Cases in Transpo Law

RepublicofthePhilippines SUPREMECOURT Manila ENBANC G.R.No.L3678February29,1952 JOSEMENDOZA,plaintiffappellant, vs. PHILIPPINEAIRLINES,INC.,defendantappellee. ManuelO.Chan,ReyesandDyLiacoforappellant. DanielMe.GomezandEmigdioTanjuatcoforappellee. MONTEMAYOR,J.: ThepresentappealbyplaintiffJoseMendozafromthedecisionoftheCourtofFirstInstanceofCamarinesSur,hascome directlytothisTribunalforthereasonthatbothparties,appellantandappellee,acceptedthefindingsoffactmadebythe trialcourtandhereraiseonlyquestionsoflaw.Onourpart,wemustalsoacceptsaidfindingsoffactofthelowercourt.
Intheyear1948,appellantJoseMendozawastheowneroftheCitaTheaterlocatedintheCityofNaga,CamarinesSur, whereheusedtoexhibitmoviepicturesbookedfrommovieproducersorfilmownersinManila.Thefiestaortownholiday oftheCityofNaga,heldonSeptember17and18,yearly,wasusuallyattendedbyagreatmanypeople,mostlyfromthe Bicolregion,especiallysincethePatronSaintVirginofPeaFranciawasbelievedbymanytobemiraculous.Asagood businessman,appellant,takingadvantageofthesecircumstances,decidedtoexhibitafilmwhichwouldfittheoccasionand haveaspecialattractionandsignificancetothepeopleattendingsaidfiesta.Amonthbeforetheholiday,thatistosay, August1948,hecontractedwiththeLVNpictures,Inc.,amovieproducerinManilaforhimtoshowduringthetownfiesta the Tagalog film entitled "Himala ng Birhen" or Miracle of the Virgin. He made extensive preparations; he had two thousandpostersprintedandlaterdistributednotonlyintheCityofNagabutalsointheneighboringtowns.Healso advertisedinaweeklyofgeneralcirculationintheprovince.Thepostersandadvertisementstatedthatthefilmwouldbe shownintheCitatheateronthe17thand18thofSeptember,correspondingtotheeveanddayofthefiestaitself. InpursuanceoftheagreementbetweentheLVNPicturesInc.andMendoza,theformeronSeptember17th,1948,delivered tothedefendantPhilippineAirlines(PAL)whoseplanescarriedpassengersandcargoandmaderegulartripsfromManila tothePiliAirPortnearNaga,CamarinesSur,acancontainingthefilm"HimalangBirhen"consignedtotheCitaTheater. ForthisshipmentthedefendantissueditsAirWayBillNo.317133markedExhibit"1".Thiscanoffilmswasloadedon flight113ofthedefendant,theplanearrivingattheAirPortatPilialittleafterfouro'clockintheafternoonofthesame day,September17th.Forreasonsnotexplainedbythedefendant,butwhichwouldappeartobethefaultofitsemployeesor agents,thiscanoffilmwasnotunloadedatPiliAirPortanditwasbroughtbatoManila.Mendozawhohadcompletedall arrangementsfortheexhibitionofthefilmbeginningintheeveningofSeptember17th,toexploitthepresenceofthebig crowdthatcametoattendthetownfiesta,wenttotheAirPortandinquiredfromthedefendant'sstationmasterthereabout thecanoffilm.Saidstationmastercouldnotexplainwhythefilmwasnotunloadedandsentseveralradiogramstohis principalinManilamakinginquiriesandaskingthatthefilmbesenttoNagaimmediately.Afterinvestigationandsearchin theManilaoffice,thefilmwasfinallylocatedthefollowingday,September18th,andthenshippedtothePiliAirPorton September20th.Mendozareceiveditandexhibitedthefilmbuthehadmissedhisopportunitytorealizealargeprofitashe expectedforthepeopleafterthefiestahadalreadyleftfortheirtowns.Torecouphislosses,Mendozabroughtthisaction againstthePAL.Aftertrial,thelowercourtfoundthatbecauseofhisfailuretoexhibitthefilm"HimalangBirhen"during thetownfiesta,MendozasuffereddamagesorratherfailedtoearnprofitsintheamountofP3,000.00,butfindingthePAL notliableforsaiddamages,dismissedthecomplaint. Toavoidliability,defendantappellee,calledtheattentionofthetrialcourttothetermsandconditionsofparagraph6ofthe WayBillprintedonthebackthereofwhichparagraphreadsasfollows: 6.TheCarrierdoesnotobligateitselftocarrytheGoodsbyanyspecifiedaircraftoronaspecifiedtime.Said Carrierbeingherebyauthorizedtodeviatefromtherouteoftheshipmentwithoutanyliabilitytherefor. Itclaimedthatsincetherewasnoobligationonitsparttocarrythefilminquestiononanyspecifiedtime,itcouldnotbe heldaccountableforthedelayofaboutthreedays.Thetrialcourt,however,foundandheldthatalthoughthedefendantwas notobligatedtoloadthefilmonanyspecifiedplaneoronanyparticularday,oncesaidcanfilmwasloadedandshippedon oneofitsplanesmakingtriptoCamarines,thenitassumedtheobligationtounloaditatitspointofdestinationanddeliver
LAW ON TRANSPORTATION MarielAngelaPiedadSoriano
ittotheconsignee,anditsunexplainedfailuretocomplywiththisdutyconstitutednegligence.Ifhoweverfoundthatfraud wasnotinvolvedandthatthedefendantwasadebtoringoodfaith. ThetrialcourtpresidedoverbyJudgeJoseN.Leuterioinawellconsidereddecisioncitingauthorities,particularlythecase ofDaywaltvs.CorporaciondePP.AgustinosRecoletos,39Phil.587,heldthatnotbecauseplaintifffailedtorealizeprofits inthesumofP3,000.00duetothenegligenceofthedefendant,shouldthelatterbemadetoreimbursehimsaidsum. ApplyingprovisionsofArt.1107oftheCivilCodewhichprovidesthatlossesandthoseforeseen,orwhichmighthavebeen foreseen,atthetimeofconstitutingtheobligation,andwhichareanecessaryconsequenceofthefailuretoperformit,the trialcourtheldthatinasmuchasthesedamagessufferedbyMendozawerenotforeseenorcouldnothavebeenforeseenat thetimethatthedefendantacceptedthecanoffilmforshipment,forthereasonthatneithertheshipperLVNPicturesInc. northeconsigneeMendozahadcalleditsattentiontothespecialcircumstancesattendingtheshipmentandtheshowingof thefilmduringthetownfiestaofNaga,plaintiffmaynotrecoverthedamagessought. CounselforappellantinsiststhatthearticlesoftheCodeofCommerceratherthanthoseoftheCivilCodeshouldhavebeen appliedindecidingthiscaseforthereasonthattheshipmentofthecanoffilmisanactofcommerce;thatthecontractof transportationinthiscaseshouldbeconsideredcommercialunderArt.349oftheCodeofCommercebecauseitonly involvesmerchandiseoranobjectofcommercebutalsothetransportationcompany,thedefendantherein,wasacommon carrier,thatistosay,customarilyengagedintransportationforthepublic,andthatalthoughthecontractoftransportation wasnotbylandorwaterwaysasdefinedinsaidArt.349,nevertheless,airtransportationbeinganalogoustolandandwater transportation,shouldbeconsideredasincluded,especiallyinviewofthesecondparagraphofArt.2ofthesameCode whichsaysthattransactionscoveredbytheCodeofCommerceandallothersofanalogouscharactershallbedeemedactsof commerce.Thetrialcourt,however,disagreedtothiscontentionandopinedthatairtransportationnotbeingexpressly coveredbytheCodeofCommerce,cannotbegovernedbyitsprovisions. WebelievethatwhetherornottransportationbyairshouldberegardedasacommercialcontractunderArt.349,wouldbe immaterialinthepresentcase,aswillbeexplainedlater.Withoutmakingadefiniterulingonthecivilorcommercialnature oftransportationbyair,itbeingunnecessary,weareinclinedtobelieveandtoholdthatacontractoftransportationbyair mayberegardedascommercial.Thereasonisthatatleastinthepresentcasethetransportationcompany(PAL)isa commoncarrier;besides,airtransportationisclearlysimilaroranalogoustolandandwatertransportation.Theobvious reasonforitsnoninclusionintheCodeofCommercewasthatatthetimeofitspromulgation,transportationbyairona commercialbasiswasnotyetknown.IntheUnitedSateswhereairtransportationhasreacheditshighestdevelopment,an airlinecompanyengagedinthetransportationbusinessisregardedasacommoncarrier. Theprincipleswhichgoverncarriersbyothermeans,suchasbyrailroadormotorbus,governcarriersbyaircraft.6 Am.Jur.,Aviation,Sec.56,p.33. WhenAircraftOperatorisCommonCarrier.Thataircraftandtheindustryofcarriagebyaircraftarenewisno reasonwhyoneinfactemployingaircraftascommoncarriervehiclesshouldnotbeclassifiedasacommoncarrier andchargedwithliabilityassuch.Therecanbenodoubt,underthegenerallawofcommoncarriers,thatthoseair linesandaircraftownersengagedinthepassengerserviceonregularschedulesondefiniteroutes,whosolicitthe patronageofthetravelingpublic,advertiseschedulesforroutes,timeofleaving,andratesoffare,andmakethe usualstipulationastobaggage,arecommoncarriersbyair.Aflyingservicecompanywhich,accordingtoits printedadvertising,willtakeanyoneanywhereatanytime,thoughnotoperatingonregularroutesorschedules, andbasingitschargesnotonthenumberofpassengers,butontheoperatingcostoftheplanepermile,hasbeen heldtobeacommoncarrier.Itisnotnecessary,inordertomakeonecarryingpassengersbyaircraftacommon carrierofpassengersthatthepassengerscanbecarriedfromonepointtoanother;thestatusandtheliabilityasa commoncarriermayexistnotwithstandingthepassenger'sticketissuedbyanairplanecarrierofpassengersforhire containsastatementthatitisnotacommoncarrier,etc.,orastipulationthatitistobeheldonlyforitsproven negligence.Butanairplaneownercannotbeclassedasacommoncarrierofpassengersunlessheundertakes,for hire,tocarryallpersonswhoapplyforpassageindiscriminatelyaslongasthereisroomandnolegalexcusefor refusing....6Am.Jur.,Aviation,Sec.58,pp.3435. Therulesgoverningthebusinessofacommoncarrierbyairshiporflyingmachinemaybereadilyassimilatedto thoseappliedtoothercommoncarriers.2C.J.S.,1951,CumulativePocketPart,AerialNavigation,Sec.38,p.99. Thetestofwhetheroneisacommoncarrierbyairiswhetherheholdsoutthathewillcarryforhire,solongashe has room, goods for everyone bringing goods to him for carriage, not whether he is carrying as a public employmentorwhetherhecarriestoafixedplace.(Ibid.,Sec.39,p.99.) AppellantcontendsthatArt.358oftheCodeofCommerceshouldgoverntheawardofthedamagesinhisfavor.Saidarticle
providesthatifthereisnoperiodfixedforthedeliveryofthegoods,thecarriershallbeboundtoforwardtheminthefirst shipmentofthesameorsimilarmerchandisewhichhemaymaketothepointofdelivery,andthatuponfailuretodoso,the damagescausedbythedelayshouldbesufferedbythecarrier.Thisisageneralprovisionforordinarydamagesandisno differentfromtheprovisionsoftheCivilCode,particularlyArt.1101thereof,providingforthepaymentofdamagescaused bythenegligenceordelayinthefulfillmentofone'sobligation.EvenapplyingtheprovisionsoftheCodeofCommerce,as alreadystated,thepertinentprovisionsregardingdamagesonlytreats ofordinarydamagesordamagesingeneral,not specialdamageslikethosesufferedbytheplaintiffherein.Article2oftheCodeofCommerceprovidesthatcommercial transactionsaretobegovernedbytheprovisionsoftheCodeofCommerce,butintheabsenceofapplicableprovisions,they willbegovernedbytheusagesofcommercegenerallyobservedineachplace;andindefaultofboth,bythoseoftheCivil Law.Sothatassumingthatthepresentcaseinvolvedacommercialtransaction,stillinasmuchasthespecialdamagesherein claimedfindsnoapplicableprovisionintheCodeofCommerce,neitherhasitbeenshownthatthereareanycommercial usagesapplicablethereto,theninthelastanalysis,therulesofthecivillawwouldhavetocomeintoplay.UnderArt.1107 oftheCivilCode,adebtoringoodfaithlikethedefendantherein,maybeheldliableonlyfordamagesthatwereforeseenor mighthavebeenforeseenatthetimethecontractofthetransportationwasenteredinto.Thetrialcourtcorrectlyfoundthat thedefendantcompanycouldnothaveforeseenthedamagesthatwouldbesufferedbyMendozauponfailuretodeliverthe canoffilmonthe17thofSeptember,1948forthereasonthattheplansofMendozatoexhibitthatfilmduringthetown fiestaandhispreparations,speciallytheannouncementofsaidexhibitionbypostersandadvertisementinthenewspaper, werenotcalledtothedefendant'sattention. Inourresearchforauthoritieswehavefoundacaseverysimilartotheoneunderconsideration.InthecaseofChapmanvs. Fargo,L.R.A.(1918F)p.1049,theplaintiffinTroy,NewYork,deliveredpicturefilmstothedefendantFargo,anexpress company,consignedandtobedeliveredtohiminUtica.Atthetimeoftheshipmenttheattentionoftheexpresscompany wascalledtothefactthattheshipmentinvolvedmotionpicturefilmstobeexhibitedinUtica,andthattheyshouldbesentto theirdestination,rush.Therewasdelayintheirdeliveryanditwasfoundthattheplaintiffbecauseofhisfailuretoexhibit thefilminUticaduetothedelaysuffereddamagesorlossofprofits.ButthehighestcourtintheStateofNewYorkrefused toawardhimspecialdamages.Saidappellatecourtobserved: Butbeforedefendantcouldbeheldtospecialdamages,suchasthepresentallegedlossofprofitsonaccountof delayorfailureofdelivery,itmusthaveappearedthathehadnoticeatthetimeofdeliverytohimoftheparticular circumstancesattendingtheshipment,andwhichprobablywouldleadtosuchspeciallossifhedefaulted.Or,asthe rulehasbeenstatedinanotherform,inordertoimposeonthedefaultingpartyfurtherliabilitythanfordamages naturallyanddirectly,i.e.,intheordinarycourseofthings,arisingfromabreachofcontract,suchunusualor extraordinarydamagesmusthavebeenbroughtwithinthecontemplationofthepartiesastheprobableresultofa breachatthetimeoforpriortocontracting.Generally,noticethenofanyspecialcircumstanceswhichwillshow thatthedamagestobeanticipatedfromabreachwouldbeenhancedhasbeenheldsufficientforthiseffect. Asmaybeseen,thatNewYorkcaseisastrongeronethanthepresentcaseforthereasonthattheattentionofthecommon carrierinsaidcasewascalledtothenatureofthearticlesshipped,thepurposeofshipment,andthedesiretorushthe shipment,circumstancesandfactsabsentinthepresentcase. ButappellantsnowcontendsthatheisnotsuingonabreachofcontractbutonatortasprovidedforinArt.1902ofthe CivilCode.Wearealittleperplexedastothisnewtheoryoftheappellant.First,heinsiststhatthearticlesoftheCodeof Commerceshouldbeapplied;thatheinvokestheprovisionsofsaidCodegoverningtheobligationsofacommoncarrierto makepromptdeliveryofgoodsgiventoitunderacontractoftransportation.Later,asalreadysaid,hesaysthathewasnever apartytothecontractoftransportationandwasacompletestrangertoit,andthatheisnowsuingonatortorviolationof hisrightsasastranger(culpaaquiliana).Ifhedoesnotinvokethecontractofcarriageenteredintowiththedefendant company,thenhewouldhardlyhaveanylegtostandon.HisrighttopromptdeliveryofthecanoffilmatthePiliAirPort stemsandisderivedfromthecontractofcarriageunderwhichcontract,thePALundertooktocarrythecanoffilmsafely andtodeliverittohimpromptly.Takeawayorignorethatcontractandtheobligationtocarryandtodeliverandtherightto promptdeliverydisappear.Commoncarriersarenotobligatedbylawtocarryandtodelivermerchandise,andpersonsare notvestedwiththerightofpromptdelivery,unlesssuchcommoncarrierspreviouslyassumetheobligation.Saidrightsand obligationsarecreatedbyaspecificcontractenteredintobytheparties.Inthepresentcase,thefindingsofthetrialcourt whichasalreadystated,areacceptedbythepartiesandwhichwemustacceptaretotheeffectthattheLVNPicturesInc. andJoseMendozaononeside,andthedefendantcompanyontheother,enteredintoacontractoftransportation.(p.29, Rec.onAppeal).OneinterpretationofsaidfindingisthattheLVNPicturesInc.throughpreviousagreementwithMendoza actedasthelatter'sagent.WhenhenegotiatedwiththeLVNPicturesInc.torentthefilm"HimalangBirhen"andshowit
duringtheNagatownfiesta,hemostprobablyauthorizedandenjoinedthePictureCompanytoshipthefilmforhimonthe PALonSeptember17th.AnotherinterpretationisthateveniftheLVNPicturesInc.asconsignorofitsowninitiative,and actingindependentlyofMendozaforthetimebeing,madeMendozaasconsignee,astrangertothecontractifthatis possible,neverthelesswhenhe,Mendoza,appearedatthePiliAirPortarmedwiththecopyoftheAirWayBill(Exh.1) demandingthedeliveryoftheshipmenttohim,hetherebymadehimselfapartytothecontractofthetransportation.The verycitationmadebyappellantinhismemorandumsupportsthisview.Speakingofthepossibilityofaconflictbetweenthe orderoftheshipperontheonehandandtheorderoftheconsigneeontheother,aswhentheshipperorderstheshipping companytoreturnorretainthegoodsshippedwhiletheconsigneedemandstheirdelivery,MalagarrigainhisbookCodigo deComercioComentado,Vol.I,p.400,citingadecisionofArgentinaCourtofAppealsoncommercialmatters,citedby TolentinoinVol.IIofhisbookentitled"CommentariesandJurisprudenceontheCommercialLawsofthePhilippines"p. 209,saysthattherightoftheshippertocountermandtheshipmentterminateswhentheconsigneeorlegitimateholderof thebillofladingappearswithsuchbillofladingbeforethecarrierandmakeshimselfapartytothecontract.Priortothat time,heisstrangertothecontract. StillanotherviewofthisphaseofthecaseisthatcontemplatedinArt.1257,paragraph2,oftheoldCivilCodewhichreads thus: Shouldthecontractcontainanystipulationinfavorofathirdperson,hemaydemanditsfulfillment,providedhe hasgivennoticeofhisacceptancetothepersonboundbeforethestipulationhasbeenrevoked. Here,thecontractofcarriagebetweentheLVNPicturesInc.andthedefendantcarriercontainsthestipulationsofthe deliverytoMendozaasconsignee.HisdemandforthedeliveryofthecanoffilmtohimatthePiliAirPortmayberegarded asanoticeofhisacceptanceofthestipulationofthedeliveryinhisfavorcontainedinthecontractofcarriage,suchdemand beingoneofthefulfillmentofthecontractofcarriageanddelivery.Inthiscasehealsomadehimselfapartytothecontract, oratleasthascometocourttoenforceit.Hiscauseofactionmustnecessarilybefoundedonitsbreach. Onecanreadilysympathizewiththeappellanthereinforhislossofprofitswhichheexpectedtorealize.Butheoverlooked thelegalangle.Insituationslikethepresentwherefailuretoexhibitfilmsonacertaindaywouldspellsubstantialdamages or considerable loss of profits, including waste of efforts on preparations and expenses incurred in advertisements, exhibitors,fortheirsecurity,mayeithergetholdofthefilmswellaheadofthetimeofexhibitioninordertomakeallowance foranyhitchinthedelivery,orelseenterintoaspecialcontractormakeasuitablearrangementwiththecommoncarrierfor thepromptdeliveryofthefilms,callingtheattentionofthecarriertothecircumstancessurroundingthecaseandthe approximateamountofdamagestobesufferedincaseofdelay. Findingnoreversibleerrorinthedecisionappealedfrom,thesameisherebyaffirmed.Nopronouncementastocosts.So ordered. Paras, C.J., Feria, Bengzon, Padilla, Reyes, Jugo and Bautista Angelo, JJ., concur. Paras,C.J.,IcertifythatMr.JusticeTuasonvotedfortheaffirmance.
RepublicofthePhilippines SUPREMECOURT Manila ENBANC G.R.No.L9671August23,1957 CESARL.ISAAC,plaintiffappellant, vs. A.L.AMMENTRANSPORTATIONCO.,INC.,defendantappellee. AngelS.Gamboaforappellant. ManuelO.Chanforappellee. BAUTISTAANGELO,J.: A.L.AmmenTransportationCo.,Inc.,hereinafterreferredtoasdefendant,isacorporationengagedinthebusinessof transporting passengers by land for compensation in the Bicol provinces and one of the lines it operates is the one connectingLegaspiCity,AlbaywithNagaCity,CamarinesSur.OneofthebuseswhichdefendantwasoperatingisBusNo. 31.OnMay31,1951,plaintiffboardedsaidbusasapassengerpayingtherequiredfarefromLigao,AlbayboundforPili, CamarinesSur,butbeforereachinghisdestination,thebuscollidedwithamotorvehicleofthepickuptypecomingfrom theoppositedirection,asaresultofwhichplaintiff'sleftarmwascompletelyseveredandtheseveredportionfellinsidethe bus.PlaintiffwasrushedtoahospitalinIriga,CamarinesSurwherehewasgivenbloodtransfusiontosavehislife.After fourdays,hewastransferredtoanotherhospitalinTabaco,Albay,whereheunderwenttreatmentforthreemonths.Hewas movedlatertotheOrthopedicHospitalwherehewasoperatedonandstayedthereforanothertwomonths.Forthese services,heincurredexpensesamountingtoP623.40,excludingmedicalfeeswhichwerepaidbydefendant. Asanaftermath,plaintiffbroughtthisactionagainstdefendantsfordamagesallegingthatthecollisionwhichresultedinthe lossofhis left arm wasmainlyduetothegrossincompetenceandrecklessness ofthedriverofthebusoperatedby defendantandthatdefendantincurredinculpacontractualarisingfromitsnoncompliancewithitsobligationtotransport plaintiffsafelytohis,destination.Plaintiffpraysforjudgmentagainstdefendantasfollows:(1)P5,000asexpensesforhis medicaltreatment,andP3,000asthecostofanartificialarm,oratotalofP8,000;(2)P6,000representinglossofearning; (3)P75,000fordiminutionofhisearningcapacity;(4)P50,000asmoraldamages;and(5)P10,000asattorneys'feesand costsofsuit. Defendantsetupasspecialdefensethattheinjurysufferedbyplaintiffwasdueentirelytothefaultornegligenceofthe driverofthepickupcarwhichcollidedwiththebusdrivenbyitsdriverandtothecontributorynegligenceofplaintiff himself.Defendantfurtherclaimsthattheaccidentwhichresultedintheinjuryofplaintiffisonewhichdefendantcouldnot foreseeor,thoughforeseen,wasinevitable. Theaftertrialfoundthatthecollisionoccurredduetothenegligenceofthedriverofthepickupcarandnottothatofthe driverofthebusitappearingthatthelatterdideverythinghecouldtoavoidthesamebutthatnotwithstandinghisefforts,he wasnotabletoavoidit.Asaconsequence,thecourtdismissedcomplaint,withcostsagainstplaintiff.Thisisanappealfrom saiddecision. ItappearsthatplaintiffboardedabusofdefendantaspayingpassengerfromLigao,Albay,boundforPili,CamarinesSur, butbeforereachinghisdestination,thebuscollidedwithapickupcarwhichwascomingfromtheoppositedirectionand, asa,result,hisleftarmwascompletelyseveredandfellinsidethebackpartofthebus.Havingthisbackgroundinview,and consideringthatplaintiffchosetoholddefendantliableonitscontractualobligationtocarryhimsafelytohisplaceof destination,itbecomesimportanttodeterminethenatureandextentoftheliabilityofacommoncarriertoapassengerin thelightofthelawapplicableinthisjurisdiction. Inthisconnection,appellantinvokestherulethat,"whenanactionisbasedonacontractofcarriage,asinthiscase,allthat isnecessarytosustainrecoveryisproofoftheexistenceofthecontractofthebreachthereofbyactoromission",andin supportthereof,hecitesseveralPhilippinecases.1Withtherulinginmind,appellantseemstoimplythatoncethecontract ofcarriageisestablishedandthereisproofthatthesamewasbrokenbyfailureofthecarriertotransportthepassenger safelytohisdestination,theliabilityoftheformerattaches.Ontheotherhand,appelleeclaimsthatisawrongpresentation oftherule.ItclaimsthatthedecisionsofthisCourtinthecasesciteddonotwarranttheconstructionsoughttobeplaced upon,thembyappellantforamereperusalthereofwouldshowthattheliabilityofthecarrierwaspredicatednotuponmere breachofitscontractofcarriagebutuponthefindingthatitsnegligencewasfoundtobethedirectorproximatecauseofthe
injurycomplainedof.Thus,appelleecontendsthat"ifthereisnonegligenceonthepartofthecommoncarrierbutthatthe accidentresultingininjuriesisduetocauseswhichareinevitableandwhichcouldnothavebeenavoidedoranticipated notwithstandingtheexerciseofthathighdegreeofcareandskillwhichthecarrierisboundtoexerciseforthesafetyofhis passengers",neitherthecommoncarriernorthedriverisliabletherefor. Webelievethatthelawconcerningtheliabilityofacommoncarrierhasnowsufferedasubstantialmodificationinviewof theinnovationsintroducedbythenewCivilCode.TheseinnovationsaretheonesembodiedinArticles1733,1755and1756 insofarastherelationbetweenacommoncarrieranditspassengersisconcerned,which,forreadyreference,wequote hereunder: ART.1733.Commoncarriers,fromthenatureoftheirbusinessandforreasonsofpublicpolicy,areboundto observeextraordinarydiligenceinthevigilanceoverthegoodsandforthesafetyofthepassengerstransportedby themaccordingtoallthecircumstancesofeachcase. Suchextraordinarydiligenceinthevigilanceoverthegoodsisfurtherexpressedinarticles1734,1735,and1745, Nos.5,6,and7,whiletheextraordinarydiligenceforthesafetyofthepassengersisfurthersetforthinarticles1755 and1756. ART.1755.Acommoncarrierisboundtocarrythepassengerssafelyasfarashumancareandforesightcan provide,usingtheutmostdiligenceofverycautiouspersons,withadueregardforallthecircumstances. ART.1756.Incaseofdeathoforinjuriestopassengers,commoncarriersarepresumedtohavebeenatfaultorto haveactednegligently,unlesstheyprovethattheyobservedextraordinarydiligenceasprescribedinarticles1733 and1755. TheCodeCommission,injustifyingthisextraordinarydiligencerequiredofacommoncarrier,saysthefollowing: Acommoncarrierisboundtocarrythepassengerssafelyasfarashumancareandforesightcanprovide,usingthe utmostdeligenceofverycautionspersons,withdueregardforallcircumstances.Thisextraordinarydiligence requiredofcommoncarriersiscalculatedtoprotectthepassengersfromthetragicmishapsthatfrequentlyoccurin connection with rapid modern transportation. This high standard of care is imperatively demanded by the precariousnessofhumanlifeandbytheconsiderationthateverypersonmustineverywaybesafeguardedagainst allinjury.(ReportoftheCodeCommission,pp.3536)"(Padilla,CivilCodeofthePhilippines,Vol.IV,1956ed., p.197). Fromtheabovelegalprovisions,wecanmakethefollowingrestatement oftheprinciplesgoverningtheliabilityofa commoncarrier:(1)theliabilityofacarrieriscontractualandarisesuponbreachofitsobligation.Thereisbreachifitfails toexertextraordinarydiligenceaccordingtoallcircumstancesofeachcase;(2)acarrierisobligedtocarryitspassenger withtheutmostdiligenceofaverycautiousperson,havingdueregardforallthecircumstances;(3)acarrierispresumedto beatfaultortohaveactednegligentlyincaseofdeathof,orinjuryto,passengers,itbeingitsdutytoprovethatitexercised extraordinarydiligence;and(4)thecarrierisnotaninsureragainstallrisksoftravel. Thequestionthatnowarisesis:Hasdefendantobservedextraordinarydiligenceortheutmostdiligenceofeverycautious person,havingdueregardforallcircumstances,inavoidingthecollisionwhichresultedintheinjurycausedtotheplaintiff? Afterexaminingtheevidenceinconnectionwithhowthecollisionoccurred,thelowercourtmadethefollowingfinding: Hemosexaminadomuydetenidamentelaspruebaspresentadasenlavista,principalmente,lasdeclaracionesque hemosacotadoarriba,yhernosIlegadoalaconclusiondequeeldemandadohahecho,todocuantoestuvieredesu parteparaevitarelaccidente,perosinembargo,nohapodidoevitarlo. EIhechodequeeldemandado,antesdelchoque,tuvoquehacerpasarsutruckencimadelosmontonesdegrava queestabandepositadosenlaorilladelcamino,sinquehayaidomasalla,porelgraveriesgoquecorrianlasvidas desuspasajeros,espruebaconcluyentedeloquetenemosdicho,asaber:queelcuantoesubadesuparte,para evitarelaccidente,sinquehayapodidoevitardo,porestarfueradesucontrol. The evidence would appear tosupport the abovefinding.Thus, it appears that Bus No.31, immediatelyprior to the collision,wasrunningatamoderatespeedbecauseithadjuststoppedattheschoolzoneofMatacong,Polangui,Albay.The pickupcarwasatfullspeedandwasrunningoutsideofitsproperlane.Thedriverofthebus,uponseeingthemannerin whichthepickupwasthenrunning,swervedthebustotheveryextremerightoftheroaduntilitsfrontandrearwheels havegoneoverthepileofstonesorgravelsituatedontherampartoftheroad.Saiddrivercouldnotmovethebusfarther rightandrunoveragreaterportionofthepile,thepeakofwhichwasabout3feethigh,withoutendangeringthesafetyof hispassengers.Andnotwithstandingalltheseefforts,therearleftsideofthebuswashitbythepickupcar. Ofcourse,thisfindingisdisputedbyappellantwhocannotseeeyetoeyewiththeevidencefortheappelleeandinsiststhat thecollisiontookplacebecausethedriverofthebuswasgoingatafastspeed.Hecontendsthat,havingseenthatacarwas
comingfromtheoppositedirectionatadistancewhichallowstheuseofmoderatecareandprudencetoavoidanaccident, andknowingthatonthesideoftheroadalongwhichhewasgoingtherewasapileofgravel,thedriverofthebusshould havestoppedandwaitedforthevehiclefromtheoppositedirectiontopass,andshouldhaveproceededonlyaftertheother vehiclehadpassed.Inotherwords,accordingtoappellant,theactofthedriverofthebusinsqueezinghiswaythroughof thebusinsqueezinghiswaythroughbetweentheoncomingpickupandthepileofgravelunderthecircumstanceswas considerednegligent. Butthismatterisoneofcredibilityandevaluationoftheevidence.Thisisevidence.Thisisthefunctionofthetrialcourt. Thetrialcourthasalreadyspokenonthismatteraswehavepointedoutabove.Thisisalsoamatterofappreciationofthe situationonthepartofthedriver.Whilethepositiontakenbyappellantappealsmoretothesenseofcautionthatoneshould observeinagivensituationtoavoidanaccidentormishap,suchhowevercannotalwaysbeexpectedfromonewhois placedsuddenlyinapredicamentwhereheisnotgivenenoughtimetotakethecourseofactionasheshouldunderordinary circumstances.Onewhoisplacedinsuchapredicamentcannotexercisesuchcoolnessoraccuracyofjudgmentasis requiredofhimunderordinarycircumstancesandhecannotthereforebeexpectedtoobservethesamejudgment,careand precautionasinthelatter.Forthisreason,authoritiesaboundwherefailuretoobservethesamedegreeofcarethatas ordinaryprudentmanwouldexerciseunderordinarycircumstanceswhenconfrontedwithasaddenemergencywasheldto bewarrantedandajustificationtoexemptthecarrierfromliability.Thus,itwasheldthat"whereacarrier'semployeeis confrontedwithasuddenemergency,thefactthatheisobligedtoactquicklyandwithoutachancefordeliberationmustbe takenintoaccount,andheisheldtothesomedegreeofcarethathewouldotherwiseberequiredtoexerciseintheabsence ofsuchemergencybutmustexerciseonlysuchcareasanyordinaryprudentpersonwouldexerciseunderlikecircumstances andconditions,andthefailureonhisparttoexercisethebestjudgementthecaserenderspossibledoesnotestablishlackof careandskillonhispartwhichrendersthecompany,liable....(13C.J.S.,1412;10C.J.,970).Consideringallthe circumstances,wearepersuadedtoconcludethatthedriverofthebushasdonewhataprudentmancouldhavedoneto avoidthecollisionandinouropinionthisrelievesappelleefromlegibilityunderourlaw. Acircumstanceswhichmiliatesagainstthestandofappellantisthefactborneoutbytheevidencethatwhenheboardedthe businquestion,heseatedhimselfontheleftsidethereofrestinghisleftarmonthewindowsillbutwithhisleftelbow outsidethewindow,thisbeinghispositioninthebuswhenthecollisiontookplace.Itisforthisreasonthatthecollision resultedintheseveranceofsaidleftarmfromthebodyofappellantthusdoinghimagreatdamage.Itisthereforeapparent thatappellantisguiltyofcontributorynegligence.Hadhenotplacedhisleftarmonthewindowsillwithaportionthereof protrudingoutside,perhapstheinjurywouldhavebeenavoidedasisthecasewiththeotherpassenger.Itistobenotedthat appellantwastheonlyvictimofthecollision. Itistruethatsuchcontributorynegligencecannotrelieveappelleeofitsliabilitybutwillonlyentitleittoareductionofthe amountofdamagecaused(Article1762,newCivilCode),butthisisacircumstancewhichfurthermilitatesagainstthe positiontakenbyappellantinthiscase. Itistheprevailingrulethatitisnegligenceperseforapassengeronarailroadvoluntarilyorinadvertentlyto protrudehisarm,hand,elbow,oranyotherpartofhisbodythroughthewindowofamovingcarbeyondtheouter edgeofthewindoworoutersurfaceofthecar,soastocomeincontactwithobjectsorobstaclesnearthetrack,and thatnorecoverycanbehadforaninjurywhichbutforsuchnegligencewouldnothavebeensustained.(10C.J. 1139) Plaintiff,(passenger)whileridingonaninterurbancar,toflicktheashes,fromhiscigar,thrusthishandoverthe guardrailasufficientdistancebeyondthesidelineofthecartobringitincontactwiththetrunkofatreestanding besidethetrack;theforceoftheblowbreakinghiswrist.Held,thathewasguiltyofcontributorynegligenceasa matteroflaw.(Malakiavs.RhodeIslandCo.,89A.,337.) Wherefore,thedecisionappealedfromisaffirmed,withcostagainstappellant. Paras,C.J.,Bengzon,Padilla,Montemayor,Reyes,A.,Labrador,Concepcion,EndenciaandFelix,JJ.,concur.
RepublicofthePhilippines SUPREMECOURT Manila ENBANC G.R.No.L10126October22,1957 SALUD VILLANUEVA VDA. DE BATACLAN and the minors NORMA, LUZVIMINDA, ELENITA, OSCAR and ALFREDO BATACLAN, represented by their Natural guardian, SALUD VILLANUEVA VDA. DE BATACLAN, plaintiffsappellants, vs. MARIANOMEDINA,defendantappellant. LopeE.Adriano,EmmanuelAndamoandJoseR.Franciscoforplaintiffsappellants. FortunatoJosefordefendantandappellant. MONTEMAYOR,J.: Shortlyaftermidnight,onSeptember13,1952busno.30oftheMedinaTransportation,operatedbyitsownerdefendant MarianoMedinaunderacertificateofpublicconvenience,leftthetownofAmadeo,Cavite,onitswaytoPasayCity,driven byitsregularchauffeur,ConradoSaylon.Therewereabouteighteenpassengers,includingthedriverandconductor.Among thepassengerswereJuanBataclan,seatedbesideandtotherightofthedriver,FelipeLara,satedtotherightofBataclan, anotherpassengerapparentlyfromtheVisayanIslandswhomthewitnessesjustcalledVisaya,apparentlynotknowinghis name, seated in the left side of the driver, and a woman named Natalia Villanueva, seated just behind the four last mentioned.Atabout2:00o'clockthatsamemorning,whilethebuswasrunningwithinthejurisdictionofImus,Cavite,one ofthefronttiresburstandthevehiclebegantozigzaguntilitfellintoacanalorditchontherightsideoftheroadand turnedturtle.Someofthepassengersmanagedtoleavethebusthebestwaytheycould,othershadtobehelpedorpulled out,whilethethreepassengersseatedbesidethedriver,namedBataclan,LaraandtheVisayanandthewomanbehindthem namedNataliaVillanueva,couldnotgetoutoftheoverturnedbus.Someofthepassengers,aftertheyhadclamberedupto theroad,heardgroansandmoansfrominsidethebus,particularly,shoutsforhelpfromBataclanandLara,whosaidthey couldnotgetoutofthebus.Thereisnothingintheevidencetoshowwhetherornotthepassengersalreadyfreefromthe wreck,includingthedriverandtheconductor,madeanyattempttopulloutorextricateandrescuethefourpassengers trappedinsidethevehicle,butcallsorshoutsforhelpweremadetothehousesintheneighborhood.Afterhalfanhour, cameabouttenmen,oneofthemcarryingalightedtorchmadeofbamboowithawickononeend,evidentlyfueledwith petroleum.Thesemenpresumablyapproachtheoverturnedbus,andalmostimmediately,afiercefirestarted,burningand allbutconsumingthebus,includingthefourpassengerstrappedinsideit.Itwouldappearthatasthebusoverturned, gasolinebegantoleakandescapefromthegasolinetankonthesideofthechassis,spreadingoverandpermeatingthebody ofthebusandthegroundunderandaroundit,andthatthelightedtorchbroughtbyoneofthemenwhoansweredthecall forhelpsetitonfire. Thatsameday,thecharredbodiesofthefourdeemedpassengersinsidethebuswereremovedanddulyidentifiedthatof JuanBataclan.Byreasonofhisdeath,hiswidow,SaludVillanueva,inhernameandinbehalfofherfiveminorchildren, broughtthepresentsuittorecoverfromMarianoMedinacompensatory,moral,andexemplarydamagesandattorney'sfees inthetotalamountofP87,150.Aftertrial,theCourtofFirstInstanceofCaviteawardedP1,000totheplaintiffsplusP600as attorney'sfee,plusP100,thevalueofthemerchandisebeingcarriedbyBataclantoPasayCityforsaleandwhichwaslostin thefire.TheplaintiffsandthedefendantsappealedthedecisiontotheCourtofAppeals,butthelatterendorsedtheappealto usbecauseofthevalueinvolvedintheclaiminthecomplaint. OurnewCivilCodeamplyprovidesfortheresponsibilityofcommoncarriertoitspassengersandtheirgoods.Forpurposes ofreference,wearereproducingthepertinentcodalprovisions: ART.1733.Commoncarriers,fromthenatureoftheirbusinessandforreasonsofpublicpolicy,areboundto observeextraordinarydiligenceinthevigilanceoverthegoodsandforthesafetyofthepassengerstransportedby them,accordingtoallthecircumstancesofeachcase. Suchextraordinarydiligenceinthevigilanceoverthegoodsisfurtherexpressedinarticles1734,1735,and1745, Nos.5,6,and7,whiletheextraordinarydiligenceforthesafetyofthepassengersisfurthersetforthinarticles 1755and1756.
ART.1755.Acommoncarrierisboundtocarrythepassengerssafelyasfarashumancareandforesightcan provide,usingtheutmostdiligenceofverycautiouspersons,withadueregardforallthecircumstances. ART.1756.Incaseofdeathoforinjuriestopassengers,commoncarriersarepresumedtohavebeenatfaultorto haveactednegligently,unlesstheyprovethattheyobservedextraordinarydiligenceasprescribedinarticles1733 and1755 ART.1759.Commoncarriersareliableforthedeathoforinjuriestopassengersthroughthenegligenceorwillful actsoftheformer'semployees,althoughsuchemployeesmayhaveactedbeyondthescopeoftheirauthorityorin violationoftheorderofthecommoncarriers. Thisliabilityofthecommoncarriersdoesnotceaseuponproofthattheyexercisedallthediligenceofagood fatherofafamilyintheselectionandsupervisionoftheiremployees. ART.1763.Acommoncarrierresponsibleforinjuriessufferedbyapassengeronaccountofthewillfulactsor negligenceofotherpassengersorofstrangers,ifthecommoncarrier'semployees throughtheexerciseofthe diligenceofagoodfatherofafamilycouldhavepreventedorstoppedtheactoromission. Weagreewiththetrialcourtthatthecaseinvolvesabreachofcontractoftransportationforhire,theMedinaTransportation havingundertakentocarryBataclansafelytohisdestination,PasayCity.Wealsoagreewiththetrialcourtthattherewas negligenceonthepartofthedefendant,throughhisagent,thedriverSaylon.Thereisevidencetoshowthatatthetimeof theblowout,thebuswasspeeding,astestifiedtobyoneofthepassengers,andasshownbythefactthataccordingtothe testimonyofthewitnesses,includingthatofthedefense,fromthepointwhereoneofthefronttiresburstuptothecanal wherethebusoverturnedafterzigzaging,therewasadistanceofabout150meters.Thechauffeur,aftertheblowout,must haveappliedthebrakesinordertostopthebus,butbecauseofthevelocityatwhichthebusmusthavebeenrunning,its momentumcarrieditoveradistanceof150metersbeforeitfellintothecanalandturnedturtle. Thereisnoquestionthatunderthecircumstances,thedefendantcarrierisliable.Theonlyquestionistowhatdegree.The trialcourtwasoftheopinionthattheproximatecauseofthedeathofBataclanwasnottheoverturningofthebus,but rather,thefirethatburnedthebus,includinghimselfandhiscopassengerswhowereunabletoleaveit;thatatthetimethe firestarted,Bataclan,thoughhemusthavesufferedphysicalinjuries,perhapsserious,wasstillalive,andsodamageswere awarded,notforhisdeath,butforthephysicalinjuriessufferedbyhim.Wedisagree.Asatisfactorydefinitionofproximate causeisfoundinVolume38,pages695696ofAmericanjurisprudence,citedbyplaintiffsappellantsintheirbrief.Itisas follows: ...'thatcause,which,innaturalandcontinuoussequence,unbrokenbyanyefficientinterveningcause,produces theinjury,andwithoutwhichtheresultwouldnothaveoccurred.'Andmorecomprehensively,'theproximatelegal causeisthatactingfirstandproducingtheinjury,eitherimmediatelyorbysettingothereventsinmotion,all constitutinganaturalandcontinuouschainofevents,eachhavingaclosecausalconnectionwithitsimmediate predecessor,thefinaleventinthechainimmediatelyeffectingtheinjuryasanaturalandprobableresultofthe causewhichfirstacted,undersuchcircumstancesthatthepersonresponsibleforthefirsteventshould,asan ordinaryprudentandintelligentperson,havereasonablegroundtoexpectatthemomentofhisactordefaultthat aninjurytosomepersonmightprobablyresulttherefrom. Itmaybethatordinarily,whenapassengerbusoverturns,andpinsdownapassenger,merelycausinghimphysicalinjuries, if through some event, unexpected and extraordinary, the overturned bus is set on fire, say, by lightning, or if some highwaymenafterlootingthevehiclesetsitonfire,andthepassengerisburnedtodeath,onemightstillcontendthatthe proximate cause of his death was the fire and not the overturning of the vehicle. But in the present case under the circumstancesobtaininginthesame,wedonothesitatetoholdthattheproximatecausewastheoverturningofthebus,this forthereasonthatwhenthevehicleturnednotonlyonitssidebutcompletelyonitsback,theleakingofthegasolinefrom thetankwasnotunnaturalorunexpected;thatthecomingofthemenwithalightedtorchwasinresponsetothecallfor help,madenotonlybythepassengers,butmostprobably,bythedriverandtheconductorthemselves,andthatbecauseit wasdark(about2:30inthemorning),therescuershadtocarryalightwiththem,andcomingastheydidfromaruralarea wherelanternsandflashlightswerenotavailable;andwhatwasmorenaturalthanthatsaidrescuersshouldinnocently approachthevehicletoextendtheaidandeffecttherescuerequestedfromthem.Inotherwords,thecomingofthemen withatorchwastobeexpectedandwasanaturalsequenceoftheoverturningofthebus,thetrappingofsomeofits passengersandthecallforoutsidehelp.Whatismore,theburningofthebuscanalsoinpartbeattributedtothenegligence ofthecarrier,throughisdriveranditsconductor.Accordingtothewitness,thedriverandtheconductorwereontheroad walkingbackandforth.They,oratleast,thedrivershouldandmusthaveknownthatinthepositioninwhichtheoverturned buswas,gasolinecouldandmusthaveleakedfromthegasolinetankandsoakedtheareainandaroundthebus,thisaside
fromthefactthatgasolinewhenspilled,speciallyoveralargearea,canbesmeltanddirectedevenfromadistance,andyet neitherthedrivernortheconductorwouldappeartohavecautionedortakenstepstowarntherescuersnottobringthe lightedtorchtoonearthebus.Saidnegligenceonthepartoftheagentsofthecarriercomeunderthecodalprovisions abovereproduced,particularly,Articles1733,1759and1763. Asregardthedamagestowhichplaintiffsareentitled,consideringtheearningcapacityofthedeceased,aswellastheother elementsenteringintoadamageaward,wearesatisfiedthattheamountofSIXTHOUSAND(P6,000)PESOSwould constitutesatisfactorycompensation,thistoincludecompensatory,moral,andotherdamages.Wealsobelievethatplaintiffs areentitledtoattorney'sfees,andassessingthelegalservicesrenderedbyplaintiffs'attorneysnotonlyinthetrialcourt,but alsointhecourseoftheappeal,andnotlosingsightoftheablebriefspreparedbythem,theattorney'sfeesmaywellbe fixedatEIGHTHUNDRED(P800)PESOSforthelossofmerchandisecarriedbythedeceasedinthebus,isadequateand willnotbedisturbed. Thereisonephaseofthiscasewhichdisturbsifitdoesnotshockus.Accordingtotheevidence,oneofthepassengerswho, becauseoftheinjuriessufferedbyher,washospitalized,andwhileinthehospital,shewasvisitedbythedefendantMariano Medina,andinthecourseofhisvisit,sheoverheardhimspeakingtooneofhisbusinspectors,tellingsaidinspectortohave thetiresofthebuschangedimmediatelybecausetheywerealreadyold,andthatasamatteroffact,hehadbeentellingthe drivertochangethesaidtires,butthatthedriverdidnotfollowhisinstructions.Ifthisbetrue,itgoestoprovethatthe driverhadnotbeendiligentandhadnottakenthenecessaryprecautionstoinsurethesafetyofhispassengers.Hadhe changedthetires,speciallythoseinfront,withnewones,ashehadbeeninstructedtodo,probably,despitehisspeeding,as wehavealreadystated,theblowoutwouldnothaveoccurred.Allinall,thereisreasontobelievethatthedriveroperated anddrovehis vehiclenegligently,resultinginthedeathoffourofhispassengers,physical injuriestoothers,andthe completelossanddestructionoftheirgoods,andyetthecriminalcaseagainsthim,onmotionofthefiscalandwithhis consent,wasprovisionallydismissed,becauseaccordingtothefiscal,thewitnessesonwhosetestimonyhewasbankingto supportthecomplaint,eitherfailedorappearorwerereluctanttotestify.Buttherecordofthecasebeforeusshowsthe severalwitnesses,passengers,inthatbus,willinglyandunhesitatinglytestifiedincourttotheeffectofthesaiddriverwas negligent.Inthepublicinteresttheprosecutionofsaiderringdrivershouldbepursued,this,notonlyasamatterofjustice, butforthepromotionofthesafetyofpassengersonpublicutilitybuses.Letacopyofthisdecisionbefurnishedthe DepartmentofJusticeandtheProvincialFiscalofCavite. Inviewoftheforegoing,withthemodificationthat thedamages awardedbythetrial courtareincreasedfromONE THOUSAND(P1,000)PESOSTOSIXTHOUSAND(P6,000)PESOS,andfromSIXHUNDREDPESOSTOEIGHT HUNDRED(P800)PESOS,forthedeathofBataclanandfortheattorney'sfees,respectively,thedecisionappealedisfrom herebyaffirmed,withcosts. Paras,C.J.,Bengzon,Padilla,Reyes,A.,BautistaAngelo,Labrador,Concepcion,Reyes,J.B.L.,Endencia,andFelix,JJ., concur.
RepublicofthePhilippines SUPREMECOURT Manila ENBANC G.R.No.L25599April4,1968 HOMEINSURANCECOMPANY,plaintiffappellee, vs. AMERICANSTEAMSHIPAGENCIES,INC.andLUZONSTEVEDORINGCORPORATION,defendants, AMERICANSTEAMSHIPAGENCIES,INC.,defendantappellant. WilliamH.QuashaandAssociatesforplaintiffappellee. Ross,Selph,SalcedoandAssociatesfordefendantappellant. BENGZON,J.P.,J.: "ConsorcioPesquerodelPeruofSouthAmerica"shippedfreightprepaidatChimbate,Peru,21,740jutebagsofPeruvian fishmealthroughSSCrowborough,coveredbycleanbillsofladingNumbers1and2,bothdatedJanuary17,1963.The cargo,consignedtoSanMiguelBrewery,Inc.,nowSanMiguelCorporation,andinsuredbyHomeInsuranceCompanyfor $202,505,arrivedinManilaonMarch7,1963andwasdischargedintothelightersofLuzonStevedoringCompany.When thecargowasdeliveredtoconsigneeSanMiguelBreweryInc.,therewereshortagesamountingtoP12,033.85,causingthe latter to lay claims against Luzon Stevedoring Corporation, Home Insurance Company and the American Steamship Agencies,ownerandoperatorofSSCrowborough. Becausetheothersdeniedliability,HomeInsuranceCompanypaidtheconsigneeP14,870.71theinsurancevalueofthe loss,asfullsettlementoftheclaim.HavingbeenrefusedreimbursementbyboththeLuzonStevedoringCorporationand AmericanSteamshipAgencies,HomeInsuranceCompany,assubrogeetotheconsignee,filedagainstthemonMarch6, 1964beforetheCourtofFirstInstanceofManilaacomplaintforrecoveryofP14,870.71withlegalinterest,plusattorney's fees. Inanswer,LuzonStevedoringCorporationallegedthatitdeliveredwithduediligencethegoodsinthesamequantityand qualitythatithadreceivedthesamefromthecarrier.Italsoclaimedthatplaintiff'sclaimhadprescribedunderArticle366 oftheCodeofCommercestatingthattheclaimmustbemadewithin24hoursfromreceiptofthecargo. AmericanSteamshipAgenciesdeniedliabilitybyallegingthatundertheprovisionsoftheCharterpartyreferredtointhe billsoflading,thecharterer,nottheshipowner,wasresponsibleforanylossordamageofthecargo.Furthermore,itclaimed tohaveexercisedduediligenceinstowingthegoodsandthatasamereforwardingagent,itwasnotresponsibleforlossesor damagestothecargo. OnNovember17,1965,theCourtofFirstInstance,aftertrial,absolvedLuzonStevedoringCorporation,havingfoundthe lattertohavemerelydeliveredwhatitreceivedfromthecarrierinthesameconditionandquality,andorderedAmerican SteamshipAgenciestopayplaintiffP14,870.71withlegalinterestplusP1,000attorney'sfees.Saidcourtcitedthefollowing grounds: (a)ThenonliabilityclaimofAmericanSteamshipAgenciesunderthecharterpartycontractisnottenablebecause Article587oftheCodeofCommercemakestheshipagentalsocivillyliablefordamagesinfavorofthirdpersons duetotheconductofthecaptainofthecarrier; (b)Thestipulationinthecharterpartycontractexemptingtheownerfromliabilityisagainstpublicpolicyunder Article1744oftheCivilCode; (c)Incaseofloss,destructionordeteriorationofgoods,commoncarriersarepresumedatfaultornegligentunder Article1735oftheCivilCodeunless theyproveextraordinarydiligence,andtheycannotbycontractexempt themselvesfromliabilityresultingfromtheirnegligenceorthatoftheirservants;and (d)Whengoodsaredeliveredtothecarrieringoodorderandthesameareinbadorderattheplaceofdestination, thecarrierisprimafacieliable. Disagreeing with such judgment, American Steamship Agencies appealed directly to Us. The appeal brings forth for determinationthislegalissue:Isthestipulationinthecharterpartyoftheowner'snonliabilityvalidsoastoabsolvethe AmericanSteamshipAgenciesfromliabilityforloss? Thebillsoflading,1coveringtheshipmentofPeruvianfishmealprovideatthebackthereofthatthebillsofladingshallbe
governedbyandsubjecttothetermsandconditionsofthecharterparty,ifany,otherwise,thebillsofladingprevailoverall theagreements.2Ontheofthebillsarestamped"Freightprepaidaspercharterparty.Subjecttoallterms,conditionsand exceptionsofcharterpartydatedLondon,Dec.13,1962." Aperusal ofthecharterparty3referredtoshowsthat whilethepossessionandcontrol oftheshipwerenotentirely transferredtothecharterer,4thevesselwascharteredtoitsfullandcompletecapacity(Exh.3).Furthermore,the,charter hadtheoptiontogonorthorsouthorviceversa,5loading,stowinganddischargingatitsriskandexpense.6Accordingly, thecharterpartycontractisoneofaffreightmentoverthewholevesselratherthanademise.Assuch,theliabilityofthe shipownerforactsornegligenceofitscaptainandcrew,wouldremainintheabsenceofstipulation. Section2,paragraph2ofthecharterparty,providesthattheownerisliableforlossordamagetothegoodscausedby personalwantofduediligenceonitspartoritsmanagertomakethevesselinallrespectsseaworthyandtosecurethatshe beproperlymanned,equippedandsuppliedorbythepersonalactordefaultoftheowneroritsmanager.Saidparagraph, however,exemptstheownerofthevesselfromanylossordamageordelayarisingfromanyothersource,evenfromthe neglectorfaultofthecaptainorcreworsomeotherpersonemployedbytheowneronboard,forwhoseactstheowner wouldordinarilybeliableexceptforsaidparagraph.. Regardingthestipulation,theCourtofFirst Instancedeclaredthecontractas contrarytoArticle587oftheCodeof Commercemakingtheshipagentcivillyliableforindemnitiessufferedbythirdpersonsarisingfromactsoromissionsof thecaptaininthecareofthegoodsandArticle1744oftheCivilCodeunderwhichastipulationbetweenthecommon carrierandtheshipperorownerlimitingtheliabilityoftheformerforlossordestructionofthegoodstoadegreelessthan extraordinarydiligenceisvalidprovideditbereasonable,justandnotcontrarytopublicpolicy.Thereleasefromliabilityin thiscasewasheldunreasonableandcontrarytothepublicpolicyoncommoncarriers. The provisions of our Civil Code on common carriers were taken from AngloAmerican law.7 Under American jurisprudence,acommoncarrierundertakingtocarryaspecialcargoorcharteredtoaspecialpersononly,becomesa privatecarrier.8Asaprivatecarrier,astipulationexemptingtheownerfromliabilityforthenegligenceofitsagentisnot againstpublicpolicy,9andisdeemedvalid. SuchdoctrineWefindreasonable.TheCivilCodeprovisionsoncommoncarriersshouldnotbeappliedwherethecarrieris notactingassuchbutasaprivatecarrier.Thestipulationinthecharterpartyabsolvingtheownerfromliabilityforlossdue tothenegligenceofitsagentwouldbevoidonlyifthestrictpublicpolicygoverningcommoncarriersisapplied.Such policyhasnoforcewherethepublicatlargeisnotinvolved,asinthecaseofashiptotallycharteredfortheuseofasingle party. Andfurthermore,inacharteroftheentirevessel,thebillofladingissuedbythemastertothecharterer,asshipper,isinfact andlegalcontemplationmerelyareceiptandadocumentoftitlenotacontract,forthecontractisthecharterparty.10The consignee may not claim ignorance of said charter party because the bills of lading expressly referred to the same. Accordingly,theconsigneesunderthebillsofladingmustlikewiseabidebythetermsofthecharterparty.Andasstated, recoverycannotbehadthereunder,forlossordamagetothecargo,againsttheshipowners,unlessthesameisdueto personalactsornegligenceofsaidowneroritsmanager,asdistinguishedfromitsotheragentsoremployees.Inthiscase,no suchpersonalactornegligencehasbeenproved. WHEREFORE,thejudgmentappealedfromisherebyreversedandappellantisabsolvedfromliabilitytoplaintiff.Nocosts. Soordered. Reyes,J.B.L.,Makalintal,Zaldivar,Sanchez,Castro,AngelesandFernando,JJ.,concur. DizonJ.,tooknopart. Concepcion,C.J.,isonleave.
RepublicofthePhilippines SUPREMECOURT Manila ENBANC G.R.No.L28512February28,1973 PEDROR.DAVILAandPRECIOSAC.TIRO,plaintiffsappellants, vs. PHILIPPINEAIRLINES,defendantappellant. Dizon,DeGuzmanandVitugandPedroR.Davilaforplaintiffsappellants. SiguionReyna,Montecillo,BeloandOngsiakofordefendantappellant. MAKALINTAL,J.: InCivilCaseNo.5728oftheCourtofFirstInstanceofIloilo(PedroR.DavilaandPreciosaC.Tirol,plaintiffs,vs. PhilippineAirLines,Inc.,defendant)judgmentwasrenderedorderingthedefendanttopaytheplaintiffsvarioussumsof money,asfollows: (1)ForthedeathofPedroT.Davila,Jr.theamountofP6,000.00; (2)ForthelossoftheearningcapacityofthedeceasedattherateofP12,000.00perannumforfive(5) yearsintheamountofSixtyThousandPesos.(P60,000.00); (3)FormoraldamagesinfavoroftheplaintiffsTenThousandPesos(P10,000.00); (4)ForexemplarydamagesintheamountofTenThousandPesos(P10,000.00); (5)ForactualdamagestheamountofFiveThousandPesos(P5,000.00)brokendowntoasfollows:A rolexwatch valued at P600.00; a pistol worthP300.00; burial expenses P600.00; for the lot and the mausoleumP3,500.00; (6)ForAttorney'sfeestheamountofTenThousandPesos(P10,000.00)oratotalamountofOneHundred andOneThousandPesos(P101,000.00) Topaythecostsofthisproceedings. BothpartiesappealeddirectlytothisCourtinviewoftheaggregateoftheamountsawarded,thejudgmenthavingbeen renderedbeforetheeffectivityofRep.ActNo.5440.Inthisappealtheplaintiffsseekanincreaseinsaidamounts,andthe defendant,completeexonerationfrom,oratleastmitigationof,liability. The case arose from the tragic crash of a passenger plane of the defendant which took the lives of all its crew and passengers.Theplane,identifiedas PIC133,wasaDC3typeofaircraft,manufacturedin1942andacquiredbythe defendantin1948.Ithadflownalmost18,000hoursatthetimeofitsillfatedflight.Despiteitsage,however,ithadbeen certifiedasairworthybytheCivilAeronauticsAdministration.OnNovember23,1960,at5:30intheafternoon,ittookoff fromtheManduriaoAirport,Iloilo,onitswaytoManila,with33peopleonboard,includingtheplane'scomplement.Itdid notreachitsdestination,butcrashedatMt.Baco,Mindoro,onehourandfifteenminutesaftertakeoff.Amassivesearch wasundertakenbythedefendantandbyotherpartiesassoonasitwasrealizedthattheplane'sarrivalinManilawas overdue.Theplaintiffs,parentsofPedroT.Davila,Jr.,whowasoneofthepassengers,hadnodefinitenewsofwhathad happenedtotheirson,gettingwhatinformationtheycouldonlyfromconflictingnewspaperreports,untiltheyreceived,on December19,1960,aletterofcondolencefromthedefendant'spresidentAndresSoriano,informingthemthattheirsonhad diedinthecrash.AnditwasonlyonDecember29thathisbodywasrecoveredantakenbacktoIloilo. Theissuesbeforethetrialcourt,andnowbeforeUsinthisappeal,arewhetherornotthedefendantisliableforviolationof itscontractofcarriageandifso,forhowmuch.TheprovisionsoftheCivilCodeonthissubstantivequestionofliabilityare clearandexplicit.Article1733bindscommoncarriers,"fromthenatureoftheirbusinessandbyreasonsofpublicpolicy,... toobserveextraordinarydiligenceinthevigilance...forthesafetyofthepassengerstransportedbythemaccordingtoallthe circumstancesofeachcase."Article1755establishesthestandardofcarerequiredofacommoncarrier,whichis,"tocarry thepassengerssafelyasfarashumancareandforesightcanprovide,usingtheutmostdiligenceofverycautiouspersons, withdueregardforallthecircumstances."Article1756fixestheburdenofproofbyprovidingthat"incaseofdeathofor injuriestopassengers,commoncarriersarepresumedtohavebeenatfaultortohaveactednegligently,unlesstheyprove thattheyobservedextraordinarydiligenceasprescribedinArticles1733and1755."Lastly,Article1757statesthat"the responsibilityofacommoncarrierforthesafetyofpassengers...cannotbedispensedwithorlessenedbystipulation,bythe
postingofnotices,bystatementsontickets,orotherwise." TherouteprescribedbytheCivilAeronauticsAdministrationfortheflightofplanePIC113intheafternoonofNovember 23, 1960 was IloiloRomblonManila, the latter stage, denominated as airway "Amber I," being a straight lane from RomblontoManila.Theprescribedelevationoftheflightwas6,000ft.Theplanereporteditspositionaftertakeoffand againwhenitwasabeamtheRoxashomer.However,itdidnotinterceptairway"AmberI"overRomblonasitwassupposed todo,andthepilotdidnotgivehispositionthenalthoughRomblonwasacompulsorycheckingpoint.Thefactwasthatthe planehaddeviatedfromtheprescribedrouteby32milestothewestwhenitcrashedatMt.Baco.Thereadingofthe altimeteroftheplanewhenitswreckagewasfoundwas6,800ft. ThereisasuggestionthatinthecourseoftheflightbetweenRomblonandMindorotheaircraftwasdriftedwestwardbythe crosswindsthenblowingintheregion.Thedefendant,however,hasnotgivenadefiniteexplanationastowhy,ifsuchwas the case, thepilot failedtomakethenecessarycorrectioninhis flight tocompensateforthedrift. Accordingtothe defendant's witness, Maj. Mijares, Chief of the Aviation Safety Division of the Civil Aeronautics Administration and ChairmanoftheCAAInvestigatingCommittee,therewasanavigationalerror,towhichseveralfactorscontributed:"the weatherobservationatthattimefromtheWeatherBureauwasnotsogoodbetweenMt.BacoandRomblonandthewind aloftwasquitestrong,whichwouldbealsooneofthecausesforthedriftingoftheaircraft;andtheotherstrongprobability, Iwouldsay,wouldbethemalfunctionoftheaircraft'snavigationalinstrument."Hefurtherexplainedthat"acrosswindcan drifttheplaneifthepilotwillnotmakethenecessarycorrection,ifhisnavigationalinstrumentismalfunctioningandthe visualreferenceoutsidetheaircraftcouldnotmakethenecessarycorrections." ThereisnothinginthetestimonyofMaj.Mijarestoshowjusthowstrongthecrosswindswereintheregionatthetime, althoughintheinvestigationoftheaccidentbytheSenateCommitteeontransportationtherewastestimonythatthecross windshadavelocityofeither20to25knotsor25to35knotsanhour.Consideringtherelativelyshortdistancefrom RomblontoMt.Bacoandthebriefspanoftimeitwouldtaketoflythatdistance,crosswindswiththevelocitystatedcould nothavepossiblydeviatedtheplanebyasmuchas32miles. Thedefendantpointsoutthatthenavigationalinstrumentonboardtheplaneconsistedoftwo(2)setsofautomaticdirection finders(ADF)which,whenfoundafterthecrash,showedareadingthattheaircraftwasheadingnorth,whichwasthe properflightdirection.Thispoint,however,isofnovitalsignificanceinthiscasesinceitdoesnotexplainwhytheaircraft was32milesoffitsprescribedrouteinthefirstplace.Itissuggestedthatthepilotdidnotnoticethedriftofhisplane becauseofpoorvisibilityduetothickclouds,whichpreventedhimfrommakingthecorrespondingcorrectiononthebasis ofvisualreferencestotheterrainoutside.ButaccordingtoMaj.MijareshimselfthereportfromtheWeatherBureauatthe timeshowedthatvisibilitywas15milesbetweenRomblonandMt.Bacoandthat thecloudsfrom2,700to7,000ft. elevationwere"scattered."Andtheprofileoftheprobableweathercrosssectionalongairway"AmberI"duringtheflight (Exh.33A)showsthatat6,000ft.theairlanewasclearandfreeofclouds.Thesuggestionthereforethatthepilotwas practicallyflyingblindandconsequentlyfailedtonoticethedriftoftheaircraftisnotjustifiedbytheevidence.Indeedeven theinvestigatingteamofthedefendantunderthechairmanshipofCapt.JaimeManzanoconcludedinitsreportthat"based onthelimitedevidencesavailable,theboardisoftheopinionthattheprobablecausewastheinabilityofthepilotto intersectairway"AmberI"overRomblonandtomaintaintrackwithinitsdesignatedairwaylaneforreasonsunknown." Whatisundisputedthereforeisthatthepilotdidnotfollowtherouteprescribedforhisflight,atleastbetweenRomblonand Manila.SinceuptothatpointoverRomblon,wherehewassupposedtointersectairway"AmberI"theweatherwasclear, themostreasonableconclusionisthathisfailuretodosowasintentional,andthatheprobablywantedtoflyonastraight linetoManila.Itwasaviolationofaircrafttrafficrulestowhich,underthecircumstances,theaccidentmaybedirectly attributable. Inanycase,absentasatisfactoryexplanationonthepartofthedefendantastohowandwhytheaccidentoccurred,the presumptionisthatitwasatfault,underArticle1756oftheCivilCode. Thenextquestionrelatestotheamountofdamagesthatshouldbeawardedtotheplaintiffs,parentsofthedeceased.The trialcourtfixedtheindemnityforhisdeathintheamountofP6,000.00.Pursuanttocurrentjurisprudenceonthepointit shouldbeincreasedtoP12,000.00.1 Thedeceasedwasemployedasmanagerofaradiostation2,fromwhichhewasearningP8,400.00ayear,consistingofa monthlysalaryofP600.00andallowanceofP100.00.Asalawyerandjuniorpartnerofhisfatherinthelawoffice,hehad anannualincomeofP3,600.00.FromfarminghewasgettinganaverageofP3,000.00.Allinallthereforethedeceasedhad grossearningsofP15,000.00ayear. AccordingtoArticle2206,paragraph(1),oftheCivilCode,"thedefendantshallbeliableforthelossoftheearning capacityofthedeceasedandindemnityshallbepaidtotheheirsofthelatter."ThisArticle,whilereferringto"damagesfor
