1

G.R. No. 101089. April 7, 1993.

BASCOS vs. CA
1. CIVIL LAW; COMMON CARRIERS; DEFINED; TEST TO DETERMINE
COMMON CARRIER. Article 1732 of the Civil Code defines a
common carrier as "(a) person, corporation or firm, or association
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 test to determine a common
carrier is "whether the given undertaking is a part of the business
engaged in by the carrier which he has held out to the general
public as his occupation rather than the quantity or extent of the
business transacted." . . . The holding of the Court in De Guzman vs.
Court of Appeals is instructive. In referring to Article 1732 of the
Civil Code, it held thus: "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 distinguished 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."
2. ID.; ID.; DILIGENCE REQUIRED IN VIGILANCE OVER GOODS
TRANSPORTED; WHEN PRESUMPTION OF NEGLIGENCE ARISES;
HOW PRESUMPTION OVERCAME; WHEN PRESUMPTION MADE
ABSOLUTE. Common carriers are obliged to observe
extraordinary diligence in the vigilance over the goods transported
by them. Accordingly, they are presumed to have been at fault or to
have acted negligently if the goods are lost, destroyed or
deteriorated. There are very few instances when the presumption
of negligence does not attach and these instances are enumerated
in Article 1734. In those cases where the presumption is applied, the
common carrier must prove that it exercised extraordinary diligence
in order to overcome the presumption . . . The presumption of
negligence was raised against petitioner. It was petitioner's burden
to overcome it. Thus, contrary to her assertion, private respondent
need not introduce any evidence to prove her negligence. Her own
failure to adduce sufficient proof of extraordinary diligence made
the presumption conclusive against her.
3. ID.; ID.; HIJACKING OF GOODS; CARRIER PRESUMED NEGLIGENT;
HOW CARRIER ABSOLVED FROM LIABILITY. In De Guzman vs.
Court of Appeals, the Court held that hijacking, not being included
in the provisions of Article 1734, must be dealt with under the
provisions of Article 1735 and thus, the common carrier is
presumed to have been at fault or negligent. To exculpate the
carrier from liability arising from hijacking, he must prove that the
robbers or the hijackers acted with grave or irresistible threat,
violence, or force. This is in accordance with Article 1745 of the Civil
Code which provides: "Art. 1745. Any of the following or similar
stipulations shall be considered unreasonable, unjust and contrary
to public policy . . . (6) That the common carrier's liability for acts
committed by thieves, or of robbers who do not act with grave or
irresistible threat, violences or force, is dispensed with or
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diminished"; In the same case, the Supreme Court also held that:
"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 of
irresistible threat, violence of 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."
4. REMEDIAL LAW; EVIDENCE; JUDICIAL ADMISSIONS CONCLUSIVE.
In this case, petitioner herself has made the admission that she
was in the trucking business, offering her trucks to those with cargo
to move. Judicial admissions are conclusive and no evidence is
required to prove the same.
5. ID.; ID.; BURDEN OF PROOF RESTS WITH PARTY WHO ALLEGES A
FACT. Petitioner presented no other proof of the existence of the
contract of lease. He who alleges a fact has the burden of proving it.
6. ID.; ID.; AFFIDAVITS NOT CONSIDERED BEST EVIDENCE IF
AFFIANTS AVAILABLE AS WITNESSES. While the affidavit of
Juanito Morden, the truck helper in the hijacked truck, was
presented as evidence in court, he himself was a witness as could be
gleaned from the contents of the petition. Affidavits are not
considered the best evidence if the affiants are available as
witnesses.
7. CIVIL LAW; OBLIGATIONS AND CONTRACTS; CONTRACT IS WHAT
LAW DEFINES IT TO BE. Granting that the said evidence were not
self-serving, the same were not sufficient to prove that the contract
was one of lease. It must be understood that a contract is what the
law defines it to be and not what it is called by the contracting
parties.
D E C I S I O N
CAMPOS, JR., J p:
This is a petition for review on certiorari of the decision ** of the
Court of Appeals in "RODOLFO A. CIPRIANO,doing business under
the name CIPRIANO TRADING ENTERPRISES plaintiff-appellee, vs.
ESTRELLITA M. BASCOS, doing business under the name of BASCOS
TRUCKING, defendant-appellant," C.A.-G.R. CV No. 25216, the
dispositive portion of which is quoted hereunder:
"PREMISES considered, We find no reversible error in the decision
appealed from, which is hereby affirmed in toto. Costs against
appellant." 1
The facts, as gathered by this Court, are as follows:
Rodolfo A. Cipriano representing Cipriano Trading Enterprise
(CIPTRADE for short) entered into a hauling contract 2 with
Jibfair Shipping Agency Corporation whereby the former bound
itself to haul the latter's 2,000 m/tons of soya bean meal from
Magallanes Drive, Del Pan, Manila to the warehouse of Purefoods
Corporation in Calamba, Laguna. To carry out its obligation,
CIPTRADE, through Rodolfo Cipriano, subcontracted with Estrellita
Bascos (petitioner) to transport and to deliver 400 sacks of soya
bean meal worth P156,404.00 from the Manila Port Area to
Calamba, Laguna at the rate of P50.00 per metric ton. Petitioner
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failed to deliver the said cargo. As a consequence of that failure,
Cipriano paid Jibfair Shipping Agency the amount of the lost goods
in accordance with the contract which stated that:
"1. CIPTRADE shall be held liable and answerable for any loss in bags
due to theft, hijacking and non-delivery or damages to the cargo
during transport at market value, . . ." 3
Cipriano demanded reimbursement from petitioner but the latter
refused to pay. Eventually, Cipriano filed a complaint for a sum of
money and damages with writ of preliminary attachment 4 for
breach of a contract of carriage. The prayer for a Writ of Preliminary
Attachment was supported by an affidavit 5 which contained the
following allegations:
"4. That this action is one of those specifically mentioned in Sec. 1,
Rule 57 the Rules of Court, whereby a writ of preliminary
attachment may lawfully issue, namely:
"(e) in an action against a party who has removed or disposed of his
property, or is about to do so, with intent to defraud his creditors;"
5. That there is no sufficient security for the claim sought to be
enforced by the present action;
6. That the amount due to the plaintiff in the above-entitled case is
above all legal counterclaims;"
The trial court granted the writ of preliminary attachment on
February 17, 1987.
In her answer, petitioner interposed the following defenses: that
there was no contract of carriage since CIPTRADE leased her cargo
truck to load the cargo from Manila Port Area to Laguna; that
CIPTRADE was liable to petitioner in the amount of P11,000.00 for
loading the cargo; that the truck carrying the cargo was hijacked
along Canonigo St., Paco, Manila on the night of October 21, 1988;
that the hijacking was immediately reported to CIPTRADE and that
petitioner and the police exerted all efforts to locate the hijacked
properties; that after preliminary investigation, an information for
robbery and carnapping were filed against Jose Opriano, et al.; and
that hijacking, being a force majeure, exculpated petitioner from
any liability to CIPTRADE.
After trial, the trial court rendered a decision *** the dispositive
portion of which reads as follows:
"WHEREFORE, judgment is hereby rendered in favor of plaintiff and
against defendant ordering the latter to pay the former:
1. The amount of ONE HUNDRED FIFTY-SIX THOUSAND FOUR
HUNDRED FOUR PESOS (P156,404.00) as an (sic) for actual damages
with legal interest of 12% per cent per annum to be counted from
December 4, 1986 until fully paid;
2. The amount of FIVE THOUSAND PESOS (P5,000.00) as and for
attorney's fees; and
3. The costs of the suit.
The "Urgent Motion To Dissolve/Lift preliminary Attachment" dated
March 10, 1987 filed by defendant is DENIED for being moot and
academic.
SO ORDERED." 6
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Petitioner appealed to the Court of Appeals but respondent Court
affirmed the trial court's judgment.
Consequently, petitioner filed this petition where she makes the
following assignment of errors; to wit:
"I. THE RESPONDENT COURT ERRED IN HOLDING THAT THE
CONTRACTUAL RELATIONSHIP BETWEEN PETITIONER AND PRIVATE
RESPONDENT WAS CARRIAGE OF GOODS AND NOT LEASE OF
CARGO TRUCK.
II. GRANTING, EX GRATIA ARGUMENTI, THAT THE FINDING OF THE
RESPONDENT COURT THAT THE CONTRACTUAL RELATIONSHIP
BETWEEN PETITIONER AND PRIVATE RESPONDENT WAS CARRIAGE
OF GOODS IS CORRECT, NEVERTHELESS, IT ERRED IN FINDING
PETITIONER LIABLE THEREUNDER BECAUSE THE LOSS OF THE
CARGO WAS DUE TO FORCE MAJEURE, NAMELY, HIJACKING.
III. THE RESPONDENT COURT ERRED IN AFFIRMING THE FINDING OF
THE TRIAL COURT THAT PETITIONER'S MOTION TO DISSOLVE/LIFT
THE WRIT OF PRELIMINARY ATTACHMENT HAS BEEN RENDERED
MOOT AND ACADEMIC BY THE DECISION OF THE MERITS OF THE
CASE." 7
The petition presents the following issues for resolution: (1) was
petitioner a common carrier?; and (2) was the hijacking referred to
a force majeure?
The Court of Appeals, in holding that petitioner was a common
carrier, found that she admitted in her answer that she did business
under the name A.M. Bascos Trucking and that said admission
dispensed with the presentation by private respondent, Rodolfo
Cipriano, of proofs that petitioner was a common carrier. The
respondent Court also adopted in toto the trial court's decision that
petitioner was a common carrier, Moreover, both courts
appreciated the following pieces of evidence as indicators that
petitioner was a common carrier: the fact that the truck driver of
petitioner, Maximo Sanglay, received the cargo consisting of 400
bags of soya bean meal as evidenced by a cargo receipt signed by
Maximo Sanglay; the fact that the truck helper, Juanito Morden,
was also an employee of petitioner; and the fact that control of the
cargo was placed in petitioner's care.
In disputing the conclusion of the trial and appellate courts that
petitioner was a common carrier, she alleged in this petition that
the contract between her and Rodolfo A. Cipriano, representing
CIPTRADE, was lease of the truck. She cited as evidence certain
affidavits which referred to the contract as "lease". These affidavits
were made by Jesus Bascos 8 and by petitioner herself. 9 She
further averred that Jesus Bascos confirmed in his testimony his
statement that the contract was a lease contract. 10 She also stated
that: she was not catering to thegeneral public. Thus, in her answer
to the amended complaint, she said that she does business under
the same style of A.M. Bascos Trucking, offering her trucks for lease
to those who have cargo to move, not to the general public but to a
few customers only in view of the fact that it is only a small
business. 11
We agree with the respondent Court in its finding that petitioner is
a common carrier.
Article 1732 of the Civil Code defines a common carrier as "(a)
person, corporation or firm, or association engaged in the business
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of carrying or transporting passengers or goods or both, by land,
water or air, for compensation, offering their services to the public."
The test to determine a common carrier is "whether the given
undertaking is a part of the business engaged in by the carrier which
he has held out to the general public as his occupation rather than
the quantity or extent of the business transacted." 12 In this case,
petitioner herself has made the admission that she was in the
trucking business, offering her trucks to those with cargo to move.
Judicial admissions are conclusive and no evidence is required to
prove the same. 13
But petitioner argues that there was only a contract of lease
because they offer their services only to a select group of people
and because the private respondents, plaintiffs in the lower court,
did not object to the presentation of affidavits by petitioner where
the transaction was referred to as a lease contract.
Regarding the first contention, the holding of the Court in De
Guzman vs. Court of Appeals 14 is instructive. In referring to Article
1732 of the Civil Code, it held thus:
"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."
Regarding the affidavits presented by petitioner to the court, both
the trial and appellate courts have dismissed them as self-serving
and petitioner contests the conclusion. We are bound by the
appellate court's factual conclusions. Yet, granting that the said
evidence were not self-serving, the same were not sufficient to
prove that the contract was one of lease. It must be understood
that a contract is what the law defines it to be and not what it is
called by the contracting parties. 15 Furthermore, petitioner
presented no other proof of the existence of the contract of lease.
He who alleges a fact has the burden of proving it. 16
Likewise, We affirm the holding of the respondent court that the
loss of the goods was not due to force majeure.
Common carriers are obliged to observe extraordinary diligence in
the vigilance over the goods transported by them. 17 Accordingly,
they are presumed to have been at fault or to have acted
negligently if the goods are lost, destroyed or deteriorated. 18
There are very few instances when the presumption of negligence
does not attach and these instances are enumerated in Article 1734.
19 In those cases where the presumption is applied, the common
carrier must prove that it exercised extraordinary diligence in order
to overcome the presumption.
In this case, petitioner alleged that hijacking constituted force
majeure which exculpated her from liability for the loss of the
cargo. In De Guzman vs. Court of Appeals, 20 the Court held that
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hijacking, not being included in the provisions of Article 1734, must
be dealt with under the provisions of Article 1735 and thus, the
common carrier is presumed to have been at fault or negligent. To
exculpate the carrier from liability arising from hijacking, he must
prove that the robbers or the hijackers acted with grave or
irresistible threat, violence, or force. This is in accordance with
Article 1745 of the Civil Code which provides:
"Art. 1745. Any of the following or similar stipulations shall be
considered unreasonable, unjust and contrary to public policy;
xxx xxx xxx
(6) That the common carrier's liability for acts committed by
thieves, or of robbers who do not act with grave or irresistible
threat, violences or force, is dispensed with or diminished;"
In the same case, 21 the Supreme Court also held that:
"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."
To establish grave and irresistible force, petitioner presented her
accusatory affidavit, 22 Jesus Bascos' affidavit, 23 and Juanito
Morden's 24 "Salaysay". However, both the trial court and the Court
of Appeals have concluded that these affidavits were not enough to
overcome the presumption. Petitioner's affidavit about the hijacking
was based on what had been told her by Juanito Morden. It was not
a first-hand account. While it had been admitted in court for lack of
objection on the part of private respondent, the respondent Court
had discretion in assigning weight to such evidence. We are bound
by the conclusion of the appellate court. In a petition for review on
certiorari, We are not to determine the probative value of evidence
but to resolve questions of law. Secondly, the affidavit of Jesus
Bascos did not dwell on how the hijacking took place. Thirdly, while
the affidavit of Juanito Morden, the truck helper in the hijacked
truck, was presented as evidence in court, he himself was a witness
as could be gleaned from the contents of the petition. Affidavits are
not considered the best evidence if the affiants are available as
witnesses. 25 The subsequent filing of the information for
carnapping and robbery against the accused named in said affidavits
did not necessarily mean that the contents of the affidavits were
true because they were yet to be determined in the trial of the
criminal cases.
The presumption of negligence was raised against petitioner. It was
petitioner's burden to overcome it. Thus, contrary to her assertion,
private respondent need not introduce any evidence to prove her
negligence. Her own failure to adduce sufficient proof of
extraordinary diligence made the presumption conclusive against
her.
Having affirmed the findings of the respondent Court on the
substantial issues involved, We find no reason to disturb the
conclusion that the motion to lift/dissolve the writ of preliminary
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attachment has been rendered moot and academic by the decision
on the merits.
In the light of the foregoing analysis, it is Our opinion that the
petitioner's claim cannot be sustained. The petition is DISMISSED
and the decision of the Court of Appeals is hereby AFFIRMED.
SO ORDERED.
G.R. No. L-25599,
Home Insurance Company v. American Steamship Agencies and
Luzon Stevedoring, 23 SCRA 24
"Consorcio Pesquero del Peru of South America" shipped freight
pre-paid at Chimbate, Peru, 21,740 jute bags of Peruvian fish meal
through SS Crowborough, covered by clean bills of lading Numbers 1
and 2, both dated January 17, 1963. The cargo, consigned to San
Miguel Brewery, Inc., now San Miguel Corporation, and insured by
Home Insurance Company for $202,505, arrived in Manila on March
7, 1963 and was discharged into the lighters of Luzon Stevedoring
Company. When the cargo was delivered to consignee San Miguel
Brewery Inc., there were shortages amounting to P12,033.85,
causing the latter to lay claims against Luzon Stevedoring
Corporation, Home Insurance Company and the American
Steamship Agencies, owner and operator of SS Crowborough.
Because the others denied liability, Home Insurance Company paid
the consignee P14,870.71 the insurance value of the loss, as full
settlement of the claim. Having been refused reimbursement by
both the Luzon Stevedoring Corporation and American Steamship
Agencies, Home Insurance Company, as subrogee to the consignee,
filed against them on March 6, 1964 before the Court of First
Instance of Manila a complaint for recovery of P14,870.71 with legal
interest, plus attorney's fees.
In answer, Luzon Stevedoring Corporation alleged that it delivered
with due diligence the goods in the same quantity and quality that it
had received the same from the carrier. It also claimed that
plaintiff's claim had prescribed under Article 366 of the Code of
Commerce stating that the claim must be made within 24 hours
from receipt of the cargo.
American Steamship Agencies denied liability by alleging that under
the provisions of the Charter party referred to in the bills of lading,
the charterer, not the shipowner, was responsible for any loss or
damage of the cargo. Furthermore, it claimed to have exercised due
diligence in stowing the goods and that as a mere forwarding agent,
it was not responsible for losses or damages to the cargo.
On November 17, 1965, the Court of First Instance, after trial,
absolved Luzon Stevedoring Corporation, having found the latter to
have merely delivered what it received from the carrier in the same
condition and quality, and ordered American Steamship Agencies to
pay plaintiff P14,870.71 with legal interest plus P1,000 attorney's
fees. Said court cited the following grounds:
(a) The non-liability claim of American Steamship Agencies under
the charter party contract is not tenable because Article 587 of the
Code of Commerce makes the ship agent also civilly liable for
damages in favor of third persons due to the conduct of the captain
of the carrier;
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(b) The stipulation in the charter party contract exempting the
owner from liability is against public policy under Article 1744 of the
Civil Code;
(c) In case of loss, destruction or deterioration of goods, common
carriers are presumed at fault or negligent under Article 1735 of the
Civil Code unless they prove extraordinary diligence, and they
cannot by contract exempt themselves from liability resulting from
their negligence or that of their servants; and
(d) When goods are delivered to the carrier in good order and the
same are in bad order at the place of destination, the carrier
is prima facie liable.
Disagreeing with such judgment, American Steamship Agencies
appealed directly to Us. The appeal brings forth for determination
this legal issue: Is the stipulation in the charter party of the owner's
non-liability valid so as to absolve the American Steamship Agencies
from liability for loss?
The bills of lading,[[1]] covering the shipment of Peruvian fish meal
provide at the back thereof that the bills of lading shall be governed
by and subject to the terms and conditions of the charter party, if
any, otherwise, the bills of lading prevail over all the
agreements.[[2]] On the of the bills are stamped "Freight prepaid as
per charter party. Subject to all terms, conditions and exceptions of
charter party dated London, Dec. 13, 1962."
A perusal of the charter party[[3]] referred to shows that while the
possession and control of the ship were not entirely transferred to
the charterer,[[4]] the vessel was chartered to its full and complete
capacity (Exh. 3). Furthermore, the, charter had the option to go
north or south or vice-versa,[[5]] loading, stowing and discharging at
its risk and expense.[[6]] Accordingly, the charter party contract is
one of affreightment over the whole vessel rather than a demise. As
such, the liability of the shipowner for acts or negligence of its
captain and crew, would remain in the absence of stipulation.
Section 2, paragraph 2 of the charter party, provides that the owner
is liable for loss or damage to the goods caused by personal want of
due diligence on its part or its manager to make the vessel in all
respects seaworthy and to secure that she be properly manned,
equipped and supplied or by the personal act or default of the
owner or its manager. Said paragraph, however, exempts the owner
of the vessel from any loss or damage or delay arising from any
other source, even from the neglect or fault of the captain or crew
or some other person employed by the owner on board, for whose
acts the owner would ordinarily be liable except for said paragraph.
Regarding the stipulation, the Court of First Instance declared the
contract as contrary to Article 587 of the Code of Commerce making
the ship agent civilly liable for indemnities suffered by third persons
arising from acts or omissions of the captain in the care of the goods
and Article 1744 of the Civil Code under which a stipulation
between the common carrier and the shipper or owner limiting the
liability of the former for loss or destruction of the goods to a
degree less than extraordinary diligence is valid provided it be
reasonable, just and not contrary to public policy. The release from
liability in this case was held unreasonable and contrary to the
public policy on common carriers.
The provisions of our Civil Code on common carriers were taken
from Anglo-American law.[[7]] Under American jurisprudence, a
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common carrier undertaking to carry a special cargo or chartered to
a special person only, becomes a private carrier.[[8]]As a private
carrier, a stipulation exempting the owner from liability for the
negligence of its agent is not against public policy,[[9]] and is
deemed valid.
Such doctrine We find reasonable. The Civil Code provisions on
common carriers should not be applied where the carrier is not
acting as such but as a private carrier. The stipulation in the charter
party absolving the owner from liability for loss due to the
negligence of its agent would be void only if the strict public policy
governing common carriers is applied. Such policy has no force
where the public at large is not involved, as in the case of a ship
totally chartered for the use of a single party.
And furthermore, in a charter of the entire vessel, the bill of lading
issued by the master to the charterer, as shipper, is in fact and legal
contemplation merely a receipt and a document of title not a
contract, for the contract is the charter party.[[10]] The consignee
may not claim ignorance of said charter party because the bills of
lading expressly referred to the same. Accordingly, the consignees
under the bills of lading must likewise abide by the terms of the
charter party. And as stated, recovery cannot be had thereunder,
for loss or damage to the cargo, against the shipowners, unless the
same is due to personal acts or negligence of said owner or its
manager, as distinguished from its other agents or employees. In
this case, no such personal act or negligence has been proved.
WHEREFORE, the judgment appealed from is hereby reversed and
appellant is absolved from liability to plaintiff. No costs. So ordered.
G.R. No. 98243 July 1, 1992
ALEJANDRO ARADA, doing business under the name and style
"SOUTH NEGROS ENTERPRISES", petitioner,
vs.
HONORABLE COURT OF APPEALS
This is a petition for review on certiorari which seeks to annul and
set aside the decision * of the Court of Appeals dated April 8, 1991
in CA-G.R. CV No. 20597 entitled "San Miguel Corporation v.
Alejandro Arada, doing business under the name and style "South
Negros Enterprises", reversing the decision of the RTC, Seventh
Judicial Region, Branch XII, Cebu City, ordering petitioner to pay the
private respondent tho amount of P172,284.80 representing the
value of the cargo lost on board the ill-fated, M/L Maya with
interest thereon at the legal rate from the date of the filing of the
complaint on March 25, 1983 until fully paid, and the costs.
The undisputed facts of the case are as follows: Alejandro Arada,
herein petitioner, is the proprietor and operator of the firm South
Negros Enterprises which has been organized and established for
more than ten (10) years. It is engaged in the business of small scale
shipping as a common carrier, servicing the hauling of cargoes of
different corporations and companies with the five (5) vessels it was
operating (Rollo, p. 121).
On March 24, 1982. petitioner entered into a contract with private
respondent to safely transport as a common carrier, cargoes of the
latter from San Carlos City, Negros Occidental to Mandaue City
using one of petitioner's vessels, M/L Maya. The cargoes of private
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respondent consisted of 9,824 cases of beer empties valued at
P176,824.80, were itemized as follows:
NO. OF CASES CARGO VALUE
7,515 CS PPW STENIE MTS P136.773.00
1,542 CS PLW GRANDE MTS 23,438.40
58 CS G.E. PLASTIC MTS 1,276.00
24 CS PLP MTS 456.00
37 CS CS WOODEN MTS 673.40
8 CS LAGERLITE PLASTIC MTS 128.00
640 CS STENEI PLASTIC MTS 14,080.00
9,824 CS P176,824.80
On March 24, 1982, petitioner thru its crew master, Mr. Vivencio
Babao, applied for a clearance with the Philippine Coast Guard for
M/L Maya to leave the port of San Carlos City, but due to a typhoon,
it was denied clearance by SNI Antonio Prestado PN who was then
assigned at San Carlos City Coast Guard Detachment (Rollo, p. 122).
On March 25, 1982 M/L Maya was given clearance as there was no
storm and the sea was calm. Hence, said vessel left for Mandaue
City. While it was navigating towards Cebu, a typhoon developed
and said vessel was buffeted on all its sides by big waves. Its rudder
was destroyed and it drifted for sixteen (16) hours although its
engine was running.
On March 27, 1982 at about 4:00 a.m., the vessel sank with
whatever was left of its cargoes. The crew was rescued by a passing
pump boat and was brought to Calanggaman Island. Later in the
afternoon, they were brought to Palompon, Leyte, where Vivencio
Babao filed a marine protest (Rollo, p. 10).
On the basis of such marine protest, the Board of Marine Inquiry
conducted a hearing of the sinking of M/L Maya wherein private
respondent was duly represented. Said Board made its findings and
recommendation dated November 7, 1983, the dispositive portion
of which reads as:
WHEREFORE, premises considered, this Board recommends as it is
hereby recommended that the owner/operator, officers and crew
of M/L Maya be exonerated or absolved from any administrative
liability on account of this incident (Exh. 1).
The Board's report containing its findings and recommendation was
then forwarded to the headquarters of the Philippine Coast Guard
for appropriate action. On the basis of such report, the
Commandant of the Philippine Coast Guard rendered a decision
dated December 21, 1984 in SBMI Adm. Case No. 88-82 exonerating
the owner/operator officers and crew of the ill-fated M/L Maya
from any administrative liability on account of said incident (Exh. 2).
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On March 25, 1983, Private respondent filed a complaint in the
Regional Trial Court its first cause of action being for the recovery of
the value of the cargoes anchored on breach of contract of carriage.
After due hearing, said court rendered a decision dated July 18,
1988, the dispositive portion of which reads
WHEREFORE, judgment is hereby rendered as follows:
(1) With respect to the first cause of action, claim of plaintiff is
hereby dismissed;
(2) Under the second cause of action, defendant must pay plaintiff
the sum of P2,000.00;
(3) In the third cause of action, the defendant must pay plaintiff the
sum of P2,849.20;
(4) Since the plaintiff has withheld the payment of P12,997.47 due
the defendynt, the plaintiff should deduct the amount of P4,849.20
from the P12,997.47 and the balance of P8,148.27 must be paid to
the defendant; and
(5) Defendant's counterclaim not having been substantiated by
evidence is likewise dismissed. NO COSTS. (Orig. Record, pp. 193-
195).
Thereafter, private respondent appealed said decision to the Court
of Appeals claiming that the trial court erred in
(1) holding that nothing was shown that the defendant, or any of his
employees who manned the M/L Maya was negligent in any way
nor did they fail to observe extraordinary diligence over the cargoes
of the plaintiff; and
(2) holding that the sinking of said vessel was caused by the storm,
consequently, dismissing the claim of plaintiff in its first cause of
action for breach of contract of carriage of goods (Rollo, pp. 33-34;
Decision, pp. 3-4).
In its decision Promulgated on April 8, 1991, the Court of Appeals
reversed the decision of the court a quo, the dispositive portion and
the dispositive part of its decision reads as:
WHEREFORE, that part of the Judgment appeal6d from is REVERSED
and the appellee Aleiandro Arada, doing business by the name and
style, "South Negros Enterprises", ordered (sic) to pay unto the
appellant San Miguel Corporation the amount of P176,824.80
representing the value of the cargo lost on board the ill-fated vessel,
M/L Maya, with interest thereon at the legal rate from date of the
filing of the complaint on March 25, 1983, until fully paid, and the
costs. (Rollo, p. 37)
The Court of Appeals ruled that "in view of his failure to observe
extraordinary diligence over the cargo in question and his
negligence previous to the sinking of the carrying vessel, as above
shown, the appellee is liable to the appellant for the value of the
lost cargo.
Hence the present recourse.
On November 20, 1991, this Court gave due course to the petition.
The pivotal issue to be resolved is whether or not petitioner is liable
for the value of the lost cargoes.
Petitioner contends that it was not in the exercise of its function as
a common carrier when it entered into a contract with private
12

