G.R. No.
80447 January 31, 1989 in an Order dated 13 January 1986 as they were filed beyond the time for
BALIWAG TRANSIT, INC., petitioner,
vs.
HON. COURT OF APPEALS and SPS. SOTERO CAILIPAN, JR. and
ZENAIDA LOPEZ and GEORGE L. CAILIPAN, respondents.
Sta. Maria & Associates for petitioner.
Punzalan and Associates Law Office for respondents.
MELENCIO-HERRERA, J.:
On 10 April 1985 a Complaint for damages arising from breach of contract of
carriage was filed by private respondents, the Spouses Sotero Cailipan, Jr.
and Zenaida Lopez, and their son George, of legal age, against petitioner
Baliwag Transit (Baliwag, for brevity). The Complaint alleged that George,
who was a paying passenger on a Baliwag bus on 17 December 1984,
suffered multiple serious physical injuries when he was thrown off said bus
driven in a careless and negligent manner by Leonardo Cruz, the authorized
bus driver, along Barangay Patubig, Marilao, Bulacan. As a result, he was
confined in the hospital for treatment, incurring medical expenses, which
were borne by his parents, the respondent Spouses, in the sum of about
P200,000.00 plus other incidental expenses of about P10,000.00.
On 26 April 1985 an Answer was filed by petitioner alleging that the cause of
the injuries sustained by George was solely attributable to his own voluntary
act in that, without warning and provocation, he suddenly stood up from his
seat and headed for the door of the bus as if in a daze, opened it and jumped
off while said bus was in motion, in spite of the protestations by the driver
and without the knowledge of the conductor.
Baliwag then filed a Third-Party Complaint against Fortune Insurance &
Surety Company, Inc., on its third-party liability insurance in the amount of
P50,000.00. In its Answer, Fortune Insurance claimed limited liability, the
coverage being subject to a Schedule of Indemnities forming part of the
insurance policy.
On 14 November 1985 and 18 November 1985, respectively, Fortune
Insurance and Baliwag each filed Motions to Dismiss on the ground that
George, in consideration of the sum of P8,020.50 had executed a "Release
of Claims" dated 16 May 1985. These Motions were denied by the Trial Court
pleading and after the Answer were already filed.
On 5 February 1986 Baliwag filed a Motion to Admit Amended Answer, which
was granted by the Trial Court. The Amended Answer incorporated the
affirmative defense in the Motion to Dismiss to the effect that on 16 May
1985, George bad been paid all his claims for damages arising from the
incident subject matter of the complaint when he executed the following
"Release of Claims":
For and in consideration of the payment to me/us of the sum
of EIGHT THOUSAND TWENTY and 50/100 PESOS ONLY
(P8,020.50), the receipt of which is hereby acknowledged,
I/we, being of lawful age, do hereby release, acquit and
forever discharge Fortune Insurance and/or Baliwag transit,
Inc. his/her heirs, executors and assigns, from any and all
liability now accrued or hereafter to accrue on account of any
and all claims or causes of action which I/we now or may
here after have for personal injuries, damage to property,
loss of services, medical expenses, losses or damages of
any and every kind or nature whatsoever, now known or
what may hereafter develop by me/us sustained or received
on or about 17th day of December, 1984 through Reckless
Imprudence Resulting to Physical Injuries, and I/we hereby
declare that I/we fully understand the terms of this settlement
and voluntarily accept said sum for the purpose of making a
full and final compromise adjustment and settlement of the
injuries and damages, expenses and inconvenience above
mentioned. (Rollo, p. 11)
During the preliminary hearing on the aforementioned affirmative defense,
Baliwag waived the presentation of testimonial evidence and instead offered
as its Exhibit "1" the "Release of Claims" signed by George and witnessed by
his brother Benjamin L. Cailipan, a licensed engineer.
By way of opposition to petitioner's affirmative defense, respondent Sotero
Cailipan, Jr. testified that be is the father of George, who at the time of the
incident was a student, living with his parents and totally dependent on them
for their support; that the expenses for his hospitalization were shouldered by
his parents; and that they had not signed the "Release of Claims."
In an Order dated 29 August 1986, the Regional Trial Court of Bulacan,
Branch 20, dismissed the Complaint and Third-party Complaint, ruling that
1
since the contract of carriage is between Baliwag and George L. Cailipan, the
latter, who is of legal age, had the exclusive right to execute the Release of
Claims despite the fact that he is still a student and dependent on his parents
for support. Consequently, the execution by George of the Release of Claims
discharges Baliwag and Fortune Insurance.
Aggrieved, the Spouses appealed to respondent Court of Appeals.
On 22 October 1987, the Appellate Court rendered a Decision setting aside
2 must be brought in the name of the party whose legal right
the appealed Order and holding that the "Release of Claims" cannot operate
as a valid ground for the dismissal of the case because it does not have the
conformity of all the parties, particularly George's parents, who have a
substantial interest in the case as they stand to be prejudiced by the
judgment because they spent a sizeable amount for the medical bills of their
son; that the Release of Claims was secured by Fortune Insurance for the
consideration of P8,020.50 as the full and final settlement of its liability under
the insurance policy and not for the purpose of releasing Baliwag from its
liability as a carrier in this suit for breach of contract. The Appellate Court
also ordered the remand of the case to the lower Court for trial on the merits
and for George to return the amount of P8,020.50 to Fortune Insurance.
Hence, this Petition for Review on certiorari by Baliwag assailing the
Appellate Court judgment.
The issue brought to the fore is the legal effect of the Release of Claims
executed by George during the pendency of this case.
We hold that since the suit is one for breach of contract of carriage, the
Release of Claims executed by him, as the injured party, discharging Fortune
Insurance and Baliwag from any and all liability is valid. He was then of legal
age, a graduating student of Agricultural Engineering, and had the capacity
to do acts with legal effect (Article 37 in relation to Article 402, Civil Code).
Thus, he could sue and be sued even without the assistance of his parents.
Significantly, the contract of carriage was actually between George, as the
paying passenger, and Baliwag, as the common carrier. As such carrier,
Baliwag was bound to carry its passengers safely as far as human care and
foresight could provide, and is liable for injuries to them through the
negligence or wilful acts of its employees (Articles 1755 and 1759, Civil
Code). Thus, George had the right to be safely brought to his destination and
Baliwag had the correlative obligation to do so. Since a contract may be
violated only by the parties thereto, as against each other, in an action upon
that contract, the real parties in interest, either as plaintiff or as defendant,
must be parties to said contract (Marimperio Compania Naviera, S.A. vs.
Court of Appeals, No. L-40234, December 14, 1987, 156 SCRA 368). A real
party-in-interest -plaintiff is one who has a legal right while a real party-in-
interest-defendant is one who has a correlative legal obligation whose act or
omission violates the legal right of the former (Lee vs. Romillo, Jr., G.R. No.
60973, May 28, 1988). In the absence of any contract of carriage between
Baliwag and George's parents, the latter are not real parties-in-interest in an
action for breach of that contract.
The general rule of the common law is that every action
has been invaded or infringed. 15 Enc. P1. & Pr. p. 484. "For
the immediate wrong and damage the person injured is the
only one who can maintain the action." Id. p. 578. The
person who sustains an injury is the person to bring an
action for the injury against the wrongdoer." Dicey parties to
Actions, 347. (Cited in Green v. Shoemaker, 73 A 688, 23
L.R.A., N.S. 667).
There is no question regarding the genuineness and due execution of the
Release of Claims. It is a duly notarized public document. It clearly stipulates
that the consideration of P8,020.50 received by George was "to release and
forever discharge Fortune Insurance and/or Baliwag from any and all
liabilities now accrued or to accrue on account of any and all claims or
causes of action ... for personal injuries, damage to property, loss of
services, medical expenses, losses or damages of any and every kind or
nature whatsoever, sustained by him on 17 December 1984 thru Reckless
Imprudence Resulting to Physical Injuries." Consequently, the ruling of
respondent Appellate Court that the "Release of Claims" was intended only
as the full and final settlement of a third-party liability for bodily injury claim
and not for the purpose of releasing Baliwag from its liability, if any, in a
breach of a contract of carriage, has to be rejected for being contrary to the
very terms thereof. If the terms of a contract are clear and leave no doubt
upon the intention of the contracting parties, the literal meaning of its
stipulations shall control (Article 1370, Civil Code). The phraseology "any and
all claims or causes of action" is broad enough to include all damages that
may accrue to the injured party arising from the unfortunate accident.
The Release of Claims had the effect of a compromise agreement since it
was entered into for the purpose of making a full and final compromise
adjustment and settlement of the cause of action involved. A compromise is
a contract whereby the parties, by making reciprocal concessions, avoid a
litigation or put an end to one already commenced (Article 2028, Civil Code).
The Release of Claims executed by the injured party himself wrote finish to
this litigation.
WHEREFORE, the Decision dated 22 October 1987 of respondent Court of
Appeals is SET ASIDE, the Decision of the Regional Trial Court of Bulacan,
Branch 20, is REINSTATED, and the Complaint and Third-Party Complaint
are hereby ordered DISMISSED. No costs.
SO ORDERED.
G.R. No. 111127 July 26, 1996
MR. & MRS. ENGRACIO FABRE, JR. and PORFIRIO CABIL, petitioners,
vs.
COURT OF APPEALS, THE WORD FOR THE WORLD CHRISTIAN
FELLOWSHIP, INC., AMYLINE ANTONIO, JOHN RICHARDS, GONZALO
GONZALES, VICENTE V. QUE, JR., ICLI CORDOVA, ARLENE GOJOCCO,
ALBERTO ROXAS CORDERO, RICHARD BAUTISTA, JOCELYN GARCIA,
YOLANDA CORDOVA, NOEL ROQUE, EDWARD TAN, ERNESTO
NARCISO, ENRIQUETA LOCSIN, FRANCIS NORMAN O. LOPES, JULIUS
CAESAR, GARCIA, ROSARIO MA. V. ORTIZ, MARIETTA C. CLAVO, ELVIE
SENIEL, ROSARIO MARA-MARA, TERESITA REGALA, MELINDA
TORRES, MARELLA MIJARES, JOSEFA CABATINGAN, MARA NADOC,
DIANE MAYO, TESS PLATA, MAYETTE JOCSON, ARLENE Y. MORTIZ,
LIZA MAYO, CARLOS RANARIO, ROSAMARIA T. RADOC and
BERNADETTE FERRER, respondents.
MENDOZA, J.:p
This is a petition for review on certiorari of the decision of the Court of Appeals1 in CA-GR No. 28245, dated
September 30, 1992, which affirmed with modification the decision of the Regional Trial Court of Makati, Branch 58,
ordering petitioners jointly and severally to pay damages to private respondent Amyline Antonio, and its resolution
which denied petitioners' motion for reconsideration for lack of merit.
Petitioners Engracio Fabre, Jr. and his wife were owners of a 1982 model
Mazda minibus. They used the bus principally in connection with a bus
service for school children which they operated in Manila. The couple had a
driver, Porfirio J. Cabil, whom they hired in 1981, after trying him out for two
weeks, His job was to take school children to and from the St. Scholastica's
College in Malate, Manila.
On November 2, 1984 private respondent Word for the World Christian
Fellowship Inc. (WWCF) arranged with petitioners for the transportation of 33
members of its Young Adults Ministry from Manila to La Union and back in
consideration of which private respondent paid petitioners the amount of
P3,000.00.
The group was scheduled to leave on November 2, 1984, at 5:00 o'clock in
the afternoon. However, as several members of the party were late, the bus
did not leave the Tropical Hut at the corner of Ortigas Avenue and EDSA
until 8:00 o'clock in the evening. Petitioner Porfirio Cabil drove the minibus.
The usual route to Caba, La Union was through Carmen, Pangasinan.
However, the bridge at Carmen was under repair, sot hat petitioner Cabil,
who was unfamiliar with the area (it being his first trip to La Union), was
forced to take a detour through the town of Baay in Lingayen, Pangasinan. At
11:30 that night, petitioner Cabil came upon a sharp curve on the highway,
running on a south to east direction, which he described as "siete." The road
was slippery because it was raining, causing the bus, which was running at
the speed of 50 kilometers per hour, to skid to the left road shoulder. The bus
hit the left traffic steel brace and sign along the road and rammed the fence
of one Jesus Escano, then turned over and landed on its left side, coming to
a full stop only after a series of impacts. The bus came to rest off the road. A
coconut tree which it had hit fell on it and smashed its front portion.
Several passengers were injured. Private respondent Amyline Antonio was
thrown on the floor of the bus and pinned down by a wooden seat which
came down by a wooden seat which came off after being unscrewed. It took
three persons to safely remove her from this portion. She was in great pain
and could not move.
The driver, petitioner Cabil, claimed he did not see the curve until it was too
late. He said he was not familiar with the area and he could not have seen
the curve despite the care he took in driving the bus, because it was dark
and there was no sign on the road. He said that he saw the curve when he
was already within 15 to 30 meters of it. He allegedly slowed down to 30
kilometers per hour, but it was too late.
The Lingayen police investigated the incident the next day, November 3,
1984. On the basis of their finding they filed a criminal complaint against the
driver, Porfirio Cabil. The case was later filed with the Lingayen Regional
Trial Court. Petitioners Fabre paid Jesus Escano P1,500.00 for the damage
to the latter's fence. On the basis of Escano's affidavit of desistance the case
against petitioners Fabre was dismissed.
Amyline Antonio, who was seriously injured, brought this case in the RTC of
Makati, Metro Manila. As a result of the accident, she is now suffering from
paraplegia and is permanently paralyzed from the waist down. During the
trial she described the operations she underwent and adduced evidence
regarding the cost of her treatment and therapy. Immediately after the
accident, she was taken to the Nazareth Hospital in Baay, Lingayen. As this
hospital was not adequately equipped, she was transferred to the Sto. Niño
Hospital, also in the town of Ba-ay, where she was given sedatives. An x-ray
was taken and the damage to her spine was determined to be too severe to
be treated there. She was therefore brought to Manila, first to the Philippine
General Hospital and later to the Makati Medical Center where she
underwent an operation to correct the dislocation of her spine.
In its decision dated April 17, 1989, the trial court found that:
No convincing evidence was shown that the minibus was properly checked
for travel to a long distance trip and that the driver was properly screened
and tested before being admitted for employment. Indeed, all the evidence
presented have shown the negligent act of the defendants which ultimately
resulted to the accident subject of this case.
Accordingly, it gave judgment for private respondents holding:
Considering that plaintiffs Word for the World Christian Fellowship, Inc. and
Ms. Amyline Antonio were the only ones who adduced evidence in support of
their claim for damages, the Court is therefore not in a position to award
damages to the other plaintiffs.
WHEREFORE, premises considered, the Court hereby renders judgment
against defendants Mr. & Mrs. Engracio Fabre, Jr. and Porfirio Cabil y Jamil
pursuant to articles 2176 and 2180 of the Civil Code of the Philippines and
said defendants are ordered to pay jointly and severally to the plaintiffs the
following amount:
1) P93,657.11 as compensatory and actual damages;
2) P500,000.00 as the reasonable amount of loss of earning
capacity of plaintiff Amyline Antonio;
3) P20,000.00 as moral damages;
4) P20,000.00 as exemplary damages; and
5) 25% of the recoverable amount as attorney's fees;
6) Costs of suit.
SO ORDERED.
The Court of Appeals affirmed the decision of the trial court with respect to
Amyline Antonio but dismissed it with respect to the other plaintiffs on the
ground that they failed to prove their respective claims. The Court of Appeals
modified the award of damages as follows:
1) P93,657.11 as actual damages;
2) P600,000.00 as compensatory damages;
3) P50,000.00 as moral damages;
4) P20,000.00 as exemplary damages;
5) P10,000.00 as attorney's fees; and
6) Costs of suit.
The Court of Appeals sustained the trial court's finding that petitioner Cabil
failed to exercise due care and precaution in the operation of his vehicle
considering the time and the place of the accident. The Court of Appeals held
that the Fabres were themselves presumptively negligent. Hence, this
petition. Petitioners raise the following issues:
I. WHETHER OR NOT PETITIONERS
WERE NEGLIGENT.
II. WHETHER OF NOT PETITIONERS
WERE LIABLE FOR THE INJURIES
SUFFERED BY PRIVATE RESPONDENTS.
III WHETHER OR NOT DAMAGES CAN BE
AWARDED AND IN THE POSITIVE, UP TO
WHAT EXTENT.
Petitioners challenge the propriety of the award of compensatory damages in
the amount of P600,000.00. It is insisted that, on the assumption that
petitioners are liable an award of P600,000.00 is unconscionable and highly
speculative. Amyline Antonio testified that she was a casual employee of a
company called "Suaco," earning P1,650.00 a month, and a dealer of Avon
products, earning an average of P1,000.00 monthly. Petitioners contend that
as casual employees do not have security of tenure, the award of
P600,000.00, considering Amyline Antonio's earnings, is without factual
basis as there is no assurance that she would be regularly earning these
amounts.
With the exception of the award of damages, the petition is devoid of merit.
First, it is unnecessary for our purpose to determine whether to decide this
case on the theory that petitioners are liable for breach of contract of carriage
or culpa contractual or on the theory of quasi delict or culpa aquiliana as both
the Regional Trial Court and the Court of Appeals held, for although the
relation of passenger and carrier is "contractual both in origin and nature,"
nevertheless "the act that breaks the contract may be also a tort." In either
2
case, the question is whether the bus driver, petitioner Porfirio Cabil, was
negligent.
The finding that Cabil drove his bus negligently, while his employer, the
Fabres, who owned the bus, failed to exercise the diligence of a good father
of the family in the selection and supervision of their employee is fully
supported by the evidence on record. These factual findings of the two courts
we regard as final and conclusive, supported as they are by the evidence.
Indeed, it was admitted by Cabil that on the night in question, it was raining,
and as a consequence, the road was slippery, and it was dark. He averred
these facts to justify his failure to see that there lay a sharp curve ahead.
However, it is undisputed that Cabil drove his bus at the speed of 50
kilometers per hour and only slowed down when he noticed the curve some
15 to 30 meters ahead. By then it was too late for him to avoid falling off the
3
road. Given the conditions of the road and considering that the trip was
Cabil's first one outside of Manila, Cabil should have driven his vehicle at a
moderate speed. There is testimony that the vehicles passing on that
4
portion of the road should only be running 20 kilometers per hour, so that at
50 kilometers per hour, Cabil was running at a very high speed.
Considering the foregoing — the fact that it was raining and the road was
slippery, that it was dark, that he drove his bus at 50 kilometers an hour
when even on a good day the normal speed was only 20 kilometers an hour,
and that he was unfamiliar with the terrain, Cabil was grossly negligent and
should be held liable for the injuries suffered by private respondent Amyline
Antonio.
Pursuant to Arts. 2176 and 2180 of the Civil Code his negligence gave rise to
the presumption that his employers, the Fabres, were themselves negligent
in the selection and supervisions of their employee.
Due diligence in selection of employees is not satisfied by finding that the
applicant possessed a professional driver's license. The employer should
also examine the applicant for his qualifications, experience and record of
service. Due diligence in supervision, on the other hand, requires the
5
formulation of rules and regulations for the guidance of employees and
issuance of proper instructions as well as actual implementation and
monitoring of consistent compliance with the rules. 6
In the case at bar, the Fabres, in allowing Cabil to drive the bus to La Union,
apparently did not consider the fact that Cabil had been driving for school
children only, from their homes to the St. Scholastica's College in Metro
