 4

moreover had waived any right to institute any action against him (private respondent) and his driver, when petitioner Gatchalian signed do not explicitly and clearly evidence an intent to abandon a right vested in
the Joint Affidavit on 14 July 1973. such person.

After trial, the trial court dismissed the complaint upon the ground that when petitioner Gatchalian signed the Joint Affidavit, she The degree of explicitness which this Court has required in purported waivers
relinquished any right of action (whether criminal or civil) that she may have had against respondent and the driver of the mini-bus. is illustrated in Yepes and Susaya v. Samar Express Transit (supra), where the
Court in reading and rejecting a purported waiver said:
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: . . . 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."
x x x           x x x          x x x have awarded her actual or compensatory and moral damages as a matter of
course.
Even a cursory examination of the document mentioned above will readily
show that appellees did not actually waive their right to claim damages from We have already noted that a duty to exercise extraordinary diligence in
appellant for the latter's failure to comply with their contract of carriage. All that protecting the safety of its passengers is imposed upon a common carrier.   In 7

said document proves is that they expressed a "desire" to make the waiver — case of death or injuries to passengers, a statutory presumption arises that the
which obviously is not the same as making an actual waiver of their right. A common carrier was at fault or had acted negligently "unless it proves that it
waiver of the kind invoked by appellant must be clear and [had] observed extraordinary diligence as prescribed in Articles 1733 and
unequivocal (Decision of the Supreme Court of Spain of July 8, 1887) — which 1755."   In fact, because of this statutory presumption, it has been held that a
8

is not the case of the one relied upon in this appeal. (Emphasis supplied) 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.   To overcome this presumption, 9

If we apply the standard used in Yepes and Susaya, we would have to the common carrier must slow to the court that it had exercised extraordinary
conclude that the terms of the Joint Affidavit in the instant case cannot be diligence to prevent the injuries.   The standard of extraordinary diligence 10

regarded as a waiver cast in "clear and unequivocal" terms. Moreover, the imposed upon common carriers is considerably more demanding than the
circumstances under which the Joint Affidavit was signed by petitioner standard of ordinary diligence, i.e., the diligence of a
Gatchalian need to be considered. Petitioner testified that she was still reeling good paterfamilias established in respect of the ordinary relations between
from the effects of the vehicular accident, having been in the hospital for only members of society. A common carrier is bound to carry its passengers
three days, when the purported waiver in the form of the Joint Affidavit was safely" as far as human care and foresight can provide, using the utmost
presented to her for signing; that while reading the same, she experienced diligence of a very cautious person, with due regard to all the circumstances".  11

dizziness but that, seeing the other passengers who had also suffered injuries
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
sign the document, she too signed without bothering to read the Joint Affidavit 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

in its entirety. Considering these circumstances there appears substantial 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
doubt whether petitioner understood fully the import of the Joint Affidavit 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

(prepared by or at the instance of private respondent) she signed and whether  the Court summed
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

she actually intended thereby to waive any right of action against private up the essential characteristics of force majeure by quoting with approval from
respondent. the Enciclopedia Juridica Española:

Finally, because what is involved here is the liability of a common carrier for Thus, where fortuitous event or force majeure is the immediate and proximate
injuries sustained by passengers in respect of whose safety a common carrier cause of the loss, the obligor is exempt from liability non-performance. The
must exercise extraordinary diligence, we must construe any such purported Partidas, the antecedent of Article 1174 of the Civil Code, defines "caso
waiver most strictly against the common carrier. For a waiver to be valid and fortuito" as 'an event that takes place by accident and could not have been
effective, it must not be contrary to law, morals, public policy or good foreseen. Examples of this are destruction of houses, unexpected fire,
customs.   To uphold a supposed waiver of any right to claim damages by an
5
shipwreck, violence of robber.
injured passenger, under circumstances like those exhibited in this case, would
be to dilute and weaken the standard of extraordinary diligence exacted by the
In its dissertation on the phrase "caso fortuito" the Enciclopedia Juridica
law from common carriers and hence to render that standard
Española says: 'In legal sense and, consequently, also in relation to contracts,
unenforceable.   We believe such a purported waiver is offensive to public
6

a "caso fortuito" presents the following essential characteristics: (1) the cause
policy.
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
Petitioner Gatchalian also argues that the Court of Appeals, having by majority be impossible to foresee the event which constitutes the "caso fortuito", or if it
vote held that there was no enforceable waiver of her right of action, should 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
 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
manner; and (4) the obligor must be free from any participation in the 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

aggravation of the injury resulting to the creditor. 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:

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 We agree with the appellants that the damages awarded by the lower court for the injuries suffered by Benjamin Araneta are inadequate.
part of the bus. One of the passengers, an old woman, cried out, "What In allowing not more than P1,000.00 as compensation for the "permanent deformity and — something like an inferiority complex" as well
happened?" ("Apay addan samet nadadaelen?"). The driver replied, as for the "pathological condition on the left side of the jaw" caused to said plaintiff, the court below overlooked the clear evidence on
nonchalantly, "That is only normal" ("Ugali ti makina dayta"). The driver did not record that to arrest the degenerative process taking place in the mandible and   restore the injured boy to a nearly normal condition,
stop to check if anything had gone wrong with the bus. Moreover, the driver's surgical intervention was needed, for which the doctor's charges would amount to P3,000.00, exclusive of hospitalization fees, expenses
reply necessarily indicated that the same "snapping sound" had been heard in and medicines. Furthermore, the operation, according to Dr. Diño, would probably have to be repeated in order to effectuate a complete
the bus on previous occasions. This could only mean that the bus had not cure, while removal of the scar on the face obviously demanded plastic surgery.
been checked physically or mechanically to determine what was causing the
"snapping sound" which had occurred so frequently that the driver had gotten x x x           x x x          x x x
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
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
passengers dictated that the bus be checked and repaired. The obvious
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
continued failure of respondent to look after the roadworthiness and safety 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
the bus, coupled with the driver's refusal or neglect to stop the mini-bus after
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
he had heard once again the "snapping sound" and the cry of alarm from one
to a full indemnity.
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. . . . 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
We turn to petitioner's claim for damages. The first item in that claim relates to
indemnity granted by the trial court should be increased to a total of P18,000.00. (Emphasis supplied)
revenue which petitioner said she failed to realize because of the effects of the
vehicular mishap. Petitioner maintains that on the day that the mini-bus 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  Upon the other hand, Dr. Fe
Petitioner estimated that the cost of having her scar surgically removed was somewhere between P10,000.00 to P15,000.00.  16

the accident, she was no longer employed in a public school since, being a Tayao Lasam, a witness presented as an expert by petitioner, testified that the
casual employee and not a Civil Service eligible, she had been laid off. Her cost would probably be between P5,000.00 to P10,000.00.   In view of this 17

employment as a substitute teacher was occasional and episodic, contingent testimony, and the fact that a considerable amount of time has lapsed since
upon the availability of vacancies for substitute teachers. In view of her the mishap in 1973 which may be expected to increase not only the cost but
employment status as such, the Court of Appeals held that she could not be also very probably the difficulty of removing the scar, we consider that the
said to have in fact lost any employment after and by reason of the amount of P15,000.00 to cover the cost of such plastic surgery is not
accident.   Such was the factual finding of the Court of Appeals, a finding
13
unreasonable.
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
Turning to petitioner's claim for moral damages, the long-established rule is
damages on the basis of speculation or conjecture.  14

that moral damages may be awarded where gross negligence on the part of
the common carrier is shown.   Since we have earlier concluded that 18
respondent common carrier and his driver had been grossly negligent in have become final, for petitioner's failure to deliver safely private respondent's payloader, and for costs of suit.
The payloader was declared abandoned in favor of petitioner.
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 The facts of the case are as follows:
were still hospitalized for their injuries, petitioner must be held entitled to such
moral damages. Considering the extent of pain and anxiety which petitioner Private respondent Vicente E. Concepcion, a civil engineer doing business
must have suffered as a result of her physical injuries including the permanent under the name and style of Consolidated Construction with office address at
scar on her forehead, we believe that the amount of P30,000.00 would be a Room 412, Don Santiago Bldg., Taft Avenue, Manila, had a contract with the
reasonable award. Petitioner's claim for P1,000.00 as atttorney's fees is in fact Civil Aeronautics Administration (CAA) sometime in 1964 for the construction
even more modest.  19 of the airport in Cagayan de Oro City Misamis Oriental.

Being a Manila — based contractor, Vicente E. Concepcion had to ship his

construction equipment to Cagayan de Oro City. Having shipped some of his
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 equipment through petitioner and having settled the balance of P2,628.77 with
La Union dated 4 December 1975 are hereby REVERSED and SET ASIDE.Respondent is hereby ORDERED to pay petitioner Reynalda respect to said shipment, Concepcion negotiated anew with petitioner, thru its
Gatchalian the following sums: 1) P15,000.00 as actual or compensatory damages to cover the cost of plastic surgery for the removal of collector, Pacifico Fernandez, on August 28, 1964 for the shipment to Cagayan
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 de Oro City of one (1) unit payloader, four (4) units 6x6 Reo trucks and two (2)
interest at the legal rate of 6% per annum counting from the promulgation of this decision until full payment thereof. Costs against private pieces of water tanks. He was issued Bill of Lading 113 on the same date upon
respondent. delivery of the equipment at the Manila North Harbor.  2

SO ORDERED. These equipment were loaded aboard the MV Cebu in its Voyage No. 316,
which left Manila on August 30, 1964 and arrived at Cagayan de Oro City in
Fernan, C.J., Gutierrez, Jr., Bidin and Davide, Jr., JJ., concur.
the afternoon of September 1, 1964. The Reo trucks and water tanks were
safely unloaded within a few hours after arrival, but while the payloader was
about two (2) meters above the pier in the course of unloading, the swivel pin
G.R. No. L-31379 August 29, 1988 of the heel block of the port block of Hatch No. 2 gave way, causing the
payloader to fall.   The payloader was damaged and was thereafter taken to
3

COMPAÑIA MARITIMA, petitioner, petitioner's compound in Cagayan de Oro City.

vs.
COURT OF APPEALS and VICENTE CONCEPCION, respondents. On September 7, 1964, Consolidated Construction, thru Vicente E.
Concepcion, wrote Compañia Maritima to demand a replacement of the
Rafael Dinglasan for petitioner. payloader which it was considering as a complete loss because of the extent of
damage.   Consolidated Construction likewise notified petitioner of its claim for
4

Benjamin J. Molina for private respondent. damages. Unable to elicit response, the demand was repeated in a letter dated
October 2, 1964.  5