respondent,but was then acting as a private carrier not bound by
the requirement of extraordinary diligence (Rollo, p. 15) and that
the factual findings of the Board of Marine Inquiry and the Special
Board of Marine Inquiry are binding and conclusive on the Court
(Rollo, pp. 16-17).
Private respondent counters that M/L Maya was in the exercise of
its function as a common carrier and its failure to observe the
extraordinary diligence required of it in the vigilance over their
cargoes makes Petitioner liable for the value of said cargoes.
The petition is devoid of merit.
Common carriers are persons, corporations, firms or associations
engaged in the business of carrying or transporting passengers or
goods or both, by land, water or air, for compensation offering their
services to the public (Art. 1732 of the New Civil Code).
In the case at bar, there is no doubt that petitioner was exercising
its function as a common carrier when it entered into a contract
with private respondent to carry and transport the latter's cargoes.
This fact is best supported by the admission of petitioner's son, Mr.
Eric Arada, who testified as the officer-in-charge for operations of
South Negros Enterprises in Cebu City. In substance his testimony
on January 14, 1985 is as follows:
Q. How many vessels are you operating?
A. There were all in all around five (5).
Q. And you were entering to service hauling of cargoes to different
companies, is that correct?
A. Yes, sir.
Q. In one word, the South Negros Enterprises is engaged in the
business of common carriers, is that correct?
A. Yes, sir,
Q. And in fact, at the time of the hauling of the San Miguel Beer, it
was also in the same category as a common carrier?
A. Yes, sir,
(TSN. pp. 3-4, Jan. 29, 1985)
A common carrier, both from the nature of its business and for
insistent reasons of public policy is burdened by law with the duty
of exercising extraordinary diligence not only in ensuring the safety
of passengers, but in caring for the goods transported by it. The loss
or destruction or deterioration of goods turned over to the common
carrier for the conveyance to a designated destination raises
instantly a presumption of fault or negligence on the part of the
carrier, save only where such loss, destruction or damage arises
from extreme circumstances such as a natural disaster or calamity
... (Benedicto v. IAC, G.R. No. 70876, July 19, 1990, 187 SCRA 547)
(Emphasis supplied).
In order that the common carrier may be exempted from
responsibility, the natural disaster must have been
the proximate andonly cause of the loss. However, the common
carrier must exercise due diligence to prevent or minimize the loss
before, during and after the occurrence of flood, storm or other
natural disaster in order that the common carrier may be exempted
13

from liability for the destruction or deterioration of the goods
(Article 1739, New Civil Code).
In the instant case, the appellate court was correct in finding that
petitioner failed to observe the extraordinary diligence over the
cargo in question and he or the master in his employ was negligent
previous to the sinking of the carrying vessel. In substance, the
decision reads:
... VIVENCIO BABAO, the master of the carrying vessel, knew that
there was a typboon coming before his departure but did not check
where it was.
xxx xxx xxx
If only for the fact that he was first denied clearance to depart on
March 24, 1982, obviously because of a typhoon coming, Babao, as
master of the vessel, should have verified first where the typhoon
was before departing on March 25, 1982. True, the sea was calm at
departure time. But that might be the calm before the storm.
Prudence dictates that he should have ascertained first where the
storm was before departing as it might be on his path. (Rollo, pp.
35-36)
Respondent court's conclusion as to the negligence of petitioner is
supported by evidence. It will be noted that Vivencio Babao knew of
the impending typhoon on March 24, 1982 when the Philippine
Coast Guard denied M/L Maya the issuance of a clearance to sail.
Less than 24 hours elapsed since the time of the denial of said
clearance and the time a clearance to sail was finally issued on
March 25, 1982. Records will show that Babao did not ascertain
where the typhoon was headed by the use of his vessel's barometer
and radio (Rorlo, p. 142). Neither did the captain of the vessel
monitor and record the weather conditions everyday as required by
Art, 612 of the Code of Commerce (Rollo, pp. 142-143). Had he done
so while navigating for 31 hours, he could have anticipated the
strong winds and big waves and taken shelter (Rollo, pp- 36; 145).
His testimony on May 4, 1982 is as follows:
Q. Did you not check on your own where the typhoon was?
A. No. sir. (TSN, May 4, 1982, pp. 58-59)
Noteworthy is the fact that as Per official records of the
Climatological Division of the Philippine Atmospheric, Geophysical
and Astronomical Services Administration (PAG-ASA for brevity)
issued by its Chief of Climatological Division, Primitivo G. Ballan, Jr.
as to the weather and sea conditions that prevailed in the vicinity of
Catmon, Cebu during the period March 25-27, 1982, the sea
conditions on March 25, 1982 were slight to rough and the weather
conditions then prevailing during those times were cloudy skies with
rainshowers and the small waves grew larger and larger, to wit:
SPEED WAVE HT. SEA WEATHER
KNOTS (METERS) CONDITIONS
March 25
8 AM 15 1-2 slight cloudy skies
14

w/ rainshowers
2 PM 20-25 2.0-3.0 moderate overcast skies
to rough w/ some rains
8 PM 30 3.7 rough sea heaps up
white foam from
breaking waves
begin to be blown
in streaks along
the direction of
the wind;
Spindrift begins
2 AM 30 3.7 rough sea heaps up
white foam from
breaking waves
begin to be blown
in streaks along
the direction of the wind;
Spindrift begins
(Exh. 3)
A common carrier is obliged to observe extraordinary diligence and
the failure of Babao to ascertain the direction of the storm and the
weather condition of the path they would be traversing, constitute
lack of foresight and minimum vigilance over its cargoes taking into
account the surrounding circumstances of the case.
While the goods are in the possession of the carrier, it is but fair
that it exercises extraordinary diligence in protecting them from loss
or damage, and if loss occurs, the law presumes that it was due to
the carrier's fault or negligence; that is necessary to protect the
interest of the shipper which is at the mercy of the carrier (Art.
1756, Civil Code, Aboitiz Shipping Corporation v. Court of Appeals,
G.R. No. 89757, Aug. 6, 1990, 188 SCRA 387).
Furthermore, the records show that the crew of M/L Maya did not
have the required qualifications provided for in P.D. No. 97 or the
Philippine Merchant Marine Officers Law, all of whom were
15

unlicensed. While it is true that they were given special permit to
man the vessel, such permit was issued at the risk and responsibility
of the owner (Rollo, p. 36).
Finally, petitioner claims that the factual findings of the Special
Board of Marine Inquiry exonerating the owner/operator, crew
officers of the ill-fated vessel M/L Maya from any administrative
liability is binding on the court.
In rejecting petitioner's claim, respondent court was correct in
ruling that "such exoneration was but with respect to the
administrative liability of the owner/operator, officers and crew of
the ill-fated" vessel. It could not have meant exoneration of
appellee from liability as a common carrier for his failure to observe
extraordinary diligence in the vigilance over the goods it was
transporting and for the negligent acts or omissions of his
employees. Such is the function of the Court, not the Special Board
of Marine Inquiry." (Rollo, P. 37, Annex A, p. 7)
The Philippine Merchant Marine Rules and Regulations particularly
Chapter XVI thereof entitled "Marine Investigation and Suspension
and Revocation Proceedings" prescribes the Rules governing
maritime casualties or accidents, the rules and Procedures in
administrative investigation of all maritime cases within the
jurisdiction or cognizance of the Philippine Coast Guard and the
grounds for suspension and revocation of licenses/certificates of
marine officers and seamen (1601 SCOPE); clearly, limiting the
jurisdiction of the Board of Marine Inquiry and Special Board of
Marine Inquiry to the administrative aspect of marine casualties in
so far as it involves the shipowners and officers.
PREMISES CONSIDERED, the appealed decision is AFFIRMED.
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.
Does a charter-party 1 between a shipowner and a charterer
transform a 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 2 was entered into between Mitsubishi as shipper/charterer
and KKKK as shipowner, in Tokyo, Japan. 3Riders to the aforesaid
charter-party starting from par. 16 to 40 were attached to the pre-
printed agreement. Addenda Nos. 1, 2, 3 and 4 to the charter-party
16

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 4 were all 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). 6 The
hatches remained open throughout the duration of the discharge. 7
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. 8 The petitioner's warehouse was made of corrugated
galvanized 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
It took eleven (11) days for PPI to unload the cargo, from 5 July to
18 July 1974 (except July 12th, 14th and 18th).10 A private marine
and cargo surveyor, 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. 11 The survey report submitted by CSCI to the 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
17

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." 14Hence, on 18 July 1975, PPI filed an 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 claim of the plaintiff against the
defendant carrier for the value of the goods lost or damaged when
it ruled thus: 15
. . . 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 him from liability is shipted to the carrier,
common or private 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 to
prove that the shortage or contamination sustained by the 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. 16 Relying on the 1968 case of Home
Insurance Co. v. American Steamship Agencies, Inc., 17 the
appellate court ruled that the cargo vessel 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 . .
. 18 (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. 19 Petitioner further argues that since the possession and
control of 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; 20 a contract of affreightment by which
the owner of a ship or 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; 21 Charter parties are of two types: (a) contract of
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. 22 In 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. 23 The definition extends to
carriers either by land, air 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
19

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. 25 In the case of private carriers, 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. 26 On the 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, 29 does not find
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,
20

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. 33 When M/V "Sun Plum" 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
21

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. 35 Moreover, a shipowner is liable for damage to the 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. 37 The carrier, nonetheless, shall be liable for the 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
22

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.
Davide, Jr. and Quiason, JJ., concur.
Cruz, J., took no part.
Grio-Aquino, J., is on leave.

G.R. No. 70876 July 19, 1990
BENEDICTO vs. IAC
This Petition for Review asks us to set aside the Decision of the then
Intermediate Appellate Court dated 30 January 1985 in A.C.-G.R. CV
No. 01454, which affirmed in toto the decision of the Regional Trial
Court ("RTC") of Dagupan City in Civil Case No. 5206. There, the RTC
23

held petitioner Ma. Luisa Benedicto liable to pay private respondent
Greenhills Wood Industries Company, Inc. ("Greenhills") the
amounts of P16,016.00 and P2,000.00 representing the cost of
Greenhills' lost sawn lumber and attorney's fees, respectively.
Private respondent Greenhills, a lumber manufacturing firm with
business address at Dagupan City, operates sawmill in Maddela,
Quirino.
Sometime in May 1980, private respondent bound itself to sell and
deliver to Blue Star Mahogany, Inc., ("Blue Star") a company with
business operations in Valenzuela, Bulacan 100,000 board feet of
sawn lumber with the understanding that an initial delivery would
be made on 15 May 1980. 1 To effect its first delivery, private
respondent's resident manager in Maddela, Dominador Cruz,
contracted Virgilio Licuden, the driver of a cargo truck bearing Plate
No. 225 GA TH to transport its sawn lumber to the consignee Blue
Star in Valenzuela, Bulacan. This cargo truck was registered in the
name of petitioner Ma. Luisa Benedicto, the proprietor of Macoven
Trucking, a business enterprise engaged in hauling freight, with
main office in B.F. Homes, Paraaque.
On 15 May 1980, Cruz in the presence and with the consent of
driver Licuden, supervised the loading of 7,690 board feet of sawn
lumber with invoice value of P16,918.00 aboard the cargo truck.
Before the cargo truck left Maddela for Valenzuela, Bulacan, Cruz
issued to Licuden Charge Invoices Nos. 3259 and 3260 both of which
were initialed by the latter at the bottom left corner. 2 The first
invoice was for the amount of P11,822.80 representing the value of
5,374 board feet of sawn lumber, while the other set out the
amount of P5,095.20 as the value of 2,316 board feet. Cruz
instructed Licuden to give the original copies of the two (2) invoices
to the consignee upon arrival in Valenzuela, Bulacan 3and to retain
the duplicate copies in order that he could afterwards claim the
freightage from private respondent's Manila office. 4
On 16 May 1980, the Manager of Blue Star called up by long
distance telephone Greenhills' president, Henry Lee Chuy, informing
him that the sawn lumber on board the subject cargo truck had not
yet arrived in Valenzuela, Bulacan. The latter in turn informed
Greenhills' resident manager in its Maddela saw-mill of what had
happened. In a letter 5 dated 18 May 1980, Blue Star's
administrative and personnel manager, Manuel R. Bautista, formally
informed Greenhills' president and general manager that Blue Star
still had not received the sawn lumber which was supposed to arrive
on 15 May 1980 and because of this delay, "they were constrained
to look for other suppliers."
On 25 June 1980, after confirming the above with Blue Star and
after trying vainly to persuade it to continue with their contract,
private respondent Greenhill's filed Criminal Case No. 668 against
driver Licuden for estafa. Greenhills also filed against petitioner
Benedicto Civil Case No. D-5206 for recovery of the value of the lost
sawn lumber plus damages before the RTC of Dagupan City.
In her answer, 6 petitioner Benedicto denied liability alleging that
she was a complete stranger to the contract of carriage, the subject
truck having been earlier sold by her to Benjamin Tee, on 28
February 1980 as evidenced by a deed of sale. 7She claimed that the
truck had remained registered in her name notwithstanding its
earlier sale to Tee because the latter had paid her only P50,000.00
out of the total agreed price of P68,000.00 However, she averred
24

that Tee had been operating the said truck in Central Luzon from
that date (28 February 1980) onwards, and that, therefore, Licuden
was Tee's employee and not hers.
On 20 June 1983, based on the finding that petitioner Benedicto
was still the registered owner of the subject truck, and holding that
Licuden was her employee, the trial court adjudged as follows:
WHEREFORE, in the light of the foregoing considerations, this Court
hereby renders judgment against defendant Maria Luisa Benedicto,
ordering her to pay the Greenhills Wood Industries Co. Inc., thru its
President and General Manager, the amount of P16,016 cost of the
sawn lumber loaded on the cargo truck, with legal rate of interest
from the filing of the complaint to pay attorney's fees in the amount
of P2,000.00; and to pay the costs of this suit.
SO ORDERED. 8
On 30 January 1985, upon appeal by petitioner, the Intermediate
Appellate Court affirmed 9 the decision of the trial court in toto.
Like the trial court, the appellate court held that since petitioner
was the registered owner of the subject vehicle, Licuden the driver
of the truck, was her employee, and that accordingly petitioner
should be responsible for the negligence of said driver and bear the
loss of the sawn lumber plus damages. Petitioner moved for
reconsideration, without success. 10
In the present Petition for Review, the sole issue raised is whether
or not under the facts and applicable law, the appellate court was
correct in finding that petitioner, being the registered owner of the
carrier, should be held liable for the value of the undelivered or lost
sawn lumber.
Petitioner urges that she could not be held answerable for the loss
of the cargo, because the doctrine which makes the registered
owner of a common carrier vehicle answerable to the public for the
negligence of the driver despite the sale of the vehicle to another
person, applies only to cases involving death of or injury to
passengers. What applies in the present case, according to
petitioner, is the rule that a contract of carriage requires proper
delivery of the goods to and acceptance by the carrier. Thus,
petitioner contends that the delivery to a person falsely
representing himself to be an agent of the carrier prevents liability
from attaching to the registered owner.
The Court considers that petitioner has failed to show that appellate
court committed reversible error in affirming the trial court's
holding that petitioner was liable for the cost of the sawn lumber
plus damages.
There is no dispute that petitioner Benedicto has been holding
herself out to the public as engaged in the business of hauling or
transporting goods for hire or compensation. Petitioner Benedicto
is, in brief, a common carrier.
The prevailing doctrine on common carriers makes the registered
owner liable for consequences flowing from the operations of the
carrier, even though the specific vehicle involved may already have
been transferred to another person. This doctrine rests upon the
principle that in dealing with vehicles registered under the Public
Service Law, the public has the right to assume that the registered
owner is the actual or lawful owner thereof It would be very difficult
and often impossible as a practical matter, for members of the
general public to enforce the rights of action that they may have for
25

injuries inflicted by the vehicles being negligently operated if they
should be required to prove who the actual owner is. 11 The
registered owner is not allowed to deny liability by proving the
identity of the alleged transferee. Thus, contrary to petitioner's
claim, private respondent is not required to go beyond the vehicle's
certificate of registration to ascertain the owner of the carrier. In
this regard, the letter presented by petitioner allegedly written by
Benjamin Tee admitting that Licuden was his driver, had no
evidentiary value not only because Benjamin Tee was not presented
in court to testify on this matter but also because of the
aforementioned doctrine. To permit the ostensible or registered
owner to prove who the actual owner is, would be to set at naught
the purpose or public policy which infuses that doctrine.
In fact, private respondent had no reason at all to doubt the
authority of Licuden to enter into a contract of carriage on behalf of
the registered owner. It appears that, earlier, in the first week of
May 1980, private respondent Greenhills had contracted Licuden
who was then driving the same cargo truck to transport and carry a
load of sawn lumber from the Maddela sawmill to Dagupan
City. 12 No one came forward to question that contract or the
authority of Licuden to represent the owner of the carrier truck.
Moreover, assuming the truth of her story, petitioner Benedicto
retained registered ownership of the freight truck for her own
benefit and convenience, that is, to secure the payment of the
balance of the selling price of the truck. She may have been
unaware of the legal security device of chattel mortgage; or she, or
her buyer, may have been unwilling to absorb the expenses of
registering a chattel mortgage over the truck. In either case,
considerations both of public policy and of equity require that she
bear the consequences flowing from registered ownership of the
subject vehicle.
Petitioner Benedicto, however, insists that the said principle should
apply only to cases involving negligence and resulting injury to or
death of passengers, and not to cases involving merely carriage of
goods. We believe otherwise.
A common carrier, both from the nature of its business and for
insistent reasons of public policy, is burdened by the law with the
duty of exercising extraordinary diligence not only in ensuring the
safety of passengers but also in caring for goods transported by
it. 13 The loss or destruction or deterioration of goods turned over
to the common carrier for conveyance to a designated destination,
raises instantly a presumption of fault or negligence on the part of
the carrier, save only where such loss, destruction or damage arises
from extreme circumstances such as a natural disaster or calamity
or act of the public enemy in time of war, or from an act or omission
of the shipper himself or from the character of the goods or their
packaging or container. 14
This presumption may be overcome only by proof of extraordinary
diligence on the part of the carrier. 15 Clearly, to permit a common
carrier to escape its responsibility for the passengers or goods
transported by it by proving a prior sale of the vehicle or means of
transportation to an alleged vendee would be to attenuate
drastically the carrier's duty of extraordinary diligence. It would also
open wide the door to collusion between the carrier and the
supposed vendee and to shifting liability from the carrier to one
without financial capability to respond for the resulting damages. In
other words, the thrust of the public policy here involved is as sharp
26

and real in the case of carriage of goods as it is in the transporting of
human beings. Thus, to sustain petitioner Benedicto's contention,
that is, to require the shipper to go behind a certificate of
registration of a public utility vehicle, would be utterly subversive of
the purpose of the law and doctrine.
Petitioner further insists that there was no perfected contract of
carriage for the reason that there was no proof that her consent or
that of Tee had been obtained; no proof that the driver, Licuden
was authorized to bind the registered owner; and no proof that the
parties had agreed on the freightage to be paid.
Once more, we are not persuaded by petitioner's arguments which
appear to be a transparent attempt to evade statutory
responsibilities. Driver Licuden was entrusted with possession and
control of the freight truck by the registered owner (and by the
alleged secret owner, for that matter).itc-asl Driver Licuden,
under the circumstances, was clothed with at least implied
authority to contract to carry goods and to accept delivery of such
goods for carriage to a specified destination. That the freight to be
paid may-not have been fixed before loading and carriage, did not
prevent the contract of carriage from arising, since the freight was
at least determinable if not fixed by the tariff schedules in
petitioner's main business office. Put in somewhat different terms,
driver Licuden is in law regarded as the employee and agent of the
petitioner, for whose acts petitioner must respond. A contract of
carriage of goods was shown; the sawn lumber was loaded on board
the freight truck; loss or non-delivery of the lumber at Blue Star's
premises in Valenzuela, Bulacan was also proven; and petitioner has
not proven either that she had exercised extraordinary diligence to
prevent such loss or non-delivery or that the loss or non-delivery
was due to some casualty or force majeure inconsistent with her
liability. 16 Petitioner's liability to private respondent Greenhills was
thus fixed and complete, without prejudice to petitioner's right to
proceed against her putative transferee Benjamin Tee and driver
Licuden for reimbursement or contribution. 17
WHEREFORE, the Petition for Review is DENIED for lack of merit and
the Decision of the former Intermediate Appellate Court dated 30
January 1985 is hereby AFFIRMED. Costs against petitioner.
SO ORDERED.
G.R. No. L-61464 May 28, 1988
BA FINANCE vs. CA
This is a petition for review seeking to set aside the decision of the
Court of Appeals which affirmed the decision of the then Court of
First Instance of Manila, dismissing the complaint instituted by the
petitioner and ordering it to pay damages on the basis of the private
respondent's counterclaim.
On July 1, 1975, private respondent Augusto Yulo secured a loan
from the petitioner in the amount of P591,003.59 as evidenced by a
promissory note he signed in his own behalf and as representative
of the A & L Industries. Respondent Yulo presented an alleged
special power of attorney executed by his wife, respondent Lily
Yulo, who manages A & L Industries and under whose name the said
business is registered, purportedly authorizing Augusto Yulo to
procure the loan and sign the promissory note. About two months
prior to the loan, however, Augusto Yulo had already left Lily Yulo
and their children and had abandoned their conjugal home. When
27

the obligation became due and demandable, Augusto Yulo failed to
pay the same.
On October 7, 1975, the petitioner filed its amended complaint
against the spouses Augusto and Lily Yulo on the basis of the
promissory note. It also prayed for the issuance of a writ of
attatchment alleging that the said spouses were guilty of fraud in
contracting the debt upon which the action was brought and that
the fraud consisted of the spouses' inducing the petitioner to enter
into a contract with them by executing a Deed of Assignment in
favor of the petitioner, assigning all their rights, titles and interests
over a construction contract executed by and between the spouses
and A. Soriano Corporation on June 19, 1974 for a consideration of
P615,732.50 when, in truth, the spouses did not have any intention
of remitting the proceeds of the said construction contract to the
petitioner because despite the provisions in the Deed of Assignment
that the spouses shall, without compensation or costs, collect and
receive in trust for the petitioner all payments made upon the
construction contract and shall remit to the petitioner all collections
therefrom, the said spouses failed and refuse to remit the
collections and instead, misappropriated the proceeds for their own
use and benefit, without the knowledge or consent of the
petitioner.
The trial court issued the writ of attachment prayed for thereby
enabling the petitioner to attach the properties of A & L Industries.
Apparently not contented with the order, the petitioner filed
another motion for the examination of attachment debtor, alleging
that the properties attached by the sheriff were not sufficient to
secure the satisfaction of any judgment that may be recovered by it
in the case. This was likewise granted by the court.
Private respondent Lily Yulo filed her answer with counterclaim,
alleging that although Augusta Yulo and she are husband and wife,
the former had abandoned her and their children five (5) months
before the filing of the complaint; that they were already separated
when the promissory note was executed; that her signature in the
special power of attorney was forged because she had never
authorized Augusto Yulo in any capacity to transact any business for
and in behalf of A & L Industries, which is owned by her as a single
proprietor, that she never got a single centavo from the proceeds of
the loan mentioned in the promissory note; and that as a result of
the illegal attachment of her properties, which constituted the
assets of the A & L Industries, the latter closed its business and was
taken over by the new owner.
After hearing, the trial court rendered judgment dismissing the
petitioner's complaint against the private respondent Lily Yulo and A
& L Industries and ordering the petitioner to pay the respondent Lily
Yulo P660,000.00 as actual damages; P500,000.00 as unrealized
profits; P300,000.00 as exemplary damages; P30,000.00 as and for
attorney's fees; and to pay the costs.
The petitioner appealed. The Court of Appeals affirmed the trial
court's decision except for the exemplary damages which it reduced
from P300,000.00 to P150,000.00 and the attorney's fees which
were reduced from P30,000.00 to P20,000.00.
In resolving the question of whether or not the trial court erred in
holding that the signature of respondent Lily Yulo in the special
power of attorney was forged, the Court of Appeals said:
28