deathcausedbycrimeorquasidelict,"isexpresslymadeapplicablebyArticle1764"tothedeathofapassengercausedby thebreachofcontractbyacommoncarrier." Thedeceased,PedroDavila,Jr.,wassingleand30yearsofagewhenhedied.Atthatageone'snormallifeexpectancyis 331/3years,accordingtotheformula(2/3x[8030])adoptedbythisCourtinthecaseofVillaReyTransit,Inc.vs.Court ofAppeals3onthebasisoftheAmericanExpectancyTableofMortalityortheActuarialofCombinedExperienceTableof Mortality.However,althoughthedeceasedwasinrelativelygoodhealth,hismedicalhistoryshowsthathehadcomplained ofandbeentreatedforsuchailmentsasbackaches,chestpainsandoccasionalfeelingsoftiredness.Itisreasonabletomake anallowanceforthesecircumstancesandconsider,forpurposesofthiscase,areductionofhislifeexpectancyto25years. InthesamecaseofVillaRevenueTransitthisCourtstated: "...earningcapacity,asanelementofdamagestoone'sestateforhisdeathbywrongfulactisnecessarilyhisnetearning capacityorhiscapacitytoacquiremoney,lessthenecessaryexpenseforhisownliving.Statedotherwise,theamount recoverableisnotlossoftheentireearnings,butratherthelossofthatportionoftheearningswhichthebeneficiarywould havereceived.Inotherwords,onlynetearnings,notgrossearnings,aretobeconsidered,thatis,thetotaloftheearnings lessexpensesnecessaryinthecreationofsuchearningsorincomeandlesslivingandotherincidentalexpenses." Consideringthefactthatthedeceasedwasgettinghisincomefromthree(3)differentsources,namelyfrommanaginga radiostation,fromlawpracticeandfromfarming,theexpensesincidentaltothegenerationofsuchincomewerenecessarily morethanifhehadonlyonesource.Togetherwithhislivingexpenses,adeductionofP600.00amonth,orP7,200.00a year,seemstoUsreasonable,leavinganetyearlyincomeofP7,800.00.Thisamount,multipliedby25years,orP195,000.00 istheamountwhichshouldbeawardedtotheplaintiffsinthisparticularrespect. Actuallossessustainedconsistofthefollowing,asfoundbythetrialcourt:"RolexWatchP600.00;pistolP300.00; BurialExpensesP600.00;andcostofcemeterylotandmausoleumP3,500.00." UnderArticle2206,inrelationtoArticle1764,oftheCivilCode,theparentsofthedeceasedareentitledtomoraldamages fortheirmentalanguish.ThetrialcourtawardedP10,000.00inthisconcept,andWefindnojustificationtochangethe award,consideringthelongperiodofuncertaintyandsufferingtheplaintiffsunderwentfromNovember23,whentheplane crashoccurred,toDecember19,whentheyreceivedaletterfromthedefendant'spresidentconfirmingthedeathoftheir son,andagaintothefollowingDecember29,whenhisbodywasfinallyrecoveredandtakenbacktothem. WithrespecttotheawardofP10,000.00asexemplarydamages,itisOuropinionthatthesameshouldbeeliminated. AccordingtoArticle2232oftheCivilCode,incontractsandquasicontractsthecourtmayawardexemplarydamagesifthe defendantactedinawanton,fraudulent,reckless,oppressiveormalevolentmanner.Thefailureofthedefendanthereto exerciseextraordinarydiligence,asrequiredbylaw,doesnotamounttoanyoneofthecircumstancescontemplatedinthe saidprovision. Thetrialcourthasawardedattorney'sfeesofP10,000.00.Wedonotfindthisawardgroundlessortheamountthereof unreasonable. ThetotalofthedifferentitemsaboveenumeratedisP232,000.00.Thejudgmentofthecourtaquoisthereforemodified accordinglyandthedefendantisorderedtopaythesaidamounttotheplaintiffs,withlegalinterestthereonfromthefinality ofthisjudgment.Withcostsagainstthedefendant. Concepcion,C.J.,Zaldivar,Castro,Fernando,Teehankee,Barredo,Makasiar,AntonioandEsguerra,JJ.,concur.
RepublicofthePhilippines SUPREMECOURT Manila ENBANC G.R.No.L6577374April30,1987 COMMISSIONEROFINTERNALREVENUE,petitioner, vs. BRITISHOVERSEASAIRWAYSCORPORATIONandCOURTOFTAXAPPEALS,respondents. Quasha,Asperilla,Ancheta,Pea,Valmonte&MarcosforrespondentBritishAirways. MELENCIOHERRERA,J.: PetitionerCommissionerofInternalRevenue(CIR)seeksareviewoncertiorariofthejointDecisionoftheCourtofTax Appeals(CTA)inCTACasesNos.2373and2561,dated26January1983,whichsetasidepetitioner's assessmentof deficiencyincometaxesagainstrespondentBritishOverseasAirwaysCorporation(BOAC)forthefiscalyears1959to1967, 196869to197071,respectively,aswellasitsResolutionof18November,1983denyingreconsideration. BOACisa100%BritishGovernmentownedcorporationorganizedandexistingunderthelawsoftheUnitedKingdomItis engagedintheinternationalairlinebusinessandisamembersignatoryoftheInterlineAirTransportAssociation(IATA). Assuchitoperatesairtransportationserviceandsellstransportationticketsovertheroutesoftheotherairlinemembers. Duringtheperiodscoveredbythedisputedassessments,itisadmittedthatBOAChadnolandingrightsfortrafficpurposes inthePhilippines,andwasnotgrantedaCertificateofpublicconvenienceandnecessitytooperateinthePhilippinesbythe CivilAeronauticsBoard(CAB),exceptforaninemonthperiod,partlyin1961andpartlyin1962,whenitwasgranteda temporarylandingpermitbytheCAB.Consequently,itdidnotcarrypassengersand/orcargotoorfromthePhilippines, althoughduringtheperiodcoveredbytheassessments,itmaintainedageneralsalesagentinthePhilippinesWamer Barnes and Company, Ltd., and later Qantas Airways which was responsible for selling BOAC tickets covering passengersandcargoes.1 G.R.No.65773(CTACaseNo.2373,theFirstCase) On7May1968,petitionerCommissionerofInternalRevenue(CIR,forbrevity)assessedBOACtheaggregateamountof P2,498,358.56fordeficiencyincometaxescoveringtheyears1959to1963.ThiswasprotestedbyBOAC.Subsequent investigationresultedintheissuanceofanewassessment,dated16January1970fortheyears1959to1967intheamountof P858,307.79.BOACpaidthisnewassessmentunderprotest. On7October1970,BOACfiledaclaimforrefundoftheamountofP858,307.79,whichclaimwasdeniedbytheCIRon16 February1972.Butbeforesaiddenial,BOAChadalreadyfiledapetitionforreviewwiththeTaxCourton27January1972, assailingtheassessmentandprayingfortherefundoftheamountpaid. G.R.No.65774(CTACaseNo.2561,theSecondCase) On17November1971,BOACwasassesseddeficiencyincometaxes,interests,andpenaltyforthefiscalyears19681969to 19701971intheaggregateamountofP549,327.43,andtheadditionalamountsofP1,000.00andP1,800.00ascompromise penaltiesforviolationofSection46(requiringthefilingofcorporationreturns)penalizedunderSection74oftheNational InternalRevenueCode(NIRC). On25November1971,BOACrequestedthattheassessmentbecountermandedandsetaside.Inaletter,dated16February 1972,however,theCIRnotonlydeniedtheBOACrequestforrefundintheFirstCasebutalsoreissuedintheSecondCase thedeficiencyincometaxassessmentforP534,132.08fortheyears1969to197071plusP1,000.00ascompromisepenalty underSection74oftheTaxCode.BOAC'srequestforreconsiderationwasdeniedbytheCIRon24August1973.This promptedBOACtofiletheSecondCasebeforetheTaxCourtprayingthatitbeabsolvedofliabilityfordeficiencyincome taxfortheyears1969to1971. ThiscasewassubsequentlytriedjointlywiththeFirstCase. On26January1983,theTaxCourtrenderedtheassailedjointDecisionreversingtheCIR.TheTaxCourtheldthatthe proceedsofsalesofBOACpassageticketsinthePhilippinesbyWarnerBarnesandCompany,Ltd.,andlaterbyQantas Airways,duringtheperiodinquestion,donot constituteBOACincomefromPhilippinesources "sincenoserviceof carriageofpassengersorfreightwasperformedbyBOACwithinthePhilippines"and,therefore,saidincomeisnotsubject toPhilippineincometax.TheCTApositionwasthatincomefromtransportationisincomefromservicessothattheplace whereservicesarerendereddeterminesthesource.Thus,inthedispositiveportionofitsDecision,theTaxCourtordered
petitionertocreditBOACwiththesumofP858,307.79,andtocancelthedeficiencyincometaxassessmentsagainstBOAC intheamountofP534,132.08forthefiscalyears196869to197071. Hence,thisPetitionforReviewoncertiorarioftheDecisionoftheTaxCourt. TheSolicitorGeneral,inrepresentationoftheCIR,hasaptlydefinedtheissues,thus: 1. Whether or not the revenue derived by private respondent British Overseas Airways Corporation (BOAC)fromsalesofticketsinthePhilippinesforairtransportation,whilehavingnolandingrightshere, constituteincomeofBOACfromPhilippinesources,and,accordingly,taxable. 2.WhetherornotduringthefiscalyearsinquestionBOACsaresidentforeigncorporationdoingbusiness inthePhilippinesorhasanofficeorplaceofbusinessinthePhilippines. 3.Inthealternativethatprivaterespondentmaynotbeconsideredaresidentforeigncorporationbuta nonresidentforeigncorporation,thenitisliabletoPhilippineincometaxattherateofthirtyfivepercent (35%)ofitsgrossincomereceivedfromallsourceswithinthePhilippines. UnderSection20ofthe1977TaxCode: (h)thetermresidentforeigncorporationengagedintradeorbusinesswithinthePhilippinesorhavingan officeorplaceofbusinesstherein. (i)Theterm"nonresidentforeigncorporation"appliestoaforeigncorporationnotengagedintradeor businesswithinthePhilippinesandnothavinganyofficeorplaceofbusinesstherein ItisourconsideredopinionthatBOACisaresidentforeigncorporation.Thereisnospecificcriterionastowhatconstitutes "doing"or"engagingin"or"transacting"business.Eachcasemustbejudgedinthelightofitspeculiarenvironmental circumstances.Thetermimpliesacontinuityofcommercialdealingsandarrangements,andcontemplates,tothatextent, the performance of acts or works or the exercise of some of the functions normally incident to, and in progressive prosecutionofcommercialgainorforthepurposeandobjectofthebusinessorganization.2"Inorderthataforeign corporationmayberegardedasdoingbusinesswithinaState,theremustbecontinuityofconductandintentiontoestablish acontinuousbusiness,suchastheappointmentofalocalagent,andnotoneofatemporarycharacter.3 BOAC,duringtheperiodscoveredbythesubjectassessments,maintainedageneralsalesagentinthePhilippines,That generalsalesagent,from1959to1971,"wasengagedin(1)sellingandissuingtickets;(2)breakingdownthewholetripinto seriesoftripseachtripintheseriescorrespondingtoadifferentairlinecompany;(3)receivingthefarefromthewhole trip;and(4)consequentlyallocatingtothevariousairlinecompaniesonthebasisoftheirparticipationintheservices renderedthroughthemodeofinterlinesettlementasprescribedbyArticleVIoftheResolutionNo.850oftheIATA Agreement."4Thoseactivitieswereinexerciseofthefunctionswhicharenormallyincidentto,andareinprogressive pursuitof,thepurposeandobjectofitsorganizationasaninternationalaircarrier.Infact,theregularsaleoftickets,its mainactivity,istheverylifebloodoftheairlinebusiness,thegenerationofsalesbeingtheparamountobjective.There shouldbenodoubtthenthatBOACwas"engagedin"businessinthePhilippinesthroughalocalagentduringtheperiod coveredbytheassessments.Accordingly,itisaresidentforeigncorporationsubjecttotaxuponitstotalnetincomereceived intheprecedingtaxableyearfromallsourceswithinthePhilippines.5 Sec.24.Ratesoftaxoncorporations.... (b)Taxonforeigncorporations.... (2) Resident corporations.A corporationorganized, authorized, orexistingunder thelaws of any foreign country, except a foreign fife insurance company, engaged in trade or business within the Philippines, shall be taxable as provided in subsection (a) of this section upon the total net income receivedintheprecedingtaxableyearfromallsourceswithinthePhilippines.(Emphasissupplied) Next,weaddressourselvestotheissueofwhetherornottherevenuefromsalesofticketsbyBOACinthePhilippines constitutesincomefromPhilippinesourcesand,accordingly,taxableunderourincometaxlaws. TheTaxCodedefines"grossincome"thus: "Grossincome"includesgains,profits,andincomederivedfromsalaries,wagesorcompensationfor personal service of whatever kind and in whatever form paid, or from profession, vocations, trades, business,commerce,sales,ordealingsinproperty,whetherrealorpersonal,growingoutoftheownership oruseoforinterestinsuchproperty;alsofrominterests,rents,dividends,securities,orthetransactionsof anybusinesscarriedonforgainorprofile,orgains,profits,andincomederivedfromanysourcewhatever (Sec.29[3];Emphasissupplied) Thedefinitionisbroadandcomprehensivetoincludeproceedsfromsalesoftransportdocuments."Thewords'incomefrom anysourcewhatever'disclosealegislativepolicytoincludeallincomenotexpresslyexemptedwithintheclassoftaxable
incomeunderourlaws."Incomemeans"cashreceivedoritsequivalent";itistheamountofmoneycomingtoaperson withinaspecifictime...;itmeanssomethingdistinctfromprincipalorcapital.For,whilecapitalisafund,incomeisaflow. Asusedinourincometaxlaw,"income"referstotheflowofwealth.6 The records show that the Philippine gross income of BOAC for the fiscal years 196869 to 197071 amounted to P10,428,368.00.7 Didsuch"flowofwealth"comefrom"sourceswithinthePhilippines", Thesourceofanincomeistheproperty,activityorservicethatproducedtheincome.8Forthesourceofincometobe consideredascomingfromthePhilippines,itissufficientthattheincomeisderivedfromactivitywithinthePhilippines.In BOAC'scase,thesaleofticketsinthePhilippinesistheactivitythatproducestheincome.Theticketsexchangedhandshere andpaymentsforfareswerealsomadehereinPhilippinecurrency.ThesiteofthesourceofpaymentsisthePhilippines. Theflowofwealthproceededfrom,andoccurredwithin,Philippineterritory,enjoyingtheprotectionaccordedbythe Philippinegovernment.Inconsiderationofsuchprotection,theflowofwealthshouldsharetheburdenofsupportingthe government. Atransportationticketisnotamerepieceofpaper.Whenissuedbyacommoncarrier,itconstitutesthecontractbetween the ticketholder and the carrier.It gives rise to theobligationof the purchaser of theticket topaythe fare and the correspondingobligationofthecarriertotransportthepassengeruponthetermsandconditionssetforththereon.The ordinaryticketissuedtomembersofthetravelingpublicingeneralembraceswithinitstermsalltheelementstoconstituteit avalidcontract,bindinguponthepartiesenteringintotherelationship.9 True,Section37(a)oftheTaxCode,whichenumeratesitemsofgrossincomefromsourceswithinthePhilippines,namely: (1)interest,(21)dividends,(3)service,(4)rentalsandroyalties,(5)saleofrealproperty,and(6)saleofpersonalproperty, doesnotmentionincomefromthesaleofticketsforinternationaltransportation.However,thatdoesnotrenderitlessan incomefromsourceswithinthePhilippines.Section37,byitslanguage,doesnotintendtheenumerationtobeexclusive.It merelydirectsthatthetypesofincomelistedthereinbetreatedasincomefromsourceswithinthePhilippines.Acursory readingofthesectionwillshowthatitdoesnotstatethatitisanallinclusiveenumeration,andthatnootherkindofincome maybesoconsidered."10 BOAC,however,wouldimpressuponthisCourtthatincomederivedfromtransportationisincomeforservices,withthe resultthattheplacewheretheservicesarerendereddeterminesthesource;andsinceBOAC'sserviceoftransportationis performedoutsidethePhilippines,theincomederivedisfromsourceswithoutthePhilippinesand,therefore,nottaxable underourincometaxlaws.TheTaxCourtupholdsthatstandinthejointDecisionunderreview. TheabsenceofflightoperationstoandfromthePhilippinesisnotdeterminativeofthesourceofincomeorthesiteof incometaxation.Admittedly,BOACwasanofflineinternationalairlineatthetimepertinenttothiscase.Thetestof taxabilityisthe"source";andthesourceofanincomeisthatactivity...whichproducedtheincome.11Unquestionably,the passagedocumentationsinthesecasesweresoldinthePhilippinesandtherevenuetherefromwasderivedfromaactivity regularlypursuedwithinthePhilippines.businessaAndeveniftheBOACticketssoldcoveredthe"transportofpassengers andcargotoandfromforeigncities",12itcannotalterthefactthatincomefromthesaleofticketswasderivedfromthe Philippines. The word "source" conveys one essential idea, that of origin, and the origin of theincome hereinis the Philippines.13 It should be pointed out, however, that the assessments upheld herein apply only to the fiscal years covered by the questioneddeficiencyincometaxassessmentsinthesecases,or,from1959to1967,196869to197071.For,pursuantto PresidentialDecreeNo.69,promulgatedon24November,1972,internationalcarriersarenowtaxedasfollows: ...Provided,however,Thatinternationalcarriersshallpayataxof2percentontheircrossPhilippine billings.(Sec.24[b][21,TaxCode). PresidentialDecreeNo.1355,promulgatedon21April,1978,providedastatutorydefinitionoftheterm"grossPhilippine billings,"thus: ..."GrossPhilippinebillings"includesgrossrevenuerealizedfromupliftsanywhereintheworldbyany internationalcarrierdoingbusinessinthePhilippinesofpassagedocumentssoldtherein,whetherfor passenger,excessbaggageormailprovidedthecargoormailoriginatesfromthePhilippines.... TheforegoingprovisionensuresthatinternationalairlinesaretaxedontheirincomefromPhilippinesources.The2%tax ongrossPhilippinebillingsisanincometax.Ifithadbeenintendedasanexciseorpercentagetaxitwouldhavebeenplace underTitleVoftheTaxCodecoveringTaxesonBusiness. Lastly,wefindasuntenabletheBOACargumentthatthedismissalforlackofmeritbythisCourtoftheappealinJALvs. CommissionerofInternalRevenue(G.R.No.L30041)onFebruary3,1969,isresjudicatatothepresentcase.Theruling
bytheTaxCourtinthatcasewastotheeffectthatthemeresaleoftickets,unaccompaniedbythephysicalactofcarriageof transportation,doesnotrenderthetaxpayerthereinsubjecttothecommoncarrier'stax.AselucidatedbytheTaxCourt, however,thecommoncarrier'staxisanexcisetax,beingataxontheactivityoftransporting,conveyingorremoving passengersandcargofromoneplacetoanother.Itpurportstotaxthebusinessoftransportation.14Beinganexcisetax,the samecanbeleviedbytheStateonlywhentheacts,privilegesorbusinessesaredoneorperformedwithinthejurisdictionof thePhilippines.Thesubjectmatterofthecaseunderconsiderationisincometax,adirecttaxontheincomeofpersonsand otherentities"ofwhateverkindandinwhateverformderivedfromanysource."Sincethetwocasestreatofadifferent subjectmatter,thedecisioninonecannotberesjudicatatotheother. WHEREFORE,theappealedjointDecisionoftheCourtofTaxAppealsisherebySETASIDE.Privaterespondent,the BritishOverseasAirwaysCorporation(BOAC),isherebyorderedtopaytheamountofP534,132.08asdeficiencyincome taxforthefiscalyears196869to197071plus5%surcharge,and1%monthlyinterestfromApril16,1972foraperiodnot toexceedthree(3)yearsinaccordancewiththeTaxCode.TheBOACclaimforrefundintheamountofP858,307.79is herebydenied.Withoutcosts. SOORDERED. SeparateOpinions TEEHANKEE,C.J.,concurring: IconcurwiththeCourt'smajorityjudgmentupholdingtheassessmentsofdeficiencyincometaxesagainstrespondent BOACforthefiscalyears19591969to19701971andthereforesettingasidetheappealedjointdecisionofrespondent CourtofTaxAppeals.IjustwishtopointoutthattheconflictbetweenthemajorityopinionpennedbyMr.JusticeFeliciano astothepropercharacterizationofthetaxableincomederivedbyrespondentBOACfromthesalesinthePhilippinesof ticketsfoeBOACformtheissuedbyitsgeneralsalesagentinthePhilippinesgasbecomemootafterNovember24,1972. BoothopinionsstatethatbyamendmentthroughP.D.No.69,promulgatedonNovember24,1972,ofsection24(b)(2)ofthe TaxCodeprovidingdortherateofincometaxonforeigncorporations,internationalcarrierssuchasrespondentBOAC, havesincethenbeentaxedatareducedrateof2%ontheirgrossPhilippinebillings.Thereis,therefore,nolongerant sourceofsubstantialconflictbetweenthetwoopinionsastothepresent2%taxontheirgrossPhilippinebillingscharged againstsuchinternationalcarriersashereinrespondentforeigncorporation. FELICIANO,J.,dissenting: Withgreatrespectandreluctance,irecordmydissentfromtheopinionofMme.JusticeA.A.MelencioHerreraspeaking forthemajority.Inmyopinion,thejointdecisionoftheCourtofTaxAppealsinCTACasesNos.2373and2561,dated26 January1983,iscorrectandshouldbeaffirmed. ThefundamentalissueraisedinthispetitionforreviewiswhethertheBritishOverseasAirwaysCorporation(BOAC),a foreignairlinecompanywhichdoesnotmaintainanyflightoperationstoandfromthePhilippines,isliableforPhilippine incometaxationinrespectof"salesofairtickets"inthePhilippinesthroughageneralsalesagent,relatingtothecarriageof passengersandcargobetweentwopointsbothoutsidethePhilippines. 1.TheSolicitorGeneralhasdefinedasoneoftheissueinthiscasethequestionof: 2.Whetherornotduringthefiscalyearsinquestion1BOAC[was]aresidentforeigncorporationdoing businessinthePhilippinesor[had]anofficeorplaceofbusinessinthePhilippines. Itisimportanttonoteattheoutsetthattheanswertotheabovequotedissueisnotdeterminativeofthelialibityofthe BOACtoPhilippineincometaxationinrespectoftheincomehereinvolved.TheliabilityofBOACtoPhilippineincome taxationinrespectofsuchincomedepends,notonBOAC'sstatusasa"residentforeigncorporation"oralternatively,asa "nonresident foreign corporation," but rather on whether or not such income is derived from "source within the Philippines." A"residentforeigncorporation"orforeigncorporationengagedintradeorbusinessinthePhilippinesorhavinganofficeor placeofbusinessinthePhilippinesissubjecttoPhilippineincometaxationonlyinrespectofincomederivedfromsources withinthePhilippines.Section24(b)(2)oftheNationalInternalRevenueCODE("TaxCode"),asamendedbyRepublic ActNo.2343,approved20June1959,asitexistedupto3August1969,readasfollows: (2)Residentcorporations.AforeigncorporationengagedintradeorbusinesswithinthePhilippines (expectforeignlifeinsurancecompanies)shallbetaxableasprovidedinsubsection(a)ofthissection. Section24(a)oftheTaxCodeinturnprovides:
Rateoftaxoncorporations.(a)Taxondomesticcorporations....andaliketaxshallbelivied, collected,andpaidannuallyuponthetotalnetincomereceivedinthepreceedingtaxableyearfromall sourceswithinthePhilippinesbyeverycorporationorganized,authorized,orexistingunderthelawsof anyforeigncountry:....(Emphasissupplied) RepublicActNo.6110,whichtookeffecton4August1969,madethisevenclearerwhenitamendedoncemoreSection24 (b)(2)oftheTaxCodesoastoreadasfollows: (2)ResidentCorporations. Acorporation,organized,authorizedorexistingunderthelawsofany foreigncounrty,exceptforeignlifeinsurancecompany,engagedintradeorbusinesswithinthePhilippines, shallbetaxableasprovidedinsubsection(a)ofthissectionuponthetotalnetincomereceivedinthe precedingtaxableyearfromallsourceswithinthePhilippines.(Emphasissupplied) ExactlythesameruleisprovidedbySection24(b)(1)oftheTaxCodeuponnonresidentforeigncorporations.Section24 (b)(1)asamendedbyRepublicActNo.3825approved22June1963,readasfollows: (b)Taxonforeigncorporations.(1)Nonresidentcorporations.Thereshallbelevied,collectedand paidforeachtaxableyear,inlieuofthetaximposedbytheprecedingparagraphupontheamountreceived byeveryforeigncorporationnotengagedintradeorbusinesswithinthePhilippines,fromallsources withinthePhilippines,asinterest,dividends,rents,salaries,wages,premium,annuities,compensations, remunerations,emoluments,orotherfixedordeterminativeannualorperiodicalgains,profitsandincome ataxequal tothirtypercentumofsuchamount:provided,however,that premiumsshallnotinclude reinsurancepremiums.2 Clearly, whether the foreign corporate taxpayer is doing business in the Philippines and therefore a resident foreign corporation,ornotdoingbusinessinthePhilippinesandthereforeanonresidentforeigncorporation,itisliabletoincome taxonlytotheextentthatitderivesincomefromsourceswithinthePhilippines.Thecircumtancesthataforeigncorporation isresidentinthePhilippinesyieldsnoinferencethatalloranypartofitsincomeisPhilippinesourceincome.Similarly,the nonresidentstatusofaforeigncorporationdoesnotimplythatithasnoPhilippinesourceincome.Conversely,thereceipt ofPhilippinesourceincomecreatesnopresumptionthattherecipientforeigncorporationisaresidentofthePhilippines. Thecriticalissue,forpresentpurposes,isthereforewhetherofnotBOACisderivingincomefromsourceswithinthe Philippines. 2.Forpurposesofincometaxation,itiswelltobearinmindthatthe"sourceofincome"relatesnottothephysicalsourcing ofaflowofmoneyorthephysicalsitusofpaymentbutrathertothe"property,activityorservicewhichproducedthe income."InHowdenandCo.,Ltd.vs.CollectorofInternalRevenue,3thecourtdealtwiththeissueoftheapplicablesource rulerelatingtoreinsurancepremiumspaidbyalocalinsurancecompanytoaforeignreinsurancecompanyinrespectof riskslocatedinthePhilippines.TheCourtsaid: Thesourceofanincomeistheproperty,activityorservicesthatproducedtheincome.Thereinsurance premiumsremittedtoappellantsbyvirtueofthereinsurancecontract,accordingly,hadfortheirsourcethe undertakingtoindemnifyCommonwealthInsuranceCo.againstliability.Saidundertakingistheactivity thatproducedthereinsurancepremiums,andthesametookplaceinthePhilippines.[T]hereinsurance, theliabilitiesinsuredandtheriskoriginallyunderwrittenbyCommonwealthInsuranceCo.,uponwhich thereinsurancepremiumsandindemnitywerebased,wereallsituatedinthePhilippines.4 TheCourtmaybeseentobesayingthatitistheunderlyingprestationwhichisproperlyregardedastheactivitygivingrise totheincomethatissoughttobetaxed.IntheHowdencase,thatunderlyingprestationwastheindemnificationofthelocal insurancecompany.SuchindemnificationcouldtakeplaceonlyinthePhilippineswheretheriskswerelocatedandwhere paymentfromtheforeignreinsurance(incasethecasualtyinsuredagainstoccurs)wouldbereceivedinPhilippinepesos underthereinsurancepremiumspaidbythelocalinsurancecompaniesconstitutedPhilippinesourceincomeoftheforeign reinsurances. Theconceptof"sourceofincome"forpurposesofincometaxationoriginatedintheUnitedStatesincometaxsystem.The phrase"sourceswithintheUnitedStates"wasfirstintroducedintotheU.S.taxsystemin1916,andwassubsequently embodiedinthe1939U.S.TaxCode.Asiscommonlyknown,ourTaxCode(CommonwealthAct466,asamended)was patternedafterthe1939U.S.TaxCode.ItthereforeseemsusefultorefertoastandardU.S.textonfederalincometaxation: TheSupremeCourthassaid,inadefinitionmuchquotedbutoftendebated,thatincomemaybederived fromthreepossiblesourcesonly:(1)capitaland/or(2)laborand/or(3)thesaleofcapitalassets.Whilethe threeelementsofthisattemptatdefinitionneednotbeacceptedasallinclusive,theyserveasuseful guidesinanyinquiryintowhetheraparticularitemisfrom"sourcewithintheUnitedStates"andsuggest
aninvestigationintothenatureandlocationoftheactivitiesorpropertywhichproducetheincome.Ifthe incomeisfromlabor(services)theplacewherethelaborisdoneshouldbedecisive;ifitisdoneinthis counrty,theincomeshouldbefrom"sourcewithintheUnitedStates."Iftheincomeisfromcapital,the placewherethecapitalisemployedshouldbedecisive;ifitisemployedinthiscountry,theincomeshould befrom"sourcewithintheUnitedStates".Iftheincomeisfromthesaleofcapitalassets,theplacewhere thesaleismadeshouldbelikewisedecisive.Muchconfusionwillbeavoidedbyregardingtheterm "source"inthisfundamentallight.Itisnotaplace;itisanactivityorproperty.Assuch,ithasasitusor location; and if that situs or location is within the United States the resulting income is taxable to nonresidentaliensandforeigncorporations.TheintentionofCongressinthe1916andsubsequentstatutes wastodiscardthe1909and1913basisoftaxingnonresidentaliensandforeigncorporationsandtomake thetestoftaxabilitythe"source",orsitusoftheactivitiesorpropertywhichproducetheincome.... Thus,ifincomeistotaxed,therecipientthereofmustberesidentwithinthejurisdiction,orthepropertyor activitiesoutofwhichtheincomeissueorisderivedmustbesituatedwithinthejurisdictionsothatthe source of the income maybe said to havea situs in this country. The underlying theory is that the considerationfortaxationisprotectionoflifeandpropertyandthattheincomerightlytobelevieduponto defraytheburdensoftheUnitedStatesGovernmentisthatincomewhichiscreatedbyactivitiesand propertyprotectedbythisGovernmentorobtainedbypersonsenjoyingthatprotection.5 3.Weturnnowtothequestionwhatisthesourceofincomeruleapplicableintheinstantcase.Therearetwopossibly relevantsourceofincomerulesthatmustbeconfronted;(a)thesourceruleapplicableinrespectofcontractsofservice;and (b)thesourceruleapplicableinrespectofsalesofpersonalproperty. Whereacontractfortherenditionofserviceisinvolved,theapplicablesourcerulemaybesimplystatedasfollows:the incomeissourcedintheplacewheretheservicecontractedforisrendered.Section37(a)(3)ofourTaxCodereadsas follows: Section37.IncomeforsourceswithinthePhilippines. (a)GrossincomefromsourceswithinthePhilippines.Thefollowingitemsofgrossincomeshallbe treatedasgrossincomefromsourceswithinthePhilippines: xxxxxxxxx (3) Services. Compensation for labor or personal services performed in the Philippines;...(Emphasissupplied) Section37(c)(3)oftheTaxCode,ontheotherhand,dealswithincomefromsourceswithoutthePhilippinesinthe followingmanner: (c)GrossincomefromsourceswithoutthePhilippines.Thefollowingitemsofgrossincomeshallbe treatedasincomefromsourceswithoutthePhilippines: (3)CompensationforlabororpersonalservicesperformedwithoutthePhilippines;...(Emphasissupplied) ItshouldnotbesupposedthatSection37(a)(3)and(c)(3)oftheTaxCodeapplyonlyinrespectofservicesrenderedby individualnaturalpersons;theyalsoapplytoservicesrenderedbyorthroughthemediumofajuridicalperson.6Further,a contractofcarriageoroftransportationisassimilatedinourTaxCodeandRevenueRegulationstoacontractforservices. Thus,Section37(e)oftheTaxCodeprovidesasfollows: (e)Incomeform sources partlywithinandpartlywithoutthePhilippines.Items ofgross income, expenses,lossesanddeductions,otherthanthosespecifiedinsubsections(a)and(c)ofthissectionshall beallocatedorapportionedtosourceswithinorwithoutthePhilippines,undertherulesandregulations prescribedbytheSecretaryofFinance....Gains,profits,andincomefrom(1)transportationorother services rendered partlywithinand partlywithout the Philippines, or (2) from the sale of personnel property produced (in whole or in part) by the taxpayer within and sold without the Philippines, or produced(inwholeorinpart)bythetaxpayerwithoutandsoldwithinthePhilippines,shallbetreatedas derivedpartlyfromsourceswithinandpartlyfromsourceswithoutthePhilippines....(Emphasissupplied) ItshouldbenotedthattheaboveunderscoredportionofSection37(e)wasderivedfromthe1939U.S.TaxCodewhich "wasbaseduponarecognitionthattransportationwasaserviceandthatthesourceoftheincomederivedtherefromwasto betreatedasbeingtheplacewheretheserviceoftransportationwasrendered.7 Section37(e)oftheTaxCodequotedabovecarriesastrongwellnighirresistible,implicationthatincomederivedfrom transportationorotherservicesrenderedentirelyoutsidethePhilippinesmustbetreatedasderivedentirelyfromsources withoutthePhilippines.ThisimplicationisreinforcedbyaconsiderationofcertainprovisionsofRevenueRegulationsNo.2
entitled"IncomeTaxRegulations"asamended,firstpromulgatedbytheDepartmentofFinanceon10February1940. Section155ofRevenueRegulationsNo.2(implementingSection37oftheTaxCode)providesinpartasfollows: Section155.Compensationforlabororpersonnelservices.Grossincomefromsourceswithinthe PhilippinesincludescompensationforlabororpersonalserviceswithinthePhilippinesregardlessofthe residenceofthepayer,oftheplaceinwhichthecontractforserviceswasmade,oroftheplaceofpayment (Emphasissupplied) Section163ofRevenueRegulationsNo.2(stillrelatingtoSection37oftheTaxCode)dealswithaparticularspeciesof foreigntransportationcompaniesi.e.,foreignsteamshipcompaniesderivingincomefromsourcespartlywithinand partlywithoutthePhilippines: Section163Foreignsteamshipcompanies.Thereturnofforeignsteamshipcompanieswhosevessels touchpartsofthePhilippinesshouldincludeasgrossincome,thetotalreceiptsofalloutgoingbusiness whetherfreightorpassengers.Withthegrossincomethusascertained,theratioexistingbetweenitandthe grossincomefromallports,bothwithinandwithoutthePhilippinesofallvessels,whethertouchingofthe Philippinesornot,shouldbedeterminedasthebasisuponwhichallowabledeductionsmaybecomputed, .(Emphasissupplied) AnothertypeofutilityorserviceenterpriseisdealtwithinSection164ofRevenueRegulationsNo.2(againimplementing Section37oftheTaxCode)withprovidesasfollows: Section 164. Telegraph and cable services. A foreign corporation carrying on the business of transmissionoftelegraphorcablemessages betweenpointsinthePhilippinesandpointsoutsidethe PhilippinesderivesincomepartlyformsourcewithinandpartlyfromsourceswithoutthePhilippines. ...(Emphasissupplied) Oncemore,averystronginferencearisesunderSections163and164ofRevenueRegulationsNo.2thatsteamshipand telegraphandcableservicesrenderedbetweenpointsbothoutsidethePhilippinesgiverisetoincomewhollyfromsources outsidethePhilippines,andthereforenotsubjecttoPhilippineincometaxation. Weturntothe"sourceofincome"rulesrelatingtothesaleofpersonalproperty,upontheonehand,andtothepurchaseand saleofpersonalproperty,upontheotherhand. Weconsiderfirstsalesofpersonalproperty.Incomefromthesaleofpersonalpropertybytheproducerormanufacturerof suchpersonalpropertywillberegardedassourcedentirelywithinorentirelywithoutthePhilippinesorassourcedpartly withinandpartlywithout the Philippines,depending upontwofactors: (a)theplacewherethe saleofsuchpersonal propertyoccurs;and(b)theplacewheresuchpersonalpropertywasproducedormanufactured.Ifthepersonalproperty involved was both produced or manufactured and sold outside the Philippines, the income derived therefrom will be regarded as sourced entirely outside the Philippines, although the personal property had been produced outside the Philippines, or if the sale of the property takes place outside the Philippines and the personal was produced in the Philippines,then,theincomederivedfromthesalewillbedeemedpartlyasincomesourcedwithoutthePhilippines.In otherwords,theincome(andtherelatedexpenses,lossesanddeductions)willbeallocatedbetweensourceswithinand sourceswithoutthePhilippines.Thus,Section37(e)oftheTaxCode,althoughalreadyquotedabove,maybeusefully quotedagain: (e)IncomefromsourcespartlywithinandpartlywithoutthePhilippines....Gains,profitsandincome from(1)transportationorotherservicesrenderedpartlywithinandpartlywithoutthePhilippines;or(2) fromthesaleofpersonalpropertyproduced(inwholeorinpart)bythetaxpayerwithinandsoldwithout thePhilippines,orproduced(inwholeorinpart)bythetaxpayerwithoutandsoldwithinthePhilippines, shallbetreatedasderivedpartlyfromsourceswithinandpartlyfromsourceswithoutthePhilippines.... (Emphasissupplied) Incontrast,incomederivedfromthepurchaseandsaleofpersonalpropertyi.e.,tradingis,undertheTaxCode, regardedassourcedwhollyintheplacewherethepersonalpropertyissold.Section37(e)oftheTaxCodeprovidesinpart asfollows: (e)IncomefromsourcespartlywithinandpartlywithoutthePhilippines...Gains,profitsandincome derivedfromthepurchaseofpersonalpropertywithinanditssalewithoutthePhilippinesorfromthe purchaseofpersonalpropertywithout andits salewithinthePhilippines,shall betreatedas derived entirelyfromsourceswithinthecountryinwhichsold.(Emphasissupplied) Section159ofRevenueRegulationsNo.2putstheapplicablerulesuccinctly: Section159.Saleofpersonalproperty.Incomederivedfromthepurchaseandsaleofpersonalproperty
shallbetreatedasderivedentirelyfromthecountryinwhichsold.Theword"sold"includes"exchange." The"country"inwhich"sold"ordinarilymeanstheplacewherethepropertyismarketed.ThisSection doesnotapplytoincomefromthesalepersonalpropertyproduced(inwholeorinpart)bythetaxpayer withinandsoldwithoutthePhilippinesorproduced(inwholeorinpart)bythetaxpayerwithoutandsold withinthePhilippines.(SeeSection162oftheseregulations).(Emphasissupplied) 4. It will be seen that the basic problem is one of characterization of the transactions entered into by BOAC in the Philippines.Thosetransactionsmaybecharacterizedeitherassalesofpersonalproperty(i.e.,"salesofairlinetickets")or asenteringintoaleaseofservicesoracontractofserviceorcarriage.Theapplicable"sourceofincome"rulesdiffer dependinguponwhichcharacterizationisgiventotheBOACtransactions. Theappropriatecharacterization,inmyopinion,oftheBOACtransactionsisthatofenteringintocontractsofservice,i.e., carriageofpassengersorcargobetweenpointslocatedoutsidethePhilippines. Thephrase"saleofairlinetickets,"whilewidelyusedinpopularparlance,doesnotappeartobecorrectasamatteroftax law.Theairlineticketinandofitselfhasnomonetaryvalue,evenasscrappaper.Thevalueoftheticketlieswhollyinthe rightacquiredbythe"purchaser"thepassengertodemandaprestationfromBOAC,whichprestationconsistsofthe carriageofthe"purchaser"orpassengerfromtheonepointtoanotheroutsidethePhilippines.Theticketisreallythe evidenceofthecontractofcarriageenteredintobetweenBOACandthepassenger.Themoneypaidbythepassenger changeshandsinthePhilippines.ButthepassengerdoesnotreceiveundertakentobedeliveredbyBOAC.The"purchase priceoftheairlineticket"isquitedifferentfromthepurchasepriceofaphysicalgoodorcommoditysuchasapairofshoes ofarefrigeratororanautomobile;itisreallythecompensationpaidfortheundertakingofBOACtotransportthepassenger orcargooutsidethePhilippines. ThecharacterizationoftheBOACtransactionseitherassalesofpersonalpropertyoraspurchasesandsalesofpersonal property,appearentirelyinappropriatefromotherviewpoint.Considerfirstpurchasesandsales:isBOACproperlyregarded asengagedintradinginthepurchaseandsaleofpersonalproperty?Certainly,BOACwasnotpurchasingticketsoutside thePhilippines andsellingthem inthePhilippines.Considernextsales:canBOACberegardedas "selling" personal propertyproducedormanufacturedbyit?Inapopularorjournalisticsense,BOACmightbedescribedas"selling""a product"itsservice.However,forthetechnicalpurposesofthelawonincometaxation,BOACisinfactenteringinto contractsofserviceorcarriage.Theveryexistanceof"sourcerules"specificallyandpreciselyapplicabletotherenditionof services must preclude the applicationhereof"source rules" applyinggenerallytosales, andpurchases and sales,of personalpropertywhichcanbeinvokedonlybythegraceofpopularlanguage.Onaslightymoreabstractlevel,BOAC's incomeismoreappropriatelycharacterizedasderivedfroma"service",ratherthanfroman"activity"(abroadertermthan serviceandincludingtheactivityofselling)orfromthehereinvolvedisincometaxation,andnotasalestaxoranexciseor privilegetax. 5. The taxation of international carriers is today effected under Section 24 (b) (2) of the Tax Code, as amended by PresidentialDecreeNo.69,promulgatedon24November1972andbyPresidentialDecreeNo.1355,promulgatedon21 April1978,inthefollowingmanner: (2) Resident corporations.A corporationorganized, authorized, orexistingunder thelaws of any foreign country, engaged in trade or business within the Philippines, shall be taxable as provided in subsection(a)ofthissectionuponthetotalnetincomereceivedinthepreceedingtaxableyearfromall sourceswithinthePhilippines:Provided,however,Thatinternationalcarriersshallpayataxoftwoand onehalfpercentontheirgrossPhilippinebillings."GrossPhilippinesofpassagedocumentssoldtherein, whetherforpassenger,excessbaggegeormail,providethecargoormailoriginatesfromthePhilippines. Thegrossrevenuerealizedfromthesaidcargoormailshallincludethegrossfreightchargeuptofinal destination.GrossrevenuesfromcharteredflightsoriginatingfromthePhilippinesshalllikewiseformpart of"grossPhilippinebillings"regardlessoftheplaceofsaleorpaymentofthepassagedocuments.For purposesofdeterminingthetaxabilitytorevenuesfromcharteredflights,theterm"originatingfromthe Philippines"shallincludeflightofpasssengerswhostayinthePhilippinesformorethanfortyeight(48) hourspriortoembarkation.(Emphasissupplied) UndertheabovequotedprovisointernationalcarriersissuingforcompensationpassagedocumentationinthePhilippinesfor upliftsfromanypointintheworldtoanyotherpointintheworld,arenotchargedanyPhilippineincometaxontheir Philippinebillings(i.e.,billingsinrespectofpassengerorcargooriginatingfromthePhilippines).Underthisnewapproach, internationalcarrierswhoserviceportorpointsinthePhilippinesaretreatedinexactlythesamewayasinternational carriersnotservinganyportorpointinthePhilippines.Thus,thesourceofincomeruleapplicable,asabovediscussed,to
transportationorotherservicesrenderedpartlywithinandpartlywithoutthePhilippines,orwhollywithoutthePhilippines, hasbeensetaside.inplaceofPhilippineincometaxation,theTaxCodenowimposesthis2percenttaxcomputedonthe basisofbillingsinrespectofpassengersandcargooriginatingfromthePhilippinesregardlessofwhereembarkationand debarkationwouldbetakingplace.This2percenttaxiseffectivelyataxongrossreceiptsoranexciseorprivilegetax andnotataxonincome.Thereby,theGovernmenthasdoneawaywiththedifficultiesattendingtheallocationofincome andrelatedexpenses,lossesanddeductions.Becausetaxesaretheverylifebloodofgovernment,theresultingpotential "loss" or "gain" inthe amount of taxes collectible bythe state is sometimes, withvaryingdegrees of consciousness, consideredinchoosingfromamongcompetingpossiblecharacterizationsunderorinterpretationoftaxstatutes.Itishence perhapsusefultopointoutthatthedeterminationoftheappropriatecharacterizationherethatofcontractsofaircarriage ratherthansalesofairlineticketsentailsnodowntheroadlossofincometaxrevenuestotheGovernment.Inlieu thereof,theGovernmenttakesinrevenuesgeneratedbythe2percenttaxonthegrossPhilippinebillingsorreceiptsof internationalcarriers. IwouldvotetoaffirmthedecisionoftheCourtofTaxAppeals.
RepublicofthePhilippines SUPREMECOURT Manila SECONDDIVISION G.R.No.52159December22,1989 JOSEPILAPIL,petitioner, vs. HON.COURTOFAPPEALSandALATCOTRANSPORTATIONCOMPANY,INC.,respondents. MartinBadong,Jr.forpetitioner. EufronioK.Maristelaforprivaterespondent. PADILLA,J.: Thisisapetitiontoreviewoncertiorarithedecision*renderedbytheCourtofAppealsdated19October1979inCAG.R. No.57354Rentitled"JosePilapil,plaintiffappelleeversusAlatcoTransportationCo.,Inc.,defendantappellant,"which reversedandsetasidethejudgmentoftheCourtofFirstInstanceofCamarinesSurinCivilCaseNo.7230ordering respondenttransportationcompanytopaytopetitionerdamagesinthetotalsumofsixteenthousandthreehundredpesos(P 16,300.00). Therecorddisclosesthefollowingfacts: PetitionerplaintiffJosePilapil,apayingpassenger,boardedrespondentdefendant'sbusbearingNo.409atSanNicolas, IrigaCityon16September1971atabout6:00P.M.WhilesaidbusNo.409wasinduecoursenegotiatingthedistance betweenIrigaCityandNagaCity,uponreachingthevicinityofthecemeteryoftheMunicipalityofBaao,CamarinesSur, onthewaytoNagaCity,anunidentifiedman,abystanderalongsaidnationalhighway,hurledastoneattheleftsideofthe bus,whichhitpetitionerabovehislefteye.Privaterespondent'spersonnellostnotimeinbringingthepetitionertothe provincialhospitalinNagaCitywherehewasconfinedandtreated. Consideringthatthesightofhislefteyewasimpaired,petitionerwastakentoDr.MalabananofIrigaCitywherehewas treatedforanotherweek.Sincetherewasnoimprovementinhislefteye'svision,petitionerwenttoV.LunaHospital, QuezonCitywherehewastreatedbyDr.Capulong.DespitethetreatmentaccordedtohimbyDr.Capulong,petitionerlost partiallyhislefteye'svisionandsustainedapermanentscarabovethelefteye. Thereupon,petitionerinstitutedbeforetheCourtofFirstInstanceofCamarinesSur,BranchIanactionforrecoveryof damages sustainedas aresult ofthestonethrowingincident.Aftertrial,thecourt aquorenderedjudgment withthe followingdispositivepart: Wherefore,judgmentisherebyentered: 1.OrderingdefendanttransportationcompanytopayplaintiffJosePilapilthesumofP10,000.00, PhilippineCurrency,representingactualandmaterialdamagesforcausingapermanentscaronthe faceandinjuringtheeyesightoftheplaintiff; 2. Ordering further defendant transportation company to pay the sum of P 5,000.00, Philippine Currency,totheplaintiffasmoralandexemplarydamages; 3.Orderingfurthermore,defendanttransportationcompanytoreimburseplaintiffthesumofP300.00 forhismedicalexpensesandattorney'sfeesinthesumofP1,000.00,PhilippineCurrency;and 4.Topaythecosts. SOORDERED1 Fromthejudgment,privaterespondentappealedtotheCourtofAppealswheretheappealwasdocketedasCAG.R.No. 57354R.On19October1979,theCourtofAppeals,inaSpecialDivisionofFive,renderedjudgmentreversingandsetting asidethejudgmentofthecourtaquo. Hencethepresentpetition. InseekingareversalofthedecisionoftheCourtofAppeals,petitionercontendsthatsaidcourthasdecidedtheissuenotin accordwithlaw.Specifically,petitionerarguesthatthenatureofthebusinessofatransportationcompanyrequiresthe assumptionofcertainrisks,andthestoningofthebusbyastrangerresultingininjurytopetitionerpassengerisonesuch riskfromwhichthecommoncarriermaynotexemptitselffromliability. Wedonotagree. Inconsiderationoftherightgrantedtoitbythepublictoengageinthebusinessoftransportingpassengersandgoods,a
commoncarrierdoesnotgiveitsconsenttobecomeaninsurerofanyandallriskstopassengersandgoods.Itmerely undertakestoperformcertaindutiestothepublicasthelawimposes,andholdsitselfliableforanybreachthereof. UnderArticle1733oftheCivilCode,commoncarriersarerequiredtoobserveextraordinarydiligenceforthesafetyofthe passengertransportedbythem,accordingtoallthecircumstancesofeachcase.Therequirementofextraordinarydiligence imposeduponcommoncarriersisrestatedinArticle1755:"Acommoncarrierisboundtocarrythepassengerssafelyasfar ashumancareandforesightcanprovide,usingtheutmostdiligenceofverycautiouspersons,withdueregardforallthe circumstances."Further,incaseofdeathoforinjuriestopassengers,thelawpresumessaidcommoncarrierstobeatfault ortohaveactednegligently.2 Whilethelawrequiresthehighestdegreeofdiligencefromcommoncarriersinthesafetransportoftheirpassengersand createsapresumptionofnegligenceagainstthem,itdoesnot,however,makethecarrieraninsureroftheabsolutesafetyof itspassengers.3 Article 1755 of the Civil Code qualifies the duty of extraordinary care, vigilance and precaution in the carriage of passengersbycommoncarrierstoonlysuchashumancareandforesightcanprovide.whatconstitutescompliancewithsaid dutyisadjudgedwithdueregardtoallthecircumstances. Article1756oftheCivilCode,increatingapresumptionoffaultornegligenceonthepartofthecommoncarrierwhenits passengerisinjured,merelyrelievesthelatter,forthetimebeing,fromintroducingevidencetofastenthenegligenceonthe former,becausethepresumptionstandsintheplaceofevidence.Beingamerepresumption,however,thesameisrebuttable byproof that the common carrier had exercised extraordinary diligence as required by law in the performance of its contractualobligation,orthattheinjurysufferedbythepassengerwassolelyduetoafortuitousevent.4 Infine,wecanonlyinferfromthelawtheintentionoftheCodeCommissionandCongresstocurbtherecklessnessof driversandoperatorsofcommoncarriersintheconductoftheirbusiness. Thus,itisclearthatneitherthelawnorthenatureofthebusinessofatransportationcompanymakesitaninsurerofthe passenger'ssafety,butthatitsliabilityforpersonalinjuriessustainedbyitspassengerrestsuponitsnegligence,itsfailureto exercisethedegreeofdiligencethatthelawrequires.5 Petitionercontendsthatrespondentcommoncarrierfailedtorebutthepresumptionofnegligenceagainstitbyproofonits partthatitexercisedextraordinarydiligenceforthesafetyofitspassengers. Wedonotagree. First,asstatedearlier,thepresumptionoffaultornegligenceagainstthecarrierisonlyadisputablepresumption.Itgivesin wherecontraryfactsareestablishedprovingeitherthatthecarrierhadexercisedthedegreeofdiligencerequiredbylawor theinjurysufferedbythepassengerwasduetoafortuitousevent.Where,asintheinstantcase,theinjurysustainedbythe petitionerwasinnowayduetoanydefectinthemeansoftransportorinthemethodoftransportingortothenegligentor willfulactsofprivaterespondent'semployees,andthereforeinvolvingnoissueofnegligenceinitsdutytoprovidesafeand suitablecarsaswellascompetentemployees,withtheinjuryarisingwhollyfromcausescreatedbystrangersoverwhichthe carrierhadnocontrolorevenknowledgeorcouldnothaveprevented,thepresumptionisrebuttedandthecarrierisnotand oughtnottobeheldliable.Toruleotherwisewouldmakethecommoncarriertheinsureroftheabsolutesafetyofits passengerswhichisnottheintentionofthelawmakers. Second,whileasageneralrule,commoncarriersareboundtoexerciseextraordinarydiligenceinthesafetransportoftheir passengers,itwouldseemthatthisisnotthestandardbywhichitsliabilityistobedeterminedwheninterveningactsof strangersistobedetermineddirectlycausetheinjury,whilethecontractofcarriageArticle1763governs: Article1763.Acommoncarrierisresponsibleforinjuriessufferedbyapassengeronaccountofthewilful actsornegligenceofotherpassengersorofstrangers,ifthecommoncarrier'semployeesthroughthe exerciseofthediligenceofagoodfatherofafamilycouldhavepreventedorstoppedtheactoromission. Clearlyundertheaboveprovision,atortcommittedbyastrangerwhichcausesinjurytoapassengerdoesnotaccordthe latteracauseofactionagainstthecarrier.Thenegligenceforwhichacommoncarrierisheldresponsibleisthenegligent omissionbythecarrier'semployeestopreventthetortfrombeingcommittedwhenthesamecouldhavebeenforeseenand preventedbythem.Further,underthesameprovision,itistobenotedthatwhentheviolationofthecontractisduetothe willfulactsofstrangers,asintheinstantcase,thedegreeofcareessentialtobeexercisedbythecommoncarrierforthe protectionofitspassengerisonlythatofagoodfatherofafamily. Petitionerhas charged respondent carrier ofnegligence onthe groundthat the injurycomplained ofcould havebeen preventedbythecommoncarrierifsomethinglikemeshworkgrillshadcoveredthewindowsofitsbus. Wedonotagree. Althoughthesuggestedprecautioncouldhavepreventedtheinjurycomplainedof,theruleofordinarycareandprudenceis
notsoexactingastorequireonechargedwithitsexercisetotakedoubtfulorunreasonableprecautionstoguardagainst unlawfulactsofstrangers.Thecarrierisnotchargedwiththedutyofprovidingormaintainingvehiclesastoabsolutely preventanyandallinjuriestopassengers.Wherethecarrierusescarsofthemostapprovedtype,ingeneralusebyothers engagedinthesameoccupation,andexercisesahighdegreeofcareinmaintainingtheminsuitablecondition,thecarrier cannotbechargedwithnegligenceinthisrespect.6 Finally,petitionercontendsthatitistothegreaterinterestoftheStateifacarrierweremadeliableforsuchstonethrowing incidentsratherthanhavethebusridingpublicloseconfidenceinthetransportationsystem. Sadtosay,wearenotinapositiontosohold;suchapolicywouldbebetterlefttotheconsiderationofCongresswhichis empoweredtoenactlawstoprotectthepublicfromtheincreasingrisksanddangersoflawlessnessinsociety. WHEREFORE,thejudgmentappealedfromisherebyAFFIRMED. SOORDERED. MelencioHerrera(Chairperson),SarmientoandRegalado,concur. Paras,J.,tooknopart.
RepublicofthePhilippines SUPREMECOURT Manila FIRSTDIVISION G.R.No.89757August6,1990 ABOITIZSHIPPINGCORPORATION,petitioner, vs. COURTOFAPPEALSANDGENERALACCIDENTFIREANDLIFEASSURANCECORPORATION,LTD., respondents. Sycip,Salazar,Hernandez&Gatmaitanforpetitioner. Dollete,Blanco,Ejercito&Associatesforprivaterespondent. GANCAYCO,J.: Theextentoftheliabilityofacarrierofgoodsisagainbroughttotheforeinthiscase. OnOctober28,1980,thevesselM/V"P.Aboitiz"tookonboardinHongkongforshipmenttoManilasomecargoconsisting ofone(1)twenty(20)footercontainerholding271rollsofgoodsforapparelcoveredbyBillofLadingNo.515Mandone (1)forty(40)footercontainerholdingfourhundredfortyseven(447)rolls,ten(10)bulkandninetyfive(95)cartonsof goodsforapparelcoveredbyBillofLadingNo.505M.Thetotalvalue,includinginvoicevalue,freightage,customsduties, taxesandsimilarimportsamountstoUS$39,885.85forthefirstshipmentwhilethatofthesecondshipmentamountsto US$94,190.55.BothshipmentswereconsignedtothePhilippineApparel,Inc.andinsuredwiththeGeneralAccidentFire and Life Assurance Corporation, Ltd. (GAFLAC for short). The vessel is owned and operated by Aboitiz Shipping Corporation(Aboitizforshort). OnOctober31,1980onitswaytoManilathevesselsunkanditwasdeclaredlostwithallitscargoes.GAFLACpaidthe consigneetheamountsUS$39,885.85orP319,086.80andUS$94,190.55orP753,524.40forthelostcargo.AsGAFLAC wassubrogatedtoalltherights,interestsandactionsoftheconsigneeagainstAboitiz,itfiledanactionfordamagesagainst AboitizintheRegionalTrialCourtofManilaallegingthatthelosswasduetothefaultandnegligenceofAboitizandthe masterandcrewofitsvesselinthattheydidnotobservetheextraordinarydiligencerequiredbylawasregardscommon carriers. AftertheissueswerejoinedandthetrialonthemeritsadecisionwasrenderedbythetrialcourtonJune29,1985,the dispositivepartofwhichreadsasfollows: PREMISESCONSIDERED,theCourtfindsinfavoroftheplaintiffandagainstthedefendant,ordering thelattertopaytheformeractualdamagesinthesumofP1,072,611.20pluslegalinterestfromthedateof thefilingofthecomplaintonOctober28,1981,untilfullpaymentthereof,attorney'sfeesintheamountof 20%ofthetotalclaimandtopaythecosts. SOORDERED.1 Notsatisfiedtherewith,AboitizappealedtotheCourtofAppealswhereininduecourseadecisionwasrenderedonMarch 9,1989affirmingintototheappealeddecision,withcostsagainstdefendantAboitiz.2 AmotionforreconsiderationofsaiddecisionfiledbyAboitizwasdeniedinaresolutiondatedAugust15,1989. HencethehereinpetitionforreviewallegingthattheCourtofAppealsdecidedthecasenotinaccordancewithlawwhen 1.TheCourtofAppealsheldthat"findingsofadministrativebodiesarenotalwaysbindingoncourt.This isespeciallysointhecaseatbarwhereGAFLACwasnotapartyintheBMIproceedingsandwhich proceedings was not adversary in characther." This ruling is contrary to the principle established in Vasquezvs.CourtofAppeals(138SCRA559),whereitwasheldthatsincetheBMIpossesses the requiredexpertiseinshippingmattersandisimbuedwithquasijudicialpowers,itsfactualfindingsare conclusiveandbindingonthecourt.Likewise,thecaseofTimberExportInc.vs.RetlaSteamshipCo. (CAG.R.No.66143R)alsoestablishedtherulethatdecisionofBMImustbegiven"greatmaterialityand weighttothedeterminationandresolutionofthecase." 2.TheCourtofAppealsalsoheldthatthetrialcourtdidnoterrwhenitfixedtheliabilityofAboitiznot onthebasisofthestipulationinthebillsofladingatUS$500.00perpackage/containerbutontheactual valueoftheshipmentlostnotwithstandingthelonglineofcasesdecidedbythisHonorableSupreme Courtholdingacontraryopinion,asshownbelow.