Manila. They had hired him only after a two-week apprenticeship. They had
7
hired him only after a two-week apprenticeship. They had tested him for
certain matters, such as whether he could remember the names of the
children he would be taking to school, which were irrelevant to his
qualification to drive on a long distance travel, especially considering that the
trip to La Union was his first. The existence of hiring procedures and
supervisory policies cannot be casually invoked to overturn the presumption
of negligence on the part of an employer. 8
Petitioners argue that they are not liable because (1) an earlier departure
(made impossible by the congregation's delayed meeting) could have a
averted the mishap and (2) under the contract, the WWCF was directly
responsible for the conduct of the trip. Neither of these contentions hold
water. The hour of departure had not been fixed. Even if it had been, the
delay did not bear directly on the cause of the accident. With respect to the
second contention, it was held in an early case that:
[A] person who hires a public automobile and gives the driver directions as to
the place to which he wishes to be conveyed, but exercises no other control
over the conduct of the driver, is not responsible for acts of negligence of the
latter or prevented from recovering for injuries suffered from a collision
between the automobile and a train, caused by the negligence or the
automobile driver. 9
As already stated, this case actually involves a contract of carriage.
Petitioners, the Fabres, did not have to be engaged in the business of public
transportation for the provisions of the Civil Code on common carriers to
apply to them. As this Court has held: 10
Art. 1732. Common carriers are persons, corporations, firms
or associations engaged in the business of carrying or
transporting passengers or goods or both, by land, water, or
air for compensation, offering their services to the public.
The above article makes no distinction between one whose
principal business activity is the carrying of persons or goods
or both, and one who does such carrying only as an ancillary
activity (in local idiom, as "a sideline"). Article 1732 also
carefully avoids making any distinction between a person or
enterprise offering transportation service on a regular or
scheduled basis and one offering such service on an
occasional, episodic or unscheduled basis. Neither does
 Article 1732 distinguish between a carrier offering its
services to the "general public," i.e., the general community
or population, and one who offers services or solicits
business only from a narrow segment of the general
population. We think that Article 1732 deliberately refrained
from making such distinctions.
As common carriers, the Fabres were found to exercise
"extraordinary diligence" for the safe transportation of the
passengers to their destination. This duty of care is not
excused by proof that they exercise the diligence of a good
father of the family in the selection and supervision of their
employee. As Art. 1759 of the Code provides:
Common carriers are liable for the death of or injuries to
passengers through the negligence or willful acts of the
former's employees although such employees may have
acted beyond the scope of their authority or in violation of
the orders of the common carriers.
This liability of the common carriers does not cease upon
proof that they exercised all the diligence of a good father of
a family in the selection and supervision of their employees.
The same circumstances detailed above, supporting the finding of the trial
court and of the appellate court that petitioners are liable under Arts. 2176
and 2180 for quasi delict, fully justify findings them guilty of breach of
contract of carriage under Arts. 1733, 1755 and 1759 of the Civil Code.
Secondly, we sustain the award of damages in favor of Amyline Antonio.
However, we think the Court of Appeals erred in increasing the amount of
compensatory damages because private respondents did not question this
award as inadequate. To the contrary, the award of P500,000.00 for
11
compensatory damages which the Regional Trial Court made is reasonable
considering the contingent nature of her income as a casual employee of a
company and as distributor of beauty products and the fact that the
possibility that she might be able to work again has not been foreclosed. In
fact she testified that one of her previous employers had expressed
willingness to employ her again.
With respect to the other awards, while the decisions of the trial court and the
Court of Appeals do not sufficiently indicate the factual and legal basis for
them, we find that they are nevertheless supported by evidence in the
records of this case. Viewed as an action for quasi delict, this case falls
squarely within the purview of Art. 2219(2) providing for the payment of moral
damages in cases of quasi delict. On the theory that petitioners are liable for
breach of contract of carriage, the award of moral damages is authorized by
Art. 1764, in relation to Art. 2220, since Cabil's gross negligence amounted
to bad faith. Amyline Antonio's testimony, as well as the testimonies of her
12
father and copassengers, fully establish the physical suffering and mental
anguish she endured as a result of the injuries caused by petitioners'
negligence.
The award of exemplary damages and attorney's fees was also properly
made. However, for the same reason that it was error for the appellate court
to increase the award of compensatory damages, we hold that it was also
error for it to increase the award of moral damages and reduce the award of
attorney's fees, inasmuch as private respondents, in whose favor the awards
were made, have not appealed. 13
As above stated, the decision of the Court of Appeals can be sustained either
on the theory of quasi delict or on that of breach of contract. The question is
whether, as the two courts below held, petitioners, who are the owners and
driver of the bus, may be made to respond jointly and severally to private
respondent. We hold that they may be. In Dangwa Trans. Co. Inc. v. Court of
Appeals, on facts similar to those in this case, this Court held the bus
14
company and the driver jointly and severally liable for damages for injuries
suffered by a passenger. Again, in Bachelor Express, Inc. v. Court of
Appeals a driver found negligent in failing to stop the bus in order to let off
15
passengers when a fellow passenger ran amuck, as a result of which the
passengers jumped out of the speeding bus and suffered injuries, was held
also jointly and severally liable with the bus company to the injured
passengers.
The same rule of liability was applied in situations where the negligence of
the driver of the bus on which plaintiff was riding concurred with the
negligence of a third party who was the driver of another vehicle, thus
causing an accident. In Anuran v. Buño, Batangas Laguna Tayabas Bus
16
Co. v. Intermediate Appellate Court, 7 and Metro Manila Transit Corporation
1
v. Court of Appeals, the bus company, its driver, the operator of the other
18
vehicle and the driver of the vehicle were jointly and severally held liable to
the injured passenger or the latters' heirs. The basis of this allocation of
liability was explained in Viluan v. Court of Appeals, thus:
19
Nor should it make any difference that the liability of
petitioner [bus owner] springs from contract while that of
respondents [owner and driver of other vehicle] arises
from quasi-delict. As early as 1913, we already ruled
in Gutierrez vs. Gutierrez, 56 Phil. 177, that in case of injury
to a passenger due to the negligence of the driver of the bus
on which he was riding and of the driver of another vehicle,
 the drivers as well as the owners of the two vehicles are
jointly and severally liable for damages. Some members of
the Court, though, are of the view that under the
circumstances they are liable on quasi-delict. 20
It is true that in Philippine Rabbit Bus Lines, Inc. v. Court of Appeals this
21
Court exonerated the jeepney driver from liability to the injured passengers
and their families while holding the owners of the jeepney jointly and
severally liable, but that is because that case was expressly tried and
decided exclusively on the theory of culpa contractual. As this Court there
explained:
The trial court was therefore right in finding that Manalo (the driver) and
spouses Mangune and Carreon (the jeepney owners) were negligent.
However, its ruling that spouses Mangune and Carreon are jointly and
severally liable with Manalo is erroneous. The driver cannot be held jointly
and severally liable with carrier in case of breach of the contract of carriage.
The rationale behind this is readily discernible. Firstly, the contract of
carriage is between the carrier is exclusively responsible therefore to the
passenger, even if such breach be due to the negligence of his driver (see
Viluan v. The Court of Appeals, et al., G.R. Nos. L-21477-81, April 29, 1966,
16 SCRA 742). 22
As in the case of BLTB, private respondents in this case and her coplaintiffs
did not stake out their claim against the carrier and the driver exclusively on
one theory, much less on that of breach of contract alone. After all, it was
permitted for them to allege alternative causes of action and join as many
parties as may be liable on such causes of action so long as private
23
respondent and her coplaintiffs do not recover twice for the same injury.
What is clear from the cases is the intent of the plaintiff there to recover from
both the carrier and the driver, thus, justifying the holding that the carrier and
the driver were jointly and severally liable because their separate and distinct
acts concurred to produce the same injury.
WHEREFORE, the decision of the Court of Appeals is AFFIRMED with
MODIFICATION as to award of damages. Petitioners are ORDERED to PAY
jointly and severally the private respondent Amyline Antonio the following
amounts:
1) P93,657.11 as actual damages;
2) P500,000.00 as the reasonable amount of loss of earning capacity of
plaintiff Amyline Antonio;
3) P20,000.00 as moral damages;
4) P20,000.00 as exemplary damages;
5) 25% of the recoverable amount as attorney's fees; and
6) costs of suit.
SO ORDERED.
G.R. No. 92288 February 9, 1993
BRITISH AIRWAYS, INC., petitioner,
vs.
THE HON. COURT OF APPEALS, Twelfth Division, and FIRST
INTERNATIONAL TRADING AND GENERAL SERVICES, respondents.
Quasha, Asperilla, Ancheta, Peña & Nolasco for petitioner.
Monina P. Lee for private respondent.
NOCON, J.:
This is a petition for review on certiorari to annul and set aside the decision
dated November 15, 1989 of the Court of Appeals affirming the decision of
1
the trial court in ordering petitioner British Airways, Inc. to pay private
2
respondent First International Trading and General Services actual damages,
moral damages, corrective or exemplary damages, attorney's fees and the
costs as well as the Resolution dated February 15, 1990 denying petitioner's
3
Motion for Reconsideration in the appealed decision.
It appears on record that on February 15, 1981, private respondent First
International Trading and General Services Co., a duly licensed domestic
recruitment and placement agency, received a telex message from its
principal ROLACO Engineering and Contracting Services in Jeddah, Saudi
Arabia to recruit Filipino contract workers in behalf of said principal.
4
During the early part of March 1981, said principal paid to the Jeddah branch
of petitioner British Airways, Inc. airfare tickets for 93 contract workers with
specific instruction to transport said workers to Jeddah on or before March
30, 1981.
As soon as petitioner received a prepaid ticket advice from its Jeddah branch
to transport the 93 workers, private respondent was immediately informed by
petitioner that its principal had forwarded 93 prepaid tickets. Thereafter,
private respondent instructed its travel agent, ADB Travel and Tours. Inc., to
book the 93 workers with petitioner but the latter failed to fly said workers,
thereby compelling private respondent to borrow money in the amount of
P304,416.00 in order to purchase airline tickets from the other airlines as
evidenced by the cash vouchers (Exhibits "B", "C" and "C-1 to C-7") for the
93 workers it had recruited who must leave immediately since the visas of
said workers are valid only for 45 days and the Bureau of Employment
Services mandates that contract workers must be sent to the job site within a
period of 30 days.
Sometime in the first week of June, 1981, private respondent was again
informed by the petitioner that it had received a prepaid ticket advice from its
Jeddah branch for the transportation of 27 contract workers. Immediatety,
private respondent instructed its travel agent to book the 27 contract workers
with the petitioner but the latter was only able to book and confirm 16 seats
on its June 9, 1981 flight. However, on the date of the scheduled flight only 9
workers were able to board said flight while the remaining 7 workers were
rebooked to June 30, 1981 which bookings were again cancelled by the
petitioner without any prior notice to either private respondent or the workers.
Thereafter, the 7 workers were rebooked to the July 4,1981 flight of petitioner
with 6 more workers booked for said flight. Unfortunately, the confirmed
bookings of the 13 workers were again cancelled and rebooked to July 7,
1981.
On July 6, 1981, private respondent paid the travel tax of the said workers as
required by the petitioner but when the receipt of the tax payments was
submitted, the latter informed private respondent that it can only confirm the
seats of the 12 workers on its July 7, 1981 flight. However, the confirmed
seats of said workers were again cancelled without any prior notice either to
the private respondent or said workers. The 12 workers were finally able to
leave for Jeddah after private respondent had bought tickets from the other
airlines.
As a result of these incidents, private respondent sent a letter to petitioner
demanding compensation for the damages it had incurred by the latter's
repeated failure to transport its contract workers despite confirmed bookings
and payment of the corresponding travel taxes.
On July 23, 1981, the counsel of private respondent sent another letter to the
petitioner demanding the latter to pay the amount of P350,000.00
representing damages and unrealized profit or income which was denied by
the petitioner.
On August 8, 1981, private respondent received a telex message from its
principal cancelling the hiring of the remaining recruited workers due to the
delay in transporting the workers to Jeddah. 5
On January 27, 1982, private respondent filed a complaint for damages
against petitioner with the Regional Trial Court of Manila, Branch 1 in Civil
Case No. 82-4653.
On the other hand, petitioner, alleged in its Answer with counterclaims that it
received a telex message from Jeddah on March 20, 1981 advising that the
principal of private respondent had prepaid the airfares of 100 persons to
transport private respondent's contract workers from Manila to Jeddah on or
before March 30, 1981. However, due to the unavailability of space and
limited time, petitioner had to return to its sponsor in Jeddah the prepaid
ticket advice consequently not even one of the alleged 93 contract workers
were booked in any of its flights.
On June 5, 1981, petitioner received another prepaid ticket advice to
transport 16 contract workers of private respondent to Jeddah but the travel
agent of the private respondent booked only 10 contract workers for
petitioner's June 9, 1981 flight. However, only 9 contract workers boarded
the scheduled flight with 1 passenger not showing up as evidenced by the
Philippine Airlines' passenger manifest for Flight BA-020 (Exhibit "7", "7-A",
"7-B" and "7-C").6
Thereafter, private respondent's travel agent booked seats for 5 contract
workers on petitioner's July 4, 1981 flight but said travel agent cancelled the
booking of 2 passengers while the other 3 passengers did not show up on
said flight.
Sometime in July 1981, the travel agent of the private respondent booked 7
more contract workers in addition to the previous 5 contract workers who
were not able to board the July 4, 1981 flight with the petitioner's July 7, 1981
flight which was accepted by petitioner subject to reconfirmation.
However on July 6, 1981, petitioner's computer system broke down which
resulted to petitioner's failure to get a reconfirmation from Saudi Arabia
Airlines causing the automatic cancellation of the bookings of private
respondent's 12 contract workers. In the morning of July 7, 1981, the
computer system of the petitioner was reinstalled and immediately petitioner
tried to reinstate the bookings of the 12 workers with either Gulf Air or Saudi
Arabia Airlines but both airlines replied that no seat was available on that
date and had to place the 12 workers on the wait list. Said information was
duly relayed to the private respondent and the 12 workers before the
scheduled flight.
After due trial on or on August 27, 1985, the trial court rendered its decision,
the dispositive portion of which reads as follows:
WHEREFORE, in view of all the foregoing, this Court
renders judgment:
1. Ordering the defendant to pay the plaintiff actual damages
in the sum of P308,016.00;
2. Ordering defendant to pay moral damages to the plaintiff
in the amount of P20,000.00;
3. Ordering the defendant to pay the plaintiff P10,000.00 by
way of corrective or exemplary damages;
4. Ordering the defendant to pay the plaintiff 30% of its total
claim for and as attorney's fees; and
5. To pay the costs. 7
On March 13, 1986, petitioner appealed said decision to respondent
appellate court after the trial court denied its Motion for Reconsideration on
February 28, 1986.
On November 15, 1989, respondent appellate court affirmed the decision of
the trial court, the dispositive portion of which reads:
WHEREFORE, the decision appealed from is hereby
AFFIRMED with costs against the appellant. 8 airfares of the appellee's contract workers advising the
On December 9, 1989, petitioner filed a Motion for Reconsideration which
was also denied.
Hence, this petition.
It is the contention of petitioner that private respondent has no cause of
action against it there being no perfected contract of carriage existing
between them as no ticket was ever issued to private respondent's contract
workers and, therefore, the obligation of the petitioner to transport said
contract workers did not arise. Furthermore, private respondent's failure to
attach any ticket in the complaint further proved that it was never a party to
the alleged transaction.
Petitioner's contention is untenable.
Private respondent had a valid cause of action for damages against
petitioner. A cause of action is an act or omission of one party in violation of
the legal right or rights of the other. Petitioner's repeated failures to transport
9
private respondent's workers in its flight despite confirmed booking of said
workers clearly constitutes breach of contract and bad faith on its part. In
resolving petitioner's theory that private respondent has no cause of action in
the instant case, the appellate court correctly held that:
In dealing with the contract of common carriage of
passengers for purpose of accuracy, there are two (2)
aspects of the same, namely: (a) the contract "to carry (at
some future time)," which contract is consensual and is
necessarily perfected by mere consent (See Article 1356,
Civil Code of the Philippines), and (b) the contract "of
carriage" or "of common carriage" itself which should be
considered as a real contract for not until the carrier is
actually used can the carrier be said to have already
assumed the obligation of a carrier. (Paras, Civil Code
Annotated, Vol. V, p. 429, Eleventh Ed.)
In the instant case, the contract "to carry" is the one involved
which is consensual and is perfected by the mere consent of
the parties.
There is no dispute as to the appellee's consent to the said
contract "to carry" its contract workers from Manila to
Jeddah. The appellant's consent thereto, on the other hand,
was manifested by its acceptance of the PTA or prepaid
ticket advice that ROLACO Engineering has prepaid the
appellant that it must transport the contract workers on or
before the end of March, 1981 and the other batch in June,
1981.
Even if a PTA is merely an advice from the sponsors that an
airline is authorized to issue a ticket and thus no ticket was
yet issued, the fact remains that the passage had already
been paid for by the principal of the appellee, and the
appellant had accepted such payment. The existence of this
payment was never objected to nor questioned by the
appellant in the lower court. Thus, the cause or
consideration which is the fare paid for the passengers
exists in this case.
The third essential requisite of a contract is an object certain.
In this contract "to carry", such an object is the transport of
the passengers from the place of departure to the place of
destination as stated in the telex.
Accordingly, there could be no more pretensions as to the
existence of an oral contract of carriage imposing reciprocal
obligations on both parties.
In the case of appellee, it has fully complied with the
obligation, namely, the payment of the fare and its
willingness for its contract workers to leave for their place of
destination.
On the other hand, the facts clearly show that appellant was
remiss in its obligation to transport the contract workers on
their flight despite confirmation and bookings made by