The crucial issue to be determined is whether or not the signatures
of the appellee Lily Yulo in Exhibits B and B-1 are forged. Atty.
Crispin Ordoa, the Notary Public, admitted in open court that the
parties in the subject documents did not sign their signatures in his
presence. The same were already signed by the supposed parties
and their supposed witnesses at the time they were brought to him
for ratification. We quote from the records the pertinent testimony
of Atty. Ordoa, thus:
Q. This document marked as Exhibit B-1, when this was presented
to you by that common friend, June Enriquez, it was already
typewritten, it was already accomplished, all typewritten.?
A. Yes, sir.
Q And the parties had already affixed their signatures in this
document?
A. Yes, sir.
Q. In this document marked as Exhibit B although it appears here
that this is an acknowledgment, you have not stated here that the
principal actually acknowledged this document to be her voluntary
act and deed?
A This in one of those things that escaped my attention. Actually I
have not gone over the second page. I believed it was in order I
signed it. (TSN pp. 13-14, Hearing of Nov. 26, 1976).
The glaring admission by the Notary Public that he failed to state in
the acknowledgment portion of Exhibit B-1 that the appellee Lily
Yulo acknowledged the said document to be her own voluntary act
and deed, is a very strong and commanding circumstance to show
that she did not appear personally before the said Notary Public and
did not sign the document.
Additionally, the Notary Public admitted that, while June Enriquez is
admittedly a mutual friend of his and the defendant Augusta Yulo,
and who is also an instrumental witness in said Exhibit B-1., he
could not recognize or tell which of the two signatures appearing
therein, was the signature of this June Enriquez.
Furthermore, as the issue is one of credibility of a witness, the
findings and conclusions of the trial court before whom said
witness, Atty. Crispin Ordoa, the Notary Public before whom the
questioned document was supposedly ratified and acknowledged,
deserve great respect and are seldom disturbed on appeal by
appellate tribunals, since it is in the best and peculiar advantage of
determining and observing the conduct, demeanor and deportment
of a particular witness while he is testifying in court, an opportunity
not enjoyed by the appellate courts who merely have to rely on the
recorded proceedings which transpired in the court below, and the
records are bare of any circumstance of weight, which the trial
court had overlooked and which if duly considered, may radically
affect the outcome of the case.
On the other hand, the appellee Lily Yulo, to back up her claim of
forgery of her signature in Exhibit B-1, presented in court a
handwriting expert witness in the person of Police Captain Yakal
Giron of the Integrated National Police Training Command, and who
is also a Document Examiner of the same Command's Crime
Laboratory at Fort Bonifacio, Metro Manila. His experience as an
examiner of questioned and disputed documents, in our mind, is
29

quite impressive. To qualify him as a handwriting expert, he
declared that he underwent extensive and actual studies and
examination of disputed or questioned document, both at the
National Bureau of Investigation Academy and National Bureau of
Investigation Questioned Document Laboratory, respectively, from
July 1964, up to his appointment as Document Examiner in June,
1975, and, to further his experience along this line, he attended the
297th Annual Conference of the American Society of Questioned
Docurnent Examiners held at Seattle, Washington, in August 1971,
as a representative of the Philippines, and likewise conducted an
observation of the present and modern trends of crime laboratories
in the West Coast, U.S.A., in 1971; that he likewise had conducted
actual tests and examination of about 100,000 documents, as
requested by the different courts, administrative, and governmental
agencies of the Government, substantial portions of which relate to
actual court cases.
In concluding that the signatures of the appellee Lily Yulo, in the
disputed document in question (Exh. B-1), were all forgeries, and
not her genuine signature, the expert witness categorically recited
and specified in open court what he observed to be about twelve
(12) glaring and material significant differences, in his comparison of
the signatures appearing in the genuine specimen signatures of the
said appellee and with those appearing in the questioned document
(Exhibit B-1). Indeed, we have likewise seen the supposed notable
differences, found in the standard or genuine signatures of the
appellee which were lifted and obtained in the official files of the
government, such as the Bureau of Internal Revenue on her income
tax returns, as compared to the pretended signature of the appellee
appearing in Exhibits B, B-1. It is also noteworthy to mention that
the appellant did not even bother to conduct a cross-examination of
the handwriting expert witness, Capt. Giron, neither did the
appellant present another handwriting expert, at least to counter-
act or balance the appellee's handwriting expert.
Prescinding from the foregoing facts, we subscribe fully to the lower
court's observations that the signatures of the appellee Lily Yulo in
the questioned document (Exh. B-1) were forged. Hence, we find no
factual basis to disagree. (pp. 28-30, Rollo)
As to the petitioner's contention that even if the signature of Lily
Yulo was forged or even if the attached properties were her
exclusive property, the same can be made answerable to the
obligation because the said properties form part of the conjugal
partnership of the spouses Yulo, the appellate court held that these
contentions are without merit because there is strong preponderant
evidence to show that A & L Industries belongs exclusively to
respondent Lily Yulo, namely: a) The Certificate of Registration of A
& L Industries, issued by the Bureau of Commerce, showing that
said business is a single proprietorship, and that the registered
owner thereof is only Lily Yulo; b) The Mayor's Permit issued in
favor of A & L Industries, by the Caloocan City Mayor's Office
showing compliance by said single proprietorship company with the
City Ordinance governing business establishments; and c) The
Special Power of Attorney itself, assuming but without admitting its
due execution, is tangible proof that Augusto Yulo has no interest
whatsoever in the A & L Industries, otherwise, there would have
been no necessity for the Special Power of Attorney if he is a part
owner of said single proprietorship.
30

With regard to the award of damages, the Court of Appeals affirmed
the findings of the trial court that there was bad faith on the part of
the petitioner as to entitle the private respondent to damages as
shown not only by the fact that the petitioner did not present the
Deed of Assignment or the construction agreement or any evidence
whatsoever to support its claim of fraud on the part of the private
respondent and to justify the issuance of a preliminary attachment,
but also by the following findings:
Continuing and elaborating further on the appellant's mala
fide actuations in securing the writ of attachment, the lower court
stated as follows:
Plaintiff not satisfied with the instant case where an order for
attachment has already been issued and enforced, on the strength
of the same Promissory Note (Exhibit"A"), utilizing the Deed of
Chattel Mortgage (Exhibit "4"), filed a foreclosure proceedings
before the Office of the Sheriff of Caloocan (Exhibit"6") foreclosing
the remaining properties found inside the premises formerly
occupied by the A & L Industries. A minute examination of Exhibit
"4" will show that the contracting parties thereto, as appearing in
par. 1 thereof, are Augusto Yulo, doing business under the style of A
& L Industries (should be A & L Glass Industries Corporation), as
mortgagor and BA Finance Corporation as mortgagee, thus the
enforcement of the Chattel Mortgage against the property of A & L
Industries exclusively owned by Lily T. Yulo appears to be without
any factual or legal basis whatsoever. The chattel mortgage, Exhibit
"4" and the Promissory Note, Exhibit A, are based on one and the
same obligation. Plaintiff tried to enforce as it did enforce its claim
into two different modes a single obligation.
Aware that defendant Lily Yulo, filed a Motion to Suspend
Proceedings by virtue of a complaint she filed with the Court of First
Instance of Caloocan, seeking annulment of the Promissory Note,
the very basis of the plaintiff in filing this complaint, immediately
after the day it filed a Motion for the Issuance of an Alias Writ of
Preliminary Attachment . . .Yet, inspite of the knowledge and the
filing of this Motion to Suspend Proceedings, the Plaintiff still filed a
Motion for the Issuance of a Writ of Attachment dated February 6,
1976 before this court. To add insult to injury, plaintiff even filed a
Motion for Examination of the Attachment Debtor, although aware
that Lily Yulo had already denied participation in the execution of
Exhibits "A" and "B". These incidents and actions taken by plaintiff,
to the thinking of the court, are sufficient to prove and establish the
element of bad faith and malice on the part of plaintiff which may
warrant the award of damages in favor of defendant Lily Yulo. (Ibid.,
pp. 102-103).<re||an1w>
Indeed, the existence of evident bad faith on the appellant's part in
proceeding against the appellee Lily Yulo in the present case, may
likewise be distressed on the fact that its officer Mr. Abraham Co,
did not even bother to demand the production of at least the
duplicate original of the Special Power of Attorney (Exhibit B) and
merely contended himself with a mere xerox copy thereof, neither
did he require a more specific authority from the A & L Industries to
contract the loan in question, since from the very content and
recitals of the disputed document, no authority, express or implied,
has been delegated or granted to August Yulo to contract a loan,
especially with the appellant. (pp. 33-34, Rollo)
Concerning the actual damages, the appellate court ruled that the
petitioner should have presented evidence to disprove or rebut the
31

private respondent's claim but it remained quiet and chose not to
disturb the testimony and the evidence presented by the private
respondent to prove her claim.
In this petition for certiorari, the petitioner raises three issues. The
first issue deals with the appellate court's affirmance of the trial
court's findings that the signature of the private respondent on the
Special Power of Attorney was forged. According to the petitioner,
the Court of Appeals disregarded the direct mandate of Section 23,
Rule 132 of the Rules of Court which states in part that evidence of
handwriting by comparison may be made "with writings admitted or
treated as genuine by the party against whom the evidence is
offered, or proved to be genuine to the satisfaction of the judge,"
and that there is no evidence on record which proves or tends to
prove the genuineness of the standards used.
There is no merit in this contention.
The records show that the signatures which were used as
"standards" for comparison with the alleged signature of the private
respondent in the Special Power of Attorney were those from the
latter's residence certificates in the years 1973, 1974 and 1975, her
income tax returns for the years 1973 and 1975 and from a
document on long bond paper dated May 18, 1977. Not only were
the signatures in the foregoing documents admitted by the private
respondent as hers but most of the said documents were used by
the private respondent in her transactions with the government. As
was held in the case of Plymouth Saving & Loan Assn. No. 2 v.
Kassing (125 NE 488, 494):
We believe the true rule deduced from the authorities to be that
the genuineness of a "standard" writing may be established (1) by
the admission of the person sought to be charged with the disputed
writing made at or for the purposes of the trial or by his testimony;
(2) by witnesses who saw the standards written or to whom or in
whose hearing the person sought to be charged acknowledged the
writing thereof; (3) by evidence showing that the reputed writer of
the standard has acquiesced in or recognized the same, or that it
has been adopted and acted upon by him his business transactions
or other concerns....
Furthermore, the judge found such signatures to be sufficient as
standards. In the case of Taylor-Wharton Iron & Steel Co. v.
Earnshaw (156 N.E. 855, 856), it was held:
When a writing is offered as a standard of comparison it is for the
presiding judge to decide whether it is the handwriting of the party
to be charged. Unless his finding is founded upon error of law, or
upon evidence which is, as matter of law, insufficient to justify the
finding, this court will not revise it upon exceptions." (Costelo v.
Crowell, 139 Mass. 588, 590, 2 N.E. 648; Nuez v. Perry, 113 Mass,
274, 276.)
We cannot find any error on the part of the trial judge in using the
above documents as standards and also in giving credence to the
expert witness presented by the private respondent whose
testimony the petitioner failed to rebut and whose credibility it
likewise failed to impeach. But more important is the fact that the
unrebutted handwriting expert's testimony noted twelve (12)
glaring and material differences in the alleged signature of the
private respondent in the Special Power of Attorney as compared
32

with the specimen signatures, something which the appellate court
also took into account. In Cesar v. Sandiganbayan (134 SCRA 105,
132), we ruled:
Mr. Maniwang pointed to other significant divergences and
distinctive characteristics between the sample signatures and the
signatures on the questioned checks in his report which the court's
Presiding Justice kept mentioning during Maniwang's testimony.
In the course of his cross-examination, NBI expert Tabayoyong
admitted that he saw the differences between the exemplars used
and the questioned signatures but he dismissed the differences
because he did not consider them fundamental. We rule that
significant differences are more fundamental than a few similarities.
A forger always strives to master some similarities.
The second issue raised by the petitioner is that while it is true that
A & L Industries is a single proprietorship and the registered owner
thereof is private respondent Lily Yulo, the said proprietorship was
established during the marriage and its assets were also acquired
during the same. Therefore, it is presumed that this property forms
part of the conjugal partnership of the spouses Augusto and Lily
Yulo and thus, could be held liable for the obligations contracted by
Augusto Yulo, as administrator of the partnership.
There is no dispute that A & L Industries was established during the
marriage of Augusta and Lily Yulo and therefore the same is
presumed conjugal and the fact that it was registered in the name
of only one of the spouses does not destroy its conjugal nature (See
Mendoza v. Reyes, 124 SCRA 161, 165). However, for the said
property to be held liable, the obligation contracted by the husband
must have redounded to the benefit of the conjugal partnership
under Article 161 of the Civil Code. In the present case, the
obligation which the petitioner is seeking to enforce against the
conjugal property managed by the private respondent Lily Yulo was
undoubtedly contracted by Augusto Yulo for his own benefit
because at the time he incurred the obligation he had already
abandoned his family and had left their conjugal home. Worse, he
made it appear that he was duly authorized by his wife in behalf of
A & L Industries, to procure such loan from the petitioner. Clearly,
to make A & L Industries liable now for the said loan would be
unjust and contrary to the express provision of the Civil Code. As we
have ruled in Luzon Surety Co., Inc. v. De Gracia (30 SCRA 111, 115-
117):
As explained in the decision now under review: "It is true that the
husband is the administrator of the conjugal property pursuant to
the provisions of Art. 163 of the new Civil Code. However, as such
administrator the only obligations incurred by the husband that are
chargeable against the conjugal property are those incurred in the
legitimate pursuit of his career, profession or business with the
honest belief that he is doing right for the benefit of the family. This
is not true in the case at bar for we believe that the husband in
acting as guarantor or surety for another in an indemnity agreement
as that involved in this case did not act for the benefit of the
conjugal partnership. Such inference is more emphatic in this case,
when no proof is presented that Vicente Garcia in acting as surety
or guarantor received consideration therefore, which may redound
to the benefit of the conjugal partnership.(Ibid, pp. 46-47).
xxx xxx xxx
33

xxx xxx xxx
In the most categorical language, a conjugal partnership under that
provision is liable only for such "debts and obligations contracted by
the husband for the benefit of the conjugal partnership." There
must be the requisite showing then of some advantage which
clearly accrued to the welfare of the spouses. There is none in this
case.
xxx xxx xxx
Moreover, it would negate the plain object of the additional
requirement in the present Civil Code that a debt contracted by the
husband to bind a conjugal partnership must redound to its benefit.
That is still another provision indicative of the solicitude and tender
regard that the law manifests for the family as a unit. Its interest is
paramount; its welfare uppermost in the minds of the codifiers and
legislators.
We, therefore, rule that the petitioner cannot enforce the
obligation contracted by Augusto Yulo against his conjugal
properties with respondent Lily Yulo. Thus, it follows that the writ of
attachment cannot issue against the said properties.
Finally, the third issue assails the award of actual damages
according to the petitioner, both the lower court and the appellate
court overlooked the fact that the properties referred to are still
subject to a levy on attachment. They are, therefore, still
under custodia legis and thus, the assailed decision should have
included a declaration as to who is entitled to the attached
properties and that assuming arguendo that the attachment was
erroneous, the lower court should have ordered the sheriff to
return to the private respondent the attached properties instead of
condemning the petitioner to pay the value thereof by way of actual
damages.
In the case of Lazatin v. Twao (2 SCRA 842, 847), we ruled:
xxx xxx xxx
... It should be observed that Sec. 4 of Rule 59, does not prescribed
the remedies available to the attachment defendant in case of a
wrongful attachment, but merely provides an action for recovery
upon the bond, based on the undertaking therein made and not
upon the liability arising from a tortuous act, like the malicious suing
out of an attachment. Under the first, where malice is not essential,
the attachment defendant, is entitled to recover only the actual
damages sustained by him by reason of the attachment. Under the
second, where the attachment is maliciously sued out, the damages
recoverable may include a compensation for every injury to his
credit, business or feed (Tyler v. Mahoney, 168 NC 237, 84 SE 362;
Pittsburg etc. 5 Wakefield, etc., 135 NC 73, 47 SE 234). ...
The question before us, therefore, is whether the attachment of the
properties of A & L Industries was wrongful so as to entitle the
petitioner to actual damages only or whether the said attachment
was made in bad faith and with malice to warrant the award of
other kinds of damages. Moreover, if the private respondent is
entitled only to actual damages, was the court justified in ordering
the petitioner to pay for the value of the attached properties
instead of ordering the return of the said properties to the private
respondent Yulo ?
34

Both the trial and appellate courts found that there was bad faith
on the part of the petitioner in securing the writ of attachment. We
do not think so. "An attachment may be said to be wrongful when,
for instance, the plaintiff has no cause of action, or that there is no
true ground therefore, or that the plaintiff has a sufficient security
other than the property attached, which is tantamout to saying that
the plaintiff is not entitled to attachment because the requirements
of entitling him to the writ are wanting. (7 C.J.S., 664)" (p. 48,
Section 4, Rule 57, Francisco, Revised Rules of Court).
Although the petitioner failed to prove the ground relied upon for
the issuance of the writ of attachment, this failure cannot be
equated with bad faith or malicious intent. The steps which were
taken by the petitioner to ensure the security of its claim were
premised, on the firm belief that the properties involved could be
made answerable for the unpaid obligation due it. There is no
question that a loan in the amount of P591,003.59 was borrowed
from the bank.
We, thus, find that the petitioner is liable only for actual damages
and not for exemplary damages and attorney's fees. Respondent
Lily Yulo has manifested before this Court that she no longer desires
the return of the attached properties since the said attachment
caused her to close down the business. From that time she has
become a mere employee of the new owner of the premises. She
has grave doubts as to the running condition of the attached
machineries and equipments considering that the attachment was
effected way back in 1975. She states as a matter of fact that the
petitioner has already caused the sale of the machineries for fear
that they might be destroyed due to prolonged litigation. We,
therefore, deem it just and equitable to allow private respondent
Lily Yulo to recover actual damages based on the value of the
attached properties as proven in the trial court, in the amount of
P660,000.00. In turn, if there are any remaining attached
properties, they should be permanently released to herein
petitioner.
We cannot, however, sustain the award of P500,000.00
representing unrealized profits because this amount was not proved
or justified before the trial court. The basis of the alleged unearned
profits is too speculative and conjectural to show actual damages
for a future period. The private respondent failed to present reports
on the average actual profits earned by her business and other
evidence of profitability which are necessary to prove her claim for
the said amount (See G. A. Machineries, Inc. v. Yaptinchay, 126
SCRA 78, 88).
The judgment is therefore set aside insofar as it holds the petitioner
liable for P500,000.00 actual damages representing unrealized
profits, P150,000.00 for exemplary damages and P20,000.00 for
attorney's fees. As stated earlier, the attached properties, should be
released in favor of the petitioner.
WHEREFORE, the decision of the Court of Appeals is hereby SET
ASIDE and the petitioner is ordered to pay the private respondent
Lily Yulo the amount of SIX HUNDRED SIXTY THOUSAND PESOS
(P660,000.00) as actual damages. The remaining properties subject
of the attachment are ordered released in favor of the petitioner.
SO ORDERED.
digest of F.C. Fisher v. Yangco Steamship Co. (G.R. No. 8095)
35

G.R. No. L-8095 March 31, 1915
F.C. FISHER, plaintiff,
vs.
YANGCO STEAMSHIP COMPANY, J.S. STANLEY, as Acting Collector of
Customs of the Philippine Islands, IGNACIO VILLAMOR, as Attorney-
General of the Philippine Islands, and W.H. BISHOP, as prosecuting
attorney of the city of Manila, respondents.
Haussermann, Cohn and Fisher for plaintiff.
Office of the Solicitor-General Harvey for respondents.
CARSON, J.:
The real question involved in these proceedings is whether the
refusal of the owners and officers of a steam vessel, duly licensed to
engage in the coastwise trade of the Philippine Islands and engaged
in that trade as a common carrier, to accept for carriage "dynamite,
powder or other explosives" from any and all shippers who may
offer such explosives for carriage can be held to be a lawful act
without regard to any question as to the conditions under which
such explosives are offered to carriage, or as to the suitableness of
the vessel for the transportation of such explosives, or as to the
possibility that the refusal to accept such articles of commerce in a
particular case may have the effect of subjecting any person or
locality or the traffic in such explosives to an undue, unreasonable
or unnecessary prejudice or discrimination.
Summarized briefly, the complaint alleges that plaintiff is a
stockholder in the Yangco Steamship Company, the owner of a large
number of steam vessels, duly licensed to engage in the coastwise
trade of the Philippine Islands; that on or about June 10, 1912, the
directors of the company adopted a resolution which was thereafter
ratified and affirmed by the shareholders of the company,
"expressly declaring and providing that the classes of merchandise
to be carried by the company in its business as a common carrier do
not include dynamite, powder or other explosives, and expressly
prohibiting the officers, agents and servants of the company from
offering to carry, accepting for carriage said dynamite, powder or
other explosives;" that thereafter the respondent Acting Collector
of Customs demanded and required of the company the acceptance
and carriage of such explosives; that he has refused and suspended
the issuance of the necessary clearance documents of the vessels of
the company unless and until the company consents to accept such
explosives for carriage; that plaintiff is advised and believes that
should the company decline to accept such explosives for carriage,
the respondent Attorney-General of the Philippine Islands and the
respondent prosecuting attorney of the city of Manila intend to
institute proceedings under the penal provisions of sections 4, 5,
and 6 of Act No. 98 of the Philippine Commission against the
company, its managers, agents and servants, to enforce the
requirements of the Acting Collector of Customs as to the
acceptance of such explosives for carriage; that notwithstanding the
demands of the plaintiff stockholder, the manager, agents and
servants of the company decline and refuse to cease the carriage of
such explosives, on the ground that by reason of the severity of the
penalties with which they are threatened upon failure to carry such
explosives, they cannot subject themselves to "the ruinous
consequences which would inevitably result" from failure on their
part to obey the demands and requirements of the Acting Collector
of Customs as to the acceptance for carriage of explosives; that
plaintiff believes that the Acting Collector of Customs erroneously
36

construes the provisions of Act No. 98 in holding that they require
the company to accept such explosives for carriage notwithstanding
the above mentioned resolution of the directors and stockholders
of the company, and that if the Act does in fact require the
company to carry such explosives it is to that extent
unconstitutional and void; that notwithstanding this belief of
complainant as to the true meaning of the Act, the questions
involved cannot be raised by the refusal of the company or its
agents to comply with the demands of the Acting Collector of
Customs, without the risk of irreparable loss and damage resulting
from his refusal to facilitate the documentation of the company's
vessels, and without assuming the company to test the questions
involved by refusing to accept such explosives for carriage.
The prayer of the complaint is as follows:
Wherefore your petitioner prays to this honorable court as follows:
First. That to the due hearing of the above entitled action be issued
a writ of prohibition perpetually restraining the respondent Yangco
Steamship Company, its appraisers, agents, servants or other
representatives from accepting to carry and from carrying, in
steamers of said company dynamite, powder or other explosive
substance, in accordance with the resolution of the board of
directors and of the shareholders of said company.
Second. That a writ of prohibition be issued perpetually enjoining
the respondent J.S. Stanley as Acting Collector of Customs of the
Philippine Islands, his successors, deputies, servants or other
representatives, from obligating the said Yangco Steamship
Company, by any means whatever, to carry dynamite, powder or
other explosive substance.
Third. That a writ of prohibition be issued perpetually enjoining the
respondent Ignacio Villamor as Attorney-General of the Philippine
Islands, and W.H. Bishop as prosecuting attorney of the city of
Manila, their deputies representatives or employees, from accusing
the said Yangco Steamship Company, its officers, agents or servants,
of the violation of Act No. 98 by reason of the failure or omission of
the said company to accept for carriage out to carry dynamite
powder or other explosive.
Fourth. That the petitioner be granted such other remedy as may be
meet and proper.
To this complaint the respondents demurred, and we are of opinion
that the demurrer must be sustained, on the ground that the
complaint does not set forth facts sufficient to constitute a cause of
action.
It will readily be seen that plaintiff seeks in these proceedings to
enjoin the steamship company from accepting for carriage on any of
its vessels, dynamite, powder or other explosives, under any
conditions whatsoever; to prohibit the Collector of Customs and the
prosecuting officers of the government from all attempts to compel
the company to accept such explosives for carriage on any of its
vessels under any conditions whatsoever; and to prohibit these
officials from any attempt to invoke the penal provisions of Act No.
98, in any case of a refusal by the company or its officers so to do;
and this without regard to the conditions as to safety and so forth
under which such explosives are offered for carriage, and without
37

regard also to any question as to the suitableness for the
transportation of such explosives of the particular vessel upon
which the shipper offers them for carriage; and further without
regard to any question as to whether such conduct on the part of
the steamship company and its officers involves in any instance an
undue, unnecessary or unreasonable discrimination to the prejudice
of any person, locality or particular kind of traffic.
There are no allegations in the complaint that for some special and
sufficient reasons all or indeed any of the company's vessels are
unsuitable for the business of transporting explosives; or that
shippers have declined or will in future decline to comply with such
reasonable regulations and to take such reasonable precautions as
may be necessary and proper to secure the safety of the vessels of
the company in transporting such explosives. Indeed the contention
of petitioner is that a common carrier in the Philippine Islands may
decline to accept for carriage any shipment of merchandise of a
class which it expressly or impliedly declines to accept from all
shippers alike, because as he contends "the duty of a common
carrier to carry for all who offer arises from the public profession he
has made, and limited by it."
In support of this contention counsel cites for a number of English
and American authorities, discussing and applying the doctrine of
the common law with reference to common carriers. But it is
unnecessary now to decide whether, in the absence of statute, the
principles on which the American and English cases were decided
would be applicable in this jurisdiction. The duties and liabilities of
common carriers in this jurisdiction are defined and fully set forth in
Act No. 98 of the Philippine Commission, and until and unless that
statute be declared invalid or unconstitutional, we are bound by its
provisions.
Sections 2, 3 and 4 of the Act are as follows:
SEC. 2. It shall be unlawful for any common carrier engaged in the
transportation of passengers or property as above set forth to make
or give any unnecessary or unreasonable preference or advantage
to any particular person, company, firm, corporation or locality, or
any particular kind of traffic in any respect whatsoever, or to subject
any particular person, company, firm, corporation or locality, or any
particular kind of traffic, to undue or unreasonable prejudice or
discrimination whatsoever, and such unjust preference or
discrimination is also hereby prohibited and declared to be
unlawful.
SEC. 3. No common carrier engaged in the carriage of passengers or
property as aforesaid shall, under any pretense whatsoever, fail or
refuse to receive for carriage, and as promptly as it is able to do so
without discrimination, to carry any person or property offering for
carriage, and in the order in which such persons or property are
offered for carriage, nor shall any such common carrier enter into
any arrangement, contract or agreement with any other person or
corporation whereby the latter is given an exclusive or preferential
or monopolize the carriage any class or kind of property to the
exclusion or partial exclusion of any other person or persons, and
the entering into any such arrangement, contract or agreement,
under any form or pretense whatsoever, is hereby prohibited and
declared to be unlawful.
38