Meanwhile, petitioner shipped the payloader to Manila where it was weighed at

FERNAN, C.J.: the San Miguel Corporation. Finding that the payloader weighed 7.5 tons and
not 2.5 tons as declared in the B-111 of Lading, petitioner denied the claim for
Petitioner Compañia Maritima seeks to set aside through this petition for review on certiorari the decision 1 of damages of Consolidated Construction in its letter dated October 7, 1964,
the Court of Appeals dated December 5, 1965, adjudging petitioner liable to private respondent Vicente E. contending that had Vicente E. Concepcion declared the actual weight of the
Concepcion for damages in the amount of P24,652.97 with legal interest from the date said decision shall
payloader, damage to their ship as well as to his payloader could have been of 7.5 tons was the proximate and only cause of the damage on the Oliver
prevented.  6
Payloader OC-12 when it fell while being unloaded by petitioner's crew, as
would absolutely exempt petitioner from liability for damages under paragraph
To replace the damaged payloader, Consolidated Construction in the 3 of Article 1734 of the Civil Code, which provides:
meantime bought a new one at P45,000.00 from Bormaheco Inc. on December
3, 1964, and on July 6, 1965., Vicente E. Concepcion filed an action for Art. 1734. Common carriers are responsible for the loss, destruction, or
damages against petitioner with the then Court of First Instance of Manila, deterioration of the goods, unless the same is due to any of the following
Branch VII, docketed as Civil Case No. 61551, seeking to recover damages in causes only:
the amount of P41,225.00 allegedly suffered for the period of 97 days that he
was not able to employ a payloader in the construction job at the rate of xxx xxx xxx
P450.00 a day; P34,000.00 representing the cost of the damaged payloader;
Pl 1, 000. 00 representing the difference between the cost of the damaged (3) Act or omission of the shipper or owner of the goods.
payloader and that of the new payloader; P20,000.00 representing the losses
suffered by him due to the diversion of funds to enable him to buy a new
Petitioner claims absolute exemption under this provision upon the reasoning
payloader; P10,000.00 as attorney's fees; P5,000.00 as exemplary damages;
that private respondent's act of furnishing it with an inaccurate weight of the
and cost of the suit. 
7

payloader constitutes misrepresentation within the meaning of "act or omission

of the shipper or owner of the goods" under the above- quoted article. It
After trial, the then Court of First Instance of Manila, Branch VII, dismissed on likewise faults the respondent Court of Appeals for reversing the decision of
April 24, 1968 the complaint with costs against therein plaintiff, herein private the trial court notwithstanding that said appellate court also found that by
respondent Vicente E. Concepcion, stating that the proximate cause of the fall representing the weight of the payloader to be only 2.5 tons, private
of the payloader was Vicente E. Concepcion's act or omission in having respondent had led petitioner's officer to believe that the same was within the 5
misrepresented the weight of the payloader as 2.5 tons instead of its true tons capacity of the heel block of Hatch No. 2. Petitioner would thus insist that
weight of 7.5 tons, which underdeclaration was intended to defraud Compañia the proximate and only cause of the damage to the payloader was private
Maritima of the payment of the freight charges and which likewise led the Chief respondent's alleged misrepresentation of the weight of the machinery in
Officer of the vessel to use the heel block of hatch No. 2 in unloading the question; hence, any resultant damage to it must be borne by private
payloader.  8
respondent Vicente E. Concepcion.

From the adverse decision against him, Vicente E. Concepcion appealed to The general rule under Articles 1735 and 1752 of the Civil Code is that
the Court of Appeals which, on December 5, 1965 rendered a decision, the common carriers are presumed to have been at fault or to have acted
dispositive portion of which reads: negligently in case the goods transported by them are lost, destroyed or had
deteriorated. To overcome the presumption of liability for the loss, destruction
IN VIEW WHEREOF, judgment must have to be as it is hereby reversed; or deterioration of the goods under Article 1735, the common carriers must
defendant is condemned to pay unto plaintiff the sum in damages of prove that they observed extraordinary diligence as required in Article 1733 of
P24,652.07 with legal interest from the date the present decision shall have the Civil Code. The responsibility of observing extraordinary diligence in the
become final; the payloader is declared abandoned to defendant; costs against vigilance over the goods is further expressed in Article 1734 of the same Code,
the latter. 
9
the article invoked by petitioner to avoid liability for damages.

Hence, the instant petition. Corollary is the rule that mere proof of delivery of the goods in good order to a
common carrier, and of their arrival at the place of destination in bad order,
The principal issue in the instant case is whether or not the act of private makes out prima facie case against the common carrier, so that if no
respondent Vicente E. Concepcion in furnishing petitioner Compañia Maritima explanation is given as to how the loss, deterioration or destruction of the
with an inaccurate weight of 2.5 tons instead of the payloader's actual weight goods occurred, the common carrier must be held responsible.   Otherwise
10
stated, it is incumbent upon the common carrier to prove that the loss, 5-ton capacity lifting apparatus to lift and unload a visibly heavy cargo like a
deterioration or destruction was due to accident or some other circumstances payloader. Private respondent has, likewise, sufficiently established the laxity
inconsistent with its liability. and carelessness of petitioner's crew in their methods of ascertaining the
weight of heavy cargoes offered for shipment before loading and unloading
In the instant case, We are not persuaded by the proferred explanation of them, as is customary among careful persons.
petitioner alleged to be the proximate cause of the fall of the payloader while it
was being unloaded at the Cagayan de Oro City pier. Petitioner seems to have It must be noted that the weight submitted by private respondent Concepcion
overlooked the extraordinary diligence required of common carriers in the appearing at the left-hand portion of Exhibit 8   as an addendum to the original
12

vigilance over the goods transported by them by virtue of the nature of their enumeration of equipment to be shipped was entered into the bill of lading by
business, which is impressed with a special public duty. petitioner, thru Pacifico Fernandez, a company collector, without seeing the
equipment to be shipped.  Mr. Mariano Gupana, assistant traffic manager of
13

Thus, Article 1733 of the Civil Code provides: petitioner, confirmed in his testimony that the company never checked the
information entered in the bill of lading.   Worse, the weight of the payloader as
14

Art. 1733. Common carriers, from the nature of their business and for reason entered in the bill of lading was assumed to be correct by Mr. Felix Pisang,
of public policy, are bound to observe extraordinary diligence in the vigilance Chief Officer of MV Cebu.  15

over the goods and for the safety of the passengers transported by them
according to all the circumstances of each case. The weights stated in a bill of lading are prima facie evidence of the amount
received and the fact that the weighing was done by another will not relieve the
Such extraordinary diligence in the vigilance over the goods is further common carrier where it accepted such weight and entered it on the bill of
expressed in Articles 1734, 1735 and 1745, Nos. 5, 6 and 7, ... lading.   Besides, common carriers can protect themselves against mistakes in
16

the bill of lading as to weight by exercising diligence before issuing the same. 
17

The extraordinary diligence in the vigilance over the goods tendered for
shipment requires the common carrier to know and to follow the required While petitioner has proven that private respondent Concepcion did furnish it
precaution for avoiding damage to, or destruction of the goods entrusted to it with an inaccurate weight of the payloader, petitioner is nonetheless liable, for
for safe carriage and delivery. It requires common carriers to render service the damage caused to the machinery could have been avoided by the exercise
with the greatest skill and foresight and "to use all reasonable means to of reasonable skill and attention on its part in overseeing the unloading of such
ascertain the nature and characteristic of goods tendered for shipment, and to a heavy equipment. And circumstances clearly show that the fall of the
exercise due care in the handling and stowage including such methods as their payloader could have been avoided by petitioner's crew. Evidence on record
nature requires."  Under Article 1736 of the Civil Code, the responsibility to
11 sufficiently show that the crew of petitioner had been negligent in the
observe extraordinary diligence commences and lasts from the time the goods performance of its obligation by reason of their having failed to take the
are unconditionally placed in the possession of, and received by the carrier for necessary precaution under the circumstances which usage has established
transportation until the same are delivered, actually or constructively, by the among careful persons, more particularly its Chief Officer, Mr. Felix Pisang,
carrier to the consignee, or to the person who has the right to receive them who is tasked with the over-all supervision of loading and unloading heavy
without prejudice to the provisions of Article 1738. cargoes and upon whom rests the burden of deciding as to what particular
winch the unloading of the payloader should be undertaken.   While it was his
18

duty to determine the weight of heavy cargoes before accepting them. Mr.
Where, as in the instant case, petitioner, upon the testimonies of its own crew,
Felix Pisang took the bill of lading on its face value and presumed the same to
failed to take the necessary and adequate precautions for avoiding damage to,
be correct by merely "seeing" it.   Acknowledging that there was a "jumbo" in
19

or destruction of, the payloader entrusted to it for safe carriage and delivery to
the MV Cebu which has the capacity of lifting 20 to 25 ton cargoes, Mr. Felix
Cagayan de Oro City, it cannot be reasonably concluded that the damage
Pisang chose not to use it, because according to him, since the ordinary boom
caused to the payloader was due to the alleged misrepresentation of private
has a capacity of 5 tons while the payloader was only 2.5 tons, he did not
respondent Concepcion as to the correct and accurate weight of the payloader.
bother to use the "jumbo" anymore.  20

As found by the respondent Court of Appeals, the fact is that petitioner used a
In that sense, therefore, private respondent's act of furnishing petitioner with failed to take any steps to settle his valid, just and demandable claim for
an inaccurate weight of the payloader upon being asked by petitioner's damages.
collector, cannot be used by said petitioner as an excuse to avoid liability for
the damage caused, as the same could have been avoided had petitioner We find private respondent's submission erroneous. It is well- settled that an
utilized the "jumbo" lifting apparatus which has a capacity of lifting 20 to 25 appellee, who is not an appellant, may assign errors in his brief where his
tons of heavy cargoes. It is a fact known to the Chief Officer of MV Cebu that purpose is to maintain the judgment on other grounds, but he may not do so if
the payloader was loaded aboard the MV Cebu at the Manila North Harbor on his purpose is to have the judgment modified or reversed, for, in such case, he
August 28, 1964 by means of a terminal crane.   Even if petitioner chose not to
21
must appeal.   Since private respondent did not appeal from the judgment
22

take the necessary precaution to avoid damage by checking the correct weight insofar as it limited the award of damages due him, the reduction of 20% or 1/5
of the payloader, extraordinary care and diligence compel the use of the of the value of the payloader stands.
"jumbo" lifting apparatus as the most prudent course for petitioner.
WHEREFORE, in view of the foregoing, the petition is DENIED. The decision
While the act of private respondent in furnishing petitioner with an inaccurate of the Court of Appeals is hereby AFFIRMED in all respects with costs against
weight of the payloader cannot successfully be used as an excuse by petitioner. In view of the length of time this case has been pending, this
petitioner to avoid liability to the damage thus caused, said act constitutes a decision is immediately executory.
contributory circumstance to the damage caused on the payloader, which
mitigates the liability for damages of petitioner in accordance with Article 1741 Gutierrez, Jr., Feliciano, Bidin and Cortes JJ., concur.
of the Civil Code, to wit:
G.R. No. 84458 November 6, 1989
Art. 1741. If the shipper or owner merely contributed to the loss, destruction or
deterioration of the goods, the proximate cause thereof being the negligence of
ABOITIZ SHIPPING CORPORATION, petitioner,
the common carrier, the latter shall be liable in damages, which however, shall
vs.
be equitably reduced.
HON. COURT OF APPEALS, ELEVENTH DIVISION, LUCILA C. VIANA,
SPS. ANTONIO VIANA and GORGONIA VIANA, and PIONEER
We find equitable the conclusion of the Court of Appeals reducing the STEVEDORING CORPORATION, respondents.
recoverable amount of damages by 20% or 1/5 of the value of the payloader,
which at the time the instant case arose, was valued at P34,000. 00, thereby
Herenio E. Martinez for petitioner.
reducing the recoverable amount at 80% or 4/5 of P34,000.00 or the sum of
P27,200.00. Considering that the freight charges for the entire cargoes
shipped by private respondent amounting to P2,318.40 remained unpaid.. the M.R. Villaluz Law Office for private respondent.
same would be deducted from the P27,000.00 plus an additional deduction of
P228.63 representing the freight charges for the undeclared weight of 5 tons
(difference between 7.5 and 2.5 tons) leaving, therefore, a final recoverable
amount of damages of P24,652.97 due to private respondent Concepcion. REGALADO, J.:

Notwithstanding the favorable judgment in his favor, private respondent In this appeal by certiorari, petitioner Aboitiz Shipping Corporation seeks a
assailed the Court of Appeals' decision insofar as it limited the damages due review of the decision   of respondent Court of Appeals, dated July 29, 1988,
1

him to only P24,652.97 and the cost of the suit. Invoking the provisions on the decretal portion of which reads:
damages under the Civil Code, more particularly Articles 2200 and 2208,
private respondent further seeks additional damages allegedly because the WHEREFORE, the judgment appealed from as modified by the order of
construction project was delayed and that in spite of his demands, petitioner October 27, 1982, is hereby affirmed with the modification that appellant
Aboitiz Shipping is hereby ordered to pay plaintiff-appellees the amount of
P30,000.00 for the death of Anacleto Viana; actual damages of P9,800.00; For the filing of the instant case, they had to hire a lawyer for an agreed fee of
P150,000.00 for unearned income; P7,200.00 as support for deceased's ten thousand (P10,000.00) pesos.  2

parents; P20,000.00 as moral damages; P10,000.00 as attorney's fees; and to

pay the costs. Private respondents Vianas filed a complaint   for damages against petitioner
3

corporation (Aboitiz, for brevity) for breach of contract of carriage.

The undisputed facts of the case, as found by the court a quo and adopted by
respondent court, are as follows: . In its answer.   Aboitiz denied responsibility contending that at the time of the
4

accident, the vessel was completely under the control of respondent Pioneer
The evidence disclosed that on May 11, 1975, Anacleto Viana boarded the Stevedoring Corporation (Pioneer, for short) as the exclusive stevedoring
vessel M/V Antonia, owned by defendant, at the port at San Jose, Occidental contractor of Aboitiz, which handled the unloading of cargoes from the vessel
Mindoro, bound for Manila, having purchased a ticket (No. 117392) in the sum of Aboitiz. It is also averred that since the crane operator was not an employee
of P23.10 (Exh. 'B'). On May 12, 1975, said vessel arrived at Pier 4, North of Aboitiz, the latter cannot be held liable under the fellow-servant rule.
Harbor, Manila, and the passengers therein disembarked, a gangplank having
been provided connecting the side of the vessel to the pier. Instead of using Thereafter, Aboitiz, as third-party plaintiff, filed a third-party complaint   against
5

said gangplank Anacleto Viana disembarked on the third deck which was on Pioneer imputing liability thereto for Anacleto Viana's death as having been
the level with the pier. After said vessel had landed, the Pioneer Stevedoring allegedly caused by the negligence of the crane operator who was an
Corporation took over the exclusive control of the cargoes loaded on said employee of Pioneer under its exclusive control and supervision.
vessel pursuant to the Memorandum of Agreement dated July 26, 1975 (Exh.
'2') between the third party defendant Pioneer Stevedoring Corporation and Pioneer, in its answer to the third-party complaint,   raised the defenses that
6

defendant Aboitiz Shipping Corporation. Aboitiz had no cause of action against Pioneer considering that Aboitiz is being
sued by the Vianas for breach of contract of carriage to which Pioneer is not a
The crane owned by the third party defendant and operated by its crane party; that Pioneer had observed the diligence of a good father of a family both
operator Alejo Figueroa was placed alongside the vessel and one (1) hour in the selection and supervision of its employees as well as in the prevention of
after the passengers of said vessel had disembarked, it started operation by damage or injury to anyone including the victim Anacleto Viana; that Anacleto
unloading the cargoes from said vessel. While the crane was being operated, Viana's gross negligence was the direct and proximate cause of his death; and
Anacleto Viana who had already disembarked from said vessel obviously that the filing of the third-party complaint was premature by reason of the
remembering that some of his cargoes were still loaded in the vessel, went pendency of the criminal case for homicide through reckless imprudence filed
back to the vessel, and it was while he was pointing to the crew of the said against the crane operator, Alejo Figueroa.
vessel to the place where his cargoes were loaded that the crane hit him,
pinning him between the side of the vessel and the crane. He was thereafter In a decision rendered on April 17, 1980 by the trial court,   Aboitiz was ordered
7

brought to the hospital where he later expired three (3) days thereafter, on May to pay the Vianas for damages incurred, and Pioneer was ordered to
15, 1975, the cause of his death according to the Death Certificate (Exh. "C") reimburse Aboitiz for whatever amount the latter paid the Vianas. The
being "hypostatic pneumonia secondary to traumatic fracture of the pubic bone dispositive portion of said decision provides:
lacerating the urinary bladder" (See also Exh. "B"). For his hospitalization,
medical, burial and other miscellaneous expenses, Anacleto's wife, herein
WHEREFORE, judgment is hereby rendered in favor of the plantiffs:
plaintiff, spent a total of P9,800.00 (Exhibits "E", "E-1", to "E-5"). Anacleto
Viana who was only forty (40) years old when he met said fateful accident
(Exh. 'E') was in good health. His average annual income as a farmer or a farm (1) ordering defendant Aboitiz Shipping Corporation to pay to plaintiffs the sum
supervisor was 400 cavans of palay annually. His parents, herein plaintiffs of P12,000.00 for the death of Anacleto Viana P9,800.00 as actual damages;
Antonio and Gorgonia Viana, prior to his death had been recipient of twenty P533,200.00 value of the 10,664 cavans of palay computed at P50.00 per
(20) cavans of palay as support or P120.00 monthly. Because of Anacleto's cavan; P10,000.00 as attorney's fees; F 5,000.00, value of the 100 cavans of
death, plaintiffs suffered mental anguish and extreme worry or moral damages. palay as support for five (5) years for deceased (sic) parents, herein plaintiffs
Antonio and Gorgonia Viana computed at P50.00 per cavan; P7,200.00 as
support for deceased's parents computed at P120.00 a month for five years appearing that the negligence of its crane operator has not been established
pursuant to Art. 2206, Par. 2, of the Civil Code; P20,000.00 as moral damages, therein.
and costs; and
Not satisfied with the modified judgment of the trial court, Aboitiz appealed the
(2) ordering the third party defendant Pioneer Stevedoring Corporation to same to respondent Court of Appeals which affirmed the findings of of the trial
reimburse defendant and third party plaintiff Aboitiz Shipping Corporation the court except as to the amount of damages awarded to the Vianas.
said amounts that it is ordered to pay to herein plaintiffs.
Hence, this petition wherein petitioner Aboitiz postulates that respondent court
Both Aboitiz and Pioneer filed separate motions for reconsideration wherein erred:
they similarly raised the trial court's failure to declare that Anacleto Viana acted
with gross negligence despite the overwhelming evidence presented in support (A) In holding that the doctrine laid down by this honorable Court in La
thereof. In addition, Aboitiz alleged, in opposition to Pioneer's motion, that Mallorca vs. Court of Appeals, et al. (17 SCRA 739, July 27, 1966) is
under the memorandum of agreement the liability of Pioneer as contractor is applicable to the case in the face of the undisputable fact that the factual
automatic for any damages or losses whatsoever occasioned by and arising situation under the La Mallorca case is radically different from the facts
from the operation of its arrastre and stevedoring service. obtaining in this case;

In an order dated October 27, 1982,   the trial court absolved Pioneer from
8
(B) In holding petitioner liable for damages in the face of the finding of the court
liability for failure of the Vianas and Aboitiz to preponderantly establish a case a quo and confirmed by the Honorable respondent court of Appeals that the
of negligence against the crane operator which the court a quo ruled is never deceased, Anacleto Viana was guilty of contributory negligence, which, We
presumed, aside from the fact that the memorandum of agreement supposedly respectfully submit contributory negligence was the proximate cause of his
refers only to Pioneer's liability in case of loss or damage to goods handled by death; specifically the honorable respondent Court of Appeals failed to apply
it but not in the case of personal injuries, and, finally that Aboitiz cannot Art. 1762 of the New Civil Code;
properly invoke the fellow-servant rule simply because its liability stems from a
breach of contract of carriage. The dispositive portion of said order reads: (C) In the alternative assuming the holding of the Honorable respondent Court
of Appears that petitioner may be legally condemned to pay damages to the
WHEREFORE, judgment is hereby modified insofar as third party defendant private respondents we respectfully submit that it committed a reversible error
Pioneer Stevedoring Corporation is concerned rendered in favor of the when it dismissed petitioner's third party complaint against private respondent
plaintiffs-,: Pioneer Stevedoring Corporation instead of compelling the latter to reimburse
the petitioner for whatever damages it may be compelled to pay to the private
(1) Ordering defendant Aboitiz Shipping Corporation to pay the plaintiffs the respondents Vianas.  9

sum of P12,000.00 for the death of Anacleto Viana; P9,000.00 (sic) as actual
damages; P533,200.00 value of the 10,664 cavans of palay computed at At threshold, it is to be observed that both the trial court and respondent Court
P50.00 per cavan; P10,000.00 as attorney's fees; P5,000.00 value of the 100 of Appeals found the victim Anacleto Viana guilty of contributory negligence,
cavans of palay as support for five (5) years for deceased's parents, herein but holding that it was the negligence of Aboitiz in prematurely turning over the
plaintiffs Antonio and Gorgonia Viana,computed at P50.00 per cavan; vessel to the arrastre operator for the unloading of cargoes which was the
P7,200.00 as support for deceased's parents computed at P120.00 a month direct, immediate and proximate cause of the victim's death.
for five years pursuant to Art. 2206, Par. 2, of the Civil Code; P20,000.00 as
moral damages, and costs; and I. Petitioner contends that since one (1) hour had already elapsed from the
time Anacleto Viana disembarked from the vessel and that he was given more
(2) Absolving third-party defendant Pioneer Stevedoring Corporation for (sic) than ample opportunity to unload his cargoes prior to the operation of the
any liability for the death of Anacleto Viana the passenger of M/V Antonia crane, his presence on the vessel was no longer reasonable e and he
owned by defendant third party plaintiff Aboitiz Shipping Corporation it
consequently ceased to be a passenger. Corollarily, it insists that the doctrine claimed that the carrier's agent had exercised the 'utmost diligence' of a 'very
in La Mallorca vs. Court of Appeals, et al.   is not applicable to the case at bar.
10
cautious person' required by Article 1755 of the Civil Code to be observed by a
common carrier in the discharge of its obligation to transport safely its
The rule is that the relation of carrier and passenger continues until the passengers. ... The presence of said passengers near the bus was not
passenger has been landed at the port of destination and has left the vessel unreasonable and they are, therefore, to be considered still as passengers of
owner's dock or premises.   Once created, the relationship will not ordinarily
11 the carrier, entitled to the protection under their contract of carriage. 
14