appellee's travelling agent.
xxx xxx xxx
Besides, appellant knew very well that time was of the
essence as the prepaid ticket advice had specified the
period of compliance therewith, and with emphasis that it
could only be used if the passengers fly on BA. Under the
circumstances, the appellant should have refused
acceptance of the PTA from appellee's principal or to at least
inform appellee that it could not accommodate the contract
workers.
xxx xxx xxx
While there is no dispute that ROLACO Engineering
advanced the payment for the airfares of the appellee's
contract workers who were recruited for ROLACO
Engineering and the said contract workers were the intended
passengers in the aircraft of the appellant, the said contract
"to carry" also involved the appellee for as recruiter he had
to see to it that the contract workers should be transported to
ROLACO Engineering in Jeddah thru the appellant's
transportation. For that matter, the involvement of the
appellee in the said contract "to carry" was well
demonstrated when
the appellant upon receiving the PTA immediately advised
the appellee thereof. 10
Petitioner also contends that the appellate court erred in awarding actual
damages in the amount of P308,016.00 to private respondent since all
expenses had already been subsequently reimbursed by the latter's
principal.
In awarding actual damages to private respondent, the appellate court held
that the amount of P308,016.00 representing actual damages refers to
private respondent's second cause of action involving the expenses incurred
by the latter which were not reimbursed by ROLACO Engineering. However,
in the Complaint filed by private respondent, it was alleged that private
11
respondent suffered actual damages in the amount of P308,016.00
representing the money it borrowed from friends and financiers which is
P304,416.00 for the 93 airline tickets and P3,600.00 for the travel tax of the
12 workers. It is clear therefore that the actual damages private respondent
seeks to recover are the airline tickets and travel taxes it spent for its workers
which were already reimbursed by its principal and not for any other
expenses it had incurred in the process of recruiting said contract workers.
Inasmuch as all expenses including the processing fees incurred by private
respondent had already been paid for by the latter's principal on a staggered
basis as admitted in open court by its managing director, Mrs. Bienvenida
Brusellas. We do not find anymore justification in the appellate court's
12
decision in granting actual damages to private respondent.
Thus, while it may be true that private respondent was compelled to borrow
money for the airfare tickets of its contract workers when petitioner failed to
transport said workers, the reimbursements made by its principal to private
respondent failed to support the latter's claim that it suffered actual damages
as a result of petitioner's failure to transport said workers. It is undisputed
that private respondent had consistently admitted that its principal had
reimbursed all its expenses.
Article 2199 of the Civil Code provides that:
Except as provided by law or by stipulations, one is entitled
to an adequate compensation only for such pecuniary loss
suffered by him as he has duly proved. Such compensation
is referred to as actual or compensatory damages.
Furthermore, actual or compensatory damages cannot be presumed, but
must be duly proved, and proved with reasonable degree of certainty. A court
cannot rely on speculation, conjecture or guesswork as to the fact and
amount of damages, but must depend upon competent proof that they have
suffered and on evidence of the actual amount thereof. 13
However, private respondent is entitled to an award of moral and exemplary
damages for the injury suffered as a result of petitioner's failure to transport
the former's workers because of the latter's patent bad faith in the
performance of its obligation. As correctly pointed out by the appellate court:
As evidence had proved, there was complete failure on the
part of the appellant to transport the 93 contract workers of
the appellee on or before March 30, 1981 despite receipt of
the payment for their airfares, and acceptance of the same
by the appellant, with specific instructions from the
appellee's principal to transport the contract workers on or
before March 30, 1981. No previous notice was ever
registered by the appellant that it could not comply with the
same. And then followed the detestable act of appellant in
unilaterally cancelling, booking and rebooking unreasonably
the flight of appellee's contract workers in June to July, 1981
without prior notice. And all of these actuations of the
appellant indeed constitute malice and evident bad faith
which had caused damage and besmirched the reputation
and business image of the appellee. 14
As to the alleged damages suffered by the petitioner as stated in its
counterclaims, the record shows that no claim for said damages was ever
made by the petitioner immediately after their alleged occurrence therefore
said counterclaims were mere afterthoughts when private respondent filed
the present case.
WHEREFORE, the assailed decision is hereby AFFIRMED with the
MODIFICATION that the award of actual damages be deleted from said
decision.
SO ORDERED.
G.R. No. L-18965 October 30, 1964
COMPAÑIA MARITIMA, petitioner,
vs.
INSURANCE COMPANY OF NORTH AMERICA, respondent.
Rafael Dinglasan for petitioner.
Ozaeta Gibbs & Ozaeta for respondent.
BAUTISTA ANGELO, J.:
Sometime in October, 1952, Macleod and Company of the Philippines
contracted by telephone the services of the Compañia Maritima, a shipping
corporation, for the shipment of 2,645 bales of hemp from the former's Sasa
private pier at Davao City to Manila and for their subsequent transhipment to
Boston, Massachusetts, U.S.A. on board the S.S. Steel Navigator. This oral
contract was later on confirmed by a formal and written booking issued by
Macleod's branch office in Sasa and handcarried to Compañia Maritima's
branch office in Davao in compliance with which the latter sent to Macleod's
private wharf LCT Nos. 1023 and 1025 on which the loading of the hemp was
completed on October 29, 1952. These two lighters were manned each by a
patron and an assistant patron. The patrons of both barges issued the
corresponding carrier's receipts and that issued by the patron of Barge No.
1025 reads in part:
Received in behalf of S.S. Bowline Knot in good order and condition
from MACLEOD AND COMPANY OF PHILIPPINES, Sasa Davao,
for transhipment at Manila onto S.S. Steel Navigator.
FINAL DESTINATION: Boston.
Thereafter, the two loaded barges left Macleod's wharf and proceeded to and
moored at the government's marginal wharf in the same place to await the
arrival of the S.S. Bowline Knot belonging to Compañia Maritima on which
the hemp was to be loaded. During the night of October 29, 1952, or at the
early hours of October 30, LCT No. 1025 sank, resulting in the damage or
loss of 1,162 bales of hemp loaded therein. On October 30, 1952, Macleod
promptly notified the carrier's main office in Manila and its branch in Davao
advising it of its liability. The damaged hemp was brought to Odell Plantation
in Madaum, Davao, for cleaning, washing, reconditioning, and redrying.
During the period from November 1-15, 1952, the carrier's trucks and lighters
hauled from Odell to Macleod at Sasa a total of 2,197.75 piculs of the
reconditioned hemp out of the original cargo of 1,162 bales weighing 2,324
piculs which had a total value of 116,835.00. After reclassification, the value
of the reconditioned hemp was reduced to P84,887.28, or a loss in value of
P31,947.72. Adding to this last amount the sum of P8,863.30 representing
Macleod's expenses in checking, grading, rebating, and other fees for
washing, cleaning and redrying in the amount of P19.610.00, the total loss
adds up to P60,421.02.
All abaca shipments of Macleod, including the 1,162 bales loaded on the
carrier's LCT No. 1025, were insured with the Insurance Company of North
America against all losses and damages. In due time, Macleod filed a claim
for the loss it suffered as above stated with said insurance company, and
after the same had been processed, the sum of P64,018.55 was paid, which
was noted down in a document which aside from being a receipt of the
amount paid, was a subrogation agreement between Macleod and the
insurance company wherein the former assigned to the latter its rights over
the insured and damaged cargo. Having failed to recover from the carrier the
sum of P60,421.02, which is the only amount supported by receipts, the
insurance company instituted the present action on October 28, 1953. After
trial, the court a quo rendered judgment ordering the carrier to pay the
insurance company the sum of P60,421.02, with legal interest thereon from
the date of the filing of the complaint until fully paid, and the costs. This
judgment was affirmed by the Court of Appeals on December 14, 1960.
Hence, this petition for review.
The issues posed before us are: (1) Was there a contract of carriage
between the carrier and the shipper even if the loss occurred when the hemp
was loaded on a barge owned by the carrier which was loaded free of charge
and was not actually loaded on the S.S. Bowline Knot which would carry the
hemp to Manila and no bill of lading was issued therefore?; (2) Was the
damage caused to the cargo or the sinking of the barge where it was loaded
due to a fortuitous event, storm or natural disaster that would exempt the
carrier from liability?; (3) Can respondent insurance company sue the carrier
under its insurance contract as assignee of Macleod in spite of the fact that
the liability of the carrier as insurer is not recognized in this jurisdiction?; (4)
Has the Court of Appeals erred in regarding Exhibit NNN-1 as an implied
admission by the carrier of the correctness and sufficiency of the shipper's
statement of accounts contrary to the burden of proof rule?; and (5) Can the
insurance company maintain this suit without proof of its personality to do
so?
1. This issue should be answered in the affirmative. As found by the Court of
Appeals, Macleod and Company contracted by telephone the services of
petitioner to ship the hemp in question from the former's private pier at Sasa,
Davao City, to Manila, to be subsequently transhipped to Boston,
Massachusetts, U.S.A., which oral contract was later confirmed by a formal
and written booking issued by the shipper's branch office, Davao City, in
virtue of which the carrier sent two of its lighters to undertake the service. It
also appears that the patrons of said lighters were employees of the carrier
with due authority to undertake the transportation and to sign the documents
that may be necessary therefor so much so that the patron of LCT No. 1025
signed the receipt covering the cargo of hemp loaded therein as follows: .
Received in behalf of S.S. Bowline Knot in good order and condition
from MACLEOD AND COMPANY OF PHILIPPINES, Sasa Davao,
for transhipment at Manila onto S.S. Steel Navigator.
FINAL DESTINATION: Boston.
The fact that the carrier sent its lighters free of charge to take the hemp from
Macleod's wharf at Sasa preparatory to its loading onto the ship Bowline
Knot does not in any way impair the contract of carriage already entered into
between the carrier and the shipper, for that preparatory step is but part and
parcel of said contract of carriage. The lighters were merely employed as the
first step of the voyage, but once that step was taken and the hemp delivered
to the carrier's employees, the rights and obligations of the parties attached
thereby subjecting them to the principles and usages of the maritime law. In
other words, here we have a complete contract of carriage the
consummation of which has already begun: the shipper delivering the cargo
to the carrier, and the latter taking possession thereof by placing it on a
lighter manned by its authorized employees, under which Macleod became
entitled to the privilege secured to him by law for its safe transportation and
delivery, and the carrier to the full payment of its freight upon completion of
the voyage.
The receipt of goods by the carrier has been said to lie at the
foundation of the contract to carry and deliver, and if actually no
goods are received there can be no such contract. The liability and
responsibility of the carrier under a contract for the carriage of goods
commence on their actual delivery to, or receipt by, the carrier or an
authorized agent. ... and delivery to a lighter in charge of a vessel for
shipment on the vessel, where it is the custom to deliver in that way,
is a good delivery and binds the vessel receiving the freight, the
liability commencing at the time of delivery to the lighter. ... and,
similarly, where there is a contract to carry goods from one port to
another, and they cannot be loaded directly on the vessel and
lighters are sent by the vessel to bring the goods to it, the lighters are
for the time its substitutes, so that the bill of landing is applicable to
the goods as soon as they are placed on the lighters. (80 C.J.S., p.
901, emphasis supplied)
... The test as to whether the relation of shipper and carrier had been
established is, Had the control and possession of the cotton been
completely surrendered by the shipper to the railroad company?
 Whenever the control and possession of goods passes to the carrier
and nothing remains to be done by the shipper, then it can be said
with certainty that the relation of shipper and carrier has been
established. Railroad Co. v. Murphy, 60 Ark. 333, 30 S.W. 419, 46 A.
St. Rep. 202; Pine Bluff & Arkansas River Ry. v. MaKenzie, 74 Ark.
100, 86 S.W. 834; Matthews & Hood v. St. L., I.M. & S.R. Co., 123
Ark. 365, 185 S.W. 461, L.R.A. 1916E, 1194. (W.F. Bogart & Co., et
al. v. Wade, et al., 200 S.W. 148).
The claim that there can be no contract of affreightment because the hemp
was not actually loaded on the ship that was to take it from Davao City to
Manila is of no moment, for, as already stated, the delivery of the hemp to
the carrier's lighter is in line with the contract. In fact, the receipt signed by
the patron of the lighter that carried the hemp stated that he was receiving
the cargo "in behalf of S.S. Bowline Knot in good order and condition." On
the other hand, the authorities are to the effect that a bill of lading is not
indispensable for the creation of a contract of carriage.
Bill of lading not indispensable to contract of carriage. — As to the
issuance of a bill of lading, although article 350 of the Code of
Commerce provides that "the shipper as well as the carrier of
merchandise or goods may mutua-lly demand that a bill of lading is
not indispensable. As regards the form of the contract of carriage it
can be said that provided that there is a meeting of the minds and
from such meeting arise rights and obligations, there should be no
limitations as to form." The bill of lading is not essential to the
contract, although it may become obligatory by reason of the
regulations of railroad companies, or as a condition imposed in the
contract by the agreement of the parties themselves. The bill of
lading is juridically a documentary proof of the stipulations and
conditions agreed upon by both parties. (Del Viso, pp. 314-315;
Robles vs. Santos, 44 O.G. 2268). In other words, the Code does not
demand, as necessary requisite in the contract of transportation, the
delivery of the bill of lading to the shipper, but gives right to both the
carrier and the shipper to mutually demand of each other the delivery
of said bill. (Sp. Sup. Ct. Decision, May 6, 1895). (Martin, Philippine
Commercial Laws, Vol. II, Revised Edition, pp. 12-13)
The liability of the carrier as common carrier begins with the actual
delivery of the goods for transportation, and not merely with the
formal execution of a receipt or bill of lading; the issuance of a bill of
lading is not necessary to complete delivery and acceptance. Even
where it is provided by statute that liability commences with the
issuance of the bill of lading, actual delivery and acceptance are
sufficient to bind the carrier. (13 C.J.S., p. 288)
2. Petitioner disclaims responsibility for the damage of the cargo in question
shielding itself behind the claim of force majeure or storm which occurred on
the night of October 29, 1952. But the evidence fails to bear this out.
Rather, it shows that the mishap that caused the damage or loss was due,
not to force majeure, but to lack of adequate precautions or measures taken
by the carrier to prevent the loss as may be inferred from the following
findings of the Court of Appeals:
Aside from the fact that, as admitted by appellant's own witness, the
ill-fated barge had cracks on its bottom (pp. 18-19, t.s.n., Sept. 13,
1959) which admitted sea water in the same manner as rain entered
"thru tank man-holes", according to the patron of LCT No. 1023 (exh.
JJJ-4) — conclusively showing that the barge was not seaworthy —
it should be noted that on the night of the nautical accident there was
no storm, flood, or other natural disaster or calamity. Certainly, winds
of 11 miles per hour, although stronger than the average 4.6 miles
per hour then prevailing in Davao on October 29, 1952 (exh. 5),
cannot be classified as storm. For according to Beaufort's wind
scale, a storm has wind velocities of from 64 to 75 miles per hour;
and by Philippine Weather Bureau standards winds should have a
velocity of from 55 to 74 miles per hour in order to be classified as
storm (Northern Assurance Co., Ltd. vs. Visayan Stevedore
Transportation Co., CA-G.R. No. 23167-R, March 12, 1959).
The Court of Appeals further added: "the report of R. J. del Pan & Co., Inc.,
marine surveyors, attributes the sinking of LCT No. 1025 to the 'non-water-
tight conditions of various buoyancy compartments' (exh. JJJ); and this
report finds confirmation on the above-mentioned admission of two witnesses
for appellant concerning the cracks of the lighter's bottom and the entrance
of the rain water 'thru manholes'." We are not prepared to dispute this finding
of the Court of Appeals.
3. There can also be no doubt that the insurance company can recover from
the carrier as assignee of the owner of the cargo for the insurance amount it
paid to the latter under the insurance contract. And this is so because since
the cargo that was damaged was insured with respondent company and the
latter paid the amount represented by the loss, it is but fair that it be given the
right to recover from the party responsible for the loss. The instant case,
therefore, is not one between the insured and the insurer, but one between
the shipper and the carrier, because the insurance company merely stepped
into the shoes of the shipper. And since the shipper has a direct cause of
action against the carrier on account of the damage of the cargo, no valid
reason is seen why such action cannot be asserted or availed of by the
insurance company as a subrogee of the shipper. Nor can the carrier set up
as a defense any defect in the insurance policy not only because it is not a
privy to it but also because it cannot avoid its liability to the shipper under the
contract of carriage which binds it to pay any loss that may be caused to the
cargo involved therein. Thus, we find fitting the following comments of the
Court of Appeals:
It was not imperative and necessary for the trial court to pass upon
the question of whether or not the disputed abaca cargo was
covered by Marine Open Cargo Policy No. MK-134 isued by
appellee. Appellant was neither a party nor privy to this insurance
contract, and therefore cannot avail itself of any defect in the policy
which may constitute a valid reason for appellee, as the insurer, to
reject the claim of Macleod, as the insured. Anyway, whatever defect
the policy contained, if any, is deemed to have been waived by the
subsequent payment of Macleod's claim by appellee. Besides,
appellant is herein sued in its capacity as a common carrier, and
appellee is suing as the assignee of the shipper pursuant to exhibit
MM. Since, as above demonstrated, appellant is liable to Macleod
and Company of the Philippines for the los or damage to the 1,162
bales of hemp after these were received in good order and condition
by the patron of appellant's LCT No. 1025, it necessarily follows that
appellant is likewise liable to appellee who, as assignee of Macleod,
merely stepped into the shoes of and substi-tuted the latter in
demanding from appellant the payment for the loss and damage
aforecited.
fortuitous event. Hence, under the carrier's theory, the correctness of the
account representing the loss was not so material as would necessitate the
presentation of the books in question. At any rate, even if the books of
accounts were not produced, the correctness of the accounts cannot now be
disputed for the same is supported by the original documents on which the
entries in said books were based which were presented by the shipper as
part of its evidence. And according to the Court of Appeals, these documents
alone sufficiently establish the award of P60,412.02 made in favor of
respondent.
5. Finally, with regard to the question concerning the personality of the
insurance company to maintain this action, we find the same of no
importance, for the attorney himself of the carrier admitted in open court that
it is a foreign corporation doing business in the Philippines with a personality
to file the present action.
WHEREFORE, the decision appealed from is affirmed, with costs against
petitioner.