SEC. 4. Any willful violation of the provisions of this Act by any
common carrier engaged in the transportation of passengers or
property as hereinbefore set forth is hereby declared to be
punishable by a fine not exceeding five thousand dollars money of
the United States, or by imprisonment not exceeding two years, or
both, within the discretion of the court.
The validity of this Act has been questioned on various grounds, and
it is vigorously contended that in so far as it imposes any obligation
on a common carrier to accept for carriage merchandise of a class
which he makes no public profession to carry, or which he has
expressly or impliedly announced his intention to decline to accept
for carriage from all shippers alike, it is ultra vires, unconstitutional
and void.
We may dismiss without extended discussion any argument or
contention as to the invalidity of the statute based on alleged
absurdities inherent in its provisions or on alleged unreasonable or
impossible requirements which may be read into it by a strained
construction of its terms.
We agree with counsel for petitioner that the provision of the Act
which prescribes that, "No common carrier ... shall, under any
pretense whatsoever, fail or refuse to receive for carriage ... to carry
any person or property offering for carriage," is not to be construed
in its literal sense and without regard to the context, so as to
impose an imperative duty on all common carriers to accept for
carriage, and to carry all and any kind of freight which may be
offered for carriage without regard to the facilities which they may
have at their disposal. The legislator could not have intended and
did not intend to prescribe that a common carrier running
passenger automobiles for hire must transport coal in his machines;
nor that the owner of a tank steamer, expressly constructed in small
watertight compartments for the carriage of crude oil must accept
common carrier must accept and carry contraband articles, such as
opium, morphine, cocaine, or the like, the mere possession of which
is declared to be a criminal offense; nor that common carriers must
accept eggs offered for transportation in paper parcels or any
merchandise whatever do defectively packed as to entail upon the
company unreasonable and unnecessary care or risks.
Read in connection with its context this, as well as all the other
mandatory and prohibitory provisions of the statute, was clearly
intended merely to forbid failures or refusals to receive persons or
property for carriage involving any "unnecessary or unreasonable
preference or advantage to any particular person, company, firm,
corporation, or locality, or any particular kind of traffic in any
respect whatsoever," or which would "subject any particular
person, company, firm, corporation or locality, or any particular
kind of traffic to any undue or unreasonable prejudice or
discrimination whatsoever."
The question, then, of construing and applying the statute, in cases
of alleged violations of its provisions, always involves a
consideration as to whether the acts complained of had the effect
of making or giving an "unreasonable or unnecessary preference or
advantage" to any person, locality or particular kind of traffic, or of
subjecting any person, locality, or particular kind of traffic to any
undue or unreasonable prejudice or discrimination. It is very clear
therefore that the language of the statute itself refutes any
contention as to its invalidity based on the alleged
unreasonableness of its mandatory or prohibitory provisions.
39

So also we may dismiss without much discussion the contentions as
to the invalidity of the statute, which are based on the alleged
excessive severity of the penalties prescribed for violation of its
provisions. Upon general principles it is peculiarly and exclusively
within the province of the legislator to prescribe the pains and
penalties which may be imposed upon persons convicted of
violations of the laws in force within his territorial jurisdiction. With
the exercise of his discretion in this regard where it is alleged that
excessive fines or cruel and unusual punishments have been
prescribed, and even in such cases the courts will not presume to
interfere in the absence of the clearest and most convincing
argument and proof in support of such contentions.
(Weems vs. United States, 217 U.S., 349; U.S. vs. Pico, 18 Phil. Rep.,
386.) We need hardly add that there is no ground upon which to
rest a contention that the penalties prescribed in the statute under
consideration are either excessive or cruel and unusual, in the sense
in which these terms are used in the organic legislation in force in
the Philippine Islands.
But it is contended that on account of the penalties prescribed the
statute should be held invalid upon the principles announced in Ex
parte Young (209 U.S., 123, 147, 148); Cotting vs. Goddard (183 U.S.,
79, 102); Mercantile Trust Co. vs. Texas Co. (51 Fed., 529); Louisville
Ry. vs. McCord (103 Fed., 216); Cons. Gas Co. vs.Mayer (416 Fed.,
150). We are satisfied however that the reasoning of those cases is
not applicable to the statute under consideration. The principles
announced in those decisions are fairly indicated in the following
citations found in petitioner's brief:
But when the legislature, in an effort to prevent any inquiry of the
validity of a particular statute, so burdens any challenge thereof in
the courts that the party affected is necessarily constrained to
submit rather than take the chances of the penalties imposed, then
it becomes a serious question whether the party is not deprived of
the equal protection of the laws. (Cotting vs. Goddard, 183 U. S., 79,
102.)
It may therefore be said that when the penalties for disobedience
are by fines so enormous and imprisonment so severe as to
intimidate the company and its officers from resorting to the courts
to test the validity of the legislation, the result is the same as if the
law in terms prohibited the company from seeking judicial
construction of laws which deeply affect its rights.
It is urged that there is no principle upon which to base the claim
that a person is entitled to disobey a statute at least once, for the
purpose of testing its validity, without subjecting himself to the
penalties for disobedience provided by the statute in case it is valid.
This is not an accurate statement of the case. Ordinarily a law
creating offenses in the nature of misdemeanors or felonies relates
to a subject over which the jurisdiction of the legislature is complete
in any event. In the case, however, of the establishment of certain
rates without any hearing, the validity of such rates necessarily
depends upon whether they are high enough to permit at least
some return upon the investment (how much it is not now
necessary to state), and an inquiry as to that fact is a proper subject
of judicial investigation. If it turns out that the rates are too low for
that purpose, then they are illegal. Now, to impose upon a party
interested the burden of obtaining a judicial decision of such a
question (no prior hearing having been given) only upon the
condition that, if unsuccessful, he must suffer imprisonment and
pay fines, as provided in these acts, is, in effect, to close up all
40

approaches to the courts, and thus prevent any hearing upon the
question whether the rates as provided by the acts are not too low,
and therefore invalid. The distinction is obvious between a case
where the validity of the act depends upon the existence of a fact
which can be determined only after investigation of a very
complicated and technical character, and the ordinary case of a
statute upon a subject requiring no such investigation, and over
which the jurisdiction of the legislature is complete in any event.
We hold, therefore, that the provisions of the acts relating to the
enforcement of the rates, either for freight or passengers, by
imposing such enormous fines and possible imprisonment as a
result of an unsuccessful effort to test the validity of the laws
themselves, are unconstitutional on their face, without regard to
the question of the insufficiency of those rates. (Ex parte Young, 209
U.S., 123 147, 148.)
An examination of the general provisions of our statute, of the
circumstances under which it was enacted, the mischief which it
sought to remedy and of the nature of the penalties prescribed for
violations of its terms convinces us that, unlike the statutes under
consideration in the above cited cases, its enactment involved no
attempt to prevent common carriers "from resorting to the courts
to test the validity of the legislation;" no "effort to prevent any
inquiry" as to its validity. It imposes no arbitrary obligation upon the
company to do or to refrain from doing anything. It makes no
attempt to compel such carriers to do business at a fixed or
arbitrarily designated rate, at the risk of separate criminal
prosecutions for every demand of a higher or a different rate. Its
penalties can be imposed only upon proof of "unreasonable,"
"unnecessary" and "unjust" discriminations, and range from a
maximum which is certainly not excessive for willful, deliberate and
contumacious violations of its provisions by a great and powerful
corporation, to a minimum which may be a merely nominal fine.
With so wide a range of discretion for a contention on the part of
any common carrier that it or its officers are "intimidated from
resorting to the courts to test the validity" of the provisions of the
statute prohibiting such "unreasonable," "unnecessary" and
"unjust" discriminations, or to test in any particular case whether a
given course of conduct does in fact involve such discrimination. We
will presume, for the purpose of declaring the statute invalid, that
there is so real a danger that the Courts of First Instance and this
court on appeal will abuse the discretion thus conferred upon us, as
to intimidate any common carrier, acting in good faith, from
resorting to the courts to test the validity of the statute. Legislative
enactments, penalizing unreasonable discriminations, unreasonable
restraints of trade, and unreasonable conduct in various forms of
human activity are so familiar and have been so frequently
sustained in the courts, as to render extended discussion
unnecessary to refute any contention as to the invalidity of the
statute under consideration, merely it imposes upon the carrier the
obligation of adopting one of various courses of conduct open to it,
at the risk of incurring a prescribed penalty in the event that the
course of conduct actually adopted by it should be held to have
involved an unreasonable, unnecessary or unjust discrimination.
Applying the test announced in Ex parte Young, supra, it will be seen
that the validity of the Act does not depend upon "the existence of
a fact which can be determined only after investigation of a very
complicated and technical character," and that "the jurisdiction of
the legislature" over the subject with which the statute deals "is
complete in any event." There can be no real question as to the
41

plenary power of the legislature to prohibit and to penalize the
making of undue, unreasonable and unjust discriminations by
common carriers to the prejudice of any person, locality or
particular kind of traffic. (See Munn vs. Illinois, 94 U.S., 113, and
other cases hereinafter cited in support of this proposition.)
Counsel for petitioner contends also that the statute, if construed
so as to deny the right of the steamship company to elect at will
whether or not it will engage in a particular business, such as that of
carrying explosives, is unconstitutional "because it is a confiscation
of property, a taking of the carrier's property without due process of
law," and because it deprives him of his liberty by compelling him to
engage in business against his will. The argument continues as
follows:
To require of a carrier, as a condition to his continuing in said
business, that he must carry anything and every thing is to render
useless the facilities he may have for the carriage of certain lines of
freight. It would be almost as complete a confiscation of such
facilities as if the same were destroyed. Their value as a means of
livelihood would be utterly taken away. The law is a prohibition to
him to continue in business; the alternative is to get out or to go
into some other business the same alternative as was offered in
the case of the Chicago & N.W. Ry. vs. Dey (35 Fed. Rep., 866, 880),
and which was there commented on as follows:
"Whatever of force there may be in such arguments, as applied to
mere personal property capable of removal and use elsewhere, or
in other business, it is wholly without force as against railroad
corporations, so large a proportion of whose investment is in the
soil and fixtures appertaining thereto, which cannot be removed.
For a government, whether that government be a single sovereign
or one of the majority, to say to an individual who has invested his
means in so laudable an enterprise as the construction of a railroad,
one which tends so much to the wealth and prosperity of the
community, that, if he finds that the rates imposed will cause him to
do business at a loss, he may quit business, and abandon that road,
is the very irony of despotism. Apples of Sodom were fruit of joy in
comparison. Reading, as I do, in the preamble of the Federal
Constitution, that it was ordained to "establish justice," I can never
believe that it is within the property of an individual invested in and
used for a purpose in which even the Argus eyes of the police power
can see nothing injurious to public morals, public health, or the
general welfare. I read also in the first section of the bill of rights of
this state that "all men are by nature free and equal, and have
certain inalienable rights, among which are those of enjoying and
defending life and liberty, acquiring, possessing, and protecting
property, and pursuing and obtaining safety and happiness;" and I
know that, while that remains as the supreme law of the state, no
legislature can directly or indirectly lay its withering or destroying
hand on a single dollar invested in the legitimate business of
transportation." (Chicago & N.W. Ry. vs. Dey, 35 Fed. Rep., 866,
880.)
It is manifest, however, that this contention is directed against a
construction of the statute, which, as we have said, is not warranted
by its terms. As we have already indicated, the statute does not
"require of a carrier, as a condition to his continuing in said
business, that he must carry anything and everything," and thereby
"render useless the facilities he may have for the carriage of certain
lines of freight." It merely forbids failures or refusals to receive
42

persons or property for carriage which have the effect of giving an
"unreasonable or unnecessary preference or advantage" to any
person, locality or particular kind of traffic, or of subjecting any
person, locality or particular kind of traffic to any undue or
unreasonable prejudice or discrimination.
Counsel expressly admits that the statute, "as a prohibition against
discrimination is a fair, reasonable and valid exercise of
government," and that "it is necessary and proper that such
discrimination be prohibited and prevented," but he contends that
"on the other hand there is no reasonable warrant nor valid excuse
for depriving a person of his liberty by requiring him to engage in
business against his will. If he has a rolling boat, unsuitable and
unprofitable for passenger trade, he may devote it to lumber
carrying. To prohibit him from using it unless it is fitted out with
doctors and stewards and staterooms to carry passengers would be
an invalid confiscation of this property. A carrier may limit his
business to the branches thereof that suit his convenience. If his
wagon be old, or the route dangerous, he may avoid liability for loss
of passengers' lives and limbs by carrying freight only. If his vehicles
require expensive pneumatic tires, unsuitable for freight
transportation, ha may nevertheless carry passengers. The only
limitation upon his action that it is competent for the governing
authority to impose is to require him to treat all alike. His limitations
must apply to all, and they must be established limitations. He
cannot refuse to carry a case of red jusi on the ground that he has
carried for others only jusi that he was green, or blue, or black. But
he can refuse to carry red jusi, if he has publicly professed such a
limitation upon his business and held himself out as unwilling to
carry the same for anyone."
To this it is sufficient answer to say that there is nothing in the
statute which would deprive any person of his liberty "by requiring
him to engage in business against his will." The prohibitions of the
statute against undue, unnecessary or unreasonable regulations
which the legislator has seen fit to prescribe for the conduct of the
business in which the carrier is engaged of his own free will and
accord. In so far as the self-imposed limitations by the carrier upon
the business conducted by him, in the various examples given by
counsel, do not involve an unreasonable or unnecessary
discrimination the statute would not control his action in any wise
whatever. It operates only in cases involving such unreasonable or
unnecessary preferences or discriminations. Thus in the
hypothetical case suggested by the petitioner, a carrier engaged in
the carriage of green, blue or black jusi, and duly equipped therefor
would manifestly be guilty of "giving an unnecessary and
unreasonable preference to a particular kind of traffic" and of
subjecting to "an undue and reasonable prejudice a particular kind
of traffic," should he decline to carry red jusi, to the prejudice of a
particular shipper or of those engaged in the manufacture of that
kind of jusi, basing his refusal on the ground of "mere whim or
caprice" or of mere personal convenience. So a public carrier of
passengers would not be permitted under this statute to absolve
himself from liability for a refusal to carry a Chinaman, a Spaniard,
an American, a Filipino, or a mestizo by proof that from "mere whim
or caprice or personal scruple," or to suit his own convenience, or in
the hope of increasing his business and thus making larger profits,
he had publicly announced his intention not to carry one or other of
these classes of passengers.
43

The nature of the business of a common carrier as a public
employment is such that it is clearly within the power of the state to
impose such just and reasonable regulations thereon in the interest
of the public as the legislator may deem proper. Of course such
regulations must not have the effect of depriving an owner of his
property without due process of law, nor of confiscating or
appropriating private property without just compensation, nor of
limiting or prescribing irrevocably vested rights or privileges lawfully
acquired under a charter or franchise. But aside from such
constitutional limitations, the determination of the nature and
extent of the regulations which should be prescribed rests in the
hands of the legislator.
Common carriers exercise a sort of public office, and have duties to
perform in which the public is interested. Their business is,
therefore, affected with a public interest, and is subject of public
regulation. (New Jersey Steam Nav. Co. vs. Merchants Bank, 6 How.,
344, 382; Munn vs. Illinois, 94 U.S., 113, 130.) Indeed, this right of
regulation is so far beyond question that it is well settled that the
power of the state to exercise legislative control over railroad
companies and other carriers "in all respects necessary to protect
the public against danger, injustice and oppression" may be
exercised through boards of commissioners. (New York etc. R.
Co. vs. Bristol, 151 U.S., 556, 571; Connecticut etc. R.
Co. vs. Woodruff, 153 U.S., 689.)
Regulations limiting of passengers the number of passengers that
may be carried in a particular vehicle or steam vessel, or forbidding
the loading of a vessel beyond a certain point, or prescribing the
number and qualifications of the personnel in the employ of a
common carrier, or forbidding unjust discrimination as to rates, all
tend to limit and restrict his liberty and to control to some degree
the free exercise of his discretion in the conduct of his business. But
since the Granger cases were decided by the Supreme Court of the
United States no one questions the power of the legislator to
prescribe such reasonable regulations upon property clothed with a
public interest as he may deem expedient or necessary to protect
the public against danger, injustice or oppression. (Munn vs.Illinois,
94 U.S., 113, 130; Chicago etc. R. Co. vs. Cutts, 94 U.S., 155;
Budd vs. New York, 143 U.S., 517; Cottingvs. Goddard, 183 U.S., 79.)
The right to enter the public employment as a common carrier and
to offer one's services to the public for hire does not carry with it
the right to conduct that business as one pleases, without regard to
the interest of the public and free from such reasonable and just
regulations as may be prescribed for the protection of the public
from the reckless or careless indifference of the carrier as to the
public welfare and for the prevention of unjust and unreasonable
discrimination of any kind whatsoever in the performance of the
carrier's duties as a servant of the public.
Business of certain kinds, including the business of a common
carrier, holds such a peculiar relation to the public interest that
there is superinduced upon it the right of public regulation.
(Budd vs. New York, 143 U.S., 517, 533.) When private property is
"affected with a public interest it ceases to be juris privati only."
Property becomes clothed with a public interest when used in a
manner to make it of public consequence and affect the community
at large. "When, therefore, one devotes his property to a use in
which the public has an interest, he, in effect, grants to the public
an interest in that use, and must submit to be controlled by the
public for the common good, to the extent of the interest he has
44

thus created. He may withdraw his grant by discontinuing the use,
but so long as he maintains the use he must submit to control."
(Munn vs. Illinois, 94 U.S., 113; Georgia R. & Bkg. Co. vs. Smith, 128
U.S., 174; Budd vs. New York, 143 U.S., 517; Louisville etc. Ry.
Co. vs. Kentucky, 161 U.S., 677, 695.)
Of course this power to regulate is not a power to destroy, and
limitation is not the equivalent of confiscation. Under pretense of
regulating fares and freight the state can not require a railroad
corporation to carry persons or property without reward. Nor can it
do that which in law amounts to a taking of private property for
public use without just compensation, or without due process of
law. (Chicago etc. R. Co. vs. Minnesota, 134 U.S., 418; Minneapolis
Eastern R. Co. vs. Minnesota, 134 U.S., 467.) But the judiciary ought
not to interfere with regulations established and palpably
unreasonable as to make their enforcement equivalent to the taking
of property for public use without such compensation as under all
the circumstances is just both to the owner and to the public, that
is, judicial interference should never occur unless the case presents,
clearly and beyond all doubt, such a flagrant attack upon the rights
of property under the guise of regulations as to compel the court to
say that the regulation in question will have the effect to deny just
compensation for private property taken for the public use.
(Chicago etc. R. Co. vs. Wellman, 143 U.S., 339; Smyth vs. Ames, 169
U.S., 466, 524; Henderson Bridge Co. vs.Henderson City, 173 U.S.,
592, 614.)
Under the common law of England it was early recognized that
common carriers owe to the public the duty of carrying indifferently
for all who may employ them, and in the order in which application
is made, and without discrimination as to terms. True, they were
allowed to restrict their business so as to exclude particular classes
of goods, but as to the kinds of property which the carrier was in
the habit of carrying in the prosecution of his business he was
bound to serve all customers alike (State vs. Cincinnati etc. R. Co.,
47 Ohio St., 130, 134, 138; Louisville etc. Ry. Co. vs. Quezon City
Coal Co., 13 Ky. L. Rep., 832); and it is to be observed in passing that
these common law rules are themselves regulations controlling,
limiting and prescribing the conditions under which common
carriers were permitted to conduct their business. (Munn vs. Illinois,
94 U. S., 113, 133.)
It was found, in the course of time, that the correction of abuses
which had grown up with the enormously increasing business of
common carriers necessitated the adoption of statutory regulations
controlling the business of common carriers, and imposing severe
and drastic penalties for violations of their terms. In England, the
Railway Clauses Consolidation Act was enacted in 1845, the Railway
and Canal Traffic Act in 1854, and since the passage of those Acts
much additional legislation has been adopted tending to limit and
control the conduct of their business by common carriers. In the
United States, the business of common carriers has been subjected
to a great variety of statutory regulations. Among others Congress
enacted "The Interstate Commerce Act" (1887) and its
amendments, and the Elkins Act as amended (1906); and most if not
all of the States of the Union have adopted similar legislation
regulating the business of common carriers within their respective
jurisdictions. Unending litigation has arisen under these statutes
and their amendments, but nowhere has the right of the state to
prescribe just and reasonable regulations controlling and limiting
the conduct of the business of common carriers in the public
45

interest and for the general welfare been successfully challenged,
though of course there has been wide divergence of opinion as to
the reasonableness, the validity and legality of many of the
regulations actually adopted.
The power of the Philippine legislator to prohibit and to penalize all
and any unnecessary or unreasonable discriminations by common
carriers may be maintained upon the same reasoning which justified
the enactment by the Parliament of England and the Congress of
the United States of the above mentioned statutes prohibiting and
penalizing the granting of certain preferences and discriminations in
those countries. As we have said before, we find nothing
confiscatory or unreasonable in the conditions imposed in the
Philippine statute upon the business of common carriers. Correctly
construed they do not force him to engage in any business his will
or to make use of his facilities in a manner or for a purpose for
which they are not reasonably adapted. It is only when he offers his
facilities as a common carrier to the public for hire, that the statute
steps in and prescribes that he must treat all alike, that he may not
pick and choose which customer he will serve, and, specifically, that
he shall not make any undue or unreasonable preferences or
discriminations whatsoever to the prejudice not only of any person
or locality but also of any particular kind of traffic.
The legislator having enacted a regulation prohibiting common
carriers from giving unnecessary or unreasonable preferences or
advantages to any particular kind of traffic or subjecting any
particular kind of traffic to any undue or unreasonable prejudice or
discrimination whatsoever, it is clear that whatever may have been
the rule at the common law, common carriers in this jurisdiction
cannot lawfully decline to accept a particular class of goods for
carriage, to the prejudice of the traffic in those goods, unless it
appears that for some sufficient reason the discrimination against
the traffic in such goods is reasonable and necessary. Mere whim or
prejudice will not suffice. The grounds for the discrimination must
be substantial ones, such as will justify the courts in holding the
discrimination to have been reasonable and necessary under all
circumstances of the case.
The prayer of the petition in the case at bar cannot be granted
unless we hold that the refusal of the defendant steamship
company to accept for carriage on any of its vessels "dynamite,
gunpowder or other explosives" would in no instance involve a
violation of the provisions of this statute. There can be little doubt,
however, that cases may and will arise wherein the refusal of a
vessel "engaged in the coastwise trade of the Philippine Islands as a
common carrier" to accept such explosives for carriage would
subject some person, company, firm or corporation, or locality, or
particular kind of traffic to a certain prejudice or discrimination.
Indeed it cannot be doubted that the refusal of a "steamship
company, the owner of a large number of vessels" engaged in that
trade to receive for carriage any such explosives on any of its vessels
would subject the traffic in such explosives to a manifest prejudice
and discrimination. The only question to be determined therefore is
whether such prejudice or discrimination might in any case prove to
be undue, unnecessary or unreasonable.
This of course is, in each case, a question of fact, and we are of the
opinion that the facts alleged in the complaint are not sufficient to
sustain a finding in favor of the contentions of the petitioner. It is
not alleged in the complaint that "dynamite, gunpowder and other
explosives" can in no event be transported with reasonable safety
46