3.TheCourtofAppealsalsoheldthatthetrialcourtdidnotabuseitsdiscretioningrantingGAFLAC's motionforexecutionpendingappealnotwithstandingtheabsenceofreasonableandjustifiablegroundsto supportthesame.3 UnderthefirstissuepetitionerstatethatthesinkingofthevesselM/V"P.Aboitiz"wasthesubjectofanadministrative investigationconductedbytheBoardofMarineInquiry(BMI)wherebyinadecisiondatedDecember26,1984,itwas foundthatthesinkingofthevesselmaybeattributedtoforcemajeureonaccountofatyphoon.Petitionercontendsthat thesefindingsareconclusiveonthecourts. Inrejectingtheevidenceofferedbythepetitionertheappellatecourtruled Butoverandabovealltheseconsiderations,thetrialcourtdidnoterrinnotgivingweighttothefindingof theBMIthatthevesselsankduetoafortuitousevent.Findingsofadministrativebodiesarenotalways bindingoncourts.ThisisespeciallysointhecaseatbarwhereplaintiffwasnotapartyintheBMI proceedingsandwhichproceedingwasnotadversaryincharacter.4 Asageneralrule,administrativefindingsoffactsarenotdisturbedbythecourtswhensupportedbysubstantialevidence unlessitistaintedwithunfairnessorarbitrarinessthatwouldamounttoabuseofdiscretionorlackofjurisdiction.5Evenin Vasquezvs.CourtofAppeals,6whichiscitedbypetitioner,thisCourtruledthatWenevertheless disagreewiththe conclusionoftheBMIexoneratingthecaptainfromanynegligence"sinceitobviouslyhadnottakenintoaccountthelegal responsibilityofacommoncarriertowardsthesecurityofthepassengersinvolved." This case was brought to court on October 28, 1981. The trial court was never informed of a parallel administrative investigationthatwasbeingconductedbytheBMIinanyofthepleadingsofthepetitioner.ItwasonlyonMarch22,1985 whenpetitionerrevealedtothetrialcourtthedecisionoftheBMIdatedDecember26,1984(onedayafterChristmasday). 7Thesaiddecisionappearstohavebeenrenderedoverthree(3)yearsafterthecasewasbroughttocourt. Moreover,saidadministrativeinvestigationwasconductedunilaterally.PrivaterespondentGAFLACwasnotnotifiedor givenanopportunitytoparticipatetherein.ItcannottherebybeboundbysaidfindingsandconclusionsoftheBMI. ThetrialcourtandtheappellatecourtfoundthatthesinkingoftheM/V"P.Aboitiz"wasnotduetothewavescausedby tropicalstorm"Yoning"butduetothefaultandnegligenceofpetitioner,itsmasterandcrew.Thecourtreproduceswith approvalsaidfindings xxxxxxxxx Afteracarefulexaminationoftheevidence,theCourtisconvincedintheplaintiffsclaimthattheM/V"Aboitiz"andits cargowerenotlostduetofortuitouseventorforcemajeure. Tobeginwith,paragraph4ofthemarineprotest(Exh."4",alsoExhibit"M"),whichisdefendant'sownevidence,shows thatthewindforcewhentheillfatedshipfounderedwas10to15knots.AccordingtotheBeaufortScale(Exhibit"I"), whichisadmittedlyanaccuratereferenceformeasuringwindvelocity,thewindforceof10to15knotsisclassifiedas scale No. 4 and described as "moderate breeze," small waves, becoming longer, fairly frequent white horses. MeteorologistJustoIglesias,Jr.himselfaffirmstheabovedescriptionofawindforceof10to15knotsandaddsthatthe weatherconditionprevailingundersaidwindforceisusualandforseeable.ThusIglesias,Jr.testified: Q.InthemarineprotestofthemasterofthevesselofAboitiz,thereisreferencetowindforcefromten to15knots.InthisBeaufortScale,willyoubeabletoclarifywhatthiswindforceof10to15asstated inthemarineprotest? A.ItwillbeunderForce4oftheBeaufortScale. Q.Whatisthebasisofyouranswer? A.10to15fallswithinthisscaleoftheBeaufortScale,Force4. Atty.Dollete: MayIreadintotherecords,YourHonor.Force4,descriptivetermmoderatebreeze.Nearvelocityin knots1116meterspersecond,5.57.9inkilometersperhourto20to28kilometersperhourand13to 18milesperhour.Seathedescriptionofthiswillbesmallwavesbecominglongerfairlyfrequentwhite horse(sic). Q.Inthelayman'slanguagehowdoyouinterpretthiswhitehorses? A.Itmeanswhiteforms.Atthetopofthecresttheywerebeginningtoformwhitefoams. Q.HowaboutthismoderatebreezeasdescribedunderthisForce4oftheBeaufortScale,howwillyou interpretthat? A. Moderate breeze will only give winds of 29 kilometers per hour which is equivalent to just extendingyourhandoutofarunningcaratthatspeed.
Q. This weather condition between October 28 and November 1, 1980, will you classify this as extraordinaryorordinary? A.Itwasordinary. Q.Whenyousaidordinary,wasitusualorunusual? A.Itisusual. Q.Whenyousaiditisusualitisforeseeableandpredictable? A.Foranexperiencedmeteorologistlikeashipcaptain,itisforeseeable. Q.Whenitisforeseeable,necessarilyitfollowsthattheweathercouldbepredictedbasedonthe weatherbulletinorreport? A.Yes,sir. Q.Andusuallythebulletinstates theconditioninotherwords,thisweatherconditionwhichyou testifiedtoandreflectedinyourExhibit"7"isanordinaryoccurrencewithinthatareaofPhilippine responsibility? A.Yes,sir. Q.Andinfactthisweatherconditionistobeanticipatedatthattimeoftheyearwithrespectto weatherconditionwhichisreflectedinExhibit"7"? A.Itisaregularoccurrence. xxxxxxxxx Moreover,Capt.RacinesagainadmittedinCourtthathisillfatedvesselwas200milesawayfromthe storm'Yoningwhenitsank.SaidCapt.Racines: Q.HowfarwereyoufromthisdepressionorweatherdisturbanceonOctober30,1980? A.Twohundredmiles. xxxxxxxxx Q.Inotherwords,thisdepressionwasfarfromyourroutebecauseittookanorthernapproachwhereas youweretowardsthesouthapproach? A.AsIhavesaid,Iwas200milesawayfromthedisturbance. xxxxxxxxx Consideringtheforegoingreasons,theCourtholdsthatthevesselM/V"Aboitiz"anditscargowerenot lostduetofortuitouseventorforcemajeure. InaccordancewithArticle1732oftheCivilCode,thedefendantcommoncarrier,fromthenatureofits businessandforreasonsofpublicpolicy,isboundtoobserveextraordinarydiligenceinthevigilanceover thegoodsandforthesafetyofthepassengerstransportedbyitaccordingtoallthecircumstancesofeach case.Whilethegoodsareinthepossessionofthecarrier,itisbutfairthatitexerciseextraordinary diligenceinprotectingthemfromlossordamage,andifitsoccursthelawpresumesthatitwasduetothe carrier'sfaultornegligence;thatisnecessarytoprotecttheinterestoftheshipperwhichisatthemercyof thecarrier(Article1756,CivilCode;Anuranvs.Puno,17SCRA224;Nocumvs.LagunaTayabasBus Co.,30SCRA69;Landiganvs.PangasinanTransportationCompany,88SCRA284).Inthecaseatbar, thedefendantfailedtoprovethatthelossofthesubjectcargowasnotduetoitsfaultornegligence.8 Thesaidfactual findings oftheappellatecourt andthetrialcourt arefindingonthis Court.Itsconclusionas tothe negligenceofthepetitionerissupportedbytheevidence. ThesecondissueraisedtotheeffectthattheliabilityofthepetitionershouldbefixedatUS$500.00perpackage/container, asstipulatedinthebillofladingandnotattheactualvalueofthecargo,shouldberesolvedagainstpetitioner. While it is true that in the bill of lading there is such stipulation that the liability of the carrier is US$500.00 per package/container/customaryfreight,thereisanexception,thatis,whenthenatureandvalueofsuchgoodshavebeen declaredbytheshipperbeforeshipmentandinsertedinthebilloflading.ThisisprovidedforinSection4(5)oftheCarriage ofGoodsbySeaActtowit (5)Neitherthecarriernortheshipshallinanyeventbeorbecomeliableforanylossordamagetoorin connectionwiththetransportationofgoodsinanamountexceeding$500perpackageoflawfulmoneyof theUnitedStates,orincaseofgoodsnotshippedinpackages,percustomaryfreightunit,ortheequivalent ofthatsuminothercurrency,unlessthenatureandvalueofsuchgoodshavebeeninsertedinthebillof lading.Thisdeclaration,ifembodiedinthebilloflading,shallbeprimafacieevidence,butshallnotbe conclusiveonthecarrier.
Byagreement between the carrier,master oragent of thecarrier,andtheshipper another maximum amountthanthatmentionedinthisparagraphmaybefixed:Provided,thatsuchmaximumshallnotbeless thanthefigureabovenamed.Innoeventshallthecarrierbeliableformorethantheamountofdamage actuallysustained. Neitherthecarriernortheshipshallberesponsibleinanyeventforlossordamagetoorinconnection withthetransportationofthegoodsifthenatureorvaluethereofhasbeenknowinglyandfraudulently misstatedbytheshipperinthebilloflading.(Emphasissupplied.) Inthiscasethedescriptionofthenatureandthevalueofthegoodsshippedaredeclaredandreflectedinthebillsoflading. Thus,itisthebasisoftheliabilityofthecarrierastheactualvalueoftheloss. Moreover,itisabsurdtointerpret"container,"asprovidedinthebillofladingtobevaluedatUS$500.00each,toreferto thecontainerwhichisthemodernsubstitutefortheholdofthevessel.9Thepackage/containercontemplatedbythelawto limittheliabilityofthecarriershouldbesensiblyrelatedtotheunitinwhichtheshipperpackedthegoodsanddescribed them,notalargemetalobject,functionallyapartoftheship,inwhichthecarrierusedthemtobecontained.10Such "container"mustbegiventhesamemeaningandclassificationasa"package"and"customaryfreightunit." TheappellatecourtindisposingthisissuequoteditsdecisioninAlliedGuaranteeInsuranceCo.Inc.vs.AboitizShipping Corporation,CAGR.CVNo.04121,March23,1987,viz; Third.Stillitiscontendedthatthecarrier'sliabilityislimitedto$500.00,pursuanttosection8oftheBill ofLadingwhichprovidesthat'TheliabilityoftheCarrierforanylossordamagetothegoodsshallinno caseexceedthesumofU.S.$500.00perpackage/container/customaryfreightunit,unlessthevalueofthe goodshasbeencorrectlydeclaredandextrafreightpaid,priortotheshipmentandasigneddeclarationto thiseffectappearsinthebilloflading,dulyconfirmedbytheCarrier....ItiscontendedthattheBillof Lading does not indicate thevalueof the goods.Norwas thecorrespondingfreight ...paidprior to shipment. Generally speaking a stipulation, limiting the common carrier's liability to the value of the goods appearinginthebilloflading,unlesstheshipperorownerdeclaresagreatervalue,isvalid.(CivilCode, Art.1749).Suchstipulation,however,mustbereasonableandjustunderthecircumstancesandmusthave beenfairlyandfreelyagreedupon.(St.PaulFire&MarineInsuranceCo.vs.MacondrayCo.,70 SCRA122,126127(1976)Inthecaseatbar,thegoodsshippedontheM/V"P.Aboitiz"wereinsuredfor P278,530.50,whichmaybetakenastheirvalue.Tolimittheliabilityofthecarrierto$500.00would obviouslyputitinitspowertohavetakenthewholecargo.InJuanYsmael&Co.vs.GabinoBarreto& Co.,51Phil.90(1927),itwasheldthatastipulationlimitingthecarrier'sliabilityto$500.00perpackage ofsilkwhenthevalueofsuchpackagewasP2,500.00unlessthetruevaluehadbeendeclaredandthe correspondingfreightpaidwas"voidasagainstpublicpolicy."Thatrulingappliestothiscase. Moreover,bytheweightofmodernauthority,acarriercannotlimititsliabilityforinjuryorlossofgoods shippedwheresuchinjuryorlosswascausedbyitsownnegligence.(JuanYsmael&Co.v.Gabino Barreto&Co.,supra)HeretolimittheliabilityofAboitizShippingto$500.00wouldnullifythepolicyof thelawimposingoncommoncarriersthedutytoobserveextraordinarydiligenceinthecarriageofgoods. Indeed,it is even doubtful whether theword"container" insection8of theBill of Ladingincludes containerswhichareasubstitutefortheholdofavessel.Thisprovisionlimitsthecarrier'sliabilityto"the sumofUS$500.00perpackage/containercustomaryfreightunit."Bytheruleofnosciturasociisthe word"container"mustbegiventhesamemeaningaspackageandcustomaryfreightunitandtherefore cannotpossiblyrefertomoderncontainerswhichareusedforshipmentofgoodsinbulk.11 Inthesamelight,thethirdissuequestioningtheorderofexecutionpendingappealofthetrialcourtmustberesolvedagainst petitioneraswell. TheavermentsinthemotionforexecutionpendingappealdatedDecember8,1985areasfollows Aside from the fact that petitioner can easily post a supersedeas bond to stay execution, still other circumstancesarepresentpeculiarintheincidentofthesinkingofM/VP.Aboitizwhichwouldjustifythe issuanceofexecutionpendingappeal.Thereareotherdecidedcasesadjudgingpetitionerliableinthe lowercourtinthesameincident.Othercasesareonappeal,upcomingandabouttobedecided.Thevalue ofcargolosscausedbythesinkingofpetitioner'svesselisinthetuneofnolessthanfiftymillionpesos inclusiveofinterestsfeesandallclaims.Itsinsurerhasgonebankruptandpetitioneralonemustfaceand answerforalltheseclaims.InonebranchoftheRegionalTrialCourtofManilaalonetherearetwentyfive
(25)casespendingagainstpetitionerinvolvingthesamelossofcargoesaboardM/V"P.Aboitiz"asper certificationherewithattachedasAnnex"A".Thisclaimdonotincludeothers,pendinginvariouscourts inMetroManilawhichwouldhavetobesatisfiedultimatelybypetitioner,itbeingacommoncarrier whichfailedtoexerciseextraordinarydiligenceoverthegoodslost.Thejudgmentsoughttobeenforced mayindeedberenderedimminentlyineffectualintheultimateanalysis. ThepurposeofSec.2Rule39wouldnotbeachievedorexecutionpendingappealwouldnotbeachieved ifinsolvencywouldstillbeawaited.TheremedyisavailabletopetitionerunderSec.3Rule39ofthe RulesofCourtbuttoplaceinsolvencyasaconditiontoissuanceofawritofexecutionpendingappeal wouldrenderitillusoryandineffectual. Justiceandequitythereforedictates,thatasaconsequenceofthebondpostedbyprivaterespondentand therebeingseveralothercasesagainstpetitioner,decidedaswellaspending,thetotalityofwhichclaims may render the appealed decision imminently ineffectual and the further fact that the appeal being interposedisevidentlyfordelayasaconsequenceoftheseveraladversedecisionsagainstitasacommon carrierinthelowercourt,areconsiderationofthedecisiondatedNovember25,1985oftheHonorable Courtwillbeinconsonancewithlaw,jurisprudenceandequity. Inordertoeraseallapprehensionsthattheaforesaidjudgmentawardwillwindupineffectualwhennot immediately executed, it is most respectfully prayed that herein respondent be required to post a supersedeasbond.Thestatutoryundertakingofpostingabondwillthenachieveathreeprongeddirection ofjustice,(1)itwillcastnodoubtonthesolvencyofthehereinpetitioner;(2)itwillnotdefeatorrender phyrricajustresolutionofthecasewhicheverpartyprevailsintheendorinthemaincaseonappeal,since bothoftheirclaimsaresecuredbytheircorrespondingbonds;and(3)itwillputtoequitableoperation Sec.3Rule39oftheRevisedRulesofCourt.12 Theforegoingallegationswhichwerenottraversedthatpetitionerisfacingmanylawsuitsarisingfromsaidsinkingofits vesselinvolvingcargolossofnolessthan50millionpesos,insomecasesofwhichjudgmenthadbeenrenderedagainst Aboitiz,andconsideringthatitsinsurerisnowbankrupt,leavingAboitizalonetofaceandanswerthesuits,whichmay renderanyjudgmentforGAFLACineffectual,thattheappealisinterposedmanifestlyfordelayandthewillingnessof GAFLACtoputupabondcertainlyarecogentbasesfortheissuanceofanorderofexecutionpendingappeal. Finally,inasimilarcasefordamagesarisingfromthesameincidententitledAboitizShippingCorporationvs.Honorable Court of Appeals and Allied Guaranteed Insurance Company, Inc., G.R. No. 88159, this Court in a resolution dated November13,1989dismissedthepetitionforlackofmerit.ThereinthisCourtheldinpart Theappellatecourtaffirmedthedecisionofthelowercourtbasedonitsfindingsthatthecauseofsinking of the vessel was due to its unseaworthiness and the failure of its crew and the master to exercise extraordinarydiligence. Thepetitioner,however,contendsthattheappellatecourterredonthismatterandinsiststhatthecontrary findingsoftheBoardofMarineInquiry(BMI),whichconductedaseparateinvestigationtotheeffectthat theproximatecauseofthesinkingofthevesselwasduetoforcemajeureandthattheofficersandcrew hadexhaustedallpreventivemeasurestosavethevesselandhercargobuttonoavail,shouldprevail.This, accordingtothepetitionerisbasedonthedoctrineofprimaryadministrativejurisdiction. Thisargumentisuntenable. Acursoryreadingofthedecisionandresolutionoftheappellatecourtshowsthatthesametookinto considerationnotonlythefindingsofthelowercourtbutalsothefindingsoftheBMI.Thus,theappellate courtstated: Indeed,thedecisionoftheBoardwasbasedsimplyonitsfindingthatthePhilippineCoastGuard hadcertifiedthevessel tobeseaworthyandthat it sankbecauseitwasexposedlatertoan oncomingtyphoonplottedwithintheradiuswherethevesselwaspositioned.Thisgeneralization certainlycannotprevailoverthedetailedexplanationofthetrialcourtinthiscaseasbasisforits contraryconclusion.(Rollo,atp.42) Wefindnocogentreasontodeviatefromthefactualfindingsoftheappellatecourtandrulethatthe doctrineofprimaryadministrativejurisdictionisnotapplicableinthecaseatbar. Theotherissueraisediswhetherornotthecarrier'sliabilityislimitedto$500.00pursuanttosection8of theBillofLading.Thepetitionerclaimsthattheappellatecourterredindisregardingthelimitationof liabilitystipulatedinthebilloflading.Itarguesthattheconsigneeagreedtothisamount(and)thereforeis
boundbythisrateandthatthereisnobasisfortheappellatecourt'sfindingthattherateisunreasonable. Theargumentisnotwelltaken.Asaptlystatedbytheappellatecourt: Generally speaking any stipulation, limiting the common carrier's liability to the value of the goods appearinginthebilloflading,unlesstheshipperorownerdeclaresagreatervalueisvalid.(CivilCode, Art.1749)Suchstipulation,however,mustbereasonableandjustunderthecircumstancesandmusthave beenfairlyandfreelyagreedupon.(St.PaulFire&MarineInsuranceCo.v.Macondray&Co.,70SCRA 122,126127[1976]Inthecaseatbar,thegoodsshippedontheM/V"P.Aboitiz" wereinsuredfor P278,536.50,whichmaybetakenastheirvalue.Tolimittheliabilityofthecarrierto$500.00would obviouslyputinitspowertohavetakenthewholecargo.InJuanYsmael&Co.v.GabinoBarretto&Co., 51Phil.90[1927],itwasheldthatastipulationlimitingthecarrier'sliabilitytoP300.00perpackageof silk,whenthevalueofsuchpackagewasP2,500.00,unlessthetruevaluehadbeendeclaredandthe correspondingfreightpaid;wasvoidasagainstpublicpolicy.Thatrulingappliestothiscase. As argued by the respondent, a limitation of liability in this case would render inefficacious the extraordinarydiligencerequiredbylawofcommoncarriers.13 ThemotionforreconsiderationofsaidresolutionfiledbypetitionerwasdeniedwithfinalityinaresolutiondatedJanuary8, 1990.Saidresolutionofthecasehadbecomefinalandexecutory,entryofjudgmenthavingbeenmadeandtherecords remandedforexecutiononMarch22,1990. Saidcaseisnowthelawofthecaseapplicabletothepresentpetition. WHEREFORE,thepetitionisdismissedwithcostsagainstpetitioner.
RepublicofthePhilippines SUPREMECOURT Manila SECONDDIVISION G.R.No.101089.April7,1993. ESTRELLITAM.BASCOS,petitioners, vs. COURTOFAPPEALSandRODOLFOA.CIPRIANO,respondents. ModestoS.Bascosforpetitioner. Pelaez,Adriano&Gregorioforprivaterespondent. SYLLABUS 1.CIVILLAW;COMMONCARRIERS;DEFINED;TESTTODETERMINECOMMONCARRIER.Article1732of theCivilCodedefinesacommoncarrieras"(a)person,corporationorfirm,orassociationengagedinthebusinessof carryingortransportingpassengersorgoodsorboth,byland,waterorair,forcompensation,offeringtheirservicestothe public."Thetesttodetermineacommoncarrieris"whetherthegivenundertakingisapartofthebusinessengagedinby thecarrierwhichhehasheldouttothegeneralpublicashisoccupationratherthanthequantityorextentofthebusiness transacted."...TheholdingoftheCourtinDeGuzmanvs.CourtofAppealsisinstructive.InreferringtoArticle1732of theCivilCode,itheldthus:"Theabovearticlemakesnodistinctionbetweenonewhoseprincipalbusinessactivityisthe carryingofpersonsorgoodsorboth,andonewhodoessuchcarryingonlyasanancillaryactivity(inlocalidiom,asa "sideline").Article1732alsocarefullyavoidsmakinganydistinctionbetweenapersonorenterpriseofferingtransportation serviceonaregularorscheduledbasisandoneofferingsuchserviceonanoccasional,episodicorunscheduledbasis. NeitherdoesArticle1732distinguishedbetweenacarrierofferingitsservicestothe"generalpublic,"i.e.,thegeneral communityorpopulation,andonewhooffersservicesorsolicitsbusinessonlyfromanarrowsegmentofthegeneral population.WethinkthatArticle1732deliberatelyrefrainedfrommakingsuchdistinctions." 2.ID.;ID.;DILIGENCEREQUIREDINVIGILANCEOVERGOODSTRANSPORTED;WHENPRESUMPTIONOF NEGLIGENCE ARISES; HOW PRESUMPTION OVERCAME; WHEN PRESUMPTION MADE ABSOLUTE. Commoncarriers are obliged toobserveextraordinary diligenceinthevigilanceoverthegoods transportedbythem. Accordingly, theyare presumed tohave been at fault orto have acted negligently ifthe goods are lost,destroyedor deteriorated.Thereareveryfewinstanceswhenthepresumptionofnegligencedoesnotattachandtheseinstancesare enumerated in Article 1734. In those cases where the presumption is applied, the common carrier must prove that it exercisedextraordinarydiligenceinordertoovercomethepresumption...Thepresumptionofnegligencewasraised againstpetitioner.Itwaspetitioner'sburdentoovercomeit.Thus,contrarytoherassertion,privaterespondentneednot introduceanyevidencetoprovehernegligence.Herownfailuretoadducesufficientproofofextraordinarydiligencemade thepresumptionconclusiveagainsther. 3. ID.; ID.; HIJACKING OF GOODS; CARRIER PRESUMED NEGLIGENT; HOW CARRIER ABSOLVED FROM LIABILITY.InDeGuzmanvs.CourtofAppeals,theCourtheldthathijacking,notbeingincludedintheprovisionsof Article1734,mustbedealtwithundertheprovisionsofArticle1735andthus,thecommoncarrierispresumedtohavebeen atfaultornegligent.Toexculpatethecarrierfromliabilityarisingfromhijacking,hemustprovethattherobbersorthe hijackersactedwithgraveorirresistiblethreat,violence,orforce.ThisisinaccordancewithArticle1745oftheCivilCode which provides: "Art.1745. Any ofthe followingor similar stipulations shall be considered unreasonable, unjust and contrarytopublicpolicy...(6)Thatthecommoncarrier'sliabilityforactscommittedbythieves,orofrobberswhodonot actwithgraveorirresistiblethreat,violencesorforce,isdispensedwithordiminished";Inthesamecase,theSupreme Courtalsoheldthat:"UnderArticle1745(6)above,acommoncarrierisheldresponsibleandwillnotbeallowedto divestortodiminishsuchresponsibilityevenforactsofstrangerslikethievesorrobbers,exceptwheresuchthievesor robbersinfactacted"withgraveofirresistiblethreat,violenceofforce,"Webelieveandsoholdthatthelimitsoftheduty ofextraordinarydiligenceinthevigilanceoverthegoodscarriedarereachedwherethegoodsarelostasaresultofa robberywhichisattendedby"graveorirresistiblethreat,violenceorforce."
4.REMEDIALLAW;EVIDENCE;JUDICIALADMISSIONSCONCLUSIVE.Inthiscase,petitionerherselfhasmade theadmissionthatshewasinthetruckingbusiness,offeringhertruckstothosewithcargotomove.Judicialadmissionsare conclusiveandnoevidenceisrequiredtoprovethesame. 5.ID.;ID.;BURDENOFPROOFRESTSWITHPARTYWHOALLEGESAFACT.Petitionerpresentednootherproof oftheexistenceofthecontractoflease.Hewhoallegesafacthastheburdenofprovingit. 6.ID.;ID.;AFFIDAVITSNOTCONSIDEREDBESTEVIDENCEIFAFFIANTSAVAILABLEASWITNESSES. WhiletheaffidavitofJuanitoMorden,thetruckhelperinthehijackedtruck,waspresentedasevidenceincourt,hehimself wasawitnessascouldbegleanedfromthecontentsofthepetition.Affidavitsarenotconsideredthebestevidenceifthe affiantsareavailableaswitnesses. 7.CIVILLAW;OBLIGATIONSANDCONTRACTS;CONTRACTISWHATLAWDEFINESITTOBE.Granting thatthesaidevidencewerenotselfserving,thesamewerenotsufficienttoprovethatthecontractwasoneoflease.Itmust beunderstoodthatacontractiswhatthelawdefinesittobeandnotwhatitiscalledbythecontractingparties. DECISION CAMPOS,JR.,Jp: Thisisapetitionforreviewoncertiorariofthedecision**oftheCourtofAppealsin"RODOLFOA.CIPRIANO,doing businessunderthenameCIPRIANOTRADINGENTERPRISESplaintiffappellee,vs.ESTRELLITAM.BASCOS,doing businessunderthenameofBASCOSTRUCKING,defendantappellant,"C.A.G.R.CVNo.25216,thedispositiveportion ofwhichisquotedhereunder: "PREMISESconsidered,Wefindnoreversibleerrorinthedecisionappealedfrom,whichisherebyaffirmedintoto.Costs againstappellant."1 Thefacts,asgatheredbythisCourt,areasfollows: RodolfoA.CiprianorepresentingCiprianoTradingEnterprise(CIPTRADEforshort)enteredintoahaulingcontract2with JibfairShippingAgencyCorporationwherebytheformerbounditselftohaulthelatter's2,000m/tonsofsoyabeanmeal fromMagallanesDrive,DelPan,ManilatothewarehouseofPurefoodsCorporationinCalamba,Laguna.Tocarryoutits obligation,CIPTRADE,throughRodolfoCipriano,subcontractedwithEstrellitaBascos(petitioner)totransportandto deliver400sacksofsoyabeanmealworthP156,404.00fromtheManilaPortAreatoCalamba,LagunaattherateofP50.00 permetricton.Petitionerfailedtodeliverthesaidcargo.Asaconsequenceofthatfailure,CiprianopaidJibfairShipping Agencytheamountofthelostgoodsinaccordancewiththecontractwhichstatedthat: "1.CIPTRADEshallbeheldliableandanswerableforanylossinbagsduetotheft,hijackingandnondeliveryordamages tothecargoduringtransportatmarketvalue,..."3 Ciprianodemandedreimbursementfrompetitionerbutthelatterrefusedtopay.Eventually,Ciprianofiledacomplaintfora sumofmoneyanddamageswithwritofpreliminaryattachment4forbreachofacontractofcarriage.TheprayerforaWrit ofPreliminaryAttachmentwassupportedbyanaffidavit5whichcontainedthefollowingallegations: "4.Thatthis actionis oneofthosespecificallymentionedinSec.1,Rule57theRules ofCourt,wherebyawrit of preliminaryattachmentmaylawfullyissue,namely: "(e)inanactionagainstapartywhohasremovedordisposedofhisproperty,orisabouttodoso,withintenttodefraudhis creditors;" 5.Thatthereisnosufficientsecurityfortheclaimsoughttobeenforcedbythepresentaction; 6.Thattheamountduetotheplaintiffintheaboveentitledcaseisabovealllegalcounterclaims;" ThetrialcourtgrantedthewritofpreliminaryattachmentonFebruary17,1987. Inheranswer,petitionerinterposedthefollowingdefenses:thattherewasnocontractofcarriagesinceCIPTRADEleased hercargotrucktoloadthecargofromManilaPortAreatoLaguna;thatCIPTRADEwasliabletopetitionerintheamount ofP11,000.00forloadingthecargo;thatthetruckcarryingthecargowashijackedalongCanonigoSt.,Paco,Manilaonthe nightofOctober21,1988;thatthehijackingwasimmediatelyreportedtoCIPTRADEandthatpetitionerandthepolice exertedalleffortstolocatethehijackedproperties;thatafterpreliminaryinvestigation,aninformationforrobberyand carnappingwerefiledagainstJoseOpriano,etal.;andthathijacking,beingaforcemajeure,exculpatedpetitionerfromany liabilitytoCIPTRADE. Aftertrial,thetrialcourtrenderedadecision***thedispositiveportionofwhichreadsasfollows:
"WHEREFORE,judgmentisherebyrenderedinfavorofplaintiffandagainstdefendantorderingthelattertopaythe former: 1.TheamountofONEHUNDREDFIFTYSIXTHOUSANDFOURHUNDREDFOURPESOS(P156,404.00)asan(sic) foractualdamageswithlegalinterestof12%percentperannumtobecountedfromDecember4,1986untilfullypaid; 2.TheamountofFIVETHOUSANDPESOS(P5,000.00)asandforattorney'sfees;and 3.Thecostsofthesuit. The"UrgentMotionToDissolve/LiftpreliminaryAttachment"datedMarch10,1987filedbydefendantisDENIEDfor beingmootandacademic. SOORDERED."6 PetitionerappealedtotheCourtofAppealsbutrespondentCourtaffirmedthetrialcourt'sjudgment. Consequently,petitionerfiledthispetitionwhereshemakesthefollowingassignmentoferrors;towit: "I.THERESPONDENTCOURTERREDINHOLDINGTHATTHECONTRACTUALRELATIONSHIPBETWEEN PETITIONERANDPRIVATERESPONDENTWASCARRIAGEOFGOODSANDNOTLEASEOFCARGOTRUCK. II. GRANTING, EX GRATIA ARGUMENTI, THATTHE FINDING OF THE RESPONDENT COURT THATTHE CONTRACTUALRELATIONSHIPBETWEENPETITIONERANDPRIVATERESPONDENTWASCARRIAGEOF GOODSISCORRECT,NEVERTHELESS,ITERREDINFINDINGPETITIONERLIABLETHEREUNDERBECAUSE THELOSSOFTHECARGOWASDUETOFORCEMAJEURE,NAMELY,HIJACKING. III. THE RESPONDENT COURT ERRED IN AFFIRMING THE FINDING OF THE TRIAL COURT THAT PETITIONER'S MOTION TO DISSOLVE/LIFT THE WRIT OF PRELIMINARY ATTACHMENT HAS BEEN RENDEREDMOOTANDACADEMICBYTHEDECISIONOFTHEMERITSOFTHECASE."7 Thepetitionpresentsthefollowingissuesforresolution:(1)waspetitioneracommoncarrier?;and(2)wasthehijacking referredtoaforcemajeure? TheCourtofAppeals,inholdingthatpetitionerwasacommoncarrier,foundthatsheadmittedinheranswerthatshedid business under the name A.M. Bascos Trucking and that said admission dispensed with the presentation by private respondent,RodolfoCipriano,ofproofsthatpetitionerwasacommoncarrier.TherespondentCourtalsoadoptedintotothe trial court's decisionthat petitionerwas a commoncarrier,Moreover,bothcourts appreciated thefollowingpieces of evidenceasindicatorsthatpetitionerwasacommoncarrier:thefactthatthetruckdriverofpetitioner,MaximoSanglay, receivedthecargoconsistingof400bagsofsoyabeanmealasevidencedbyacargoreceiptsignedbyMaximoSanglay;the factthatthetruckhelper,JuanitoMorden,wasalsoanemployeeofpetitioner;andthefactthatcontrolofthecargowas placedinpetitioner'scare. Indisputingtheconclusionofthetrialandappellatecourtsthatpetitionerwasacommoncarrier,sheallegedinthispetition thatthecontractbetweenherandRodolfoA.Cipriano,representingCIPTRADE,wasleaseofthetruck.Shecitedas evidencecertainaffidavitswhichreferredtothecontractas"lease".TheseaffidavitsweremadebyJesusBascos8andby petitionerherself.9ShefurtheraverredthatJesusBascosconfirmedinhistestimonyhisstatementthatthecontractwasa leasecontract.10Shealsostatedthat:shewasnotcateringtothegeneralpublic.Thus,inheranswertotheamended complaint,shesaidthatshedoesbusinessunderthesamestyleofA.M.BascosTrucking,offeringhertrucksforleaseto thosewhohavecargotomove,nottothegeneralpublicbuttoafewcustomersonlyinviewofthefactthatitisonlyasmall business.11 WeagreewiththerespondentCourtinitsfindingthatpetitionerisacommoncarrier. Article1732oftheCivilCodedefinesacommoncarrieras"(a)person,corporationorfirm,orassociationengagedinthe businessofcarryingortransportingpassengersorgoodsorboth,byland,waterorair,forcompensation,offeringtheir servicestothepublic."Thetesttodetermineacommoncarrieris"whetherthegivenundertakingisapartofthebusiness engagedinbythecarrierwhichhehasheldouttothegeneralpublicashisoccupationratherthanthequantityorextentof thebusinesstransacted."12Inthiscase,petitionerherselfhasmadetheadmissionthatshewasinthetruckingbusiness, offeringhertruckstothosewithcargotomove.Judicialadmissionsareconclusiveandnoevidenceisrequiredtoprovethe same.13 Butpetitionerarguesthattherewasonlyacontractofleasebecausetheyoffertheirservicesonlytoaselectgroupofpeople andbecausetheprivaterespondents,plaintiffsinthelowercourt,didnotobjecttothepresentationofaffidavitsbypetitioner wherethetransactionwasreferredtoasaleasecontract. Regardingthefirstcontention,theholdingoftheCourtinDeGuzmanvs.CourtofAppeals14isinstructive.Inreferringto Article1732oftheCivilCode,itheldthus: "Theabovearticlemakesnodistinctionbetweenonewhoseprincipalbusinessactivityisthecarryingofpersonsorgoodsor
both,andonewhodoessuchcarryingonlyasanancillaryactivity(inlocalidiom,asa"sideline").Article1732also carefullyavoidsmakinganydistinctionbetweenapersonorenterpriseofferingtransportationserviceonaregularor scheduledbasisandoneofferingsuchserviceonanoccasional,episodicorunscheduledbasis.NeitherdoesArticle1732 distinguishbetweenacarrierofferingitsservicestothe"generalpublic,"i.e.,thegeneralcommunityorpopulation,andone whooffersservicesorsolicitsbusinessonlyfromanarrowsegmentofthegeneralpopulation.WethinkthatArticle1732 deliberatelyrefrainedfrommakingsuchdistinctions." Regardingtheaffidavitspresentedbypetitionertothecourt,boththetrialandappellatecourtshavedismissedthemasself servingandpetitionerconteststheconclusion.Weareboundbytheappellatecourt'sfactualconclusions.Yet,grantingthat thesaidevidencewerenotselfserving,thesamewerenotsufficienttoprovethatthecontractwasoneoflease.Itmustbe understood that a contract is what the law defines it to be and not what it is called by the contracting parties. 15 Furthermore,petitionerpresentednootherproofoftheexistenceofthecontractoflease.Hewhoallegesafacthasthe burdenofprovingit.16 Likewise,Weaffirmtheholdingoftherespondentcourtthatthelossofthegoodswasnotduetoforcemajeure. Commoncarriersareobligedtoobserveextraordinarydiligenceinthevigilanceoverthegoodstransportedbythem.17 Accordingly, theyare presumed tohave been at fault orto have acted negligently ifthe goods are lost,destroyedor deteriorated.18Thereareveryfewinstanceswhenthepresumptionofnegligencedoesnotattachandtheseinstancesare enumeratedinArticle1734.19Inthosecaseswherethepresumptionisapplied,thecommoncarriermustprovethatit exercisedextraordinarydiligenceinordertoovercomethepresumption. Inthiscase,petitionerallegedthathijackingconstitutedforcemajeurewhichexculpatedherfromliabilityforthelossofthe cargo.InDeGuzmanvs.CourtofAppeals,20theCourtheldthathijacking,notbeingincludedintheprovisionsofArticle 1734,mustbedealtwithundertheprovisionsofArticle1735andthus,thecommoncarrierispresumedtohavebeenatfault ornegligent.Toexculpatethecarrierfromliabilityarisingfromhijacking,hemustprovethattherobbersorthehijackers actedwithgraveorirresistiblethreat,violence,orforce.ThisisinaccordancewithArticle1745oftheCivilCodewhich provides: "Art.1745.Anyofthefollowingorsimilarstipulationsshallbeconsideredunreasonable,unjustandcontrarytopublic policy; xxxxxxxxx (6)Thatthecommoncarrier'sliabilityforactscommittedbythieves,orofrobberswhodonotactwithgraveorirresistible threat,violencesorforce,isdispensedwithordiminished;" Inthesamecase,21theSupremeCourtalsoheldthat: "UnderArticle1745(6)above,acommoncarrierisheldresponsibleandwillnotbeallowedtodivestortodiminishsuch responsibilityevenforactsofstrangerslikethievesorrobbersexceptwheresuchthievesorrobbersinfactactedwith graveorirresistiblethreat,violenceorforce.Webelieveandsoholdthatthelimitsofthedutyofextraordinarydiligencein thevigilanceoverthegoodscarriedarereachedwherethegoodsarelostasaresultofarobberywhichisattendedby"grave orirresistiblethreat,violenceorforce." Toestablishgraveandirresistibleforce,petitionerpresentedheraccusatoryaffidavit,22JesusBascos'affidavit,23and JuanitoMorden's24"Salaysay".However,boththetrialcourtandtheCourtofAppealshaveconcludedthattheseaffidavits werenotenoughtoovercomethepresumption.Petitioner'saffidavitaboutthehijackingwasbasedonwhathadbeentoldher byJuanitoMorden.Itwasnotafirsthandaccount.Whileithadbeenadmittedincourtforlackofobjectiononthepartof private respondent, the respondent Court had discretion in assigning weight to such evidence. We are bound by the conclusionoftheappellatecourt.Inapetitionforreviewoncertiorari,Wearenottodeterminetheprobativevalueof evidencebuttoresolvequestionsoflaw.Secondly,theaffidavitofJesusBascosdidnotdwellonhowthehijackingtook place.Thirdly,whiletheaffidavitofJuanitoMorden,thetruckhelperinthehijackedtruck,waspresentedasevidencein court,hehimselfwasawitnessascouldbegleanedfromthecontentsofthepetition.Affidavitsarenotconsideredthebest evidenceiftheaffiantsareavailableaswitnesses.25Thesubsequentfilingoftheinformationforcarnappingandrobbery againsttheaccusednamedinsaidaffidavitsdidnotnecessarilymeanthatthecontentsoftheaffidavitsweretruebecause theywereyettobedeterminedinthetrialofthecriminalcases. Thepresumptionofnegligencewasraisedagainstpetitioner.Itwaspetitioner'sburdentoovercomeit.Thus,contrarytoher assertion,privaterespondentneednotintroduceanyevidencetoprovehernegligence.Herownfailuretoadducesufficient proofofextraordinarydiligencemadethepresumptionconclusiveagainsther. HavingaffirmedthefindingsoftherespondentCourtonthesubstantialissuesinvolved,Wefindnoreasontodisturbthe conclusionthatthemotiontolift/dissolvethewritofpreliminaryattachmenthasbeenrenderedmootandacademicbythe
decisiononthemerits. Inthelightoftheforegoinganalysis,itisOuropinionthatthepetitioner'sclaimcannotbesustained.Thepetitionis DISMISSEDandthedecisionoftheCourtofAppealsisherebyAFFIRMED. SOORDERED. Narvasa,C.J.,Padilla,RegaladoandNocon,JJ.,concur.
RepublicofthePhilippines SUPREMECOURT Manila ENBANC G.R.No.97412July12,1994 EASTERN SHIPPING LINES, INC., petitioner, vs. HON.COURTOFAPPEALSANDMERCANTILEINSURANCECOMPANY,INC.,respondents. Alojada&GarciaandJimenea,Dala&Zaragozaforpetitoner. ZapaLawOfficeforprivaterespondent. VITUG,J.: Theissues,albeitnotcompletelynovel,are:(a)whetherornotaclaimfordamagesustainedonashipmentofgoodscanbe asolidary,orjointandseveral,liabilityofthecommoncarrier,thearrastreoperatorandthecustomsbroker;(b)whetherthe paymentoflegalinterestonanawardforlossordamageistobecomputedfromthetimethecomplaintisfiledorfromthe datethedecisionappealedfromisrendered;and(c)whethertheapplicablerateofinterest,referredtoabove,istwelve percent(12%)orsixpercent(6%). Thefindingsofthecourtaquo,adoptedbytheCourtofAppeals,ontheantecedentandundisputedfactsthathaveledtothe controversyarehereunderreproduced: Thisisanactionagainstdefendantsshippingcompany,arrastreoperatorandbrokerforwarderfordamages sustainedbyashipmentwhileindefendants'custody,filedbytheinsurersubrogeewhopaidtheconsignee thevalueofsuchlosses/damages. OnDecember4,1981,twofiberdrumsofriboflavinwereshippedfromYokohama,Japanfordelivery vessel "SS EASTERN COMET" owned by defendant Eastern Shipping Lines under Bill of Lading No.YMA8(Exh.B).Theshipmentwasinsuredunderplaintiff'sMarineInsurancePolicyNo.81/01177 forP36,382,466.38. UponarrivaloftheshipmentinManilaonDecember12,1981,itwasdischargeduntothecustodyof defendantMetroPortService,Inc.Thelatterexceptedtoonedrum,saidtobeinbadorder,whichdamage wasunknowntoplaintiff. OnJanuary7,1982defendantAlliedBrokerageCorporationreceivedtheshipmentfromdefendantMetro PortService,Inc.,onedrumopenedandwithoutseal(per"RequestforBadOrderSurvey."Exh.D). OnJanuary8and14,1982,defendantAlliedBrokerageCorporationmadedeliveriesoftheshipmentto theconsignee'swarehouse.Thelatterexceptedtoonedrumwhichcontainedspillages,whiletherestofthe contentswasadulterated/fake(per"BadOrderWaybill"No.10649,Exh.E). Plaintiffcontendedthatduetothelosses/damagesustainedbysaiddrum,theconsigneesufferedlosses totaling P19,032.95, due to the fault and negligence of defendants. Claims were presented against defendantswhofailedandrefusedtopaythesame(Exhs.H,I,J,K,L). Asaconsequenceofthelossessustained,plaintiffwascompelledtopaytheconsigneeP19,032.95under theaforestatedmarineinsurancepolicy,sothatitbecamesubrogatedtoalltherightsofactionofsaid consigneeagainstdefendants(per"FormofSubrogation","Release"andPhilbankingcheck,Exhs.M,N, andO).(pp.8586,Rollo.) Therewere,tobesure,otherfactualissuesthatconfrontedbothcourts.Here,theappellatecourtsaid: Defendantsfiledtheirrespectiveanswers,traversingthematerialallegationsofthecomplaintcontending that:AsfordefendantEasternShippingitallegedthattheshipmentwasdischargedingoodorderfromthe vesseluntothecustodyofMetroPortServicesothatanydamage/lossesincurredaftertheshipmentwas incurredaftertheshipmentwasturnedovertothelatter,isnolongeritsliability(p.17,Record);Metroport averredthatalthoughsubjectshipmentwasdischargeduntoitscustody,portionofthesamewasalreadyin badorder(p.11,Record);AlliedBrokerageallegedthatplaintiffhasnocauseofactionagainstit,not havingnegligentoratfaultfortheshipmentwasalreadyindamageandbadorderconditionwhenreceived byit,butnonetheless,itstillexercisedextraordinarycareanddiligenceinthehandling/deliveryofthe cargotoconsigneeinthesameconditionshipmentwasreceivedbyit.
Fromtheevidencethecourtfoundthefollowing: Theissuesare: 1.Whetherornottheshipmentsustainedlosses/damages; 2. Whether or not these losses/damages were sustained while in the custody of defendants(inwhoserespectivecustody,ifdeterminable); 3. Whether or not defendant(s) should be held liable for the losses/damages (see plaintiff's preTrial Brief,Records,p.34; Allied's preTrial Brief,adoptingplaintiff's Records,p.38). Astothefirstissue,therecanbenodoubtthattheshipmentsustainedlosses/damages. Thetwodrumswereshippedingoodorderandcondition,asclearlyshownbytheBillof Lading and Commercial Invoice which do not indicate any damages drum that was shipped(Exhs.BandC).ButwhenonDecember12,1981theshipmentwasdeliveredto defendantMetroPortService,Inc.,itexceptedtoonedruminbadorder. Correspondingly, as to the second issue, it follows that the losses/damages were sustainedwhileintherespectiveand/orsuccessivecustodyandpossessionofdefendants carrier (Eastern), arrastre operator (Metro Port) and broker (Allied Brokerage). This becomesevidentwhentheMarineCargoSurveyReport(Exh.G),withits"Additional SurveyNotes",areconsidered.Inthelatternotes,itisstatedthatwhentheshipmentwas "landedonvessel"todockofPier#15,SouthHarbor,ManilaonDecember12,1981,it was observed that "one (1) fiber drum (was) in damaged condition, covered by the vessel'sAgent'sBadOrderTallySheetNo.86427."Thereportfurtherstatesthatwhen defendantAlliedBrokeragewithdrewtheshipmentfromdefendantarrastreoperator's custodyonJanuary7,1982,onedrumwasfoundopenedwithoutseal,cellobagpartly torn but contents intact. Net unrecovered spillages was 15kgs.Thereportwentontostatethatwhenthedrumsreachedtheconsignee,onedrum was found with adulterated/faked contents. It is obvious, therefore, that these losses/damages occurred beforethe shipment reached the consignee while under the successivecustodiesofdefendants.UnderArt.1737oftheNewCivilCode,thecommon carrier'sdutytoobserveextraordinarydiligenceinthevigilanceofgoodsremainsinfull forceandeffectevenifthegoodsaretemporarilyunloadedandstoredintransitinthe warehouseofthecarrierattheplaceofdestination,untiltheconsigneehasbeenadvised andhashadreasonableopportunitytoremoveordisposeofthegoods(Art.1738,NCC). Defendant Eastern Shipping's own exhibit, the "TurnOver Survey of Bad Order Cargoes" (Exhs. 3Eastern) states that on December 12, 1981 one drum was found "open". andthusheld: WHEREFORE,PREMISESCONSIDERED,judgmentisherebyrendered: A.Orderingdefendantstopayplaintiff,jointlyandseverally: 1.TheamountofP19,032.95,withthepresentlegalinterestof12%perannumfrom October1,1982,thedateoffilingofthiscomplaints,untilfullypaid(theliabilityof defendantEasternShipping,Inc.shallnotexceedUS$500percaseortheCIFvalueof theloss,whicheverislesser,whiletheliabilityofdefendantMetroPortService,Inc. shallbetotheextentoftheactualinvoicevalueofeachpackage,crateboxorcontainer in no case to exceed P5,000.00 each, pursuant to Section 6.01 of the Management Contract); 2.P3,000.00asattorney'sfees,and 3.Costs. B. Dismissing the counterclaims and crossclaim of defendant/cross claimantAlliedBrokerageCorporation. SOORDERED.(p.207,Record). Dissatisfied,defendant'srecoursetoUS. Theappealisdevoidofmerit.
Afteracarefulscrutinyoftheevidenceonrecord.Wefindthattheconclusiondrawntherefromiscorrect. Asthereissufficientevidencethattheshipmentsustaineddamagewhileinthesuccessivepossessionof appellants, and therefore they are liable to the appellee, as subrogee for the amount it paid to the consignee.(pp.8789,Rollo.) TheCourtofAppealsthusaffirmedintotothejudgmentofthecourtaquo. Inthispetition,EasternShippingLines,Inc.,thecommoncarrier,attributeserrorandgraveabuseofdiscretiononthepart oftheappellatecourtwhen I.ITHELDPETITIONERCARRIERJOINTLYANDSEVERALLYLIABLEWITHTHEARRASTRE OPERATOR AND CUSTOMS BROKER FOR THE CLAIM OF PRIVATE RESPONDENT AS GRANTEDINTHEQUESTIONEDDECISION; II. ITHELD THATTHEGRANT OF INTERESTONTHECLAIM OF PRIVATERESPONDENT SHOULDCOMMENCEFROMTHEDATEOFTHEFILINGOFTHECOMPLAINTATTHERATE OFTWELVEPERCENTPERANNUMINSTEADOFFROMTHEDATEOFTHEDECISIONOFTHE TRIAL COURT AND ONLY AT THE RATE OF SIX PERCENT PER ANNUM, PRIVATE RESPONDENT'SCLAIMBEINGINDISPUTABLYUNLIQUIDATED. Thepetitionis,inpart,granted. Inthisdecision,wehavebegunbysayingthatthequestionsraisedbypetitionercarrierarenotallthatnovel.Indeed,wedo haveafairlygoodnumberofpreviousdecisionsthisCourtcanmerelytackto. Thecommoncarrier'sdutytoobservetherequisitediligenceintheshipmentofgoodslastsfromthetimethearticlesare surrenderedtoorunconditionallyplacedinthepossessionof,andreceivedby,thecarrierfortransportationuntildelivered to,oruntilthelapseofareasonabletimefortheiracceptanceby,thepersonentitledtoreceivethem(Arts.17361738,Civil Code;Ganzonvs.CourtofAppeals,161SCRA646;KuiBaivs.DollarSteamshipLines,52Phil.863).Whenthegoods shippedeitherarelostorarriveindamagedcondition,apresumptionarisesagainstthecarrierofitsfailuretoobservethat diligence,andthereneednotbeanexpressfindingofnegligencetoholditliable(Art.1735,CivilCode;PhilippineNational Railwaysvs.CourtofAppeals,139SCRA87;MetroPortServicevs.CourtofAppeals,131SCRA365).Thereare,of course,exceptionalcaseswhensuchpresumptionoffaultisnotobservedbutthesecases,enumeratedinArticle17341of theCivilCode,areexclusive,notoneofwhichcanbeappliedtothiscase. Thequestionofchargingboththecarrierandthearrastreoperatorwiththeobligationofproperlydeliveringthegoodstothe consigneehas,too,beenpasseduponbytheCourt.InFireman'sFundInsurancevs.MetroPortServices(182SCRA455), wehaveexplained,inholdingthecarrierandthearrastreoperatorliableinsolidum,thus: Thelegalrelationshipbetweentheconsigneeandthearrastreoperatorisakintothatofadepositorand warehouseman (Lua Kian v. Manila Railroad Co., 19 SCRA 5 [1967]. The relationship between the consigneeandthecommoncarrierissimilartothatoftheconsigneeandthearrastreoperator(Northern Motors,Inc.v.PrinceLine,etal.,107Phil.253[1960]).SinceitisthedutyoftheARRASTREtotake goodcareofthegoodsthatareinitscustodyandtodeliverthemingoodconditiontotheconsignee,such responsibilityalsodevolvesupontheCARRIER.BoththeARRASTREandtheCARRIERaretherefore chargedwiththeobligationtodeliverthegoodsingoodconditiontotheconsignee. Wedonot,ofcourse,implybytheabovepronouncementthatthearrastreoperatorandthecustomsbrokerarethemselves alwaysandnecessarilyliablesolidarilywiththecarrier,orviceversa,northatattendantfactsinagivencasemaynotvary therule.TheinstantpetitionhasbeenbroughtsolelybyEasternShippingLines,which,beingthecarrierandnothaving beenabletorebutthepresumptionoffault,is,inanyevent,tobeheldliableinthisparticularcase.Afactualfindingofboth thecourtaquoandtheappellatecourt,wetakenote,isthat"thereissufficientevidencethattheshipmentsustaineddamage whileinthesuccessivepossessionofappellants"(thehereinpetitioneramongthem).Accordingly,theliabilityimposedon EasternShippingLines,Inc.,thesolepetitionerinthiscase,isinevitableregardlessofwhetherthereareotherssolidarily liablewithit. Itisovertheissueoflegalinterestadjudgedbytheappellatecourtthatdeservesmorethanjustapassingremark. LetusfirstseeachronologicalrecitationofthemajorrulingsofthisCourt: The early case of Malayan Insurance Co., Inc., vs. Manila Port Service,2decided3on15May1969,involvedasuitforrecoveryofmoneyarisingoutofshortdeliveriesandpilferageof goods.Inthiscase,appelleeMalayanInsurance(theplaintiffinthelowercourt)averredinitscomplaintthatthetotal amountofitsclaimforthevalueoftheundeliveredgoodsamountedtoP3,947.20.Thisdemand,however,wasneither establishedinitstotalitynordefinitelyascertained.Inthestipulationoffactslaterenteredintobytheparties,inlieuof
proof,theamountofP1,447.51wasagreedupon.Thetrialcourtrenderedjudgmentorderingtheappellants(defendants) ManilaPortServiceandManilaRailroadCompanytopayappelleeMalayanInsurancethesumofP1,447.51withlegal interestthereonfromthedatethecomplaintwasfiledon28December1962untilfullpaymentthereof.Theappellantsthen assailed,interalia,theawardoflegalinterest.Insustainingtheappellants,thisCourtruled: Interestuponanobligationwhichcallsforthepaymentofmoney,absentastipulation,isthelegalrate. Suchinterestnormallyisallowablefromthedateofdemand,judicialorextrajudicial.Thetrialcourtopted forjudicialdemandasthestartingpoint. But then upon the provisions of Article 2213 of the Civil Code, interest "cannot be recovered upon unliquidatedclaimsordamages,exceptwhenthedemandcanbeestablishedwithreasonablecertainty." AndaswasheldbythisCourtinRiveravs.Perez,4L6998,February29,1956,ifthesuitwerefor damages,"unliquidatedandnotknownuntildefinitelyascertained,assessedanddeterminedbythecourts after proof (Montilla c. Corporacion de P.P. Agustinos, 25 Phil. 447; Lichauco v. Guzman, 38Phil.302),"then,interest"shouldbefromthedateofthedecision."(Emphasissupplied) ThecaseofReforminavs.Tomol,5renderedon11October1985,wasfor"RecoveryofDamagesforInjurytoPersonand LossofProperty."Aftertrial,thelowercourtdecreed: WHEREFORE,judgment isherebyrenderedinfavoroftheplaintiffsandthirdpartydefendants and againstthedefendantsandthirdpartyplaintiffsasfollows: OrderingdefendantsandthirdpartyplaintiffsShellandMichael,Incorporatedtopayjointlyandseverally thefollowingpersons: xxxxxxxxx (g)PlaintiffsPacitaF.ReforminaandFranciscoReforminathesumofP131,084.00whichisthevalueof theboatFBPacitaIIItogetherwithitsaccessories,fishinggearandequipmentminusP80,000.00which isthevalueoftheinsurancerecoveredandtheamountofP10,000.00amonthastheestimatedmonthly losssufferedbythemasaresultofthefireofMay6,1969uptothetimetheyareactuallypaidoralready thetotalsumofP370,000.00asofJune4,1972withlegalinterestfromthefilingofthecomplaintuntil paid and to pay attorney's fees of P5,000.00 with costs against defendants and third party plaintiffs. (Emphasissupplied.) OnappealtotheCourtofAppeals,thelattermodifiedtheamountofdamagesawardedbutsustainedthetrialcourt inadjudginglegalinterestfromthefilingofthecomplaintuntilfullypaid.Whentheappellatecourt'sdecision becamefinal,thecasewasremandedtothelowercourtforexecution,andthiswaswhenthetrialcourtissuedits assailedresolutionwhichappliedthe6%interestperannumprescribedinArticle2209oftheCivilCode.Intheir petition for review on certiorari, the petitioners contended that Central Bank Circular No.416,providingthus ByvirtueoftheauthoritygrantedtoitunderSection1ofAct2655,asamended,MonetaryBoardinits ResolutionNo.1622datedJuly29,1974,hasprescribedthattherateofinterestfortheloan,orforbearance ofanymoney,goods,orcreditsandtherateallowedinjudgments,intheabsenceofexpresscontractasto suchrateofinterest,shallbetwelve(12%)percentperannum.ThisCircularshalltakeeffectimmediately. (Emphasisfoundinthetext) shouldhave,instead,beenapplied.ThisCourt6ruled: Thejudgmentsspokenofandreferredtoarejudgmentsinlitigationsinvolvingloansorforbearanceofany money, goods or credits. Any other kind of monetary judgment which has nothing to do with, nor involvingloansorforbearanceofanymoney,goodsorcreditsdoesnotfallwithinthecoverageofthesaid lawforitisnotwithintheambitoftheauthoritygrantedtotheCentralBank. xxxxxxxxx Comingtothecaseatbar,thedecisionhereinsoughttobeexecutedisonerenderedinanActionfor Damagesforinjurytopersonsandlossofpropertyanddoesnotinvolveanyloan,muchlessforbearances ofanymoney,goodsorcredits.Ascorrectlyarguedbytheprivaterespondents,thelawapplicabletothe saidcaseisArticle2209oftheNewCivilCodewhichreads Art.2209.Iftheobligationconsistsinthepaymentofasumofmoney,andthedebtor incursindelay,theindemnityfordamages,therebeingnostipulationtothecontrary, shallbethepaymentofinterestagreedupon,andintheabsenceofstipulation,thelegal interestwhichissixpercentperannum.
TheaboverulewasreiteratedinPhilippineRabbitBusLines,Inc.,v.Cruz,7promulgatedon28July1986.Thecasewasfor damagesoccasionedbyaninjurytopersonandlossofproperty.ThetrialcourtawardedprivaterespondentPedroManabat actualandcompensatorydamagesintheamountofP72,500.00withlegalinterestthereonfromthefilingofthecomplaint untilfullypaid.RelyingontheReforminav.Tomolcase,thisCourt8modifiedtheinterestawardfrom12%to6%interest perannumbutsustainedthetimecomputationthereof,i.e.,fromthefilingofthecomplaintuntilfullypaid. InNakpilandSonsvs.CourtofAppeals,9thetrialcourt,inanactionfortherecoveryofdamagesarisingfromthecollapse of a building, ordered, inter alia, the "defendant United Construction Co., Inc. (one of the petitioners) ...topaytheplaintiff,...,thesumofP989,335.68withinterestatthelegalratefromNovember29,1968,thedateofthe filingofthecomplaintuntilfullpayment...."Savefromthemodificationoftheamountgrantedbythelowercourt,the CourtofAppealssustainedthetrialcourt'sdecision.WhentakentothisCourtforreview,thecase,on03October1986,was decided,thus: WHEREFORE, the decision appealed from is hereby MODIFIED and considering the special and environmentalcircumstancesofthiscase,wedeemitreasonabletorenderadecisionimposing,asWedo herebyimpose,uponthedefendantandthethirdpartydefendants(withtheexceptionofRomanOzaeta)a solidary (Art. 1723, Civil Code, Supra. p.10)indemnityinfavorofthePhilippineBarAssociationofFIVEMILLION(P5,000,000.00)Pesosto coveralldamages(withtheexceptiontoattorney'sfees)occasionedbythelossofthebuilding(including interestchargesandlostrentals)andanadditionalONEHUNDREDTHOUSAND(P100,000.00)Pesosas andforattorney'sfees,thetotalsumbeingpayableuponthefinalityofthisdecision.Uponfailuretopay onsuchfinality,twelve(12%)percentinterestperannumshallbeimposeduponaforementionedamounts fromfinalityuntilpaid.Solidarycostsagainstthedefendantandthirdpartydefendants(ExceptRoman Ozaeta).(Emphasissupplied) AmotionforreconsiderationwasfiledbyUnitedConstruction,contendingthat"theinterestoftwelve(12%)per centperannumimposedonthetotalamountofthemonetaryawardwasincontraventionoflaw."TheCourt10 ruledouttheapplicabilityoftheReforminaandPhilippineRabbitBusLinescasesand,initsresolutionof15April 1988,itexplained: Thereshouldbenodisputethattheimpositionof12%interestpursuanttoCentralBankCircularNo. 416...isapplicableonlyinthefollowing:(1)loans;(2)forbearanceofanymoney,goodsorcredit;and (3)rateallowedinjudgments(judgmentsspokenofrefertojudgmentsinvolvingloansorforbearanceof any money, goods or credits. (Philippine Rabbit Bus Lines Inc. v. Cruz, 143 SCRA 160161 [1986]; Reforminav.Tomol,Jr.,139SCRA260[1985]).Itistruethatintheinstantcase,thereisneitheraloanor aforbearance,butthennointerestisactuallyimposedprovidedthesumsreferredtointhejudgmentare paiduponthefinalityofthejudgment.Itisdelayinthepaymentofsuchfinaljudgment,thatwillcause theimpositionoftheinterest. Itwillbenotedthatinthecasesalreadyadvertedto,therateofinterestisimposedonthetotalsum,from thefilingofthecomplaintuntilpaid;inotherwords,aspartofthejudgmentfordamages.Clearly,theyare notapplicabletotheinstantcase.(Emphasissupplied.) ThesubsequentcaseofAmericanExpressInternational,Inc.,vs.IntermediateAppellateCourt11wasapetitionforreview oncertiorarifromthedecision,dated27February1985,ofthethenIntermediateAppellateCourtreducingtheamountof moralandexemplarydamagesawardedbythetrialcourt,toP240,000.00andP100,000.00,respectively,anditsresolution, dated29April1985,restoringtheamountofdamagesawardedbythetrialcourt,i.e.,P2,000,000.00asmoraldamagesand P400,000.00asexemplarydamageswithinterestthereonat12%perannumfromnoticeofjudgment,pluscostsofsuit.Ina decisionof09November1988,thisCourt,whilerecognizingtherightoftheprivaterespondenttorecoverdamages,held theaward,however,formoraldamagesbythetrialcourt,latersustainedbytheIAC,tobeinconceivablylarge.TheCourt12 thussetasidethedecisionoftheappellatecourtandrenderedanewone,"orderingthepetitionertopayprivaterespondent the sum of One Hundred Thousand (P100,000.00) Pesos as moral damages, with six(6%)percentinterestthereoncomputedfromthefinalityofthisdecisionuntilpaid.(Emphasissupplied) Reformina came into fore again in the 21February 1989 case of Florendo v. Ruiz 13 which arose from a breach of employmentcontract.Forhavingbeenillegallydismissed,thepetitionerwasawardedbythetrialcourtmoralandexemplary damageswithout,however,providinganylegalinterestthereon.WhenthedecisionwasappealedtotheCourtofAppeals, thelatterheld:
WHEREFORE,exceptasmodifiedhereinabovethedecisionoftheCFIofNegrosOrientaldatedOctober 31,1972isaffirmedinallrespects,withthemodificationthatdefendantsappellants,exceptdefendant appellantMertonMunn,areorderedtopay,jointlyandseverally,theamountsstatedinthedispositive portionofthedecision,includingthesumofP1,400.00inconceptofcompensatorydamages,withinterest atthelegalratefromthedateofthefilingofthecomplaintuntilfullypaid(Emphasissupplied.) ThepetitionforreviewtothisCourtwasdenied.Therecordswerethereupontransmittedtothetrialcourt,andan entryofjudgmentwasmade.Thewritofexecutionissuedbythetrialcourtdirectedthatonlycompensatory damagesshouldearninterestat6%perannumfromthedateofthefilingofthecomplaint.Ascribinggraveabuse ofdiscretiononthepartofthetrialjudge,apetitionforcertiorariassailedthesaidorder.ThisCourtsaid: ...,itistobenotedthattheCourtofAppealsorderedthepaymentofinterest"atthelegalrate"fromthe timeofthefilingofthecomplaint...Saidcircular[CentralBankCircularNo.416]doesnotapplyto actionsbasedonabreachofemploymentcontractlikethecaseatbar.(Emphasissupplied) The Court reiterated that the 6%interest per annum onthe damages shouldbe computed from the time the complaintwasfileduntiltheamountisfullypaid. Quiterecently,theCourthadanotheroccasiontoruleonthematter.NationalPowerCorporationvs.Angas,14decidedon 08May1992,involvedtheexpropriationofcertainparcelsofland.Afterconductingahearingonthecomplaintsfor eminent domain, the trial court ordered the petitioner to pay the private respondents certain sums of money as just compensationfortheirlandssoexpropriated"withlegalinterestthereon...untilfullypaid."Again,inapplyingthe6% legalinterestperannumundertheCivilCode,theCourt15declared: ...,(T)hetransactioninvolvedis clearlynot a loanorforbearance ofmoney,goods orcredits but expropriationofcertainparcelsoflandforapublicpurpose,thepaymentofwhichiswithoutstipulation regardinginterest,andtheinterestadjudgedbythetrialcourtisinthenatureofindemnityfordamages. Thelegalinterestrequiredtobepaidontheamountofjustcompensationforthepropertiesexpropriatedis manifestlyintheformofindemnityfordamagesforthedelayinthepaymentthereof.Therefore,sincethe kindofinterestinvolvedinthejointjudgmentofthelowercourtsoughttobeenforcedinthiscaseis interestbywayofdamages,andnotbywayofearningsfromloans,etc.Art.2209oftheCivilCodeshall apply. Concededly,therehavebeenseemingvariancesintheaboveholdings.Thecasescanperhapsbeclassifiedintotwogroups accordingtothesimilarityoftheissuesinvolvedandthecorrespondingrulingsrenderedbythecourt.The"firstgroup" wouldconsistofthecasesofReforminav.Tomol(1985),PhilippineRabbitBusLinesv.Cruz(1986),Florendov.Ruiz (1989) andNationalPowerCorporationv.Angas(1992).Inthe"secondgroup"wouldbeMalayanInsuranceCompanyv.Manila PortService(1969),NakpilandSonsv.CourtofAppeals(1988),andAmericanExpressInternationalv.Intermediate AppellateCourt(1988). Inthe"firstgroup",thebasicissuefocusesontheapplicationofeitherthe6%(undertheCivilCode)or12%(underthe CentralBankCircular)interestperannum.Itiseasilydiscernibleinthesecasesthattherehasbeenaconsistentholdingthat theCentralBankCircularimposingthe12%interestperannumappliesonlytoloansorforbearance16ofmoney,goodsor credits,aswellastojudgmentsinvolvingsuchloanorforbearanceofmoney,goodsorcredits,andthatthe6%interestunder theCivilCodegovernswhenthetransactioninvolvesthepaymentofindemnitiesintheconceptofdamagearisingfromthe breachoradelayintheperformanceofobligationsingeneral.Observe,too,thatinthesecases,acommontimeframeinthe computationofthe6%interestperannumhasbeenapplied,i.e.,fromthetimethecomplaintisfileduntiltheadjudged amountisfullypaid. The"secondgroup",didnotalterthepronouncedruleontheapplicationofthe6%or12%interestperannum,17depending onwhetherornottheamountinvolvedisaloanorforbearance,ontheonehand,oroneofindemnityfordamage,onthe otherhand.Unlike,however,the"firstgroup"whichremainedconsistentinholdingthattherunningofthelegalinterest shouldbefromthetimeofthefilingofthecomplaintuntilfullypaid,the"secondgroup"variedonthecommencementof therunningofthelegalinterest. Malayanheldthattheamountawardedshouldbearlegalinterestfromthedateofthedecisionofthecourtaquo,explaining that"ifthesuitwerefordamages,'unliquidatedandnotknownuntildefinitelyascertained,assessedanddeterminedbythe courts after proof,' then, interest 'should be from the date of the decision.'" American Express International v. IAC, introducedadifferenttimeframeforreckoningthe6%interestbyorderingittobe"computedfromthefinalityof(the) decisionuntilpaid."TheNakpilandSonscaseruledthat12%interestperannumshouldbeimposedfromthefinalityofthe