4. It should be recalled in connection with this issue that during the trial of
this case the carrier asked the lower court to order the production of the
books of accounts of the Odell Plantation containing the charges it made for
the loss of the damaged hemp for verification of its accountants, but later it
desisted therefrom on the claim that it finds their production no longer
necessary. This desistance notwithstanding, the shipper however pre-sented
other documents to prove the damage it suffered in connection with the
cargo and on the strength thereof the court a quo ordered the carrier to pay
the sum of P60,421.02. And after the Court of Appeals affirmed this award
upon the theory that the desistance of the carrier from producing the books of
accounts of Odell Plantation implies an admission of the correctness of the
statements of accounts contained therein, petitioner now contends that the
Court of Appeals erred in basing the affirmance of the award on such
erroneous interpretation.

There is reason to believe that the act of petitioner in waiving its right to have
the books of accounts of Odell Plantation presented in court is tantamount to
an admission that the statements contained therein are correct and their
verification not necessary because its main defense here, as well as below,
was that it is not liable for the loss because there was no contract of carriage
between it and the shipper and the loss caused, if any, was due to a

G.R. No. 145804 February 6, 2003
LIGHT RAIL TRANSIT AUTHORITY & RODOLFO ROMAN, petitioners,
vs.
MARJORIE NAVIDAD, Heirs of the Late NICANOR NAVIDAD & PRUDENT
SECURITY AGENCY, respondents.
DECISION
VITUG, J.:
The case before the Court is an appeal from the decision and resolution of
the Court of Appeals, promulgated on 27 April 2000 and 10 October 2000,
respectively, in CA-G.R. CV No. 60720, entitled "Marjorie Navidad and Heirs
of the Late Nicanor Navidad vs. Rodolfo Roman, et. al.," which has modified
the decision of 11 August 1998 of the Regional Trial Court, Branch 266,
Pasig City, exonerating Prudent Security Agency (Prudent) from liability and
finding Light Rail Transit Authority (LRTA) and Rodolfo Roman liable for
damages on account of the death of Nicanor Navidad.
On 14 October 1993, about half an hour past seven o’clock in the evening,
Nicanor Navidad, then drunk, entered the EDSA LRT station after purchasing
a "token" (representing payment of the fare). While Navidad was standing on
the platform near the LRT tracks, Junelito Escartin, the security guard
assigned to the area approached Navidad. A misunderstanding or an
altercation between the two apparently ensued that led to a fist fight. No
evidence, however, was adduced to indicate how the fight started or who,
between the two, delivered the first blow or how Navidad later fell on the LRT
tracks. At the exact moment that Navidad fell, an LRT train, operated by
petitioner Rodolfo Roman, was coming in. Navidad was struck by the moving
train, and he was killed instantaneously.
On 08 December 1994, the widow of Nicanor, herein respondent Marjorie
Navidad, along with her children, filed a complaint for damages against
Junelito Escartin, Rodolfo Roman, the LRTA, the Metro Transit Organization,
Inc. (Metro Transit), and Prudent for the death of her husband. LRTA and
Roman filed a counterclaim against Navidad and a cross-claim against
Escartin and Prudent. Prudent, in its answer, denied liability and averred that
it had exercised due diligence in the selection and supervision of its security
guards.
The LRTA and Roman presented their evidence while Prudent and Escartin,
instead of presenting evidence, filed a demurrer contending that Navidad had
failed to prove that Escartin was negligent in his assigned task. On 11 August
1998, the trial court rendered its decision; it adjudged:
"WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and
against the defendants Prudent Security and Junelito Escartin ordering the
latter to pay jointly and severally the plaintiffs the following:
"a) 1) Actual damages of P44,830.00;
2) Compensatory damages of P443,520.00;
3) Indemnity for the death of Nicanor Navidad in the sum of
P50,000.00;
"b) Moral damages of P50,000.00;
"c) Attorney’s fees of P20,000;
"d) Costs of suit.
"The complaint against defendants LRTA and Rodolfo Roman are dismissed
for lack of merit.
"The compulsory counterclaim of LRTA and Roman are likewise dismissed." 1
Prudent appealed to the Court of Appeals. On 27 August 2000, the appellate
court promulgated its now assailed decision exonerating Prudent from any
liability for the death of Nicanor Navidad and, instead, holding the LRTA and
Roman jointly and severally liable thusly:
"WHEREFORE, the assailed judgment is hereby MODIFIED, by exonerating
the appellants from any liability for the death of Nicanor Navidad, Jr. Instead,
appellees Rodolfo Roman and the Light Rail Transit Authority (LRTA) are
held liable for his death and are hereby directed to pay jointly and severally
to the plaintiffs-appellees, the following amounts:
a) P44,830.00 as actual damages;
b) P50,000.00 as nominal damages;
c) P50,000.00 as moral damages;
 d) P50,000.00 as indemnity for the death of the deceased;
and
e) P20,000.00 as and for attorney’s fees." 2 employer-employee relationship between Roman and LRTA lacked basis
The appellate court ratiocinated that while the deceased might not have then
as yet boarded the train, a contract of carriage theretofore had already
existed when the victim entered the place where passengers were supposed
to be after paying the fare and getting the corresponding token therefor. In
exempting Prudent from liability, the court stressed that there was nothing to
link the security agency to the death of Navidad. It said that Navidad failed to
show that Escartin inflicted fist blows upon the victim and the evidence
merely established the fact of death of Navidad by reason of his having been
hit by the train owned and managed by the LRTA and operated at the time by
Roman. The appellate court faulted petitioners for their failure to present
expert evidence to establish the fact that the application of emergency
brakes could not have stopped the train.
The appellate court denied petitioners’ motion for reconsideration in its
resolution of 10 October 2000.
In their present recourse, petitioners recite alleged errors on the part of the
appellate court; viz:
"I.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED BY
DISREGARDING THE FINDINGS OF FACTS BY THE TRIAL COURT
"II.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING
THAT PETITIONERS ARE LIABLE FOR THE DEATH OF NICANOR
NAVIDAD, JR.
"III.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING
THAT RODOLFO ROMAN IS AN EMPLOYEE OF LRTA." 3
Petitioners would contend that the appellate court ignored the evidence and
the factual findings of the trial court by holding them liable on the basis of a
sweeping conclusion that the presumption of negligence on the part of a
common carrier was not overcome. Petitioners would insist that Escartin’s
assault upon Navidad, which caused the latter to fall on the tracks, was an
act of a stranger that could not have been foreseen or prevented. The LRTA
would add that the appellate court’s conclusion on the existence of an
because Roman himself had testified being an employee of Metro Transit
and not of the LRTA.
Respondents, supporting the decision of the appellate court, contended that
a contract of carriage was deemed created from the moment Navidad paid
the fare at the LRT station and entered the premises of the latter, entitling
Navidad to all the rights and protection under a contractual relation, and that
the appellate court had correctly held LRTA and Roman liable for the death
of Navidad in failing to exercise extraordinary diligence imposed upon a
common carrier.
Law and jurisprudence dictate that a common carrier, both from the nature of
its business and for reasons of public policy, is burdened with the duty of
exercising utmost diligence in ensuring the safety of passengers. The Civil
4
Code, governing the liability of a common carrier for death of or injury to its
passengers, provides:
"Article 1755. A common carrier is bound to carry the passengers safely as
far as human care and foresight can provide, using the utmost diligence of
very cautious persons, with a due regard for all the circumstances.
"Article 1756. In case of death of or injuries to passengers, common carriers
are presumed to have been at fault or to have acted negligently, unless they
prove that they observed extraordinary diligence as prescribed in articles
1733 and 1755."
"Article 1759. Common carriers are liable for the death of or injuries to
passengers through the negligence or willful acts of the former’s employees,
although such employees may have acted beyond the scope of their
authority or in violation of the orders of the common carriers.
"This liability of the common carriers does not cease upon proof that they
exercised all the diligence of a good father of a family in the selection and
supervision of their employees."
"Article 1763. A common carrier is responsible for injuries suffered by a
passenger on account of the willful acts or negligence of other passengers or
of strangers, if the common carrier’s employees through the exercise of the
diligence of a good father of a family could have prevented or stopped the act
or omission."
The law requires common carriers to carry passengers safely using the
utmost diligence of very cautious persons with due regard for all
circumstances. Such duty of a common carrier to provide safety to its
5
passengers so obligates it not only during the course of the trip but for so
breach of contract would have itself constituted the source of a quasi-
delictual liability had no contract existed between the parties, the contract
can be said to have been breached by tort, thereby allowing the rules on tort
to apply.
17

long as the passengers are within its premises and where they ought to be in
pursuance to the contract of carriage. The statutory provisions render a
6
Regrettably for LRT, as well as perhaps the surviving spouse and heirs of the
common carrier liable for death of or injury to passengers (a) through the late Nicanor Navidad, this Court is concluded by the factual finding of the
negligence or wilful acts of its employees or b) on account of wilful acts or Court of Appeals that "there is nothing to link (Prudent) to the death of
negligence of other passengers or of strangers if the common carrier’s Nicanor (Navidad), for the reason that the negligence of its employee,
employees through the exercise of due diligence could have prevented or Escartin, has not been duly proven x x x." This finding of the appellate court
stopped the act or omission. In case of such death or injury, a carrier is
7
is not without substantial justification in our own review of the records of the
presumed to have been at fault or been negligent, and by simple proof of
8
case.
injury, the passenger is relieved of the duty to still establish the fault or
negligence of the carrier or of its employees and the burden shifts upon the There being, similarly, no showing that petitioner Rodolfo Roman himself is
carrier to prove that the injury is due to an unforeseen event or to force guilty of any culpable act or omission, he must also be absolved from liability.
majeure. In the absence of satisfactory explanation by the carrier on how the
9
Needless to say, the contractual tie between the LRT and Navidad is not
accident occurred, which petitioners, according to the appellate court, have
itself a juridical relation between the latter and Roman; thus, Roman can be
failed to show, the presumption would be that it has been at fault, an 10
made liable only for his own fault or negligence.
exception from the general rule that negligence must be proved. 11

The award of nominal damages in addition to actual damages is untenable.

The foundation of LRTA’s liability is the contract of carriage and its obligation
Nominal damages are adjudicated in order that a right of the plaintiff, which
to indemnify the victim arises from the breach of that contract by reason of its
has been violated or invaded by the defendant, may be vindicated or
failure to exercise the high diligence required of the common carrier. In the
recognized, and not for the purpose of indemnifying the plaintiff for any loss
discharge of its commitment to ensure the safety of passengers, a carrier
suffered by him. It is an established rule that nominal damages cannot co-
18

may choose to hire its own employees or avail itself of the services of an exist with compensatory damages. 19

outsider or an independent firm to undertake the task. In either case, the

common carrier is not relieved of its responsibilities under the contract of
carriage. WHEREFORE, the assailed decision of the appellate court is AFFIRMED
with MODIFICATION but only in that (a) the award of nominal damages is
DELETED and (b) petitioner Rodolfo Roman is absolved from liability. No
Should Prudent be made likewise liable? If at all, that liability could only be costs.
for tort under the provisions of Article 2176 and related provisions, in
12

conjunction with Article 2180, of the Civil Code. The premise, however, for
13

the employer’s liability is negligence or fault on the part of the employee. SO ORDERED.
Once such fault is established, the employer can then be made liable on the
basis of the presumption juris tantum that the employer failed to exercise Davide, Jr., C.J., (Chairman), Ynares-Santiago, Carpio and Azcuna, JJ.,
diligentissimi patris families in the selection and supervision of its employees. concur.
The liability is primary and can only be negated by showing due diligence in
the selection and supervision of the employee, a factual matter that has not
been shown. Absent such a showing, one might ask further, how then must
the liability of the common carrier, on the one hand, and an independent
contractor, on the other hand, be described? It would be solidary. A
contractual obligation can be breached by tort and when the same act or
omission causes the injury, one resulting in culpa contractual and the other in
culpa aquiliana, Article 2194 of the Civil Code can well apply. In fine, a
14 15