terminate until the passenger has, after reaching his destination, safely
alighted from the carrier's conveyance or had a reasonable opportunity to It is apparent from the foregoing that what prompted the Court to rule as it did
leave the carrier's premises. All persons who remain on the premises a in said case is the fact of the passenger's reasonable presence within the
reasonable time after leaving the conveyance are to be deemed passengers, carrier's premises. That reasonableness of time should be made to depend on
and what is a reasonable time or a reasonable delay within this rule is to be the attending circumstances of the case, such as the kind of common carrier,
determined from all the circumstances, and includes a reasonable time to see the nature of its business, the customs of the place, and so forth, and therefore
after his baggage and prepare for his departure.  The carrier-passenger
12
precludes a consideration of the time element per se without taking into
relationship is not terminated merely by the fact that the person transported account such other factors. It is thus of no moment whether in the cited case
has been carried to his destination if, for example, such person remains in the of La Mallorca there was no appreciable interregnum for the passenger therein
carrier's premises to claim his baggage. 13
to leave the carrier's premises whereas in the case at bar, an interval of one
(1) hour had elapsed before the victim met the accident. The primary factor to
It was in accordance with this rationale that the doctrine in the aforesaid case be considered is the existence of a reasonable cause as will justify the
of La Mallorca was enunciated, to wit: presence of the victim on or near the petitioner's vessel. We believe there
exists such a justifiable cause.
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 It is of common knowledge that, by the very nature of petitioner's business as a
place selected by the carrier at the point of destination, but continues until the shipper, the passengers of vessels are allotted a longer period of time to
passenger has had a reasonable time or a reasonable opportunity to leave the disembark from the ship than other common carriers such as a passenger bus.
carrier's premises. And, what is a reasonable time or a reasonable delay within With respect to the bulk of cargoes and the number of passengers it can load,
this rule is to be determined from all the circumstances. Thus, a person who, such vessels are capable of accommodating a bigger volume of both as
after alighting from a train, walks along the station platform is considered still a compared to the capacity of a regular commuter bus. Consequently, a ship
passenger. So also, where a passenger has alighted at his destination and is passenger will need at least an hour as is the usual practice, to disembark
proceeding by the usual way to leave the company's premises, but before from the vessel and claim his baggage whereas a bus passenger can easily
actually doing so is halted by the report that his brother, a fellow passenger, get off the bus and retrieve his luggage in a very short period of time. Verily,
has been shot, and he in good faith and without intent of engaging in the petitioner cannot categorically claim, through the bare expedient of comparing
difficulty, returns to relieve his brother, he is deemed reasonably and the period of time entailed in getting the passenger's cargoes, that the ruling
necessarily delayed and thus continues to be a passenger entitled as such to in La Mallorca is inapplicable to the case at bar. On the contrary, if we are to
the protection of the railroad company and its agents. apply the doctrine enunciated therein to the instant petition, we cannot in
reason doubt that the victim Anacleto Viana was still a passenger at the time of
In the present case, the father returned to the bus to get one of his baggages the incident. When the accident occurred, the victim was in the act of
which was not unloaded when they alighted from the bus. Racquel, the child unloading his cargoes, which he had every right to do, from petitioner's vessel.
that she was, must have followed the father. However, although the father was As earlier stated, a carrier is duty bound not only to bring its passengers safely
still on the running board of the bus waiting for the conductor to hand him the to their destination but also to afford them a reasonable time to claim their
bag or bayong, the bus started to run, so that even he (the father) had to jump baggage.
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
It is not definitely shown that one (1) hour prior to the incident, the victim had inadequately complied with the required degree of diligence to prevent the
already disembarked from the vessel. Petitioner failed to prove this. What is accident from happening.
clear to us is that at the time the victim was taking his cargoes, the vessel had
already docked an hour earlier. In consonance with common shipping As found by the Court of Appeals, the evidence does not show that there was
procedure as to the minimum time of one (1) hour allowed for the passengers a cordon of drums around the perimeter of the crane, as claimed by petitioner.
to disembark, it may be presumed that the victim had just gotten off the vessel It also adverted to the fact that the alleged presence of visible warning signs in
when he went to retrieve his baggage. Yet, even if he had already the vicinity was disputable and not indubitably established. Thus, we are not
disembarked an hour earlier, his presence in petitioner's premises was not inclined to accept petitioner's explanation that the victim and other passengers
without cause. The victim had to claim his baggage which was possible only were sufficiently warned that merely venturing into the area in question was
one (1) hour after the vessel arrived since it was admittedly standard fraught with serious peril. Definitely, even assuming the existence of the
procedure in the case of petitioner's vessels that the unloading operations shall supposed cordon of drums loosely placed around the unloading area and the
start only after that time. Consequently, under the foregoing circumstances, the guard's admonitions against entry therein, these were at most insufficient
victim Anacleto Viana is still deemed a passenger of said carrier at the time of precautions which pale into insignificance if considered vis-a-vis the gravity of
his tragic death. the danger to which the deceased was exposed. There is no showing that
petitioner was extraordinarily diligent in requiring or seeing to it that said
II. Under the law, common carriers are, from the nature of their business and precautionary measures were strictly and actually enforced to subserve their
for reasons of public policy, bound to observe extraordinary diligence in the purpose of preventing entry into the forbidden area. By no stretch of liberal
vigilance over the goods and for the safety of the passengers transported by evaluation can such perfunctory acts approximate the "utmost diligence of very
them, according to all the circumstances of each case.   More particularly, a
15
cautious persons" to be exercised "as far as human care and foresight can
common carrier is bound to carry the passengers safely as far as human care provide" which is required by law of common carriers with respect to their
and foresight can provide, using the utmost diligence of very cautious persons, passengers.
with a due regard for all the circumstances.   Thus, where a passenger dies or
16

is injured, the common carrier is presumed to have been at fault or to have While the victim was admittedly contributorily negligent, still petitioner's
acted negligently.   This gives rise to an action for breach of contract of
17
aforesaid failure to exercise extraordinary diligence was the proximate and
carriage where all that is required of plaintiff is to prove the existence of the direct cause of, because it could definitely have prevented, the former's death.
contract of carriage and its non-performance by the carrier, that is, the failure Moreover, in paragraph 5.6 of its petition, at bar,   petitioner has expressly
19

of the carrier to carry the passenger safely to his destination,   which, in the
18
conceded the factual finding of respondent Court of Appeals that petitioner did
instant case, necessarily includes its failure to safeguard its passenger with not present sufficient evidence in support of its submission that the deceased
extraordinary diligence while such relation subsists. Anacleto Viana was guilty of gross negligence. Petitioner cannot now be heard
to claim otherwise.
The presumption is, therefore, established by law that in case of a passenger's
death or injury the operator of the vessel was at fault or negligent, having failed No excepting circumstance being present, we are likewise bound by
to exercise extraordinary diligence, and it is incumbent upon it to rebut the respondent court's declaration that there was no negligence on the part of
same. This is in consonance with the avowed policy of the State to afford full Pioneer Stevedoring Corporation, a confirmation of the trial court's finding to
protection to the passengers of common carriers which can be carried out only that effect, hence our conformity to Pioneer's being absolved of any liability.
by imposing a stringent statutory obligation upon the latter. Concomitantly, this
Court has likewise adopted a rigid posture in the application of the law by As correctly observed by both courts, Aboitiz joined Pioneer in proving the
exacting the highest degree of care and diligence from common carriers, alleged gross negligence of the victim, hence its present contention that the
bearing utmost in mind the welfare of the passengers who often become death of the passenger was due to the negligence of the crane operator
hapless victims of indifferent and profit-oriented carriers. We cannot in reason cannot be sustained both on grounds, of estoppel and for lack of evidence on
deny that petitioner failed to rebut the presumption against it. Under the facts its present theory. Even in its answer filed in the court below it readily alleged
obtaining in the present case, it cannot be gainsaid that petitioner had that Pioneer had taken the necessary safeguards insofar as its unloading
operations were concerned, a fact which appears to have been accepted by thereby to be determined and governed by the vague Civil Code provision on
the plaintiff therein by not impleading Pioneer as a defendant, and likewise common carriers, or shall it be, in the absence of a specific provision
inceptively by Aboitiz by filing its third-party complaint only after ten (10) thereon governed by Art. 698 of the Code of Commerce? 1

months from the institution of the suit against it. Parenthetically, Pioneer is not
within the ambit of the rule on extraordinary diligence required of, and the The petitioner considers it a "novel question of law."
corresponding presumption of negligence foisted on, common carriers like
Aboitiz. This, of course, does not detract from what we have said that no Upon a closer evaluation, however, of the challenged decision of the Court of
negligence can be imputed to Pioneer but, that on the contrary, the failure of Appeals of 23 November 1994,  vis-a-vis, the decision of 29 June 1992 in Civil
2

Aboitiz to exercise extraordinary diligence for the safety of its passenger is the Case No. 91-491 of the Regional Trial Court (RTC) of Cagayan de Oro City,
rationale for our finding on its liability. Branch 24,  as well as the allegations and arguments adduced by the parties,
3

we find the petitioner's formulation of the issue imprecise. As this Court sees it,
WHEREFORE, the petition is DENIED and the judgment appealed from is what stands for resolution is a common carrier's liability for damages to a
hereby AFFIRMED in toto. 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
SO ORDERED. commenced the contracted voyage on one engine.