on board steam vessels engaged in the business of common
carriers. It is not alleged that all, or indeed any of the defendant
steamship company's vessels are unsuited for the carriage of such
explosives. It is not alleged that the nature of the business in which
the steamship company is engaged is such as to preclude a finding
that a refusal to accept such explosives on any of its vessels would
subject the traffic in such explosives to an undue and unreasonable
prejudice and discrimination.
Plaintiff's contention in this regard is as follows:
In the present case, the respondent company has expressly and
publicly renounced the carriage of explosives, and expressly
excluded the same terms from the business it conducts. This in itself
were sufficient, even though such exclusion of explosives were
based on no other ground than the mere whim, caprice or personal
scruple of the carrier. It is unnecessary, however, to indulge in
academic discussion of a moot question, for the decision not a carry
explosives rests on substantial grounds which are self-evident.
We think however that the answer to the question whether such a
refusal to carry explosives involves an unnecessary or unreasonable
preference or advantage to any person, locality or particular kind of
traffic or subjects any person, locality or particular to traffic to an
undue or unreasonable prejudice and discrimination is by no means
"self-evident," and that it is a question of fact to be determined by
the particular circumstances of each case.
The words "dynamite, powder or other explosives" are broad
enough to include matches, and other articles of like nature, and
may fairly be held to include also kerosene oil, gasoline and similar
products of a highly inflammable and explosive character. Many of
these articles of merchandise are in the nature of necessities in any
country open to modern progress and advancement. We are not
fully advised as to the methods of transportation by which they are
made commercially available throughout the world, but certain it is
that dynamite, gunpowder, matches, kerosene oil and gasoline are
transported on many vessels sailing the high seas. Indeed it is a
matter of common knowledge that common carriers throughout
the world transport enormous quantities of these explosives, on
both land and sea, and there can be little doubt that a general
refusal of the common carriers in any country to accept such
explosives for carriage would involve many persons, firms and
enterprises in utter ruin, and would disastrously affect the interests
of the public and the general welfare of the community.
It would be going to far to say that a refusal by a steam vessel
engaged in the business of transporting general merchandise as a
common carrier to accept for carriage a shipment of matches, solely
on the ground of the dangers incident to the explosive quality of
this class of merchandise, would not subject the traffic in matches
to an unnecessary, undue or unreasonable prejudice and
discrimination without proof that for some special reason the
particular vessel is not fitted to carry articles of that nature. There
may be and doubtless are some vessels engaged in business as
common carriers of merchandise, which for lack of suitable deck
space or storage rooms might be justified in declining to carry
kerosene oil, gasoline, and similar products, even when offered for
carriage securely packed in cases; and few vessels are equipped to
transport those products in bulk. But in any case of a refusal to carry
such products which would subject any person, locality or the traffic
47

in such products would be necessary to hear evidence before
making an affirmative finding that such prejudice or discrimination
was or was not unnecessary, undue or unreasonable. The making of
such a finding would involve a consideration of the suitability of the
vessel for the transportation of such products ; the reasonable
possibility of danger or disaster resulting from their transportation
in the form and under the conditions in which they are offered for
carriage; the general nature of the business done by the carrier and,
in a word, all the attendant circumstances which might affect the
question of the reasonable necessity for the refusal by the carrier to
undertake the transportation of this class of merchandise.
But it is contended that whatever the rule may be as to other
explosives, the exceptional power and violence of dynamite and
gunpowder in explosion will always furnish the owner of a vessel
with a reasonable excuse for his failure or refusal to accept them for
carriage or to carry them on board his boat. We think however that
even as to dynamite and gunpowder we would not be justified in
making such a holding unaided by evidence sustaining the
proposition that these articles can never be carried with reasonable
safety on any vessel engaged in the business of a common carrier. It
is said that dynamite is so erratic an uncontrollable in its action that
it is impossible to assert that it can be handled with safety in any
given case. On the other hand it is contended that while this may be
true of some kinds of dynamite, it is a fact that dynamite can be and
is manufactured so as to eliminate any real danger from explosion
during transportation. These are of course questions of fact upon
which we are not qualified to pass judgment without the assistance
of expert witnesses who have made special studies as to the
chemical composition and reactions of the different kinds of
dynamite, or attained a thorough knowledge of its properties as a
result of wide experience in its manufacture and transportation.
As we construe the Philippine statute, the mere fact that violent
and destructive explosions can be obtained by the use of dynamite
under certain conditions would not be sufficient in itself to justify
the refusal of a vessel, duly licensed as a common carrier of
merchandise, to accept it for carriage, if it can be proven that in the
condition in which it is offered for carriage there is no real danger to
the carrier, nor reasonable ground to fear that his vessel or those on
board his vessel will be exposed to unnecessary and unreasonable
risk in transporting it, having in mind the nature of his business as a
common carrier engaged in the coastwise trade in the Philippine
Islands, and his duty as a servant of the public engaged in a public
employment. So also, if by the exercise of due diligence and the
taking of unreasonable precautions the danger of explosions can be
practically eliminated, the carrier would not be justified in
subjecting the traffic in this commodity to prejudice or
discrimination by proof that there would be a possibility of danger
from explosion when no such precautions are taken.
The traffic in dynamite, gunpowder and other explosives is vitally
essential to the material and general welfare of the people of these
Islands. If dynamite, gunpowder and other explosives are to
continue in general use throughout the Philippines, they must be
transported by water from port to port in the various islands which
make up the Archipelago. We are satisfied therefore that the refusal
by a particular vessel, engaged as a common carrier of merchandise
in the coastwise trade of the Philippine Islands, to accept any or all
of these explosives for carriage would constitute a violation of the
prohibitions against discriminations penalized under the statute,
48

unless it can be shown by affirmative evidence that there is so real
and substantial a danger of disaster necessarily involved in the
carriage of any or all of these articles of merchandise as to render
such refusal a due or a necessary or a reasonable exercise of
prudence and discretion on the part of the shipowner.
The complaint in the case at bar lacking the necessary allegations
under this ruling, the demurrer must be sustained on the ground
that the facts alleged do not constitute a cause of action.
A number of interesting questions of procedure are raised and
discussed in the briefs of counsel. As to all of these questions we
expressly reserve our opinion, believing as we do that in sustaining
the demurrer on the grounds indicated in this opinion we are able
to dispose of the real issue involved in the proceedings without
entering upon the discussion of the nice questions which it might
have been necessary to pass upon had it appeared that the facts
alleged in the complaint constitute a cause of action.
We think, however, that we should not finally dispose of the case
without indicating that since the institution of these proceedings
the enactment of Acts No. 2307 and No. 2362 (creating a Board of
Public Utility Commissioners and for other purposes) may have
materially modified the right to institute and maintain such
proceedings in this jurisdiction. But the demurrer having been
formallly submitted for judgment before the enactment of these
statutes, counsel have not been heard in this connection. We
therefore refrain from any comment upon any questions which
might be raised as to whether or not there may be another
adequate and appropriate remedy for the alleged wrong set forth in
the complaint. Our disposition of the question raised by the
demurrer renders that unnecessary at this time, though it may not
be improper to observe that a careful examination of those acts
confirms us in the holding upon which we base our ruling on this
demurrer, that is to say "That whatever may have been the rule at
the common law, common carriers in this jurisdiction cannot
lawfully decline to accept a particular class of goods for carriage, to
the prejudice of the traffic in those goods, unless it appears that for
some sufficient reason the discrimination against the traffic in such
goods is reasonable and necessary. Mere prejudice or whim will not
suffice. The grounds of the discrimination must be substantial ones,
such as will justify the courts in holding the discrimination to have
been reasonable and necessary under all the circumstances of the
case."
Unless an amended complaint be filed in the meantime, let
judgment be entered ten days hereafter sustaining the demurrer
and dismissing the complaint with costs against the complainant,
and twenty days thereafter let the record be filed in the archives of
original actions in this court. So ordered.
Arellano, C.J., and Trent, J., concur.
Torres and Johnson, JJ., concur in the result.


Separate Opinions
MORELAND, J., concurring.
I may briefly say, although the nature of the action is stated at
length in the foregoing opinion, that it is an action by a shareholder
49

of the Yangco Steamship Co. against the company itself and certain
officials of the Insular Government for an injunction against the
company prohibiting it from carrying dynamite on its ships and
preventing the defendant officials from compelling the company to
do so under Act No. 98.
A demurrer was filed to the complaint raising the question not only
of its sufficiency in general, but putting in issue also the right of the
plaintiff to maintain the action under the allegations of his
complaint.
It should be noted that all of the boats of the defendant company,
under the allegations of the complaint, are boatswhich carry
passengers as well as freight, and that the holding of the opinion
which I am discussing compelspassenger ships to carry dynamite
and all other high explosives when offered for shipment. (See
paragraph 3 of the complaint.)
I base my opinion for a dismissal of the complaint on the ground
that the plaintiff has not alleged in his complaint a single one of the
grounds, apart from that of being a stockholder, necessary for him
to allege to maintain a shareholder's action.
In the case of Hawes vs. Oakland (104 U.S., 450) it was said relative
to the right of a stockholder to bring an action which should
regularly be bought by the company of which he is a stockholder:
We understand that doctrine to be that, to enable a stockholder in a
corporation to sustain in a court of equity in his own name, a suit
founded on a right of action existing in the corporation itself, and in
which the corporation itself is the appropriate plaintiff, there must
exist as the foundation of the suit:
Some action or threatened action of the managing board of
directors or trustees of the corporation, which is beyond the
authority conferred on them by their character or other source of
organization;
Or such a fraudulent transaction, completed or contemplated by the
acting managers, in connection with some other party, or among
themselves, or with other shareholders as will in serious injury to
the corporation, or to the interest of the other shareholders;
Or where the board of directors, or a majority of them, are acting
for their own interest, in a manner destructive of the corporation
itself, or of the rights of the other shareholders;
Or where the majority of shareholders themselves are oppressively
and illegally pursuing a course in the name of the corporation,
which is in violation of the rights of the other shareholders, and
which can only be restrained by the aid of a court of equity.
It was also said: "In this country the cases outside of the Federal
Courts are not numerous, and while they admit the right of a
stockholder to sue in cases where the corporation is the proper
party to bring the suit, they limit this right to cases where the
directors are guilty of a fraud or a breach of trust, or are proceeding
ultra vires."
Further on in the same case we find: "Conceding appellant's
construction of the company's charter to be correct, there is
nothing which forbids the corporation from dealing with the city in
the manner it has done. That city conferred on the company
valuable rights by special ordinance; namely, the use of the streets
50

for the laying of its pipes, and the privilege of furnishing water to
the whole population.
It may be the exercise of the highest wisdom, to let the city use the
water in the manner complained of. The directors are better able to
act understandingly on this subject than a stockholder residing in
New York. The great body of the stockholders residing in Oakland or
other places in California may take this view of it, and be content to
abide by the action of their directors."
This case is conclusive of the right of the plaintiff in the case at bar
to maintain the action. The complaint is devoid of allegations
necessary to sustain a complaint by a shareholder.
The contention of the plaintiff based upon the case of Ex
parte Young (209 U.S. 123) is not sustained by that case. The
decision there requires precisely the same allegations in the
complaint as does the case of Hawes vs.Oakland. Not one of those
allegations appears in the complaint in the case at bar except the
allegation that the plaintiff is a stockholder.
Indeed, not only does the complaint lack allegations essential to its
sufficiency, but it contains allegations which affirmatively show the
plaintiff is not entitled to maintain the action. I do not stop to
enumerate them all. I call attention to one only, namely the
allegation that the company, by its authorized officials, has acted in
strict conformity with the plaintiff's wishes and has refused to
accept dynamite for carriage. This allegation shows that the plaintiff
has been able to obtain his remedy and accomplish his purpose
within the corporation itself, and it is sufficient, therefore, under
the case of Hawes vs. Oakland and that of Ex parte Young, to
require that the demurrer be sustained.
I am opposed to a decision of this case on the merits.
In the first place, there has been no adequate discussion of the
merits by the parties. Substantially all of the brief of the
government was devoted to what may be called the technical
defects of the complaint, such as I have referred to above. Indeed, it
is doubtful if any portion of the brief can be said to be directly a
discussion of the merits.
In the second place, there is no real pending in this court. It is clear
from the complaint that the case is a collusive one (not in any
improper sense) between the plaintiff and the defendant company.
There is no reason found in the complaint why the company should
not have brought the action itself, every member of the board of
directors and every stockholder, according to the allegations of the
complaint, being in absolute accord with the contentions of the
plaintiff on the proposition that the company should not carry
dynamite, and having passed unanimously resolutions to that effect.
Moreover, there has been no violation of Act No. 98. No shipper, or
any other person, has offered dynamite to the defendant company
for shipment, and, accordingly, the defendant company has not
refused t o accept dynamite for carriage. Nor have the defendant
government officials begun proceedings, or threatened to bring
proceedings, against the defendant company in any given case.
According to the allegations of the complaint, the parties are straw
parties and the case a straw case.
51

In the third place, Act No. 98, under which this proceeding is
brought and under which, it is alleged, the defendant public officers
are threatening to enforce, has been repealed, in so far as it affects
public service corporations, by Act No. 2307, as amended by Act No.
2362. More than that; not only has the law been repealed, but
proceedings of this character have been placed, in the first instance,
under the exclusive jurisdiction of the Board of Public Utilities. I am
unable to see why this court should, under the facts of this case,
undertake to render a decision on the merits when the Act under
which it is brought has been repealed and the jurisdiction to render
a decision on the subject matter involved has been turned over to
another body. As I have said before, it was unnecessary to a
decision of this case to touch the merits in any way; and I am
opposed to an attempt to lay down a doctrine on a subject which is
within the exclusive jurisdiction of another body created by law
expressly for the purpose of removing such cases as this from the
jurisdiction of the courts.
I am of the opinion that the complaint should be dismissed, but
upon grounds apart from the merits. If the merits of the case were
alone to govern, I should be distinctly in favor of the plaintiff's
contention so far as it relates to the carriage of dynamite on ships
carrying passengers; and, while I am opposed to a decision on the
merits of this case, nevertheless, the merits having been brought
into the case by the opinion of some of my brethren, I desire to
refer briefly to the jurisprudence of the subject.
So far as my researches go, the proposition that passenger boats
must carry dynamite and other high explosives is without support in
the decisions of any English speaking country. I have been unable to
find a case anywhere which lays down such a doctrine. Indeed, I
have been unable to find a case which holds
that freight boats mustcarry dynamite or other high explosives.
Every case that I have been able to find states a contrary doctrine;
and neither in courts nor in text books is there even a hint
supporting the contention of my brethren. The opinion cites no
authorities to support it; and I am constrained to believe that, in any
opinion so elaborately written, cases to support its thesis would
have been cited if any such existed.
On page 372, Vol. 6 of Cyc., will be found the following: "Common
carriers owe to the public the duty of carrying indifferently for all
who may employ them, and in the order in which the application is
made, and without discrimination as to terms. They may, however,
restrict their business so as to exclude particular classes of goods,
and they are not bound to receive dangerous articles, such as nitro-
glycerine, dynamite, gunpowder, oil of vitriol, matches, etc."
In the case of California Powder Works vs. Atlantic and Pacific R. R.
Co. (113 Cal., 329), it was said: "Nor are the exemptions contained
in the contract of the shipping order void for lack of consideration.
The defendant was not obliged to received and transport the
powder at all. A common carrier is not bound to receive ...
dangerous articles, as nitro-glycerine, dynamite, gunpowder, aqua
fortis, oil of vitriol, matches, etc."
This, so far as I can learn, is the universal doctrine. The California
case is reproduced in 36 L.R.A., 648 and has appended to it a note. It
is well known that the L.R.A. cites in its notes all of the cases
reasonably obtainable relative to the subject matter of the case
which it annotates. The note in L.R.A. with reference to the
California case cites a considerable number of authorities holding
52

that a carrier of goods is not obliged to receive dynamite or other
dangerous explosives for carriage. It does not cite or refer to a case
which holds the contrary.
The reporter of the L.R.A, at the beginning of the note with
reference to the California case, says: "The law upon this question is
to be drawn from inference or from dicta rather than from decided
cases. California Powder Worksvs. Atlantic & Pacific R. R. Co. seems
to be the first case to have squarely decided that the carrier is not
bound to transport dangerous articles, although there has been
what may be regarded as a general understanding that such is the
fact."
In Hutchinson on Carriers (sec. 145), it is said, relative to the
necessity of a carrier receiving for carriage dynamite or other
dangerous explosives: "He may, for instance, lawfully refuse to
receive them (the goods) if they are improperly packed or if they
are otherwise in an unfit condition for carriage. Or he may show
that the goods offered were of a dangerous character, which might
subject him or his vehicle, or strangers or his passengers, or his
other freight, to the risk of injury."
In a note to the text the author says: "Nor is he bound to accept
such articles as nitro-glycerine, dynamite, gunpowder, oil of vitriol
and the like."
In Elliot on Railroads (vol. 4, p. 151), appears the following: "Again,
goods may properly be refused which are tendered in an unfit
condition for transportation, or which are dangerous, or which are
reasonably believed to be dangerous."
In the case of Boston & Albany Railroad Co. vs. Shanly (107 Mass.,
568), the court said at page 576: "Both the dualin and the exploders
are thus alleged to be explosive and dangerous articles. Each of
them was sent without giving notice of its character to the plaintiffs,
and they were ignorant in respect to it. The rule of law on this
subject is in conformity with the dictates of common sense and
justice, and is well established. One who has in his possession a
dangerous article, which he desires to send to another, am send it
by a common carrier if he will take it; but it is his duty to give him
notice of its character, so that he may either refuse to take it, or be
enabled, if he takes it, to make suitable provision against the
danger."
This case cites three English cases as follows, Williams vs. East India
Co. (3 East, 192); Brass vs. Maitland (6 El. & Bl. 470;
Farrant vs. Barnes (11 C.B. [N.S.], 553).
In the case of Porcher vs. Northeastern R. Co. (14 Rich. L., 181), the
court quoted with approval the following from Story on Bailments:
"If he (the carrier) refuses to take charge of the goods because his
coach is full or because they are of a nature which will at the time
expose them to extraordinary danger or to popular rage, or because
he has no convenient means of carrying such goods with security,
etc., these will furnish reasonable grounds for his refusal, and will, if
true, be a sufficient legal defense to a suit for the non-carriage of
the goods."
In the case of Fish vs. Chapman (2 Ga., 349), the court said: "A
common carrier is bound to convey the goods of any person
offering to pay his hire, unless his carriage be already full, or the risk
sought to be imposed upon him extraordinary, or unless the goods
53

be of a sort which he cannot convey or is not in the habit of
conveying."
In the case of Farrant vs. Barnes, above cited, the court said that the
shipper "knowing the dangerous character of the article and
omitting to give notice of it to the carrier so that he might exercise
his discretion as to whether he would take it or not was guilty of a
clear breach of duty."
To the same effect, generally, are Jackson vs. Rodgers (2 Show.,
327); Riley vs. Horne (5 Bing., 217); Lane vs.Cotton (1 Ld. Raym.,
646); Edwards vs. Sheratt (1 East, 604); Elsee vs. Gatward (5 T. R.,
143); Dwight vs.Brewster (1 Pick., 50); Jencks vs. Coleman (2 Summ.,
221); Story on Bail., 322, 323; Patton vs. Magrath (31 Am. Dec.,
552).
In Story on Bailments (sec. 508), is found the following: "If a carrier
refuses to take charge of goods because his coach is full; or because
the goods are of a nature which will at the time expose them to
extraordinary danger; ... these will furnish reasonable grounds for
his refusal; and will, if true, be a sufficient legal defense to a suit for
the non-carriage of the goods."
It will be noted that all of these cases holding that a common carrier
is not obliged to receive a dangerous substance, such as dynamite
and other high explosives, refer exclusively to carriers of
merchandise and not to carriers of passengers. If the authorities are
uniform in holding that companies carrying freight are not obliged
to accept dangerous explosives for carriage, there can be no
question as to what the rule would be with reference to a carrier of
passengers.
Far from requiring passenger boats to accept dynamite and other
high explosives for carriage, the attitude of the people of the United
States and of various States is shown by their statutes. The laws of
the United States and of many of the States prohibit passengers
boats and passenger trains from carrying dangerous explosives.
Sections 232, 233, 234, 2345 and 236 of the Criminal Code of the
United States (Compiled Stat., 1901), read:
SEC. 232. It shall be unlawful to transport, carry, or convey, any
dynamite, gunpowder, or other explosive, between a place in a
foreign country and a place within or subject to the jurisdiction of
the United States, or between a place in any State, Territory, or
District of the United States, or place non-contiguous to but subject
to the jurisdiction thereof, and a place in any other State, Territory,
or District of the United States, or place non-contiguous to but
subject to the jurisdiction thereof, on any vessel or vehicle of any
description operated by a common carrier, which vessel or vehicle is
carrying passengers for hire: . . ..
SEC. 233. The Interstate Commerce Commission shall formulate
regulations for the safe transportation of explosives, which shall be
binding all common carriers engaged in interstate or foreign
commerce which transport explosives by land. Said commission, of
its own motion, or upon application made by any interested party,
may make changes or modifications in such regulations, made
desirable by new information or altered conditions. Such
regulations shall be in accord with the best known practicable
means for securing in transit, covering the packing, marking,
loading, handling while in transit, and the precautions necessary to
determine whether the material when offered is in proper condition
to transport.
54

Such regulations, as well as all changes or modifications thereof,
shall take effect after ninety days after their formulation and
publication commission and shall be in effect until reversed, set
aside, or modified.
SEC. 234. It shall be unlawful to transport, carry, or convey, liquid
nitroglycerin, fulminate in bulk "in dry condition, or other like
explosive, between a place in a foreign country and a place within
or subject to the jurisdiction of the United States, or between a
place in one State, Territory, or District of the United States, or
place non-contiguous to but subject to the jurisdiction thereof, and
a place in any other State, Territory, or District of the United States,
or place non-contiguous to but subject to the jurisdiction thereof,
on any vessel or vehicle of any description operated by a common
carrier in the transportation of passengers or articles of commerce
by land or water.
SEC. 235. Every package containing explosives or other dangerous
articles when presented to a common carrier for shipment shall
have plainly marked on the outside thereof the contents thereof;
and it shall be unlawful for any person to deliver, or cause to be
delivered, to any common carrier engaged in interstate or foreign
commerce by land or water, for interstate or foreign transportation,
or to carry upon any vessel or vehicle engaged in interstate or
foreign transportation, any explosive, or other dangerous article,
under any false or deceptive marking, description, invoice, shipping
order, or other declaration, or without informing the agent of such
carrier of the true character thereof, at or before the time such
delivery or carriage is made. Whoever shall knowingly violate, or
cause to be violated any provision of this section, or of the three
sections last preceding, or any regulation made by the Interstate
Commerce Commission in pursuance thereof, shall be fined not
more than two thousand dollars, or imprisoned not more than
eighteen months, or both.
SEC. 236. When the death or bodily injury of any person is caused
by the explosion of any article named in the four sections last
preceding, while the same is being placed upon any vessel or vehicle
to be transported in violation thereof, or while the same is being so
transported, or while the same is being removed from such vessel
or vehicle, the person knowingly placing, or aiding or permitting the
placing of such articles upon any such vessel or vehicle, to be so
transported, shall be imprisoned not more than ten years.
Human ingenuity has been continuously exercised for ages to make
sea travel safe, that men might sail the seas with as little risk as
possible; that they might rely upon the quality of the ship and the
character and experiences of the sailors who manned her; that they
might feel that the dangers of the deep had been reduced to the
minimum. Not only this; the abilities of legislators have been taxed
to the same end; to frame that would ensure seaworthy ships, safe
appliances, and reliable officers and crews; to curb the avarice of
those who would subordinate the safety of passengers to a desire
for freight; and to so regulate travel by sea that all might safely
confide their property and their lives to the ships sailing under the
flag of their country. Can a decision which requires passenger ships
to carry dynamite and all high explosives be made to harmonize
with this purpose? What is there in the Philippine Islands to justify
the requirement that passenger ships carry dynamite, while in the
United States the carrying of dynamite by passenger ships is a
crime? Why should passengers in the Philippine Islands be
subjected to conditions which are abhorent in the United States?
55

Why compel shipowners in the Philippine Islands to perform acts
which, if done in the United States, would send them to the
penitentiary?
I do not believe that we should require passengers to travel on ships
carrying, perhaps, many tons of nitro-glycerine, dynamite or
gunpowder in their holds; nor do I believe that any public official
should do anything calculated to add to the calamity of fire,
collision, or shipwreck the horrors of explosion.