liability for tort may arise even under a contract, where tort is that which
breaches the contract. Stated differently, when an act which constitutes a
16
G.R. No. L-47822 December 22, 1988
PEDRO DE GUZMAN, petitioner,
vs.
COURT OF APPEALS and ERNESTO CENDANA, respondents.
Vicente D. Millora for petitioner.
Jacinto Callanta for private respondent.
FELICIANO, J.:
Respondent Ernesto Cendana, a junk dealer, was engaged in buying up used bottles and scrap metal in Pangasinan.
Upon gathering sufficient quantities of such scrap material, respondent would bring such material to Manila for resale.
He utilized two (2) six-wheeler trucks which he owned for hauling the material to Manila. On the return trip to
Pangasinan, respondent would load his vehicles with cargo which various merchants wanted delivered to differing
establishments in Pangasinan. For that service, respondent charged freight rates which were commonly lower than
regular commercial rates.
Sometime in November 1970, petitioner Pedro de Guzman a merchant and
authorized dealer of General Milk Company (Philippines), Inc. in Urdaneta,
Pangasinan, contracted with respondent for the hauling of 750 cartons of
Liberty filled milk from a warehouse of General Milk in Makati, Rizal, to
petitioner's establishment in Urdaneta on or before 4 December 1970.
Accordingly, on 1 December 1970, respondent loaded in Makati the
merchandise on to his trucks: 150 cartons were loaded on a truck driven by
respondent himself, while 600 cartons were placed on board the other truck
which was driven by Manuel Estrada, respondent's driver and employee.
Only 150 boxes of Liberty filled milk were delivered to petitioner. The other
600 boxes never reached petitioner, since the truck which carried these
boxes was hijacked somewhere along the MacArthur Highway in Paniqui,
Tarlac, by armed men who took with them the truck, its driver, his helper and
the cargo.
On 6 January 1971, petitioner commenced action against private respondent
in the Court of First Instance of Pangasinan, demanding payment of P
22,150.00, the claimed value of the lost merchandise, plus damages and
attorney's fees. Petitioner argued that private respondent, being a common
carrier, and having failed to exercise the extraordinary diligence required of
him by the law, should be held liable for the value of the undelivered goods.
In his Answer, private respondent denied that he was a common carrier and
argued that he could not be held responsible for the value of the lost goods,
such loss having been due to force majeure.
On 10 December 1975, the trial court rendered a Decision finding private
1
respondent to be a common carrier and holding him liable for the value of the
undelivered goods (P 22,150.00) as well as for P 4,000.00 as damages and
P 2,000.00 as attorney's fees.
On appeal before the Court of Appeals, respondent urged that the trial court
had erred in considering him a common carrier; in finding that he had
habitually offered trucking services to the public; in not exempting him from
liability on the ground of force majeure; and in ordering him to pay damages
and attorney's fees.
The Court of Appeals reversed the judgment of the trial court and held that
respondent had been engaged in transporting return loads of freight "as a
casual
occupation — a sideline to his scrap iron business" and not as a common
carrier. Petitioner came to this Court by way of a Petition for Review
assigning as errors the following conclusions of the Court of Appeals:
1. that private respondent was not a common carrier;
2. that the hijacking of respondent's truck was force majeure;
and
3. that respondent was not liable for the value of the
undelivered cargo. (Rollo, p. 111)
We consider first the issue of whether or not private respondent Ernesto
Cendana may, under the facts earlier set forth, be properly characterized as
a common carrier.
The Civil Code defines "common carriers" in the following terms:
Article 1732. Common carriers are persons, corporations,
firms or associations engaged in the business of carrying or
transporting passengers or goods or both, by land, water, or
air for compensation, offering their services to the public.
The above article makes no distinction between one
whose principal business activity is the carrying of persons or goods or both,
and one who does such carrying only as an ancillary activity (in local Idiom
as "a sideline"). Article 1732 also carefully avoids making any distinction
between a person or enterprise offering transportation service on a regular or
scheduled basis and one offering such service on an occasional, episodic or
unscheduled basis. Neither does Article 1732 distinguish between a carrier
offering its services to the "general public," i.e., the general community or
population, and one who offers services or solicits business only from a
narrow segment of the general population. We think that Article 1733
deliberaom making such distinctions.
So understood, the concept of "common carrier" under Article 1732 may be
seen to coincide neatly with the notion of "public service," under the Public
Service Act (Commonwealth Act No. 1416, as amended) which at least
partially supplements the law on common carriers set forth in the Civil Code.
Under Section 13, paragraph (b) of the Public Service Act, "public service"
includes:
... every person that now or hereafter may own, operate,
manage, or control in the Philippines, for hire or
compensation, with general or limited clientele, whether
permanent, occasional or accidental, and done for general
business purposes, any common carrier, railroad, street
railway, traction railway, subway motor vehicle, either for
freight or passenger, or both, with or without fixed route and
whatever may be its classification, freight or carrier service
of any class, express service, steamboat, or steamship line,
pontines, ferries and water craft, engaged in the
transportation of passengers or freight or both, shipyard,
marine repair shop, wharf or dock, ice plant,
ice-refrigeration plant, canal, irrigation system, gas, electric
light, heat and power, water supply and power petroleum,
sewerage system, wire or wireless communications systems,
wire or wireless broadcasting stations and other similar
public services. ... (Emphasis supplied)
It appears to the Court that private respondent is properly characterized as a
common carrier even though he merely "back-hauled" goods for other
merchants from Manila to Pangasinan, although such back-hauling was done
on a periodic or occasional rather than regular or scheduled manner, and
even though private respondent's principal occupation was not the carriage
of goods for others. There is no dispute that private respondent charged his
customers a fee for hauling their goods; that fee frequently fell below
commercial freight rates is not relevant here.
The Court of Appeals referred to the fact that private respondent held no
certificate of public convenience, and concluded he was not a common
carrier. This is palpable error. A certificate of public convenience is not a
requisite for the incurring of liability under the Civil Code provisions governing
common carriers. That liability arises the moment a person or firm acts as a
common carrier, without regard to whether or not such carrier has also
complied with the requirements of the applicable regulatory statute and
implementing regulations and has been granted a certificate of public
convenience or other franchise. To exempt private respondent from the
liabilities of a common carrier because he has not secured the necessary
certificate of public convenience, would be offensive to sound public policy;
that would be to reward private respondent precisely for failing to comply with
applicable statutory requirements. The business of a common carrier
impinges directly and intimately upon the safety and well being and property
of those members of the general community who happen to deal with such
carrier. The law imposes duties and liabilities upon common carriers for the
safety and protection of those who utilize their services and the law cannot
allow a common carrier to render such duties and liabilities merely facultative
by simply failing to obtain the necessary permits and authorizations.
We turn then to the liability of private respondent as a common carrier.
Common carriers, "by the nature of their business and for reasons of public
policy" are held to a very high degree of care and diligence ("extraordinary
2
diligence") in the carriage of goods as well as of passengers. The specific
import of extraordinary diligence in the care of goods transported by a
common carrier is, according to Article 1733, "further expressed in Articles
1734,1735 and 1745, numbers 5, 6 and 7" of the Civil Code.
Article 1734 establishes the general rule that common carriers are
responsible for the loss, destruction or deterioration of the goods which they
carry, "unless the same is due to any of the following causes only:
(1) Flood, storm, earthquake, lightning or
other natural disaster or calamity;
(2) Act of the public enemy in war, whether
international or civil;
(3) Act or omission of the shipper or owner
of the goods;
(4) The character-of the goods or defects in
the packing or-in the containers; and
(5) Order or act of competent public
authority.
It is important to point out that the above list of causes of loss, destruction or
deterioration which exempt the common carrier for responsibility therefor, is a
closed list. Causes falling outside the foregoing list, even if they appear to
constitute a species of force majeure fall within the scope of Article 1735,
which provides as follows:
In all cases other than those mentioned in numbers 1, 2, 3, 4
and 5 of the preceding article, if the goods are lost,
destroyed or deteriorated, common carriers are presumed to
have been at fault or to have acted negligently, unless they
prove that they observed extraordinary diligence as required
in Article 1733. (Emphasis supplied)
Applying the above-quoted Articles 1734 and 1735, we note firstly that the
specific cause alleged in the instant case — the hijacking of the carrier's
truck — does not fall within any of the five (5) categories of exempting
causes listed in Article 1734. It would follow, therefore, that the hijacking of
the carrier's vehicle must be dealt with under the provisions of Article 1735,
in other words, that the private respondent as common carrier is presumed to
have been at fault or to have acted negligently. This presumption, however,
may be overthrown by proof of extraordinary diligence on the part of private
respondent.
Petitioner insists that private respondent had not observed extraordinary
diligence in the care of petitioner's goods. Petitioner argues that in the
circumstances of this case, private respondent should have hired a security
guard presumably to ride with the truck carrying the 600 cartons of Liberty
filled milk. We do not believe, however, that in the instant case, the standard
of extraordinary diligence required private respondent to retain a security
guard to ride with the truck and to engage brigands in a firelight at the risk of
his own life and the lives of the driver and his helper.
The precise issue that we address here relates to the specific requirements
of the duty of extraordinary diligence in the vigilance over the goods carried
in the specific context of hijacking or armed robbery.
As noted earlier, the duty of extraordinary diligence in the vigilance over
goods is, under Article 1733, given additional specification not only by
Articles 1734 and 1735 but also by Article 1745, numbers 4, 5 and 6, Article
1745 provides in relevant part:
Any of the following or similar stipulations shall be
considered unreasonable, unjust and contrary to public
policy:
xxx xxx xxx
(5) that the common carrier shall not be
responsible for the acts or omissions of his
or its employees;
(6) that the common carrier's liability for acts
committed by thieves, or of robbers who
donot act with grave or irresistible threat,
violence or force, is dispensed with or
diminished; and
(7) that the common carrier shall not
responsible for the loss, destruction or
deterioration of goods on account of the
defective condition of the car vehicle, ship,
airplane or other equipment used in the
contract of carriage. (Emphasis supplied)
Under Article 1745 (6) above, a common carrier is held responsible — and
will not be allowed to divest or to diminish such responsibility — even for acts
of strangers like thieves or robbers, except where such thieves or robbers in
fact acted "with grave or irresistible threat, violence or force." We believe and
so hold that the limits of the duty of extraordinary diligence in the vigilance
over the goods carried are reached where the goods are lost as a result of a
robbery which is attended by "grave or irresistible threat, violence or force."
In the instant case, armed men held up the second truck owned by private
respondent which carried petitioner's cargo. The record shows that an
information for robbery in band was filed in the Court of First Instance of
Tarlac, Branch 2, in Criminal Case No. 198 entitled "People of the Philippines
v. Felipe Boncorno, Napoleon Presno, Armando Mesina, Oscar Oria and one
John Doe." There, the accused were charged with willfully and unlawfully
taking and carrying away with them the second truck, driven by Manuel
Estrada and loaded with the 600 cartons of Liberty filled milk destined for
delivery at petitioner's store in Urdaneta, Pangasinan. The decision of the
trial court shows that the accused acted with grave, if not irresistible, threat,
violence or force. Three (3) of the five (5) hold-uppers were armed with
3
firearms. The robbers not only took away the truck and its cargo but also
kidnapped the driver and his helper, detaining them for several days and
later releasing them in another province (in Zambales). The hijacked truck
was subsequently found by the police in Quezon City. The Court of First
Instance convicted all the accused of robbery, though not of robbery in
band. 4
In these circumstances, we hold that the occurrence of the loss must
reasonably be regarded as quite beyond the control of the common carrier
and properly regarded as a fortuitous event. It is necessary to recall that
even common carriers are not made absolute insurers against all risks of
travel and of transport of goods, and are not held liable for acts or events
which cannot be foreseen or are inevitable, provided that they shall have
complied with the rigorous standard of extraordinary diligence.
We, therefore, agree with the result reached by the Court of Appeals that
private respondent Cendana is not liable for the value of the undelivered
merchandise which was lost because of an event entirely beyond private
respondent's control.
ACCORDINGLY, the Petition for Review on certiorari is hereby DENIED and
the Decision of the Court of Appeals dated 3 August 1977 is AFFIRMED. No
pronouncement as to costs.
SO ORDERED.
G.R. No. 125948 December 29, 1998
FIRST PHILIPPINE INDUSTRIAL CORPORATION, petitioner,
vs.
COURT OF APPEALS, HONORABLE PATERNO V. TAC-AN, BATANGAS
CITY and ADORACION C. ARELLANO, in her official capacity as City
Treasurer of Batangas, respondents.
MARTINEZ, J.:
This petition for review on certiorari assails the Decision of the Court of
Appeals dated November 29, 1995, in CA-G.R. SP No. 36801, affirming the
decision of the Regional Trial Court of Batangas City, Branch 84, in Civil
Case No. 4293, which dismissed petitioners' complaint for a business tax
refund imposed by the City of Batangas.
Petitioner is a grantee of a pipeline concession under Republic Act No. 387,
as amended, to contract, install and operate oil pipelines. The original
pipeline concession was granted in 1967 and renewed by the Energy
1
Regulatory Board in 1992. 2
Sometime in January 1995, petitioner applied for a mayor's permit with the
Office of the Mayor of Batangas City. However, before the mayor's permit
could be issued, the respondent City Treasurer required petitioner to pay a
local tax based on its gross receipts for the fiscal year 1993 pursuant to the
Local Government Code . The respondent City Treasurer assessed a
3
business tax on the petitioner amounting to P956,076.04 payable in four
installments based on the gross receipts for products pumped at GPS-1 for
the fiscal year 1993 which amounted to P181,681,151.00. In order not to
hamper its operations, petitioner paid the tax under protest in the amount of
P239,019.01 for the first quarter of 1993.
On January 20, 1994, petitioner filed a letter-protest addressed to the
respondent City Treasurer, the pertinent portion of which reads:
Please note that our Company (FPIC) is a pipeline operator
with a government concession granted under the Petroleum
Act. It is engaged in the business of transporting petroleum
products from the Batangas refineries, via pipeline, to Sucat
and JTF Pandacan Terminals. As such, our Company is
exempt from paying tax on gross receipts under Section 133
of the Local Government Code of 1991 . . . .
 Moreover, Transportation contractors are not included in the trains, ships and the like. Respondents further posit that the term "common
enumeration of contractors under Section 131, Paragraph carrier" under the said code pertains to the mode or manner by which a
(h) of the Local Government Code. Therefore, the authority product is delivered to its destination.
8

to impose tax "on contractors and other independent

contractors" under Section 143, Paragraph (e) of the Local On October 3, 1994, the trial court rendered a decision dismissing the
Government Code does not include the power to levy on complaint, ruling in this wise:
transportation contractors.
. . . Plaintiff is either a contractor or other independent
The imposition and assessment cannot be categorized as a contractor.
mere fee authorized under Section 147 of the Local
Government Code. The said section limits the imposition of
. . . the exemption to tax claimed by the plaintiff has become
fees and charges on business to such amounts as may be
unclear. It is a rule that tax exemptions are to be strictly
commensurate to the cost of regulation, inspection, and construed against the taxpayer, taxes being the lifeblood of
licensing. Hence, assuming arguendo that FPIC is liable for the government. Exemption may therefore be granted only
the license fee, the imposition thereof based on gross
by clear and unequivocal provisions of law.
receipts is violative of the aforecited provision. The amount
of P956,076.04 (P239,019.01 per quarter) is not
commensurate to the cost of regulation, inspection and Plaintiff claims that it is a grantee of a pipeline concession
licensing. The fee is already a revenue raising measure, and under Republic Act 387. (Exhibit A) whose concession was
not a mere regulatory imposition. 4 lately renewed by the Energy Regulatory Board (Exhibit B).
Yet neither said law nor the deed of concession grant any
tax exemption upon the plaintiff.
On March 8, 1994, the respondent City Treasurer denied the protest
contending that petitioner cannot be considered engaged in transportation
business, thus it cannot claim exemption under Section 133 (j) of the Local Even the Local Government Code imposes a tax on
Government Code. 5 franchise holders under Sec. 137 of the Local Tax Code.
Such being the situation obtained in this case (exemption
being unclear and equivocal) resort to distinctions or other
On June 15, 1994, petitioner filed with the Regional Trial Court of Batangas
considerations may be of help:
City a complaint for tax refund with prayer for writ of preliminary injunction
6

against respondents City of Batangas and Adoracion Arellano in her capacity

as City Treasurer. In its complaint, petitioner alleged, inter alia, that: (1) the 1. That the exemption
imposition and collection of the business tax on its gross receipts violates granted under Sec. 133 (j)
Section 133 of the Local Government Code; (2) the authority of cities to encompasses only common
impose and collect a tax on the gross receipts of "contractors and carriers so as not to
independent contractors" under Sec. 141 (e) and 151 does not include the overburden the riding public
authority to collect such taxes on transportation contractors for, as defined or commuters with
under Sec. 131 (h), the term "contractors" excludes transportation taxes. Plaintiff is not a
contractors; and, (3) the City Treasurer illegally and erroneously imposed common carrier, but a
and collected the said tax, thus meriting the immediate refund of the tax special carrier extending its
paid.7 services and facilities to a
single specific or "special
customer" under a "special
Traversing the complaint, the respondents argued that petitioner cannot be
contract."
exempt from taxes under Section 133 (j) of the Local Government Code as
said exemption applies only to "transportation contractors and persons
engaged in the transportation by hire and common carriers by air, land and 2. The Local Tax Code of
water." Respondents assert that pipelines are not included in the term 1992 was basically enacted
"common carrier" which refers solely to ordinary carriers such as trucks, to give more and effective
 local autonomy to local
governments than the
previous enactments, to
make them economically
and financially viable to
serve the people and
discharge their functions
with a concomitant
obligation to accept certain
devolution of powers, . . .
So, consistent with this
policy even franchise
grantees are taxed (Sec.
137) and contractors are
also taxed under Sec. 143
(e) and 151 of the Code. 9
The test for determining whether a party is a common carrier of goods is:
1. He must be engaged in
the business of carrying
goods for others as a public
employment, and must hold
himself out as ready to
engage in the transportation
of goods for person
generally as a business and
not as a casual occupation;
2. He must undertake to
carry goods of the kind to
which his business is
confined;

Petitioner assailed the aforesaid decision before this Court via a petition for
3. He must undertake to
review. On February 27, 1995, we referred the case to the respondent Court carry by the method by
of Appeals for consideration and adjudication. On November 29, 1995, the
10
which his business is
respondent court rendered a decision affirming the trial court's dismissal of
11
conducted and over his
petitioner's complaint. Petitioner's motion for reconsideration was denied on
established roads; and
July 18, 1996. 12

4. The transportation must

Hence, this petition. At first, the petition was denied due course in a
be for hire.15

Resolution dated November 11, 1996. Petitioner moved for a

13

reconsideration which was granted by this Court in a Resolution of January

14

22, 1997. Thus, the petition was reinstated.
Petitioner claims that the respondent Court of Appeals erred in holding that
(1) the petitioner is not a common carrier or a transportation contractor, and
(2) the exemption sought for by petitioner is not clear under the law.
There is merit in the petition.
Based on the above definitions and requirements, there is no doubt that
petitioner is a common carrier. It is engaged in the business of transporting
or carrying goods, i.e. petroleum products, for hire as a public employment. It
undertakes to carry for all persons indifferently, that is, to all persons who
choose to employ its services, and transports the goods by land and for
compensation. The fact that petitioner has a limited clientele does not
exclude it from the definition of a common carrier. In De Guzman vs. Court of
Appeals we ruled that:
16

A "common carrier" may be defined, broadly, as one who holds himself out to The above article (Art. 1732, Civil Code)
the public as engaged in the business of transporting persons or property makes no distinction between one whose
from place to place, for compensation, offering his services to the public principal business activity is the carrying of
generally. persons or goods or both, and one who
does such carrying only as an ancillary
Art. 1732 of the Civil Code defines a "common carrier" as "any person, activity (in local idiom, as a "sideline").
corporation, firm or association engaged in the business of carrying or Article 1732 . . . avoids making any
transporting passengers or goods or both, by land, water, or air, for distinction between a person or enterprise
compensation, offering their services to the public." offering transportation service on
a regular or scheduled basis and one
offering such service on an occasional,
episodic or unscheduled basis. Neither does
Article 1732 distinguish between a carrier
offering its services to the "general
public," i.e., the general community or
population, and one who offers services or
solicits business only from a narrow
segment of the general population. We think
that Article 1877 deliberately refrained from
making such distinctions.
So understood, the concept of "common
carrier" under Article 1732 may be seen to
coincide neatly with the notion of "public
service," under the Public Service Act
(Commonwealth Act No. 1416, as amended)
which at least partially supplements the law
on common carriers set forth in the Civil
Code. Under Section 13, paragraph (b) of
the Public Service Act, "public service"
includes:
every person that now or
hereafter may own, operate.
manage, or control in the
Philippines, for hire or
compensation, with general
or limited clientele, whether
permanent, occasional or
accidental, and done for
general business purposes,
any common carrier,
railroad, street railway,
traction railway, subway
motor vehicle, either for
freight or passenger, or
both, with or without fixed
route and whatever may be
its classification, freight or
carrier service of any class,
express service, steamboat,
or steamship line, pontines,
ferries and water
craft, engaged in the
transportation
of passengers or freight or
both, shipyard, marine
repair shop, wharf or dock,
ice plant, ice-refrigeration
plant, canal, irrigation
system gas, electric light
heat and power, water
supply andpower
petroleum, sewerage
system, wire or wireless
communications systems,
wire or wireless
broadcasting stations and
other similar public services.
(Emphasis Supplied)
Also, respondent's argument that the term "common carrier" as used in
Section 133 (j) of the Local Government Code refers only to common carriers
transporting goods and passengers through moving vehicles or vessels
either by land, sea or water, is erroneous.
As correctly pointed out by petitioner, the definition of "common carriers" in
the Civil Code makes no distinction as to the means of transporting, as long
as it is by land, water or air. It does not provide that the transportation of the
passengers or goods should be by motor vehicle. In fact, in the United
States, oil pipe line operators are considered common carriers. 17
Under the Petroleum Act of the Philippines (Republic Act 387), petitioner is
considered a "common carrier." Thus, Article 86 thereof provides that:
Art. 86. Pipe line concessionaire as common
carrier. — A pipe line shall have the
preferential right to utilize installations for the
transportation of petroleum owned by him,
but is obligated to utilize the remaining
transportation capacity pro rata for the
transportation of such other petroleum as
may be offered by others for transport, and
to charge without discrimination such rates
as may have been approved by the
Secretary of Agriculture and Natural
Resources.
Republic Act 387 also regards petroleum operation as a public utility.
Pertinent portion of Article 7 thereof provides:
 that everything relating to the exploration for or freight by
and exploitation of petroleum . . . and hire and
everything relating to the manufacture, common
refining, storage, or transportation by special carriers by
methods of petroleum, is hereby declared to air, land or
be a public utility. (Emphasis Supplied) water,
except as
The Bureau of Internal Revenue likewise considers the petitioner a "common provided in
carrier." In BIR Ruling No. 069-83, it declared: this Code.