Melencio-Herrera (Chairperson), Paras, Padilla and Sarmiento, JJ., concur. 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 . .
. 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
G.R. No. 118126 March 4, 1996 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.
TRANS-ASIA SHIPPING LINES, INC., petitioner,
After an hour of slow voyage, the vessel stopped near Kawit Island and
vs.
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
COURT OF APPEALS and ATTY. RENATO T. ARROYO, respondents. longer willing to continue their voyage to, Cagayan de Oro City. The captain
acceeded [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
DAVIDE, JR., J.:p 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
As formulated by the petitioner, the issue in this petition for review on certiorari under Rule 45 of the Rules of Asia Japan for its voyage to Cagayan de Oro City, likewise a vessel of
Court is as follows:
defendant.
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
On account of this failure of defendant to transport him to the place of In the light of the evidence adduced by the parties and of the above provisions
destination on November 12, 1991, plaintiff filed before the trial court a of the New Civil Code, the issue to be resolved, in the resolution of this case is
complaint for damages against defendant. 4
whether or not, defendant thru its employees in [sic] the night of November 12,
1991, committed fraud, negligence, bad faith or malice when it left plaintiff in
In his complaint, docketed as Civil Case No. 91-491, plaintiff (hereinafter the Port of Cebu when it sailed back to Cagayan de Oro City after it has [sic]
private respondent) alleged that the engines of the M/V Asia Thailand conked returned from Kawit Island.
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 Evaluation of the evidence of the parties tended to show nothing that
after it regained power, but for unexplained reasons, the passengers, including defendant committed fraud. As early as 3:00 p.m. of November 12, 1991,
the private respondent, were arrogantly told to disembark without the defendant did not hide the fact that the cylinder head cracked. Plaintiff even
necessary precautions against possible injury to them. They were thus saw during its repair. If he had doubts as to the vessel's capacity to sail, he
unceremoniously dumped, which only exacerbated the private respondent's had time yet to take another boat. The ticket could be returned to defendant
mental distress. He further alleged that by reason of the petitioner's wanton, and corresponding cash [would] be returned to him.
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 Neither could negligence, bad faith or malice on the part of defendant be
income. He then prayed that he be awarded P1,100.00, P50,000.00, and inferred from the evidence of the parties. When the boat arrived at [the] Port of
P25,000.00 as compensatory, moral; and exemplary damages, respectively. 5
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
In his pre-trial brief, the private respondent asserted that his complaint was "an do so. By this announcement, it could be inferred that the boat will [sic]
action for damages arising from bad faith, breach of contract and from tort," proceed to Cagayan de Oro City. If plaintiff entertained doubts, he should have
with the former arising from the petitioner's "failure to carry [him] to his place of asked a member of the crew of the boat or better still, the captain of the boat.
destination as contracted," while the latter from the "conduct of the [petitioner] But as admitted by him, he was of the impression only that the boat will not
resulting [in] the infliction of emotional distress" to the private respondent.
6
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
After due trial, the trial court rendered its decision  and ruled that the action
7 those who will disembark were given ten minutes only, he should have lingered
was only for breach of contract, with Articles 1170, 1172, and 1173 of the Civil a little by staying in his cot and inquired whether the boat will proceed to
Code as applicable law — not Article 2180 of the same Code. It was of the Cagayan de Oro City or not. Defendant cannot be expected to be telling [sic]
opinion that Article 1170 made a person liable for damages if, in the the reasons to each passenger. Announcement by microphone was enough.
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 The court is inclined to believe that the story of defendant that the boat
of the same Code, to be entitled to damages, the non-performance of the returned to the Port of Cebu because of the request of the passengers in view
obligation must have been tainted not only by fraud, negligence, or delay, but of the waves. That it did not return because of the defective engines as shown
also bad faith, malice, and wanton attitude. It then disposed of the case as by the fact that fifteen (15) minutes after the boat docked [at] the Port of Cebu
follows: and those who wanted to proceed to Cagayan de Oro disembarked, it left for
Cagayan de Oro City.
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 The defendant got nothing when the boat returned to Cebu to let those who did
defendant's employees, the complaint is DISMISSED. Defendant's not want to proceed to Cagayan de Oro City including plaintiff disembarked.
counterclaim is likewise dismissed it not appearing also that filing of the case On the contrary, this would mean its loss instead because it will have to refund
by plaintiff was motivated by malice or bad faith. 8
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
The trial court made the following findings to support its disposition: acted in bad faith, negligently, wantonly and with malice.
If plaintiff, therefore, was not able to [m]ake the trip that night of November 12, obligation; on the contrary, he even admitted that the petitioner had been
1991, it was not because defendant maliciously did it to exclude him [from] the assuring the passengers that the vessel would leave on time, and that it could
trip. If he was left, it was because of his fault or negligence.
9
still perform its obligation to transport them as scheduled.

Unsatisfied, the private respondent appealed to the Court of Appeals (CA-G.R. To justify its award of damages, the Court of Appeals ratiocinated as follows:
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 It is an established and admitted fact that the vessel before the voyage had
guilty of fraud, delay, negligence, and bad faith; and (2) the trial court. erred in undergone some repair work on the cylinder head of the engine. It is likewise
not awarding moral and exemplary damages. 10
admitted by defendant-appellee that it left the port of Cebu City with only one
engine running. Defendant-appellee averred:
In its decision of 23 November 1994,  the Court of Appeals reversed the trial
11

court's decision by applying Article 1755 in relation to Articles 2201, 2208, . . . The dropping of the vessel's anchor after running slowly on only one
2217, and 2232 of the Civil Code and, accordingly, awarded compensatory, engine when it departed earlier must have alarmed some nervous
moral, and exemplary damages as follows: passengers . . .

WHEREFORE, premises considered, the appealed decision is hereby The entries in the logbook which defendant-appellee itself offered as evidence
REVERSED and SET ASIDE and another one is rendered ordering defendant- categorically stated therein that the vessel stopped at Kawit Island because of
appellee to pay plaintiff-appellant: engine trouble. It reads:

1. P20,000.00 as moral damages; 2330 HRS STBD ENGINE' EMERGENCY STOP

2. P10,000.00 as exemplary damages; 2350 HRS DROP ANCHOR DUE TO ENGINE TROUBLE, 2 ENGINE STOP.

3. P5,000.00 as attorney's fees; 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
4. Cost of suit. vessel broke down; it was because of the disability of the vessel which from
the very beginning of the voyage was known to defendant-appellee.
SO ORDERED. 12

Defendant-appellee from the very start of the voyage knew for a fact that the
It did not, however, allow the grant of damages for the delay in the vessel was not yet in its sailing condition because the second engine was still
performance of the petitioner's obligation as the requirement of demand set being repaired. Inspite of this knowledge, defendant-appellee still proceeded to
forth in Article 1169 of the Civil Code had not been met by the private sail with only one engine running.
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 Defendant-appellee at that instant failed to exercise the diligence which all
case of delay in departure, nor that a designation of the time of departure was common carriers should exercise in transporting or carrying passengers. The
the controlling motive for the establishment of the contract. On the latter, the law does not merely require extraordinary diligence in the performance of the
court a quo observed that the private respondent even admitted he was obligation. The law mandates that common carrier[s] should exercise utmost
unaware of the vessel's departure time, and it was only when he boarded the diligence the transport of passengers.
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 Article 1755 of the New Civil Code provides:
because the petitioner had rendered it beyond its power to perform its
Art. 1755. A common carrier is bound to carry the passengers safely as far as Art. 2201.
human care and foresight can provide, using the utmost diligence of very
cautious persons, with a due regard for all the circumstances. x x x           x x x          x x x

Utmost diligence of a VERY CAUTIOUS person dictates that defendant- In case of fraud, bad faith, malice or wanton attitude, the obligor shall be
appellee should have pursued the voyage only when its vessel was already fit responsible for all damages which may be reasonably attributed to the non-
to sail. Defendant-appellee should have made certain that the vessel [could] performance of the obligation.
complete the voyage before starting [to] sail. Anything less than this, the vessel
[could not] sail . . . with so many passengers on board it. 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
However, defendant-appellant [sic] in complete disregard of the safety of the broke down and when he disembarked from the vessel during the wee hours of
passengers, chose to proceed with its voyage even if only one engine was the morning at Cebu City when it returned. 14

running as the second engine was still being repaired during the voyage.
Defendant-appellee disregarded the not very remote possibility that because of Moral damages are recoverable in a damage suit predicated upon a breach of
the disability of the vessel, other problems might occur which would endanger contract of carriage where it is proved that the carrier was guilty of fraud or bad
the lives of the passengers sailing with a disabled vessel. faith even if death does not result.  15

As expected, . . . engine trouble occurred. Fortunate[ly] for defendant-appellee, Fraud and bad faith by defendant-appellee having been established, the award
such trouble only necessitated the stoppage of the vessel and did not cause of moral damages is in order. 16

the vessel to capsize. No wonder why some passengers requested to be

brought back to Cebu City. Common carriers which are mandated to exercise
To serve as a deterrent to the commission of similar acts in the future,
utmost diligence should not be taking these risks.
exemplary damages should be imposed upon defendant-appellee.  7 1

Exemplary damages are designed by our civil law to permit the courts to
On this premise, plaintiff-appellant should not be faulted why he chose to reshape behavior that is socially deleterious in its consequence by creating . . .
disembark from the vessel with the other passengers when it returned back to negative incentives or deterrents against such behavior. 18

Cebu City. Defendant-appellee may call him a very "panicky passenger" or a

"nervous person", but this will not relieve defendant-appellee from the liability it
Moral damages having been awarded, exemplary damages maybe properly
incurred for its failure to exercise utmost diligence.
13

awarded. When entitlement to moral damages has been established, the

award of exemplary damages is proper. 19

xxx xxx xxx

The petitioner then instituted this petition and submitted the question of law
As to the second assigned error, we find that plaintiff-appellant is entitled to the earlier adverted to.
award of moral and exemplary damages for the breach committed by
defendant-appellee.
Undoubtedly, there was, between the petitioner and the private respondent, a
contract of common carriage. The laws of primary application then are the
As discussed, defendant-appellee in sailing to Cagayan de Oro City with only provisions on common carriers under Section 4, Chapter 3, Title VIII, Book IV
one engine and with full knowledge of the true condition of the vessel, acted. in of the Civil Code, while for all other matters not regulated thereby, the Code of
bad faith with malice, in complete disregard for the safety of the passengers Commerce and special laws. 20

and only for its own personal advancement/interest.

Under Article 1733 of the Civil Code, the petitioner was bound to observe
The Civil Code provides: 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 Moral damages include moral suffering, mental anguish, fright, serious anxiety,
to carry the private respondent safely as far as human care and foresight could besmirched reputation, wounded feelings, moral shock, social humiliation, or
provide, using the utmost diligence of very cautious persons, with due regard similar injury. They may be recovered in the cases enumerated in Article 2219
for all the circumstances. In this case, we are in full accord with the Court of of the Civil Code, likewise, if they are the proximate result of, as in this case,
Appeals that the petitioner failed to discharge this obligation. the petitioner's breach of the contract of carriage.  Anent a breach of a
24

contract of common carriage, moral damages may be awarded if the common

Before commencing the contracted voyage, the petitioner undertook some carrier, like the petitioner, acted fraudulently or in bad faith. 25

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 Exemplary damages are imposed by way of example or correction for the
only one functioning engine, instead of two. Moreover, even the lone public good, in addition to moral, temperate, liquidated or compensatory
functioning engine was not in perfect condition as sometime after it had run its damages.  In contracts and quasi-contracts, exemplary damages may be
26

course, it conked out. This caused the vessel to stop and remain a drift at sea, awarded if the defendant acted in a wanton, fraudulent, reckless, oppressive or
thus in order to prevent the ship from capsizing, it had to drop anchor. Plainly, malevolent manner. 7 It cannot, however, be considered as a matter of right;
2

the vessel was unseaworthy even before the voyage began. For a vessel to be the court having to decide whether or not they should be adjudicated.  Before
28

seaworthy, it must be adequately equipped for the voyage and manned with a the court may consider an award for exemplary damages, the plaintiff must first
sufficient number of competent officers and crew.   The failure of a common
21
show that he is entitled to moral, temperate or compensatory damages; but it is
carrier to maintain in seaworthy condition its vessel involved in a contract of not necessary that he prove the monetary value thereof. 29

carriage is a clear breach of its duty prescribed in Article 1755 of the Civil
Code. The Court of Appeals did not grant the private respondent actual or
compensatory damages, reasoning that no delay was incurred since there was
As to its liability for damages to the private respondent, Article 1764 of the Civil no demand, as required by Article 1169 of the Civil Code. This article,
Code expressly provides: 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
Art. 1764. Damages in cases comprised in this Section shall be awarded in voyage. If any delay was incurred, it was after the commencement of such
accordance with Title XVIII of this Book, concerning Damages. Article 2206 voyage, more specifically, when the voyage was subsequently interrupted
shall also apply to the death of a passenger caused by the breach of contract when the vessel had to stop near Kawit Island after the only functioning engine
by common carrier. conked out.