decisionuntilthejudgmentamountispaid. Theostensiblediscordisnotdifficulttoexplain.Thefactualcircumstancesmayhavecalledfordifferentapplications, guidedbytherulethatthecourtsarevestedwithdiscretion,dependingontheequitiesofeachcase,ontheawardofinterest. Nonetheless,itmaynotbeunwise,bywayofclarificationandreconciliation,tosuggestthefollowingrulesofthumbfor futureguidance. I.Whenanobligation,regardlessofitssource,i.e.,law,contracts,quasicontracts,delictsorquasidelicts18isbreached,the contravenorcanbeheldliablefordamages.19TheprovisionsunderTitleXVIIIon"Damages"oftheCivilCodegovernin determiningthemeasureofrecoverabledamages.20 II.Withregardparticularlytoanawardofinterestintheconceptofactualandcompensatorydamages,therateofinterest,as wellastheaccrualthereof,isimposed,asfollows: 1.Whentheobligationisbreached,anditconsistsinthepaymentofasumofmoney,i.e.,aloanorforbearanceofmoney, theinterestdueshouldbethatwhichmayhavebeenstipulatedinwriting.21Furthermore,theinterestdueshallitselfearn legalinterestfromthetimeitisjudiciallydemanded.22Intheabsenceofstipulation,therateofinterestshallbe12%per annumtobecomputedfromdefault,i.e.,fromjudicialorextrajudicialdemandunderandsubjecttotheprovisionsofArticle 116923oftheCivilCode. 2.Whenanobligation,notconstitutingaloanorforbearanceofmoney,isbreached,aninterestontheamountofdamages awardedmaybeimposedatthediscretionofthecourt24attherateof6%perannum.25Nointerest,however,shallbe adjudgedonunliquidatedclaimsordamagesexceptwhenoruntilthedemandcanbeestablishedwithreasonablecertainty. 26Accordingly,wherethedemandisestablishedwithreasonablecertainty,theinterestshallbegintorunfromthetimethe claim is made judicially or extrajudicially (Art. 1169, Civil Code) but when such certainty cannot be so reasonably establishedatthetimethedemandismade,theinterestshallbegintorunonlyfromthedatethejudgmentofthecourtis made(atwhichtimethequantificationofdamagesmaybedeemedtohavebeenreasonablyascertained).Theactualbasefor thecomputationoflegalinterestshall,inanycase,beontheamountfinallyadjudged. 3.Whenthejudgmentofthecourtawardingasumofmoneybecomesfinalandexecutory,therateoflegalinterest,whether thecasefallsunderparagraph1orparagraph2,above,shallbe12%perannumfromsuchfinalityuntilitssatisfaction,this interimperiodbeingdeemedtobebythenanequivalenttoaforbearanceofcredit. WHEREFORE,thepetitionispartlyGRANTED.TheappealeddecisionisAFFIRMEDwiththeMODIFICATIONthatthe legal interest to be paid is SIX PERCENT (6%) on the amount due computed from the decision, dated 03February1988,ofthecourtaquo.ATWELVEPERCENT(12%)interest,inlieuofSIXPERCENT(6%),shallbe imposedonsuchamountuponfinalityofthisdecisionuntilthepaymentthereof. SOORDERED. Narvasa,C.J.,Cruz,Feliciano,Padilla,Bidin,Regalado,Davide,Jr.,Romero,Bellosillo,Melo,Quiason,Punoand Kapunan,JJ.,concur. Mendoza,J.,tooknopart.
G.R.No.118664August7,1998 JAPANAIRLINES,petitioner, vs. THECOURTOFAPPEALS,ENRIQUEAGANA.,MARIAANGELANINAAGANA,ADALIAB.FRANCISCOand JOSEMIRANDA,respondents. ROMERO,J.: BeforeusisanappealbycertiorarifiledbypetitionerJapanAirlines,Inc.(JAL)seekingthereversalofthedecisionofthe CourtofAppeals,1whichaffirmedwithmodificationtheawardofdamagesmadebythetrialcourtinfavorofherein privaterespondentsEnriqueAgana,MariaAngelaNinaAgana,AdeliaFranciscoandJoseMiranda. OnJune13,1991,privaterespondentJoseMirandaboardedJALflightNo.JL001inSanFrancisco,Californiaboundfor Manila.Likewise,onthesamedayprivaterespondentsEnriqueAgana,MariaAngelaNinaAganaandAdeliaFranciscoleft LosAngeles,CaliforniaforManilaviaJALflightNo.JL061.Asanincentivefortravellingonthesaidairline,bothflights weretomakeanovernightstopoveratNarita,Japan,attheairlines'expense,thereafterproceedingtoManilathefollowing day. UponarrivalatNarita,JapanonJune14,1991,privaterespondentswerebilletedatHotelNikkoNaritaforthenight.The nextday,privaterespondents,onthefinallegoftheirjourney,wenttotheairporttotaketheirflighttoManila.However, duetotheMt.Pinatuboeruption,unrelentingashfallblanketedNinoyAquinoInternationalAirport(NAIA),renderingit inaccessibletoairlinetraffic.Hence,privaterespondents'triptoManilawascancelledindefinitely. Toaccommodatetheneedsofitsstrandedpassengers,JALrebookedalltheManilaboundpassengersonflightNo.741due todepartonJune16,1991andalsopaidforthehotelexpensesfortheirunexpectedovernightstay.OnJune16,1991,much to the dismay of the private respondents, their long anticipated flight to Manila was again cancelled due to NAIA's indefiniteclosure. At this point,JALinformed theprivate respondents that it wouldnolonger defraytheirhotel and accommodationexpenseduringtheirstayinNarita. Since NAIA was only reopened to airline traffic on June 22, 1991, private respondents were forced to pay for their accommodationsandmealexpensesfromtheirpersonalfundsfromJune16toJune21,1991.Theirunexpectedstayin NaritaendedonJune22,1991whentheyarrivedinManilaonboardJLflightNo.741. Obviously,stillreelingfromtheexperience,privaterespondents,onJuly25,1991,commencedanactionfordamages againstJALbeforetheRegionalTrialCourtofQuezonCity,Branch104.2Tosupporttheirclaim,privaterespondents assertedthatJALfailedtoliveuptoitsdutytoprovidecareandcomforttoitsstrandedpassengerswhenitrefusedtopayfor theirhotelandaccommodationexpensesfromJune16to21,1991atNarita,Japan.Inotherwords,theyinsistedthatJAL wasobligatedtoshouldertheirexpensesaslongastheywerestillstrandedinNarita.Ontheotherhand,JALdeniedthis allegationandaverredthatairlinepassengershavenovestedrighttotheseamenitiesincaseaflightiscancelleddueto "forcemajeure." OnJune18,1992,thetrialcourtrendereditsjudgmentinfavorofprivaterespondentsholdingJALliablefordamages,viz.: WHEREFORE,judgmentisrenderedinfavorofplaintiffsorderingthedefendantJapanAirlinestopaythe plaintiffsEnriqueAgana,AdaliaB.FranciscoandMariaAngelaNinaAganathesumofOnemillionTwo HundredfortysixThousandNineHundredThirtySixPesos(P1,246,936.00)andJoseMirandathesumof ThreeHundredTwentyThousandSixHundredsixteenand31/100(P320,616.31)asactual,moraland exemplarydamagesandpayattorney'sfeesintheamountofTwoHundredThousandPesos(P200,000.00), andtopaythecostsofsuit. Undaunted,JALappealedthedecisionbeforetheCourtofAppeals,which,however,withtheexceptionofloweringthe damagesawardedaffirmedthetrialcourt'sfinding,3thus: Thus,theawardofmoral damages shouldbeas itisherebyreducedtoP200,000.00foreachofthe plaintiffs,theexemplarydamagestoP300,000.00andtheattorney'sfeestoP100,000.00plusthecosts. WHEREFORE,withtheforegoingModification,thejudgmentappealedfromisherebyAFFIRMEDinall otherrespects.
RepublicofthePhilippines SUPREMECOURT Manila THIRDDIVISION
JALfiledamotionforreconsiderationwhichprovedfutileandunavailing.4 Failinginitsbidtoreconsiderthedecision,JALhasnowfiledthisinstantpetition. TheissuetoberesolvediswhetherJAL,asacommoncarrierhastheobligationtoshoulderthehotelandmealexpensesof itsstrandedpassengersuntiltheyhavereachedtheirfinaldestination,evenifthedelaywerecausedby"forcemajeure." Tobeginwith,thereisnodisputethattheMt.PinatuboeruptionpreventedJALfromproceedingtoManilaonschedule. Likewise,privaterespondentsconcedethatsucheventcanbeconsideredas"forcemajeure"sincetheirdelayedarrivalin ManilawasnotimputabletoJAL.5 However,privaterespondentscontendthatwhileJALcannotbeheldresponsibleforthedelayedarrivalinManila,itwas neverthelessliablefortheirlivingexpensesduringtheirunexpectedstayinNaritasinceairlineshavetheobligationtoensure thecomfortandconvenienceofitspassengers.Whilewesympathizewiththeprivaterespondents'plight,weareunableto acceptthiscontention. Wearenotunmindfulofthefactthatinaplethoraofcaseswehaveconsistentlyruledthatacontracttotransportpassengers isquitedifferentinkind,anddegreefromanyothercontractualrelation.Itissafetoconcludethatitisarelationshipimbued withpublicinterest.Failureonthepartofthecommoncarriertoliveuptotheexactingstandardsofcareanddiligence rendersitliableforanydamagesthatmaybesustainedbyitspassengers.However,thisisnottosaythatcommoncarriers areabsolutelyresponsibleforallinjuriesordamagesevenifthesamewerecausedbyafortuitousevent.Toruleotherwise wouldrenderthedefenseof"forcemajeure,"asanexceptionfromanyliability,illusoryandineffective. Accordingly,thereisnoquestionthatwhenapartyisunabletofulfillhisobligationbecauseof"forcemajeure,"thegeneral ruleisthathecannotbeheldliablefordamagesfornonperformance.6Corollarily,whenJALwaspreventedfromresuming itsflighttoManiladuetotheeffectsofMt.Pinatuboeruption,whateverlossesordamagesintheformofhotelandmeal expensesthestrandedpassengersincurred,cannotbechargedtoJAL.YetitisundeniablethatJALassumedthehotel expensesofrespondentsfortheirunexpectedovernightstayonJune15,1991. Admittedly,tobestrandedforalmostaweekinaforeignlandwasanexasperatingexperiencefortheprivaterespondents. Tobesure,theyunderwentdistressandanxietyduringtheirunanticipatedstayinNarita,buttheirpredicamentwasnotdue tothefaultornegligenceofJALbuttheclosureofNAIAtointernationalflights.Indeed,toholdJAL,intheabsenceofbad faithornegligence,liablefortheamenitiesofitsstrandedpassengersbyreasonofafortuitouseventistoomuchofaburden toassume. Furthermore,ithasbeenheldthatairlinepassengersmusttakesuchrisksincidenttothemodeoftravel.7Inthisregard, adverseweatherconditionsorextremeclimaticchangesaresomeoftheperilsinvolvedinairtravel,theconsequencesof whichthepassengermustassumeorexpect.Afterall,commoncarriersarenottheinsurerofallrisks.8 Paradoxically,theCourtofAppeals,despitethepresenceof"forcemajeure,"stillruledagainstJALrelyinginourdecision inPALv.CourtofAppeals,9thus: ThepositiontakenbyPALinthiscaseclearlyillustratesitsfailuretograsptheexactingstandardrequired by law. Undisputably, PAL's diversion of its flight due to inclement weather was a fortuitous event. Nonetheless,suchoccurrencedidnotterminatePAL'scontractwithitspassengers.Beinginthebusiness ofaircarriageandthesoleonetooperateinthecountry,PALisdeemedequippedtodealwithsituations asinthecaseatbar.Whatwesaidinonecaseonceagainmustbestressed,i.e.,therelationofcarrierand passengercontinuesuntilthelatterhasbeenlandedattheportofdestinationandhasleftthecarrier's premises.Hence,PALnecessarilywouldstillhavetoexerciseextraordinarydiligenceinsafeguardingthe comfort,convenienceandsafetyofitsstrandedpassengersuntiltheyhavereachedtheirfinaldestination. Onthisscore,PALgrosslyfailedconsideringthethenongoingbattlebetweengovernmentforcesand MuslimrebelsinCotabatoCityandthefactthattheprivaterespondentwasastrangertotheplace. Therelianceismisplaced.ThefactualbackgroundofthePALcaseisdifferentfromtheinstantpetition.Inthatcasethere wasindeedafortuitouseventresultinginthediversionofthePALflight.However,theunforeseendiversionwasworsened when"privaterespondents(passenger)wasleftattheairportandcouldnotevenhitcharideinaFordFieraloadedwith PALpersonnel,"10nottomentiontheapparentapathyofthePALstationmanagerastothepredicamentofthestranded passengers. 11 In light of these circumstances, we held that if the fortuitous event was accompanied by neglect and malfeasancebythecarrier'semployees,anactionfordamagesagainstthecarrierispermissible.Unfortunately,forprivate respondents,noneoftheseconditionsarepresentintheinstantpetition. We are not prepared, however, to completely absolve petitioner JAL from any liability. It must be noted that private respondentsboughtticketsfromtheUnitedStateswithManilaastheirfinaldestination.WhileJALwasnolongerrequired todefrayprivaterespondents'livingexpensesduringtheirstayinNaritaonaccountofthefortuitousevent,JALhadtheduty
tomakethenecessaryarrangementstotransportprivaterespondentsonthefirstavailableconnectingflighttoManila. PetitionerJALrenegedonitsobligationtolookafterthecomfortandconvenienceofitspassengerswhenitdeclassified privaterespondentsfrom"transitpassengers"to"newpassengers"asaresultofwhichprivaterespondentswereobligedto makethenecessaryarrangementsthemselvesforthenextflighttoManila.Privaterespondentswereplacedonthewaiting listfromJune20toJune24.Toassurethemselvesofaseatonanavailableflight,theywerecompelledtostayintheairport thewholedayofJune22,1991anditwasonlyat8:00p.m.oftheaforesaiddatethattheywereadvisedthattheycouldbe accommodatedinsaidflightwhichflewatabout9:00a.m.thenextday. WearenotoblivioustothefactthatthecancellationofJALflightstoManilafromJune15toJune21,1991caused considerabledisruptioninpassengerbookingandreservation.Infact,itwouldbeunreasonabletoexpect,considering NAIA'sclosure,thatJALflightoperationswouldbenormalonthedaysaffected.Nevertheless,thisdoesnotexcuseJAL from itsobligationtomakethenecessaryarrangements totransport privaterespondentsonitsfirstavailableflight to Manila. After all, it had a contract to transport private respondents from the United States to Manila as their final destination. Consequently,theawardofnominal damages is inorder.Nominaldamagesareadjudicatedinorderthat arightofa plaintiff,whichhasbeenviolatedorinvadedbythedefendant,maybevindicatedorrecognizedandnotforthepurposeof indemnifyinganylosssufferedbyhim.12Thecourtmayawardnominaldamagesineveryobligationarisingfromany sourceenumeratedinarticle1157,orineverycasewhereanypropertyrighthasbeeninvaded.13 WHEREFORE, in view of the foregoing, the decision of the Court of Appeals dated December 22, 1993 is hereby MODIFIED.Theawardofactual,moralandexemplarydamagesisherebyDELETED.PetitionerJALisorderedtopayeach oftheprivaterespondentsnominaldamagesinthesumofP100,000.00eachincludingattorney'sfeesofP50,000.00plus costs. SOORDERED. Narvasa,C.J.,KapunanandPurisima,JJ.,concur.
RepublicofthePhilippines SUPREMECOURT BaguioCity SECONDDIVISION G.R.No.116110May15,1996 BALIWAGTRANSIT,INC.,petitioner, vs. COURTOFAPPEALS,SPOUSESANTONIOGARCIA&LETICIAGARCIA,A&JTRADING,ANDJULIO RECONTIQUE,respondents. PUNO,J.:p ThisisapetitionforcertioraritoreviewtheDecision1oftheCourtofAppealsinCAG.R.CV31246awardingdamagesin favorofthespousesAntonioandLeticiaGarciaforbreachofcontractofcarriage.2 TherecordsshowthatonJuly31,1980,LeticiaGarcia,andherfiveyearoldson,AllanGarcia,boardedBaliwagTransit BusNo.2036boundforCabanatuanCitydrivenbyJaimeSantiago.Theytooktheseatbehindthedriver. Atabout7:30intheevening,inMalimba,Gapan,NuevaEcija,thebuspassengerssawacargotruckparkedattheshoulder of the national highway. Its left rear portion jutted to the outer lane, as the shoulder of the road was too narrow to accommodatethewholetruck.Akerosenelampappearedattheedgeoftheroadobviouslytoserveasawarningdevice. Thetruckdriver,JulioRecontique,andhishelper,ArturoEscala,werethenreplacingaflattire.Thetruckisownedby respondentA&JTrading. BusdriverSantiagowasdrivingataninordinatelyfastspeedandfailedtonoticethetruckandthekerosenelampatthe edgeoftheroad.Santiago'spassengersurgedhimtoslowdownbuthepaidthemnoheed.Santiagoevencarriedanimated conversationswithhiscoemployeeswhiledriving.Whenthedangerofcollisionbecameimminent,thebuspassengers shouted"Babanggatayo!".Santiagosteppedonthebrake,butitwastoolate.Hisbusrammedintothestalledcargotruck.It causedtheinstantdeathofSantiagoandEscala,andinjurytoseveralothers.LeticiaandAllanGarciawereamongthe injuredpassengers. Leticiasufferedafractureinherpelvisandrightleg.TheyrushedhertotheprovincialhospitalinCabanatuanCitywhere shetreatment.Afterthreedays,shewastransferredtotheNationalOrthopedicHospitalwhereshewasconfinedformore thanamonth.3Sheunderwentanoperationforpartialhipprosthesis.4 Allan,ontheotherhand,brokealeg.Hewasalsogivenemergencytreatmentattheprovincialhospital. SpousesAntonioandLeticiaGarciasuedBaliwagTransit,Inc.,A&JTradingandJulioRecontiquefordamagesinthe RegionalTrialCourtofBulacan.5LeticiasuedasaninjuredpassengerofBaliwagandasmotherofAllan.Atthetimeof thecomplaint,Allanwasaminor,hence,thesuitinitiatedbyhisparentsinhisfavor. Baliwag,A&JTradingandRecontiquedisclaimedresponsibilityforthemishap.Baliwagallegedthattheaccidentwas causedsolelybythefaultandnegligenceofA&JTradinganditsdriver,Recontique.BaliwagchargedthatRecontique failedtoplaceanearlywarningdeviceatthecornerofthedisabledcargotrucktowarnoncomingvehicles.6Ontheother hand,A&JTradingandRecontiqueallegedthattheaccidentwastheresultofthenegligenceandrecklessdrivingof Santiago,busdriverofBaliwag.7 Afterhearing,thetrialcourtfoundallthedefendantsliable,thus: xxxxxxxxx Inviewthereof,theCourtholdsthatbothdefendantsshouldbeheldliable;thedefendantBaliwagTransit, Inc.forhavingfailedtodelivertheplaintiffandhersontotheirpointofdestinationsafelyinviolationof plaintiff'sanddefendantBaliwagTransit'scontractualrelation. ThedefendantA&JandJulioRecontiqueforfailuretoprovideitscargotruckwithanearlywarning deviceinviolationoftheMotorVehicleLaw.8 The trial court ordered Baliwag, A & J Trading and Recontique to pay jointly and severally the Garcia spouses the following: (1) P25,000,00 hospitalizationand medicationfee, (2) P450,000.00 loss of earnings in eight (8) years, (3) P2,000.00forthehospitalizationoftheirsonAllanGarcia,(4)P50,000.00moraldamages,and(5)P30,000.00attorney's fee.9 Onappeal,theCourtofAppealsmodifiedthetrialcourt'sDecisionbyabsolvingA&JTradingfromliabilityandby reducingtheawardofattorney'sfeestoP10,000.00andlossofearningstoP300,000.00,respectively.10
Baliwagfiledthepresentpetitionforreviewraisingthefollowingissues: 1.DidtheCourtofAppealserrinabsolvingA&JTradingfromliabilityandholdingBaliwagsolely liablefortheinjuriessufferedbyLeticiaandAllanGarciaintheaccident? 2.IstheamountofdamagesawardedbytheCourtofAppealstotheGarciaspousescorrect? WeaffirmthefactualfindingsoftheCourtofAppeals. I Asacommoncarrier,Baliwagbreacheditscontractofcarriagewhenitfailedtodeliveritspassengers,LeticiaandAllan Garciatotheirdestinationsafeandsound.Acommoncarrierisboundtocarryitspassengerssafelyasfarashumancare andforesightcanprovide,usingtheutmostdiligenceofaverycautiousperson,withdueregardforallthecircumstances.11 Inacontractofcarriage,itispresumedthatthecommoncarrierwasatfaultorwasnegligentwhenapassengerdiesoris injured.Unlessthepresumptionisrebutted,thecourtneednotevenmakeanexpressfindingoffaultornegligenceonthe part of the commoncarrier.This statutory presumptionmayonlybeovercome byevidence that thecarrier exercised extraordinarydiligenceasprescribedinArticles1733and1755oftheCivilCode.12 TherecordsarebereftofanyprooftoshowthatBaliwagexercisedextraordinarydiligence.Onthecontrary,theevidence demonstratesitsdriver'srecklessness.LeticiaGarciatestifiedthatthebuswasrunningataveryhighspeeddespitethe drizzleandthedarknessofthehighway.Thepassengerspleadedforitsdrivertoslowdown,buttheirpleawasignored.13 Leticiaalsorevealedthatthedriverwassmellingofliquor.14Shecouldsmellhimasshewasseatedrightbehindthedriver. Anotherpassenger,FelixCruztestifiedthatimmediatelybeforethecollision,thebusdriverwasconversingwithaco employee.15Alltheseprovethebusdriver'swantondisregardforthephysicalsafetyofhispassengers,whichmakes BaliwagasacommoncarrierliablefordamagesunderArticle1759oftheCivilCode: Art.1759.Commoncarriersareliableforthedeathoforinjuriestopassengersthroughthenegligenceor willfullactsoftheformer'semployees,althoughsuchemployeesmayhaveactedbeyondthescopeoftheir authorityorinviolationoftheordersofthecommoncarriers. Thisliabilityofthecommoncarriersdonotceaseuponproofthattheyexercisedallthediligenceofa goodfatherofafamilyintheselectionorsupervisionoftheiremployees. BaliwagcannotevadeitsliabilitybyinsistingthattheaccidentwascausedsolelybythenegligenceofA&JTradingand JulioRecontique.ItharpsontheirallegednonuseofanearlywarningdeviceastestifiedtobyCol.DemetriodelaCruz,the stationcommanderofGapan,NuevaEcijawhoinvestigatedtheincident,andFranciscoRomano,thebusconductor. TherecordsdonotbearoutBaliwag'scontention.Col.delaCruzandRomanotestifiedthattheydidnotseeanyearly warningdeviceatthesceneoftheaccident.16Theywerereferringtothetriangularreflectorizedplatesinredandyellow issuedbytheLandTransportationOffice.However,theevidenceshowsthatRecontiqueandEcalaplacedakerosenelamp or torch at the edge of the road, near the rear portion of the truck to serve as an early warning device.17ThissubstantiallycomplieswithSection34(g)oftheLandTransportationandTrafficCode,towit: (g)Lightsandreflectorwhenparkedordisabled.Appropriateparkinglightsorflares visibleone hundredmetersawayshallbedisplayedatthecornerofthevehiclewheneversuchvehicleisparkedon highwaysorinplacesthatarenotwelllightedor,isplacedinsuchmannerastoendangerpassingtraffic. Furthermore,everymotorvehicleshallbeprovidedatalltimeswithbuiltinreflectorsorothersimilar warningdeviceseitherpasted,paintedorattachedatitsfrontandbackwhichshalllikewisebevisibleat nightatleastonehundredmetersaway.Novehiclenotprovidedwithanyoftherequirementsmentionedin thissubsectionshallberegistered.(emphasissupplied) Baliwag's argument that the kerosene lamp or torch does not substantially comply with the law is untenable. The aforequotedlawclearlyallowstheusenotonlyofanearlywarningdeviceofthetriangularreflectorizedplatesvarietybut alsoparkinglightsorflaresvisibleonehundredmetersaway.Indeed,Col.delaCruzhimselfadmittedthatakerosenelamp isanacceptablesubstituteforthereflectorizedplates.18Nonegligence,therefore,maybeimputedtoA&JTradingandits driver,Recontique. Anentthisfactualissue,theanalysisofevidencemadebytheCourtofAppealsdeservesourconcurrence,viz: xxxxxxxxx Inthecaseatbar,boththeinjuredpassengersoftheBaliwaginvolvedintheaccidenttestifiedthatthey sawsomesortofkeroseneoratorchontherearportionofthetruckbeforetheaccident.BaliwagTransit's conductorattemptedtodefeatsuchtestimonybydeclaringthathenoticednoearlywarningdeviceinfront ofthetruck. Amongthetestimoniesofferedbythewitnesseswhowerepresentatthesceneoftheaccident,weruleto
upholdtheaffirmativetestimoniesgivenbythetwoinjuredpassengers andgiveless credencetothe testimonyofthebusconductorwhosolelytestifiedthatnosuchearlywarningdeviceexists. Thetestimoniesofinjuredpassengerswhomaywellbeconsideredasdisinterestedwitnessappeartobe naturalandmoreprobablethanthetestimonygivenby;FranciscoRomanowhoisundoubtedlyinterested intheoutcomeofthecase,beingtheconductorofthedefendantappellantBaliwagTransitInc. Itmustbeborneinmindthatthesituationthenprevailingatthetimeoftheaccidentwasadmittedly drizzlyandalldark.Thisbeingso,itwouldbeimprobableandperhapsimpossibleonthepartofthetruck helperwithoutthetorchnorthekerosenetoremovetheflattiresofthetruck.Moreover,witnessincluding thebusconductorhimselfadmittedthatthepassengersshouted,thattheyaregoingtobumpbeforethe collisionwhichconsequentlycausedthebusdrivertoapplythebrake3to4metersawayfromthetruck. Again,withoutthekerosenenorthetorchinfrontofthetruck,itwouldbeimprobableforthedriver,more sothepassengerstonoticethetrucktobebumpedbythebusconsideringthedarknessoftheplaceatthe timeoftheaccident. xxxxxxxxx Whileitistruethattheinvestigatingofficertestifiedthathefoundnoearlywarningdeviceatthetimeof hisinvestigation,Weruletogivelesscredencetosuchtestimonyinsofarashehimselfadmittedoncross examinationthathedidnotnoticethepresenceofanykerosenelampatthebackofthetruckbecause whenhearrivedatthesceneoftheaccident,therewerealreadymanypeoplesurroundingtheplace(TSN, Aug.22,1989,p.13).Hefurtheradmittedthatthereexistsaprobabilitythatthelightsofthetruckmay havebeensmashedbythebusatthetimeoftheaccidentconsideringthelocationofthetruckwhereits rearportionwasconnectedwiththefrontportionofthebus(TSN,March29,1985,pp.Investigator's testimonythereforedidnotconfirmnordenytheexistenceofsuchwarningdevice,makinghistestimony oflittleprobativevalue.19 WenowreviewtheamountofdamagesawardedtotheGarciaspouses. First,theproprietyoftheamountawardedashospitalizationandmedicalfees.TheawardofP25,000.00isnotsupportedby theevidenceonrecord.TheGarciaspresentedreceiptsmarkedasExhibits"B1"to"B42"buttheirtotalamountedonlyto P5,017.74.Tobesure,Leticiatestifiedastotheextraamountspentforhermedicalneedsbutwithoutmorereliableevidence, herlonetestimonycannotjustifytheawardofP25,000.00.Toproveactualdamages,thebestevidenceavailabletothe injuredpartymustbepresented.Thecourtcannotrelyonuncorroboratedtestimonywhosetruthissuspect,butmustdepend uponcompetentproofthatdamageshavebeenactuallysuffered.20Thus,wereducetheactualdamagesformedicaland hospitalizationexpensestoP5,017.74. Second,wefindasreasonabletheawardofP300,000.00representingLeticia'slostearnings.Beforetheaccident,Leticia wasengagedinembroidery,earningP5,000.00permonth.21Herinjuriesforcedhertostopworking.Consideringthe natureandextentofherinjuriesandthelengthoftimeitwouldtakehertorecover,22wefinditproperthatBaliwagshould compensateherlostincomeforfive(5)years.23 Third,theawardofmoraldamagesisinaccordwithlaw.Inabreachofcontractofcarriage,moraldamagesarerecoverable ifthecarrier,throughitsagent,actedfraudulentlyorinbadfaith.24Theevidenceshowthegrossnegligenceofthedriverof Baliwagbuswhichamountedtobadfaith.Withoutdoubt,LeticiaandAllanexperiencedphysicalsuffering,mentalanguish andseriousanxietybyreasonoftheaccident.Leticiaunderwentanoperationtoreplaceherbrokenhipbonewithametal plate.ShewasconfinedattheNationalOrthopedicHospitalfor45days.TheyoungAllanwasalsoconfinedinthehospital forhisfootinjury.ContrarytothecontentionofBaliwag,thedecisionofthetrialcourtasaffirmedby,theCourtofAppeals awardedmoraldamagestoAntonioandLeticiaGarcianotintheircapacityasparentsofAllan.Leticiawasgivenmoral damagesasaninjuredparty.Allanwasalsograntedmoraldamagesasaninjuredpartybutbecauseofhisminority,the awardinhisfavorhastobegiventohisfatherwhorepresentedhiminthesuit. Finally,wefindtheawardofattorney'sfeesjustified.ThecomplaintfordamageswasinstitutedbytheGarciaspouseson December15,1982,followingtheunjustifiedrefusalofBaliwagtosettletheirclaim.TheDecisionwaspromulgatedbythe trialcourtonlyonJanuary29,1991oraboutnineyearslater.Numerouspleadingswerefiledbeforethetrialcourt,the appellatecourtandtothisCourt.Giventhecomplexityofthecaseandtheamountofdamagesinvolved,25theawardof attorney'sfeeforP10,000.00isjustandreasonable. INVIEWWHEREOF,theDecisionoftherespondentCourtofAppealsinCAG.R.CV31246isAFFIRMEDwiththe MODIFICATIONreducingtheactualdamagesforhospitalizationandmedicalfeestoP5,017.74.Nocosts. SOORDERED.
RepublicofthePhilippines SUPREMECOURT Manila SECONDDIVISION G.R.No.122494October8,1998 EVERETTSTEAMSHIPCORPORATION,petitioner, vs. COURTOFAPPEALSandHERNANDEZTRADINGCO.INC.,respondents. MARTINEZ,J.: PetitionerEverettSteamshipCorporation,throughthispetitionforreview,seeksthereversalofthedecision1oftheCourt ofAppeals,datedJune14,1995,inCAG.R.No.428093,whichaffirmedthedecisionoftheRegionalTrialCourtof KalookanCity,Branch126,inCivilCaseNo.C15532,findingpetitionerliabletoprivaterespondentHernandezTrading Co.,Inc.forthevalueofthelostcargo. PrivaterespondentimportedthreecratesofbussparepartsmarkedasMARCOC/No.12,MARCOC/No.13andMARCO C/No.14,fromitssupplier,MarumanTradingCompany,Ltd.(MarumanTrading),aforeigncorporationbasedinInazawa, Aichi,Japan.ThecrateswereshippedfromNagoya,JapantoManilaonboard"ADELFAEVERETTE,"avesselownedby petitioner'sprincipal,EverettOrientLines.ThesaidcrateswerecoveredbyBillofLadingNo.NGO53MN. UponarrivalattheportofManila,itwasdiscoveredthatthecratemarkedMARCOC/No.14wasmissing.Thiswas confirmedandadmittedbypetitionerinitsletterofJanuary13,1992addressedtoprivaterespondent,whichthereaftermade aformalclaimuponpetitionerforthevalueofthelostcargoamountingtoOneMillionFiveHundredFiftyTwoThousand FiveHundred(Y1,552,500.00)Yen,theamountshowninanInvoiceNo.MTM941,datedNovember14,1991.However, petitionerofferedtopayonlyOneHundredThousand(Y100,000.00)Yen,themaximumamountstipulatedunderClause18 ofthecoveringbillofladingwhichlimitstheliabilityofpetitioner. PrivaterespondentrejectedtheofferandthereafterinstitutedasuitforcollectiondocketedasCivilCaseNo.C15532, againstpetitionerbeforetheRegionalTrialCourtofCaloocanCity,Branch126. Atthepretrialconference,bothpartiesmanifestedthattheyhavenotestimonialevidencetoofferandagreedinsteadtofile theirrespectivememoranda. On July 16, 1993, the trial court rendered judgment 2 in favor of private respondent, ordering petitioner to pay: (a) Y1,552,500.00;(b)Y20,000.00oritspesoequivalentrepresentingtheactualvalueofthelostcargoandthematerialand packagingcost;(c)10%ofthetotalamountasanawardforandascontingentattorney'sfees;and(d)topaythecostofthe suit.Thetrialcourtruled: Consideringdefendant's categorical admissionofloss andits failuretoovercome thepresumptionof negligenceandfault,theCourt conclusivelyfindsdefendant liabletotheplaintiff.Thenext pointof inquirytheCourtwantstoresolveistheextentoftheliabilityofthedefendant.Asstatedearlier,plaintiff contendsthatdefendantshouldbeheldliableforthewholevalueforthelossofthegoodsintheamountof Y1,552,500.00becausethetermsappearingatthebackofthebillofladingwassowritteninfineprints andthatthesamewasnotsignedbyplaintifforshipperthus,theyarenotboundbyclausestatedin paragraph18ofthebilloflading.Ontheotherhand,defendantmerelyadmittedthatitlosttheshipment butshallbeliableonlyuptotheamountofY100,000.00. TheCourtsubscribestotheprovisionsofArticle1750oftheNewCivilCode Art.1750."Acontractfixingthesumthatmayberecoveredbytheownerorshipperfor theloss,destructionordeteriorationofthegoodsisvalid,ifitisreasonableandjust underthecircumstances,andhasbeenfairlyandfreelyagreedupon." Itisrequired,however,thatthecontractmustbereasonableandjustunderthecircumstancesandhasbeen fairlyandfreelyagreedupon.TherequirementsprovidedinArt.1750oftheNewCivilCodemustbe compliedwithbeforeacommoncarriercanclaimalimitationofitspecuniaryliabilityincaseofloss, destructionordeteriorationofthegoodsithasundertakentotransport. Inthecaseatbar,theCourtisoftheviewthattherequirementsofsaidarticlehavenotbeenmet.Thefact thatthoseconditionsareprintedatthebackofthebillofladinginletterssosmallthattheyarehardto readwouldnotwarrantthepresumptionthattheplaintifforitssupplierwasawareoftheseconditionssuch
thathehad"fairlyandfreelyagreed"totheseconditions.Itcannotbesaidthattheplaintiffhadactually enteredintoacontractwiththedefendant,embodyingtheconditionsasprintedatthebackofthebillof ladingthatwasissuedbythedefendanttoplaintiff. On appeal, the Court of Appeals deleted the award of attorney's fees but affirmed the trial court's findings with the additionalobservationthatprivaterespondentcannotbeboundbythetermsandconditionsofthebillofladingbecauseit wasnotprivytothecontractofcarriage.Itsaid: Astotheamountofliability,noevidenceappearsonrecordtoshowthattheappellee(HernandezTrading Co.)consentedtothetermsoftheBillofLading.TheshippernamedintheBillofLadingisMaruman TradingCo.,Ltd.whomtheappellant(EverettSteamshipCorp.)contractedwithforthetransportationof thelostgoods. EvenassumingarguendothattheshipperMarumanTradingCo.,Ltd.acceptedthetermsofthebillof lading when it delivered the cargo to the appellant, still it does not necessarily follow that appellee HernandezTrading,Companyasconsigneeisboundtherebyconsideringthatthelatterwasneverprivyto theshippingcontract. xxxxxxxxx Neverhavingenteredintoacontractwiththeappellant,appelleeshouldthereforenotbeboundbyanyof thetermsandconditionsinthebilloflading. Hence,itfollowsthattheappelleemayrecoverthefullvalueoftheshipmentlost,thebasisofwhichisnot thebreachofcontractasappelleewasneveraprivytotheanycontractwiththeappellant,butisbasedon Article1735oftheNewCivilCode,therebeingnoevidencetoprovesatisfactorilythattheappellanthas overcomethepresumptionofnegligenceprovidedforinthelaw. PetitionernowcomestousarguingthattheCourtofAppealserred(1)inrulingthattheconsentoftheconsigneetothe termsandconditionsofthebillofladingisnecessarytomakesuchstipulationsbindinguponit;(2)inholdingthatthe carrier'slimitedpackageliabilityasstipulatedinthebillofladingdoesnotapplyintheinstantcase;and(3)inallowing privaterespondenttofullyrecoverthefullallegedvalueofitslostcargo. Weshallfirstresolvethevalidityofthelimitedliabilityclauseinthebilloflading. Astipulationinthebillofladinglimitingthecommoncarrier'sliabilityforlossordestructionofacargotoacertainsum, unlesstheshipperorownerdeclaresagreatervalue,issanctionedbylaw,particularlyArticles1749and1750oftheCivil Codewhichprovide: Art.1749.Astipulationthatthecommoncarrier'sliabilityislimitedtothevalueofthegoodsappearingin thebilloflading,unlesstheshipperorownerdeclaresagreatervalue,isbinding. Art. 1750. A contract fixing the sum that may be recovered by the owner or shipper for the loss, destruction,ordeteriorationofthegoodsisvalid,ifitisreasonableandjustunderthecircumstances,and hasbeenfreelyandfairlyagreedupon. SuchlimitedliabilityclausehasalsobeenconsistentlyupheldbythisCourtinanumberofcases.3Thus,inSeaLand Service,Inc.vs.IntermediateAppellateCourt4,weruled: Itseemsclearthatevenifsaidsection4(5)oftheCarriageofGoodsbySeaActdidnotexist,thevalidity and binding effect of the liability limitation clause in the bill of lading here are nevertheless fully sustainable on the basis alone of the cited Civil Code Provisions. That said stipulation is just and reasonableisarguablefromthefactthatitechoesArt.1750itselfinprovidingalimittoliabilityonlyifa greatervalueisnotdeclaredfortheshipmentinthebilloflading.Toholdotherwisewouldamountto questioningthejustnessandfairnessofthelawitself,andthistheprivaterespondentdoesnotpretendto do.Butoverandabovethatconsideration,thejustandreasonablecharacterofsuchstipulationisimplicit initgivingtheshipperorownertheoptionofavoidingaccrualofliabilitylimitationbythesimpleand surelyfarfromonerousexpedientofdeclaringthenatureandvalueoftheshipmentinthebilloflading. Pursuanttotheaforequotedprovisionsoflaw,itisrequiredthatthestipulationlimitingthecommoncarrier'sliabilityfor lossmustbe"reasonableandjustunderthecircumstances,andhasbeenfreelyandfairlyagreedupon." Thebillofladingsubjectofthepresentcontroversyspecificallyprovides,amongothers: 18.Allclaimsforwhichthecarriermaybeliableshallbeadjustedandsettledonthebasisoftheshipper's netinvoicecostplusfreightandinsurancepremiums,ifpaid,andinnoeventshallthecarrierbeliablefor anylossofpossibleprofitsoranyconsequentialloss. Thecarriershallnotbeliableforanylossoforanydamagetoorinanyconnectionwith,goodsinan
amountexceedingOneHundredthousandYeninJapaneseCurrency(Y100,000.00)oritsequivalentin anyothercurrencyperpackageorcustomaryfreightunit(whicheverisleast)unlessthevalueofthegoods higherthanthisamountisdeclaredinwritingbytheshipperbeforereceiptofthegoodsbythecarrierand insertedintheBillofLadingandextrafreightispaidasrequired.(Emphasissupplied) Theabovestipulationsare,toourmind,reasonableandjust.Inthebilloflading,thecarriermadeitclearthatitsliability wouldonlybeuptoOneHundredThousand(Y100,000.00)Yen.However,theshipper,MarumanTrading,hadtheoptionto declareahighervaluationifthevalueofitscargowashigherthanthelimitedliabilityofthecarrier.Consideringthatthe shipperdidnotdeclareahighervaluation,ithaditselftoblamefornotcomplyingwiththestipulations. Thetrialcourt'sratiocinationthatprivaterespondentcouldnothave"fairlyandfreely"agreedtothelimitedliabilityclause inthebillofladingbecausethesaidconditionswereprintedinsmalllettersdoesnotmakethebillofladinginvalid. WeruledinPAL,Inc.vs.CourtofAppeals5thatthe"jurisprudenceonthematterrevealstheconsistentholdingofthe courtthatcontractsofadhesionarenotinvalidperseandthatithasonnumerousoccasionsupheldthebindingeffect thereof."Also,inPhilippineAmericanGeneralInsuranceCo.,Inc.vs.SweetLines,Inc.6thisCourt,speakingthroughthe learnedJusticeFlorenzD.Regalado,held: ...OngYiuvs.CourtofAppeals,et.al.,instructsusthat"contractsofadhesionwhereinoneparty imposesareadymadeformofcontractontheother...arecontractsnotentirelyprohibited.Theonewho adherestothecontractisinrealityfreetorejectitentirely;iftheadhereshegiveshisconsent."Inthe presentcase,notevenanallegationofignoranceofapartyexcusesnoncompliancewiththecontractual stipulationssincetheresponsibilityforensuringfullcomprehensionoftheprovisionsofacontractof carriagedevolvesnotonthecarrierbutontheowner,shipper,orconsigneeasthecasemaybe.(Emphasis supplied) ItwasfurtherexplainedinOngYiuvs.CourtofAppeals7thatstipulationsincontractsofadhesionarevalidandbinding. While it may be true that petitioner had not signed the plane ticket...,heisneverthelessboundbytheprovisionsthereof."Suchprovisionshavebeenheldtobeapart ofthecontractofcarriage,andvalidandbindinguponthepassengerregardlessofthelatter'slackof knowledgeorassenttotheregulation."Itiswhatisknownasacontractof"adhesion,"inregardswhichit hasbeensaidthatcontractsofadhesionwhereinonepartyimposesareadymadeformofcontractonthe other,astheplaneticketinthecaseatbar,arecontractsnotentirelyprohibited.Theonewhoadheresto thecontractisinrealityfreetorejectitentirely;ifheadheres,hegiveshisconsent....,acontractlimiting liabilityuponanagreedvaluationdoes notoffendagainst thepolicyofthelawforbiddingonefrom contractingagainsthisownnegligence.(Emphasissupplied) Greatervigilance,however,isrequiredofthecourtswhendealingwithcontractsofadhesioninthatthesaidcontractsmust becarefullyscrutinized"inordertoshieldtheunwary(orweakerparty)fromdeceptiveschemescontainedinreadymade covenants,"8suchasthebillofladinginquestion.Thestringentrequirementwhichthecourtsareenjoinedtoobserveisin recognitionofArticle24oftheCivilCodewhichmandatesthat"(i)nallcontractual,propertyorotherrelations,whenone ofthepartiesisatadisadvantageonaccountofhismoraldependence,ignorance,indigence,mentalweakness,tenderageor otherhandicap,thecourtsmustbevigilantforhisprotection." Theshipper,MarumanTrading,weassume,hasbeenextensivelyengagedinthetradingbusiness.Itcannotbesaidtobe ignorantofthebusinesstransactionsitenteredintoinvolvingtheshipmentofitsgoodstoitscustomers.Theshippercould nothaveknown,orshouldknowthestipulationsinthebillofladingandthereitshouldhavedeclaredahighervaluationof thegoodsshipped.Moreover,MarumanTradinghasnotbeenheardtocomplainthatithasbeendeceivedorrushedinto agreeingtoshipthecargoinpetitioner'svessel.Infact,itwasnotevenimpleadedinthiscase. Thenextissuetoberesolvediswhetherornotprivaterespondent,asconsignee,whoisnotasignatorytothebilloflading isboundbythestipulationsthereof. Again,inSeaLandService,Inc.vs.IntermediateAppellateCourt(supra),weheldthateveniftheconsigneewasnota signatorytothecontractofcarriagebetweentheshipperandthecarrier,theconsigneecanstillbeboundbythecontract. SpeakingthroughMr.ChiefJusticeNarvasa,weruled: Tobeginwith,thereisnoquestionoftheright,inprinciple,ofaconsigneeinabillofladingtorecover fromthecarrierorshipperforlossof,ordamagetogoodsbeingtransportedundersaidbill,althoughthat documentmayhavebeenasinpracticeitoftentimesisdrawnuponlybytheconsignorandthecarrier without the intervention of the onsignee.....
...the right ofapartyinthesame situation as respondent here, torecoverforloss ofa shipment consignedtohimunderabillofladingdrawnuponlybyandbetweentheshipperandthecarrier,springs fromeitherarelationofagencythatmayexistbetweenhimandtheshipperorconsignor,orhisstatusas strangerinwhosefavorsomestipulationismadeinsaidcontract,andwhobecomesapartytheretowhen hedemandsfulfillmentofthatstipulation,inthiscasethedeliveryofthegoodsorcargoshipped.In neither capacity can he assert personally, in bar to any provision of the bill of lading, the alleged circumstancethatfairandfreeagreementtosuchprovisionwasvitiatedbyitsbeinginsuchfineprintasto behardlyreadable.Parenthetically,itmaybeobservedthatinonecomparativelyrecentcase(Phoenix AssuranceCompanyvs.Macondray&Co.,Inc.,64SCRA15)wherethisCourtfoundthatasimilar packagelimitationclausewas"printedinthesmallesttypeonthebackofthebilloflading,"itnonetheless ruledthattheconsigneewasboundtherebyonthestrengthofauthorityholdingthatsuchprovisionson liabilitylimitationareasmuchapartofabillofladingasthroughphysicallyinitandasthoughplaced thereinbyagreementoftheparties. Therecan,therefore,benodoubtorequivocationaboutthevalidityandenforceabilityoffreelyagreed uponstipulationsinacontractofcarriageorbillofladinglimitingtheliabilityofthecarriertoanagreed valuation unless the shipper declares a higher value and inserts it into said contract or bill. This proposition,moreover,restsuponanalmostuniformweightofauthority.(Emphasissupplied). Whenprivaterespondentformallyclaimedreimbursementforthemissinggoodsfrompetitionerandsubsequentlyfileda caseagainstthelatterbasedontheverysamebilloflading,it(privaterespondent)acceptedtheprovisionsofthecontract andtherebymadeitselfapartythereto,oratleasthascometocourttoenforceit.9Thus,privaterespondentcannotnow rejectordisregardthecarrier'slimitedliabilitystipulationinthebilloflading.Inotherwords,privaterespondentisbound bythewholestipulationsinthebillofladingandmustrespectthesame. Privaterespondent,however,insiststhatthecarriershouldbeliableforthefullvalueofthelostcargointheamountof Y1,552,500.00,consideringthattheshipper,MarumanTrading,had"fullydeclaredtheshipment...,thecontentsofeach crate,thedimensions,weightandvalueofthecontents,"10asshowninthecommercialInvoiceNo.MTM941. Thisclaimwasdeniedbypetitioner,contendingthatitdidnotknowofthecontents,quantityandvalueof"theshipment whichconsistedofthreeprepackedcratesdescribedinBillofLadingNo.NGO53MNmerelyas'3CASESSPARE PARTS.'"11 Thebillofladinginquestionconfirmspetitioner'scontention.Todefeatthecarrier'slimitedliability,theaforecitedClause 18ofthebillofladingrequiresthattheshippershouldhavedeclaredinwritingahighervaluationofitsgoodsbeforereceipt thereofbythecarrierandinsertthesaiddeclarationinthebilloflading,withextrafreightpaid.Theserequirementsinthe billofladingwerenevercompliedwithbytheshipper,hence,theliabilityofthecarrierunderthelimitedliabilityclause stands.ThecommercialInvoiceNo.MTM941doesnotinitselfsufficientlyandconvincinglyshowthatpetitionerhas knowledgeofthevalueofthecargoas contendedbyprivaterespondent.Nootherevidencewasprofferedbyprivate respondenttosupportiscontention.Thus,weareconvincedthatpetitionershouldbeliableforthefullvalueofthelost cargo. Infine,theliabilityofpetitionerforthelossofthecargoislimitedtoOneHundredThousand(Y100,000.00)Yen,pursuant toClause18ofthebilloflading. WHEREFORE, the decision of the Court of Appeals dated June 14, 1995 in C.A.G.R. CV No. 42803 is hereby REVERSEDandSETASIDE. SOORDERED. Regalado,Melo,PunoandMendoza,JJ.,concur.
RepublicofthePhilippines SUPREMECOURT Manila FIRSTDIVISION G.R.No.131166September30,1999 CALTEX(PHILIPPINES),INC.,petitioner, vs. SULPICIOLINES,INC.,GOSIOCSO,ENRIQUES.GO,EUSEBIOS.GO,CARLOSS.GO,VICTORIANOS.GO, DOMINADORS.GO,RICARDOS.GO,EDWARDS.GO,ARTUROS.GO,EDGARS.GO,EDMUNDS.GO, FRANCISCOSORIANO,VECTORSHIPPINGCORPORATION,TERESITAG.CAEZAL,ANDSOTERAE. CAEZAL,respondents. PARDO,J.: Isthechartererofaseavesselliablefordamagesresultingfromacollisionbetweenthecharteredvesselandapassenger ship? WhenMTVectorlefttheportofLimay,Bataan,onDecember19,1987carryingpetroleumproductsofCaltex(Philippines), Inc. (hereinafter Caltex) no one could have guessed that it would collide with MV Doa Paz, killing almost all the passengersandcrewmembersofbothships,andthusresultinginoneofthecountry'sworstmaritimedisasters. ThepetitionbeforeusseekstoreversetheCourtofAppealsdecision1holdingpetitionerjointlyliablewiththeoperatorof MTVectorfordamageswhenthelattercollidedwithSulpicioLines,Inc.'spassengershipMVDoaPaz. Thefactsareasfollows: OnDecember19,1987,motortankerMTVectorleftLimay,Bataan,atabout8:00p.m.,enroutetoMasbate,loadedwith 8,800barrelsofpetroleumproductsshippedbypetitionerCaltex.2MTVectorisatrampingmotortankerownedand operatedbyVectorShippingCorporation,engagedinthebusinessoftransportingfuelproductssuchasgasoline,kerosene, dieselandcrudeoil.Duringthatparticularvoyage,theMTVectorcarriedonboardgasolineandotheroilproductsowned by Caltex by virtue of a charter contract between them.3 OnDecember20,1987,atabout6:30a.m.,thepassengershipMVDoaPazlefttheportofTaclobanheadedforManila withacomplementof59crewmembersincludingthemasterandhisofficers,andpassengerstotaling1,493asindicatedin theCoastGuardClearance.4TheMVDoaPazisapassengerandcargovesselownedandoperatedbySulpicioLines,Inc. plyingtherouteofManila/Tacloban/Catbalogan/Manila/Catbalogan/Tacloban/Manila,makingtripstwiceaweek. Atabout10:30p.m.ofDecember20,1987,thetwovesselscollidedintheopenseawithinthevicinityofDumaliPoint betweenMarinduqueandOrientalMindoro.AllthecrewmembersofMVDoaPazdied,whilethetwosurvivorsfromMT Vectorclaimedthattheyweresleepingatthetimeoftheincident.1wphi1.nt TheMVDoaPazcarriedanestimated4,000passengers;manyindeed,werenotinthepassengermanifest.Only24 survivedthetragedyafterhavingbeenrescuedfromtheburningwatersbyvesselsthatrespondedtodistresscalls.5Among thosewhoperishedwerepublicschoolteacherSebastianCaezal(47yearsold)andhisdaughterCorazonCaezal(11years old),bothunmanifestedpassengersbutprovedtobeonboardthevessel. OnMarch22,1988,theboardofmarineinquiryinBMICaseNo.65987afterinvestigationfoundthattheMTVector,its registeredoperatorFranciscoSoriano,anditsownerandactualoperatorVectorShippingCorporation,wereatfaultand responsibleforitscollisionwithMVDoaPaz.6 OnFebruary13,1989,TeresitaCaezalandSoteraE.Caezal,SebastianCaezal'swifeandmotherrespectively,filedwith theRegionalTrialCourt,Branch8,Manila,acomplaintfor"DamagesArisingfromBreachofContractofCarriage"against SulpicioLines,Inc.(hereafterSulpicio).Sulpicio,inturn,filedathirdpartycomplaintagainstFranciscoSoriano,Vector ShippingCorporationandCaltex(Philippines),Inc.SulpicioallegedthatCaltexcharteredMTVectorwithgrossandevident badfaithknowingfullywell that MTVectorwas improperlymanned,illequipped,unseaworthyandahazardtosafe navigation;asaresult,itrammedagainstMVDoaPazintheopenseasettingMTVector'shighlyflammablecargoablaze. OnSeptember15,1992,thetrial court rendereddecisiondismissing,thethirdpartycomplaintagainst petitioner.The dispositiveportionreads: WHEREFORE,judgmentisherebyrenderedinfavorofplaintiffsandagainstdefendant3rdpartyplaintiff SulpicioLines,Inc.,towit:
1.ForthedeathofSebastianE.Caezalandhis11yearolddaughterCorazonG.Caezal,includingloss offutureearningsofsaidSebastian,moralandexemplarydamages,attorney'sfees,inthetotalamountof P1,241,287.44andfinally; 2.Thestatutorycostsoftheproceedings. Likewise,the3rdpartycomplaintisherebyDISMISSEDforwantofsubstantiationandwithcostsagainst the3rdpartyplaintiff. ITISSOORDERED. DONEINMANILA,this15thdayofSeptember1992. ARSENIOM.GONONG Judge7 OnappealtotheCourtofAppealsinterposedbySulpicioLines,Inc.,onApril15,1997,theCourtofAppealmodifiedthe trialcourt'srulingandincludedpetitionerCaltexasoneofthethoseliablefordamages.Thus: WHEREFORE,inviewofalltheforegoing,thejudgmentrenderedbytheRegionalTrialCourtishereby MODIFIEDasfollows: WHEREFORE,defendantSulpicioLines,Inc.,isorderedtopaytheheirsofSebastianE.Caezaland CorazonCaezal: 1.CompensatorydamagesforthedeathofSebastianE.CaezalandCorazonCaezalthetotalamountof ONEHUNDREDTHOUSANDPESOS(P100,000); 2.CompensatorydamagesrepresentingtheunearnedincomeofSebastianE.Caezal,inthetotalamount ofTHREEHUNDREDSIXTHOUSANDFOURHUNDREDEIGHTY(P306,480.00)PESOS; 3.MoraldamagesintheamountofTHREEHUNDREDTHOUSANDPESOS(P300,000.00); 4. Attorney's fees in the concept of actual damages in the amount of FIFTY THOUSAND PESOS (P50,000.00); 5.Costsofthesuit. ThirdpartydefendantsVectorShippingCo.andCaltex(Phils.),Inc.areheldequallyliableunderthethird partycomplainttoreimburse/indemnifydefendantSulpicioLines,Inc.oftheabovementioneddamages, attorney'sfeesandcostswhichthelatterisadjudgedtopayplaintiffs,thesametobesharedhalfbyVector ShippingCo.(beingthevesselatfaultforthecollision)andtheotherhalfbyCaltex(Phils.),Inc.(being thechartererthatnegligentlycausedtheshippingofcombustiblecargoaboardanunseaworthyvessel). SOORDERED. JORGES.IMPERIAL AssociateJustice WECONCUR: RAMONU.MABUTAS,JR.PORTIAALIOHERMACHUELOS AssociateJusticeAssociateJustice.8 Hence,thispetition. Wefindthepetitionmeritorious. First:ThechartererhasnoliabilityfordamagesunderPhilippineMaritimelaws. Therespectiverightsanddutiesofashipperandthecarrierdependsnotonwhetherthecarrierispublicorprivate,buton whetherthecontractofcarriageisabillofladingorequivalentshippingdocumentsontheonehand,oracharterpartyor similarcontractontheother.9 PetitionerandVectorenteredintoacontractofaffreightment,alsoknownasavoyagecharter.10 Acharterpartyisacontractbywhichanentireship,orsomeprincipalpartthereof,isletbytheownertoanotherpersonfor aspecifiedtimeoruse;acontractofaffreightmentisonebywhichtheownerofashiporothervesselletsthewholeorpart ofhertoamerchantorotherpersonfortheconveyanceofgoods,onaparticularvoyage,inconsiderationofthepaymentof freight.11 Acontractofaffreightmentmaybeeithertimecharter,whereintheleasedvesselisleasedtothechartererforafixedperiod oftime,orvoyagecharter,whereintheshipisleasedforasinglevoyage.Inbothcases,thecharterpartyprovidesforthe hireofthevesselonly,eitherforadeterminateperiodoftimeorforasingleorconsecutivevoyage,theshipownertosupply theship'sstore,payforthewagesofthemasterofthecrew,anddefraytheexpensesforthemaintenanceoftheship.12 Underademiseorbareboatcharterontheotherhand,thecharterermansthevesselwithhisownpeopleandbecomes,in effect,theownerforthevoyageorservicestipulated,subjecttoliabilityfordamagescausedbynegligence.
Ifthecharterisacontractofaffreightment,whichleavesthegeneralownerinpossessionoftheshipasownerforthe voyage,therightsandtheresponsibilitiesofownershiprestontheowner.Thechartererisfreefromliabilitytothirdpersons inrespectoftheship.13 Second:MTVectorisacommoncarrier Charterpartiesfallintothreemaincategories:(1)Demiseorbareboat,(2)timecharter,(3)voyagecharter.Doesacharter partyagreementturnthecommoncarrierintoaprivateone?Weneedtoanswerthisquestioninordertoshedlightonthe responsibilitiesoftheparties. Inthiscase,thecharterpartyagreementdidnotconvertthecommoncarrierintoaprivatecarrier.Thepartiesenteredintoa voyagecharter,whichretainsthecharacterofthevesselasacommoncarrier. InPlantersProducts,Inc.vs.CourtofAppeals,14wesaid: Itisthereforeimperativethatapubliccarriershallremainassuch,notwithstandingthecharterofthe wholeportionofavesselofoneormorepersons,providedthecharterislimitedtotheshiponly,asinthe caseofatimecharterorthevoyagecharter.Itisonlywhenthecharterincludesboththevesselandits crew,asinabareboatordemisethatacommoncarrierbecomesprivate,atleastinsofarastheparticular voyagecoveringthecharterpartyisconcerned.Indubitably,ashipownerinatimeorvoyagecharter retainspossessionandcontroloftheship,althoughherholdsmay,forthemoment,bethepropertyofthe charterer. Later,weruledinCoastwiseLighterageCorporationvs.CourtofAppeals:15 Althoughacharterpartymaytransformacommoncarrierintoaprivateone,thesamehoweverisnottrue inacontractofaffreightment... Acommoncarrierisapersonorcorporationwhoseregularbusinessistocarrypassengersorpropertyforallpersonswho maychoosetoemployandtoremuneratehim.16MTVectorfitsthedefinitionofacommoncarrierunderArticle1732of theCivilCode.InGuzmanvs.CourtofAppeals,17weruled: TheCivilCodedefines"commoncarriers"inthefollowingterms: Art.1732.Commoncarriersarepersons,corporations,firmsorassociationsengagedinthebusinessof carrying or transporting passengers for passengers or goods or both, by land, water, or air for compensation,offeringtheirservicestothepublic. Theabovearticlemakesnodistinctionbetweenonewhoseprincipalbusinessactivityisthecarryingof personsorgoodsorboth,andonewhodoessuchcarryingonlyasanancillaryactivity(inlocalidiom,as "asideline").Article1732alsocarefullyavoidsmakinganydistinctionbetweenapersonorenterprise offering transportation service on a regular or scheduled basis and one offering such services on an occasional,episodicorunscheduledbasis.NeitherdoesArticle1732distinguishbetweenacarrieroffering itsservicestothe"generalpublic,"i.e.,thegeneralcommunityorpopulation,andonewhooffersservices orsolicitsbusinessonlyfromanarrowsegmentofthegeneralpopulation.WethinkthatArticle1733 deliberatelyrefrainedfrommakingsuchdistinctions. ItappearstotheCourtthatprivaterespondentisproperlycharacterizedasacommoncarriereventhough hemerely"backhauled"goodsforothermerchantsfromManilatoPangasinan,althoughsuchbackhauling wasdoneonaperiodic,occasionalratherthanregularorscheduledmanner,andeventhoughrespondent's principaloccupationwasnotthecarriageofgoodsforothers.Thereisnodisputethatprivaterespondent chargedhiscustomersafeeforhaulingtheirgoods;thatthefeefrequentlyfellbelowcommercialfreight ratesisnotrelevanthere. UndertheCarriageofGoodsbySeaAct: Sec.3.(1)Thecarriershallbeboundbeforeandatthebeginningofthevoyagetoexerciseduediligenceto (a)Maketheshipseaworthy; (b)Properlyman,equip,andsupplytheship; xxxxxxxxx Thus,thecarriersaredeemedtowarrantimpliedlytheseaworthinessoftheship.Foravesseltobeseaworthy,itmustbe adequatelyequippedforthevoyageandmannedwithasufficientnumberofcompetentofficersandcrew.Thefailureofa commoncarriertomaintaininseaworthyconditionthevesselinvolvedinitscontractofcarriageisaclearbreachofitsduty prescribedinArticle1755oftheCivilCode.18 Theprovisionsowedtheirconceptiontothenatureofthebusinessofcommoncarriers.Thisbusinessisimpressedwitha