. . . since [petitioner] is a pipeline The deliberations conducted in the House of Representatives on the Local
concessionaire that is engaged only in Government Code of 1991 are illuminating:
transporting petroleum products, it is
considered a common carrier under MR. AQUINO (A). Thank you, Mr. Speaker.
Republic Act No. 387 . . . . Such being the
case, it is not subject to withholding tax Mr. Speaker, we would like to proceed to
prescribed by Revenue Regulations No. 13- page 95, line
78, as amended.
1. It states: "SEC. 121 [now Sec. 131].
From the foregoing disquisition, there is no doubt that petitioner is a Common Limitations on the Taxing Powers
"common carrier" and, therefore, exempt from the business tax as provided of Local Government Units." . . .
for in Section 133 (j), of the Local Government Code, to wit:
MR. AQUINO (A.). Thank you Mr. Speaker.
Sec. 133. Common Limitations on the
Taxing Powers of Local Government Units.
Still on page 95, subparagraph 5, on taxes
— Unless otherwise provided herein, the
on the business of transportation. This
exercise of the taxing powers of provinces,
appears to be one of those being deemed to
cities, municipalities, and barangays shall be exempted from the taxing powers of the
not extend to the levy of the following:
local government units. May we know the
reason why the transportation business is
xxx xxx xxx being excluded from the taxing powers of
the local government units?
(j) Taxes on
the gross MR. JAVIER (E.). Mr. Speaker, there is an
receipts of exception contained in Section 121 (now
transportati Sec. 131), line 16, paragraph 5. It states that
on local government units may not impose
contractors taxes on the business of transportation,
and except as otherwise provided in this code.
persons
engaged in
Now, Mr. Speaker, if the Gentleman would
the
care to go to page 98 of Book II, one can
transportati see there that provinces have the power to
on of impose a tax on business enjoying a
passengers
franchise at the rate of not more than one-
 half of 1 percent of the gross annual
receipts. So, transportation contractors who
are enjoying a franchise would be subject to
tax by the province. That is the exception,
Mr. Speaker.
What we want to guard against here, Mr.
Speaker, is the imposition of taxes by local
government units on the carrier business.
Local government units may impose taxes
on top of what is already being imposed by
the National Internal Revenue Code which is
the so-called "common carriers tax." We do
not want a duplication of this tax, so we just
provided for an exception under Section 125
[now Sec. 137] that a province may impose
this tax at a specific rate.
MR. AQUINO (A.). Thank you for that
clarification, Mr. Speaker. . . .
18
It is clear that the legislative intent in excluding from the taxing power of the
local government unit the imposition of business tax against common carriers
is to prevent a duplication of the so-called "common carrier's tax."
Petitioner is already paying three (3%) percent common carrier's tax on its
gross sales/earnings under the National Internal Revenue Code. To tax 19
petitioner again on its gross receipts in its transportation of petroleum
business would defeat the purpose of the Local Government Code.
WHEREFORE, the petition is hereby GRANTED. The decision of the
respondent Court of Appeals dated November 29, 1995 in CA-G.R. SP No.
36801 is REVERSED and SET ASIDE.
SO ORDERED.
G.R. No. 157917 August 29, 2012
SPOUSES TEODORO and NANETTE PERENA, Petitioners,
1
vs.
SPOUSES TERESITA PHILIPPINE NICOLAS and L. ZARATE, NATIONAL
RAILWAYS, and the COURT OF APPEALS Respondents.
DECISION
BERSAMIN, J.:
The operator of a. school bus service is a common carrier in the eyes of the
law. He is bound to observe extraordinary diligence in the conduct of his
business. He is presumed to be negligent when death occurs to a passenger.
His liability may include indemnity for loss of earning capacity even if the
deceased passenger may only be an unemployed high school student at the
time of the accident.
The Case
By petition for review on certiorari, Spouses Teodoro and Nanette Perefia
(Perefias) appeal the adverse decision promulgated on November 13, 2002,
by which the Court of Appeals (CA) affirmed with modification the decision
rendered on December 3, 1999 by the Regional Trial Court (RTC), Branch
260, in Parañaque City that had decreed them jointly and severally liable with
Philippine National Railways (PNR), their co-defendant, to Spouses Nicolas
and Teresita Zarate (Zarates) for the death of their 15-year old son, Aaron
John L. Zarate (Aaron), then a high school student of Don Bosco Technical
Institute (Don Bosco).
Antecedents
The Pereñas were engaged in the business of transporting students from
their respective residences in Parañaque City to Don Bosco in Pasong
Tamo, Makati City, and back. In their business, the Pereñas used a KIA
Ceres Van (van) with Plate No. PYA 896, which had the capacity to transport
14 students at a time, two of whom would be seated in the front beside the
driver, and the others in the rear, with six students on either side. They
employed Clemente Alfaro (Alfaro) as driver of the van.
In June 1996, the Zarates contracted the Pereñas to transport Aaron to and
from Don Bosco. On August 22, 1996, as on previous school days, the van
picked Aaron up around 6:00 a.m. from the Zarates’ residence. Aaron took
his place on the left side of the van near the rear door. The van, with its air-
conditioning unit turned on and the stereo playing loudly, ultimately carried all
the 14 student riders on their way to Don Bosco. Considering that the
students were due at Don Bosco by 7:15 a.m., and that they were already
running late because of the heavy vehicular traffic on the South
Superhighway, Alfaro took the van to an alternate route at about 6:45 a.m. by
traversing the narrow path underneath the Magallanes Interchange that was
then commonly used by Makati-bound vehicles as a short cut into Makati. At
the time, the narrow path was marked by piles of construction materials and
parked passenger jeepneys, and the railroad crossing in the narrow path had
no railroad warning signs, or watchmen, or other responsible persons
manning the crossing. In fact, the bamboo barandilla was up, leaving the
railroad crossing open to traversing motorists.
At about the time the van was to traverse the railroad crossing, PNR
Commuter No. 302 (train), operated by Jhonny Alano (Alano), was in the
vicinity of the Magallanes Interchange travelling northbound. As the train
neared the railroad crossing, Alfaro drove the van eastward across the
railroad tracks, closely tailing a large passenger bus. His view of the
oncoming train was blocked because he overtook the passenger bus on its
left side. The train blew its horn to warn motorists of its approach. When the
train was about 50 meters away from the passenger bus and the van, Alano
applied the ordinary brakes of the train. He applied the emergency brakes
only when he saw that a collision was imminent. The passenger bus
successfully crossed the railroad tracks, but the van driven by Alfaro did not.
The train hit the rear end of the van, and the impact threw nine of the 12
students in the rear, including Aaron, out of the van. Aaron landed in the path
of the train, which dragged his body and severed his head, instantaneously
killing him. Alano fled the scene on board the train, and did not wait for the
police investigator to arrive.
Devastated by the early and unexpected death of Aaron, the Zarates
commenced this action for damages against Alfaro, the Pereñas, PNR and
Alano. The Pereñas and PNR filed their respective answers, with cross-
claims against each other, but Alfaro could not be served with summons.
At the pre-trial, the parties stipulated on the facts and issues, viz:
A. FACTS:
(1) That spouses Zarate were the legitimate parents of Aaron John
L. Zarate;
(2) Spouses Zarate engaged the services of spouses Pereña for the
adequate and safe transportation carriage of the former spouses' son
from their residence in Parañaque to his school at the Don Bosco
Technical Institute in Makati City;
(3) During the effectivity of the contract of carriage and in the
implementation thereof, Aaron, the minor son of spouses Zarate died
in connection with a vehicular/train collision which occurred while
Aaron was riding the contracted carrier Kia Ceres van of spouses
Pereña, then driven and operated by the latter's
employee/authorized driver Clemente Alfaro, which van collided with
the train of PNR, at around 6:45 A.M. of August 22, 1996, within the
vicinity of the Magallanes Interchange in Makati City, Metro Manila,
Philippines;
(4) At the time of the vehicular/train collision, the subject site of the
vehicular/train collision was a railroad crossing used by motorists for
crossing the railroad tracks;
(5) During the said time of the vehicular/train collision, there were no
appropriate and safety warning signs and railings at the site
commonly used for railroad crossing;
(6) At the material time, countless number of Makati bound public
utility and private vehicles used on a daily basis the site of the
collision as an alternative route and short-cut to Makati;
(7) The train driver or operator left the scene of the incident on
board the commuter train involved without waiting for the police
investigator;
(8) The site commonly used for railroad crossing by motorists was
not in fact intended by the railroad operator for railroad crossing at
the time of the vehicular collision;
(9) PNR received the demand letter of the spouses Zarate;
(10) PNR refused to acknowledge any liability for the
vehicular/train collision;
(11) The eventual closure of the railroad crossing alleged by PNR
was an internal arrangement between the former and its project
contractor; and
(12) The site of the vehicular/train collision was within the vicinity or
less than 100 meters from the Magallanes station of PNR.
B. ISSUES
(1) Whether or not defendant-driver of the van is, in the performance
of his functions, liable for negligence constituting the proximate
cause of the vehicular collision, which resulted in the death of plaintiff
spouses' son;
(2) Whether or not the defendant spouses Pereña being the
employer of defendant Alfaro are liable for any negligence which
may be attributed to defendant Alfaro;
(3) Whether or not defendant Philippine National Railways being the
operator of the railroad system is liable for negligence in failing to
provide adequate safety warning signs and railings in the area
commonly used by motorists for railroad crossings, constituting the
proximate cause of the vehicular collision which resulted in the death
of the plaintiff spouses' son;
(4) Whether or not defendant spouses Pereña are liable for breach of
the contract of carriage with plaintiff-spouses in failing to provide
adequate and safe transportation for the latter's son;
(5) Whether or not defendants spouses are liable for actual, moral
damages, exemplary damages, and attorney's fees;
(6) Whether or not defendants spouses Teodorico and Nanette
Pereña observed the diligence of employers and school bus
operators;
(7) Whether or not defendant-spouses are civilly liable for the
accidental death of Aaron John Zarate;
(8) Whether or not defendant PNR was grossly negligent in operating
the commuter train involved in the accident, in allowing or tolerating
the motoring public to cross, and its failure to install safety devices or
equipment at the site of the accident for the protection of the public;
(9) Whether or not defendant PNR should be made to reimburse
defendant spouses for any and whatever amount the latter may be
held answerable or which they may be ordered to pay in favor of
plaintiffs by reason of the action;
(10) Whether or not defendant PNR should pay plaintiffs directly and
fully on the amounts claimed by the latter in their Complaint by
reason of its gross negligence;
(11) Whether or not defendant PNR is liable to defendants spouses
for actual, moral and exemplary damages and attorney's fees. 2
The Zarates’ claim against the Pereñas was upon breach of the contract of
carriage for the safe transport of Aaron; but that against PNR was based on
quasi-delict under Article 2176, Civil Code.
In their defense, the Pereñas adduced evidence to show that they had
exercised the diligence of a good father of the family in the selection and
supervision of Alfaro, by making sure that Alfaro had been issued a driver’s
license and had not been involved in any vehicular accident prior to the
collision; that their own son had taken the van daily; and that Teodoro
Pereña had sometimes accompanied Alfaro in the van’s trips transporting the
students to school.
For its part, PNR tended to show that the proximate cause of the collision
had been the reckless crossing of the van whose driver had not first stopped,
looked and listened; and that the narrow path traversed by the van had not
been intended to be a railroad crossing for motorists.
Ruling of the RTC
On December 3, 1999, the RTC rendered its decision, disposing:
3
WHEREFORE, premises considered, judgment is hereby rendered in favor
of the plaintiff and against the defendants ordering them to jointly and
severally pay the plaintiffs as follows:
(1) (for) the death of Aaron- Php50,000.00;
(2) Actual damages in the amount of Php100,000.00;
(3) For the loss of earning capacity- Php2,109,071.00;
(4) Moral damages in the amount of Php4,000,000.00;
(5) Exemplary damages in the amount of Php1,000,000.00;
(6) Attorney’s fees in the amount of Php200,000.00; and
(7) Cost of suit.
SO ORDERED.
On June 29, 2000, the RTC denied the Pereñas’ motion for
reconsideration, reiterating that the cooperative gross negligence of the
4
Pereñas and PNR had caused the collision that led to the death of Aaron;
and that the damages awarded to the Zarates were not excessive, but based
on the established circumstances.
The CA’s Ruling
Both the Pereñas and PNR appealed (C.A.-G.R. CV No. 68916).
PNR assigned the following errors, to wit: 5 Manila Railroad Company, wherein the Court gave the heirs of Cariaga a
The Court a quo erred in:
1. In finding the defendant-appellant Philippine National Railways
jointly and severally liable together with defendant-appellants
spouses Teodorico and Nanette Pereña and defendant-appellant
Clemente Alfaro to pay plaintiffs-appellees for the death of Aaron
Zarate and damages.
2. In giving full faith and merit to the oral testimonies of plaintiffs-
appellees witnesses despite overwhelming documentary evidence
on record, supporting the case of defendants-appellants Philippine
National Railways.
The Pereñas ascribed the following errors to the RTC, namely:
The trial court erred in finding defendants-appellants jointly and severally
liable for actual, moral and exemplary damages and attorney’s fees with the
other defendants.
The trial court erred in dismissing the cross-claim of the appellants Pereñas
against the Philippine National Railways and in not holding the latter and its
train driver primarily responsible for the incident.
The trial court erred in awarding excessive damages and attorney’s fees.
The trial court erred in awarding damages in the form of deceased’s loss of
earning capacity in the absence of sufficient basis for such an award.
On November 13, 2002, the CA promulgated its decision, affirming the
findings of the RTC, but limited the moral damages to ₱ 2,500,000.00; and
deleted the attorney’s fees because the RTC did not state the factual and
legal bases, to wit:6
WHEREFORE, premises considered, the assailed Decision of the Regional
Trial Court, Branch 260 of Parañaque City is AFFIRMED with the
modification that the award of Actual Damages is reduced to ₱ 59,502.76;
Moral Damages is reduced to ₱ 2,500,000.00; and the award for Attorney’s
Fees is Deleted.
SO ORDERED.
The CA upheld the award for the loss of Aaron’s earning capacity, taking
cognizance of the ruling in Cariaga v. Laguna Tayabas Bus Company and
7
sum representing the loss of the deceased’s earning capacity despite
Cariaga being only a medical student at the time of the fatal incident.
Applying the formula adopted in the American Expectancy Table of
Mortality:–
2/3 x (80 - age at the time of death) = life expectancy
the CA determined the life expectancy of Aaron to be 39.3 years upon
reckoning his life expectancy from age of 21 (the age when he would have
graduated from college and started working for his own livelihood) instead of
15 years (his age when he died). Considering that the nature of his work and
his salary at the time of Aaron’s death were unknown, it used the prevailing
minimum wage of ₱ 280.00/day to compute Aaron’s gross annual salary to
be ₱ 110,716.65, inclusive of the thirteenth month pay. Multiplying this
annual salary by Aaron’s life expectancy of 39.3 years, his gross income
would aggregate to ₱ 4,351,164.30, from which his estimated expenses in
the sum of ₱ 2,189,664.30 was deducted to finally arrive at P 2,161,500.00
as net income. Due to Aaron’s computed net income turning out to be higher
than the amount claimed by the Zarates, only ₱ 2,109,071.00, the amount
expressly prayed for by them, was granted.
On April 4, 2003, the CA denied the Pereñas’ motion for reconsideration. 8
Issues
In this appeal, the Pereñas list the following as the errors committed by the
CA, to wit:
I. The lower court erred when it upheld the trial court’s decision holding the
petitioners jointly and severally liable to pay damages with Philippine
National Railways and dismissing their cross-claim against the latter.
II. The lower court erred in affirming the trial court’s decision awarding
damages for loss of earning capacity of a minor who was only a high school
student at the time of his death in the absence of sufficient basis for such an
award.
III. The lower court erred in not reducing further the amount of damages
awarded, assuming petitioners are liable at all.
Ruling
The petition has no merit.
1.
Were the Pereñas and PNR jointly
and severally liable for damages?
The Zarates brought this action for recovery of damages against both the
Pereñas and the PNR, basing their claim against the Pereñas on breach of
contract of carriage and against the PNR on quasi-delict.
The RTC found the Pereñas and the PNR negligent. The CA affirmed the
findings.
We concur with the CA.
To start with, the Pereñas’ defense was that they exercised the diligence of a
good father of the family in the selection and supervision of Alfaro, the van
driver, by seeing to it that Alfaro had a driver’s license and that he had not
been involved in any vehicular accident prior to the fatal collision with the
train; that they even had their own son travel to and from school on a daily
basis; and that Teodoro Pereña himself sometimes accompanied Alfaro in
transporting the passengers to and from school. The RTC gave scant
consideration to such defense by regarding such defense as inappropriate in
an action for breach of contract of carriage.
We find no adequate cause to differ from the conclusions of the lower courts
that the Pereñas operated as a common carrier; and that their standard of
care was extraordinary diligence, not the ordinary diligence of a good father
of a family.
Although in this jurisdiction the operator of a school bus service has been
usually regarded as a private carrier, primarily because he only caters to
9
some specific or privileged individuals, and his operation is neither open to
the indefinite public nor for public use, the exact nature of the operation of a
school bus service has not been finally settled. This is the occasion to lay the
matter to rest.
A carrier is a person or corporation who undertakes to transport or convey
goods or persons from one place to another, gratuitously or for hire. The
carrier is classified either as a private/special carrier or as a common/public
carrier. A private carrier is one who, without making the activity a vocation,
10
or without holding himself or itself out to the public as ready to act for all who
may desire his or its services, undertakes, by special agreement in a
particular instance only, to transport goods or persons from one place to
another either gratuitously or for hire. The provisions on ordinary contracts of
11
the Civil Code govern the contract of private carriage.The diligence required
of a private carrier is only ordinary, that is, the diligence of a good father of
the family. In contrast, a common carrier is a person, corporation, firm or
association engaged in the business of carrying or transporting passengers
or goods or both, by land, water, or air, for compensation, offering such
services to the public. Contracts of common carriage are governed by the
12
provisions on common carriers of the Civil Code, the Public Service Act, and 13
other special laws relating to transportation. A common carrier is required to
observe extraordinary diligence, and is presumed to be at fault or to have
acted negligently in case of the loss of the effects of passengers, or the
death or injuries to passengers. 14
In relation to common carriers, the Court defined public use in the following
terms in United States v. Tan Piaco, viz: 15
"Public use" is the same as "use by the public". The essential feature of the
public use is not confined to privileged individuals, but is open to the
indefinite public. It is this indefinite or unrestricted quality that gives it its
public character. In determining whether a use is public, we must look not
only to the character of the business to be done, but also to the proposed
mode of doing it. If the use is merely optional with the owners, or the public
benefit is merely incidental, it is not a public use, authorizing the exercise of
the jurisdiction of the public utility commission. There must be, in general, a
right which the law compels the owner to give to the general public. It is not
enough that the general prosperity of the public is promoted. Public use is
not synonymous with public interest. The true criterion by which to judge the
character of the use is whether the public may enjoy it by right or only by
permission.
In De Guzman v. Court of Appeals, the Court noted that Article 1732 of the
16
Civil Code avoided any distinction between a person or an enterprise offering
transportation on a regular or an isolated basis; and has not distinguished a