The damages comprised in Title XVIII of the Civil Code are actual or As to the rights and duties of the parties strictly arising out of such delay, the
compensatory, moral, nominal, temperate or moderate, liquidated, and Civil Code is silent. However, as correctly pointed out by the petitioner, Article
exemplary. 698 of the Code of Commerce specifically provides for such a situation. It
reads:
In his complaint, the private respondent claims actual or compensatory, moral,
and exemplary damages. 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
Actual or compensatory damages represent the adequate compensation for recover for losses and damages if the interruption is due to fortuitous event
pecuniary loss suffered and for profits the obligee failed to obtain.22 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,
In contracts or quasi-contracts, the obligor is liable for all the damages which
he may not be required to pay any increased price of passage, but his living
may be reasonably attributed to the non-performance of the obligation if he is
expenses during the stay shall be for his own account.
guilty of fraud, bad faith, malice, or wanton attitude.
23
This article applies suppletorily pursuant to Article 1766 of the Civil Code. 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
Of course, this does not suffice for a resolution of the case at bench for, as stoppage of a vessel at sea in an unfamiliar zone as nighttime is not the sole
earlier stated, the cause of the delay or interruption was the petitioner's failure prerogative of the faint-hearted. More so in the light of the many tragedies at
to observe extraordinary diligence. Article 698 must then be read together with sea resulting in the loss of lives of hopeless passengers and damage to
Articles 2199, 2200, 2201, and 2208 in relation to Article 21 of the Civil Code. property simply because common carriers failed in their duty to exercise
So read, it means that the petitioner is liable for any pecuniary loss or loss of extraordinary diligence in the performance of their obligations.
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 We cannot, however, give our affirmance to the award of attorney's fees.
his office on the day he was supposed to arrive were it not for the delay. This, Under Article 2208 of the Civil Code, these are recoverable only in the concept
however, assumes that he stayed on the vessel and was with it when it of actual damages,  not as moral damages  nor judicial costs.   Hence, to
32 33 34

thereafter resumed its voyage; but he did not. As he and some passengers merit such an award, it is settled that the amount thereof must be
resolved not to complete the voyage, the vessel had to return to its port of proven.   Moreover, such must be specifically prayed for — as was not done in
35

origin and allow them to disembark. The private respondent then took the this case—and may not be deemed incorporated within a general prayer for
petitioner's other vessel the following day, using the ticket he had purchased "such other relief and remedy as this court may deem just and
for the previous day's voyage. equitable."  Finally, it must be noted that aside from the following, the body of
36

the respondent Court's decision was devoid of any statement regarding

Any further delay then in the private respondent's arrival at the port of attorney's fees:
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 Plaintiff-appellant was forced to litigate in order that he can claim moral and
1991, thus been able to report to his office in the afternoon. He, therefore, exemplary damages for the suffering he encurred [sic]. He is entitled to
would have lost only the salary for half of a day. But actual or compensatory attorney's fees pursuant to Article 2208 of the Civil Code. It states:
damages must be proved,  which the private respondent failed to do. There is
30

no convincing evidence that he did not receive his salary for 13 November Art. 2208. In the absence of stipulation, attorney's fees and expenses of
1991 nor that his absence was not excused. litigation, other than judicial costs cannot be recovered except:

We likewise fully agree with the Court of Appeals that the petitioner is liable for 1. When exemplary damages are awarded;
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 2. When the defendant's act or omission has compelled the plaintiff to litigate
awareness that it was exposed to perils of the sea, it deliberately disregarded with third persons or to incur expenses to protect his interest.
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
This Court holds that the above does not satisfy the benchmark of "factual,
petitioner asserts that the safety or the vessel and passengers was never at
legal and equitable justification" needed as basis for an award of attorney's
stake because the sea was "calm" in the vicinity where it stopped as faithfully
fees.  7 In sum, for lack of factual and legal basis, the award of attorney's fees
3

recorded in the vessel's log book (Exhibit "4"). Hence, the petitioner concludes,
must be deleted.
the private respondent was merely "over-reacting" to the situation obtaining
then.31

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
We hold that the petitioner's defense cannot exculpate it nor mitigate its
modification as to the award for attorney's fees which is hereby SET ASIDE.
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 then the sea happened to be calm. Even so, the Costs against the petitioner.
SO ORDERED. Victoria Miranda, 48, Rosario V. Miranda, 19, Ramon V. Miranda, Jr., 16, and
Elfreda de la Victoria, 26.
Narvasa, C.J., Melo, Francisco and Panganiban, JJ., concur
In its answer, petitioner admitted that private respondents purchased ticket
G.R. No. 110398 November 7, 1997 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,
NEGROS NAVIGATION CO., INC., petitioner, Manila on April 22, 1980 and sank that night after being rammed by the oil
vs. tanker M/T Tacloban City, and that, as a result of the collision, some of the
THE COURT OF APPEALS, RAMON MIRANDA, SPS. RICARDO and passengers of the M/V Don Juan died. Petitioner, however, denied that the
VIRGINIA DE LA VICTORIA, respondents. 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.
MENDOZA, J.:
On January 20, 1986, the PNOC and petitioner Negros Navigation Co., Inc.
This is a petition for review on certiorari of the decision of the Court of Appeals entered into a compromise agreement whereby petitioner assumed full
affirming with modification the Regional Trial Court's award of damages to responsibility for the payment and satisfaction of all claims arising out of or in
private respondents for the death of relatives as a result of the sinking of connection with the collision and releasing the PNOC and the PNOC/STC from
petitioner's vessel. 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
In April of 1980, private respondent Ramon Miranda purchased from the join in the agreement.
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 After trial, the court rendered judgment on February 21, 1991, the dispositive
City to attend a family reunion. The tickets were for Voyage No. 457-A of the portion of which leads as follows:
M/V Don Juan, leaving Manila at 1:00 p.m. on April 22, 1980.
WHEREFORE, in view of the foregoing, judgment is hereby rendered in favor
The ship sailed from the port of Manila on schedule. of the plaintiffs, ordering all the defendants to pay jointly and severally to the
plaintiffs damages as follows:
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 To Ramon Miranda:
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 P42,025.00 for actual damages;
the victims were found and brought to shore, but the four members of private
respondents' families were never found. P152,654.55 as compensatory damages for loss of
earning capacity of his wife;
Private respondents filed a complaint on July 16, 1980 in the Regional Trial
Court of Manila, Branch 34, against the Negros Navigation, the Philippine P90,000.00 as compensatory damages for wrongful
National Oil Company (PNOC), and the PNOC Shipping and Transport death of three (3) victims;
Corporation (PNOC/STC), seeking damages for the death of Ardita de la
P300,000.00 as moral damages;
P50,000.00 as exemplary damages, all in the total (1) whether the members of private respondents' families were actually
amount of P634,679.55; and passengers of the Don Juan;

P40,000.00 as attorney's fees. (2) whether the ruling in Mecenas v. Court of Appeals,  finding the crew
2

members of petitioner to be grossly negligent in the performance of their

To Spouses Ricardo and Virginia de la Victoria: duties, is binding in this case;

P12,000.00 for actual damages; (3) whether the total loss of the M/V Don Juan extinguished petitioner's liability;
and
P158,899.00 as compensatory damages for loss of
earning capacity; (4) whether the damages awarded by the appellate court are excessive,
unreasonable and unwarranted.
P30,000.00 as compensatory damages for wrongful
death; 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,
P100,000.00 as moral damages; 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
P20,000.00 as exemplary damages, all in the total
corroborated by the passenger manifest (Exh. E) on which the numbers of the
amount of P320,899.00; and
tickets and the names of Ardita Miranda and her children and Elfreda de la
Victoria appear.
P15,000.00 as attorney's fees.
Petitioner contends that the purchase of the tickets does not necessarily mean
On appeal, the Court of Appeals  affirmed the decision of the Regional Trial
1
that the alleged victims actually took the trip. Petitioner asserts that it is
Court with modification — common knowledge that passengers purchase tickets in advance but do not
actually use them. Hence, private respondent should also prove the presence
1. Ordering and sentencing defendants-appellants, jointly and severally, to pay of the victims on the ship. The witnesses who affirmed that the victims were on
plaintiff-appellee Ramon Miranda the amount of P23,075.00 as actual the ship were biased and unreliable.
damages instead of P42,025.00;
This contention is without merit. Private respondent Ramon Miranda testified
2. Ordering and sentencing defendants-appellants, jointly and severally, to pay that he personally took his family and his niece to the vessel on the day of the
plaintiff-appellee Ramon Miranda the amount of P150,000.00, instead of voyage and stayed with them on the ship until it was time for it to leave. There
P90,000.00, as compensatory damages for the death of his wife and two is no reason he should claim members of his family to have perished in the
children; 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
3. Ordering and sentencing defendants-appellants, jointly and severally, to pay respondents to keep the existence of their relatives if indeed they are alive
plaintiffs-appellees Dela Victoria spouses the amount of P50,000.00, instead of than it is for petitioner to show the contrary. Petitioner's only proof is that the
P30,000.00, as compensatory damages for the death of their daughter Elfreda bodies of the supposed victims were not among those recovered from the site
Dela Victoria; of the mishap. But so were the bodies of the other passengers reported
missing not recovered, as this Court noted in the Mecenas  case.
3

Hence this petition, raising the following issues:

Private respondent Miranda's testimony was corroborated by Edgardo danger facing them. This Court found that Capt. Santisteban and the crew of
Ramirez. Ramirez was a seminarian and one of the survivors of the collision. the M/V Don Juan failed to take steps to prevent the collision or at least delay
He testified that he saw Mrs. Miranda and Elfreda de la Victoria on the ship the sinking of the ship and supervise the abandoning of 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 Petitioner Negros Navigation was found equally negligent in tolerating the
townmate. Ramirez said he was with Mrs. Miranda and her children and niece playing of mahjong by the ship captain and other crew members while on
from 7:00 p.m. until 10:00 p.m. when the collision happened and that he in fact board the ship and failing to keep the M/V Don Juan seaworthy so much so
had dinner with them. Ramirez said he and Elfreda stayed on the deck after that the ship sank within 10 to 15 minutes of its impact with the M/T Tacloban
dinner and it was there where they were jolted by the collision of the two City.
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 In addition, the Court found that the Don Juan was overloaded. The Certificate
to go back to the deck when the lights went out. He tried to return to the cabin of Inspection, dated August 27, 1979, issued by the Philippine Coast Guard
but was not able to do so because it was dark and there was a stampede of Commander at Iloilo City stated that the total number of persons allowed on
passengers from the deck. 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
Petitioner casts doubt on Ramirez' testimony, claiming that Ramirez could not number that could be safely carried by it.
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 Taking these circumstances together, and the fact that the M/V Don Juan, as
acquaintances thrown together on a long journey staying together for hours on the faster and better-equipped vessel, could have avoided a collision with the
end, in idle conversation precisely to while the hours away? 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
Petitioner also points out that it took Ramirez three (3) days before he finally Juan was guilty of contributory negligence. Through Justice Feliciano, this
contacted private respondent Ramon Miranda to tell him about the fate of his Court held:
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 The grossness of the negligence of the "Don Juan" is underscored when one
her children and niece, in view of the confusion in the days following the considers the foregoing circumstances in the context of the following facts:
collision as rescue teams and relatives searched for survivors. 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
Indeed, given the facts of this case, it is improper for petitioner to even suggest 6.3. knots. Secondly, the "Don Juan" carried the full complement of officers
that private respondents' relatives did not board the ill-fated vessel and perish and crew members specified for a passenger vessel of her class. Thirdly, the
in the accident simply because their bodies were not recovered. "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
Second. In finding petitioner guilty of negligence and in failing to exercise the screen while the latter was still four (4) nautical miles away. Visual confirmation
extraordinary diligence required of it in the carriage of passengers, both the of radar contact was established by the "Don Juan" while the "Tacloban City"
trial court and the appellate court relied on the findings of this Court was still 2.7 miles away. In the total set of circumstances which existed in the
in Mecenas v. Intermediate Appellate Court,  which case was brought for the
4
instant case, the "Don Juan," had it taken seriously its duty of extraordinary
death of other passengers. In that case it was found that although the diligence, could have easily avoided the collision with the "Tacloban City."
proximate cause of the mishap was the negligence of the crew of the Indeed, the "Don Juan" might well have avoided the collision even if it had
M/T Tacloban City, the crew of the Don Juan was equally negligent as it found exercised ordinary diligence merely.
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, It is true that the "Tacloban City" failed to follow Rule 18 of the International
admitted that he failed to call the attention of Santisteban to the imminent 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 same event have been put forward by parties similarly situated as in a previous
vessel may pass on the port side (left) of the other. The "Tacloban City," when case litigated and decided by a competent court, the rule of stare decisis is a
the two (2) vessels were only three-tenths (0.3) of a mile apart, turned (for the bar to any attempt to relitigate the same issue.  In Woulfe v. Associated
6