ARAULLO, J., dissenting:
I do not agree with the decision of the majority of this court in this
case, first, because one of the grounds of the demurrer to the
complaint the first one is that of lack of legal capacity to sue
on the part of the plaintiff and nothing is said in the decision
regarding this very important point. It is one which ought to have
received special attention, even before the other alleged in the
demurrer that the complaint does not state facts sufficient to
constitute a cause of action, and the only one that received any
consideration in the decision in question. Second, because
notwithstanding that in the decision no consideration was paid to
the alleged lack of legal capacity on the part of the plaintiff, he is,
reason of the demurrer being sustained, authorized to present an
amended complaint within ten days, an authorization which could
not and should not have on the part of said plaintiff was not lacking.
DECISION OF MARCH 31, 1915.
CARSON, J.:
This case is again before us upon a demurrer interposed by the
respondent officials of the Philippine Government to an amended
complaint filed after publication of our decision sustaining the
demurrer to the original complaint.
In our former opinion, entered November 5, 1914, we sustained the
demurrer on the ground that the original complaint did not set forth
facts sufficient to constitute a cause of action. In that decision we
held that the statute (Act No. 98) the validity of which was attacked
by counsel por plaintiff was, when rightly construed, a valid and
constitutional enactment, and ruled:
That whatever may have been the rule at the common law,
common carriers in this jurisdiction cannot lawfully decline to
accept a particular class in those goods, unless it appears that for
some sufficient reason the discrimination against the traffic in such
goods is reasonable and necessary. Mere prejudice or whim will not
suffice. The grounds of the discrimination must be substantial ones,
such as will justify the courts in holding the discrimination to have
been reasonable and necessary under all the circumstances of the
case.
x x x x x x x x x
The traffic in dynamite, gunpowder and other explosives is vitally
essential to the material and general welfare of the people of these
Islands. If dynamite, gunpowder and other explosives are to
continue in general use throughout the Philippines, they must be
transported by water from port to port in the various islands which
make up the Archipelago. We are satisfied therefore that the refusal
56

by a particular vessel, engaged as a common carrier of merchandise
in the coastwise trade of the Philippine Islands, to accept any or all
of these explosives for carriage would constitute a violation of the
prohibitions against discriminations penalized under the statue,
unless it can be shown by affirmative evidence that there is so real
and substantial a danger of disaster necessarily involved in the
carriage of any or all of these articles of merchandise as to render
such refusal a due or a necessary or a reasonable exercise of
prudence and discretion on the part of the ship owner.
Resting our judgment on these rulings we held that the allegations
of the complaint, which in substance alleged merely that the
respondent officials were coercing the respondent steamship
company to carry explosives upon some of their vessels, under
authority of, and in reliance upon the provisions of the Act, did not
set forth facts constituting a cause of action; or in other words, that
the allegations of the complaint even if true, would sustain a finding
that the respondent officials were acting "without or in excess of
their jurisdiction" and lawful authority in the premises.
The amended complaint filed on November 14, 1914, is
substantially identical with the original complaint, except that it
charges the respondent officials, as of the date of the amended
complaint, with the unlawful exercise of the authority or intent to
exercise unlawful authority which should be restrained, and
substitutes the names of the officers now holding the offices of
Collector of Customs, Attorney-General and prosecuting attorney
for those of the officials holding those offices at the date of the
filing of the original complaint; and except further that it adds the
following allegations:
That each and every one of the vessels of the defendant company is
dedicated and devoted to the carriage of passengers between
various ports in the Philippine Islands, and each of said vessels, on
all of said voyages between the said ports, usually and ordinarily
does carry a large number of such passengers.
That dynamite, powder, and other explosives are dangerous
commodities that cannot be handled and transported in the manner
and from in which ordinary commodities are handled and
transported. That no degree of care, preparation and special
arrangement in the handling and transportation of dynamite,
powder and other explosives will wholly eliminate the risk and
danger of grave peril and loss therefrom, and that the highest
possible degree of care, preparation of said commodities is only
capable of reducing the degree of said danger and peril. That each
and every one of the vessels of the defendant company is wholly
without special means for the handling, carriage, or transportation
of dynamite, powder and other explosives and such special means
therefor which would appreciably and materially reduce the danger
and peril therefrom cannot be installed in said vessels without a
costs and expense unto said company that is unreasonable and
prohibitive.
As we read them, the allegations of the original complaint were
intended to raise and did in fact raise, upon demurrer, a single
question which, if ruled upon favorably to the contention of
plaintiff, would, doubtless, have put an end to this litigation and to
the dispute between the plaintiff stockholder of the steamship
company and the officials of the Philippine Government out of
which it has arisen.
57

In their brief, counsel for plaintiff, in discussing their right to
maintain an action for a writ of prohibition, relied upon the
authority of Ex parte Young (209 U. S. [123] 163, 165), and asserted
that:
Upon the authority, therefore, of Ex parte Young, supra, the merits
of the question pending between petitioner and respondents in this
action is duly presented to this court by the complaint of petitioner
and general demurrer of respondents thereto. That question, in
plain terms, is as follows:
Is the respondent Yangco Steamship Company legally required to
accept for carriage and carry "any person or property offering for
carriage?"
"The petitioner contends that the respondent company is a
common carrier of only such articles of freight as they profess to
carry and hold themselves out as carrying;" and in discussing the
legal capacity of plaintiff to maintain this action, counsel in their
printed brief asserted that "here we have no address to the court to
determine whether a minority or a majority shall prevail in the
corporate affairs; here we ask plainly and unmistakably who shall fix
the limits of the corporate business the shareholders and
directors of the corporation, or certain officials of the government
armed with an unconstitutional statute?
Counsel for plaintiff contended that under the guaranties of the
Philippine Bill of Rights a common carrier in the Philippine Islands
may arbitrarily decline to accept for carriage any shipment or
merchandise of a class which it expressly or impliedly declines to
accept from all shippers alike; that "the duty of a common carrier to
carry for all who offer arises from the public profession he has
made, and is limited by it;" that under this doctrine the respondent
steamship company might lawfully decline to accept for carriage
"dynamite, powder or other explosives," without regard to any
question as to the conditions under which such explosives are
offered for carriage, or as to the suitableness of its vessels for the
transportation of such explosives, or as to the possibility that the
refusal to accept such articles of commerce in a particular case
might have the effect of subjecting any person, locality or the traffic
in such explosives to an undue, unreasonable or unnecessary
prejudice or discrimination: and in line with these contentions
counsel boldly asserted that Act No. 98 of the Philippine
Commission is invalid and unconstitutional in so far as it announces
a contrary doctrine or lays down a different rule. The pleader who
drew up the original complaint appears to have studiously avoided
the inclusion in that complaint of any allegation which might raise
any other question. In doing so he was strictly within his rights, and
having in mind the object sought to be attained, the original
complaint is a model of skillful pleading, well calculated to secure
the end in view, that is to say, a judgment on the precise legal issue
which the pleader desired to raise as to the construction and
validity of the statute, which would put an end to the controversy, if
that issue were decided in his favor.
Had the contentions of plaintiff as to the unconstitutionality of the
statute been well founded, a writ of prohibition from this court
would have furnished an effective and appropriate remedy for the
alleged wrong. The issue presented by the pleadings on the original
complaint, involving a question as to the validity of a statute and
affecting, as it did, the shipping and public interests of the whole
58

Islands, and submitting be complicated question or series of
questions of fact, was of such a nature that this court could not
properly deny the right of the plaintiff to invoke its jurisdiction in
original proceedings. We deemed it our duty therefore to resolve
the real issue raised by the demurrer, and since we are of opinion
that the contentions of counsel for plaintiff were not well founded,
and since a ruling to that effect necessarily resulted in an order
sustaining the demurrer, we did not deem it necessary or profitable
to consider questions of practice or procedure which it might have
been necessary to decide under a contrary ruling as to the principal
question raised by the pleadings; nor did we stop to consider
whether the "subject matter involved" in the controversy might
properly be submitted to the Board of Public Utility Commissioners,
because upon the authority of Ex parte Young (supra) we are
satisfied as to the jurisdiction and competency of this court to deal
with the real issues raised by the pleadings on the original
complaint, and because, furthermore, the Act of the Philippine
Legislature creating the Board of Public Utility Commissioners could
not deprive this court of jurisdiction already invoked in prohibition
proceedings instituted for the purpose of restraining the
respondent official as of the Government from the alleged unlawful
exercise of authority under color of an invalid and without
jurisdiction in the premises.
The amended complaint, however, presents for adjudication in
original prohibition proceedings in this court questions of a wholly
different character from those submitted in the original complaint.
In so far as it reiterates the allegation s of the former complaint to
the effect that the respondent officials are unlawfully coercing the
steamship company by virtue and under color of the provisions of
an invalid or unconstitutional statute, it is manifest, of course, that
the amended complaint is no less subject to criticism than was the
original complaint. If, therefore, the action can be maintained upon
its allegations that those officials are coercing the company to carry
explosives on vessels which, as a matter of fact, are not suitably
equipped for that purpose, and which from the nature of the
business in which they are engaged should not be required to carry
explosives.
It will readily be seen, under our former opinion, that these
allegations raise no question as to the validity or constitutionality of
any statute; that the real question which plaintiff seeks to submit to
this court in original prohibition proceedings is whether the
respondent officials of the Government are correctly exercising the
discretion and authority with which they have been clothed; and
that his contention in the amended complaint is not, as it was in the
original complaint, that these officials are acting without authority
and in reliance upon an invalid and unconstitutional statute, but
rather that they are exercising their authority improvidently,
unwisely or mistakenly.
Under the provisions of sections 226 and 516 of the Code of Civil
Procedure jurisdiction in prohibition proceedings is conferred upon
the courts when the complaint alleges "the proceedings of any
inferior tribunal, corporation, board, or person, whether exercising
functions judicial or ministerial, were without or in excess of the
jurisdiction of such tribunal, corporation, board or person." It is
manifest therefore that the allegations of the amended complaint,
even if true, will not sustain the issuance of a writ of prohibition
without further amendment unless they be construed to in effect a
charge that the respondent officials are abusing the discretion
59

conferred upon them in the exercise of their authority in such
manner that the acts complained of should be held to be without or
in excess of their jurisdiction.
It may well be doubted whether the doctrine of the case Ex
parte Young (supra), relied upon by the plaintiff in his argument be
invoked in support of a right of action predicated upon such
premises; so also, since the acts complained of in the amended
complaint are alleged to have been done at a date subsequent to
the enactment of the statutes creating the Board of Public Utility
Commissioners, it may well be doubted whether the courts should
entertain prohibition proceedings seeking to restrain alleged abuses
of discretion on the part of officers and officials of the Government,
and of public service corporations with regard to the rules under
which such corporations are operated, until and unless redress for
the alleged wrong has been sought at the hands of the Board.
We do not deem it expedient or necessary, however, to consider or
decide any of these questions at this time, because we are of
opinion that we should not permit our original jurisdiction to be set
in motion upon the allegations of the amended complaint.
It is true that this court is clothed with original jurisdiction in
prohibition proceedings (sec. 516, Act No. 190). But this jurisdiction
is concurrent with the original jurisdiction of the various Courts of
First Instance throughout the Islands, except in cases where the writ
runs to restrain those courts themselves, when of course it is
exclusive; and we are satisfied that it could have been the intention
of the legislator to require this court to assume original jurisdiction
in all cases wherein the plaintiff elects to invoke it. Such a practice
might result in overwhelming this court with the duty of
entertaining and deciding original proceedings which from their
nature could much better be adjudicated in the trial courts; and in
unnecessarily diverting the time and attention of the court from its
important appellate functions to the settlement of controversies of
no especial interest to the public at large, in the course of which it
might become necessary to take testimony and to make findings
touching complicated and hotly contested issues of fact.
We are of opinion and so hold that unless special reasons appear
therefor, this court should decline to permit its original jurisdiction
to be invoked in prohibition proceedings, and this especially when
the adjudication of the issues raised involves the taking of evidence
and the making of findings touching controverted facts, which, as a
rule, can be done so much better in the first instance by a trial court
than an appellate court organized as is ours.
Spelling on Injunctions and Other Extraordinary Remedies (vol. 2, p.
1493), in discussing the cases in which the appellate courts in the
United States permit their original jurisdiction to be invoked where
that jurisdiction is concurrent with that of some inferior court, says:
Of the plan of concurrent jurisdiction West Virginia may be taken as
an illustration. The Supreme Court of Appeals of that State has
concurrent original jurisdiction with the circuit courts in cases of
prohibition, but by a rule adopted by the former court it will not
take such original jurisdiction unless reasons appear therefor.
We deemed it proper to assume jurisdiction to adjudicate and
decide the issues raised by the rulings on the original complaint,
involving as they did a question as to the validity of a public statute
of vital interest to shippers and shipowners generally as also to the
60

public at large, presenting for determination no difficult or
complicated questions of fact: but we are satisfied that we should
decline to take jurisdiction of the matters relied upon in the
amended complaint in support of plaintiff's prayer for the writ.
The question of the construction and validity of the statute having
been disposed of in our ruling on the demurrer to the original
complaint, it must be apparent that of the allegations of the
amended complaint are sufficient to maintain the plaintiff's action
for a writ of prohibition, a question as to which we expressly reserve
our opinion, the action should be brought in one of the Courts of
First Instance.
Twenty days hereafter let the complaint de dismissed at the costs of
the plaintiff, unless in the meantime it is amended so as to disclose
a right upon the part of the plaintiff to invoke the original
jurisdiction of this court without first proceeding in one of the
Courts of First Instance. So ordered.
Arellano, C.J., Torres, and Trent, JJ., concur.

G.R. No. L-8095 March 31, 1915
Carson, J.
FACTS:
F.C. Fisher v. Yangco Steamship Co.

Fisher is a stockholder in the Yangco Steamship Company. The
directors of the companyadopted a resolution which was thereafter
ratified and affirmed by the shareholders of thecompany, expressly
declaring and providing that the classes of merchandise to be
carriedby the company in its business as a common carrier do not
include dynamite, powder
orother explosives, and expressly prohibiting the officers, agents an
d servants of thecompany from offering to carry, accepting for
carriage said dynamite, powder or otherexplosives.

Then Acting Collector of Customs demanded and required of the
company the
acceptanceand carriage of such explosives. He has refused and susp
ended the issuance of thenecessary clearance documents of the ves
sels of the company unless and until thecompany consents to accep
t such explosives for carriage. Fisher was advised thatshould the co
mpany decline to accept such explosives for carriage, the responden
tAttorney-General of the Philippine Islands and the respondent
prosecuting attorney of thecity of Manila intend to institute
proceedings under the penal provisions of sections 4, 5,and 6 of Act
No. 98 of the Philippine Commission against the company, its
managers,agents and servants.

Notwithstanding the demands of Fisher, the manager, agents
and servants of the companydecline and refuse the carriage of such
explosives.
ISSUE:
61

WON the acts complained of had the effect of making or giving an
unreasonable orunnecessary preference or advantage to any
person, locality or particular kind of traffic, orof subjecting any
person, locality, or particular kind of traffic to any undue or
unreasonableprejudice or discrimination
HELD:
No.

There may be some vessels engaged in business as common
carriers of merchandise,which for lack of suitable deck space or
storage rooms might be justified in declining tocarry kerosene oil,
gasoline, and similar products, even when offered for carriage
securelypacked in cases; and few vessels are equipped to transport
those products in bulk. But inany case of a refusal to carry such
products which would subject any person, locality or thetraffic in
such products would be necessary to hear evidence before making
an
affirmativefinding that such prejudice or discrimination was or was
not unnecessary, undue orunreasonable. The making of such a
finding would involve a consideration of the suitabilityof the vessel
for the transportation of such products; the reasonable possibility of
dangeror disaster resulting from their transportation in the form
and under the conditions inwhich they are offered for carriage; the
general nature of the business done by the carrierand, in a word, all
the attendant circumstances which might affect the question of
thereasonable necessity for the refusal by the carrier to undertake
the transportation of thisclass of merchandise


PhilippineLaw.info Jurisprudence 1940 June
PhilippineLaw.info Jurisprudence Phil. Rep. Vol. 70
G.R. No. 47065, Pangasinan Transportation Co. Inc. v. Public Service
Commission, 70 Phil. 221
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
June 26, 1940
G.R. No. 47065
PANGASINAN TRANSPORTATION CO., INC., petitioner,
vs.
THE PUBLIC SERVICE COMMISSION, respondent.
C. de G. Alvear for petitioner.
Evaristo R. Sandoval for respondent.
LAUREL, J.:
The petitioner has been engaged for the past twenty years in the
business of transporting passengers in the Province of Pangasinan
and Tarlac and, to a certain extent, in the Province of Nueva Ecija
and Zambales, by means of motor vehicles commonly known as TPU
buses, in accordance with the terms and conditions of the
62

certificates of public convenience issued in its favor by the former
Public Utility Commission in cases Nos. 24948, 30973, 36830, 32014
and 53090. On August 26, 1939, the petitioner filed with the Public
Service Commission an application for authorization to operate ten
additional new Brockway trucks (case No. 56641), on the ground
that they were needed to comply with the terms and conditions of
its existing certificates and as a result of the application of the Eight
Hour Labor Law. In the decision of September 26, 1939, granting the
petitioner's application for increase of equipment, the Public Service
Commission ordered:
Y de acuerdo con que se provee por el articulo 15 de la ley No. 146
del Commonwealth, tal como ha sido enmendada por el articulo 1
de la Ley No. 454, por la presente se enmienda las condiciones de
los certificados de convenciencia publica expedidos en los
expedientes Nos. 24948, 30973, 36831, 32014 y la authorizacion el
el expediente No. 53090, asi que se consideran incorporadas en los
mismos las dos siguientes condiciones:
Que los certificados de conveniencia publica y authorizacion arriba
mencionados seran validos y subsistentes solamente durante de
veinticinco (25) anos, contados desde la fecha de la promulgacion
de esta decision.
Que la empresa de la solicitante porda ser adquirida por el
Commonwealth de Filipinas o por alguna dependencia del mismo en
cualquier tiempo que lo deseare previo pago del precio d costo de
su equipo util, menos una depreciacion razonable que se ha fijar por
la Comision al tiempo de su adquisicion.
Not being agreeable to the two new conditions thus incorporated in
its existing certificates, the petitioner filed on October 9, 1939 a
motion for reconsideration which was denied by the Public Service
Commission on November 14, 1939. Whereupon, on November 20,
1939, the present petition for a writ of certiorari was instituted in
this court praying that an order be issued directing the secretary of
the Public Service Commission to certify forthwith to this court the
records of all proceedings in case No. 56641; that this court, after
hearing, render a decision declaring section 1 of Commonwealth Act
No. 454 unconstitutional and void; that, if this court should be of
the opinion that section 1 of Commonwealth Act No. 454 is
constitutional, a decision be rendered declaring that the provisions
thereof are not applicable to valid and subsisting certificates issued
prior to June 8, 1939. Stated in the language of the petitioner, it is
contended:
1. That the legislative powers granted to the Public Service
Commission by section 1 of Commonwealth Act No. 454, without
limitation, guide or rule except the unfettered discretion and
judgment of the Commission, constitute a complete and total
abdication by the Legislature of its functions in the premises, and
for that reason, the Act, in so far as those powers are concerned, is
unconstitutional and void.
2. That even if it be assumed that section 1 of Commonwealth Act
No. 454, is valid delegation of legislative powers, the Public Service
Commission has exceeded its authority because: (a) The Act applies
only to future certificates and not to valid and subsisting certificates
issued prior to June 8, 1939, when said Act took effect, and (b) the
Act, as applied by the Commission, violates constitutional
guarantees.
63

Section 15 of Commonwealth Act No. 146, as amended by section 1
of Commonwealth Act No. 454, invoked by the respondent Public
Service Commission in the decision complained of in the present
proceedings, reads as follows:
With the exception to those enumerated in the preceding section,
no public service shall operate in the Philippines without possessing
a valid and subsisting certificate from the Public Service
Commission, known as "certificate of public convenience," or
"certificate of convenience and public necessity," as the case may
be, to the effect that the operation of said service and the
authorization to do business will promote the public interests in a
proper and suitable manner.
The Commission may prescribed as a condition for the issuance of
the certificate provided in the preceding paragraph that the service
can be acquired by the Commonwealth of the Philippines or by any
instrumentality thereof upon payment of the cost price of its useful
equipment, less reasonable depreciation; and likewise, that the
certificate shall valid only for a definite period of time; and that the
violation of any of these conditions shall produce the immediate
cancellation of the certificate without the necessity of any express
action on the part of the Commission.
In estimating the depreciation, the effect of the use of the
equipment, its actual condition, the age of the model, or other
circumstances affecting its value in the market shall be taken into
consideration.
The foregoing is likewise applicable to any extension or amendment
of certificates actually force and to those which may hereafter be
issued, to permits to modify itineraries and time schedules of public
services and to authorization to renew and increase equipment and
properties.
Under the first paragraph of the aforequoted section 15 of Act No.
146, as amended, no public service can operate without a certificate
of public convenience or certificate of convenience and public
necessity to the effect that the operation of said service and the
authorization to do business will "public interests in a proper and
suitable manner." Under the second paragraph, one of the
conditions which the Public Service Commission may prescribed the
issuance of the certificate provided for in the first paragraph is that
"the service can be acquired by the Commonwealth of the
Philippines or by any instrumental thereof upon payment of the
cost price of its useful equipment, less reasonable depreciation," a
condition which is virtually a restatement of the principle already
embodied in the Constitution, section 6 of Article XII, which
provides that "the State may, in the interest of national welfare and
defense, establish and operate industries and means of
transportation and communication, and, upon payment of just
compensation, transfer to public ownership utilities and other
private enterprises to be operated by the Government. "Another
condition which the Commission may prescribed, and which is
assailed by the petitioner, is that the certificate "shall be valid only
for a definite period of time." As there is a relation between the first
and second paragraphs of said section 15, the two provisions must
be read and interpreted together. That is to say, in issuing a
certificate, the Commission must necessarily be satisfied that the
operation of the service under said certificateduring a definite
period fixed therein "will promote the public interests in a proper
64

and suitable manner." Under section 16 (a) of Commonwealth Act.
No. 146 which is a complement of section 15, the Commission is
empowered to issue certificates of public convenience whenever it
"finds that the operation of the public service proposed and the
authorization to do business will promote the public interests in a
proper and suitable manner." Inasmuch as the period to be fixed by
the Commission under section 15 is inseparable from the certificate
itself, said period cannot be disregarded by the Commission in
determining the question whether the issuance of the certificate
will promote the public interests in a proper and suitable manner.
Conversely, in determining "a definite period of time," the
Commission will be guided by "public interests," the only limitation
to its power being that said period shall not exceed fifty years (sec.
16 (a), Commonwealth Act No. 146; Constitution, Art. XIII, sec. 8.)
We have already ruled that "public interest" furnishes a sufficient
standard. (People vs.Fernandez and Trinidad, G. R. No. 45655,
promulgated June 15, 1938; People vs.Rosenthal and Osmea, G. R.
Nos. 46076 and 46077, promulgated June 12, 1939, citing New York
Central Securities Corporation vs. U.S.A., 287 U.S. 12, 24, 25, 77
Law. ed. 138, 145, 146; Schenchter Poultry Corporation vs. I.S., 295,
540, 79 Law. ed. 1570, 1585;Ferrazzini vs. Gsell, 34 Phil., 697, 711-
712.)
Section 8 of Article XIII of the Constitution provides, among other
things, that no franchise, certificate, or any other form of
authorization for the operation of a public utility shall be "for a
longer period than fifty years," and when it was ordained, in section
15 of Commonwealth Act No. 146, as amended by Commonwealth
Act No. 454, that the Public Service Commission may prescribed as a
condition for the issuance of a certificate that it "shall be valid only
for a definite period of time" and, in section 16 (a) that "no such
certificates shall be issued for a period of more than fifty years," the
National Assembly meant to give effect to the aforesaid
constitutional mandate. More than this, it has thereby also declared
its will that the period to be fixed by the Public Service Commission
shall not be longer than fifty years. All that has been delegated to
the Commission, therefore, is the administrative function, involving
the use discretion, to carry out the will of the National Assembly
having in view, in addition, the promotion of "public interests in a
proper and suitable manner." The fact that the National Assembly
may itself exercise the function and authority thus conferred upon
the Public Service Commission does not make the provision in
question constitutionally objectionable.
The theory of the separation of powers is designed by its originators
to secure action and at the same time to forestall overaction which
necessarily results from undue concentration of powers, and
thereby obtain efficiency and prevent deposition. Thereby, the "rule
of law" was established which narrows the range of governmental
action and makes it subject to control by certain devices. As a
corollary, we find the rule prohibiting delegation of legislative
authority, and from the earliest time American legal authorities
have proceeded on the theory that legislative power must be
exercised by the legislature alone. It is frankness, however, to
confess that as one delves into the mass of judicial pronouncement,
he finds a great deal of confusion. One thing, however, is apparent
in the development of the principle of separation of powers and
that is that the maxim of delegatus non potest delegari or delegata
potestas non potest delegari, attributed to Bracton (De Legius et
Consuetedinious Angliae, edited by G. E. Woodbine, Yale University
65