carrier offering his services to the general public, that is, the general
community or population, from one offering his services only to a narrow
segment of the general population.
Nonetheless, the concept of a common carrier embodied in Article 1732 of
the Civil Code coincides neatly with the notion of public service under the
Public Service Act, which supplements the law on common carriers found in
the Civil Code. Public service, according to Section 13, paragraph (b) of the
Public Service Act, includes:
x x x every person that now or hereafter may own, operate, manage, or
control in the Philippines, for hire or compensation, with general or limited
clientèle, whether permanent or occasional, and done for the general
business purposes, any common carrier, railroad, street railway, traction
railway, subway motor vehicle, either for freight or passenger, or both, with or
without fixed route and whatever may be its classification, freight or carrier
service of any class, express service, steamboat, or steamship line, pontines,
ferries and water craft, engaged in the transportation of passengers or freight
or both, shipyard, marine repair shop, ice-refrigeration plant, canal, irrigation
system, gas, electric light, heat and power, water supply and power
petroleum, sewerage system, wire or wireless communications systems, wire
or wireless broadcasting stations and other similar public services. x x x.17
Given the breadth of the aforequoted characterization of a common carrier,
the Court has considered as common carriers pipeline operators, custom
18
brokers and warehousemen, and barge operators even if they had limited
19 20
clientèle.
As all the foregoing indicate, the true test for a common carrier is not the
quantity or extent of the business actually transacted, or the number and
character of the conveyances used in the activity, but whether the
undertaking is a part of the activity engaged in by the carrier that he has held
out to the general public as his business or occupation. If the undertaking is a
single transaction, not a part of the general business or occupation engaged
in, as advertised and held out to the general public, the individual or the
entity rendering such service is a private, not a common, carrier. The
question must be determined by the character of the business actually
carried on by the carrier, not by any secret intention or mental reservation it
may entertain or assert when charged with the duties and obligations that the
law imposes. 21
Applying these considerations to the case before us, there is no question that
the Pereñas as the operators of a school bus service were: (a) engaged in
transporting passengers generally as a business, not just as a casual
occupation; (b) undertaking to carry passengers over established roads by
the method by which the business was conducted; and (c) transporting
students for a fee. Despite catering to a limited clientèle, the Pereñas
operated as a common carrier because they held themselves out as a ready
transportation indiscriminately to the students of a particular school living
within or near where they operated the service and for a fee.
The common carrier’s standard of care and vigilance as to the safety of the
passengers is defined by law. Given the nature of the business and for
reasons of public policy, the common carrier is bound "to observe
extraordinary diligence in the vigilance over the goods and for the safety of
the passengers transported by them, according to all the circumstances of
each case." Article 1755 of the Civil Code specifies that the common carrier
22
should "carry the passengers safely as far as human care and foresight can
provide, using the utmost diligence of very cautious persons, with a due
regard for all the circumstances." To successfully fend off liability in an action
upon the death or injury to a passenger, the common carrier must prove his
or its observance of that extraordinary diligence; otherwise, the legal
presumption that he or it was at fault or acted negligently would stand. No
23
device, whether by stipulation, posting of notices, statements on tickets, or
otherwise, may dispense with or lessen the responsibility of the common
carrier as defined under Article 1755 of the Civil Code. 24
And, secondly, the Pereñas have not presented any compelling defense or
reason by which the Court might now reverse the CA’s findings on their
liability. On the contrary, an examination of the records shows that the
evidence fully supported the findings of the CA.
As earlier stated, the Pereñas, acting as a common carrier, were already
presumed to be negligent at the time of the accident because death had
occurred to their passenger. The presumption of negligence, being a
25
presumption of law, laid the burden of evidence on their shoulders to
establish that they had not been negligent. It was the law no less that
26
required them to prove their observance of extraordinary diligence in seeing
to the safe and secure carriage of the passengers to their destination. Until
they did so in a credible manner, they stood to be held legally responsible for
the death of Aaron and thus to be held liable for all the natural consequences
of such death.
There is no question that the Pereñas did not overturn the presumption of
their negligence by credible evidence. Their defense of having observed the
diligence of a good father of a family in the selection and supervision of their
driver was not legally sufficient. According to Article 1759 of the Civil Code,
their liability as a common carrier did not cease upon proof that they
exercised all the diligence of a good father of a family in the selection and
supervision of their employee. This was the reason why the RTC treated this
defense of the Pereñas as inappropriate in this action for breach of contract
of carriage.
The Pereñas were liable for the death of Aaron despite the fact that their
driver might have acted beyond the scope of his authority or even in violation
of the orders of the common carrier. In this connection, the records showed
27
their driver’s actual negligence. There was a showing, to begin with, that their
driver traversed the railroad tracks at a point at which the PNR did not permit
motorists going into the Makati area to cross the railroad tracks. Although
that point had been used by motorists as a shortcut into the Makati area, that
fact alone did not excuse their driver into taking that route. On the other
hand, with his familiarity with that shortcut, their driver was fully aware of the
risks to his passengers but he still disregarded the risks. Compounding his
lack of care was that loud music was playing inside the air-conditioned van at
the time of the accident. The loudness most probably reduced his ability to
hear the warning horns of the oncoming train to allow him to correctly
appreciate the lurking dangers on the railroad tracks. Also, he sought to
overtake a passenger bus on the left side as both vehicles traversed the
railroad tracks. In so doing, he lost his view of the train that was then coming
from the opposite side of the passenger bus, leading him to miscalculate his
chances of beating the bus in their race, and of getting clear of the train. As a
result, the bus avoided a collision with the train but the van got slammed at
its rear, causing the fatality. Lastly, he did not slow down or go to a full stop
before traversing the railroad tracks despite knowing that his slackening of
speed and going to a full stop were in observance of the right of way at
railroad tracks as defined by the traffic laws and regulations. He thereby
28
violated a specific traffic regulation on right of way, by virtue of which he was
immediately presumed to be negligent. 29
The omissions of care on the part of the van driver constituted
negligence, which, according to Layugan v. Intermediate Appellate Court, is
30 31
"the omission to do something which a reasonable man, guided by those
considerations which ordinarily regulate the conduct of human affairs, would
do, or the doing of something which a prudent and reasonable man would
not do, or as Judge Cooley defines it, ‘(t)he failure to observe for the
32
protection of the interests of another person, that degree of care, precaution,
and vigilance which the circumstances justly demand, whereby such other
person suffers injury.’"
33
The test by which to determine the existence of negligence in a particular
case has been aptly stated in the leading case of Picart v. Smith, thuswise:
34
The test by which to determine the existence of negligence in a particular
case may be stated as follows: Did the defendant in doing the alleged
negligent act use that reasonable care and caution which an ordinarily
prudent person would have used in the same situation? If not, then he is
guilty of negligence. The law here in effect adopts the standard supposed to
be supplied by the imaginary conduct of the discreet paterfamilias of the
Roman law. The existence of negligence in a given case is not determined
by reference to the personal judgment of the actor in the situation before him.
The law considers what would be reckless, blameworthy, or negligent in the
man of ordinary intelligence and prudence and determines liability by that.
The question as to what would constitute the conduct of a prudent man in a
given situation must of course be always determined in the light of human
experience and in view of the facts involved in the particular case. Abstract
speculation cannot here be of much value but this much can be profitably
said: Reasonable men govern their conduct by the circumstances which are
before them or known to them. They are not, and are not supposed to be,
omniscient of the future. Hence they can be expected to take care only when
there is something before them to suggest or warn of danger. Could a
prudent man, in the case under consideration, foresee harm as a result of the
course actually pursued? If so, it was the duty of the actor to take
precautions to guard against that harm. Reasonable foresight of harm,
followed by the ignoring of the suggestion born of this prevision, is always
necessary before negligence can be held to exist. Stated in these terms, the
proper criterion for determining the existence of negligence in a given case is
this: Conduct is said to be negligent when a prudent man in the position of
the tortfeasor would have foreseen that an effect harmful to another was
sufficiently probable to warrant his foregoing the conduct or guarding against
its consequences. (Emphasis supplied)
Pursuant to the Picart v. Smith test of negligence, the Pereñas’ driver was
entirely negligent when he traversed the railroad tracks at a point not allowed
for a motorist’s crossing despite being fully aware of the grave harm to be
thereby caused to his passengers; and when he disregarded the foresight of
harm to his passengers by overtaking the bus on the left side as to leave
himself blind to the approach of the oncoming train that he knew was on the
opposite side of the bus.
Unrelenting, the Pereñas cite Phil. National Railways v. Intermediate
Appellate Court, where the Court held the PNR solely liable for the damages
35
caused to a passenger bus and its passengers when its train hit the rear end
of the bus that was then traversing the railroad crossing. But the
circumstances of that case and this one share no similarities. In Philippine
National Railways v. Intermediate Appellate Court, no evidence of
contributory negligence was adduced against the owner of the bus. Instead,
it was the owner of the bus who proved the exercise of extraordinary
diligence by preponderant evidence. Also, the records are replete with the
showing of negligence on the part of both the Pereñas and the PNR. Another
distinction is that the passenger bus in Philippine National Railways v.
Intermediate Appellate Court was traversing the dedicated railroad crossing
when it was hit by the train, but the Pereñas’ school van traversed the
railroad tracks at a point not intended for that purpose.
At any rate, the lower courts correctly held both the Pereñas and the PNR
"jointly and severally" liable for damages arising from the death of Aaron.
They had been impleaded in the same complaint as defendants against
whom the Zarates had the right to relief, whether jointly, severally, or in the
alternative, in respect to or arising out of the accident, and questions of fact
and of law were common as to the Zarates. Although the basis of the right to
36
relief of the Zarates (i.e., breach of contract of carriage) against the Pereñas
was distinct from the basis of the Zarates’ right to relief against the PNR (i.e.,
quasi-delict under Article 2176, Civil Code), they nonetheless could be held
jointly and severally liable by virtue of their respective negligence combining
to cause the death of Aaron. As to the PNR, the RTC rightly found the PNR
also guilty of negligence despite the school van of the Pereñas traversing the
railroad tracks at a point not dedicated by the PNR as a railroad crossing for
pedestrians and motorists, because the PNR did not ensure the safety of
others through the placing of crossbars, signal lights, warning signs, and
other permanent safety barriers to prevent vehicles or pedestrians from
crossing there. The RTC observed that the fact that a crossing guard had
been assigned to man that point from 7 a.m. to 5 p.m. was a good indicium
that the PNR was aware of the risks to others as well as the need to control
the vehicular and other traffic there. Verily, the Pereñas and the PNR were
joint tortfeasors.
2.
Was the indemnity for loss of
Aaron’s earning capacity proper?
The RTC awarded indemnity for loss of Aaron’s earning capacity. Although
agreeing with the RTC on the liability, the CA modified the amount. Both
lower courts took into consideration that Aaron, while only a high school
student, had been enrolled in one of the reputable schools in the Philippines
and that he had been a normal and able-bodied child prior to his death. The
basis for the computation of Aaron’s earning capacity was not what he would
have become or what he would have wanted to be if not for his untimely
death, but the minimum wage in effect at the time of his death. Moreover, the
RTC’s computation of Aaron’s life expectancy rate was not reckoned from his
age of 15 years at the time of his death, but on 21 years, his age when he
would have graduated from college.
We find the considerations taken into account by the lower courts to be
reasonable and fully warranted.
Yet, the Pereñas submit that the indemnity for loss of earning capacity was
speculative and unfounded. They cited People v. Teehankee, Jr., where the
1âw phi1
37
Court deleted the indemnity for victim Jussi Leino’s loss of earning capacity
as a pilot for being speculative due to his having graduated from high school
at the International School in Manila only two years before the shooting, and
was at the time of the shooting only enrolled in the first semester at the
Manila Aero Club to pursue his ambition to become a professional pilot. That
meant, according to the Court, that he was for all intents and purposes only a
high school graduate.
We reject the Pereñas’ submission.
First of all, a careful perusal of the Teehankee, Jr. case shows that the
situation there of Jussi Leino was not akin to that of Aaron here. The CA and
the RTC were not speculating that Aaron would be some highly-paid
professional, like a pilot (or, for that matter, an engineer, a physician, or a
lawyer). Instead, the computation of Aaron’s earning capacity was premised
on him being a lowly minimum wage earner despite his being then enrolled at
a prestigious high school like Don Bosco in Makati, a fact that would have
likely ensured his success in his later years in life and at work.
And, secondly, the fact that Aaron was then without a history of earnings
should not be taken against his parents and in favor of the defendants whose
negligence not only cost Aaron his life and his right to work and earn money,
but also deprived his parents of their right to his presence and his services as
well. Our law itself states that the loss of the earning capacity of the
deceased shall be the liability of the guilty party in favor of the heirs of the
deceased, and shall in every case be assessed and awarded by the court
"unless the deceased on account of permanent physical disability not caused
by the defendant, had no earning capacity at the time of his
death." Accordingly, we emphatically hold in favor of the indemnification for
38
Aaron’s loss of earning capacity despite him having been unemployed,
because compensation of this nature is awarded not for loss of time or
earnings but for loss of the deceased’s power or ability to earn money. 39
This favorable treatment of the Zarates’ claim is not unprecedented. In
Cariaga v. Laguna Tayabas Bus Company and Manila Railroad
Company, fourth-year medical student Edgardo Carriaga’s earning capacity,
40
although he survived the accident but his injuries rendered him permanently
incapacitated, was computed to be that of the physician that he dreamed to
become. The Court considered his scholastic record sufficient to justify the
assumption that he could have finished the medical course and would have
passed the medical board examinations in due time, and that he could have
possibly earned a modest income as a medical practitioner. Also, in People
v. Sanchez, the Court opined that murder and rape victim Eileen Sarmienta
41
and murder victim Allan Gomez could have easily landed good-paying jobs
had they graduated in due time, and that their jobs would probably pay them
high monthly salaries from ₱ 10,000.00 to ₱ 15,000.00 upon their graduation.
Their earning capacities were computed at rates higher than the minimum
wage at the time of their deaths due to their being already senior agriculture
students of the University of the Philippines in Los Baños, the country’s
leading educational institution in agriculture.
3.
Were the amounts of damages excessive?
The Pereñas plead for the reduction of the moral and exemplary damages
awarded to the Zarates in the respective amounts of ₱ 2,500,000.00 and ₱
1,000,000.00 on the ground that such amounts were excessive.
The plea is unwarranted.
The moral damages of ₱ 2,500,000.00 were really just and reasonable under
the established circumstances of this case because they were intended by
the law to assuage the Zarates’ deep mental anguish over their son’s
unexpected and violent death, and their moral shock over the senseless
accident. That amount would not be too much, considering that it would help
the Zarates obtain the means, diversions or amusements that would alleviate
their suffering for the loss of their child. At any rate, reducing the amount as
excessive might prove to be an injustice, given the passage of a long time
from when their mental anguish was inflicted on them on August 22, 1996.
Anent the ₱ 1,000,000.00 allowed as exemplary damages, we should not
reduce the amount if only to render effective the desired example for the
public good. As a common carrier, the Pereñas needed to be vigorously
reminded to observe their duty to exercise extraordinary diligence to prevent
a similarly senseless accident from happening again. Only by an award of
exemplary damages in that amount would suffice to instill in them and others
similarly situated like them the ever-present need for greater and constant
vigilance in the conduct of a business imbued with public interest.
WHEREFORE, we DENY the petition for review on certiorari; AFFIRM the
decision promulgated on November 13, 2002; and ORDER the petitioners to
pay the costs of suit.
SO ORDERED.
G.R. No. 101503 September 15, 1993
PLANTERS PRODUCTS, INC., petitioner,
vs.
COURT OF APPEALS, SORIAMONT STEAMSHIP AGENCIES AND
KYOSEI KISEN KABUSHIKI KAISHA, respondents.
Gonzales, Sinense, Jimenez & Associates for petitioner.
Siguion Reyna, Montecillo & Ongsiako Law Office for private respondents.
BELLOSILLO, J.:
Does a charter-party between a shipowner and a charterer transform a
1
common carrier into a private one as to negate the civil law presumption of
negligence in case of loss or damage to its cargo?
Planters Products, Inc. (PPI), purchased from Mitsubishi International
Corporation (MITSUBISHI) of New York, U.S.A., 9,329.7069 metric tons
(M/T) of Urea 46% fertilizer which the latter shipped in bulk on 16 June 1974
aboard the cargo vessel M/V "Sun Plum" owned by private respondent
Kyosei Kisen Kabushiki Kaisha (KKKK) from Kenai, Alaska, U.S.A., to Poro
Point, San Fernando, La Union, Philippines, as evidenced by Bill of Lading
No. KP-1 signed by the master of the vessel and issued on the date of
departure.
On 17 May 1974, or prior to its voyage, a time charter-party on the vessel
M/V "Sun Plum" pursuant to the Uniform General Charter was entered into
2
between Mitsubishi as shipper/charterer and KKKK as shipowner, in Tokyo,
Japan. Riders to the aforesaid charter-party starting from par. 16 to 40 were
3
attached to the pre-printed agreement. Addenda Nos. 1, 2, 3 and 4 to the
charter-party were also subsequently entered into on the 18th, 20th, 21st and
27th of May 1974, respectively.
Before loading the fertilizer aboard the vessel, four (4) of her holds were all
4
presumably inspected by the charterer's representative and found fit to take
a load of urea in bulk pursuant to par. 16 of the charter-party which reads:
16. . . . At loading port, notice of readiness to be
accomplished by certificate from National Cargo Bureau
inspector or substitute appointed by charterers for his
account certifying the vessel's readiness to receive cargo
 spaces. The vessel's hold to be properly swept, cleaned and
dried at the vessel's expense and the vessel to be presented
clean for use in bulk to the satisfaction of the inspector
before daytime commences. (emphasis supplied)
After the Urea fertilizer was loaded in bulk by stevedores hired by and under
the supervision of the shipper, the steel hatches were closed with heavy iron
lids, covered with three (3) layers of tarpaulin, then tied with steel bonds. The
hatches remained closed and tightly sealed throughout the entire voyage. 5
Upon arrival of the vessel at her port of call on 3 July 1974, the steel pontoon
hatches were opened with the use of the vessel's boom. Petitioner unloaded