second time) 15° to port side while the "Don Juan" veered hard to starboard. . . Realties Corporation,  the Supreme Court of New Jersey held that where
7

. [But] "route observance" of the International Rules of the Road will not relieve substantially similar cases to the pending case were presented and applicable
a vessel from responsibility if the collision could have been avoided by proper principles declared in prior decisions, the court was bound by the principle of
care and skill on her part or even by a departure from the rules. stare decisis. Similarly, in State ex rel. Tollinger v. Gill,  it was held that under
8

the doctrine of stare decisis a ruling is final even as to parties who are
In the petition at bar, the "Don Juan" having sighted the "Tacloban City" when strangers to the original proceeding and not bound by the judgment under the
it was still a long way off was negligent in failing to take early preventive action res judicata doctrine. The Philadelphia court expressed itself in this wise:
and in allowing the two (2) vessels to come to such close quarters as to render "Stare decisis simply declares that, for the sake of certainty, a conclusion
the collision inevitable when there was no necessity for passing so near to the reached in one case should be applied to those which follow, if the facts are
"Tacloban City" as to create that hazard or inevitability, for the "Don Juan" substantially the same, even though the parties may be different."  Thus, 9

could choose its own distance. It is noteworthy that the "Tacloban City," upon in J.M. Tuason v. Mariano, supra, this Court relied on its rulings in other cases
turning hard to port shortly before the moment of collision, signalled its involving different parties in sustaining the validity of a land title on the principle
intention to do so by giving two (2) short blasts with its horn. The "Don Juan" of "stare decisis et non quieta movere."
gave no answering horn blast to signal its own intention and proceeded to turn
hard to starboard. Indeed, the evidence presented in this case was the same as those presented
in the Mecenas case, to wit:
We conclude that Capt. Santisteban and Negros Navigation are properly held
liable for gross negligence in connection with the collision of the "Don Juan" Document Mecenas case This case
and "Tacloban City" and the sinking of the "Don Juan" leading to the death of
hundreds of passengers. . . . 5
Decision of Commandant, Exh. 10   Exh. 10
11-B-NN/X
Phil. Coast Guard
Petitioner criticizes the lower court's reliance on the Mecenas case, arguing in BMI Case No.
that, although this case arose out of the same incident as that involved 415-80 dated 3/26/81
in Mecenas, the parties are different and trial was conducted separately.
Petitioner contends that the decision in this case should be based on the Decision of the Minister Exh. 11   Exh.
11
ZZ
allegations and defenses pleaded and evidence adduced in it or, in short, on of National Defense
the record of this case. dated 3/12/82

The contention is without merit. What petitioner contends may be true with Resolution on the Exh. 13   Exh. 12
AAA
respect to the merits of the individual claims against petitioner but not as to the motion for reconsideration (private
cause of the sinking of its ship on April 22, 1980 and its liability for such of the decision of the respondents)
accident, of which there can only be one truth. Otherwise, one would be Minister of National
subscribing to the sophistry: truth on one side of the Pyrenees, falsehood on defense dated 7/27/84
the other!
Certificate of Exh. 1-A   Exh.
13
19-NN
Adherence to the Mecenas case is dictated by this Court's policy of inspection dated
maintaining stability in jurisprudence in accordance with the legal maxim "stare 8/27/79
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
Certificate of Stability Exh. 6-A   Exh.
14
19-D-NN of his entire family. As a matter of fact, three months after the collision, he
dated 12/16/76 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
Nor is it true that the trial court merely based its decision on the Mecenas case. reasonable and should be affirmed.
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 As for the amount of civil indemnity awarded to private respondents, the
incidentally gave substantially the same testimony on petitioner's behalf before appellate court's award of P50,000.00 per victim should be sustained. The
the Board of Marine Inquiry. The trial court agreed with the conclusions of the amount of P30,000.00 formerly set in De Lima v. Laguna Tayabas
then Minister of National Defense finding both vessels to be negligent. Co.,   Heirs of Amparo delos Santos v. Court of Appeals,   and Philippine
17 18

Rabbit Bus Lines, Inc. v. Intermediate Appellate Court   as benchmark was

19

Third. The next issue is whether petitioner is liable to pay damages subsequently increased to P50,000.00 in the case of Sulpicio Lines,
notwithstanding the total loss of its ship. The issue is not one of first Inc. v. Court of Appeals,   which involved the sinking of another interisland
20

impression. The rule is well-entrenched in our jurisprudence that a shipowner ship on October 24, 1988.
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 We now turn to the determination of the earning capacity of the victims. With
shipowner. 15
respect to Ardita Miranda, the trial court awarded damages computed as
follows:  21

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 In the case of victim Ardita V. Miranda whose age at the time of the accident
voyage, (2) in failing to maintain the vessel seaworthy and (3) in allowing the was 48 years, her life expectancy was computed to be 21.33 years, and
ship to carry more passengers than it was allowed to carry. Petitioner is, therefore, she could have lived up to almost 70 years old. Her gross earnings
therefore, clearly liable for damages to the full extent. 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
Fourth. Petitioner contends that, assuming that the Mecenas case applies, P152,654.55, to which plaintiff Ramon Miranda is entitled to compensatory
private respondents should be allowed to claim only P43,857.14 each as moral damages for the loss of earning capacity of his wife. In considering 30% as the
damages because in the Mecenas case, the amount of P307,500.00 was living expenses of Ardita Miranda, the Court takes into account the fact that
awarded to the seven children of the Mecenas couple. Under petitioner's plaintiff and his wife were supporting their daughter and son who were both
formula, Ramon Miranda should receive P43,857.14, while the De la Victoria college students taking Medicine and Law respectively.
spouses should receive P97,714.28.
In accordance with the ruling in Villa-Rey Transit, Inc. v. Court of
Here is where the principle of stare decisis does not apply in view of Appeals,   we think the life expectancy of Ardita Miranda was correctly
22

differences in the personal circumstances of the victims. For that matter, determined to be 21.33 years, or up to age 69. Petitioner contends, however,
differentiation would be justified even if private respondents had joined the that Mrs. Miranda would have retired from her job as a public school teacher at
private respondents in the Mecenas case. The doctrine of stare decisis works 65, hence her loss of earning capacity should be reckoned up to 17.33 years
as a bar only against issues litigated in a previous case. Where the issue only.
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 The accepted formula for determining life expectancy is 2/3 multiplied by (80
of the question presently presented.   The decision in the Mecenas case
16
minus the age of the deceased). It may be that in the Philippines the age of
relates to damages for which petitioner was liable to the claimants in that case. 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
In the case at bar, the award of P300,000.00 for moral damages is reasonable the Civil Code, it is assumed that the deceased would have earned income
considering the grief petitioner Ramon Miranda suffered as a result of the loss 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 capacity (x) expectancy annual & necessary
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 income living expenses
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 (50%)
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
x = [2(80-26)] x [P6,192.00 - P3,096.00]
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. 3
Miranda's earnings would have been subject to taxes, social security
deductions and inflation. = 36 x 3,096.00

We agree with this contention. In Villa-Rey Transit, Inc. v. Court of = P111,456.00

Appeals,   the Court allowed a deduction of P1,184.00 for living expenses from
23

the P2,184.00 annual salary of the victim, which is roughly 54.2% thereof. The On the other hand, the award of actual damages in the amount of P23,075.00
deceased was 29 years old and a training assistant in the Bacnotan Cement was determined by the Court of Appeals on the basis receipts submitted by
Industries. In People v. Quilation,   the deceased was a 26-year old laborer
24 private respondents. This amount is reasonable considering the expenses
earning a daily wage. The court allowed a deduction of P120,000.00 which incurred by private respondent Miranda in organizing three search teams to
was 51.3% of his annual gross earnings of P234,000.00. In People look for his family, spending for transportation in going to places such as
v. Teehankee,   the court allowed a deduction of P19,800.00, roughly 42.4%
25 Batangas City and Iloilo, where survivors and the bodies of other victims were
thereof from the deceased's annual salary of P46,659.21. The deceased, found, making long distance calls, erecting a monument in honor of the four
Maureen Hultman, was 17 years old and had just received her first paycheck victims, spending for obituaries in the Bulletin Today and for food, masses and
as a secretary. In the case at bar, we hold that a deduction of 50% from Mrs. novenas.
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 Petitioner's contention that the expenses for the erection of a monument and
her living expenses constituted a smaller percentage of her gross income than other expenses for memorial services for the victims should be considered
the living expenses in the decided cases. To hold that she would have used included in the indemnity for death awarded to private respondents is without
only a small part of her income for herself, a larger part going to the support of merit. Indemnity for death is given to compensate for violation of the rights of
her children would be conjectural and unreasonable. the deceased, i.e., his right to life and physical integrity.   On the other hand,
26

damages incidental to or arising out of such death are for pecuniary losses of
As for Elfreda de la Victoria, the trial court found that, at the time of her death, the beneficiaries of the deceased.
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 As for the award of attorney's fees, we agree with the Court of Appeals that the
already been working in the school for two years at the time of her death and amount of P40,000.00 for private respondent Ramon Miranda and P15,000.00
she had a general efficiency rating of 92.85% and it can be presumed that, if for the de la Victoria spouses is justified. The appellate court correctly held:
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: 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
net earning = life x gross less reasonable is admitted that plaintiff-appellee Ramon Miranda who is himself a lawyer,
represented also plaintiffs-appellees Dela Victoria spouses, we note that P150,000.00 as compensatory damages for wrongful
separate testimonial evidence were adduced by plaintiff-appellee Ramon death of three (3) victims;
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 P300,000.00 as moral damages;
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 P300,000.00 as exemplary damages, all in the total
plaintiff-appellee Ramon Miranda and P15,000.00 for plaintiffs-appellees Dela amount of P882,113.96; and
Victoria spouses. 27

P40,000.00 as attorney's fees.