Press, 1922, vol. 2, p. 167) but which is also recognized in principle
in the Roman Law (D. 17.18.3), has been made to adapt itself to the
complexities of modern governments, giving rise to the adoption,
within certain limits, of the principle of "subordinate legislation,"
not only in the United States and England but in practically all
modern governments. (People vs. Rosenthal and Osmea, G. R. Nos.
46076 and 46077, promulgated June 12, 1939.) Accordingly, with
the growing complexity of modern life, the multiplication of the
subjects of governmental regulation, and the increased difficulty of
administering the laws, there is a constantly growing tendency
toward the delegation of greater powers by the legislature, and
toward the approval of the practice by the court. (Dillon Catfish
Drainage Dist, v. Bank of Dillon, 141 S. E. 274, 275, 143 S. Ct. 178;
State vs. Knox County, 54 S. W. 2d. 973, 976, 165 Tenn. 319.) In
harmony with such growing tendency, this Court, since the decision
in the case of Compaia General de Tabacos de Filipinas vs. Board of
Public Utility Commissioner(34 Phil., 136), relied upon by the
petitioner, has, in instances, extended its seal of approval to the
"delegation of greater powers by the legislature." (Inchausti
Steamship Co. vs. Public Utility Commissioner, 44 Phil.,
363; Autobus Co. vs. De Jesus, 56 Phil., 446;People vs. Fernandez &
Trinidad, G. R. No. 45655, promulgated June 15,
1938; People vs.Rosenthal & Osmea, G. R. Nos. 46076, 46077,
promulgated June 12, 1939; and Robb and Hilscher vs. People, G. R.
No. 45866, promulgated June 12, 1939.)
Under the fourth paragraph of section 15 of Commonwealth Act No.
146, as amended by Commonwealth Act No. 454, the power of the
Public Service Commission to prescribed the conditions "that the
service can be acquired by the Commonwealth of the Philippines or
by any instrumentality thereof upon payment of the cost price of its
useful equipment, less reasonable," and "that the certificate shall
be valid only for a definite period of time" is expressly made
applicable "to any extension or amendment of certificates actually
in force" and "to authorizations to renew and increase equipment
and properties." We have examined the legislative proceedings on
the subject and have found that these conditions were purposely
made applicable to existing certificates of public convenience. The
history of Commonwealth Act No. 454 reveals that there was an
attempt to suppress, by way of amendment, the sentence "and
likewise, that the certificate shall be valid only for a definite period
of time," but the attempt failed:
x x x x x x x x x
Sr. CUENCO. Se?or Presidente, para otra enmienda. En la misma
pagina, lineas 23 y 24, pido que se supriman las palabras 'and
likewise, that the certificate shall be valid only for a definite period
time.' Esta disposicion del proyecto autoriza a la Comision de
Servicios Publicos a fijar un plazo de vigencia certificado de
conveniencia publica. Todo el mundo sabe que bo se puede
determinar cuando los intereses del servicio publico requiren la
explotacion de un servicio publico y ha de saber la Comision de
Servisios, si en un tiempo determinado, la explotacion de algunos
buses en cierta ruta ya no tiene de ser, sobre todo, si tiene en
cuenta; que la explotacion de los servicios publicos depende de
condiciones flutuantes, asi como del volumen como trafico y de
otras condiciones. Ademas, el servicio publico se concede por la
Comision de Servicios Publicos el interes publico asi lo exige. El
interes publico no tiene duracion fija, no es permanente; es un
66

proceso mas o menos indefinido en cuanto al tiempo. Se ha
acordado eso en el caucus de anoche.
EL PRESIDENTE PRO TEMPORE. ?Que dice el Comite?
Sr. ALANO. El Comite siente tener que rechazar esa enmienda, en
vista de que esto certificados de conveniencia publica es igual que la
franquicia: sepuede extender. Si los servicios presentados por la
compa?ia durante el tiempo de su certificado lo require, puede
pedir la extension y se le extendera; pero no creo conveniente el
que nosotros demos un certificado de conveniencia publica de una
manera que podria pasar de cincuenta anos, porque seria
anticonstitucional.
x x x x x x x x x
By a majority vote the proposed amendment was defeated. (Sesion
de 17 de mayo de 1939, Asamblea Nacional.)
The petitioner is mistaken in the suggestion that, simply because its
existing certificates had been granted before June 8, 1939, the date
when Commonwealth Act No. 454, amendatory of section 15
of Commonwealth Act No. 146, was approved, it must be deemed
to have the right of holding them in perpetuity. Section 74 of the
Philippine Bill provided that "no franchise, privilege, or concession
shall be granted to any corporation except under the conditions
that it shall be subject to amendment, alteration, or repeal by the
Congress of the United States." The Jones Law, incorporating a
similar mandate, provided, in section 28, that "no franchise or right
shall be granted to any individual, firm, or corporation except under
the conditions that it shall be subject to amendment, alteration, or
repeal by the Congress of the United States." Lastly, the
Constitution of the Philippines provided, in section 8 of Article XIII,
that "no franchise or right shall be granted to any individual, firm, or
corporation, except under the condition that it shall be subject to
amendment, alteration, or repeal by the National Assembly when
the public interest so requires." The National Assembly, by virtue of
the Constitution, logically succeeded to the Congress of the United
States in the power to amend, alter or repeal any franchise or right
granted prior to or after the approval of the Constitution; and when
Commonwealth Acts Nos. 146 and 454 were enacted, the National
Assembly, to the extent therein provided, has declared its will and
purpose to amend or alter existing certificates of public
convenience.
Upon the other hand, statutes enacted for the regulation of public
utilities, being a proper exercise by the state of its police power, are
applicable not only to those public utilities coming into existence
after its passage, but likewise to those already established and in
operation.
Nor is there any merit in petitioner's contention, that, because of
the establishment of petitioner's operations prior to May 1, 1917,
they are not subject to the regulations of the Commission. Statutes
for the regulation of public utilities are a proper exercise by the
state of its police power. As soon as the power is exercised, all
phases of operation of established utilities, become at once subject
to the police power thus called into operation. Procedures'
Transportation Co. v. Railroad Commission, 251 U. S. 228, 40 Sup.
Ct. 131, 64 Law. ed. 239, Law v. Railroad Commission, 184 Cal. 737,
195 Pac. 423, 14 A. L. R. 249. The statute is applicable not only to
those public utilities coming into existence after its passage, but
likewise to those already established and in operation. The 'Auto
67

Stage and Truck Transportation Act' (Stats. 1917, c. 213) is a statute
passed in pursuance of the police power. The only distinction
recognized in the statute between those established before and
those established after the passage of the act is in the method of
the creation of their operative rights. A certificate of public
convenience and necessity it required for any new operation, but no
such certificate is required of any transportation company for the
operation which was actually carried on in good faith on May 1,
1917, This distinction in the creation of their operative rights in no
way affects the power of the Commission to supervise and regulate
them. Obviously the power of the Commission to hear and dispose
of complaints is as effective against companies securing their
operative rights prior to May 1, 1917, as against those subsequently
securing such right under a certificate of public convenience and
necessity. (Motor Transit Co. et al. v. Railroad Commission of
California et al., 209 Pac. 586.)
Moreover, Commonwealth Acts Nos. 146 and 454 are not only the
organic acts of the Public Service Commission but are "a part of the
charter of every utility company operating or seeking to operate a
franchise" in the Philippines. (Streator Aqueduct Co. v. et al., 295
Fed. 385.) The business of a common carrier holds such a peculiar
relation to the public interest that there is superinduced upon it the
right of public regulation. When private property is "affected with a
public interest it ceased to be juris privationly." When, therefore,
one devotes his property to a use in which the public has an
interest, he, in effect, grants to the public an interest in that use,
and must submit to be controlled by the public for the common
good, to the extent of the interest he has thus created. He may
withdraw his grant by discounting the use, but so long as he
maintains the use he must submit to control. Indeed, this right of
regulation is so far beyond question that it is well settled that the
power of the state to exercise legislative control over public utilities
may be exercised through boards of commissioners.
(Fisher vs. Yangco Steamship Company, 31 Phil., 1, citing
Munn vs. Illinois, 94 U.S. 113; Georgia R. & Bkg. Co. vs. Smith, 128
U.S. 174; Budd vs. New York, 143 U.S. 517; New York etc. R.
Co. vs. Bristol 151 U.S. 556, 571; Connecticut etc. R.
Co. vs. Woodruff, 153 U.S. 689; Louisville etc. Ry Co. vs. Kentucky,
161 U.S. 677, 695.) This right of the state to regulate public utilities
is founded upon the police power, and statutes for the control and
regulation of utilities are a legitimate exercise thereof, for the
protection of the public as well as of the utilities themselves. Such
statutes are, therefore, not unconstitutional, either impairing the
obligation of contracts, taking property without due process, or
denying the equal protection of the laws, especially inasmuch as the
question whether or not private property shall be devoted to a
public and the consequent burdens assumed is ordinarily for the
owner to decide; and if he voluntarily places his property in public
service he cannot complain that it becomes subject to the
regulatory powers of the state. (51 C. J., sec. 21, pp. 9-10.) in the
light of authorities which hold that a certificate of public
convenience constitutes neither a franchise nor contract, confers no
property right, and is mere license or privilege. (Burgess vs. Mayor &
Alderman of Brockton, 235 Mass. 95, 100, 126 N. E. 456;
Roberto vs. Commisioners of Department of Public Utilities, 262
Mass. 583, 160 N. E. 321; Scheible vs. Hogan, 113 Ohio St. 83, 148 N.
E. 581; Martz vs. Curtis [J. L.] Cartage Co. [1937], 132 Ohio St. 271, 7
N. E. [d] 220; Manila Yellow Taxicab Co. vs. Sabellano, 59 Phil., 773.)
68

Whilst the challenged provisions of Commonwealth Act No. 454 are
valid and constitutional, we are, however, of the opinion that the
decision of the Public Service Commission should be reversed and
the case remanded thereto for further proceedings for the reason
now to be stated. The Public Service Commission has power, upon
proper notice and hearing, "to amend, modify or revoke at any time
any certificate issued under the provisions of this Act, whenever the
facts and circumstances on the strength of which said certificate
was issued have been misrepresented or materially changed."
(Section 16, par. [m], Commonwealth Act No. 146.) The petitioner's
application here was for an increase of its equipment to enable it to
comply with the conditions of its certificates of public convenience.
On the matter of limitation to twenty five (25) years of the life of its
certificates of public convenience, there had been neither notice
nor opportunity given the petitioner to be heard or present
evidence. The Commission appears to have taken advantage of the
petitioner to augment petitioner's equipment in imposing the
limitation of twenty-five (25) years which might as well be twenty or
fifteen or any number of years. This is, to say the least, irregular and
should not be sanctioned. There are cardinal primary rights which
must be respected even in proceedings of this character. The first of
these rights is the right to a hearing, which includes the right of the
party interested or affected to present his own case and submit
evidence in support thereof. In the language of Chief Justice
Hughes, in Morgan v. U.S., (304 U.S. 1, 58 S. Ct. 773, 999, 82 Law.
ed. 1129), "the liberty and property of the citizen shall be protected
by the rudimentary requirements of fair play." Not only must the
party be given an opportunity to present his case and to adduce
evidence tending to establish the rights which he asserts but the
tribunal must consider the evidence presented. (Chief Justice
Hughes in Morgan vs. U.S., 298 U.S. 468, 56 S. Ct. 906, 80 Law. ed.
1288.) In the language of this Court in Edwards vs. McCoy (22 Phil.,
598), "the right to adduce evidence, without the corresponding duty
on the part of the board to consider it, is vain. Such right is
conspicuously futile if the person or persons to whom the evidence
is presented can thrust it aside without or consideration." While the
duty to deliberate does not impose the obligation to decide right, it
does imply a necessity which cannot be disregarded, namely, that of
having something to support its decision. A decision with absolutely
nothing to support it is a nullity, at least when directly attacked.
(Edwards vs. McCoy, supra.) This principle emanates from the more
fundamental principle that the genius of constitutional government
is contrary to the vesting of unlimited power anywhere. Law is both
a grant and a limitation upon power.
The decision appealed from is hereby reversed and the case
remanded to the Public Service Commission for further proceedings
in accordance with law and this decision, without any
pronouncement regarding costs. So ordered.
Avancea, C.J., Imperial, Diaz, Concepcion and Moran, JJ., concur.





G.R. No. L-12191, Cangco v. Manila Railroad Co.
69

PhilippineLaw.info Jurisprudence 1918 October
G.R. No. L-12191, Cangco v. Manila Railroad Co.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
DECISION
October 14, 1918
G.R. No. L-12191
JOSE CANGCO, plaintiff-appellant,
vs.
MANILA RAILROAD CO., defendant-appellee.
Ramon Sotelo for appellant. Kincaid & Hartigan for appellee.
Fisher, J.:
At the time of the occurrence which gave rise to this litigation the
plaintiff, Jose Cangco, was in the employment of Manila Railroad
Company in the capacity of clerk, with a monthly wage of P25. He
lived in the pueblo of San Mateo, in the province of Rizal, which is
located upon the line of the defendant railroad company; and in
coming daily by train to the company's office in the city of Manila
where he worked, he used a pass, supplied by the company, which
entitled him to ride upon the company's trains free of charge. Upon
the occasion in question, January 20, 1915, the plaintiff arose from
his seat in the second class-car where he was riding and, making, his
exit through the door, took his position upon the steps of the coach,
seizing the upright guardrail with his right hand for support.
On the side of the train where passengers alight at the San Mateo
station there is a cement platform which begins to rise with a
moderate gradient some distance away from the company's office
and extends along in front of said office for a distance sufficient to
cover the length of several coaches. As the train slowed down
another passenger, named Emilio Zu
Cangco vs. Manila Railroad Co., 38 Phil. 768 , No. 12191, October 14,
1918
At the time of the occurrence which gave rise to this litigation the
plaintiff, Jose Cangco, was in the employment of Manila Railroad
Company in the capacity of clerk, with a monthly wage of P25. He
lived in the pueblo of San Mateo, in the province of Rizal, which is
located upon the line of the defendant railroad company; and in
coming daily by train to the company's office in the city of Manila
where he worked, he used a pass, supplied by the company, which
entitled him to ride upon the company's trains free of charge. Upon
the occasion in question, January 20, 1915, the plaintiff arose from
his seat in the second class-car where he was riding and, making, his
exit through the door, took his position upon the steps of the coach,
seizing the upright guardrail with his right hand for support.
On the side of the train where passengers alight at the San
Mateo station there is a cement platform which begins to rise with
a moderate gradient some distance away from the company's office
and extends along in front of said office for a distance sufficient to
cover the length of several coaches. As the train slowed down
70

another passenger, named Emilio Zuiga, also an employee of the
railroad company, got off the same car, alighting safely at the point
where the platform begins to rise from the level of the ground.
When the train had proceeded a little farther the plaintiff Jose
Cangco stepped off also, but one or both of his feet came in contact
with a sack of watermelons with the result that his feet slipped from
under him and he fell violently on the platform. His body at once
rolled from the platform and was drawn under the moving car,
where his right arm was badly crushed and lacerated. It appears
that after the plaintiff alighted from the train the car moved
forward possibly six meters before it came to a full stop.
The accident occurred between 7 and 8 o'clock on a dark
night, and as the railroad station was lighted dimly by a single light
located some distance away, objects on the platform where the
accident occurred were difficult to discern especially to a person
emerging from a lighted car.
The explanation of the presence of a sack of melons on the
platform where the plaintiff alighted is found in the fact that it was
the customary season for harvesting these melons and a large lot
had been brought to the station for the shipment to the market.
They were contained in numerous sacks which has been piled on
the platform in a row one upon another. The testimony shows that
this row of sacks was so placed of melons and the edge of platform;
and it is clear that the fall of the plaintiff was due to the fact that his
foot alighted upon one of these melons at the moment he stepped
upon the platform. His statement that he failed to see these objects
in the darkness is readily to be credited.
The plaintiff was drawn from under the car in an unconscious
condition, and it appeared that the injuries which he had received
were very serious. He was therefore brought at once to a certain
hospital in the city of Manila where an examination was made and
his arm was amputated. The result of this operation was
unsatisfactory, and the plaintiff was then carried to another hospital
where a second operation was performed and the member was
again amputated higher up near the shoulder. It appears in
evidence that the plaintiff expended the sum of P790.25 in the form
of medical and surgical fees and for other expenses in connection
with the process of his curation.
Upon August 31, 1915, he instituted this proceeding in the
Court of First Instance of the city of Manila to recover damages of
the defendant company, founding his action upon the negligence of
the servants and employees of the defendant in placing the sacks of
melons upon the platform and leaving them so placed as to be a
menace to the security of passenger alighting from the company's
trains. At the hearing in the Court of First Instance, his Honor, the
trial judge, found the facts substantially as above stated, and drew
therefrom his conclusion to the effect that, although negligence was
attributable to the defendant by reason of the fact that the sacks of
melons were so placed as to obstruct passengers passing to and
from the cars, nevertheless, the plaintiff himself had failed to use
due caution in alighting from the coach and was therefore
precluded form recovering. Judgment was accordingly entered in
favor of the defendant company, and the plaintiff appealed.
It can not be doubted that the employees of the railroad
company were guilty of negligence in piling these sacks on the
platform in the manner above stated; that their presence caused
71

the plaintiff to fall as he alighted from the train; and that they
therefore constituted an effective legal cause of the injuries
sustained by the plaintiff. It necessarily follows that the defendant
company is liable for the damage thereby occasioned unless
recovery is barred by the plaintiff's own contributory negligence. In
resolving this problem it is necessary that each of these conceptions
of liability, to-wit, the primary responsibility of the defendant
company and the contributory negligence of the plaintiff should be
separately examined.
It is important to note that the foundation of the legal liability
of the defendant is the contract of carriage, and that the obligation
to respond for the damage which plaintiff has suffered arises, if at
all, from the breach of that contract by reason of the failure of
defendant to exercise due care in its performance. That is to say, its
liability is direct and immediate, differing essentially, in legal
viewpoint from that presumptive responsibility for the negligence of
its servants, imposed by article 1903 of the Civil Code, which can be
rebutted by proof of the exercise of due care in their selection and
supervision. Article 1903 of the Civil Code is not applicable to
obligations arising ex contractu, but only to extra-contractual
obligations or to use the technical form of expression, that article
relates only to culpa aquiliana and not to culpa contractual.
Manresa (vol. 8, p. 67) in his commentaries upon articles 1103
and 1104 of the Civil Code, clearly points out this distinction, which
was also recognized by this Court in its decision in the case of
Rakes vs. Atlantic, Gulf and Pacific Co. (7 Phil. rep., 359). In
commenting upon article 1093 Manresa clearly points out the
difference between "culpa, substantive and independent, which of
itself constitutes the source of an obligation between persons not
formerly connected by any legal tie" and culpa considered as an
accident in the performance of an obligation already existing . . . ."
In the Rakes case (supra) the decision of this court was made
to rest squarely upon the proposition that article 1903 of the Civil
Code is not applicable to acts of negligence which constitute the
breach of a contract.
Upon this point the Court said:
The acts to which these articles [1902 and 1903 of the Civil
Code] are applicable are understood to be those not growing out of
pre-existing duties of the parties to one another. But where
relations already formed give rise to duties, whether springing from
contract or quasi-contract, then breaches of those duties are
subject to article 1101, 1103, and 1104 of the same code.
(Rakes vs. Atlantic, Gulf and Pacific Co., 7 Phil. Rep., 359 at 365.)
This distinction is of the utmost importance. The liability,
which, under the Spanish law, is, in certain cases imposed upon
employers with respect to damages occasioned by the negligence of
their employees to persons to whom they are not bound by
contract, is not based, as in the English Common Law, upon the
principle of respondeat superior if it were, the master would be
liable in every case and unconditionally but upon the principle
announced in article 1902 of the Civil Code, which imposes upon all
persons who by their fault or negligence, do injury to another, the
obligation of making good the damage caused. One who places a
powerful automobile in the hands of a servant whom he knows to
be ignorant of the method of managing such a vehicle, is himself
guilty of an act of negligence which makes him liable for all the
72

consequences of his imprudence. The obligation to make good the
damage arises at the very instant that the unskillful servant, while
acting within the scope of his employment causes the injury. The
liability of the master is personal and direct. But, if the master has
not been guilty of any negligence whatever in the selection and
direction of the servant, he is not liable for the acts of the latter,
whatever done within the scope of his employment or not, if the
damage done by the servant does not amount to a breach of the
contract between the master and the person injured.
It is not accurate to say that proof of diligence and care in the
selection and control of the servant relieves the master from
liability for the latter's acts on the contrary, that proof shows that
the responsibility has never existed. As Manresa says (vol. 8, p. 68)
the liability arising from extra-contractual culpa is always based
upon a voluntary act or omission which, without willful intent, but
by mere negligence or inattention, has caused damage to another.
A master who exercises all possible care in the selection of his
servant, taking into consideration the qualifications they should
possess for the discharge of the duties which it is his purpose to
confide to them, and directs them with equal diligence, thereby
performs his duty to third persons to whom he is bound by no
contractual ties, and he incurs no liability whatever if, by reason of
the negligence of his servants, even within the scope of their
employment, such third person suffer damage. True it is that under
article 1903 of the Civil Code the law creates a presumption that he
has been negligent in the selection or direction of his servant, but
the presumption is rebuttable and yield to proof of due care and
diligence in this respect.
The supreme court of Porto Rico, in interpreting identical
provisions, as found in the Porto Rico Code, has held that these
articles are applicable to cases of extra-
contractual culpa exclusively. (Carmona vs. Cuesta, 20 Porto Rico
Reports, 215.)
This distinction was again made patent by this Court in its
decision in the case of Bahia vs. Litonjua and Leynes, (30 Phil. rep.,
624), which was an action brought upon the theory of the extra-
contractual liability of the defendant to respond for the damage
caused by the carelessness of his employee while acting within the
scope of his employment. The Court, after citing the last paragraph
of article 1903 of the Civil Code, said:
From this article two things are apparent: (1) That when an
injury is caused by the negligence of a servant or employee there
instantly arises a presumption of law that there was negligence on
the part of the master or employer either in selection of the servant
or employee, or in supervision over him after the selection, or both;
and (2) that that presumption is juris tantum and not juris et de
jure, and consequently, may be rebutted. It follows necessarily that
if the employer shows to the satisfaction of the court that in
selection and supervision he has exercised the care and diligence of
a good father of a family, the presumption is overcome and he is
relieved from liability.
This theory bases the responsibility of the master ultimately
on his own negligence and not on that of his servant. This is the
notable peculiarity of the Spanish law of negligence. It is, of course,
in striking contrast to the American doctrine that, in relations with
73

strangers, the negligence of the servant in conclusively the
negligence of the master.
The opinion there expressed by this Court, to the effect that in
case of extra-contractual culpa based upon negligence, it is
necessary that there shall have been some fault attributable to the
defendant personally, and that the last paragraph of article 1903
merely establishes a rebuttable presumption, is in complete accord
with the authoritative opinion of Manresa, who says (vol. 12, p. 611)
that the liability created by article 1903 is imposed by reason of the
breach of the duties inherent in the special relations of authority or
superiority existing between the person called upon to repair the
damage and the one who, by his act or omission, was the cause of
it.
On the other hand, the liability of masters and employers for
the negligent acts or omissions of their servants or agents, when
such acts or omissions cause damages which amount to the breach
of a contact, is not based upon a mere presumption of the master's
negligence in their selection or control, and proof of exercise of the
utmost diligence and care in this regard does not relieve the master
of his liability for the breach of his contract.
Every legal obligation must of necessity be extra-contractual
or contractual. Extra-contractual obligation has its source in the
breach or omission of those mutual duties which civilized society
imposes upon it members, or which arise from these relations,
other than contractual, of certain members of society to others,
generally embraced in the concept of status. The legal rights of each
member of society constitute the measure of the corresponding
legal duties, mainly negative in character, which the existence of
those rights imposes upon all other members of society. The breach
of these general duties whether due to willful intent or to mere
inattention, if productive of injury, give rise to an obligation to
indemnify the injured party. The fundamental distinction between
obligations of this character and those which arise from contract,
rests upon the fact that in cases of non-contractual obligation it is
the wrongful or negligent act or omission itself which creates
the vinculum juris, whereas in contractual relations
the vinculum exists independently of the breach of the voluntary
duty assumed by the parties when entering into the contractual
relation.
With respect to extra-contractual obligation arising from
negligence, whether of act or omission, it is competent for the
legislature to elect and our Legislature has so elected whom
such an obligation is imposed is morally culpable, or, on the
contrary, for reasons of public policy, to extend that liability,
without regard to the lack of moral culpability, so as to include
responsibility for the negligence of those person who acts or
mission are imputable, by a legal fiction, to others who are in a
position to exercise an absolute or limited control over them. The
legislature which adopted our Civil Code has elected to limit extra-
contractual liability with certain well-defined exceptions to
cases in which moral culpability can be directly imputed to the
persons to be charged. This moral responsibility may consist in
having failed to exercise due care in the selection and control of
one's agents or servants, or in the control of persons who, by
reason of their status, occupy a position of dependency with respect
to the person made liable for their conduct.
74