the cargo from the holds into its steelbodied dump trucks which were parked
alongside the berth, using metal scoops attached to the ship, pursuant to the
terms and conditions of the charter-partly (which provided for an F.I.O.S.
clause). The hatches remained open throughout the duration of the
6 claim of the plaintiff against the defendant carrier for the value of the goods
discharge. 7 lost or damaged when it ruled thus: 15
Each time a dump truck was filled up, its load of Urea was covered with
tarpaulin before it was transported to the consignee's warehouse located
some fifty (50) meters from the wharf. Midway to the warehouse, the trucks
were made to pass through a weighing scale where they were individually
weighed for the purpose of ascertaining the net weight of the cargo. The port
area was windy, certain portions of the route to the warehouse were sandy
and the weather was variable, raining occasionally while the discharge was
in progress. The petitioner's warehouse was made of corrugated galvanized
8 him from liability is shipted to the carrier, common or private
iron (GI) sheets, with an opening at the front where the dump trucks entered
and unloaded the fertilizer on the warehouse floor. Tarpaulins and GI sheets
were placed in-between and alongside the trucks to contain spillages of the
ferilizer.
9 to prove that the shortage or contamination sustained by the
It took eleven (11) days for PPI to unload the cargo, from 5 July to 18 July
1974 (except July 12th, 14th and 18th). A private marine and cargo surveyor,
10
Cargo Superintendents Company Inc. (CSCI), was hired by PPI to determine
the "outturn" of the cargo shipped, by taking draft readings of the vessel prior
to and after discharge. The survey report submitted by CSCI to the
11
consignee (PPI) dated 19 July 1974 revealed a shortage in the cargo of
106.726 M/T and that a portion of the Urea fertilizer approximating 18 M/T
was contaminated with dirt. The same results were contained in a Certificate
of Shortage/Damaged Cargo dated 18 July 1974 prepared by PPI which
showed that the cargo delivered was indeed short of 94.839 M/T and about
23 M/T were rendered unfit for commerce, having been polluted with sand,
rust and
dirt.
12
Consequently, PPI sent a claim letter dated 18 December 1974 to Soriamont
Steamship Agencies (SSA), the resident agent of the carrier, KKKK, for
P245,969.31 representing the cost of the alleged shortage in the goods
shipped and the diminution in value of that portion said to have been
contaminated with dirt.13
Respondent SSA explained that they were not able to respond to the
consignee's claim for payment because, according to them, what they
received was just a request for shortlanded certificate and not a formal claim,
and that this "request" was denied by them because they "had nothing to do
with the discharge of the shipment." Hence, on 18 July 1975, PPI filed an
14
action for damages with the Court of First Instance of Manila. The defendant
carrier argued that the strict public policy governing common carriers does
not apply to them because they have become private carriers by reason of
the provisions of the charter-party. The court a quo however sustained the
. . . Prescinding from the provision of the law that a common
carrier is presumed negligent in case of loss or damage of
the goods it contracts to transport, all that a shipper has to
do in a suit to recover for loss or damage is to show receipt
by the carrier of the goods and to delivery by it of less than
what it received. After that, the burden of proving that the
loss or damage was due to any of the causes which exempt
he may be. Even if the provisions of the charter-party
aforequoted are deemed valid, and the defendants
considered private carriers, it was still incumbent upon them
cargo is attributable to the fault or negligence on the part of
the shipper or consignee in the loading, stowing, trimming
and discharge of the cargo. This they failed to do. By this
omission, coupled with their failure to destroy the
presumption of negligence against them, the defendants are
liable (emphasis supplied).
On appeal, respondent Court of Appeals reversed the lower court and
absolved the carrier from liability for the value of the cargo that was lost or
damaged. Relying on the 1968 case of Home Insurance Co. v. American
16
Steamship Agencies, Inc., the appellate court ruled that the cargo vessel
17
M/V "Sun Plum" owned by private respondent KKKK was a private carrier
and not a common carrier by reason of the time charterer-party. Accordingly,
the Civil Code provisions on common carriers which set forth a presumption
of negligence do not find application in the case at bar. Thus —
 . . . In the absence of such presumption, it was incumbent
upon the plaintiff-appellee to adduce sufficient evidence to
prove the negligence of the defendant carrier as alleged in
its complaint. It is an old and well settled rule that if the
plaintiff, upon whom rests the burden of proving his cause of
action, fails to show in a satisfactory manner the facts upon
which he bases his claim, the defendant is under no
obligation to prove his exception or defense
(Moran, Commentaries on the Rules of Court, Volume 6, p.
2, citing Belen v. Belen, 13 Phil. 202).
But, the record shows that the plaintiff-appellee dismally
failed to prove the basis of its cause of action, i.e. the
alleged negligence of defendant carrier. It appears that the
plaintiff was under the impression that it did not have to
establish defendant's negligence. Be that as it may, contrary
to the trial court's finding, the record of the instant case
discloses ample evidence showing that defendant carrier
was not negligent in performing its obligation . .
. (emphasis supplied).
18
Petitioner PPI appeals to us by way of a petition for review assailing the
decision of the Court of Appeals. Petitioner theorizes that the Home
Insurance case has no bearing on the present controversy because the issue
raised therein is the validity of a stipulation in the charter-party delimiting the
liability of the shipowner for loss or damage to goods cause by want of due
deligence on its part or that of its manager to make the vessel seaworthy in
all respects, and not whether the presumption of negligence provided under
the Civil Code applies only to common carriers and not to private
carriers. Petitioner further argues that since the possession and control of
19
the vessel remain with the shipowner, absent any stipulation to the contrary,
such shipowner should made liable for the negligence of the captain and
crew. In fine, PPI faults the appellate court in not applying the presumption of
negligence against respondent carrier, and instead shifting the onus
probandi on the shipper to show want of due deligence on the part of the
carrier, when he was not even at hand to witness what transpired during the
entire voyage.
As earlier stated, the primordial issue here is whether a common carrier
becomes a private carrier by reason of a charter-party; in the negative,
whether the shipowner in the instant case was able to prove that he had
exercised that degree of diligence required of him under the law.
It is said that etymology is the basis of reliable judicial decisions in
commercial cases. This being so, we find it fitting to first define important
terms which are relevant to our discussion.
A "charter-party" is defined as a contract by which an entire ship, or some
principal part thereof, is let by the owner to another person for a specified
time or use; a contract of affreightment by which the owner of a ship or
20
other vessel lets the whole or a part of her to a merchant or other person for
the conveyance of goods, on a particular voyage, in consideration of the
payment of freight; Charter parties are of two types: (a) contract of
21
affreightment which involves the use of shipping space on vessels leased by
the owner in part or as a whole, to carry goods for others; and, (b) charter by
demise or bareboat charter, by the terms of which the whole vessel is let to
the charterer with a transfer to him of its entire command and possession
and consequent control over its navigation, including the master and the
crew, who are his servants. Contract of affreightment may either be time
charter, wherein the vessel is leased to the charterer for a fixed period of
time, or voyage charter, wherein the ship is leased for a single voyage. In22
both cases, the charter-party provides for the hire of vessel only, either for a
determinate period of time or for a single or consecutive voyage, the
shipowner to supply the ship's stores, pay for the wages of the master and
the crew, and defray the expenses for the maintenance of the ship.
Upon the other hand, the term "common or public carrier" is defined in Art.
1732 of the Civil Code. The definition extends to carriers either by land, air
23
or water which hold themselves out as ready to engage in carrying goods or
transporting passengers or both for compensation as a public employment
and not as a casual occupation. The distinction between a "common or
public carrier" and a "private or special carrier" lies in the character of the
business, such that if the undertaking is a single transaction, not a part of the
general business or occupation, although involving the carriage of goods for
a fee, the person or corporation offering such service is a private carrier. 24
Article 1733 of the New Civil Code mandates that common carriers, by
reason of the nature of their business, should observe extraordinary diligence
in the vigilance over the goods they carry. In the case of private carriers,
25
however, the exercise of ordinary diligence in the carriage of goods will
suffice. Moreover, in the case of loss, destruction or deterioration of the
goods, common carriers are presumed to have been at fault or to have acted
negligently, and the burden of proving otherwise rests on them. On the
26
contrary, no such presumption applies to private carriers, for whosoever
alleges damage to or deterioration of the goods carried has the onus of
proving that the cause was the negligence of the carrier.
It is not disputed that respondent carrier, in the ordinary course of business,
operates as a common carrier, transporting goods indiscriminately for all
persons. When petitioner chartered the vessel M/V "Sun Plum", the ship
captain, its officers and compliment were under the employ of the shipowner
and therefore continued to be under its direct supervision and control. Hardly
then can we charge the charterer, a stranger to the crew and to the ship, with
the duty of caring for his cargo when the charterer did not have any control of
the means in doing so. This is evident in the present case considering that
the steering of the ship, the manning of the decks, the determination of the
course of the voyage and other technical incidents of maritime navigation
were all consigned to the officers and crew who were screened, chosen and
hired by the shipowner. 27
It is therefore imperative that a public carrier shall remain as such,
notwithstanding the charter of the whole or portion of a vessel by one or
more persons, provided the charter is limited to the ship only, as in the case
of a time-charter or voyage-charter. It is only when the charter includes both
the vessel and its crew, as in a bareboat or demise that a common carrier
becomes private, at least insofar as the particular voyage covering the
charter-party is concerned. Indubitably, a shipowner in a time or voyage
charter retains possession and control of the ship, although her holds may,
for the moment, be the property of the charterer. 28
Respondent carrier's heavy reliance on the case of Home Insurance
Co. v. American Steamship Agencies, supra, is misplaced for the reason that
the meat of the controversy therein was the validity of a stipulation in the
charter-party exempting the shipowners from liability for loss due to the
negligence of its agent, and not the effects of a special charter on common
carriers. At any rate, the rule in the United States that a ship chartered by a
single shipper to carry special cargo is not a common carrier, does not find
29
application in our jurisdiction, for we have observed that the growing concern
for safety in the transportation of passengers and /or carriage of goods by
sea requires a more exacting interpretation of admiralty laws, more
particularly, the rules governing common carriers.
We quote with approval the observations of Raoul Colinvaux, the learned
barrister-at-law —
30
As a matter of principle, it is difficult to find a valid distinction
between cases in which a ship is used to convey the goods
of one and of several persons. Where the ship herself is let
to a charterer, so that he takes over the charge and control
of her, the case is different; the shipowner is not then a
carrier. But where her services only are let, the same
grounds for imposing a strict responsibility exist, whether he
is employed by one or many. The master and the crew are in
each case his servants, the freighter in each case is usually
without any representative on board the ship; the same
opportunities for fraud or collusion occur; and the same
difficulty in discovering the truth as to what has taken place
arises . . .
In an action for recovery of damages against a common carrier on the goods
shipped, the shipper or consignee should first prove the fact of shipment and
its consequent loss or damage while the same was in the possession, actual
or constructive, of the carrier. Thereafter, the burden of proof shifts to
respondent to prove that he has exercised extraordinary diligence required
by law or that the loss, damage or deterioration of the cargo was due to
fortuitous event, or some other circumstances inconsistent with its liability. 31
To our mind, respondent carrier has sufficiently overcome, by clear and
convincing proof, the prima faciepresumption of negligence.
The master of the carrying vessel, Captain Lee Tae Bo, in his deposition
taken on 19 April 1977 before the Philippine Consul and Legal Attache in the
Philippine Embassy in Tokyo, Japan, testified that before the fertilizer was
loaded, the four (4) hatches of the vessel were cleaned, dried and fumigated.
After completing the loading of the cargo in bulk in the ship's holds, the steel
pontoon hatches were closed and sealed with iron lids, then covered with
three (3) layers of serviceable tarpaulins which were tied with steel bonds.
The hatches remained close and tightly sealed while the ship was in transit
as the weight of the steel covers made it impossible for a person to open
without the use of the ship's boom. 32
It was also shown during the trial that the hull of the vessel was in good
condition, foreclosing the possibility of spillage of the cargo into the sea or
seepage of water inside the hull of the vessel. When M/V "Sun Plum"
33
docked at its berthing place, representatives of the consignee boarded, and
in the presence of a representative of the shipowner, the foreman, the
stevedores, and a cargo surveyor representing CSCI, opened the hatches
and inspected the condition of the hull of the vessel. The stevedores
unloaded the cargo under the watchful eyes of the shipmates who were
overseeing the whole operation on rotation basis. 34
Verily, the presumption of negligence on the part of the respondent carrier
has been efficaciously overcome by the showing of extraordinary zeal and
assiduity exercised by the carrier in the care of the cargo. This was
confirmed by respondent appellate court thus —
. . . Be that as it may, contrary to the trial court's finding, the
record of the instant case discloses ample evidence showing
that defendant carrier was not negligent in performing its
obligations. Particularly, the following testimonies of plaintiff-
appellee's own witnesses clearly show absence of
negligence by the defendant carrier; that the hull of the
vessel at the time of the discharge of the cargo was sealed
and nobody could open the same except in the presence of
 the owner of the cargo and the representatives of the vessel
(TSN, 20 July 1977, p. 14); that the cover of the hatches was
made of steel and it was overlaid with tarpaulins, three
layers of tarpaulins and therefore their contents were
protected from the weather (TSN, 5 April 1978, p. 24); and,
that to open these hatches, the seals would have to be
broken, all the seals were found to be intact (TSN, 20 July
1977, pp. 15-16) (emphasis supplied).
The period during which private respondent was to observe the degree of
diligence required of it as a public carrier began from the time the cargo was
unconditionally placed in its charge after the vessel's holds were duly
inspected and passed scrutiny by the shipper, up to and until the vessel
reached its destination and its hull was reexamined by the consignee, but
prior to unloading. This is clear from the limitation clause agreed upon by the
parties in the Addendum to the standard "GENCON" time charter-party which
provided for an F.I.O.S., meaning, that the loading, stowing, trimming and
discharge of the cargo was to be done by the charterer, free from all risk and
expense to the carrier. Moreover, a shipowner is liable for damage to the
35
cargo resulting from improper stowage only when the stowing is done by
stevedores employed by him, and therefore under his control and
supervision, not when the same is done by the consignee or stevedores
under the employ of the latter. 36
Article 1734 of the New Civil Code provides that common carriers are not
responsible for the loss, destruction or deterioration of the goods if caused by
the charterer of the goods or defects in the packaging or in the containers.
The Code of Commerce also provides that all losses and deterioration which
the goods may suffer during the transportation by reason of fortuitous
event, force majeure, or the inherent defect of the goods, shall be for the
account and risk of the shipper, and that proof of these accidents is
incumbent upon the carrier. The carrier, nonetheless, shall be liable for the
37
loss and damage resulting from the preceding causes if it is proved, as
against him, that they arose through his negligence or by reason of his
having failed to take the precautions which usage has established among
careful persons. 38
Respondent carrier presented a witness who testified on the characteristics
of the fertilizer shipped and the expected risks of bulk shipping. Mr.
Estanislao Chupungco, a chemical engineer working with Atlas Fertilizer,
described Urea as a chemical compound consisting mostly of ammonia and
carbon monoxide compounds which are used as fertilizer. Urea also contains
46% nitrogen and is highly soluble in water. However, during storage,
nitrogen and ammonia do not normally evaporate even on a long voyage,
provided that the temperature inside the hull does not exceed eighty (80)
degrees centigrade. Mr. Chupungco further added that in unloading fertilizer
in bulk with the use of a clamped shell, losses due to spillage during such
operation amounting to one percent (1%) against the bill of lading is deemed
"normal" or "tolerable." The primary cause of these spillages is the clamped
shell which does not seal very tightly. Also, the wind tends to blow away
some of the materials during the unloading process.
The dissipation of quantities of fertilizer, or its daterioration in value, is
caused either by an extremely high temperature in its place of storage, or
when it comes in contact with water. When Urea is drenched in water, either
fresh or saline, some of its particles dissolve. But the salvaged portion which
is in liquid form still remains potent and usable although no longer saleable in
its original market value.
The probability of the cargo being damaged or getting mixed or contaminated
with foreign particles was made greater by the fact that the fertilizer was
transported in "bulk," thereby exposing it to the inimical effects of the
elements and the grimy condition of the various pieces of equipment used in
transporting and hauling it.
The evidence of respondent carrier also showed that it was highly
improbable for sea water to seep into the vessel's holds during the voyage
since the hull of the vessel was in good condition and her hatches were
tightly closed and firmly sealed, making the M/V "Sun Plum" in all respects
seaworthy to carry the cargo she was chartered for. If there was loss or
contamination of the cargo, it was more likely to have occurred while the
same was being transported from the ship to the dump trucks and finally to
the consignee's warehouse. This may be gleaned from the testimony of the
marine and cargo surveyor of CSCI who supervised the unloading. He
explained that the 18 M/T of alleged "bar order cargo" as contained in their
report to PPI was just an approximation or estimate made by them after the
fertilizer was discharged from the vessel and segregated from the rest of the
cargo.
The Court notes that it was in the month of July when the vessel arrived port
and unloaded her cargo. It rained from time to time at the harbor area while
the cargo was being discharged according to the supply officer of PPI, who
also testified that it was windy at the waterfront and along the shoreline
where the dump trucks passed enroute to the consignee's warehouse.
Indeed, we agree with respondent carrier that bulk shipment of highly soluble
goods like fertilizer carries with it the risk of loss or damage. More so, with a
variable weather condition prevalent during its unloading, as was the case at
bar. This is a risk the shipper or the owner of the goods has to face. Clearly,
respondent carrier has sufficiently proved the inherent character of the goods
which makes it highly vulnerable to deterioration; as well as the inadequacy
of its packaging which further contributed to the loss. On the other hand, no
proof was adduced by the petitioner showing that the carrier was remise in
the exercise of due diligence in order to minimize the loss or damage to the
goods it carried.

WHEREFORE, the petition is DISMISSED. The assailed decision of the

Court of Appeals, which reversed the trial court, is AFFIRMED.
Consequently, Civil Case No. 98623 of the then Court of the First Instance,
now Regional Trial Court, of Manila should be, as it is hereby DISMISSED.

Costs against petitioner.

SO ORDERED.