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
To private respondents Spouses Ricardo and Virginia de la Victoria:
with our ruling in the Mecenas case:
P12,000.00 for actual damages;
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 P111,456.00 as compensatory damages for loss of
compliance with the standard of extraordinary diligence, a standard which is in earning capacity;
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 P50,000.00 as compensatory damages for wrongful
them to control their employees, to tame their reckless instincts and to force death;
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 P100,000.00 as moral damages;
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 P100,000.00 as exemplary damages, all in the total
notwithstanding the frequent sinking of passenger vessels in our waters, amount of P373,456.00; and
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. P15,000.00 as attorney's fees.
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 Petitioners are further ordered to pay costs of suit.
safe and reliable carriage of people and goods by sea.  28

In the event the Philippine National Oil Company and/or the PNOC Shipping
WHEREFORE, the decision of the Court of Appeals is AFFIRMED with and Transport Corporation pay or are required to pay all or a portion of the
modification and petitioner is ORDERED to pay private respondents damages amounts adjudged, petitioner Negros Navigation Co., Inc. shall reimburse
as follows: 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
To private respondent Ramon Miranda: reimbursement, PNOC and/or PNOC/STC shall be entitled to a writ of
execution without need of filing another action.
P23,075.00 for actual damages;
SO ORDERED.
P109,038.96 as compensatory damages for loss of
earning capacity of his wife; Regalado and Puno, JJ., concur.
 of age, fell from the passenger coach of the said train, as a result of which,
they were over run, causing their instantaneous death. "
G.R. No. L-30309 November 25, 1983
The facts established by the prosecution and accepted by the respondent court
CLEMENTE BRIÑAS, petitioner, as basis for the decision are summarized as follows:
vs.
THE PEOPLE OF THE PHILIPPINES and HONORABLE COURT OF The evidence of the prosecution tends to show that in the afternoon of January
APPEALS, respondents. 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
Mariano R. Abad for petitioner. 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
The Solicitor General for respondents. 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',
GUTIERREZ, JR., J.: '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
This is a petition to review the decision of respondent Court of Appeals, now baggage with the other. When Martina and Emelita were near the door, the
Intermediate Appellate Court, affirming the decision of the Court of First train suddenly picked up speed. As a result the old woman and the child
Instance of Quezon, Ninth Judicial District, Branch 1, which found the accused stumbled and they were seen no more. It took three minutes more before the
Clemente Briñas guilty of the crime of DOUBLE HOMICIDE THRU RECKLESS train stopped at the next barrio, Lusacan, and the victims were not among the
IMPRUDENCE prior the deaths of Martina Bool and Emelita Gesmundo. passengers who disembarked thereat . têñ.£îhqwâ£

The information charged the accused-appellant. and others as follows: 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
That on or about the 6th day of January, 1957, in the Municipality of Tiaong, investigate, they found the lifeless body of a female child, about 2 feet from the
Province of Quezon, Philippines, and within the jurisdiction of this Hon. Court, railroad tracks, sprawled to the ground with her belly down, the hand resting on
the said accused Victor Milan, Clemente Briñas and Hermogenes the forehead, and with the back portion of the head crushed. The investigators
Buencamino, being then persons in charge of passenger Train No. 522-6 of also found the corpse of an old woman about 2 feet away from the railroad
the Manila Railroad Company, then running from Tagkawayan to San Pablo tracks with the head and both legs severed and the left hand missing. The
City, as engine driver, conductor and assistant conductor, respectively, wilfully head was located farther west between the rails. An arm was found midway
and unlawfully drove and operated the same in a negligent, careless and from the body of the child to the body of the old woman. Blood, pieces of
imprudent manner, without due regard to existing laws, regulations and scattered brain and pieces of clothes were at the scene. Later, the bodies were
ordinances, that although there were passengers on board the passenger Identified as those of Martina Bool and Emelita Gesmundo. Among the
coach, they failed to provide lamps or lights therein, and failed to take the personal effects found on Martina was a train ticket (Exhibits "B").
necessary precautions for the safety of passengers and to prevent accident to
persons and damage to property, causing by such negligence, carelessness On January 7, 1957, the bodies of the deceased were autopsied by Dr. Pastor
and imprudence, that when said passenger Train No. 522-6 was passing the Huertas, the Municipal Health Officer of Tiaong. Dr. Huertas testified on the
railroad tracks in the Municipality of Tiaong, Quezon, two of its passengers, cause of death of the victims as follows:  têñ.£îhqwâ£

Martina Bool, an old woman, and Emelita Gesmundo, a child about three years
FISCAL YNGENTE:
Q What could have caused the death of those women? WHEREFORE, the court finds the defendant Clemente Briñas guilty beyond
doubt of the crime of double homicide thru reckless imprudence, defined and
A Shock. 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
Q What could have caused that shock? 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
A Traumatic injury.
penalty, and to pay the costs.
Q What could have caused traumatic injury?
For lack of sufficient evidence against the defendant Hermogenes Buencamino
and on the ground of reasonable doubt in the case of defendant Victor Millan
A The running over by the wheel of the train. the court hereby acquits them of the crime charged in the information and their
bail bonds declared cancelled.
Q With those injuries, has a person a chance to survive?
As to the responsibility of the Manila Railroad Company in this case, this will
A No chance to survive. be the subject of court determination in another proceeding.

Q What would you say death would come? On appeal, the respondent Court of Appeals affirmed the judgment of the lower
court.
A Instantaneous.
During the pendency of the criminal prosecution in the Court of First Instance
Q How about the girl, the young girl about four years old, what could have of Quezon, the heirs of the deceased victims filed with the same court, a
caused the death? separate civil action for damages against the Manila Railroad Company
entitled "Civil Case No. 5978, Manaleyo Gesmundo, et al., v. Manila Railroad
A Shock too. 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.
Q What could have caused the shock?
The accused-appellant alleges that the Court of Appeals made the following
A Compound fracture of the skull and going out of the brain. errors in its decision:

Q What could have caused the fracture of the skull and the going out of the I 
têñ.£îhqwâ£

brain?
THE HONORABLE COURT OF APPEALS ERRED IN CONVICTING
A That is the impact against a steel object. (TSN., pp. 81-82, July 1, 1959) PETITIONER-APPELLANT UNDER THE FACTS AS FOUND BY SAID
COURT; and
The Court of First Instance of Quezon convicted defendant-appellant Clemente
Briñas for double homicide thru reckless imprudence but acquitted II  têñ.£îhqwâ£

Hermogenes Buencamino and Victor Millan The dispositive portion of the

decision reads: têñ.£îhqwâ£
THE HONORABLE COURT OF APPEALS ERRED IN INCLUDING THE
PAYMENT OF DEATH INDEMNITY BY THE PETITIONER- APPELLANT,
WITH SUBSIDIARY IMPRISONMENT IN CASE OF INSOLVENCY, AFTER
THE HEIRS OF THE DECEASED HAVE ALREADY COMMENCED A xxx xxx xxx
SEPARATE CIVIL ACTION FOR DAMAGES AGAINST THE RAILROAD
COMPANY ARISING FROM THE SAME MISHAP. 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
We see no error in the factual findings of the respondent court and in the and the conductor announces the name of the place. It is also a matter of
conclusion drawn from those findings. common experience that as the train or bus slackens its speed, some
passengers usually stand and proceed to the nearest exit, ready to disembark
It is undisputed that the victims were on board the second coach where the as the train or bus comes to a full stop. This is especially true of a train
petitioner-appellant was assigned as conductor and that when the train because passengers feel that if the train resumes its run before they are able
slackened its speed and the conductor shouted "Lusacan, Lusacan", they to disembark, there is no way to stop it as a bus may be stopped.
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 It was negligence on the conductor's part to announce the next flag stop when
the child stumbled and they were seen no more. said stop was still a full three minutes ahead. As the respondent Court of
Appeals correctly observed, "the appellant's announcement was premature
In finding petitioner-appellant negligent, respondent Court  têñ.£îhqwâ£
and erroneous.

xxx xxx xxx That the announcement was premature and erroneous is shown by the fact
that immediately after the train slowed down, it unexpectedly accelerated to full
The appellant's announcement was premature and erroneous, for it took a full speed. Petitioner-appellant failed to show any reason why the train suddenly
three minutes more before the next barrio of Lusacan was reached. In making resumed its regular speed. The announcement was made while the train was
the erroneous and premature announcement, appellant was negligent. He still in Barrio Lagalag.
ought to have known that train passengers invariably prepare to alight upon
notice from the conductor that the destination was reached and that the train The proximate cause of the death of the victims was the premature and
was about to stop. Upon the facts, it was the appellant's negligent act which erroneous announcement of petitioner' appelant Briñas. This announcement
led the victims to the door. Said acts virtually exposed the victims to peril, for prompted the victims to stand and proceed to the nearest exit. Without said
had not the appellant mistakenly made the announcement, the victims would announcement, the victims would have been safely seated in their respective
be safely ensconced in their seats when the train jerked while picking up seats when the train jerked as it picked up speed. The connection between the
speed, Although it might be argued that the negligent act of the appellant was premature and erroneous announcement of petitioner-appellant and the
not the immediate cause of, or the cause nearest in time to, the injury, for the deaths of the victims is direct and natural, unbroken by any intervening efficient
train jerked before the victims stumbled, yet in legal contemplation appellant's causes.
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 Petitioner-appellant also argues that it was negligence per se for Martina Bool
the injury is not necessarily the immediate cause of, or the cause nearest in to go to the door of the coach while the train was still in motion and that it was
time to, the injury. It is only when the causes are independent of each other this negligence that was the proximate cause of their deaths.
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 We have carefully examined the records and we agree with the respondent
(sic) that it can reasonably be said that but for the act the injury could not have court that the negligence of petitioner-appellant in prematurely and erroneously
occurred, such negligent act is the proximate cause of the injury, and whoever announcing the next flag stop was the proximate cause of the deaths of
is responsible therefore is liable for damages resulting therefrom. One who Martina Bool and Emelita Gesmundo. Any negligence of the victims was at
negligently creates a dangerous condition cannot escape liability for the natural most contributory and does not exculpate the accused from criminal liability.
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.
With respect to the second assignment of error, the petitioner argues that after indemnity fixed for death is separate and distinct from the other forms of
the heirs of Martina Bool and Emelita Gesmundo had actually commenced the indemnity for damages.
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 WHEREFORE, the judgment appealed from is modified in that the award for
liability in its judgment of conviction. 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
The source of the obligation sought to be enforced in Civil Case No. 5978 is instead of P3,000.00, but deleting the subsidiary imprisonment in case of
culpa contractual, not an act or omission punishable by law. We also note from insolvency imposed by the lower court. The judgment is AFFIRMED in all other
the appellant's arguments and from the title of the civil case that the party respects.
defendant is the Manila Railroad Company and not petitioner-appellant Briñas
Culpa contractual and an act or omission punishable by law are two distinct SO ORDERED. 1äwphï1.ñët

sources of obligation.
Teehankee (Chairman), Melencio-Herrera; Plana and Relova, JJ., concur.
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 petitioner-appellant.

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.

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