specialpublicduty.Thepublicmustofnecessityrelyonthecareandskillofcommoncarriersinthevigilanceoverthe goods and safety of the passengers, especially because with the modern development of science and invention, transportationhasbecomemorerapid,morecomplicatedandsomehowmorehazardous.19Forthesereasons,apassenger orashipperofgoodsisundernoobligationtoconductaninspectionoftheshipanditscrew,thecarrierbeingobligedby lawtoimpliedlywarrantitsseaworthiness. Thisaside,wenowruleonwhetherCaltexisliablefordamagesundertheCivilCode. Third:IsCaltexliablefordamagesundertheCivilCode? Werulethatitisnot. SulpicioarguesthatCaltexnegligentlyshippeditshighlycombustiblefuelcargoaboardanunseaworthyvesselsuchasthe MTVectorwhenCaltex: 1.DidnottakestepstohaveM/TVector'scertificateofinspectionandcoastwiselicenserenewed; 2.ProceededtoshipitscargodespitedefectsfoundbyMr.CarlosTanofBataanRefineryCorporation; 3.WitnessedM/TVectorsubmittingfakedocumentsandcertificatestothePhilippineCoastGuard. SulpiciofurtherarguesthatCaltexchoseMTVectortransportitscargodespitethesedeficiencies. 1.ThemasterofM/TVectordidnotpossestherequiredChiefMatelicensetocommandandnavigatethevessel; 2.Thesecondmate,RonaldoTarife,hadthelicenseofaMinorPatron,authorizedtonavigateonlyinbaysandriverswhen thesubjectcollisionoccurredintheopensea; 3.TheChiefEngineer,FiloteoAguas,hadnolicensetooperatetheengineofthevessel; 4.ThevesseldidnothaveaThirdMate,aradiooperatorandlookout;and 5.Thevesselhadadefectivemainengine.20 AsbasisfortheliabilityofCaltex,theCourtofAppealsreliedonArticles20and2176oftheCivilCode,whichprovide: Art.20.Everypersonwhocontrarytolaw,willfullyornegligentlycausesdamagetoanother,shall indemnifythelatterforthesame. Art.2176.Whoeverbyactoromissioncausesdamagetoanother,therebeingfaultornegligence,is obligedtopayforthedamagedone.Suchfaultornegligence,ifthereisnopreexistingcontractualrelation betweentheparties,iscalledaquasidelictandisgovernedbytheprovisionsofthisChapter. Andwhatisnegligence? TheCivilCodeprovides: Art.1173.The fault ornegligence of the obligor consists in the omissionof that diligence which is requiredbythenatureoftheobligationandcorrespondswiththecircumstancesofthepersons,ofthetime andoftheplace.Whennegligenceshowsbadfaith,theprovisionsofArticle1171and2201paragraph2, shallapply. Ifthelawdoesnotstatethediligencewhichistobeobservedintheperformance,thatwhichisexpected ofagoodfatherofafamilyshallberequired. InSoutheasternCollege,Inc.vs.CourtofAppeals,21wesaidthatnegligence,ascommonlyunderstood,isconductwhich naturallyorreasonablycreatesundueriskorharmtoothers.Itmaybethefailuretoobservethatdegreeofcare,precaution, andvigilance,whichthecircumstances justlydemand,ortheomissiontodosomethingwhichordinarilyregulatethe conductofhumanaffairs,woulddo. Thechartererofavesselhasnoobligationbeforetransportingitscargotoensurethatthevesselitcharteredcompliedwith alllegalrequirements.Thedutyrestsuponthecommoncarriersimplyforbeingengagedin"publicservice."22TheCivil Code demands diligence which is required by the nature of the obligation and that which corresponds with the circumstancesofthepersons,thetimeandtheplace.Hence,consideringthenatureoftheobligationbetweenCaltexand MTVector,liabilityasfoundbytheCourtofAppealsiswithoutbasis.1wphi1.nt The relationship between the parties in this case is governed by special laws. Because of the implied warranty of seaworthiness,23shippersofgoods,whentransactingwithcommoncarriers,arenotexpectedtoinquireintothevessel's seaworthiness,genuinenessofitslicensesandcompliancewithallmaritimelaws.Todemandmorefromshippersandhold themliableincaseoffailureexhibitsnothingbutthefutilityofourmaritimelawsinsofarastheprotectionofthepublicin generalisconcerned.Bythesametoken,wecannotexpectpassengerstoinquireeverytimetheyboardacommoncarrier, whetherthecarrierpossessesthenecessarypapersorthatallthecarrier'semployeesarequalified.Suchapracticewouldbe anabsurdityinabusinesswheretimeisalwaysoftheessence.Consideringthenatureoftransportationbusiness,passengers andshippersalikecustomarilypresumethatcommoncarrierspossessallthelegalrequisitesinitsoperation. Thus,thenatureoftheobligationofCaltexdemandsordinarydiligencelikeanyothershipperinshippinghiscargoes.
AcursoryreadingoftherecordsconvincesusthatCaltexhadreasonstobelievethatMTVectorcouldlegallytransport cargothattimeoftheyear. Atty.Poblador:Mr.Witness,Idirectyourattentiontothisportionherecontainingtheentrieshereunder "VESSEL'SDOCUMENTS 1. Certificate of Inspection No. 129085, issued December 21, 1986, and Expires December7,1987",Mr.Witness,whatstepsdidyoutakeregardingtheimpendingexpiry oftheC.I.ortheCertificateofInspectionNo.129085duringthehiringofMTVector? ApolinarioNg:AtthetimewhenIextendedtheContract,Ididnothingbecausethe tankerhasavalidC.I.whichwillexpireonDecember7,1987butonthelastweekof November,IcalledtheattentionofMr.AbalostoensurethattheC.I.berenewedandMr. Abalos,inturn,assuredmetheywillrenewthesame. Q:Whathappenedafterthat? A:OnthefirstweekofDecember,IagainmadeafollowupfromMr.Abalos,andsaid theyweregoingtosendmeacopyassoonaspossible,sir.24 xxxxxxxxx Q:WhatdidyoudowiththeC.I.? A:WedidnotinsistongettingacopyoftheC.I.fromMr.Abalosonthefirstplace, becauseofourlongbusinessrelation,wetrustMr.Abalosandthefactthatthevessel wasabletosailindicatesthatthedocumentsareinorder....25 Oncrossexamination Atty.Sarenas:Thisbeingthecase,andthisbeinganadmissionbyyou,thisCertificateof InspectionhasexpiredonDecember7.Diditoccurtoyounottoletthevesselsailon thatdaybecauseoftheveryapproachingdateofexpiration? ApolinarNg:Nosir,becauseasIsaidbefore,theoperationManagerassuredusthatthey wereabletosecurearenewaloftheCertificateofInspectionandthattheywillintime submit us a copy.26 Finally,onMr.Ng'sredirectexamination: Atty.Poblador:Mr.Witness,wereyouawareofthependingexpiryoftheCertificateof InspectioninthecoastwiselicenseonDecember7,1987.Whatwasyourassurancefor therecordthatthisdocumentwasrenewedbytheMTVector? Atty.Sarenas:... Atty.Poblador:ThecertificateofInspection? A: As I said, firstly, we trusted Mr. Abalos as he is a long time business partner; secondly,thosethreeyears;theywereallowedtosailbytheCoastGuard.Thataresome thatmakemebelievethattheyinfactwereabletosecurethenecessaryrenewal. Q:IftheCoastGuardclearsavesseltosail,whatwouldthatmean? Atty.Sarenas:Objection. Court:Healreadyansweredthatinthecrossexaminationtotheeffectthatifitwas allowed,referringtoMVVector,tosail,whereitisloadedandthatitwasscheduledfora destinationbytheCoastGuard,itmeansthatithasCertificateofInspectionextendedas assuredtothiswitnessbyRestitutoAbalos.ThatinnocaseMVVectorwillbeallowed to sail if the Certificate of inspection is, indeed, not to be extended. That was his repeatedexplanationtothecrossexamination.So,thereisnoneedtoclarifythesamein theredirectexamination.27 CaltexandVectorShippingCorporationhadbeendoingbusiness since1985,orforabouttwoyearsbeforethetragic incidentoccurredin1987.PastservicesrenderedshowednoreasonforCaltextoobserveahigherdegreeofdiligence. Clearly,asamerevoyagecharterer,CaltexhadtherighttopresumethattheshipwasseaworthyaseventhePhilippineCoast Guarditselfwasconvincedofitsseaworthiness.Allthingsconsidered,wefindnolegalbasistoholdpetitionerliablefor damages. AsVectorShippingCorporationdidnotappealfromtheCourtofAppeals'decision,welimitourrulingtotheliabilityof Caltexalone.However,wemaintaintheCourtofAppeals'rulinginsofarasVectorisconcerned.
WHEREFORE,theCourtherebyGRANTSthepetitionandSETSASIDEthedecisionoftheCourtofAppealsinCAG.R. CV No. 39626, promulgated on April 15, 1997, insofar as it held Caltex liable under the third party complaint to reimburse/indemnifydefendantSulpicioLines,Inc.thedamagesthelatterisadjudgedtopayplaintiffsappellees.TheCourt AFFIRMSthedecisionoftheCourtofAppealsinsofarasitordersSulpicioLines,Inc.topaytheheirsofSebastianE. CaezalandCorazonCaezaldamagesassetforththerein.ThirdpartydefendantappelleeVectorShippingCorporation andFranciscoSorianoareheldliabletoreimburse/indemnifydefendantSulpicioLines,Inc.whateverdamages,attorneys' feesandcoststhelatterisadjudgedtopayplaintiffsappelleesinthecase.1wphi1.nt Nocostsinthisinstance. SOORDERED. Davide,Jr.,C.J.,KapunanandYnaresSantiago,JJ.,concur. Puno,J.,nopartduetocloserelationwithaparty.
RepublicofthePhilippines SUPREMECOURT Manila SECONDDIVISION G.R.No.122039May31,2000 VICENTECALALAS,petitioner, vs. COURTOFAPPEALS,ELIZAJUJEURCHESUNGAandFRANCISCOSALVA,respondents. MENDOZA,J.: Thisisapetitionforreviewoncertiorariofthedecision1oftheCourtofAppeals,datedMarch31,1991,reversingthe contrary decision of the Regional Trial Court, Branch 36, Dumaguete City, and awarding damages instead to private respondentElizaJujeurcheSungaasplaintiffinanactionforbreachofcontractofcarriage. Thefacts,asfoundbytheCourtofAppeals,areasfollows: At10o'clockinthemorningofAugust23,1989,privaterespondentElizaJujeurcheG.Sunga,thenacollegefreshman majoringinPhysical Educationat theSilimanUniversity,tookapassengerjeepneyownedandoperatedbypetitioner VicenteCalalas.As thejeepneywas filledtocapacityofabout 24passengers,Sungawas givenbytheconductoran "extensionseat,"awoodenstoolatthebackofthedoorattherearendofthevehicle. OnthewaytoPoblacionSibulan,NegrosOccidental,thejeepneystoppedtoletapassengeroff.Asshewasseatedatthe rearofthevehicle,Sungagavewaytotheoutgoingpassenger.Justasshewasdoingso,anIsuzutruckdrivenbyIglecerio VerenaandownedbyFranciscoSalvabumpedtheleftrearportionofthejeepney.Asaresult,Sungawasinjured.She sustainedafractureofthe"distalthirdofthelefttibiafibulawithseverenecrosisoftheunderlyingskin."Closedreduction ofthefracture,longlegcircularcasting,andcasewedgingweredoneundersedation.Herconfinementinthehospitallasted fromAugust23toSeptember7,1989.Herattendingphysician,Dr.DaniloV.Oligario,anorthopedicsurgeon,certifiedshe wouldremainonacastforaperiodofthreemonthsandwouldhavetoambulateincrutchesduringsaidperiod. OnOctober9,1989,SungafiledacomplaintfordamagesagainstCalalas,allegingviolationofthecontractofcarriageby theformerinfailingtoexercisethediligencerequiredofhimasacommoncarrier.Calalas,ontheotherhand,filedathird partycomplaintagainstFranciscoSalva,theowneroftheIsuzutruck. ThelowercourtrenderedjudgmentagainstSalvaasthirdpartydefendantandabsolvedCalalasofliability,holdingthatit wasthedriveroftheIsuzutruckwhowasresponsiblefortheaccident.Ittookcognizanceofanothercase(CivilCaseNo. 3490),filedbyCalalasagainstSalvaandVerena,forquasidelict,inwhichBranch37ofthesamecourtheldSalvaandhis driverVerenajointlyliabletoCalalasforthedamagetohisjeepney. OnappealtotheCourtofAppeals,therulingofthelowercourtwasreversedonthegroundthatSunga'scauseofactionwas basedonacontractofcarriage,notquasidelict,andthatthecommoncarrierfailedtoexercisethediligencerequiredunder theCivil Code.Theappellatecourt dismissedthethirdpartycomplaint against SalvaandadjudgedCalalas liablefor damagestoSunga.Thedispositiveportionofitsdecisionreads: WHEREFORE,thedecisionappealedfromisherebyREVERSEDandSETASIDE,andanotheroneis enteredorderingdefendantappelleeVicenteCalalastopayplaintiffappellant: (1)P50,000.00asactualandcompensatorydamages; (2)P50,000.00asmoraldamages; (3)P10,000.00asattorney'sfees;and (4)P1,000.00asexpensesoflitigation;and (5)topaythecosts. SOORDERED. Hence,thispetition.PetitionercontendsthattherulinginCivilCaseNo.3490thatthenegligenceofVerenawasthe proximatecauseoftheaccidentnegateshisliabilityandthattoruleotherwisewouldbetomakethecommoncarrieran insurerofthesafetyofitspassengers.HecontendsthatthebumpingofthejeepneybythetruckownedbySalvawasacaso fortuito.PetitionerfurtherassailstheawardofmoraldamagestoSungaonthegroundthatitisnotsupportedbyevidence. Thepetitionhasnomerit. TheargumentthatSungaisboundbytherulinginCivilCaseNo.3490findingthedriverandtheownerofthetruckliable forquasidelictignoresthefactthatshewasneverapartytothatcaseand,therefore,theprincipleofresjudicatadoesnot
apply. NoraretheissuesinCivilCaseNo.3490andinthepresentcasethesame.TheissueinCivilCaseNo.3490waswhether SalvaandhisdriverVerenawereliableforquasidelictforthedamagecausedtopetitioner'sjeepney.Ontheotherhand,the issueinthiscaseiswhetherpetitionerisliableonhiscontractofcarriage.Thefirst,quasidelict,alsoknownasculpa aquilianaorculpaextracontractual,hasasitssourcethenegligenceofthetortfeasor.Thesecond,breachofcontractor culpacontractual,ispremiseduponthenegligenceintheperformanceofacontractualobligation. Consequently,inquasidelict,thenegligenceorfaultshouldbeclearlyestablishedbecauseitisthebasisoftheaction, whereasinbreachofcontract,theactioncanbeprosecutedmerelybyprovingtheexistenceofthecontractandthefactthat theobligor,inthiscasethecommoncarrier,failedtotransporthispassengersafelytohisdestination.2Incaseofdeathor injuriestopassengers,Art.1756oftheCivilCodeprovidesthatcommoncarriersarepresumedtohavebeenatfaultorto haveactednegligentlyunlesstheyprovethattheyobservedextraordinarydiligenceasdefinedinArts.1733and1755ofthe Code.Thisprovisionnecessarilyshiftstothecommoncarriertheburdenofproof. Thereis,thus,nobasisforthecontentionthattherulinginCivilCaseNo.3490,findingSalvaandhisdriverVerenaliable forthedamagetopetitioner'sjeepney,shouldbebindingonSunga.Itisimmaterialthattheproximatecauseofthecollision betweenthejeepneyandthetruckwasthenegligenceofthetruckdriver.Thedoctrineofproximatecauseisapplicableonly inactionsforquasidelict,notinactionsinvolvingbreachofcontract.Thedoctrineisadeviceforimputingliabilitytoa personwherethereisnorelationbetweenhimandanotherparty.Insuchacase,theobligationiscreatedbylawitself.But, wherethereisapreexistingcontractualrelationbetweentheparties,itisthepartiesthemselveswhocreatetheobligation, andthefunctionofthelawismerelytoregulatetherelationthuscreated.Insofarascontractsofcarriageareconcerned, someaspectsregulatedbytheCivilCodearethoserespectingthediligencerequiredofcommoncarrierswithregardtothe safetyofpassengersaswellasthepresumptionofnegligenceincasesofdeathorinjurytopassengers.Itprovides: Art.1733.Commoncarriers,fromthenatureoftheirbusinessandforreasonsofpublicpolicy,arebound toobserveextraordinarydiligenceinthevigilanceoverthegoodsandforthesafetyofthepassengers transportedbythem,accordingtoallthecircumstancesofeachcase. Suchextraordinarydiligenceinthevigilanceoverthegoodsisfurtherexpressedinarticles1734,1735,and 1746,Nos.5,6,and7,whiletheextraordinarydiligenceforthesafetyofthepassengersisfurthersetforth inarticles1755and1756. Art.1755.Acommoncarrierisboundtocarrythepassengerssafelyasfarashumancareandforesightcan provide,usingtheutmostdiligenceofverycautiouspersons,withdueregardforallthecircumstances. Art.1756.Incaseofdeathoforinjuriestopassengers,commoncarriersarepresumedtohavebeenatfault ortohaveactednegligently,unlesstheyprovethattheyobservedextraordinarydiligenceasprescribedby articles1733and1755. Inthecaseatbar,uponthehappeningoftheaccident,thepresumptionofnegligenceatoncearose,anditbecametheduty ofpetitionertoprovethathehadtoobserveextraordinarydiligenceinthecareofhispassengers. Now,didthedriverofjeepneycarrySunga"safelyasfarashumancareandforesightcouldprovide,usingtheutmost diligenceofverycautiouspersons,withdueregardforallthecircumstances"asrequiredbyArt.1755?Wedonotthinkso. Severalfactorsmilitateagainstpetitioner'scontention. First,asfoundbytheCourtofAppeals,thejeepneywasnotproperlyparked,itsrearportionbeingexposedabouttwo metersfromthebroadshouldersofthehighway,andfacingthemiddleofthehighwayinadiagonalangle.Thisisa violationoftheR.A.No.4136,asamended,ortheLandTransportationandTrafficCode,whichprovides: Sec.54.ObstructionofTraffic.Nopersonshalldrivehismotorvehicleinsuchamannerastoobstruct or impede the passage of any vehicle, nor, while discharging or taking on passengers or loading or unloadingfreight,obstructthefreepassageofothervehiclesonthehighway. Second,itisundisputedthatpetitioner'sdrivertookinmorepassengersthantheallowedseatingcapacityofthejeepney,a violationof32(a)ofthesamelaw.Itprovides: Exceedingregisteredcapacity.Nopersonoperatinganymotorvehicleshallallowmorepassengersor morefreightorcargoinhisvehiclethanitsregisteredcapacity. ThefactthatSungawasseatedinan"extensionseat"placedherinaperilgreaterthanthattowhichtheotherpassengers wereexposed.Therefore,notonlywaspetitionerunabletoovercomethepresumptionofnegligenceimposedonhimforthe injurysustainedbySunga,butalso,theevidenceshowshewasactuallynegligentintransportingpassengers. Wefindithardtogiveseriousthoughttopetitioner'scontentionthatSunga'stakingan"extensionseat"amountedtoan impliedassumptionofrisk.Itisakintoarguingthattheinjuriestothemanyvictimsofthetragediesinourseasshouldnot
becompensatedmerelybecausethosepassengersassumedagreaterriskofdrowningbyboardinganoverloadedferry.This isalsotrueofpetitioner'scontentionthatthejeepneybeingbumpedwhileitwasimproperlyparkedconstitutescasofortuito. Acasofortuitoisaneventwhichcouldnotbeforeseen,orwhich,thoughforeseen,wasinevitable.3Thisrequiresthatthe following requirements be present: (a) the cause of the breach is independent of the debtor's will; (b) the event is unforeseeableorunavoidable;(c)theeventissuchastorenderitimpossibleforthedebtortofulfillhisobligationina normal manner, and (d) the debtor did not take part in causing the injury to the creditor.4Petitionershouldhaveforeseenthedangerofparkinghisjeepneywithitsbodyprotrudingtwometersintothe highway. Finally,petitionerchallengestheawardofmoraldamagesallegingthatitisexcessiveandwithoutbasisinlaw.Wefindthis contentionwelltaken. Inawardingmoraldamages,theCourtofAppealsstated: Plaintiffappellantatthetimeoftheaccidentwasafirstyearcollegestudentinthatschoolyear19891990 attheSillimanUniversity,majoringinPhysicalEducation.Becauseoftheinjury,shewasnotableto enrollinthesecondsemesterofthatschoolyear.Shetestifiedthatshehadnomoreintentionofcontinuing withherschooling,becauseshecouldnotwalkanddecidednottopursueherdegree,majorinPhysical Education"becauseofmylegwhichhasadefectalready." Plaintiffappellantlikewisetestifiedthatevenwhileshewasunderconfinement,shecriedinpainbecause ofherinjuredleft foot.As aresultofherinjury,theOrthopedicSurgeonalsocertifiedthatshehas "residualbowingofthefractureside."ShelikewisedecidednottofurtherpursuePhysicalEducationas hermajorsubject,because"myleftleg...hasadefectalready." Those are her physical pains and moral sufferings, the inevitable bedfellows of the injuries that she suffered.UnderArticle2219oftheCivilCode,sheisentitledtorecovermoraldamagesinthesumof P50,000.00,whichisfair,justandreasonable. Asageneralrule,moraldamagesarenotrecoverableinactionsfordamagespredicatedonabreachofcontractforitisnot oneoftheitemsenumeratedunderArt.2219oftheCivilCode.5Asanexception,suchdamagesarerecoverable:(1)incases inwhichthemishapresultsinthedeathofapassenger,asprovidedinArt.1764,inrelationtoArt.2206(3)oftheCivil Code;and(2)inthecasesinwhichthecarrierisguiltyoffraudorbadfaith,asprovidedinArt.2220.6 Inthiscase,thereisnolegalbasisforawardingmoraldamagessincetherewasnofactualfindingbytheappellatecourtthat petitioneractedinbadfaithintheperformanceofthecontractofcarriage.Sunga'scontentionthatpetitioner'sadmissionin opencourt that thedriverofthejeepneyfailedtoassist heringoingtoanearbyhospitalcannotbeconstruedasan admissionofbadfaith.ThefactthatitwasthedriveroftheIsuzutruckwhotookhertothehospitaldoesnotimplythat petitionerwasutterlyindifferenttotheplightofhisinjuredpassenger.Ifatall,itismerelyimpliedrecognitionbyVerena thathewastheoneatfaultfortheaccident. WHEREFORE,thedecisionoftheCourtofAppeals,datedMarch31,1995,anditsresolution,datedSeptember11,1995, areAFFIRMED,withtheMODIFICATIONthattheawardofmoraldamagesisDELETED. SOORDERED. BellosilloandBuena,JJ.,concur. QuisumbingandDeLeon,Jr.,JJ.,areonleave.
RepublicofthePhilippines SUPREMECOURT Manila FIRSTDIVISION G.R.No.141910August6,2002 FGUINSURANCECORPORATION,petitioner, vs. G.P.SARMIENTOTRUCKINGCORPORATIONandLAMBERTM.EROLES,respondents. VITUG,J.: G.P.SarmientoTruckingCorporation(GPS)undertooktodeliveron18June1994thirty(30)unitsofConduraS.D.white refrigeratorsaboardoneofitsIsuzutruck,drivenbyLambertEroles,fromtheplantsiteofConcepcionIndustries,Inc., alongSouthSuperhighwayinAlabang,MetroManila,totheCentralLuzonAppliancesinDagupanCity.Whilethetruck wastraversingthenorthdiversionroadalongMcArthurhighwayinBarangayAnupol,Bamban,Tarlac,itcollidedwithan unidentifiedtruck,causingittofallintoadeepcanal,resultingindamagetothecargoes. FGUInsuranceCorporation(FGU),aninsureroftheshipment,paidtoConcepcionIndustries,Inc.,thevalueofthecovered cargoesinthesumofP204,450.00.FGU,inturn,beingthesubrogeeoftherightsandinterestsofConcepcionIndustries, Inc.,soughtreimbursementoftheamountithadpaidtothelatterfromGPS.Sincethetruckingcompanyfailedtoheedthe claim,FGUfiledacomplaintfordamagesandbreachofcontractofcarriageagainstGPSanditsdriverLambertEroleswith theRegionalTrialCourt,Branch66,ofMakatiCity.Initsanswer,respondentsassertedthatGPSwastheexclusivehauler onlyofConcepcionIndustries,Inc.,since1988,anditwasnotsoengagedinbusinessasacommoncarrier.Respondents furtherclaimedthatthecauseofdamagewaspurelyaccidental.1wphi1.nt Theissueshavingthusbeenjoined,FGUpresenteditsevidence,establishingtheextentofdamagetothecargoesandthe amountithadpaidtotheassured.GPS,insteadofsubmittingitsevidence,filedwithleaveofcourtamotiontodismissthe complaintbywayofdemurrertoevidenceonthegroundthatpetitionerhadfailedtoprovethatitwasacommoncarrier. Thetrialcourt,initsorderof30April1996,1grantedthemotiontodismiss,explainingthusly: "UnderSection1ofRule131oftheRulesofCourt,itisprovidedthatEachpartymustprovehisownaffirmative allegation,xxx. "Intheinstantcase,plaintiffdidnotpresentanysingleevidencethatwouldprovethatdefendantisacommon carrier. "xxxxxxxxx "Accordingly,theapplicationofthelawoncommoncarriersisnotwarrantedandthepresumptionoffaultor negligenceonthepartofacommoncarrierincaseofloss,damageordeteriorationofgoodsduringtransportunder 1735oftheCivilCodeisnotavailing. "Thus,thelawsgoverningthecontractbetweentheownerofthecargotowhomtheplaintiffwassubrogatedand theownerofthevehiclewhichtransportsthecargoarethelawsonobligationandcontractoftheCivilCodeas wellasthelawonquasidelicts. "Underthelawonobligationandcontract,negligenceorfaultisnotpresumed.Thelawonquasidelictprovidesfor somepresumptionofnegligencebutonlyupontheattendanceofsomecircumstances.Thus,Article2185provides: Art.2185.Unlessthereisprooftothecontrary,itispresumedthatapersondrivingamotorvehiclehas beennegligentifatthetimeofthemishap,hewasviolatinganytrafficregulation. "Evidence for the plaintiff shows no proof that defendant was violating any traffic regulation. Hence, the presumptionofnegligenceisnotobtaining. "Consideringthatplaintifffailedtoadduceevidencethatdefendantisacommoncarrieranddefendantsdriverwas theonenegligent,defendantcannotbemadeliableforthedamagesofthesubjectcargoes."2 Thesubsequentmotionforreconsiderationhavingbeendenied,3plaintiffinterposedanappealtotheCourtofAppeals, contendingthatthetrialcourthaderred(a)inholdingthattheappelleecorporationwasnotacommoncarrierdefinedunder thelawandexistingjurisprudence;and(b)indismissingthecomplaintonademurrertoevidence. TheCourtofAppealsrejectedtheappealofpetitionerandruledinfavorofGPS.Theappellatecourt,initsdecisionof10 June1999,4discoursed,amongotherthings,that "xxxinorderforthepresumptionofnegligenceprovidedforunderthelawgoverningcommoncarrier(Article
1735,CivilCode)toarise,theappellantmustfirstprovethattheappelleeisacommoncarrier.Shouldtheappellant failtoprovethattheappelleeisacommoncarrier,thepresumptionwouldnotarise;consequently,theappellant wouldhavetoprovethatthecarrierwasnegligent. "xxxxxxxxx "Becauseitistheappellantwhoinsiststhattheappelleescanstillbeconsideredasacommoncarrier,despiteits `limitedclientele,(assumingitwasreallyacommoncarrier),itfollowsthatit(appellant)hastheburdenofproving thesame.It(plaintiffappellant)`mustestablishhiscasebyapreponderanceofevidence,whichmeansthatthe evidenceasawholeadducedbyonesideissuperiortothatoftheother.(SummaInsuranceCorporationvs.Court ofAppeals,243SCRA175).This,unfortunately,theappellantfailedtodohence,thedismissaloftheplaintiffs complaintbythetrialcourtisjustified. "xxxxxxxxx "Basedontheforegoingdisquisitionsandconsideringthecircumstancesthattheappelleetruckingcorporationhas been`itsexclusivecontractor,haulersince1970,defendanthasnochoicebuttocomplywiththedirectiveofits principal,theinevitableconclusionisthattheappelleeisaprivatecarrier. "xxxxxxxxx "xxxthelowercourtcorrectlyruledthat'theapplicationofthelawoncommoncarriersisnotwarrantedandthe presumptionoffaultornegligenceonthepartofacommoncarrierincaseofloss,damageordeteriorationof good[s]duringtransportunder[article]1735oftheCivilCodeisnotavailing.'xxx. "Finally,Weadverttothelongestablishedrulethatconclusionsandfindingsoffactofatrialcourtareentitledto greatweightonappealandshouldnotbedisturbedunlessforstrongandvalidreasons."5 Petitioner'smotionforreconsiderationwaslikewisedenied;6hence,theinstantpetition,7raisingthefollowingissues: I WHETHERRESPONDENTGPSMAYBECONSIDEREDASACOMMONCARRIERASDEFINEDUNDER THELAWANDEXISTINGJURISPRUDENCE. II WHETHERRESPONDENTGPS,EITHERASACOMMONCARRIERORAPRIVATECARRIER,MAYBE PRESUMED TO HAVE BEEN NEGLIGENT WHEN THE GOODS IT UNDERTOOK TO TRANSPORT SAFELY WERE SUBSEQUENTLY DAMAGED WHILE IN ITS PROTECTIVE CUSTODY AND POSSESSION. III WHETHERTHEDOCTRINEOFRESIPSALOQUITURISAPPLICABLEINTHEINSTANTCASE. Onthefirstissue,theCourtfindstheconclusionofthetrialcourtandtheCourtofAppealstobeamplyjustified.GPS, beinganexclusivecontractorandhaulerofConcepcionIndustries,Inc.,renderingorofferingits services tonoother individual or entity, cannot be considered a common carrier. Common carriers are persons, corporations, firms or associationsengagedinthebusinessofcarryingortransportingpassengersorgoodsorboth,byland,water,orair,forhire orcompensation,offeringtheirservicestothepublic,8whethertothepublicingeneralortoalimitedclienteleinparticular, butneveronanexclusivebasis.9Thetruetestofacommoncarrieristhecarriageofpassengersorgoods,providingspace forthosewhoopttoavailthemselvesofitstransportationserviceforafee.10Givenacceptedstandards,GPSscarcelyfalls withintheterm"commoncarrier." Theaboveconclusionnothwithstanding,GPScannotescapefromliability. Inculpacontractual,uponwhichtheactionofpetitionerrestsasbeingthesubrogeeofConcepcionIndustries,Inc.,themere proofoftheexistenceofthecontractandthefailureofitscompliancejustify,primafacie,acorrespondingrightofrelief.11 Thelaw,recognizingtheobligatoryforceofcontracts,12willnotpermitapartytobesetfreefromliabilityforanykindof misperformanceofthecontractualundertakingoracontraventionofthetenorthereof.13Abreachuponthecontractconfers upontheinjuredpartyavalidcauseforrecoveringthatwhichmayhavebeenlostorsuffered.Theremedyservestopreserve theinterestsofthepromiseethatmayincludehis"expectationinterest,"whichishisinterestinhavingthebenefitofhis bargainbybeingputinasgoodapositionashewouldhavebeeninhadthecontractbeenperformed,orhis"reliance interest,"whichishisinterestinbeingreimbursedforlosscausedbyrelianceonthecontractbybeingputinasgooda positionashewouldhavebeeninhadthecontractnotbeenmade;orhis"restitutioninterest,"whichishisinterestinhaving restoredtohimanybenefitthathehasconferredontheotherparty.14Indeed,agreementscanaccomplishlittle,eitherfor theirmakersorforsociety,unlesstheyaremadethebasisforaction.15Theeffectofeveryinfractionistocreateanewduty, thatis,tomakerecompensetotheonewhohasbeeninjuredbythefailureofanothertoobservehiscontractualobligation16
unlesshecanshowextenuatingcircumstances,likeproofofhisexerciseofduediligence(normallythatofthediligenceofa good father of a family or, exceptionally by stipulation or by law such as in the case of common carriers, that of extraordinarydiligence)oroftheattendanceoffortuitousevent,toexcusehimfromhisensuingliability. Respondenttruckingcorporationrecognizestheexistenceofacontractofcarriagebetweenitandpetitionersassured,and admitsthatthecargoesithasassumedtodeliverhavebeenlostordamagedwhileinitscustody.Insuchasituation,adefault on,orfailureofcompliancewith,theobligationinthiscase,thedeliveryofthegoodsinitscustodytotheplaceof destinationgivesrisetoapresumptionoflackofcareandcorrespondingliabilityonthepartofthecontractualobligorthe burdenbeingonhimtoestablishotherwise.GPShasfailedtodoso. Respondentdriver,ontheotherhand,withoutconcreteproofofhisnegligenceorfault,maynothimselfbeorderedtopay petitioner.Thedriver,notbeingapartytothecontractofcarriagebetweenpetitionersprincipalanddefendant,maynotbe heldliableundertheagreement.Acontractcanonlybindthepartieswhohaveenteredintoitortheirsuccessorswhohave assumedtheirpersonalityortheirjuridicalposition.17Consonantlywiththeaxiomresinteraliosactaaliisnequenocet prodest,suchcontractcanneitherfavornorprejudiceathirdperson.Petitionerscivilactionagainstthedrivercanonlybe basedonculpaaquiliana,which,unlikeculpacontractual,wouldrequiretheclaimantfordamagestoprovenegligenceor faultonthepartofthedefendant.18 Awordinpassing.Resipsaloquitur,adoctrinebeinginvokedbypetitioner,holdsadefendantliablewherethethingwhich causedtheinjurycomplainedofisshowntobeunderthelattersmanagementandtheaccidentissuchthat,intheordinary courseofthings,cannotbeexpectedtohappenifthosewhohaveitsmanagementorcontrolusepropercare.Itaffords reasonableevidence,intheabsenceofexplanationbythedefendant,thattheaccidentarosefromwantofcare.19Itisnota ruleofsubstantivelawand,assuch,itdoesnotcreateanindependentgroundofliability.Instead,itisregardedasamodeof proof,oramereproceduralconveniencesinceitfurnishesasubstitutefor,andrelieves theplaintiffof,theburdenof producingspecificproofofnegligence.Themaximsimplyplacesonthedefendanttheburdenofgoingforwardwiththe proof.20Resorttothedoctrine,however,maybeallowedonlywhen(a)theeventisofakindwhichdoesnotordinarily occurintheabsenceofnegligence;(b)otherresponsiblecauses,includingtheconductoftheplaintiffandthirdpersons,are sufficientlyeliminatedbytheevidence;and(c)theindicatednegligenceiswithinthescopeofthedefendant'sdutytothe plaintiff.21Thus,itisnotapplicablewhenanunexplainedaccidentmaybeattributabletooneofseveralcauses,forsomeof whichthedefendantcouldnotberesponsible.22 Resipsaloquiturgenerallyfindsrelevancewhetherornotacontractualrelationshipexistsbetweentheplaintiffandthe defendant,fortheinferenceofnegligencearisesfromthecircumstancesandnatureoftheoccurrenceandnotfromthe nature of the relation of the parties.23 Nevertheless, the requirement that responsible causes other than those due to defendantsconductmustfirstbeeliminated,forthedoctrinetoapply,shouldbeunderstoodasbeingconfinedonlytocases ofpure(noncontractual)tortsinceobviouslythepresumptionofnegligenceinculpacontractual,aspreviouslysopointed out,immediatelyattachesbyafailureofthecovenantoritstenor.Inthecaseofthetruckdriver,whoseliabilityinacivil actionispredicatedonculpaacquiliana,whileheadmittedlycanbesaidtohavebeenincontrolandmanagementofthe vehiclewhichfiguredintheaccident,itisnotequallyshown,however,thattheaccidentcouldhavebeenexclusivelydueto hisnegligence,amatterthatcanallow,forthwith,resipsaloquiturtoworkagainsthim. Ifademurrertoevidenceisgrantedbutonappealtheorderofdismissalisreversed,themovantshallbedeemedtohave waivedtherighttopresentevidence.24Thus,respondentcorporationmaynolongerofferprooftoestablishthatithas exercised due care in transporting the cargoes of the assured so as to still warrant a remand of the case to the trial court.1wphi1.nt WHEREFORE,theorder,dated30April1996,oftheRegionalTrialCourt,Branch66,ofMakatiCity,andthedecision, dated10June1999,oftheCourtofAppeals,areAFFIRMEDonlyinsofarasrespondentLambertM.Erolesisconcerned, butsaidassailedorderofthetrialcourtanddecisionoftheappellatecourtareREVERSEDasregardsG.P.Sarmiento TruckingCorporationwhich,instead,isherebyorderedtopayFGUInsuranceCorporationthevalueofthedamagedand lostcargoesintheamountofP204,450.00.Nocosts. SOORDERED. Davide,Jr.,C.J.,Kapunan,YnaresSantiago,andAustriaMartinez,JJ.,concur.
RepublicofthePhilippines SUPREMECOURT Manila THIRDDIVISION G.R.No.135377October7,2003 DSRSENATOR LINES AND C.F. SHARP AND COMPANY, INC., petitioners, vs. FEDERALPHOENIXASSURANCECO.,INC.,respondent. DECISION SANDOVALGUTIERREZ,J.: Beforeusisapetitionforreviewoncertiorari1assailingtheDecision2datedJune5,1998oftheCourtofAppealsinCA G.R.CVNo.50833whichaffirmedtheDecisionoftheRegionalTrialCourt(RTC),ManilaCity,Branch16,inCivilCase No.9469699,"FederalPhoenixAssuranceCompany,Inc.vs.DSRSenatorLinesandC.F.Sharp&Co.,Inc.,"fordamages arisingfromthelossofcargowhileintransit. BerdePlants,Inc.(BerdePlants)delivered632unitsofartificialtreestoC.F.SharpandCompany,Inc.(C.F.Sharp),the GeneralShipAgentofDSRSenatorLines,aforeignshippingcorporation,fortransportationanddeliverytotheconsignee, AlMohr International Group, in Riyadh, Saudi Arabia. C.F. Sharp issued International Bill of Lading No. SENU MNL265483forthecargowithaninvoicevalueof$34,579.60.UndertheBillofLading,theportofdischargeforthe cargowasattheKhorFakkanportandtheportofdeliverywasRiyadh,SaudiArabia,viaPortDammam.Thecargowas loadedinM/S"ArabianSenator." FederalPhoenixAssuranceCompany,Inc.(FederalPhoenixAssurance)insuredthecargoagainstallrisksintheamountof P941,429.61.4 OnJune7,1993,M/S"ArabianSenator"lefttheManilaSouthHarborforSaudiArabiawiththecargoonboard.Whenthe vesselarrivedinKhorFakkanPort,thecargowasreloadedonboardDSRSenatorLinesfeedervessel,M/V"Kapitan Sakharov,"boundforPortDammam,SaudiArabia.However,whileintransit,thevesselandallitscargocaughtfire. OnJuly5,1993,DSRSenatorLinesinformedBerdePlantsthatM/V"KapitanSakharov"withitscargowasguttedbyfire andsankonoraboutJuly4,1993.OnDecember16,1993,C.F.Sharpissuedacertificationtothateffect. Consequently,FederalPhoenixAssurancepaidBerdePlantsP941,429.61correspondingtotheamountofinsuranceforthe cargo.InturnBerdePlantsexecutedinitsfavora"SubrogationReceipt"5datedJanuary17,1994. OnFebruary8,1994,FederalPhoenixAssurancesentalettertoC.F.SharpdemandingpaymentofP941,429.61onthebasis oftheSubrogationReceipt.C.F.Sharpdeniedanyliabilityonthegroundthatsuchliabilitywasextinguishedwhenthe vesselcarryingthecargowasguttedbyfire. Thus,onMarch11,1994,FederalPhoenixAssurancefiledwiththeRTC,Branch16,Manilaacomplaintfordamages against DSRSenator Lines and C.F. Sharp, praying that the latter be ordered to pay actual damages of P941,429.61, compensatorydamagesofP100,000.00andcosts. OnAugust22,1995,theRTCrenderedaDecisioninfavorofFederalPhoenixAssurance,thedispositiveportionofwhich reads: "WHEREFORE,premisesconsidered,judgmentisherebyrenderedinfavorofplaintiffandagainstthedefendantswhoare herebyorderedjointlyandseverallytopayplaintiff: I.TheamountofP941,439.61(shouldbeP941,429.616)withlegalinterestof6%perannumfromthedateofthe letterofdemandofFebruary8,1993(EXH.L)and12%perannumfromthedatethejudgmentbecomesfinaland executoryuntilitssatisfaction(EasternShippingLinesvs.CourtofAppeals,G.R.No.97412,July12,1994); II.TheamountofP15,000.00bywayofreasonableattorneysfees;and III.Topaycosts. "ThecounterclaimofdefendantsisDISMISSED. "SOORDERED."7 Onappeal,theCourtofAppealsrenderedaDecisiondatedJune5,1998,affirmingtheRTCDecision,thus: "Inthepresentrecourse,theappellantcarrierwaspresumedtohaveactednegligentlyforthefirethatguttedthefeeder vesselandtheconsequentlossordestructionofthecargo.Hence,theappellantcarrierisliableforappelleesclaimunder
theNewCivilCodeofthePhilippines. "ContrarytoC.F.SharpandCo.,Inc.spose,itsliabilityasshipagentcontinuedandremaineduntilthecargowasdelivered totheconsignee.Thestatusoftheappellantasshipagentsubsistedanditsliabilityasashipagentwascoterminouswith andsubsistedaslongasthecargowasnotdeliveredtotheconsigneeunderthetermsoftheBillofLading. "INLIGHTOFALLTHEFOREGOING,theappealoftheappellantsisDISMISSED.TheDecisionappealedfromis affirmed.Withcostsagainsttheappellants. "SOORDERED."8 OnSeptember7,1998,theCourtofAppealsdeniedthemotionforreconsiderationofDSRSenatorLinesandC.F.Sharp, promptingthemtofilewiththisCourttheinstantpetition. Wefindthepetitionbereftofmerit. Article1734oftheCivilCodeprovides: "Art.1734.Commoncarriersareresponsiblefortheloss,destruction,ordeteriorationofthegoods,unlessthesameisdue toanyofthefollowingcausesonly: (1)Flood,storm,earthquake,lightning,orothernaturaldisasterorcalamity; (2)Actofthepublicenemyinwar,whetherinternationalorcivil; (3)Actoromissionoftheshipperorownerofthegoods; (4)Thecharacterofthegoodsordefectsinthepackingorinthecontainers; (5)Orderoractofcompetentpublicauthority." Fireisnotoneofthoseenumeratedundertheaboveprovisionwhichexemptsacarrierfromliabilityforlossordestruction ofthecargo. InEasternShippingLines,Inc.vs.IntermediateAppellateCourt,9weruledthatsincetheperiloffireisnotcomprehended withintheexceptionsinArticle1734,thenthecommoncarriershallbepresumedtohavebeenatfaultortohaveacted negligently,unlessitprovesthatithasobservedtheextraordinarydiligencerequiredbylaw. EveniffireweretobeconsideredanaturaldisasterwithinthepurviewofArticle1734,itisrequiredunderArticle173910of thesameCodethatthenaturaldisastermusthavebeentheproximateandonlycauseoftheloss,andthatthecarrierhas exercisedduediligencetopreventorminimizethelossbefore,duringoraftertheoccurrenceofthedisaster. Wehaveheldthatacommoncarriersdutytoobservetherequisitediligenceintheshipmentofgoodslastsfromthetime thearticlesaresurrenderedtoorunconditionallyplacedinthepossessionof,andreceivedby,thecarrierfortransportation untildeliveredtooruntilthelapseofareasonabletimefortheiracceptancebythepersonentitledtoreceivethem.Whenthe goodsshippedeitherarelostorarriveindamagedcondition,apresumptionarisesagainstthecarrierofitsfailuretoobserve thatdiligence,andthereneednotbeanexpressfindingofnegligencetoholditliable.111awphi1.nts Commoncarriers are obliged toobserveextraordinary diligenceinthevigilanceoverthegoods transportedbythem. Accordingly, theyare presumed tohave been at fault orto have acted negligently ifthe goods are lost,destroyedor deteriorated.Thereareveryfewinstanceswhenthepresumptionofnegligencedoesnotattachandtheseinstancesare enumerated in Article 1734. In those cases where the presumption is applied, the common carrier must prove that it exercisedextraordinarydiligenceinordertoovercomethepresumption.12 RespondentFederalPhoenixAssuranceraisedthepresumptionofnegligenceagainstpetitioners.However,theyfailedto overcomeitbysufficientproofofextraordinarydiligence. WHEREFORE,theinstantpetitionisDENIED.TheassailedDecisionoftheCourtofAppealsdatedJune5,1998,inCA G.R.CVNo.50833isherebyAFFIRMED. SOORDERED. Puno,J.,(Chairman),Panganiban,andCarpioMoralesJJ.,concur. Corona,J.,onleave.
RepublicofthePhilippines SUPREMECOURT Manila FIRSTDIVISION G.R.No.149038April9,2003 PHILIPPINEAMERICANGENERALINSURANCECOMPANY,petitioner, vs. PKSSHIPPINGCOMPANY,respondent. VITUG,J.: The petition before the Court seeks a review of the decision of the Court of Appeals in C.A. G.R. CV No. 56470, promulgatedon25June2001,whichhasaffirmedintotothejudgmentoftheRegionalTrialCourt(RTC),Branch65,of Makati, dismissing the complaint for damages filed by petitioner insurance corporation against respondent shipping company. Davao Union Marketing Corporation (DUMC) contracted the services of respondent PKS Shipping Company (PKS Shipping)fortheshipmenttoTaclobanCityofseventyfivethousand(75,000)bagsofcementworthThreeMillionThree Hundred SeventyFive Thousand Pesos (P3,375,000.00). DUMC insured the goods for its full value with petitioner PhilippineAmericanGeneralInsuranceCompany(Philamgen).ThegoodswereloadedaboardthedumbbargeLimarI belongingtoPKSShipping.Ontheeveningof22December1988,aboutnineoclock,whileLimarIwasbeingtowedby respondentstugboat,MTIronEagle,thebargesankacoupleofmilesoffthecoastofDumagasaPoint,inZamboangadel Sur,bringingdownwithittheentirecargoof75,000bagsofcement. DUMCfiledaformalclaimwithPhilamgenforthefullamountoftheinsurance.Philamgenpromptlymadepayment;it thensought reimbursementfromPKS ShippingofthesumpaidtoDUMCbuttheshippingcompanyrefusedtopay, promptingPhilamgentofilesuitagainstPKSShippingwiththeMakatiRTC. TheRTCdismissedthecomplaintafterfindingthatthetotallossofthecargocouldhavebeencausedeitherbyafortuitous event,inwhichcasetheshipownerwasnotliable,orthroughthenegligenceofthecaptainandcrewofthevesselandthat, underArticle587oftheCodeofCommerceadoptingthe"LimitedLiabilityRule,"theshipownercouldfreeitselfof liabilitybyabandoning,asitapparentlysodid,thevesselwithallherequipmentandearnedfreightage. PhilamgeninterposedanappealtotheCourtofAppealswhichaffirmedintotothedecisionofthetrialcourt.Theappellate courtruledthatevidencetoestablishthatPKSShippingwasacommoncarrieratthetimeitundertooktotransportthebags ofcementwaswantingbecausethepeculiarmethodoftheshippingcompanyscarryinggoodsforotherswasnotgenerally heldoutasabusinessbutasacasualoccupation.ItthenconcludedthatPKSShipping,notbeingacommoncarrier,wasnot expectedtoobservethestringentextraordinarydiligencerequiredofcommoncarriersinthecareofgoods.Theappellate court,moreover,foundthat theloss ofthegoods was sufficientlyestablished as havingbeendue tofortuitous event, negatinganyliabilityonthepartofPKSShippingtotheshipper. Intheinstantappeal,PhilamgencontendsthattheappellatecourthascommittedapatenterrorinrulingthatPKSShipping isnotacommoncarrierandthatitisnotliableforthelossofthesubjectcargo.Thefactthatrespondenthasalimited clientele,petitionerargues,doesnotmilitateagainstrespondentsbeingacommoncarrierandthattheonlywaybywhich suchcarriercanbeheldexemptforthelossofthecargowouldbeifthelosswerecausedbynaturaldisasterorcalamity. Petitioneravers thattyphoon"APIANG" has notenteredthePhilippineareaofresponsibilityandthat,evenifit did, respondentwouldnotbeexemptfromliabilitybecauseitsemployees,particularlythetugmaster,havefailedtoexercisedue diligencetopreventorminimizetheloss. PKSShipping,initscomment,urgesthatthepetitionshouldbedeniedbecausewhatPhilamgenseeksisnotareviewon pointsorerrorsoflawbutareviewoftheundisputedfactualfindingsoftheRTCandtheappellatecourt.Inanyevent,PKS Shipping points out, the findings and conclusions of both courts find support from the evidence and applicable jurisprudence. ThedeterminationofpossibleliabilityonthepartofPKSShippingboilsdowntothequestionofwhetheritisaprivate carrieroracommoncarrierand,ineithercase,totheotherquestionofwhetherornotithasobservedtheproperdiligence (ordinary,ifaprivatecarrier,orextraordinary,ifacommoncarrier)requiredofitgiventhecircumstances. ThefindingsoffactmadebytheCourtofAppeals,particularlywhensuchfindingsareconsistentwiththoseofthetrial court,maynotatlibertybereviewedbythisCourtinapetitionforreviewunderRule45oftheRulesofCourt.1The
conclusionsderivedfromthosefactualfindings,however,arenotnecessarilyjustmattersoffactaswhentheyaresolinked to,orinextricablyintertwinedwith,arequisiteappreciationoftheapplicablelaw.Insuchinstances,theconclusionsmade couldwellberaisedasbeingappropriateissuesinapetitionforreviewbeforethisCourt.Thus,anissuewhetheracarrieris privateorcommononthebasisofthefactsfoundbyatrialcourtortheappellatecourtcanbeavalidandreviewable questionoflaw. TheCivilCodedefines"commoncarriers"inthefollowingterms: "Article 1732. Common carriers are persons, corporations, firms or associations engaged in the business of carryingortransportingpassengersorgoodsorboth,byland,water,orairforcompensation,offeringtheirservices tothepublic." ComplementarytothecodaldefinitionisSection13,paragraph(b),ofthePublicServiceAct;itdefines"publicservice"to be "xxxeverypersonthatnoworhereaftermayown,operate,manage,orcontrolinthePhilippines,forhireor compensation,withgeneralorlimitedclientele,whetherpermanent,occasionaloraccidental,anddoneforgeneral business purposes, any common carrier, railroad, street railway, subway motor vehicle, either for freight or passenger,orboth,withorwithoutfixedrouteandwhatevermaybeitsclassification,freightorcarrierserviceof anyclass,expressservice,steamboat,orsteamship,orsteamshipline,pontines,ferriesandwatercraft,engagedin thetransportationofpassengersorfreightorboth,shipyard,marinerepairshop,wharfordock,iceplant,ice refrigerationplant,canal,irrigationsystem,gas,electriclight,heatandpower,watersupplyandpowerpetroleum, seweragesystem,wireorwirelesscommunicationsystems,wireorwirelessbroadcastingstationsandothersimilar publicservices.xxx.(Underscoringsupplied)." The prevailingdoctrine onthequestionis that enunciated inthe leadingcase ofDeGuzmanvs.Court of Appeals.2 ApplyingArticle1732oftheCode,inconjunctionwithSection13(b)ofthePublicServiceAct,thisCourthasheld: "Theabovearticlemakesnodistinctionbetweenonewhoseprincipalbusinessactivityisthecarryingofpersonsor goodsorboth,andonewhodoessuchcarryingonlyasanancillaryactivity(inlocalidiom,as`asideline).Article 1732alsocarefullyavoidsmakinganydistinctionbetweenapersonorenterpriseofferingtransportationserviceon aregularorscheduledbasisandoneofferingsuchserviceonanoccasional,episodicorunscheduledbasis.Neither does Article 1732 distinguish between a carrier offering its services to the `general public, i.e., the general communityorpopulation,andonewhooffersservicesorsolicitsbusinessonlyfromanarrowsegmentofthe generalpopulation.WethinkthatArticle1732deliberatelyrefrainedfrommakingsuchdistinctions. "Sounderstood,theconceptof`commoncarrierunderArticle1732maybeseentocoincideneatlywiththenotion of `public service, under the Public Service Act (Commonwealth Act No. 1416, as amended) which at least partiallysupplementsthelawoncommoncarrierssetforthintheCivilCode." Muchofthedistinctionbetweena"commonorpubliccarrier"anda"privateorspecialcarrier"liesinthecharacterofthe business,suchthatiftheundertakingisanisolatedtransaction,notapartofthebusinessoroccupation,andthecarrierdoes notholditselfouttocarrythegoodsforthegeneralpublicortoalimitedclientele,althoughinvolvingthecarriageofgoods forafee,3thepersonorcorporationprovidingsuchservicecouldverywellbejustaprivatecarrier.Atypicalcaseisthatof acharterpartywhichincludesboththevesselanditscrew,suchasinabareboatordemise,wherethechartererobtainsthe useandserviceofallorsomepartofashipforaperiodoftimeoravoyageorvoyages4andgetsthecontrolofthevessel anditscrew.5Contrarytotheconclusionmadebytheappellatecourt,itsfactualfindingsindicatethatPKSShippinghas engageditselfinthebusinessofcarryinggoodsforothers,althoughforalimitedclientele,undertakingtocarrysuchgoods forafee.Theregularityofitsactivitiesinthisareaindicatesmorethanjustacasualactivityonitspart.6Neithercanthe conceptofacommoncarrierchangemerelybecauseindividualcontractsareexecutedorenteredintowithpatronsofthe carrier.Suchrestrictiveinterpretationwouldmakeiteasyforacommoncarriertoescapeliabilitybythesimpleexpedientof enteringintothosedistinctagreementswithclients. AddressingnowtheissueofwhetherornotPKSShippinghasexercisedtheproperdiligencedemandedofcommoncarriers, Article1733oftheCivilCoderequirescommoncarrierstoobserveextraordinarydiligenceinthevigilanceoverthegoods theycarry.Incaseofloss,destructionordeteriorationofgoods,commoncarriersarepresumedtohavebeenatfaultorto haveactednegligently,andtheburdenofprovingotherwiserestsonthem.7TheprovisionsofArticle1733,notwithstanding, commoncarriersareexemptfromliabilityforloss,destruction,ordeteriorationofthegoodsduetoanyofthefollowing causes: (1)Flood,storm,earthquake,lightning,orothernaturaldisasterorcalamity; (2)Actofthepublicenemyinwar,whetherinternationalorcivil;
(3)Actoromissionoftheshipperorownerofthegoods; (4)Thecharacterofthegoodsordefectsinthepackingorinthecontainers;and (5)Orderoractofcompetentpublicauthority.8 Theappellatecourtruled,gatheredfromthetestimoniesandswornmarineprotestsoftherespectivevesselmastersofLimar IandMTIronEagle,thattherewasnowaybywhichthebargesorthetugboatscrewcouldhavepreventedthesinkingof LimarI.Thevesselwassuddenlytossedbywavesofextraordinaryheightofsix(6)toeight(8)feetandbuffetedbystrong windsof1.5knotsresultingintheentryofwaterintothebargeshatches.TheofficialCertificateofInspectionofthebarge issuedbythePhilippineCoastguardandtheCoastwiseLoadLineCertificatewouldattesttotheseaworthinessofLimarI andshouldstrengthenthefactualfindingsoftheappellatecourt. FindingsoffactoftheCourtofAppealsgenerallyconcludethisCourt;noneoftherecognizedexceptionsfromtherule(1) whenthefactualfindingsoftheCourtofAppealsandthetrialcourtarecontradictory;(2)whentheconclusionisafinding groundedentirelyonspeculation,surmises,orconjectures;(3)whentheinferencemadebytheCourtofAppealsfromits findings of fact is manifestly mistaken, absurd, or impossible; (4) when there is a grave abuse of discretion in the appreciationoffacts;(5)whentheappellatecourt,inmakingitsfindings,wentbeyondtheissuesofthecaseandsuch findingsarecontrarytotheadmissionsofbothappellantandappellee;(6)whenthejudgmentoftheCourtofAppealsis premisedonamisapprehensionoffacts;(7)whentheCourtofAppealsfailedtonoticecertainrelevantfactswhich,if properlyconsidered,wouldjustifyadifferentconclusion;(8)whenthefindingsoffactarethemselvesconflicting;(9)when thefindingsoffactareconclusionswithoutcitationofthespecificevidenceonwhichtheyarebased;and(10)whenthe findingsoffactoftheCourtofAppealsarepremisedontheabsenceofevidencebutsuchfindingsarecontradictedbythe evidenceonrecordwouldappeartobeclearlyextantinthisinstance. Allgiventhen,theappellatecourtdidnoterrinitsjudgmentabsolvingPKSShippingfromliabilityforthelossofthe DUMCcargo. WHEREFORE,thepetitionisDENIED.Nocosts. SOORDERED. Davide,Jr.,C.J.,YnaresSantiago,Carpio,andAzcuna,JJ.,concur.
RepublicofthePhilippines SUPREMECOURT Manila THIRDDIVISION G.R.No.150751September20,2004 CENTRALSHIPPINGCOMPANY,INC.,petitioner, vs. INSURANCECOMPANYOFNORTHAMERICA,respondent. DECISION PANGANIBAN,J.: Acommoncarrierispresumedtobeatfaultornegligent.Itshallbeliablefortheloss,destructionordeteriorationofits cargo,unlessitcanprovethatthesoleandproximatecauseofsucheventisoneofthecausesenumeratedinArticle1734of theCivilCode,orthatitexercisedextraordinarydiligencetopreventorminimizetheloss.Inthepresentcase,theweather conditionencounteredbypetitionersvesselwasnota"storm"oranaturaldisastercomprehendedinthelaw.Giventhe knownweatherconditionprevailingduringthevoyage,themannerofstowageemployedbythecarrierwasinsufficientto securethecargofromtherollingactionofthesea.Thecarriertookacalculatedriskinimproperlysecuringthecargo. Havinglostthatrisk,itcannotnowdisclaimanyliabilityfortheloss. TheCase BeforetheCourtisaPetitionforReview1underRule45oftheRulesofCourt,seekingtoreverseandsetasidetheMarch 23,2001Decision2oftheCourtofAppeals(CA)inCAGRCVNo.48915.TheassailedDecisiondisposedasfollows: "WHEREFORE,thedecisionoftheRegionalTrialCourtofMakatiCity,Branch148datedAugust4,1994is herebyMODIFIEDinsofarastheawardofattorneysfeesisDELETED.ThedecisionisAFFIRMEDinallother respects."3 TheCAdeniedpetitionersMotionforReconsiderationinitsNovember7,2001Resolution.4 TheFacts Thefactualantecedents,summarizedbythetrialcourtandadoptedbytheappellatecourt,areasfollows: "OnJuly25,1990atPuertoPrincesa,Palawan,the[petitioner]receivedonboarditsvessel,theM/VCentral Bohol,376pieces[of]PhilippineApitongRoundLogsandundertooktotransportsaidshipmenttoManilafor deliverytoAlaskaLumberCo.,Inc. "The cargo was insured for P3,000,000.00 against total loss under [respondents] Marine Cargo Policy No. MCPB00170. "OnJuly25,1990,uponcompletionofloadingofthecargo,thevesselleftPalawanandcommencedthevoyageto Manila. "Atabout0125hoursonJuly26,1990,whileenroutetoManila,thevessellistedabout10degreesstarboardside, duetotheshiftingoflogsinthehold. "Atabout0128hours,afterthelistingofthevesselhadincreasedto15degrees,theshipcaptainorderedhismento abandonshipandatabout0130hoursofthesamedaythevesselcompletelysank.Duetothesinkingofthevessel, thecargowastotallylost. "[Respondent]allegedthatthetotallossoftheshipmentwascausedbythefaultandnegligenceofthe[petitioner] anditscaptainandasdirectconsequencethereoftheconsigneesuffereddamageinthesumofP3,000,000.00. "Theconsignee,AlaskaLumberCo.Inc.,presentedaclaimforthevalueoftheshipmenttothe[petitioner]butthe latterfailedandrefusedtosettletheclaim,hence[respondent],beingtheinsurer,paidsaidclaimandnowseeksto besubrogatedtoalltherightsandactionsoftheconsigneeasagainstthe[petitioner]. "[Petitioner],whileadmittingthesinkingofthevessel,interposedthedefensethatthevesselwasfullymanned, fullyequippedandinallrespectsseaworthy;thatallthelogswereproperlyloadedandsecured;thatthevessels masterexercisedduediligencetopreventorminimizethelossbefore,duringandaftertheoccurrenceofthestorm. "Itraisedasitsmaindefensethattheproximateandonlycauseofthesinkingofitsvesselandthelossofitscargo wasanaturaldisaster,atropicalstormwhichneither[petitioner]northecaptainofitsvesselcouldhaveforeseen."5 TheRTCwasunconvincedthatthesinkingofM/VCentralBoholhadbeencausedbytheweatheroranyothercasofortuito.
Itnotedthatmonsoons,whichwerecommonoccurrencesduringthemonthsofJulytoDecember,couldhavebeenforeseen andprovidedforbyanoceangoingvessel.Applyingtheruleofpresumptivefaultornegligenceagainstthecarrier,thetrial courtheldpetitionerliableforthelossofthecargo.Thus,theRTCdeductedthesalvagevalueofthelogsintheamountof P200,000fromtheprincipalclaimofrespondentandfoundthatthelatterwasentitledtobesubrogatedtotherightsofthe insured.Thecourtaquodisposedasfollows: "WHEREFORE,premisesconsidered,judgmentisherebyrenderedinfavorofthe[respondent]andagainstthe [petitioner]orderingthelattertopaythefollowing: 1)theamountofP2,800,000.00withlegalinterestthereoffromthefilingofthiscomplaintuptoanduntil thesameisfullypaid; 2)P80,000.00asandforattorneysfees; 3)Pluscostsofsuit."6 RulingoftheCourtofAppeals TheCAaffirmedthetrialcourtsfindingthatthesouthwesternmonsoonencounteredbythevesselwasnotunforeseeable. Giventheseasonofrainsandmonsoons,theshipcaptainandhiscrewshouldhaveanticipatedtheperilsofthesea.The appellatecourtfurtherheldthattheweatherdisturbancewasnotthesoleandproximatecauseofthesinkingofthevessel, whichwasalsoduetotheconcurrentshiftingofthelogsintheholdthatcouldhaveresultedonlyfromimproperstowage. Thus,thecarrierwasheldresponsiblefortheconsequentlossofordamagetothecargo,becauseitsownnegligencehad contributedthereto. TheCAfoundnomeritinpetitionersassertionofthevesselsseaworthiness.ItheldthattheCertificatesofInspectionand Drydockingwerenotconclusiveproofsthereof.Inordertoconsideravesseltobeseaworthy,itmustbefittomeettheperils ofthesea. Founduntenablewaspetitionersinsistencethatthetrialcourtshouldhavegivengreaterweighttothefactualfindingsofthe BoardofMarineInquiry(BMI)intheinvestigationoftheMarineProtestfiledbytheshipcaptain,EnriquitoCahatol.The CAfurtherobservedthatwhatpetitionerhadpresentedtothecourtaquoweremereexcerptsofthetestimonyofCaptain CahatolgivenduringthecourseoftheproceedingsbeforetheBMI,nottheactualfindingsandconclusionsoftheagency. CitingAradav.CA,7itsaidthatfindingsoftheBMIwerelimitedtotheadministrativeliabilityoftheowner/operator, officersandcrewofthevessel.However,thedeterminationofwhetherthecarrierobservedextraordinarydiligencein protectingthecargoitwastransportingwasafunctionofthecourts,notoftheBMI. TheCAconcludedthatthedoctrineoflimitedliabilitywasnotapplicable,inviewofpetitionersnegligenceparticularly itsimproperstowageofthelogs. Hence,thisPetition.8 Issues InitsMemorandum,petitionersubmitsthefollowingissuesforourconsideration: "(i)WhetherornottheweatherdisturbancewhichcausedthesinkingofthevesselM/VCentralBoholwasa fortuitousevent. "(ii)WhetherornottheinvestigationreportpreparedbyClaimsmenAdjustmentCorporationishearsayevidence underSection36,Rule130oftheRulesofCourt. "(iii)WhetherornotthefindingoftheCourtofAppealsthatthelogsintheholdshiftedandsuchshiftingcould onlybeduetoimproperstowagehasavalidandfactualbasis. "(iv)WhetherornotM/VCentralBoholisseaworthy. "(v)WhetherornottheCourtofAppealserredinnotgivingcredencetothefactualfindingoftheBoardofMarine Inquiry(BMI),anindependentgovernmentagencytaskedtoconductinquiriesonmaritimeaccidents. "(vi)WhetherornottheDoctrineofLimitedLiabilityisapplicabletothecaseatbar."9 Theissuesboildowntotwo:(1)whetherthecarrierisliableforthelossofthecargo;and(2)whetherthedoctrineof limitedliabilityisapplicable.Theseissuesinvolveadeterminationoffactualquestionsofwhetherthelossofthecargowas duetotheoccurrenceofanaturaldisaster;andifso,whetheritssoleandproximatecausewassuchnaturaldisasteror whetherpetitionerwaspartlytoblameforfailingtoexerciseduediligenceinthepreventionofthatloss. TheCourtsRuling ThePetitionisdevoidofmerit. FirstIssue: LiabilityforLostCargo Fromthenatureoftheirbusinessandforreasonsofpublicpolicy,commoncarriersareboundtoobserveextraordinary
diligenceoverthegoodstheytransport,accordingtoallthecircumstancesofeachcase.10Intheeventofloss,destructionor deteriorationoftheinsuredgoods,commoncarriersareresponsible;thatis,unlesstheycanprovethatsuchloss,destruction ordeteriorationwasbroughtaboutamongothersby"flood,storm,earthquake,lightningorothernaturaldisasteror calamity."11InallothercasesnotspecifiedunderArticle1734oftheCivilCode,commoncarriersarepresumedtohave beenatfaultortohaveactednegligently,unlesstheyprovethattheyobservedextraordinarydiligence.12 Inthepresentcase,petitionerdisclaimsresponsibilityforthelossofthecargobyclaimingtheoccurrenceofa"storm" underArticle1734(1).Itattributesthesinkingofitsvesselsolelytotheweatherconditionbetween10:00p.m.onJuly25, 1990and1:25a.m.onJuly26,1990. Attheoutset,itmustbestressedthatonlyquestionsoflaw13mayberaisedinapetitionforreviewoncertiorariunderRule 45oftheRulesofCourt.Questionsoffactarenotpropersubjectsinthismodeofappeal,14for"[t]heSupremeCourtisnot atrieroffacts."15FactualfindingsoftheCAmaybereviewedonappeal16onlyunderexceptionalcircumstancessuchas, amongothers,whentheinferenceismanifestlymistaken,17thejudgmentisbasedonamisapprehensionoffacts,18orthe CA manifestly overlooked certain relevant and undisputed facts that, if properly considered, would justify a different conclusion.19 Inthepresentcase,petitionerhasnotgiventheCourtsufficientcogentreasonstodisturbtheconclusionoftheCAthatthe weatherencounteredbythevesselwasnota"storm"ascontemplatedbyArticle1734(1).Establishedisthefactthatbetween 10:00p.m.onJuly25,1990and1:25a.m.onJuly26,1990,M/VCentralBoholencounteredasouthwesternmonsooninthe courseofitsvoyage. TheNoteofMarineProtest,20whichthecaptainofthevesselissuedunderoath,statedthatheandhiscrewencountereda southwesternmonsoonabout2200hoursonJuly25,1990,andanothermonsoonabout2400hoursonJuly26,1990.Even petitioner admitted in its Answer that the sinking of M/V Central Bohol had been caused by the strong southwest monsoon.21Havingmadesuchfactualrepresentation,itcannotnowbeallowedtoretreatandclaimthatthesouthwestern monsoonwasa"storm." The pieces of evidence with respect to the weather conditions encountered by the vessel showed that there was a southwesternmonsoonatthetime.Normallyexpectedonseavoyages,however,weresuchmonsoons,duringwhichstrong windswerenotunusual.RosaS.Barba,weatherspecialistofthePhilippineAtmosphericGeophysicalandAstronomical Services Administration (PAGASA), testified that a thunderstorm might occur in the midst of a southwest monsoon. Accordingtoher,onedidoccurbetween8:00p.m.onJuly25,1990,and2a.m.onJuly26,1990,asrecordedbythe PAGASAWeatherBureau.22 Nonetheless,toourminditwouldnotbesufficienttocategorizetheweatherconditionatthetimeasa"storm"withinthe absolutorycausesenumeratedinthelaw.Significantly,notyphoonwasobservedwithinthePhilippineareaofresponsibility duringthatperiod.23 AccordingtoPAGASA,astormhasawindforceof48to55knots,24equivalentto55to63milesperhouror10to11inthe BeaufortScale.Thesecondmateofthevesselstatedthatthewindwasblowingaroundforce7to8ontheBeaufortScale.25 Consequently,thestrongwindsaccompanyingthesouthwesternmonsooncouldnotbeclassifiedasa"storm."Suchwinds aretheordinaryvicissitudesofaseavoyage.26 EveniftheweatherencounteredbytheshipistobedeemedanaturaldisasterunderArticle1739oftheCivilCode, petitionerfailedtoshowthatsuchnaturaldisasterorcalamitywastheproximateandonlycauseoftheloss.Humanagency mustbeentirelyexcludedfromthecauseofinjuryorloss.Inotherwords,thedamagingeffectsblamedontheeventor phenomenonmustnothavebeencaused,contributedto,orworsenedbythepresenceofhumanparticipation.27Thedefense offortuitouseventornaturaldisastercannotbesuccessfullymadewhentheinjurycouldhavebeenavoidedbyhuman precaution.28 Hence,ifacommoncarrierfailstoexerciseduediligenceorthatordinarycarethatthecircumstancesoftheparticular casedemandtopreventorminimizethelossbefore,duringandaftertheoccurrenceofthenaturaldisaster,thecarrier shallbedeemedtohavebeennegligent.Thelossorinjuryisnot,inalegalsense,duetoanaturaldisasterunderArticle 1734(1).29 WealsofindnoreasontodisturbtheCAsfindingthatthelossofthevesselwascausednotonlybythesouthwestern monsoon,butalsobytheshiftingofthelogsinthehold.Suchshiftingcouldbeendueonlytoimproperstowage.The assailedDecisionstated: "Notably,inMasterCahatolsaccount,thevesselencounteredthefirstsouthwesternmonsoonatabout1[0]:00in theevening.Themonsoonwascoupledwithheavyrainsandroughseasyetthevesselwithstoodtheonslaught.The secondmonsoonattackoccurredatabout12:00midnight.Duringthisoccasion,themasterfeltthatthelogsinthe
holdshifted,promptinghimtoordersecondmatePercivalDayanantolookatthebodega.Complyingwiththe captainsorder,2ndmatePercivalDayananfoundthattherewasseawaterinthebodega.2ndmateDayanans accountwas: 14.T Kunginyo pongnatatandaan ang mga pangyayari,maari mobang isalaysay ang naganap na paglubogsabarkongM/VCentralBohol? S Opo, noongika26 ngJulio1990 humigit kumulang alas 1:20 ngumaga (dst)habang kami ay nagnanabegarpatungongMaynilasatapatngCadlaoIslandatCauayanIslandsakopngElNido,Palawan, inutusanakoniCaptainEnriquitoCahatolnatingnankoangbodega;nangakoaynasabodega,nakitako ang loob nang bodega na maraming tubig at naririnig ko ang malakas na agos ng tubigdagat na pumapasoksaloobngbodegangbarko;agadbumalikakokayCaptainEnriquitoCahatolatsinabikoang malakas na pagpasok ng tubigdagat sa loob nang bodega ng barko na ito ay nakatagilid humigit kumulangsa020degrees,nagordersiCaptainCahatolnastandbyengineattinawaganglahatngmga officials at mga crew nang maipon kaming lahat ang barko ay nakatagilid at ito aytuloytuloy ang pagtatagilidnaangilansamgaofficialsaynakahawaknasabarandillangbarkoatdinagtagalsumigaw nangABANDO[N]SHIPsiCaptainCahatolatkamiaynagkanyakanyanangtalunanatlanguyansadagat namalakasangalonatnangakoaylumingonsabarkoitoaydikonanakita. "Additionally,[petitioners]ownwitnesses,boatswainEduardoViasCastroandoilerFrederickPerena,areonein sayingthatthevesselencounteredtwoweatherdisturbances,oneataround10oclockto11oclockintheevening andtheotherataround12oclockmidnight.Bothdisturbanceswerecoupledwithwavesandheavyrains,yet,the vesselenduredthefirstandnotthesecond.Why?Thereasonisplain.Thevesselfeltthestrainduringthesecond onslaughtbecausethelogsinthebodegashiftedandtherewerealreadyseawaterthatseepedinside."30 Theaboveconclusionissupportedbythefactthatthevesselproceededthroughthefirstsouthwesternmonsoonwithoutany mishap,andthatitbegantolistonlyduringthesecondmonsoonimmediatelyafterthelogshadshiftedandseawaterhad enteredthehold.Inthehold,thesloshingoftonsofwaterbackandforthhadcreatedpressuresthateventuallycausedthe shiptosink.Hadthelogsnotshifted,theshipcouldhavesurvivedandreachedatleasttheportofElNido.Infact,therewas anothermotorlaunchthathadbeenbuffetedbythesameweatherconditionwithinthesamearea,yetitwasabletoarrive safelyatElNido.31 InitsAnswer,petitionercategoricallyadmittedtheallegationofrespondentinparagraph5ofthelattersComplaint"[t]hat at about 0125 hours on 26 July 1990, while enroute to Manila, the M/V Central Bohol listed about 10 degrees starboardside,duetotheshiftingoflogsinthehold."Further,petitioneraverredthat"[t]hevessel,whilenavigatingthrough thissecondsouthwesternmonsoon,wasunderextremestress.Atabout0125hours,26July1990,athudwasheardinthe cargoholdandthelogsthereinwerefelttohaveshifted.Thevesselthereafterimmediatelylistedbyten(10)degrees starboardside."32 Yet,petitionernowclaimsthattheCAsconclusionwasgroundedonmerespeculationsandconjectures.Itallegesthatit wasimpossibleforthelogstohaveshifted,becausetheyhadfittedexactlyintheholdfromtheporttothestarboardside. Aftercarefullystudyingtherecords,weareinclinedtobelievethat thelogs didindeedshift,andthattheyhadbeen improperlyloaded. Accordingtotheboatswainstestimony,thelogswerepiledproperly,andtheentireshipmentwaslashedtothevesselby cablewire.33Theshipcaptaintestifiedthatoutofthe376piecesofroundlogs,around360hadbeenloadedinthelower holdofthevesseland16ondeck.Thelogsstoredinthelowerholdwerenotsecuredbycablewire,becausetheyfitted exactlyfromfloortoceiling.However,whiletheywereplacedsidebyside,therewereunavoidableclearancesbetweenthem owingtotheirroundshape.Thoseloadedondeckwerelashedtogetherseveraltimesacrossbycablewire,whichhada diameterof60millimeters,andweresecuredfromstarboardtoport.34 Itisobvious,asamatterofcommonsense,thatthemannerofstowageinthelowerholdwasnotsufficienttosecurethelogs intheeventtheshipshouldrollinheavyweather.Notably,theywereofdifferentlengthsrangingfrom3.7to12.7meters.35 Beingclearlypronetoshifting,theroundlogsshouldnothavebeenstowedwithnothingtoholdthemsecurelyinplace. Eachpileoflogsshouldhavebeenlashedtogetherbycablewire,andthewirefastenedtothesideofthehold.Considering thestrongforceofthewindandtherollofthewaves,theloosearrangementofthelogsdidnotruleoutthepossibilityof theirshifting.Byforceofgravity,thoseontopofthepilewouldnaturallyrolltowardsthebottomoftheship. TheadjustersReport,whichwasheavilyrelieduponbypetitionertostrengthenitsclaimthatthelogshadnotshifted,stated that"thelogswerestillproperlylashedbysteelchainsondeck."Parenthetically,thisstatementreferredonlytothoseloaded ondeckanddidnotmentionanythingabouttheconditionofthoseplacedinthelowerhold.Thus,thefindingofthe
surveyorthatthelogswerestillintactclearlypertainedonlytothoselashedondeck. TheevidenceindicatedthatstrongsouthwestmonsoonswerecommonoccurrencesduringthemonthofJuly.Thus,the officersandcrewofM/VCentralBoholshouldhavereasonablyanticipatedheavyrains,strongwindsandroughseas.They should then have taken extra precaution in stowing the logs in the hold, in consonance with their duty of observing extraordinarydiligenceinsafeguardingthegoods.Butthecarriertookacalculatedriskinimproperlysecuringthecargo. Havinglostthatrisk,itcannotnowescaperesponsibilityfortheloss. SecondIssue: DoctrineofLimitedLiability ThedoctrineoflimitedliabilityunderArticle587oftheCodeofCommerce36isnotapplicabletothepresentcase.This ruledoesnotapplytosituationsinwhichthelossortheinjuryisduetotheconcurrentnegligenceoftheshipownerandthe captain.37IthasalreadybeenestablishedthatthesinkingofM/VCentralBoholhadbeencausedbythefaultornegligence oftheshipcaptainandthecrew,asshownbytheimproperstowageofthecargooflogs."Closersupervisiononthepartof theshipownercouldhavepreventedthisfatalmiscalculation."38Assuch,theshipownerwasequallynegligent.Itcannot escapeliabilitybyvirtueofthelimitedliabilityrule. WHEREFORE,thePetitionisDENIED,andtheassailedDecisionandResolutionAFFIRMED.Costsagainstpetitioner. SOORDERED.
RepublicofthePhilippines SUPREMECOURT Manila THIRDDIVISION G.R.No.147079December21,2004 A.F.SANCHEZBROKERAGEINC.,petitioners, vs. THEHON.COURTOFAPPEALSandFGUINSURANCECORPORATION,respondents. DECISION CARPIOMORALES,J.: BeforethisCourtonapetitionforCertiorariistheappellatecourtsDecision1ofAugust10,2000reversingandsetting asidethejudgmentofBranch133,RegionalTrialCourtofMakatiCity,inCivilCaseNo.9376Bwhichdismissedthe complaintofrespondent FGUInsuranceCorporation(FGUInsurance)againstpetitionerA.F.SanchezBrokerage,Inc. (SanchezBrokerage). OnJuly8,1992,WyethPharmaGMBHshippedonboardanaircraftofKLMRoyalDutchAirlinesatDusseldorf,Germany oral contraceptives consisting of 86,800 Blisters Femenal tablets, 14,000 Blisters Nordiol tablets and 42,000 Blisters TrinordioltabletsfordeliverytoManilainfavoroftheconsignee,WyethSuacoLaboratories,Inc.2TheFemenaltablets wereplacedin124cartonsandtheNordioltabletswereplacedin20cartonswhichwerepackedtogetherinone(1)LD3 aluminumcontainer,whiletheTrinordialtabletswerepackedintwopallets,eachofwhichcontained30cartons.3 WyethSuacoinsuredtheshipmentagainstallriskswithFGUInsurancewhichissuedMarineRiskNoteNo.4995pursuant toMarineOpenPolicyNo.138.4 Uponarrivaloftheshipment onJuly11,1992attheNinoyAquinoInternational Airport (NAIA),5itwasdischarged "withoutexception"6anddeliveredtothewarehouseofthePhilippineSkylanders,Inc.(PSI)locatedalsoattheNAIAfor safekeeping.7 InordertosecurethereleaseofthecargoesfromthePSIandtheBureauofCustoms,WyethSuacoengagedtheservicesof SanchezBrokeragewhichhadbeenitslicensedbrokersince1984.8Asitscustomsbroker,SanchezBrokeragecalculates andpaysthecustomsduties,taxesandstoragefeesforthecargoandthereafterdeliversittoWyethSuaco.9 On July 29, 1992, Mitzi Morales and Ernesto Mendoza, representatives of Sanchez Brokerage, paid PSI storage fee amounting to P8,572.35 a receipt for which, Official Receipt No. 016992,10 was issued. On the receipt, another representativeofSanchezBrokerage,M.Sison,11acknowledgedthathereceivedthecargoesconsistingofthreepiecesin goodcondition.12 WyethSuacobeingaregularimporter,thecustomsexaminerdidnotinspectthecargoes13whichwerethereuponstripped fromthealuminumcontainers14andloadedinsidetwotransportvehicleshiredbySanchezBrokerage.15 AmongthosewhowitnessedthereleaseofthecargoesfromthePSIwarehousewereRubenAlonsoandTonyAkas,16 employees of Elite Adjusters and Surveyors Inc. (Elite Surveyors), a marine and cargo surveyor and insurance claim adjustersfirmengagedbyWyethSuacoonbehalfofFGUInsurance. UponinstructionsofWyethSuaco,thecargoesweredeliveredtoHizonLaboratories Inc.inAntipoloCityforquality controlcheck.17Thedeliveryreceipt,bearingNo.07037datedJuly29,1992,indicatedthatthedeliveryconsistedofone containerwith144cartonsofFemenalandNordioland1palletcontainingTrinordiol.18 OnJuly31,1992,RonnieLikas,arepresentativeofWyethSuaco,acknowledgedthedeliveryofthecargoesbyaffixinghis signature on the delivery receipt.19 Upon inspection, however, he, together with Ruben Alonzo of Elite Surveyors, discoveredthat44cartonscontainingFemenalandNordioltabletswereinbadorder.20Hethusplacedanoteabovehis signatureonthedeliveryreceiptstatingthat44cartonsoforalcontraceptiveswereinbadorder.Theremaining160cartons oforalcontraceptiveswereacceptedascompleteandingoodorder. RubenAlonzothuspreparedandsigned,alongwithRonnieLikas,asurveyreport21datedJuly31,1992statingthat41 cartonsofFemenaltabletsand3cartonsofNordioltabletswere"wetted"(sic).22 TheEliteSurveyorslaterissuedCertificateNo.CS07311538/9223attachedtowhichwasan"AnnexedSchedule"whereon itwasindicatedthatpriortotheloadingofthecargoestothebrokerstrucksattheNAIA,theywereinspectedandfoundto bein"apparentgoodcondition."24AlsonotedwasthatatthetimeofdeliverytothewarehouseofHizonLaboratoriesInc.,
slighttoheavyrainsfell,whichcouldaccountforthewettingofthe44cartonsofFemenalandNordioltablets.25 OnAugust4,1992,theHizonLaboratoriesInc.issuedaDestructionReport26confirmingthat38x700blisterpacksof Femenaltablets,3x700blisterpacksofFemenaltabletsand3x700blisterpacksofNordioltabletswereheavilydamaged withwaterandemittedfoulsmell. OnAugust5,1992,WyethSuacoissuedaNoticeofMaterialsRejection27of38cartonsofFemenaland3cartonsof Nordiolonthegroundthattheywere"deliveredtoHizonLaboratorieswithheavywaterdamaged(sic)causingthecartons tosagged(sic)emittingafoulorderandeasilyattractedflies."28 WyethSuaco later demanded, by letter29 of August 25, 1992, from Sanchez Brokerage the payment of P191,384.25 representingthevalueofitslossarisingfromthedamagedtablets. AstheSanchezBrokeragerefusedtoheedthedemand,WyethSuacofiledaninsuranceclaimagainstFGUInsurancewhich paidWyethSuacotheamountofP181,431.49insettlementofitsclaimunderMarineRiskNoteNumber4995. WyethSuacothusissuedSubrogationReceipt30infavorofFGUInsurance. OndemandbyFGUInsuranceforpaymentoftheamountofP181,431.49itpaidWyethSuaco,SanchezBrokerage,by letter31ofJanuary7,1993,disclaimedliabilityforthedamagedgoods,positingthatthedamagewasduetoimproperand insufficientexportpackaging;thatwhenthesealedcontainerswereopenedoutsidethePSIwarehouse,itwasdiscovered that someoftheloosecartons werewet,32promptingits(SanchezBrokerages)representativeMorales toinformthe ImportExportAssistantofWyethSuaco,RamirCalicdan,abouttheconditionofthecargoesbutthatthelatteradvisedto stilldeliverthemtoHizonLaboratorieswhereanadjusterwouldassessthedamage.33 Hence,thefilingbyFGUInsuranceofacomplaintfordamagesbeforetheRegionalTrialCourtofMakatiCityagainstthe SanchezBrokerage. Thetrialcourt,byDecision34ofJuly29,1996,dismissedthecomplaint,holdingthattheSurveyReportpreparedbythe EliteSurveyorsisbereftofanyevidentiarysupportandamereproductofpureguesswork.35 Onappeal,theappellatecourtreversedthedecisionofthetrialcourt,itholdingthattheSanchezBrokerageengagednot onlyinthebusinessofcustomsbrokeragebutalsointhetransportationanddeliveryofthecargoofitsclients,hence,a commoncarrierwithinthecontextofArticle1732oftheNewCivilCode.36 NotingthatWyethSuacoadducedevidencethatthecargoesweredeliveredtopetitioneringoodorderandconditionbut wereinadamagedstatewhendeliveredtoWyethSuaco,theappellatecourtheldthatSanchezBrokerageispresumed negligentanduponitrestedtheburdenofprovingthatitexercisedextraordinarynegligencenotonlyininstanceswhen negligenceisdirectlyprovenbutalsointhosecaseswhenthecauseofthedamageisnotknownorunknown.37 Theappellatecourtthusdisposed: INTHELIGHTOFALLTHEFOREGOING,theappealoftheAppellantisGRANTED.TheDecisionofthe Court a quo is REVERSED. Another Decision is hereby rendered in favor of the Appellant and against the Appelleeasfollows: 1.TheAppelleeisherebyorderedtopaytheAppellanttheprincipalamountofP181,431.49,withinterest thereuponattherateof6%perannum,fromthedateoftheDecisionoftheCourt,untilthesaidamountis paidinfull; 2.TheAppelleeisherebyorderedtopaytotheAppellanttheamountofP20,000.00asandbywayof attorneysfees;and 3.ThecounterclaimsoftheAppelleeareDISMISSED.38 SanchezBrokeragesMotionforReconsiderationhavingbeendeniedbytheappellatecourtsResolutionofDecember8, 2000whichwasreceivedbypetitioneronJanuary5,2001,itcomestothisCourtonpetitionforcertiorarifiledonMarch6, 2001. Inthemain,petitionerassertsthattheappellatecourtcommittedgraveandreversibleerrortantamounttoabuseofdiscretion whenitfoundpetitionera"commoncarrier"withinthecontextofArticle1732oftheNewCivilCode. RespondentFGUInsuranceaversinitsCommentthatthepropercourseofactionwhichpetitionershouldhavetakenwasto fileapetitionforreviewoncertiorarisincethesoleofficeofawritofcertiorariisthecorrectionoferrorsofjurisdiction includingthecommissionofgraveabuseofdiscretionamountingtolackorexcessofjurisdictionanddoesnotinclude correctionoftheappellatecourtsevaluationoftheevidenceandfactualfindingsthereon. Onthemerits,respondentFGUInsurancecontendsthatpetitioner,asacommoncarrier,failedtoovercomethepresumption ofnegligence,itbeingdocumentedthatpetitionerwithdrewfromthewarehouseofPSIthesubjectshipmententirelyin goodorderandcondition.39 Thepetitionfails.
Rule45isclearthatdecisions,finalordersorresolutionsoftheCourtofAppealsinanycase,i.e.,regardlessofthenatureof theactionorproceedingsinvolved,maybeappealedtothisCourtbyfilingapetitionforreview,whichwouldbebuta continuationoftheappellateprocessovertheoriginalcase.40 TheResolutionoftheCourtofAppealsdatedDecember8,2000denyingthemotionforreconsiderationofitsDecisionof August10,2000wasreceivedbypetitioneronJanuary5,2001.Sincepetitionerfailedtoappealwithin15daysoronor beforeJanuary20,2001,theappellatecourtsdecisionhadbecomefinalandexecutory.Thefilingbypetitionerofapetition forcertiorarionMarch6,2001cannotserveasasubstituteforthelostremedyofappeal. Inanothervein,theruleiswellsettledthatinapetitionforcertiorari,thepetitionermustprovenotmerelyreversibleerror butalsograveabuseofdiscretionamountingtolackorexcessofjurisdiction. Petitionerallegesthattheappellatecourterredinreversingandsettingasidethedecisionofthetrialcourtbasedonits findingthatpetitionerisliableforthedamagetothecargoasacommoncarrier.Whatpetitionerisascribingisanerrorof judgment,notofjurisdiction,whichisproperlythesubjectofanordinaryappeal. Wheretheissueorquestioninvolvesoraffectsthewisdomorlegalsoundnessofthedecisionnotthejurisdictionofthe courttorendersaiddecisionthesameisbeyondtheprovinceofapetitionforcertiorari.41Thesupervisoryjurisdictionof thisCourt toissueacert writ cannotbeexercisedinordertoreviewthejudgment oflowercourtsas toitsintrinsic correctness,eitheruponthelaworthefactsofthecase.42 Proceduraltechnicalitiesaside,thepetitionstillfails. Theappellatecourtdidnoterrinfindingpetitioner,acustomsbroker,tobealsoacommoncarrier,asdefinedunderArticle 1732oftheCivilCode,towit: Art.1732.Commoncarriersarepersons,corporations,firmsorassociationsengagedinthebusinessofcarryingor transportingpassengersorgoodsorboth,byland,water,orair,forcompensation,offeringtheirservicestothe public. AnacletoF.Sanchez,Jr.,theManagerandPrincipalBrokerofSanchezBrokerage,himselftestifiedthattheservicesthe firmoffersincludethedeliveryofgoodstothewarehouseoftheconsigneeorimporter. ATTY.FLORES: Q:Whatarethefunctionsoftheselicensebrokers,licensecustomsbroker? WITNESS: Ascustomsbroker,wecalculatethetaxesthathastobepaidincargos,andthoseuponapprovaloftheimporter,we preparetheentrytogetherforprocessingandclaimsfromcustomsandfinallydeliverthegoodstothewarehouseof theimporter.43 Article1732doesnotdistinguishbetweenonewhoseprincipalbusinessactivityisthecarryingofgoodsandonewhodoes suchcarryingonlyasanancillaryactivity.44Thecontention,therefore,ofpetitionerthatitisnotacommoncarrierbuta customsbrokerwhoseprincipalfunctionistopreparethecorrectcustomsdeclarationandpropershippingdocumentsas requiredbylawisbereftofmerit.Itsufficesthatpetitionerundertakestodeliverthegoodsforpecuniaryconsideration. Inthislight,petitionerasacommoncarrierismandatedtoobserve,underArticle173345oftheCivilCode,extraordinary diligenceinthevigilanceoverthegoodsittransportsaccordingtoallthecircumstancesofeachcase.Intheeventthatthe goodsarelost,destroyedordeteriorated,itispresumedtohavebeenatfaultortohaveactednegligently,unlessitproves thatitobservedextraordinarydiligence.46 Theconceptof"extraordinarydiligence"wasexplainedinCompaniaMaritimav.CourtofAppeals:47 Theextraordinarydiligenceinthevigilanceoverthegoodstenderedforshipmentrequiresthecommoncarrierto knowandtofollowtherequiredprecautionforavoidingdamageto,ordestructionofthegoodsentrustedtoitfor sale,carriageanddelivery.Itrequirescommoncarrierstorenderservicewiththegreatestskillandforesightand "touseallreasonablemeanstoascertainthenatureandcharacteristicsofgoodstenderedforshipment,andto exerciseduecareinthehandlingandstowage,includingsuchmethodsastheirnaturerequires."48 Inthecaseatbar,itwasestablishedthatpetitionerreceivedthecargoesfromthePSIwarehouseinNAIAingoodorderand condition;49andthatupondeliverybypetitionertoHizonLaboratoriesInc.,someofthecargoeswerefoundtobeinbad order,asnotedintheDeliveryReceipt50issuedbypetitioner,andasindicatedintheSurveyReportofEliteSurveyors51 andtheDestructionReportofHizonLaboratories,Inc.52 Inanattempttofreeitselffromresponsibilityforthedamagetothegoods,petitionerpositsthattheyweredamageddueto thefaultornegligenceoftheshipperforfailingtoproperlypackthemandtotheinherentcharacteristicsofthegoods53;and thatitshouldnotbefaultedforfollowingtheinstructionsofCalicdanofWyethSuacotoproceedwiththedeliverydespite informationconveyedtothelatterthatsomeofthecartons,onexaminationoutsidethePSIwarehouse,werefoundtobe
wet.54 WhileparagraphNo.4ofArticle173455oftheCivilCodeexemptsacommoncarrierfromliabilityifthelossordamageis duetothecharacterofthegoodsordefectsinthepackingorinthecontainers,theruleisthatiftheimproperpackingis knowntothecarrierorhisemployeesorisapparentuponordinaryobservation,butheneverthelessacceptsthesame withoutprotestorexceptionnotwithstandingsuchcondition,heisnotrelievedofliabilityfortheresultingdamage.56 Iftheclaimofpetitionerthatsomeofthecartonswerealreadydamagedupondeliverytoitweretrue,thenitshould naturallyhavereceivedthecargounderprotestorwithreservationsdulynotedonthereceiptissuedbyPSI.Butitmadeno suchprotestorreservation.57 Moreover,asobservedbytheappellatecourt,ifindeedpetitionersemployeesonlyexaminedthecargoesoutsidethePSI warehouseandfoundsometobewet,theywouldcertainlyhavegonebacktoPSI,showedtothewarehousemanthedamage, anddemandedthenandthereforBadOrderdocumentsoracertificationconfirmingthedamage.58Or,petitionerwould havepresented,aswitness,theemployeesofthePSIfromwhomMoralesandDomingotookdeliveryofthecargotoprove that,indeed,partofthecargoeswasalreadydamagedwhenthecontainerwasallegedlyopenedoutsidethewarehouse.59 PetitionergoesontopositthatcontrarytothereportofEliteSurveyors,norainfellthatday.Instead,itassertsthatsomeof thecargoeswerealreadywetondeliverybyPSIoutsidethePSIwarehousebutsuchnotwithstandingCalicdandirected MoralestoproceedwiththedeliverytoHizonLaboratories,Inc. WhileCalicdantestifiedthathereceivedthepurportedtelephonecallofMoralesonJuly29,1992,hefailedtospecifically declarewhattimehereceivedthecall.AstowhetherthecallwasmadeatthePSIwarehousewhentheshipmentwas strippedfromtheairportcontainers,orwhenthecargoeswerealreadyintransittoAntipolo,itisnotdeterminable.Aside fromthatphonecall,petitioneradmittedthatithadnodocumentaryevidencetoprovethatatthetimeitreceivedthe cargoes,apartofitwaswet,damagedorinbadcondition.60 The4pageweatherdatafurnishedbyPAGASA61onrequestofSanchezBrokeragehardlyimpresses,nowitnesshaving identifieditandinterpretedthetechnicaltermsthereof. Thepossibilityontheotherhandthat,asfoundbyHizonLaboratories,Inc.,theoralcontraceptivesweredamagedby rainwaterwhileintransittoAntipoloCityismorelikelythen.Sanchezhimselftestifiedthatinthepast,therewasasimilar instancewhentheshipmentofWyethSuacowasalsofoundtobewetbyrain. ATTY.FLORES: Q:Was thereanyinstancethat ashipmentofthisnature,oral contraceptives,that arrivedat theNAIAwere damagedandclaimedbytheWyethSuacowithoutanyquestion? WITNESS: A:Yessir,therewasaninstancethatonecartoon(sic)werewetted(sic)butWyethSuacodidnotclaimanything againstus. ATTY.FLORES: Q:HOWISIT? WITNESS: A:Weexperienced,therewasatimethatweexperiencedthattherewasacartoon(sic)wetted(sic)uptothe bottomarewetspeciallyduringrainyseason.62 Since petitioner received all the cargoes in good order and condition at the time they were turned over by the PSI warehouseman,andupontheirdeliverytoHizonLaboratories,Inc.aportionthereofwasfoundtobeinbadorder,itwas incumbentonpetitionertoprovethatitexercisedextraordinarydiligenceinthecarriageofthegoods.Itdidnot,however. Hence,itspresumednegligenceunderArticle1735oftheCivilCoderemainsunrebutted. WHEREFORE,theAugust10,2000DecisionoftheCourtofAppealsisherebyAFFIRMED. Costsagainstpetitioner. SOORDERED. Panganiban, (Chairman), SandovalGutierrez, and Garcia, JJ., concur. Corona,J.,onleave.
RepublicofthePhilippines SUPREMECOURT Manila FIRSTDIVISION G.R.No.161730January28,2005 JAPANAIRLINES,petitioner, vs. MICHAELASUNCIONandJEANETTEASUNCION,respondents. DECISION YNARESSANTIAGO,J.: ThispetitionforreviewseekstoreverseandsetasidetheOctober9,2002decision1oftheCourtofAppealsanditsJanuary 12,2004resolution,2whichaffirmedintototheJune10,1997decisionoftheRegionalTrialCourtofMakatiCity,Branch 61inCivilCaseNo.923635.3 OnMarch27,1992,respondentsMichaelandJeanetteAsuncionleftManilaonboardJapanAirlines(JAL)Flight742 boundforLosAngeles.TheiritineraryincludedastopoverinNaritaandanovernightstayatHotelNikkoNarita.Upon arrivalatNarita,Mrs.NorikoEtouHiguchiofJALendorsedtheirapplicationsforshorepassanddirectedthemtothe Japaneseimmigrationofficial.4Ashorepassisrequiredofaforeigneraboardavesseloraircraftwhodesirestostayinthe neighborhoodoftheportofcallfornotmorethan72hours. Duringtheirinterview,theJapaneseimmigrationofficialnotedthatMichaelappearedshorterthanhisheightasindicatedin hispassport.Becauseofthisinconsistency,respondentsweredeniedshorepassentriesandwerebroughtinsteadtothe NaritaAirportRestHousewheretheywerebilletedovernight. TheimmigrationofficialalsohandedMrs.HiguchiaNotice5whereitwasstatedthatrespondentsweretobe"watchedsoas nottoescape". Mr.AtsushiTakemotooftheInternationalServiceCenter(ISC),theagencytaskedbyJapansImmigrationDepartmentto handlepassengerswhoweredeniedshorepassentries,broughtrespondentstotheNaritaAirportRestHousewherethey stayedovernightuntiltheirdeparturethefollowingdayforLosAngeles.RespondentswerechargedUS$400.00eachfor theiraccommodation,securityserviceandmeals. OnDecember12,1992,respondentsfiledacomplaintfordamages6claimingthatJALdidnotfullyapprisethemoftheir travelrequirementsandthattheywererudelyandforciblydetainedatNaritaAirport. JALdeniedtheallegationsofrespondents.ItmaintainedthattherefusaloftheJapaneseimmigrationauthoritiestoissue shorepassestorespondentsisanactofstatewhichJALcannotinterferewithorprevailupon.Consequently,itcannot imposeupontheimmigrationauthoritiesthatrespondentsbebilletedatHotelNikkoinsteadoftheairportresthouse.7 OnJune10,1997,thetrialcourtrendereditsdecision,thedispositiveportionofwhichreads: WHEREFOREPREMISESCONSIDERED,judgmentisherebyrenderedinfavorofplaintiffsorderingdefendantJALto payplaintiffsasfollows: 1.thesumofUS$800.00representingtheexpensesincurredattheNaritaAirportwithinterestat12%perannum fromMarch27,1992untilthesumisfullypaid; 2.thesumofP200,000.00foreachplaintiffasmoraldamages; 3.theamountofP100,000.00foreachplaintiffasexemplarydamages; 4.theamountofP100,000.00asattorneysfees;and 5.costsofsuit. SOORDERED.8 ThetrialcourtdismissedJALscounterclaimforlitigationexpenses,exemplarydamagesandattorneysfees. OnOctober9,2002,theCourtofAppealsaffirmedintotothedecisionofthetrialcourt.Itsmotionforreconsideration havingbeendenied,9JALnowfilestheinstantpetition. ThebasicissueforresolutioniswhetherJALisguiltyofbreachofcontract. UnderArticle1755oftheCivilCode,acommoncarriersuchasJALisboundtocarryitspassengerssafelyasfarashuman care and foresight can provide, using the utmost diligence of very cautious persons, with due regard for all the circumstances.Whenanairlineissuesatickettoapassenger,confirmedforaparticularflightonacertaindate,acontractof
carriagearises.Thepassengerhaseveryrighttoexpectthathebetransportedonthatflightandonthatdateanditbecomes thecarriersobligationtocarryhimandhisluggagesafelytotheagreeddestination.10Ifthepassengerisnotsotransported orifintheprocessoftransportinghediesorisinjured,thecarriermaybeheldliableforabreachofcontractofcarriage.11 WefindthatJALdidnotbreachitscontractofcarriagewithrespondents.ItmaybetruethatJALhasthedutytoinspect whetheritspassengershavethenecessarytraveldocuments,however,suchdutydoesnotextendtocheckingtheveracityof everyentryinthesedocuments.JALcouldnotvouchfortheauthenticityofapassportandthecorrectnessoftheentries therein.ThepowertoadmitornotanalienintothecountryisasovereignactwhichcannotbeinterferedwithevenbyJAL. ThisisnotwithintheambitofthecontractofcarriageenteredintobyJALandhereinrespondents.Assuch,JALshouldnot befaultedforthedenialofrespondentsshorepassapplications. Priortotheirdeparture,respondentswereawarethatuponarrivalinNarita,theymustsecureshorepassentriesfortheir overnightstay.Respondentsmother,Mrs.ImeldaAsuncion,insistedthoughthatMs.LindaVillavicencioofJALassured her that her children would be granted the passes.12 This assertion was satisfactorily refuted by Ms. Villavicencios testimonyduringthecrossexamination,towit: ATTY.GONZAGA: QIwillshowtoyouExh.9whichistheTIMandonpage184hereof,particularlynumber10,andIquote,"Those holdingticketswithconfirmedseatsandotherdocumentsfortheironwardjourneyandcontinuingtheirjourneyto athirdcountryprovidedthattheyobtainanindorsementwithanapplicationofshorepassortransitpassfromthe airlinegroundpersonnelbeforeclearingtheimmigrationformality?" WITNESS: AYes,Sir. QDidyoutellthisprovisiontoMrs.Asuncion? AYes,Sir.Idid. QAreyousure? AYes,Sir. QDidyougiveacopy? ANo,Sir,IdidnotgiveacopybutverballyIexplainedtohertheproceduretheyhavetoundergowhentheygetto naritaairport. . QAndyoureadthecontentsofthis[TIM]? ANo,Sir,IdidnotreadittoherbutIexplainedtohertheprocedurethateachpassengerhastogothroughbefore whentheygettonaritaairportbeforetheylineupintheimmigrationcounter. QInotherwords,youtoldMrs.Asunciontheresponsibilityofsecuringshorepassesbearssolelyonthepassengers only? AYes,Sir. QThattheairlinehasnoresponsibilitywhatsoeverwithregards(sic)totheapplicationforshorepasses? AYes,Sir.13 Next,respondentsclaimedthatpetitionerbreacheditscontractofcarriagewhenitfailedtoexplaintotheimmigration authoritiesthattheyhadovernightvouchersattheHotelNikkoNarita.TheyimputedthatJALdidnotexhaustallmeansto preventthedenialoftheirshorepassentryapplications. Toreiterate,JALoranyofitsrepresentativeshavenoauthoritytointerferewithorinfluencetheimmigrationauthorities. ThemostthatcouldbeexpectedofJAListoendorserespondentsapplications,whichMrs.Higuchididimmediatelyupon theirarrivalinNarita. AsMrs.Higuchistatedduringherdeposition: ATTY.QUIMBO Q:MadamWitness,whatassistancedidyougive,ifany,totheplaintiffsduringthisinterview? A:No,Iwasnotpresentduringtheirinterview.Icannotassist. Q:Whynot? A:ItisforbiddenforacivilianpersonneltointerferewiththeImmigrationagentsduties.14 . Q:Duringthetimethatyouwereinthatroomandyouweregiventhisnoticeforyoutosign,didyoutellthe immigrationagentthatMichaelandJeanetteAsuncionshouldbeallowedtostayattheHotelNikkoNaritabecause, aspassengersofJAL,andaccordingtotheplaintiff,theyhadvoucherstostayinthathotelthatnight?
A:No,Icouldntdoso. Q:Whynot? A:Thisnoticeisevidencewhichshowsthedecisionofimmigrationauthorities.Itshowstherethattheimmigration inspectoralsodesignatedRoom304oftheNaritaAirportResthouseastheplacewherethepassengersweregoing towaitfortheiroutboundflight.1awphi1.ntIcannotinterferewiththatdecision.15 Mrs.Higuchididallshecouldtoassisttherespondents.Uponbeingnotifiedofthedenialofrespondentsapplications,Mrs. HiguchiimmediatelymadereservationsforrespondentsattheNaritaAirportRestHousewhichisreallymoreahotelthana detentionhouseasclaimedbyrespondents.16 Moreimportantly,nowhereinrespondentMichaelstestimonydidhestatecategoricallythatMrs.Higuchioranyother employeeofJALtreatedthemrudelyorexhibitedimproperbehaviorthroughouttheirstay.WethereforefindJALnotremiss initsobligationsasacommoncarrier.1awphi1.nt Moraldamagesmayberecoveredincaseswhereonewillfullycausesinjurytoproperty,orincasesofbreachofcontract wheretheotherpartyactsfraudulentlyorinbadfaith.Exemplarydamagesareimposedbywayofexampleorcorrectionfor thepublicgood,whenthepartytoacontractactsinwanton,fraudulent,oppressiveormalevolentmanner.Attorneysfees areallowedwhenexemplarydamagesareawardedandwhenthepartytoasuitiscompelledtoincurexpensestoprotecthis interest.17TherebeingnobreachofcontractnorproofthatJALactedinwanton,fraudulentormalevolentmanner,thereis nobasisfortheawardofanyformofdamages. NeithershouldJALbeheldliabletoreimburserespondentstheamountofUS$800.00.Ithasbeensufficientlyproventhat theamountpertainedtoISC,anagencyseparateanddistinctfromJAL,inpaymentfortheaccommodationsprovidedto respondents.ThepaymentsdidnotinanymanneraccruetothebenefitofJAL. However,wefindthattheCourtofAppeals correctlydismissedJALscounterclaimforlitigationexpenses,exemplary damages and attorneys fees. The action was filed by respondents in utmost good faith and not manifestly frivolous. RespondentshonestlybelievedthatJALbreacheditscontract.Apersonsrighttolitigateshouldnotbepenalizedbyholding himliablefordamages.Thisisespeciallytruewhenthefilingofthecaseistoenforcewhathebelievestobehisrightful claimagainstanotheralthoughfoundtobeerroneous.18 WHEREFORE,inviewoftheforegoing,theinstantpetitionisPARTLYGRANTED.TheOctober9,2002decisionofthe CourtofAppealsanditsJanuary12,2004resolutioninCAG.R.CVNo.57440,areREVERSEDandSETASIDEinsofar asthefindingofbreachonthepartofpetitionerandtheawardofdamages,attorneysfeesandcostsofthesuitinfavorof respondentsisconcerned.Accordingly,therebeingnobreachofcontractonthepartofpetitioner,theawardofactual,moral andexemplarydamages,as wellas attorneys fees andcosts ofthesuit infavorofrespondentsMichael andJeanette Asuncion,isDELETEDforlackofbasis.However,thedismissalforlackofmeritofpetitionerscounterclaimforlitigation expenses,exemplarydamagesandattorneysfees,isSUSTAINED.Nopronouncementastocosts. SOORDERED. Davide,Jr.,C.J.,(Chairman),Carpio,andAzcuna,JJ.,concur. Quisumbing,J.,nopart.
RepublicofthePhilippines SUPREMECOURT Manila SECONDDIVISION G.R.No.149749July25,2006 AGAPITADIAZ,petitioner, vs. COURTOFAPPEALS;HEIRSOFSHERLYMONEO,1namely:MAMERTAC.MONEO,JASPHINM.VILLAMIL, WHELHELMIA M. DECARO, EDDIE MONEO, GININA M. DAQUIPIL, FERNAN C. MONEO, ARLENE C. MONEO, RICHARD C. MONEO and NIKKI C. MONEO, represented by EDDIE C. MONEO; TEODORO LANTORIAandROGELIOFRANCISCO,respondents. RESOLUTION CORONA,J.: InthispetitionforcertiorariunderRule65oftheRulesofCourt,petitionerimputesgraveabuseofdiscretiontotheCourt ofAppealsvisavisitsMay30,2001decision2inCAG.R.CVNo.67017,thedispositiveportionofwhichread: WHEREFORE,premisesconsidered,thepresentappealisherebyDISMISSEDforlackofmerit.TheDecision (Judgment)datedOctober29,1999oftheRegionalTrialCourtofMalaybalayCity,Bukidnon,Branch10inCivil CaseNo.258695isherebyAFFIRMEDandREITERATED.3 Thefactsfollow. PetitionerAgapitaDiazoperatedacommoncarrier,aTamarawFXtaxiplyingtherouteofCagayandeOroCitytoanypoint inRegion10.OnJuly20,1996,petitionerstaxi,drivenbyoneArmanRetes,wasmovingatanexcessivespeedwhenit rammedintotherearportionofaHinocargotruckownedbyprivaterespondentTeodoroLantoriaanddrivenbyprivate respondentRogelioFrancisco.Asaresult,ninepassengersofthetaxidiedincludingSherlyMoneo. OnAugust13,1996,theheirsofSherlyMoneo4filedwiththeRegionalTrialCourtofMalaybalayCity,Branch10,5an actionforbreachofcontractofcarriageanddamages6againstpetitionerandherdriver,ArmanRetes. Onmotion,7petitionerfiledathirdpartycomplaintagainstprivaterespondentsTeodorioLantoriaandRogelioFrancisco.8 ThepretrialconferencewasinitiallysetonJuly11,1998butwasresettoJuly30,1998forpetitionerandhercounsels failuretoappear9despiteduenotice.Registryreceiptnumber0436410showedthatnoticehadbeensenttopetitioners counsel,Atty.CiprianoLupeba.11Onscheduleddate,petitionerandhercounselagainfailedtoappear,promptingthecourt toallowprivaterespondentstopresentevidenceexparte. Morethansevenmonthsaftertheconclusion12ofprivaterespondentsexpartepresentationofevidence,petitionerfileda motionforleavetopresentevidenceonherdefenseandthirdpartycomplaint.13Thetrialcourtdeniedthis.14 OnOctober29,1999,thetrialcourtrenderedadecisionholdingpetitionerandArmanRetesjointlyandseverallyliableto payprivaterespondentheirsofSherlyMoneoP50,000forherdeath,P50,000asmoraldamages,P20,000asexemplary damagesandP20,000asattorneysfees.15 Onappeal,thetrialcourtsdecisionwasaffirmedbytheCourtofAppealsintheassailedMay30,2001decision.16The motionforreconsiderationwasdenied.17Hence,thisrecourse. Theissuesraisedbypetitionerare: 1)whetherornottheCourtofAppealscommittedgraveabuseofdiscretioninaffirmingthetrialcourtsdecision denyingpetitionersmotionforleavetopresentevidenceonherdefenseandthirdpartycomplaint,and 2)whetherornottheCourtofAppealscommittedgraveabuseofdiscretioninaffirmingthetrialcourtsdecision holdingpetitionerliableforbreachofcontract. Thepetitionlacksmerit. First,Section3,Rule18oftheRulesofCourtstatesthat: Thenoticeofpretrialshallbeservedoncounsel,oronthepartywhohasnocounsel.Thecounselservedwith suchnoticeischargedwiththedutyofnotifyingthepartyrepresentedbyhim. PetitionerwasrepresentedbyAtty.CiprianoLupebatowhomthenoticewassent.18Itwasincumbentonthelattertoadvise petitioneraccordingly.Hisfailuretodosoconstitutednegligencewhichboundpetitioner. Further,Sections4and5ofRule18read:
Sec.4.AppearanceofParties.Itshallbethedutyofthepartiesandtheircounseltoappearatthepretrial.The nonappearanceofthepartymaybeexcusedonlyifavalidcauseisshownthereforeorifarepresentativeshall appearinhisbehalffullyauthorizedinwritingtoenterintoanamicablesettlement,tosubmittoalternativemodes ofdisputeresolution,andtoenterintostipulationsoradmissionsoffactsandofdocuments. Sec.5.Effectoffailuretoappear.Thefailureoftheplaintifftoappearwhensorequiredpursuanttothenext precedingsectionshallbecauseforthedismissaloftheaction.Thedismissalshallbewithprejudice,unless otherwiseorderedbythecourt.Asimilarfailureonthedefendantshallbecausetoallowtheplaintifftopresenthis evidenceexparteandthecourttorenderjudgmentonthebasisthereof. Consequently,itwasnoerrorforthetrial court toallowprivaterespondents topresent theirevidenceexpartewhen petitionerandhercounselfailedtoappearforthescheduledpretrialconference. Second,"acommoncarrierisboundtocarrythepassengerssafelyasfarashumancareandforesightcanprovide,usingthe utmostdiligenceofverycautiouspersons,withadueregardforallthecircumstances."19 Inacontractofcarriage,itispresumedthatthecommoncarrierisatfaultorisnegligentwhenapassengerdiesoris injured.Infact,thereisevennoneedforthecourttomakeanexpressfindingoffaultornegligenceonthepartofthe commoncarrier.Thisstatutorypresumptionmayonlybeovercomebyevidencethatthecarrierexercisedextraordinary diligence.20 In the case at bar, petitioner, as common carrier, failed to establish sufficient evidence to rebut the presumption of negligence.Thefindingsofthetrialcourt,asaffirmedbytheCourtofAppeals,showedthattheaccidentwhichledtothe deathofSherlyMoneowascausedbytherecklessspeedandgrossnegligenceofpetitionersdriverwhodemonstratedno regardforthesafetyofhispassengers.21Itwasthuscorrecttoholdpetitionerguiltyofbreachofthecontractofcarriage. WHEREFORE,thispetitionisherebyDISMISSED. Costsagainstpetitioner. SOORDERED. Puno,Chairperson,SandovalGutierrez,Azcuna,Garcia,J.J.,concur.
RepublicofthePhilippines SUPREMECOURT Manila FIRSTDIVISION G.R.No.150403January25,2007 CEBUSALVAGECORPORATION,Petitioner, vs. PHILIPPINEHOMEASSURANCECORPORATION,Respondent. DECISION CORONA,J.: Mayacarrierbeheldliableforthelossofcargoresultingfromthesinkingofashipitdoesnotown? ThisistheissuepresentedfortheCourtsresolutioninthispetitionforreviewoncertiorari1assailingtheMarch16,2001 decision2andSeptember17,2001resolution3oftheCourtofAppeals(CA)inCAG.R.CVNo.40473whichinturn affirmedtheDecember27,1989decision4oftheRegionalTrialCourt(RTC),Branch145,Makati,MetroManila.5 Thepertinentfactsfollow. OnNovember12,1984,petitionerCebuSalvageCorporation(ascarrier)andMariaCristinaChemicalsIndustries,Inc. [MCCII](ascharterer)enteredintoavoyagecharter6whereinpetitionerwastoload800to1,100metrictonsofsilicaquartz onboardtheM/TEspirituSanto7atAyungon,NegrosOccidentalfortransporttoanddischargeatTagoloan,Misamis OrientaltoconsigneeFerrochromePhils.,Inc.8 Pursuanttothecontract,onDecember23,1984,petitionerreceivedandloaded1,100metrictonsofsilicaquartzonboard theM/TEspirituSantowhichleftAyungonforTagoloanthenextday.9Theshipmentneverreacheditsdestination,however, becausetheM/TEspirituSantosankintheafternoonofDecember24,1984offthebeachofOpol,MisamisOriental, resultinginthetotallossofthecargo.10 MCCIIfiledaclaimforthelossoftheshipmentwithitsinsurer,respondentPhilippineHomeAssuranceCorporation.11 RespondentpaidtheclaimintheamountofP211,500andwassubrogatedtotherightsofMCCII.12Thereafter,itfileda caseintheRTC13againstpetitionerforreimbursementoftheamountitpaidMCCII. Aftertrial,theRTCrenderedjudgmentinfavorofrespondent.ItorderedpetitionertopayrespondentP211,500pluslegal interest,attorneysfeesequivalentto25%oftheawardandcostsofsuit. Onappeal,theCAaffirmedthedecisionoftheRTC.Hence,thispetition. PetitionerandMCCIIenteredintoa"voyagecharter,"alsoknownasacontractofaffreightmentwhereintheshipwasleased forasinglevoyagefortheconveyanceofgoods,inconsiderationofthepaymentoffreight.14Underavoyagecharter,the shipownerretainsthepossession,commandandnavigationoftheship,thechartererorfreightermerelyhavinguseofthe spaceinthevesselinreturnforhispaymentoffreight.15Anownerwhoretainspossessionoftheshipremainsliableas carrierandmustanswerforlossornondeliveryofthegoodsreceivedfortransportation.16 PetitionerarguesthattheCAerredwhenitaffirmedtheRTCfindingthatthevoyagecharteritenteredintowithMCCIIwas acontractofcarriage.17ItinsiststhattheagreementwasmerelyacontractofhirewhereinMCCIIhiredthevesselfromits owner,ALSTimberEnterprises(ALS).18NotbeingtheowneroftheM/TEspirituSanto,petitionerdidnothavecontrol andsupervisionoverthevessel,itsmasterandcrew.19Thus,itcouldnotbeheldliableforthelossoftheshipmentcaused bythesinkingofashipitdidnotown. Wedisagree. Basedontheagreementsignedbythepartiesandthetestimonyofpetitionersoperationsmanager,itisclearthatitwasa contractofcarriagepetitionersignedwithMCCII.ItactivelynegotiatedandsolicitedMCCIIsaccount,offereditsservices toshipthesilicaquartzandproposedtoutilizetheM/TEspirituSantoinlieuoftheM/TSeebeesortheM/TShirley(as previouslyagreeduponinthevoyagecharter)sincethesevesselshadbrokendown.20 Thereisnodisputethatpetitionerwasacommoncarrier.Atthetimeofthelossofthecargo,itwasengagedinthebusiness ofcarryingandtransportinggoodsbywater,forcompensation,andoffereditsservicestothepublic.21 Fromthenatureoftheirbusinessandforreasonsofpublicpolicy,commoncarriersareboundtoobserveextraordinary diligenceoverthegoodstheytransportaccordingtothecircumstancesofeachcase.22Intheeventoflossofthegoods, commoncarriersareresponsible,unlesstheycanprovethatthiswasbroughtaboutbythecausesspecifiedinArticle1734
oftheCivilCode.23Inallothercases,commoncarriersarepresumedtobeatfaultortohaveactednegligently,unlessthey provethattheyobservedextraordinarydiligence.24 PetitionerwastheonewhichcontractedwithMCCIIforthetransportofthecargo.Ithadcontroloverwhatvesselitwould use.AllthroughoutitsdealingswithMCCII,itrepresenteditselfasacommoncarrier.Thefactthatitdidnotownthevessel itdecidedtousetoconsummatethecontractofcarriagedidnotnegateitscharacteranddutiesasacommoncarrier.The MCCII(respondentssubrogor)couldnotbereasonablyexpectedtoinquireabouttheownershipofthevesselswhich petitionercarrierofferedtoutilize.Asapracticalmatter,itisverydifficultandoftenimpossibleforthegeneralpublicto enforceitsrightsofactionunderacontractofcarriageifitshouldberequiredtoknowwhotheactualownerofthevessel is.25Infact,inthiscase,thevoyagecharteritselfdenominatedpetitionerasthe"owner/operator"ofthevessel.26 Petitionernextcontendsthatiftherewasacontractofcarriage,thenitwasbetweenMCCIIandALSasevidencedbythe billofladingALSissued.27 Again,wedisagree. The bill of lading was merely a receipt issued by ALS to evidence the fact that the goods had been received for transportation.ItwasnotsignedbyMCCII,asinfactitwassimplysignedbythesupercargoofALS.28Thisisconsistent withthefactthatMCCIIdidnotcontractdirectlywithALS.Whileitistruethatabillofladingmayserveasthecontractof carriagebetweentheparties,29itcannotprevailovertheexpressprovisionofthevoyagecharterthatMCCIIandpetitioner executed: [I]ncaseswhereaBillofLadinghasbeenissuedbyacarriercoveringgoodsshippedaboardavesselunderacharterparty, andthechartererisalsotheholderofthebilloflading,"thebillofladingoperatesasthereceiptforthegoods,andas document of title passing the property of the goods, but not as varying the contract between the charterer and the shipowner."TheBillofLadingbecomes,therefore,onlyareceiptandnotthecontractofcarriageinacharteroftheentire vessel,forthecontractistheCharterParty,andisthelawbetweenthepartieswhoareboundbyitstermsandcondition providedthatthesearenotcontrarytolaw,morals,goodcustoms,publicorderandpublicpolicy.30 Finally,petitionerassertsthatMCCIIshouldbeheldliableforitsownlosssincethevoyagecharterstipulatedthatcargo insurancewasforthecharterersaccount.31Thisdeservesscantconsideration.Thissimplymeantthatthechartererwould takecareofhavingthegoodsinsured.Itcouldnotexculpatethecarrierfromliabilityforthebreachofitscontractof carriage.Thelaw,infact,prohibitsitandcondemnsitasunjustandcontrarytopublicpolicy.32 Tosummarize,acontractofcarriageofgoodswasshowntoexist;thecargowasloadedonboardthevessel;lossornon deliveryofthecargowasproven;andpetitionerfailedtoprovethatitexercisedextraordinarydiligencetopreventsuchloss orthatitwasduetosomecasualtyorforcemajeure.Thevoyagecharterherebeingacontractofaffreightment,thecarrier wasanswerableforthelossofthegoodsreceivedfortransportation.33 Theideaproposedbypetitionerisnotonlypreposterous,itisalsodangerous.Itsaysthatacarrierthatentersintoacontract ofcarriageisnotliabletothechartererorshipperifitdoesnotownthevesselitchoosestouse.MCCIIneverdealtwith ALSandyetpetitionerinsiststhatMCCIIshouldsueALSforreimbursementforitsloss.Certainly,topermitacommon carriertoescapeitsresponsibilityforthegoodsitagreedtotransport(bytheexpedientofallegingnonownershipofthe vesselitemployed)wouldradicallyderogatefromthecarrier'sdutyofextraordinarydiligence.Itwouldalsoopenthedoor tocollusionbetweenthecarrierandthesupposedownerandtothepossibleshiftingofliabilityfromthecarriertoone withoutanyfinancialcapabilitytoanswerfortheresultingdamages.34 WHEREFORE,thepetitionisherebyDENIED. Costsagainstpetitioner. SOORDERED.
RepublicofthePhilippines SUPREMECOURT Manila FIRSTDIVISION G.R.No.145044June12,2008 PHILIPPINECHARTERINSURANCECORPORATION,petitioner, vs. NEPTUNEORIENTLINES/OVERSEASAGENCYSERVICES,INC.,respondent. DECISION AZCUNA,J.: Thisisapetitionforreviewoncertiorari1oftheResolutionoftheCourtofAppeals(CA)inCAG.R.CVNo.52855 promulgatedonApril13,2000grantingrespondents'motionforreconsiderationdatedMarch9,2000.TheResolutionheld respondentsliablefordamagestopetitionersubjecttothelimitedliabilityprovisioninthebilloflading. Thefactsareasfollows: OnSeptember30,1993,L.T.GarmentsManufacturingCorp.Ltd.shippedfromHongKongthreesetsofwarpyarnon returnable beams aboard respondent Neptune Orient Lines' vessel, M/V Baltimar Orion, for transport and delivery to FukuyamaManufacturingCorporation(Fukuyama)ofNo.7JasminStreet,AUVSubdivision,MetroManila. ThesaidcargoeswereloadedinContainerNo.IEAU4592750ingoodconditionunderBillofLadingNo.HKG0396180. FukuyamainsuredtheshipmentagainstallriskswithpetitionerPhilippineCharterInsuranceCorporation(PCIC)under MarineCargoPolicyNo.RN55581intheamountofP228,085. Duringthecourseofthevoyage,thecontainerwiththecargoesfelloverboardandwaslost. Thus,FukuyamawrotealettertorespondentOverseasAgencyServices,Inc.(OverseasAgency),theagentofNeptune OrientLinesinManila,andclaimedforthevalueofthelostcargoes.However,OverseasAgencyignoredtheclaim.Hence, Fukuyamasoughtpaymentfromitsinsurer,PCIC,fortheinsuredvalueofthecargoesintheamountofP228,085,which claimwasfullysatisfiedbyPCIC. OnFebruary17,1994,FukuyamaissuedaSubrogationReceipttopetitionerPCICforthelattertobesubrogatedinitsright torecoveritslossesfromrespondents. PCIC demanded from respondents reimbursement of the entire amount it paid to Fukuyama, but respondents refused payment. OnMarch21,1994,PCICfiledacomplaintfordamages againstrespondentswiththeRegionalTrialCourt(RTC)of Manila,Branch35. RespondentsfiledanAnswerwithCompulsoryCounterclaimdenyingliability.Theyallegedthatduringthevoyage,the vesselencounteredstrongwindsandheavyseasmakingthevesselpitchandroll,whichcausedthesubjectcontainerwith thecargoestofalloverboard.Respondentscontendedthattheoccurrencewasafortuitouseventwhichexemptedthemfrom anyliability,andthattheirliability,ifany,shouldnotexceedUS$500orthelimitofliabilityinthebilloflading,whichever islower. InaDecisiondatedJanuary12,1996,theRTCheldthatrespondents,ascommoncarrier,2failedtoprovethattheyobserved therequiredextraordinarydiligencetopreventlossofthesubjectcargoesinaccordancewiththepertinentprovisionsofthe CivilCode.3ThedispositiveportionoftheDecisionreads: WHEREFORE,judgmentisrenderedorderingthedefendants,jointlyandseverally,topaytheplaintiffthePeso equivalentasofFebruary17,1994ofHK$55,000.00orthesumofP228,085.00,whicheverislower,withcosts againstthedefendants.4 Respondents'motionforreconsiderationwasdeniedbytheRTCinanOrderdatedFebruary19,1996. RespondentsappealedtheRTCDecisiontotheCA. InaDecisionpromulgatedonFebruary15,2000,theCAaffirmedtheRTCDecisionwithmodification,thus: WHEREFORE,theassaileddecisionisherebyMODIFIED.AppellantsNeptuneandOverseasareherebyordered topayjointlyandseverallyappelleePCICP228,085.00,representingtheamountitpaidFukuyama.Costsagainst theappellants.5 RespondentsmovedforreconsiderationoftheDecisionoftheCAarguing,amongothers,thattheirliabilitywasonly
US$1,500orUS$500perpackageunderthelimitedliabilityprovisionoftheCarriageofGoodsbySeaAct(COGSA). InitsResolutiondatedApril13,2000,theCAfoundthesaidargumentofrespondentstobemeritorious.Thedispositive portionoftheResolutionreads: WHEREFORE,themotionispartlygrantedinthesensethatappellantsshallbeliabletopayappelleePCICthe valueofthethreepackageslostcomputedattherateofUS$500perpackageoratotalofUS$1,500.00.6 Hence,thispetitionraisingthisloneissue: THECOURTOFAPPEALSERREDINAWARDINGRESPONDENTSDAMAGESSUBJECTTOTHEUS$500 PERPACKAGELIMITATION. PetitionercontendsthattheCAerredinawardingdamagestorespondentssubjecttotheUS$500perpackagelimitation sincethevesselcommitteda"quasideviation"whichisabreachofthecontractofcarriagewhenitintentionallythrew overboardthecontainerwiththesubjectshipmentduringthevoyagetoManilaforitsownbenefitorpreservationbasedona SurveyReport7conductedbyMariner'sAdjustmentCorporation,whichfirmwastaskedbypetitionertoinvestigatetheloss ofthesubjectcargoes.Accordingtopetitioner,thebreachofcontractresultedintheabrogationofrespondents'rightsunder thecontractandCOGSAincludingtheUS$500perpackagelimitation.Hence,respondentscannotinvokethebenefitofthe US$500perpackagelimitationandtheCAerredinconsideringthelimitationandmodifyingitsdecisionaccordingly. Thecontentionlacksmerit. ThefactsasfoundbytheRTCdonotsupportthenewallegationoffactsbypetitionerregardingtheintentionalthrowing overboardofthesubject cargoes andquasi deviation.The Court notes that inpetitioner's Complaint beforethe RTC, petitionerallegedasfollows: xxxxxxxxx 2.03InthecourseofthemaritimevoyagefromHongkongtoManilasubjectshipmentfelloverboardwhileinthe custodyofthedefendantsandwereneverrecovered;itwaspartoftheLCLcargoespackedbydefendantsin containerIEAU4592750thatfelloverboardduringthevoyage.8 Moreover,thesameSurveyReportcitedbypetitionerstated: Fromtheinvestigationconducted,wenotedthatCapt.S.L.Halloway,MasterofMV"BALTIMARORION"fileda NoteofProtestintheCityofManila,andwasnotarizedon06October1993. BasedonNoteofProtest,copyattachedheretoforyourreference,carriervesselsailedfromHongkongon1st October1993carryingcontainersboundforManila. Apparently,atthetimethevessel[was]sailingatabout2400hoursof2ndOctober1993,sheencounteredwinds andseassuchastocauseoccasionalmoderatetoheavypitchingandrollingdeeplyattimes.At0154hours,same day,whileinpositionLat.20degrees,29minutesNorth,Long.115degrees,49minutesEast,four(4)x40ft. containers were lost/fell overboard. The numbers of these containers are NUSU3100789, TPHU 5262138, IEAU4592750,NUSU4515404. xxxxxxxxx Furthermore,duringthecourseofvoyage,highwindsandheavyseaswereencounteredcausingtheshiptorolland pitchheavily.Thecourseandspeedwasalteredtoeasemotionofthevessel,causingdelayandlossoftimeonthe voyage. xxxxxxxxx SURVEYORSREMARKS: Inviewoftheforegoingincident,weareoftheopinionthattheshipmentof3casesofVariousWarpYarnon ReturnableBeamswhichwerecontainerizedonto40feetLCL(no.IEAU4592750)andfelloverboardthesubject vesselduringheavyweatherisan"ActualTotalLoss".9 Therecordsshowthatthesubjectcargoesfelloverboardtheshipandpetitionershouldnotvarythefactsofthecaseon appeal.ThisCourtisnotatrieroffacts,and,inthiscase,thefactualfindingoftheRTCandtheCA,whichissupportedby theevidenceonrecord,isconclusiveuponthisCourt. Asregardstheissueonthelimitedliabilityofrespondents,theCourtupholdsthedecisionoftheCA. Since the subject cargoes were lost while being transported by respondent common carrier from Hong Kong to the Philippines,PhilippinelawappliespursuanttotheCivilCodewhichprovides: Art.1753.Thelawofthecountrytowhichthegoodsaretobetransportedshallgoverntheliabilityofthecommon carrierfortheirloss,destructionordeterioration. Art. 1766. In all matters not regulated by this Code, the rights and obligations of common carriers shall be governedbytheCodeofCommerceandbyspeciallaws.
TherightsandobligationsofrespondentcommoncarrierarethusgovernedbytheprovisionsoftheCivilCode,andthe COGSA,10whichisaspeciallaw,appliessuppletorily. ThepertinentprovisionsoftheCivilCodeapplicabletothiscaseareasfollows: Art.1749.Astipulationthatthecommoncarrier'sliabilityislimitedtothevalueofthegoodsappearinginthebill oflading,unlesstheshipperorownerdeclaresagreatervalue,isbinding. Art.1750.Acontractfixingthesumthatmayberecoveredbytheownerorshipperfortheloss,destruction,or deteriorationofthegoodsisvalid,ifitisreasonableandjustunderthecircumstances,andhasbeenfairlyand freelyagreedupon. Inaddition,Sec.4,paragraph(5)oftheCOGSA,whichisapplicabletoallcontractsforthecarriageofgoodsbyseatoand fromPhilippineportsinforeigntrade,provides: Neitherthecarriernortheshipshallinanyeventbeorbecomeliableforanylossordamagetoorinconnection withthetransportationofgoodsinanamountexceeding$500perpackagelawfulmoneyoftheUnitedStates,orin caseofgoodsnotshippedinpackages,percustomaryfreightunit,ortheequivalentofthatsuminothercurrency, unlessthenatureandvalueofsuchgoodshavebeendeclaredbytheshipperbeforeshipmentandinsertedinthebill oflading.Thisdeclaration,ifembodiedinthebillofladingshallbeprimafacieevidence,butshallbeconclusive onthecarrier. Inthiscase,BillofLadingNo.0396180stipulates: NeithertheCarriernorthevesselshallinanyeventbecomeliableforanylossofordamagetoorinconnection withthetransportationofGoodsinanamountexceedingUS$500(whichisthepackageorshippingunitlimitation underU.S.COGSA)perpackageorinthecaseofGoodsnotshippedinpackagespershippingunitorcustomary freight,unlessthenatureandvalueofsuchGoodshavebeendeclaredbytheShipperbeforeshipmentandinserted inthisBillofLadingandtheShipperhaspaidadditionalchargesonsuchdeclaredvalue.... Thebilloflading11submittedinevidencebypetitionerdidnotshowthattheshipperinHongKongdeclaredtheactual valueofthegoodsasinsuredbyFukuyamabeforeshipmentandthatthesaidvaluewasinsertedintheBillofLading,and sonoadditionalchargeswerepaid.Hence,thestipulationinthebillofladingthatthecarrier'sliabilityshallnotexceed US$500perpackageapplies. Suchstipulationinthebillofladinglimitingrespondents'liabilityforthelossofthesubjectcargoesisallowedunderArt. 1749oftheCivilCode,andSec.4,paragraph(5)oftheCOGSA.EverettSteamshipCorporationv.CourtofAppeals12 held: Astipulationinthebillofladinglimitingthecommoncarrier'sliabilityforlossordestructionofacargotoa certainsum,unlesstheshipperorownerdeclaresagreatervalue,issanctionedbylaw,particularlyArticles1749 and1750oftheCivilCodewhichprovide: 'Art.1749.Astipulationthatthecommoncarrier'sliabilityislimitedtothevalueofthegoodsappearinginthebill oflading,unlesstheshipperorownerdeclaresagreatervalue,isbinding.' 'Art.1750.Acontractfixingthesumthatmayberecoveredbytheownerorshipperfortheloss,destruction,or deteriorationofthegoodsisvalid,ifitisreasonableandjustunderthecircumstances,andhasbeenfairlyand freelyagreedupon.' Suchlimitedliabilityclausehasalsobeenconsistentlyupheldbythiscourtinanumberofcases.Thus,inSea LandService,Inc.vs.IntermediateAppellateCourt,weruled: 'Itseemsclearthatevenifsaidsection4(5)oftheCarriageofGoodsbySeaActdidnotexist,thevalidityand bindingeffectoftheliabilitylimitationclauseinthebillofladinghereareneverthelessfullysustainableonthe basisaloneofthecitedCivilCodeProvisions.Thatsaidstipulationisjustandreasonableisarguablefromthefact thatitechoesArt.1750itselfinprovidingalimittoliabilityonlyifagreatervalueisnotdeclaredfortheshipment inthebilloflading.Toholdotherwisewouldamounttoquestioningthejustnessandfairnessofthelawitself.... Butoverandabovethatconsideration,thejustandreasonablecharacterofsuchstipulationisimplicitinitgiving theshipperorownertheoptionofavoidingaccrualofliabilitylimitationbythesimpleandsurelyfarfromonerous expedientofdeclaringthenatureandvalueoftheshipmentinthebilloflading.' TheCA,therefore,didnoterrinholdingrespondentsliablefordamagestopetitionersubjecttotheUS$500perpackage limitedliabilityprovisioninthebilloflading. WHEREFORE,thepetitionisDENIED.TheResolutionoftheCourtofAppealsinCAG.R.CVNo.52855promulgatedon April13,2000isherebyAFFIRMED. Costsagainstpetitioner.
RepublicofthePhilippines SUPREMECOURT Manila SECONDDIVISION G.R.No.162467May8,2009 MINDANAOTERMINALANDBROKERAGESERVICE,INC.Petitioner, vs. PHOENIXASSURANCECOMPANYOFNEWYORK/MCGEE&CO.,INC.,Respondent. DECISION TINGA,J.: Beforeusisapetitionforreviewoncertiorari1underRule45ofthe1997RulesofCivilProcedureofthe29October20032 DecisionoftheCourtofAppealsandthe26February2004Resolution3ofthesamecourtdenyingpetitionersmotionfor reconsideration. Thefactsofthecasearenotdisputed. DelMontePhilippines,Inc.(DelMonte)contractedpetitionerMindanaoTerminalandBrokerageService,Inc.(Mindanao Terminal),astevedoringcompany,toloadandstowashipmentof146,288cartonsoffreshgreenPhilippinebananasand 15,202cartonsoffreshpineapplesbelongingtoDelMonteFreshProduceInternational,Inc.(DelMonteProduce)intothe cargoholdofthevesselM/VMistrau.ThevesselwasdockedattheportofDavaoCityandthegoodsweretobetransported byittotheportofInchon,KoreainfavorofconsigneeTaeguIndustries,Inc.DelMonteProduceinsuredtheshipment underan"opencargopolicy"withprivaterespondentPhoenixAssuranceCompanyofNewYork(Phoenix),anonlife insurancecompany,andprivaterespondentMcGee&Co.Inc.(McGee),theunderwritingmanager/agentofPhoenix.4 MindanaoTerminalloadedandstowedthecargoesaboardtheM/VMistrau.ThevesselsetsailfromtheportofDavaoCity andarrivedattheportofInchon,Korea.Itwasthendiscoveredupondischargethatsomeofthecargowasinbadcondition. TheMarineCargoDamageSurveyorofIncokLossandAverageAdjusterofKorea,throughitsrepresentativeByeongYong Ahn(Byeong),surveyedtheextentofthedamageoftheshipment.Inasurveyreport,itwasstatedthat16,069cartonsofthe bananashipmentand2,185cartonsofthepineappleshipmentweresodamagedthattheynolongerhadcommercialvalue.5 DelMonteProducefiledaclaimundertheopencargopolicyforthedamagestoitsshipment.McGeesMarineClaims InsuranceAdjusterevaluatedtheclaimandrecommendedthatpaymentintheamountof$210,266.43bemade.Acheckfor therecommendedamountwassenttoDelMonteProduce;thelatterthenissuedasubrogationreceipt6toPhoenixand McGee. PhoenixandMcGeeinstitutedanactionfordamages7againstMindanaoTerminalintheRegionalTrialCourt(RTC)of DavaoCity,Branch12.Aftertrial,theRTC,8inadecisiondated20October1999,heldthattheonlyparticipationof MindanaoTerminalwastoloadthecargoesonboardtheM/VMistrauunderthedirectionandsupervisionoftheships officers,whowouldnothaveacceptedthecargoesonboardthevesselandsignedtheforemansreportunlesstheywere properlyarrangedandtightlysecuredtowithstandvoyageacrosstheopenseas.Accordingly,MindanaoTerminalcannotbe heldliableforwhateverhappenedtothecargoesafterithadloadedandstowedthem.Moreover,citingthesurveyreport,it wasfoundbytheRTCthatthecargoesweredamagedonaccountofatyphoonwhichM/VMistrauhadencounteredduring thevoyage.ItwasfurtherheldthatPhoenixandMcGeehadnocauseofactionagainstMindanaoTerminalbecausethe latter,whoseserviceswerecontractedbyDelMonte,adistinctcorporationfromDelMonteProduce,hadnocontractwith theassuredDelMonteProduce.TheRTCdismissedthecomplaintandawardedthecounterclaimofMindanaoTerminalin theamountofP83,945.80asactualdamagesandP100,000.00asattorneysfees.9Theactualdamageswereawardedas reimbursementfortheexpensesincurredbyMindanaoTerminalslawyerinattendingthehearingsinthecasewhereinhe hadtotravelallthewayfromMetroManilatoDavaoCity. PhoenixandMcGeeappealedtotheCourtofAppeals.Theappellatecourtreversedandsetaside10thedecisionoftheRTC inits29October2003decision.ThesamecourtorderedMindanaoTerminaltopayPhoenixandMcGee"thetotalamount of$210,265.45pluslegalinterestfromthefilingofthecomplaintuntilfullypaidandattorneysfeesof20%oftheclaim."11 It sustained Phoenixs and McGees argument that the damage in the cargoes was the result of improper stowage by MindanaoTerminal.ItimposedonMindanaoTerminal,asthestevedoreofthecargo,thedutytoexerciseextraordinary diligenceinloadingandstowingthecargoes.Itfurtherheldthatevenwiththeabsenceofacontractualrelationshipbetween
MindanaoTerminalandDelMonteProduce,thecauseofactionofPhoenixandMcGeecouldbebasedonquasidelict underArticle2176oftheCivilCode.12 MindanaoTerminalfiledamotionforreconsideration,13whichtheCourtofAppealsdeniedinits26February200414 resolution.Hence,thepresentpetitionforreview. MindanaoTerminalraisestwoissuesinthecaseatbar,namely:whetheritwascarelessandnegligentintheloadingand stowageofthecargoesonboardM/VMistraumakingitliablefordamages;and,whetherPhoenixandMcGeehasacauseof actionagainstMindanaoTerminal underArticle2176oftheCivil Codeonquasidelict.Toresolvethepetition,three questionshavetobeanswered:first,whetherPhoenixandMcGeehaveacauseofactionagainstMindanaoTerminal; second,whetherMindanaoTerminal,asastevedoringcompany,isunderobligationtoobservethesameextraordinary degreeofdiligenceintheconductofitsbusinessasrequiredbylawforcommoncarriers15andwarehousemen;16andthird, whetherMindanaoTerminalobservedthedegreeofdiligencerequiredbylawofastevedoringcompany. WeagreewiththeCourtofAppealsthatthecomplaintfiledbyPhoenixandMcGeeagainstMindanaoTerminal,from whichthepresentcasehasarisen,statesacauseofaction.Thepresentactionisbasedonquasidelict,arisingfromthe negligent andcarelessloadingandstowingofthecargoesbelongingtoDel MonteProduce.Evenassumingthatboth PhoenixandMcGeehaveonlybeensubrogatedintherightsofDelMonteProduce,whoisnotapartytothecontractof servicebetweenMindanaoTerminalandDelMonte,stilltheinsurancecarriersmayhaveacauseofactioninlightofthe Courtsconsistentrulingthattheactthatbreaksthecontractmaybealsoatort.17Infine,aliabilityfortortmayariseeven underacontract,wheretortisthatwhichbreachesthecontract18.Inthepresentcase,PhoenixandMcGeearenotsuingfor damagesforinjuriesarisingfromthebreachofthecontractofservicebutfromtheallegednegligentmannerbywhich MindanaoTerminalhandledthecargoesbelongingtoDelMonteProduce.Despitetheabsenceofcontractualrelationship betweenDelMonteProduceandMindanaoTerminal,theallegationofnegligenceonthepartofthedefendantshouldbe sufficienttoestablishacauseofactionarisingfromquasidelict.19 Theresolutionofthetworemainingissuesisdeterminativeoftheultimateresultofthiscase. Article1173oftheCivilCodeisveryclearthatifthelaworcontractdoesnotstatethedegreeofdiligencewhichistobe observedintheperformanceofanobligationthenthatwhichisexpectedofagoodfatherofafamilyorordinarydiligence shallberequired.MindanaoTerminal,astevedoringcompanywhichwaschargedwiththeloadingandstowingthecargoes ofDelMonteProduceaboardM/VMistrau,hadactedmerelyasalaborproviderinthecaseatbar.Thereisnospecific provisionoflawthatimposesahigherdegreeofdiligencethanordinarydiligenceforastevedoringcompanyoronewhois chargedonlywiththeloadingandstowingofcargoes.ItwasneitherallegednorprovenbyPhoenixandMcGeethat MindanaoTerminalwasboundbycontractualstipulationtoobserveahigherdegreeofdiligencethanthatrequiredofa goodfatherofafamily.WethereforeconcludethatfollowingArticle1173,MindanaoTerminalwasrequiredtoobserve ordinarydiligenceonlyinloadingandstowingthecargoesofDelMonteProduceaboardM/VMistrau. imposingahigherdegreeofdiligence,21onMindanaoTerminalinloadingandstowingthecargoes.ThecaseofSumma InsuranceCorporationv.CA,whichinvolvedtheissueofwhetheranarrastreoperatorislegallyliableforthelossofa shipmentinitscustodyandtheextentofitsliability,isinapplicabletothefactualcircumstancesofthecaseatbar.Therein,a vesselownedbytheNationalGalleonShippingCorporation(NGSC)arrivedatPier3,SouthHarbor,Manila,carryinga shipmentconsignedtotheorderofCaterpillarFarEastLtd.withSemiraraCoalCorporation(Semirara)as"notifyparty." Theshipment,includingabundleofPC8Ublades,wasdischargedfromthevesseltothecustodyoftheprivaterespondent, theexclusivearrastreoperatorattheSouthHarbor.Accordingly,threegoodordercargoreceiptswereissuedbyNGSC,duly signedbytheship'scheckerandarepresentativeofprivaterespondent.WhenSemirarainspectedtheshipmentathouse,it discoveredthatthebundleofPC8Ubladeswasmissing.Fromthosefacts,theCourtobserved: xxxTherelationshipthereforebetweentheconsigneeandthearrastreoperatormustbeexamined.Thisrelationshipis muchakintothatexistingbetweentheconsigneeorownerofshippedgoodsandthecommoncarrier,orthatbetweena depositorandawarehouseman[22].Intheperformanceofitsobligations,anarrastreoperatorshouldobservethesame degreeofdiligenceasthatrequiredofacommoncarrierandawarehousemanasenunciatedunderArticle1733oftheCivil CodeandSection3(b)oftheWarehouseReceiptsLaw,respectively.Beingthecustodianofthegoodsdischargedfroma vessel,anarrastreoperator'sdutyistotakegoodcareofthegoodsandtoturnthemovertothepartyentitledtotheir possession.(Emphasissupplied)23 Thereisadistinctionbetweenanarrastreandastevedore.24Arrastre,aSpanishwordwhichreferstohaulingofcargo, comprehendsthehandlingofcargoonthewharforbetweentheestablishmentoftheconsigneeorshipperandtheship's tackle.Theresponsibilityofthearrastreoperatorlastsuntilthedeliveryofthecargototheconsignee.Theserviceisusually performedbylongshoremen.Ontheotherhand,stevedoringreferstothehandlingofthecargointheholdsofthevesselor
betweentheship'stackleandtheholdsofthevessel.Theresponsibilityofthestevedoreendsupontheloadingandstowing ofthecargointhevessel.1avvphi1 ItisnotdisputedthatMindanaoTerminalwasperformingpurelystevedoringfunctionwhiletheprivaterespondentinthe Summacasewasperformingarrastrefunction.Inthepresentcase,MindanaoTerminal,asastevedore,wasonlycharged withtheloadingandstowingofthecargoesfromthepiertotheshipscargohold;itwasneverthecustodianoftheshipment ofDelMonteProduce.Astevedoreisnotacommoncarrierforitdoesnottransportgoodsorpassengers;itisnotakintoa warehousemanforitdoesnotstoregoodsforprofit.Theloadingandstowingofcargoeswouldnothaveafarreaching publicramificationasthatofacommoncarrierandawarehouseman;thepublicisadequatelyprotectedbyourlawson contract and on quasidelict. The public policy considerations in legally imposing upon a common carrier or a warehousemanahigherdegreeofdiligenceisnotpresentinastevedoringoutfitwhichmainlyprovideslaborinloadingand stowingofcargoesforitsclients. Inthethirdissue,PhoenixandMcGeefailedtoprovebypreponderanceofevidence25thatMindanaoTerminalhadacted negligently.Wheretheevidenceonanissueoffact is inequipoiseorthereisanydoubt onwhichsidetheevidence preponderatesthepartyhavingtheburdenofprooffailsuponthatissue.Thatistosay,iftheevidencetouchingadisputed factisequallybalanced,orifitdoesnotproduceajust,rationalbeliefofitsexistence,orifitleavesthemindinastateof perplexity,thepartyholdingtheaffirmativeastosuchfactmustfail.261avvphi1 Weadoptthefindings27oftheRTC,28whicharenotdisputedbyPhoenixandMcGee.TheCourtofAppealsdidnotmake anynewfindingsoffactwhenitreversedthedecisionofthetrialcourt.TheonlyparticipationofMindanaoTerminalwasto loadthecargoesonboardM/VMistrau.29ItwasnotdisputedbyPhoenixandMcGeethatthematerials,suchasropes, pallets,andcardboards,usedinlashingandriggingthecargoeswereallprovidedbyM/VMistrauandthesematerialsmeets industrystandard.30 ItwasfurtherestablishedthatMindanaoTerminalloadedandstowedthecargoesofDelMonteProduceaboardtheM/V Mistrauinaccordancewiththestowageplan,aguidefortheareaassignmentsofthegoodsinthevesselshold,preparedby Del Monte Produce and the officers of M/V Mistrau.31 The loading and stowing was done under the direction and supervisionoftheshipofficers.Thevesselsofficerwouldordertheclosingofthehatchesonlyiftheloadingwasdone correctlyafterafinalinspection.32Thesaidshipofficerswouldnothaveacceptedthecargoesonboardthevesselifthey werenotproperlyarrangedandtightlysecuredtowithstandthevoyageinopenseas.Theywouldorderthestevedoreto rectifyanyerrorinitsloadingandstowing.Aforemansreport,asproofofworkdoneonboardthevessel,waspreparedby thecheckersofMindanaoTerminalandconcurredinbytheChiefOfficerofM/VMistrauaftertheyweresatisfiedthatthe cargoeswereproperlyloaded.33 PhoenixandMcGeereliedheavilyonthedepositionofByeongYongAhn34andonthesurveyreport35ofthedamageto thecargoes.Byeong,whosetestimonywasrefreshedbythesurveyreport,36foundthatthecauseofthedamagewas improperstowage37duetothemannerthecargoeswerearrangedsuchthattherewerenospacesbetweencartons,theuseof cardboardsassupportsystem,andtheuseofsmallropetotiethecartonstogetherbutnotbythenegligentconductof MindanaoTerminalinloadingandstowingthecargoes.AsadmittedbyPhoenixandMcGeeintheirComment38beforeus, thelatterismerelyastevedoringcompanywhichwastaskedbyDelMontetoloadandstowtheshipmentsoffreshbanana andpineappleofDelMonteProduceaboardtheM/VMistrau.Howandwhereitshouldloadandstowashipmentina vesseliswhollydependentontheshipperandtheofficersofthevessel.Inotherwords,theworkofthestevedorewasunder thesupervisionoftheshipperandofficersofthevessel.Eventhematerialsusedforstowage,suchasropes,pallets,and cardboards,areprovidedforbythevessel.Eventhesurveyreportfoundthatitwasbecauseoftheboisterousstormyweather duetothetyphoonSeth,asencounteredbyM/VMistrauduringitsvoyage,whichcausedtheshipmentsinthecargoholdto collapse,shiftandbruiseinextensiveextent.39EventhedepositionofByeongwasnotsupportedbytheconclusioninthe surveyreportthat: CAUSEOFDAMAGE xxx Fromtheabovefactsandoursurveyresults,weareoftheopinionthatdamageoccurredaboardthecarryingvesselduring seatransit,beingcausedbyshipsheavyrollingandpitchingunderboisterousweatherwhileproceedingfrom1600hrson 7thOctoberto0700hrson12thOctober,1994asdescribedintheseaprotest.40 AsitisclearthatMindanaoTerminalhaddulyexercisedtherequireddegreeofdiligenceinloadingandstowingthe cargoes,whichistheordinarydiligenceofagoodfatherofafamily,thegrantofthepetitionisinorder. However, the Court finds no basis for the award of attorneys fees in favor of petitioner.lawphil.net None of the circumstancesenumeratedinArticle2208oftheCivilCodeexists.Thepresentcaseisclearlynotanunfoundedcivilaction
againsttheplaintiffasthereisnoshowingthatitwasinstitutedforthemerepurposeofvexationorinjury.Itisnotsound publicpolicytosetapremiumtotherighttolitigatewheresuchrightisexercisedingoodfaith,eveniferroneously.41 Likewise,theRTCerredinawardingP83,945.80actualdamagestoMindanaoTerminal.Althoughactualexpenseswere incurredbyMindanaoTerminalinrelationtothetrialofthiscaseinDavaoCity,thelawyerofMindanaoTerminalincurred expensesforplanefare,hotelaccommodationsandfood,aswellasothermiscellaneousexpenses,asheattendedthetrials comingallthewayfromManila.ButthereisnoshowingthatPhoenixandMcGeemadeafalseclaimagainstMindanao Terminalresultingintheprotractedtrialofthecasenecessitatingtheincurrenceofexpenditures.42 WHEREFORE,thepetitionisGRANTED.ThedecisionoftheCourtofAppealsinCAG.R.CVNo.66121isSETASIDE andthedecisionoftheRegionalTrialCourtofDavaoCity,Branch12inCivilCaseNo.25,311.97isherebyREINSTATED MINUStheawardsofP100,000.00asattorneysfeesandP83,945.80asactualdamages. SOORDERED. DANTEO.TINGAAssociateJustice
RepublicofthePhilippines SUPREMECOURT Manila SECONDDIVISION G.R.No.168151September4,2009 REGIONALCONTAINERLINES(RCL)OFSINGAPOREandEDSASHIPPINGAGENCY,Petitioners, vs. THENETHERLANDSINSURANCECO.(PHILIPPINES),INC.,Respondent. DECISION BRION,J.: ForourresolutionisthepetitionforreviewoncertiorarifiledbypetitionersRegionalContainerLinesofSingapore(RCL) andEDSAShippingAgency(EDSAShipping)toannulandsetasidethedecision1andresolution2oftheCourtofAppeals (CA)datedMay26,2004andMay10,2005,respectively,inCAG.R.CVNo.76690. RCLisaforeigncorporationbasedinSingapore.ItdoesbusinessinthePhilippinesthroughitsagent,EDSAShipping,a domestic corporation organized and existing under Philippine laws. Respondent Netherlands Insurance Company (Philippines),Inc.(NetherlandsInsurance)islikewiseadomesticcorporationengagedinthemarineunderwritingbusiness. FACTUALANTECEDENTS Thepertinentfacts,basedontherecordsaresummarizedbelow. OnOctober20,1995,405cartonsofEpoxyMoldingCompoundwereconsignedtobeshippedfromSingaporetoManilafor Temic Telefunken Microelectronics Philippines (Temic). UFreight Singapore PTE Ltd.3 (UFreight Singapore), a forwardingagentbasedinSingapore,contractedtheservicesofPacificEagleLinesPTE.Ltd.(PacificEagle)totransport thesubjectcargo.Thecargowaspacked,stored,andsealedbyPacificEagleinitsRefrigeratedContainerNo.6105660with SealNo.13223.Asthecargowashighlyperishable,theinsideofthecontainerhadtobekeptatatemperatureof0Celsius. PacificEaglethenloadedtherefrigeratedcontaineronboardtheM/VPiyaBhum,avesselownedbyRCL,withwhich PacificEaglehadaslotcharteragreement.RCLdulyissueditsownBillofLadinginfavorofPacificEagle. Toinsurethecargoagainstlossanddamage,NetherlandsInsuranceissuedaMarineOpenPolicyinfavorofTemic,as shownbyMPO210508194andMarineRiskNoteMRN2114022,tocoveralllosses/damagestotheshipment. OnOctober25,1995,theM/VPiyaBhumdockedinManila.Afterunloadingtherefrigeratedcontainer,itwaspluggedto thepowerterminalofthepiertokeepitstemperatureconstant.FidelRocha(Rocha),VicePresidentforOperationsof MarinesAdjustmentCorporation,accompaniedbytwosurveyors,conductedaprotectivesurveyofthecargo.Theyfound thatbasedonthetemperaturechart,thetemperaturereadingwasconstantfromOctober18,1995toOctober25,1995at0 Celsius.However,atmidnightofOctober25,1995whenthecargohadalreadybeenunloadedfromtheshipthe temperaturefluctuatedwithareadingof33Celsius.Rochabelievedthefluctuationwascausedbytheburntcondenserfan motoroftherefrigeratedcontainer. OnNovember9,1995,Temicreceivedtheshipment.Itfoundthecargocompletelydamaged.Temicfiledaclaimforcargo lossagainstNetherlandsInsurance,withsupportingclaimsdocuments.TheNetherlandsInsurancepaidTemicthesumof P1,036,497.00underthetermsoftheMarineOpenPolicy.Temicthenexecutedalossandsubrogationreceiptinfavorof NetherlandsInsurance. SevenmonthsfromdeliveryofthecargooronJune4,1996,NetherlandsInsurancefiledacomplaintforsubrogationof insurancesettlementwiththeRegionalTrialCourt,Branch5,Manila,against"theunknownownerofM/VPiyaBhum"and TMSShipAgencies(TMS),thelatterthoughttobethelocalagentofM/VPiyaBhumsunknownowner.4Thecomplaint wasdocketedasCivilCaseNo.9678612. NetherlandsInsuranceamendedthecomplaintonJanuary17,1997toimpleadEDSAShipping,RCL,EagleLinerShipping Agencies,UFreightSingapore,andUOcean(Phils.),Inc.(UOcean),asadditionaldefendants.Athirdamendedcomplaint waslatermade,impleadingPacificEagleinsubstitutionofEagleLinerShippingAgencies. TMS filed its answer to the original complaint. RCL and EDSA Shipping filed their answers with crossclaim and compulsory counterclaim to the second amended complaint. UOcean likewise filed an answer with compulsory counterclaimandcrossclaim.Duringthependencyofthecase,UOcean,jointlywithUFreightSingapore,filedanother answerwithcompulsorycounterclaim.OnlyPacificEagleandTMSfiledtheiranswerstothethirdamendedcomplaint.
The defendants all disclaimed liability for the damage caused to the cargo, citing several reasons why Netherland Insurancesclaimsmustberejected.Specifically,RCLandEDSAShippingdeniednegligenceinthetransportofthecargo; theyattributedanynegligencethatmayhavecausedthelossoftheshipmenttotheircodefendants.Theylikewiseasserted thatnovalidsubrogationexists,asthepaymentmadebyNetherlandsInsurancetotheconsigneewasinvalid.Bywayof affirmativedefenses,RCLandEDSAShippingaverredthattheNetherlandsInsurancehasnocauseofaction,andisnotthe realpartyininterest,andthattheclaimisbarredbylaches/prescription. AfterNetherlandsInsurancehadmadeitsformalofferofevidence,thedefendantsincludingRCLandEDSAShipping soughtleaveofcourttofiletheirrespectivemotionstodismissbasedondemurrertoevidence. RCLandEDSAShipping,intheirmotion,insistedthatNetherlandsInsurancehad(1)failedtoproveanyvalidsubrogation, and(2)failedtoestablishthatanynegligenceontheirpartorthatthelosswassustainedwhilethecargowasintheir custody. OnMay22,2002,thetrialcourthandeddownanOrderdismissingCivilCaseNo.9678612ondemurrertoevidence.The trialcourtruledthatwhiletherewasvalidsubrogation,thedefendantscouldnotbeheldliableforthelossordamage,as theirrespectiveliabilitiesendedatthetimeofthedischargeofthecargofromtheshipatthePortofManila. NetherlandsInsuranceseasonablyappealedtheorderofdismissaltotheCA. OnMay26,2004,theCAdisposedoftheappealasfollows: WHEREFORE,inviewoftheforegoing,thedismissalofthecomplaintagainstdefendantsRegionalContainerLinesandIts localagent,EDSAShippingAgency,isREVERSEDandSETASIDE.Thedismissalofthecomplaintagainsttheother defendants is AFFIRMED.Pursuant toSection1,Rule33ofthe1997Rules ofCivilProcedure,defendantsRegional ContainerLinesandEDSAShippingAgencyaredeemedtohavewaivedtherighttopresentevidence. Assuch,defendantsRegionalContainerLinesandEDSAShippingAgencyareorderedtoreimburseplaintiffinthesumof P1,036,497.00withinterestfromdatehereofuntilfullypaid. Nocosts. SOORDERED.[Emphasissupplied.] TheCAdismissedNetherlandInsurancescomplaintagainsttheotherdefendantsafterfindingthattheclaimhadalready beenbarredbyprescription.5 Havingbeenfoundliableforthedamagetothecargo,RCLandEDSAShippingfiledamotionforreconsideration,butthe CAmaintaineditsoriginalconclusions. ThesoleissueforourresolutioniswhethertheCAcorrectlyheldRCLandEDSAShippingliableascommoncarriersunder thetheoryofpresumptionofnegligence. THECOURTSRULING ThepresentcaseisgovernedbythefollowingprovisionsoftheCivilCode: ART.1733.Commoncarriers,fromthenatureoftheirbusinessandforreasonsofpublicpolicy,areboundtoobserve extraordinarydiligenceinthevigilanceoverthegoodsandforthesafetyofthepassengerstransportedbythemaccordingto allthecircumstancesofeachcase. Suchextraordinarydiligenceinthevigilanceoverthegoodsisfurtherexpressedinarticles1734,1735,and1745,Nos.5,6, and7,whiletheextraordinarydiligenceforthesafetyofthepassengersisfurthersetforthinarticles1755and1756. ART.1734.Commoncarriersareresponsiblefortheloss,destruction,ordeteriorationofthegoods,unlessthesameisdue toanyofthefollowingcausesonly: 1)Flood,storm,earthquake,lightning,orothernaturaldisasterorcalamity; 2)Actofthepublicenemyinwar,whetherinternationalorcivil; 3)Actofomissionoftheshipperorownerofthegoods; 4)Thecharacterofthegoodsordefectsinthepackingorinthecontainers; 5)Orderoractofcompetentpublicauthority. ART.1735.InallcasesotherthatthosementionedinNos.1,2,3,4and5oftheprecedingarticle,ifthegoodsarelost, destroyed,ordeteriorated,commoncarriersarepresumedtohavebeenatfaultortohaveactednegligently,unlessthey provethattheyobservedextraordinarydiligenceasrequiredbyarticle1733. ART.1736.Theextraordinaryresponsibilityofthecommoncarrierlastsfromthetimethegoodsareunconditionallyplaced inthepossessionof,andreceivedbythecarrierfortransportationuntilthesanearedelivered,actuallyorconstructively,by thecarriertotheconsignee,ortothepersonwhohasarighttoreceivethem,withoutprejudicetotheprovisionsofarticles 1738. ART.1738.Theextraordinaryliabilityofthecommoncarriercontinuestobeoperativeevenduringthetimethegoodsare
storedinawarehouseofthecarrierattheplaceofdestination,untiltheconsigneehasbeenadvisedofthearrivalofthe goodsandhashadreasonableopportunitythereaftertoremovethemorotherwisedisposeofthem. ART.1742.Eveniftheloss,destruction,ordeteriorationofthegoodsshouldbecausedbythecharacterofthegoods,orthe faultynatureofthepackingorofthecontainers,thecommoncarriermustexerciseduediligencetoforestallorlessenthe loss. InCentralShippingCompany,Inc.v.InsuranceCompanyofNorthAmerica,6wereiteratedtherulesfortheliabilityofa commoncarrierforlostordamagedcargoasfollows: (1)Commoncarriersareboundtoobserveextraordinarydiligenceoverthegoodstheytransport,accordingtoall thecircumstancesofeachcase; (2)Intheeventofloss,destruction,ordeteriorationoftheinsuredgoods,commoncarriersareresponsible,unless theycanprovethatsuchloss,destruction,ordeteriorationwasbroughtaboutby,amongothers,"flood,storm, earthquake,lightning,orothernaturaldisasterorcalamity";and (3)InallothercasesnotspecifiedunderArticle1734oftheCivilCode,commoncarriersarepresumedtohave beenatfaultortohaveactednegligently,unlesstheyobservedextraordinarydiligence.7 Inthepresentcase,RCLandEDSAShippingdisclaimanyresponsibilityforthelossordamagetothegoodsinquestion. Theycontendthatthecauseofthedamagetothecargowasthe"fluctuationofthetemperatureinthereefervan,"which fluctuationoccurredafterthecargohadalreadybeendischargedfromthevessel;nofluctuation,theypointout,arosewhen thecargowasstillonboardM/VPiyaBhum.Asthecauseofthedamagetothecargooccurredafterthesamewasalready dischargedfromthevesselandwasunderthecustodyofthearrastreoperator(InternationalContainerTerminalServices, Inc.orICTSI),RCLandEDSAShippingpositthatthepresumptionofnegligenceprovidedinArticle1735oftheCivil Codeshouldnotapply.WhatappliesinthiscaseisArticle1734,particularlyparagraphs3and4thereof,whichexemptsthe carrierfromliabilityforlossordamagetothecargowhenitiscausedeitherbyanactoromissionoftheshipperorbythe characterofthegoodsordefectsinthepackingorinthecontainers.Thus,RCLandEDSAShippingseektolaytheblameat thefeetofotherparties. WedonotfindtheargumentsofRCLandEDSAShippingmeritorious. Acommoncarrierispresumedtohavebeennegligentifitfailstoprovethatitexercisedextraordinaryvigilanceoverthe goodsittransported.8Whenthegoodsshippedareeitherlostorarrivedindamagedcondition,apresumptionarisesagainst the carrier of its failure toobserve that diligence, and there need not be an express finding of negligence tohold it liable.91avvphi1 To overcome the presumption of negligence, the common carrier must establish by adequate proof that it exercised extraordinarydiligenceoverthegoods.Itmustdomorethanmerelyshowthatsomeotherpartycouldberesponsibleforthe damage.10 Inthepresentcase,RCLandEDSAShippingfailedtoprovethattheydidexercisethatdegreeofdiligencerequiredbylaw overthegoodstheytransported.Indeed,thereissufficientevidenceshowingthatthefluctuationofthetemperatureinthe refrigeratedcontainervan,asrecordedinthetemperaturechart,occurredafterthecargohadbeendischargedfromthe vesselandwasalreadyunderthecustodyofthearrastreoperator,ICTSI.Thisevidence,however,doesnotdisprovethatthe condenserfanwhichcausedthefluctuationofthetemperatureintherefrigeratedcontainerwasnotdamagedwhilethe cargowasbeingunloadedfromtheship.Itissettledinmaritimelawjurisprudencethatcargoeswhilebeingunloaded generallyremainunderthecustodyofthecarrier;11RCLandEDSAShippingfailedtodisputethis.1avvphi1 RCLandEDSAShippingcouldhaveofferedevidencebeforethetrialcourttoshowthatthedamagetothecondenserfan didnotoccur:(1)whilethecargowasintransit;(2)whiletheywereintheactofdischargingitfromthevessel;or(3)while theyweredeliveringitactuallyorconstructivelytotheconsignee.Theycouldhavepresentedprooftoshowthatthey exercisedextraordinarycareanddiligenceinthehandlingofthegoods,buttheyoptedtofileademurrertoevidence.Asthe ordergrantingtheirdemurrerwasreversedonappeal,theCAcorrectlyruledthattheyaredeemedtohavewaivedtheirright topresentevidence,12andthepresumptionofnegligencemuststand. ItisforthisreasonaswellthatwefindRCLandEDSAShippingsclaimthatthelossordamagetothecargowascausedby adefectinthepackingorinthecontainers.Toexculpateitselffromliabilityfortheloss/damagetothecargounderanyof thecauses,thecommoncarrierisburdenedtoproveanyofthecausesinArticle1734oftheCivilCodeclaimedbyitbya preponderanceofevidence.Ifthecarriersucceeds,theburdenofevidenceisshiftedtotheshippertoprovethatthecarrieris negligent.13RCLandEDSAShipping,however,failedtosatisfythisstandardofevidenceandinfactofferednoevidenceat allonthispoint;areversalofadismissalbasedonademurrertoevidencebarsthedefendantfrompresentingevidence supportingitsallegations.
WHEREFORE,weDENYthepetitionforreviewoncertiorarifiledbytheRegionalContainerLinesofSingaporeand EDSA Shipping Agency. The decision of the Court of Appeals dated May 26, 2004 in CAG.R. CV No. 76690 is AFFIRMEDINTOTO.Costsagainstthepetitioners. SOORDERED.
RepublicofthePhilippines SUPREMECOURT Manila FIRSTDIVISION G.R.No.157009March17,2010 SULPICIOLINES,INC.,Petitioner, vs. DOMINGOE.CURSO,LUCIAE.CURSO,MELECIOE.CURSO,SEGUNDOE.CURSO,VIRGILIOE.CURSO, DIOSDADAE.CURSO,andCECILIAE.CURSO,Respondents. DECISION BERSAMIN,J.: Arethesurvivingbrothersandsistersofapassengerofavesselthatsinksduringavoyageentitledtorecovermoraldamages fromthevesselownerascommoncarrier? ThisisthequestionpresentedintheappealtakenbythecommoncarrierfromthereversalbytheCourtofAppeals(CA)of thedecisionoftheRegionalTrialCourt(RTC)dismissingthecomplaintforvariousdamagesfiledbythesurvivingbrothers andsistersofthelateDr.CenonE.Cursouponafindingthatforcemajeurehadcausedthesinking.TheCAawardedmoral andotherdamagestothesurvivingbrothersandsisters. Antecedents OnOctober23,1988,Dr.CursoboardedattheportofManilatheMVDoaMarilyn,aninterislandvesselownedand operatedbypetitionerSulpicioLines,Inc.,boundforTaclobanCity.Unfortunately,theMVDoaMarilynsankinthe afternoonofOctober24,1988whileatseaduetotheinclementseaandweatherconditionsbroughtaboutbyTyphoon Unsang.ThebodyofDr.Cursowasnotrecovered,alongwithhundredsofotherpassengersoftheillfatedvessel.Atthe timeofhisdeath,Dr.Cursowas48yearsold,andemployedasaresidentphysicianattheNavalDistrictHospitalinNaval, Biliran.HehadabasicmonthlysalaryofP3,940.00,andwouldhaveretiredfromgovernmentservicebyDecember20, 2004attheageof65. OnJanuary21,1993,therespondents,allegedlythesurvivingbrothersandsistersofDr.Curso,suedthepetitionerinthe RTCinNaval,Bilirantoclaimdamagesbasedonbreachofcontractofcarriagebysea,averringthatthepetitionerhadacted negligently in transporting Dr. Curso and the other passengers. They stated, among others, that their parents had predeceasedDr.Curso,whodiedsingleandwithoutissue;andthat,assuch,theywereDr.Cursossurvivingheirsand successorsininterestentitledtorecovermoralandotherdamages.1Theyprayedforjudgment,asfollows:(a)compensatory damagesofP1,924,809.00;(b)moraldamagesofP100,000.00;(c)exemplaryorcorrectivedamagesintheamountdeemed properandjust;(d)expensesoflitigationofatleastP50,000.00;(e)attorneysfeesofP50,000.00;and(f)costsofsuit. Thepetitionerdeniedliability,insistingthatthesinkingofthevesselwasduetoforcemajeure(i.e.,TyphoonUnsang), whichexemptedacommoncarrierfromliability.ItaverredthattheMVDoaMarilynwasseaworthyinallrespects,and wasinfactclearedbythePhilippineCoastGuardforthevoyage;andthataftertheaccidentitconductedintensivesearch andrescueoperationsandextendedassistanceandaidtothevictimsandtheirfamilies. RulingoftheRTC OnJuly28,1995,theRTCdismissedthecomplaintuponitsfindingthatthesinkingofthevesselwasduetoforcemajeure. TheRTCconcludedthattheofficersoftheMVDoaMarilynhadactedwiththediligencerequiredofacommoncarrier; thatthesinkingofthevesselandthedeathofitspassengers,includingDr.Curso,couldnothavebeenavoided;thatthere wasnobasistoconsidertheMVDoaMarilynnotseaworthyatthetimeofthevoyage;thatthefindingsoftheSpecial BoardofMarineInquiry(SBMI)constitutedtoinvestigatethedisasterabsolvedthepetitioner,itsofficers,andcrewofany negligenceandadministrativeliability;andthattherespondentsfailedtoprovetheirclaimfordamages. RulingoftheCA TherespondentsappealedtotheCA,contendingthattheRTCerred:(a)inconsideringitselfbarredfromentertainingthe casebythefindingsoffactoftheSBMIinSBMIADMCaseNo.0888;(b)innotholdingthatthepetitionerwasnegligent anddidnotexercisetherequireddiligenceandcareinconductingDr.Cursotohisdestination;(c)innotfindingthatthe MVDoaMarilynwasunseaworthyatthetimeofitssinking;and(d)innotawardingdamagestothem.2 InitsdecisiondatedSeptember16,2002,3theCAheldanddisposed:
Basedontheeventsdescribedbytheappelleeswitness,theCourtfoundinadequateprooftoshowthatSulpicioLines,Inc., oritsofficersandcrew,hadexercisedtherequireddegreeofdiligencetoacquittheappelleeofliability. Inthefirstplace,thecourtfindsinadequateexplanationwhytheofficersoftheM.V.DoaMarilynhadnotapprised themselvesoftheweatherreportsontheapproachoftyphoon"Unsang"whichhadthepowerofasignalno.3cyclone, bearinguponthegeneraldirectionofthepathoftheM.V.DoaMarilyn.IftheofficersandcrewoftheDoaMarilynhad indeedbeenadequatelymonitoringthestrengthanddirectionofthetyphoon,andhadactedpromptlyandcompetentlyto avoidthesame,thensuchamishapwouldnothaveoccurred. Furthermore,therewasnoaccountoftheactsanddecisionofthecrewoftheillfatedshipfrom8:00PMonOctober23, 1988whentheChiefMatelefthispostuntil4:00AMthenextdaywhenheresumedduty.Itdoesnotappearwhatoccurred duringthattime,orwhatweatherreportswerereceivedandacteduponbytheshipcaptain.Whathappenedduringsuch timeisimportantindeterminingwhatinformationaboutthetyphoonwasgatheredandhowtheshipofficersreachedtheir decisiontojustchangecourse,andnottakeshelterwhileastrongtyphoonwasapproaching. Furthermore,theCourtdoubtsthefitnessoftheshipforthevoyage,sinceatthefirstsignofbadweather,theships hydraulicsystemfailedandhadtoberepairedmidvoyage,makingthevesselavirtualderelictamidstaragingstormatsea. Itispartoftheappelleesextraordinarydiligenceasacommoncarriertomakesurethatitsshipscanwithstandtheforces thatbearuponthemduringavoyage,whethertheybetheordinarystressoftheseaduringacalmvoyageortherageofa storm.Thefactthatthestudboltsintheshipshydraulicsystemgavewaywhiletheshipwasatseadiscreditsthetheorythat theappelleeexercisedduediligenceinmaintainingtheseaworthyconditionoftheM.V.DoaMarilyn.xxx.4 xxx Asidefromthese,thedefendantmustcompensatetheplaintiffsformoraldamagesthattheysufferedasaresultofthe negligenceattendingthelossoftheM.V.DoaMarilyn.Plaintiffs,haveestablishedthattheytookgreatpainstorecover,in vain,thebodyoftheirbrother,attheirowncost,whilesufferinggreatgriefduetothelossofalovedone.Furthermore, Plaintiffswereunabletorecoverthebodyoftheirbrother.MoraldamagesworthP100,000.00isproper. WHEREFORE,premisesconsidered,theappealeddecisionoftheRTCofNaval,Biliran,Branch16,renderedinCivilCase No.B0851,isherebySETASIDE.Inlieuthereof,judgmentisherebyrendered,findingthedefendantappelleeSulpicio Lines,Inc,tohavebeennegligentintransportingthedeceasedCenonE.CursowhowasonboardtheillfatedM.V.Doa Marilyn,resultinginhisuntimelydeath.DefendantappelleeisherebyorderedtopaytheplaintiffsheirsofCenonE.Curso thefollowing: (1)DeathindemnityintheamountofP50,000.00; (2)LossofEarningCapacityintheamountofP504,241.20; (3)MoralDamagesintheamountofP100,000.00. (4)Costsofthesuit.5 Hence,thisappeal,inwhichthepetitionerinsiststhattheCAcommittedgrievouserrorsinholdingthattherespondents wereentitledtomoraldamagesasthebrothersandsistersofthelateDr.Curso;thattheCAtherebydisregardedArticle1764 andArticle2206oftheCivilCode,andtherulinginReceiverforNorthNegrosSugarCo.,Inc.v.Ybaez,6wherebythe SupremeCourtdisallowedtheawardofmoraldamagesinfavorofthebrothersandsistersofadeceasedpassengerinan actionuponbreachofacontractofcarriage.7 Issues Thepetitionerraisesthefollowingissues: ARETHEBROTHERSANDSISTERSOFADECEASEDPASSENGERINACASEOFBREACHOFCONTRACTOF CARRIAGEENTITLEDTOANAWARDOFMORALDAMAGESAGAINSTTHECARRIER? ASSUMING (THAT) THEY ARE ENTITLED TO CLAIM MORAL DAMAGES, SHOULD THE AWARD BE GRANTEDORGIVENTOTHEBROTHERORSISTERNOTWITHSTANDING(THE)LACKOFEVIDENCEAS REGARDSHISORHERPERSONALSUFFERING? Ruling Thepetitionismeritorious. Asageneralrule,moraldamagesarenotrecoverableinactionsfordamagespredicatedonabreachofcontract,unlessthere isfraudorbadfaith.8Asanexception,moraldamagesmaybeawardedincaseofbreachofcontractofcarriagethatresults inthedeathofapassenger,9inaccordancewithArticle1764,inrelationtoArticle2206(3),oftheCivilCode,which provide: Article1764.DamagesincasescomprisedinthisSectionshallbeawardedinaccordancewithTitleXVIIIofthisBook, concerningDamages.Article2206shallalsoapplytothedeathofapassengercausedbythebreachofcontractbya
commoncarrier. Article2206.Theamountofdamagesfordeathcausedbyacrimeorquasidelictshallbeatleastthreethousandpesos,even thoughtheremayhavebeenmitigatingcircumstances.Inaddition: (1)Thedefendantshallbeliableforthelossoftheearningcapacityofthedeceased,andtheindemnityshallbe paidtotheheirsofthelatter;suchindemnityshallineverycasebeassessedandawardedbythecourt,unlessthe deceasedonaccountofpermanentphysicaldisabilitynotcausedbythedefendant,hadnoearningcapacityatthe timeofhisdeath; (2)Ifthedeceasedwasobligedtogivesupportaccordingtotheprovisionsofarticle291,therecipientwhoisnotan heircalledtothedecedent'sinheritancebythelawoftestateorintestatesuccession,maydemandsupportfromthe personcausingthedeath,foraperiodnotexceedingfiveyears,theexactdurationtobefixedbythecourt; (3) The spouse, legitimate and illegitimate descendants and ascendants of the deceased may demand moral damagesformentalanguishbyreasonofthedeathofthedeceased. Theforegoinglegalprovisionssetforththepersonsentitledtomoraldamages.TheomissionfromArticle2206(3)ofthe brothersandsistersofthedeceasedpassengerrevealsthelegislativeintenttoexcludethemfromtherecoveryofmoral damagesformentalanguishbyreasonofthedeathofthedeceased.Inclusiouniusestexclusioalterius.10Thesolemnpower anddutyofthecourtstointerpretandapplythelawdonotincludethepowertocorrectthelawbyreadingintoitwhatisnot writtentherein.11Thus,theCAerredinawardingmoraldamagestotherespondents. ThepetitionerhascorrectlyreliedontheholdinginReceiverforNorthNegrosSugarCompany,Inc.v.Ybaez,12tothe effectthatincaseofdeathcausedbyquasidelict,thebrotherofthedeceasedwasnotentitledtotheawardofmoral damagesbasedonArticle2206oftheCivilCode. Essentially,thepurposeofmoraldamagesisindemnityorreparation,thatis,toenabletheinjuredpartytoobtainthemeans, diversions,oramusementsthatwillservetoalleviatethemoralsufferinghehasundergonebyreasonofthetragicevent. AccordingtoVillanuevav.Salvador,13theconditionsforawardingmoraldamagesare:(a)theremustbeaninjury,whether physical,mental,orpsychological,clearlysubstantiatedbytheclaimant;(b)theremustbeaculpableact oromission factuallyestablished;(c)thewrongfulactoromissionofthedefendantmustbetheproximatecauseoftheinjurysustained bytheclaimant;and(d)theawardofdamagesispredicatedonanyofthecasesstatedinArticle2219oftheCivilCode. Tobeentitledtomoraldamages,therespondentsmusthavearightbaseduponlaw.ItistruethatunderArticle100314ofthe CivilCodetheysucceededtotheentireestateofthelateDr.Cursointheabsenceofthelattersdescendants,ascendants, illegitimatechildren,andsurvivingspouse.However,theywerenotincludedamongthepersonsentitledtorecovermoral damages,asenumeratedinArticle2219oftheCivilCode,viz: Article2219.Moraldamagesmayberecoveredinthefollowingandanalogouscases: (1)Acriminaloffenseresultinginphysicalinjuries; (2)Quasidelictscausingphysicalinjuries; (3)Seduction,abduction,rapeorotherlasciviousacts; (4)Adulteryorconcubinage; (5)Illegalorarbitrarydetentionorarrest; (6)Illegalsearch; (7)Libel,slanderoranyotherformofdefamation; (8)Maliciousprosecution; (9)Actsmentionedinarticle309; (10)Actsandactionsreferredtoinarticles21,26,27,28,29,30,32,34and35. Theparentsofthefemaleseduced,abducted,rapedorabusedreferredtoinNo.3ofthisarticle,mayalsorecovermoral damages. Thespouse,descendants,ascendantsandbrothersandsistersmaybringtheactionmentionedinNo.9ofthisarticle,inthe ordernamed.1avvphi1 Article 2219 circumscribes the instances in which moral damages may be awarded. The provision does not include successioninthecollaterallineasasourceoftherighttorecovermoraldamages.Theusageofthephraseanalogouscases intheprovisionmeanssimplythatthesituationmustbeheldsimilartothoseexpresslyenumeratedinthelawinquestion15 followingtheejusdemgenerisrule.Hence,Article1003oftheCivilCodeisnotconcernedwithrecoveryofmoraldamages. Infine,moraldamagesmayberecoveredinanactionuponbreachofcontractofcarriageonlywhen:(a)wheredeathofa passengerresults,or(b)itisprovedthatthecarrierwasguiltyoffraudandbadfaith,evenifdeathdoesnotresult.16Article 2206oftheCivilCodeentitlesthedescendants,ascendants,illegitimatechildren,andsurvivingspouseofthedeceased
passengertodemandmoraldamagesformentalanguishbyreasonofthedeathofthedeceased.17 WHEREFORE,thepetitionforreviewoncertiorariisgranted,andtheawardmadetotherespondentsinthedecisiondated September16,2002oftheCourtofAppealsofmoraldamagesamountingtoP100,000.00isdeletedandsetaside. SOORDERED.
RepublicofthePhilippines SUPREMECOURT Manila SECONDDIVISION G.R.No.148496March19,2002 VIRGINESCALVOdoingbusinessunderthenameandstyleTRANSORIENTCONTAINERTERMINALSERVICES, INC.,petitioner, vs. UCPBGENERALINSURANCECO.,INC.(formerlyAlliedGuaranteeIns.Co.,Inc.)respondent. MENDOZA,J.: Thisisapetitionforreviewofthedecision,1datedMay31,2001,oftheCourtofAppeals,affirmingthedecision2ofthe RegionalTrialCourt,MakatiCity,Branch148,whichorderedpetitionertopayrespondent,assubrogee,theamountof P93,112.00withlegalinterest,representingthevalueofdamagedcargohandledbypetitioner,25%thereofasattorney'sfees, andthecostofthesuit.1wphi1.nt Thefactsareasfollows: PetitionerVirginesCalvoistheownerofTransorientContainerTerminalServices,Inc.(TCTSI),asoleproprietorship customsbroker.Atthetimematerialtothiscase,petitionerenteredintoacontractwithSanMiguelCorporation(SMC)for thetransferof114reelsofsemichemicalflutingpaperand124reelsofkraftlinerboardfromthePortAreainManilato SMC'swarehouseattheTabacaleraCompound,RomualdezSt.,Ermita,Manila.Thecargowasinsuredbyrespondent UCPBGeneralInsuranceCo.,Inc. OnJuly14,1990,theshipmentinquestion,containedin30metalvans,arrivedinManilaonboard"M/VHayakawaMaru" and,after24hours,wereunloadedfromthevesseltothecustodyofthearrastreoperator,ManilaPortServices,Inc.From July23toJuly25,1990,petitioner,pursuanttohercontractwithSMC,withdrewthecargofromthearrastreoperatorand deliveredittoSMC'swarehouseinErmita,Manila.OnJuly25,1990,thegoodswereinspectedbyMarineCargoSurveyors, whofoundthat15reelsofthesemichemicalflutingpaperwere"wet/stained/torn"and3reelsofkraftlinerboardwere likewisetorn.ThedamagewasplacedatP93,112.00. SMC collected payment from respondent UCPB under its insurance contract for the aforementioned amount. In turn, respondent,assubrogeeofSMC,broughtsuitagainstpetitionerintheRegionalTrialCourt,Branch148,MakatiCity, which,onDecember20,1995,renderedjudgmentfindingpetitionerliabletorespondentforthedamagetotheshipment. Thetrialcourtheld: Itcannotbedenied...thatthesubjectcargoessustaineddamagewhileinthecustodyofdefendants.Evidencesuch astheWarehouseEntrySlip(Exh."E");theDamageReport(Exh."F")withentriesappearingtherein,classifiedas "TED"and"TSN",whichtheclaimsprocessor,Ms.AgrifinaDeLuna,claimedtobetearrageattheendand tearrageatthemiddleofthesubjectdamagedcargoesrespectively,coupledwiththeMarineCargoSurveyReport (Exh."H""H4A")confirmsthefactofthedamagedconditionofthesubjectcargoes.Thesurveyor[s']report (Exh."H4A")inparticular,whichprovidesamongothersthat: " . . . we opine that damages sustained by shipment is attributable to improper handling in transit presumablywhilstinthecustodyofthebroker...." isafindingwhichcannotbetraversedandoverturned. The evidence adduced by the defendants is not enough to sustain [her] defense that [she is] are not liable. Defendantbyreasonofthenatureof[her]businessshouldhavedevisedwaysandmeansinordertopreventthe damagetothecargoeswhichitisunderobligationtotakecustodyofandtoforthwithdelivertotheconsignee. Defendantdidnotpresentanyevidenceonwhatprecaution[she]performedtoprevent[the]saidincident,hence the presumption is that the moment the defendant accepts the cargo [she] shall perform such extraordinary diligencebecauseofthenatureofthecargo. .... GenerallyspeakingunderArticle1735oftheCivilCode,ifthegoodsareprovedtohavebeenlost,destroyedor deteriorated,commoncarriersarepresumedtohavebeenatfaultortohaveactednegligently,unlesstheyprovethat theyhaveobservedtheextraordinarydiligencerequiredbylaw.Theburdenoftheplaintiff,therefore,istoprove merelythatthegoodshetransportedhavebeenlost,destroyedordeteriorated.Thereafter,theburdenisshiftedto
thecarriertoprovethathehasexercisedtheextraordinarydiligencerequiredbylaw.Thus,ithasbeenheldthatthe mereproofofdeliveryofgoodsingoodordertoacarrier,andoftheirarrivalattheplaceofdestinationinbad order,makesoutaprimafaciecaseagainstthecarrier,sothatifnoexplanationisgivenastohowtheinjury occurred,thecarriermustbeheldresponsible.Itisincumbentuponthecarriertoprovethatthelosswasdueto accidentorsomeothercircumstancesinconsistentwithitsliability."(citedinCommercialLawsofthePhilippines byAgbayani,p.31,Vol.IV,1989Ed.) Defendant, beinga customs brother,warehouseman and at the same time acommon carrier is supposed [to] exercise[the]extraordinarydiligencerequiredbylaw,hencetheextraordinaryresponsibilitylastsfromthetimethe goodsareunconditionallyplacedinthepossessionofandreceivedbythecarrierfortransportationuntilthesame aredeliveredactuallyorconstructivelybythecarriertotheconsigneeortothepersonwhohastherighttoreceive thesame.3 Accordingly,thetrialcourtorderedpetitionertopaythefollowingamounts 1.ThesumofP93,112.00plusinterest; 2.25%thereofaslawyer'sfee; 3.Costsofsuit.4 ThedecisionwasaffirmedbytheCourtofAppealsonappeal.Hencethispetitionforreviewoncertiorari. Petitionercontendsthat: I.THECOURTOFAPPEALSCOMMITTEDSERIOUSANDREVERSIBLEERROR[IN]DECIDINGTHE CASE NOT ON THE EVIDENCE PRESENTED BUT ON PURE SURMISES, SPECULATIONS AND MANIFESTLYMISTAKENINFERENCE. II.THECOURTOFAPPEALSCOMMITTEDSERIOUSANDREVERSIBLEERRORINCLASSIFYINGTHE PETITIONERASACOMMONCARRIERANDNOTASPRIVATEORSPECIALCARRIERWHODIDNOT HOLDITSSERVICESTOTHEPUBLIC.5 Itwillbeconvenienttodealwiththesecontentionsintheinverseorder,forifpetitionerisnotacommoncarrier,although boththetrialcourtandtheCourtofAppealsheldotherwise,thensheisindeednotliablebeyondwhatordinarydiligencein thevigilanceoverthegoodstransportedbyher,wouldrequire.6Consequently,anydamagetothecargosheagreesto transportcannotbepresumedtohavebeenduetoherfaultornegligence. PetitionercontendsthatcontrarytothefindingsofthetrialcourtandtheCourtofAppeals,sheisnotacommoncarrierbut aprivatecarrierbecause,asacustomsbrokerandwarehouseman,shedoesnotindiscriminatelyholdherservicesouttothe publicbutonlyoffersthesametoselectpartieswithwhomshemaycontractintheconductofherbusiness. Thecontentionhasnomerit.InDeGuzmanv.CourtofAppeals,7theCourtdismissedasimilarcontentionandheldthe partytobeacommoncarrier,thus TheCivilCodedefines"commoncarriers"inthefollowingterms: "Article 1732. Common carriers are persons, corporations, firms or associations engaged in the business of carryingortransportingpassengersorgoodsorboth,byland,water,orairforcompensation,offeringtheirservices tothepublic." Theabovearticlemakesnodistinctionbetweenonewhoseprincipalbusinessactivityisthecarryingofpersonsor goodsorboth,andonewhodoessuchcarryingonlyasanancillaryactivity...Article1732alsocarefullyavoids makinganydistinctionbetweenapersonorenterpriseofferingtransportationserviceonaregularorscheduled basisandoneofferingsuchserviceonanoccasional,episodicorunscheduledbasis.NeitherdoesArticle1732 distinguishbetweenacarrierofferingitsservicestothe"generalpublic,"i.e.,thegeneralcommunityorpopulation, andonewhooffersservicesorsolicitsbusinessonlyfromanarrowsegmentofthegeneralpopulation.Wethink thatArticle1732deliberatelyrefrainedfrommakingsuchdistinctions. Sounderstood,theconceptof"commoncarrier"underArticle1732maybeseentocoincideneatlywiththenotion of"publicservice," under thePublic Service Act (CommonwealthAct No.1416,as amended)whichat least partiallysupplementsthelawoncommoncarrierssetforthintheCivilCode.UnderSection13,paragraph(b)of thePublicServiceAct,"publicservice"includes: "xxxeverypersonthatnoworhereaftermayown,operate,manage,orcontrolinthePhilippines,forhire orcompensation,withgeneralorlimitedclientele,whetherpermanent,occasionaloraccidental,anddone forgeneralbusinesspurposes,anycommoncarrier,railroad,streetrailway,tractionrailway,subwaymotor vehicle,eitherforfreightorpassenger,orboth,withorwithoutfixedrouteandwhatevermaybeits classification, freight or carrier service of any class, express service, steamboat, or steamship line,
pontines,ferriesandwatercraft,engagedinthetransportationofpassengersorfreightorboth,shipyard, marinerepairshop,wharfordock,iceplant,icerefrigerationplant,canal,irrigationsystem,gas,electric light, heat and power, water supply and power petroleum, sewerage system, wire or wireless communicationssystems,wireorwirelessbroadcastingstationsandothersimilarpublicservices.xxx"8 Thereisgreaterreasonforholdingpetitionertobeacommoncarrierbecausethetransportationofgoodsisanintegralpart ofherbusiness.Toupholdpetitioner'scontentionwouldbetodeprivethosewithwhomshecontractstheprotectionwhich thelawaffordsthemnotwithstandingthefactthattheobligationtocarrygoodsforhercustomers,asalreadynoted,ispart andparcelofpetitioner'sbusiness. Now,astopetitioner'sliability,Art.1733oftheCivilCodeprovides: Common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinarydiligenceinthevigilanceoverthegoodsandforthesafetyofthepassengerstransportedbythem, accordingtoallthecircumstancesofeachcase.... InCompaniaMaritimav.CourtofAppeals,9themeaningof"extraordinarydiligenceinthevigilanceovergoods"was explainedthus: Theextraordinarydiligenceinthevigilanceoverthegoodstenderedforshipmentrequiresthecommoncarrierto knowandtofollowtherequiredprecautionforavoidingdamageto,ordestructionofthegoodsentrustedtoitfor sale,carriageanddelivery.Itrequirescommoncarrierstorenderservicewiththegreatestskillandforesightand "touseallreasonablemeanstoascertainthenatureandcharacteristicofgoodstenderedforshipment,andto exerciseduecareinthehandlingandstowage,includingsuchmethodsastheirnaturerequires." Inthecaseatbar,petitionerdeniesliabilityforthedamagetothecargo.Sheclaimsthatthe"spoilageorwettage"tookplace whilethegoodswereinthecustodyofeitherthecarryingvessel"M/VHayakawaMaru,"whichtransportedthecargoto Manila,orthearrastreoperator,towhomthegoodswereunloadedandwhoallegedlykepttheminopenairforninedays fromJuly14toJuly23,1998notwithstandingthefactthatsomeofthecontainersweredeformed,cracked,orotherwise damaged,asnotedintheMarineSurveyReport(Exh.H),towit: MAXU2062880raingutterdeformed/cracked ICSU3634613leftsiderubbergasketondoordistorted/partlyloose PERU2042094withpinholesonroofpanelrightportion TOLU2136743woodflooringwe[t]and/orwithsignsofwatersoaked MAXU2014060withdent/crackonroofpanel ICSU4121050rubbergasketonleftside/doorpanelpartlydetachedloosened.10 Inaddition,petitionerclaimsthatMarineCargoSurveyorErnestoTolentinotestifiedthathehasnopersonalknowledgeon whetherthecontainervanswerefirststoredinpetitioner'swarehousepriortotheirdeliverytotheconsignee.Shelikewise claims that after withdrawing the container vans from the arrastre operator, her driver, Ricardo Nazarro, immediately deliveredthecargotoSMC'swarehouseinErmita,Manila,whichisamerethirtyminutedrivefromthePortAreawhere thecargocamefrom.Thus,thedamagetothecargocouldnothavetakenplacewhilethesewereinhercustody.11 Contrarytopetitioner'sassertion,theSurveyReport(Exh.H)oftheMarineCargoSurveyorsindicatesthatwhentheshipper transferredthecargoinquestiontothearrastreoperator,thesewerecoveredbycleanEquipmentInterchangeReport(EIR) and,whenpetitioner'semployeeswithdrewthecargofromthearrastreoperator,theydidsowithoutexceptionorprotest eitherwithregardtotheconditionofcontainervansortheircontents.TheSurveyReportpertinentlyreads DetailsofDischarge: Shipment,providedwithourprotectivesupervisionwasnoteddischargedexvesseltodockofPier#13South Harbor,Manilaon14July1990,containerizedonto30'x20'securemetalvans,coveredbycleanEIRs.Exceptfor slightdentsandpaintscratchesonsideandroofpanels,thesecontainersweredeemedtohave[been]receivedin goodcondition. .... Transfer/Delivery: OnJuly23,1990,shipmenthousedonto30'x20'cargocontainerswas[withdrawn]byTransorientContainer Services,Inc....withoutexception. [The cargo] was finally delivered to the consignee's storage warehouse located at Tabacalera Compound, RomualdezStreet,Ermita,ManilafromJuly23/25,1990.12 AsfoundbytheCourtofAppeals: Fromthe[SurveyReport],it[is]clearthattheshipmentwasdischargedfromthevesseltothearrastre,MarinaPort
ServicesInc.,ingoodorderandconditionasevidencedbycleanEquipmentInterchangeReports(EIRs).Hadthere beenanydamagetotheshipment,therewouldhavebeenareporttothateffectmadebythearrastreoperator.The cargoeswerewithdrawnbythedefendantappellantfromthearrastrestillingoodorderandconditionasthesame werereceivedbytheformerwithoutexception,thatis,withoutanyreportofdamageorloss.Surely,ifthecontainer vans were deformed, cracked, distorted or dented, the defendantappellant would report it immediately tothe consigneeormakeanexceptiononthedeliveryreceiptornotethesameintheWarehouseEntrySlip(WES).None ofthesetookplace.Toputitsimply,thedefendantappellantreceivedtheshipmentingoodorderandconditionand deliveredthesametotheconsigneedamaged.Wecanonlyconcludethatthedamagestothecargooccurredwhile itwasinthepossessionofthedefendantappellant.Wheneverthethingislost(ordamaged)inthepossessionofthe debtor(orobligor),itshallbepresumedthattheloss(ordamage)wasduetohisfault,unlessthereisprooftothe contrary.Noproofwasprofferedtorebutthislegalpresumptionandthepresumptionofnegligenceattachedtoa commoncarrierincaseoflossordamagetothegoods.13 Anentpetitioner'sinsistencethatthecargocouldnothavebeendamagedwhileinhercustodyassheimmediatelydelivered thecontainerstoSMC'scompound,sufficeittosaythattoprovetheexerciseofextraordinarydiligence,petitionermustdo morethanmerelyshowthepossibilitythatsomeotherpartycouldberesponsibleforthedamage.Itmustprovethatitused "allreasonablemeanstoascertainthenatureandcharacteristicofgoodstenderedfor[transport]andthat[it]exercise[d]due careinthehandling[thereof]."Petitionerfailedtodothis. NoristherebasistoexemptpetitionerfromliabilityunderArt.1734(4),whichprovides Commoncarriersareresponsiblefortheloss,destruction,ordeteriorationofthegoods,unlessthesameisdueto anyofthefollowingcausesonly: .... (4)Thecharacterofthegoodsordefectsinthepackingorinthecontainers. .... Forthisprovisiontoapply,theruleisthatiftheimproperpackingor,inthiscase,thedefect/sinthecontainer,is/areknown tothecarrierorhisemployeesorapparentuponordinaryobservation,butheneverthelessacceptsthesamewithoutprotest orexceptionnotwithstandingsuchcondition,heisnotrelievedofliabilityfordamageresultingtherefrom.14Inthiscase, petitioneracceptedthecargowithoutexceptiondespitetheapparentdefectsinsomeofthecontainervans.Hence,forfailure ofpetitionertoprovethatsheexercisedextraordinarydiligenceinthecarriageofgoodsinthiscaseorthatsheisexempt fromliability,thepresumptionofnegligenceasprovidedunderArt.173515holds. WHEREFORE,thedecisionoftheCourtofAppeals,datedMay31,2001,isAFFIRMED. SOORDERED. Bellosillo,Quisumbing,Buena,andDeLeon,Jr.,JJ.,concur.

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LAW ON TRANSPORTATION MarielAngelaPiedadSoriano

LAW ON TRANSPORTATION MarielAngelaPiedadSoriano

LAW ON TRANSPORTATION MarielAngelaPiedadSoriano

LAW ON TRANSPORTATION MarielAngelaPiedadSoriano

LAW ON TRANSPORTATION MarielAngelaPiedadSoriano

LAW ON TRANSPORTATION MarielAngelaPiedadSoriano

LAW ON TRANSPORTATION MarielAngelaPiedadSoriano

LAW ON TRANSPORTATION MarielAngelaPiedadSoriano

LAW ON TRANSPORTATION MarielAngelaPiedadSoriano

decisiononthemerits. Inthelightoftheforegoinganalysis,itisOuropinionthatthepetitioner'sclaimcannotbesustained.Thepetitionis DISMISSEDandthedecisionoftheCourtofAppealsisherebyAFFIRMED. SOORDERED. Narvasa,C.J.,Padilla,RegaladoandNocon,JJ.,concur.

LAW ON TRANSPORTATION MarielAngelaPiedadSoriano

LAW ON TRANSPORTATION MarielAngelaPiedadSoriano

RepublicofthePhilippines SUPREMECOURT Manila THIRDDIVISION

LAW ON TRANSPORTATION MarielAngelaPiedadSoriano

LAW ON TRANSPORTATION MarielAngelaPiedadSoriano

LAW ON TRANSPORTATION MarielAngelaPiedadSoriano

LAW ON TRANSPORTATION MarielAngelaPiedadSoriano

LAW ON TRANSPORTATION MarielAngelaPiedadSoriano

LAW ON TRANSPORTATION MarielAngelaPiedadSoriano

LAW ON TRANSPORTATION MarielAngelaPiedadSoriano

LAW ON TRANSPORTATION MarielAngelaPiedadSoriano

LAW ON TRANSPORTATION MarielAngelaPiedadSoriano

LAW ON TRANSPORTATION MarielAngelaPiedadSoriano

LAW ON TRANSPORTATION MarielAngelaPiedadSoriano

LAW ON TRANSPORTATION MarielAngelaPiedadSoriano

LAW ON TRANSPORTATION MarielAngelaPiedadSoriano

LAW ON TRANSPORTATION MarielAngelaPiedadSoriano

passengertodemandmoraldamagesformentalanguishbyreasonofthedeathofthedeceased.17 WHEREFORE,thepetitionforreviewoncertiorariisgranted,andtheawardmadetotherespondentsinthedecisiondated September16,2002oftheCourtofAppealsofmoraldamagesamountingtoP100,000.00isdeletedandsetaside. SOORDERED.

LAW ON TRANSPORTATION MarielAngelaPiedadSoriano

LAW ON TRANSPORTATION MarielAngelaPiedadSoriano

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