The position of a natural or juridical person who has
undertaken by contract to render service to another, is wholly
different from that to which article 1903 relates. When the sources
of the obligation upon which plaintiff's cause of action depends is a
negligent act or omission, the burden of proof rests upon plaintiff to
prove the negligence if he does not his action fails. But when the
facts averred show a contractual undertaking by defendant for the
benefit of plaintiff, and it is alleged that plaintiff has failed or
refused to perform the contract, it is not necessary for plaintiff to
specify in his pleadings whether the breach of the contract is due to
willful fault or to negligence on the part of the defendant, or of his
servants or agents. Proof of the contract and of its nonperformance
is sufficient prima facie to warrant a recovery.
As a general rule . . . it is logical that in case of extra-
contractual culpa, a suing creditor should assume the burden of
proof of its existence, as the only fact upon which his action is
based; while on the contrary, in a case of negligence which
presupposes the existence of a contractual obligation, if the creditor
shows that it exists and that it has been broken, it is not necessary
for him to prove negligence. (Manresa, vol. 8, p. 71 [1907 ed., p.
76]).
As it is not necessary for the plaintiff in an action for the
breach of a contract to show that the breach was due to the
negligent conduct of defendant or of his servants, even though such
be in fact the actual cause of the breach, it is obvious that proof on
the part of defendant that the negligence or omission of his
servants or agents caused the breach of the contract would not
constitute a defense to the action. If the negligence of servants or
agents could be invoked as a means of discharging the liability
arising from contract, the anomalous result would be that person
acting through the medium of agents or servants in the
performance of their contracts, would be in a better position than
those acting in person. If one delivers a valuable watch to
watchmaker who contract to repair it, and the bailee, by a personal
negligent act causes its destruction, he is unquestionably liable.
Would it be logical to free him from his liability for the breach of his
contract, which involves the duty to exercise due care in the
preservation of the watch, if he shows that it was his servant whose
negligence caused the injury? If such a theory could be accepted,
juridical persons would enjoy practically complete immunity from
damages arising from the breach of their contracts if caused by
negligent acts as such juridical persons can of necessity only act
through agents or servants, and it would no doubt be true in most
instances that reasonable care had been taken in selection and
direction of such servants. If one delivers securities to a banking
corporation as collateral, and they are lost by reason of the
negligence of some clerk employed by the bank, would it be just
and reasonable to permit the bank to relieve itself of liability for the
breach of its contract to return the collateral upon the payment of
the debt by proving that due care had been exercised in the
selection and direction of the clerk?
This distinction between culpa aquiliana, as the source of an
obligation, andculpa contractual as a mere incident to the
performance of a contract has frequently been recognized by the
supreme court of Spain. (Sentencias of June 27, 1894; November 20,
1896; and December 13, 1896.) In the decisions of November 20,
1896, it appeared that plaintiff's action arose ex contractu, but that
defendant sought to avail himself of the provisions of article 1902 of
75

the Civil Code as a defense. The Spanish Supreme Court rejected
defendant's contention, saying:
These are not cases of injury caused, without any pre-existing
obligation, by fault or negligence, such as those to which article
1902 of the Civil Code relates, but of damages caused by the
defendant's failure to carry out the undertakings imposed by the
contracts . . . .
A brief review of the earlier decision of this court involving the
liability of employers for damage done by the negligent acts of their
servants will show that in no case has the court ever decided that
the negligence of the defendant's servants has been held to
constitute a defense to an action for damages for breach of
contract.
In the case of Johnson vs. David (5 Phil. Rep., 663), the court
held that the owner of a carriage was not liable for the damages
caused by the negligence of his driver. In that case the court
commented on the fact that no evidence had been adduced in the
trial court that the defendant had been negligent in the
employment of the driver, or that he had any knowledge of his lack
of skill or carefulness.
In the case of Baer Senior & Co's Successors vs. Compania
Maritima (6 Phil. Rep., 215), the plaintiff sued the defendant for
damages caused by the loss of a barge belonging to plaintiff which
was allowed to get adrift by the negligence of defendant's servants
in the course of the performance of a contract of towage. The court
held, citing Manresa (vol. 8, pp. 29, 69) that if the "obligation of the
defendant grew out of a contract made between it and the plaintiff .
. . we do not think that the provisions of articles 1902 and 1903 are
applicable to the case."
In the case of Chapman vs. Underwood (27 Phil. Rep., 374),
plaintiff sued the defendant to recover damages for the personal
injuries caused by the negligence of defendant's chauffeur while
driving defendant's automobile in which defendant was riding at the
time. The court found that the damages were caused by the
negligence of the driver of the automobile, but held that the master
was not liable, although he was present at the time, saying:
. . . unless the negligent acts of the driver are continued for a
length of time as to give the owner a reasonable opportunity to
observe them and to direct the driver to desist therefrom. . . . The
act complained of must be continued in the presence of the owner
for such length of time that the owner by his acquiescence, makes
the driver's acts his own.
In the case of Yamada vs. Manila Railroad Co. and Bachrach
Garage & Taxicab Co. (33 Phil. Rep., 8), it is true that the court
rested its conclusion as to the liability of the defendant upon article
1903, although the facts disclosed that the injury complaint of by
plaintiff constituted a breach of the duty to him arising out of the
contract of transportation. The express ground of the decision in
this case was that article 1903, in dealing with the liability of a
master for the negligent acts of his servants "makes the distinction
between private individuals and public enterprise;" that as to the
latter the law creates a rebuttable presumption of negligence in the
selection or direction of servants; and that in the particular case the
presumption of negligence had not been overcome.
76

It is evident, therefore that in its decision Yamada case, the
court treated plaintiff's action as though founded in tort rather than
as based upon the breach of the contract of carriage, and an
examination of the pleadings and of the briefs shows that the
questions of law were in fact discussed upon this theory. Viewed
from the standpoint of the defendant the practical result must have
been the same in any event. The proof disclosed beyond doubt that
the defendant's servant was grossly negligent and that his
negligence was the proximate cause of plaintiff's injury. It also
affirmatively appeared that defendant had been guilty of negligence
in its failure to exercise proper discretion in the direction of the
servant. Defendant was, therefore, liable for the injury suffered by
plaintiff, whether the breach of the duty were to be regarded as
constituting culpa aquiliana or culpa contractual. As Manresa points
out (vol. 8, pp. 29 and 69) whether negligence occurs an incident in
the course of the performance of a contractual undertaking or its
itself the source of an extra-contractual undertaking obligation, its
essential characteristics are identical. There is always an act or
omission productive of damage due to carelessness or inattention
on the part of the defendant. Consequently, when the court holds
that a defendant is liable in damages for having failed to exercise
due care, either directly, or in failing to exercise proper care in the
selection and direction of his servants, the practical result is
identical in either case. Therefore, it follows that it is not to be
inferred, because the court held in the Yamada case that defendant
was liable for the damages negligently caused by its servants to a
person to whom it was bound by contract, and made reference to
the fact that the defendant was negligent in the selection and
control of its servants, that in such a case the court would have held
that it would have been a good defense to the action, if presented
squarely upon the theory of the breach of the contract, for
defendant to have proved that it did in fact exercise care in the
selection and control of the servant.
The true explanation of such cases is to be found by directing
the attention to the relative spheres of contractual and extra-
contractual obligations. The field of non- contractual obligation is
much more broader than that of contractual obligations,
comprising, as it does, the whole extent of juridical human relations.
These two fields, figuratively speaking, concentric; that is to say, the
mere fact that a person is bound to another by contract does not
relieve him from extra-contractual liability to such person. When
such a contractual relation exists the obligor may break the contract
under such conditions that the same act which constitutes the
source of an extra-contractual obligation had no contract existed
between the parties.
The contract of defendant to transport plaintiff carried with it,
by implication, the duty to carry him in safety and to provide safe
means of entering and leaving its trains (civil code, article 1258).
That duty, being contractual, was direct and immediate, and its non-
performance could not be excused by proof that the fault was
morally imputable to defendant's servants.
The railroad company's defense involves the assumption that
even granting that the negligent conduct of its servants in placing an
obstruction upon the platform was a breach of its contractual
obligation to maintain safe means of approaching and leaving its
trains, the direct and proximate cause of the injury suffered by
plaintiff was his own contributory negligence in failing to wait until
the train had come to a complete stop before alighting. Under the
77

doctrine of comparative negligence announced in the Rakes case
(supra), if the accident was caused by plaintiff's own negligence, no
liability is imposed upon defendant's negligence and plaintiff's
negligence merely contributed to his injury, the damages should be
apportioned. It is, therefore, important to ascertain if defendant
was in fact guilty of negligence.
It may be admitted that had plaintiff waited until the train had
come to a full stop before alighting, the particular injury suffered by
him could not have occurred. Defendant contends, and cites many
authorities in support of the contention, that it is negligence per
se for a passenger to alight from a moving train. We are not
disposed to subscribe to this doctrine in its absolute form. We are of
the opinion that this proposition is too badly stated and is at
variance with the experience of every-day life. In this particular
instance, that the train was barely moving when plaintiff alighted is
shown conclusively by the fact that it came to stop within six meters
from the place where he stepped from it. Thousands of person
alight from trains under these conditions every day of the year, and
sustain no injury where the company has kept its platform free from
dangerous obstructions. There is no reason to believe that plaintiff
would have suffered any injury whatever in alighting as he did had it
not been for defendant's negligent failure to perform its duty to
provide a safe alighting place.
We are of the opinion that the correct doctrine relating to this
subject is that expressed in Thompson's work on Negligence (vol. 3,
sec. 3010) as follows:
The test by which to determine whether the passenger has
been guilty of negligence in attempting to alight from a moving
railway train, is that of ordinary or reasonable care. It is to be
considered whether an ordinarily prudent person, of the age, sex
and condition of the passenger, would have acted as the passenger
acted under the circumstances disclosed by the evidence. This care
has been defined to be, not the care which may or should be used
by the prudent man generally, but the care which a man of ordinary
prudence would use under similar circumstances, to avoid injury."
(Thompson, Commentaries on Negligence, vol. 3, sec. 3010.)
Or, it we prefer to adopt the mode of exposition used by this
court in Picartvs. Smith (37 Phil. rep., 809), we may say that the test
is this; Was there anything in the circumstances surrounding the
plaintiff at the time he alighted from the train which would have
admonished a person of average prudence that to get off the train
under the conditions then existing was dangerous? If so, the
plaintiff should have desisted from alighting; and his failure so to
desist was contributory negligence.1awph!l.net
As the case now before us presents itself, the only fact from
which a conclusion can be drawn to the effect that plaintiff was
guilty of contributory negligence is that he stepped off the car
without being able to discern clearly the condition of the platform
and while the train was yet slowly moving. In considering the
situation thus presented, it should not be overlooked that the
plaintiff was, as we find, ignorant of the fact that the obstruction
which was caused by the sacks of melons piled on the platform
existed; and as the defendant was bound by reason of its duty as a
public carrier to afford to its passengers facilities for safe egress
from its trains, the plaintiff had a right to assume, in the absence of
some circumstance to warn him to the contrary, that the platform
was clear. The place, as we have already stated, was dark, or dimly
78

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



Separate Opinions
79


MALCOLM, J., dissenting:
With one sentence in the majority decision, we are of full
accord, namely, "It may be admitted that had plaintiff waited until
the train had come to a full stop before alighting, the particular
injury suffered by him could not have occurred." With the general
rule relative to a passenger's contributory negligence, we are
likewise in full accord, namely, "An attempt to alight from a moving
train is negligence per se." Adding these two points together, should
be absolved from the complaint, and judgment affirmed.





EN BANC
[G.R. No. L-8194. July 11, 1956.]
EMERENCIANA M. VDA. DE MEDINA, ET AL., Plaintiffs-Appellees, vs.
GUILLERMO CRESENCIA, ET AL., Defendants. GUILLERMO
CRESENCIA, Appellant.

D E C I S I O N
REYES, J.B.L., J.:
Appeal by Defendant Guillermo Cresencia from the judgment of the
Court of First Instance of Manila in its civil case No. 19890,
sentencing Appellant, jointly and severally with his co-
Defendant Brigido Avorque, to pay Plaintiffs Emerencia M. Vda. de
Medina and her minor children damages in the total amount of
P56,000, P5,000 attorneys fees, and costs.
It appears that on May 31, 1953, passenger jeepney bearing plate
No. TPU-2232 (Manila), driven by Brigido Avorque, smashed into a
Meralco post on Azcarraga Street, resulting in the death of Vicente
Medina, one of its passengers. A criminal case for homicide through
reckless imprudence was filed against Avorque (criminal case No.
22775 of the Court of First Instance of Manila), to which he pleaded
guilty on September 9, 1953. The heirs of the deceased, however,
reserved their right to file a separate action for damages, and on
June 16, 1953, brought suit against the driver Brigido Avorque
and Appellant Guillermo Cresencia, the registered owner and
operator of the jeepney in question. Defendant Brigido Avorque did
not file any answer; chan
roblesvirtualawlibrarywhile Defendant Cresencia answered,
disclaiming liability on the ground that he had sold the jeepney in
question on October 14, 1950 to one Maria A. Cudiamat; chan
roblesvirtualawlibrarythat the jeepney had been repeatedly sold by
one buyer after another, until the vehicle was purchased on January
29, 1953 by Rosario Avorque, the absolute owner thereof at the
time of the accident. In view of Cresencias answer, Plaintiffs filed
leave, and was allowed, to amend their complaint making Rosario
Avorque a co-Defendant; chan roblesvirtualawlibraryand the latter,
by way of answer, admitted having purchased the aforesaid jeepney
80

on May 31, 1953, but alleged in defense that she was never the
public utility operator thereof. The case then proceeded to trial,
during which, after the Plaintiffs had presented their
evidence, Defendants Guillermo Cresencia and Rosario Avorque
made manifestations admitting that the former was still the
registered operator of the jeepney in question in the records of the
Motor Vehicles Office and the Public Service Commission, while the
latter was the owner thereof at the time of the accident; chan
roblesvirtualawlibraryand submitted the case for the decision on
the question of who, as between the two, should be held liable
to Plaintiffs for damages. The lower court, by Judge Jose Zulueta,
held that as far as the public is concerned, Defendant Cresencia, in
the eyes of the law, continued to be the legal owner of the jeepney
in question; chan roblesvirtualawlibraryand rendered judgment
against him, jointly and severally with the driver Brigido Avorque,
for P6,000 compensatory damages, P30,000 moral damages,
P10,000 exemplary damages, P10,000 nominal damages, P5,000
attorneys fees, and costs, while Defendant Rosario Avorque was
absolved from liability. From this judgment, Defendant Cresencia
appealed.
We have already held in the case of Montoya vs. Ignacio, 94 Phil.,
182 (December 29, 1953), which the court below cited, that the law
(section 20 [g], C. A. No. 146 as amended) requires the approval of
the Public Service Commission in order that a franchise, or any
privilege pertaining thereto, may be sold or leased without
infringing the certificate issued to the grantee; chan
roblesvirtualawlibraryand that if property covered by the franchise
is transferred or leased without this requisite approval, the transfer
is not binding against the public or the Service Commission; chan
roblesvirtualawlibraryand in contemplation of law, the grantee of
record continues to be responsible under the franchise in relation to
the Commission and to the public. There we gave the reason for this
rule to be as follows:chanroblesvirtuallawlibrary
cralaw Since a franchise is personal in nature any transfer or lease
thereof should be notified to the Public Service Commission so that
the latter may take proper safeguards to protect the interest of the
public. In fact, the law requires that, before the approval is granted,
there should be a public hearing, with notice to all interested
parties, in order that the Commission may determine if there are
good and reasonable grounds justifying the transfer or lease of the
property covered by the franchise, or if the sale or lease is
detrimental to public interest cralaw .
The above ruling was later reiterated in the cases of Timbol vs.
Osias, L-7547, April 30, 1955 and Roque vs. Malibay Transit Inc., L-
8561, November 18, 1955.
As the sale of the jeepney here in question was admittedly without
the approval of the Public Service Commission, Appellant herein,
Guillermo Cresencia, who is the registered owner and operator
thereof, continued to be liable to the Commission and the public for
the consequences incident to its operation. Wherefore, the lower
court did not err in holding him, and not the buyer Rosario Avorque,
responsible for the damages sustained by Plaintiff by reason of the
death of Vicente Medina resulting from the reckless negligence of
the jeepneys driver, Brigido Avorque.
Appellant also argues that the basis of Plaintiffs action being the
employers subsidiary liability under the Revised Penal Code for
81

damages arising from his employees criminal acts, it
is Defendant Rosario Avorque who should answer subsidiarily for
the damages sustained byPlaintiffs, since she admits that she, and
not Appellant, is the employer of the negligent driver Brigido
Avorque. The argument is untenable, because Plaintiffs action for
damages is independent of the criminal case filed against Brigido
Avorque, and based, not on the employers subsidiary liability under
the Revised Penal Code, but on a breach of the carriers contractual
obligation to carry his passengers safely to their destination (culpa
contractual). And it is also for this reason that there is no need of
first proving the insolvency of the driver Brigido Avorque before
damages can be recovered from the carrier, for in culpa contractual,
the liability of the carrier is not merely subsidiary or secondary, but
direct and immediate (Articles 1755, 1756, and 1759, New Civil
Code).
The propriety of the damages awarded has not been questioned,
Nevertheless, it is patent upon the record that the award of P10,000
by way of nominal damages is untenable as a matter of law, since
nominal damages cannot co-exist with compensatory damages. The
purpose of nominal damages is to vindicate or recognize a right that
has been violated, in order to preclude further contest
thereon; chan roblesvirtualawlibraryand not for the purpose of
indemnifying the Plaintiff for any loss suffered by him (Articles
2221, 2223, new Civil Code.) Since the court below has already
awarded compensatory and exemplary damages that are in
themselves a judicial recognition that Plaintiffs right was violated,
the award of nominal damages is unnecessary and improper.
Anyway, ten thousand pesos cannot, in common sense, be deemed
nominal.
With the modification that the award of P10,000 nominal damages
be eliminated, the decision appealed from is affirmed. Costs
against Appellant. SO ORDERED.
Paras, C.J., Bengzon, Padilla, Montemayor, Reyes, A., Bautista
Angelo, Labrador, Concepcion and Endencia, JJ., concur.



FIRST DIVISION
[G.R. No. L-46558 : July 31, 1981.]
PHILIPPINE AIR LINES, INC., Petitioner, vs. THE COURT OF APPEALS
and JESUS V. SAMSON, Respondents.

D E C I S I O N

GUERRERO, J.:

This is a petition for review on Certiorari of the decision of the Court
of Appeals 1 dated April 18, 1977, affirming with modification the
decision of the Court of First Instance of Albay in Civil Case No.
1279, entitled Jesus V. Samson, plaintiff, vs. Philippine Air Lines,
Inc., defendant, for damages.
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The dispositive portion of the trial courts decision reads:
WHEREFORE, for all the foregoing considerations, judgment is
hereby rendered in favor of the plaintiff and against the defendant
ordering the defendant to pay the plaintiff, the following sums:
P1988,000.00 as unearned income or damages; P50,000.00 for
moral damages; P20,000.00 as attorneys fees and P5,000.00 as
expenses of litigation, or a total of P273,000.00. Costs against the
defendant.
The appellate court modified the above decision, to wit:
However, Plaintiff-Appellee, who has been deprived of his job since
1954, is entitled to the legal rate of interest on the P198,000.00
unearned income from the filing of the complaint cranad(Sec. 8,
Rule 51, Rules of Court).
WHEREFORE, with the modification indicated above, the judgment
appealed from is affirmed, with costs against defendant-appellant.
The complaint filed on July 1, 1954 by plaintiff Jesus V. Samson,
private respondent herein, averred that on January 8, 1951, he flew
as co-pilot on a regular flight from Manila to Legaspi with stops at
Daet, Camarines Norte and Pili, Camarines Sur, with Captain Delfin
Bustamante as commanding pilot of a C-47 plane belonging to
defendant Philippine Air Lines, Inc., now the herein petitioner; that
on attempting to land the plane at Daet airport, Captain Delfin
Bustamante due to his very slow reaction and poor judgment
overshot the airfield and as a result, notwithstanding the diligent
efforts of the plaintiff co-pilot to avert an accident, the airplane
crashlanded beyond the runway; that the jolt caused the head of
the plaintiff to hit and break through the thick front windshield of
the airplane causing him severe brain concussion, wounds and
abrasions on the forehead with intense pain and
suffering cranad(par. 6, complaint).:onad
The complaint further alleged that instead of giving plaintiff expert
and proper medical treatment called for by the nature and severity
of his injuries, defendant simply referred him to a company
physician, a general medical practitioner, who limited the treatment
to the exterior injuries without examining the severe brain
concussion of plaintiff cranad(par. 7, complaint); that several days
after the accident, defendant Philippine Air Lines called back the
plaintiff to active duty as co-pilot, and inspite of the latters
repeated request for expert medical assistance, defendant had not
given him anycranad(par. 8, complaint); that as a consequence of
the brain injury sustained by plaintiff from the crash, he had been
having periodic dizzy spells and had been suffering from general
debility and nervousness cranad(par. 9, complaint); that defendant
airline company instead of submitting the plaintiff to expert medical
treatment, discharged the latter from its employ on December 21,
1953 on grounds of physical disability, thereby causing plaintiff not
only to lose his job but to become physically unfit to continue as
aviator due to defendants negligence in not giving him the proper
medical attentioncranad(pars. 10-11, complaint). Plaintiff prayed for
damages in the amount of P180,000.00 representing his unearned
income, P50,000.00 as moral damages, P20,000.00 as attorneys
fees and P5,000.00 as expenses, or a total of P255,000.00.
In its answer filed on July 28, 1954, defendant PAL denied the
substantial averments in the complaint, alleging among others, that
the accident was due solely and exclusively to inevitable unforeseen
circumstances whereby plaintiff sustained only superficial wounds
83

and minor injuries which were promptly treated by defendants
medical personnel cranad(par. 5, answer); that plaintiff did not
sustain brain injury or cerebral concussion from the accident since
he passed the annual physical and medical examination given
thereafter on April 24, 1951; that the headaches and dizziness
experienced by plaintiff were due to emotional disturbance over his
inability to pass the required up-grading or promotional course
given by defendant company cranad(par. 6, answer), and that, as
confirmed by an expert neuro-surgeon, plaintiff was suffering-from
neurosis and in view of this unfitness and disqualification from
continuing as a pilot, defendant had to terminate plaintiffs
employment cranad(pars. 7, 9, answer).
Further, defendant alleged that by the very nature of its business as
a common carrier, it is bound to employ only pilots who are
proficient and in good mental, emotional and physical condition;
that the pilot, Captain Delfin Bustamante, was a competent and
proficient pilot, and although he was already afflicted with a tumor
of the nasopharynx even before the accident of January 8, 1951, the
Civil Aeronautics Administration, in passing upon the fitness of
pilots, gave Capt. Bustamante a waiver of physical standards to
enable him to retain his first class airman certificate since the
affliction had not in the least affected his proficiency cranad(pars.
16-17, answer). By way of counterclaim, defendant prayed for
P10,000.00 as expenses for the litigation.
On March 25, 1958, defendant filed a Motion to Dismiss on the
ground that the complaint is essentially a Workmens Compensation
claim, stating a cause of action not cognizable within the general
jurisdiction of the court. The Motion to Dismiss was denied in the
order of April 14, 1958. After the reception of evidence, the trial
court rendered on January 15, 1973 the decision, the dispositive
portion of which has been earlier cited.
The defendant Philippine Air Lines, Inc. appealed the decision to the
Court of Appeals as being contrary to law and unsupported by the
evidence. It raised as errors of the trial court cranad(a) the holding
that the damages allegedly suffered by plaintiff are attributable to
the accident of January 8, 1951 which was due to the negligence of
defendant in having allowed Capt. Delfin Bustamante to continue
flying despite his alleged slow reaction and poor
judgment; cranad(b) the finding that defendant was negligent in not
having given plaintiff proper and adequate expert medical
treatment and assistance for the injuries allegedly sustained in the
accident of January 8, 1951; andcranad(c) in ordering defendant to
pay actual or compensatory damages, moral damages and
attorneys fees to the plaintiff.
On April 18, 1977, the Court of Appeals rendered its decision
affirming the judgment of the lower court but modified the award
of damages by imposing legal rate of interest on the P198,000.00
unearned income from the filing of the complaint, citing Sec. 8, Rule
51 of the Rules of Court.
Its motion for reconsideration of the above judgment having been
denied, Philippine Air Lines, Inc. filed this instant petition
for Certiorari on the ground that the decision is not in accord with
law or with the applicable jurisprudence, aside from its being
replete with findings in the nature of speculation, surmises and
conjectures not borne out by the evidence on record thereby
resulting to misapprehension of facts and amounting to a grave
abuse of discretion cranad(p. 7, Petition).
84

Petitioner raises the fundamental question in the case at bar as
follows: Is there a causal connection between the injuries suffered
by private respondent during the accident on 8 January 1951 and
the subsequent periodic dizzy spells, headache and general
debility of which private respondent complained every now and
then, on the one hand, and such periodic dizzy spells, headache
and general debility allegedly caused by the accident and private
respondents eventual discharge from employment, on the other?
PAL submits that respondent courts award of damages to private
respondent is anchored on findings in the nature of speculations,
surmises and conjectures and not borne out by the evidence on
record, thereby resulting in a misapprehension of facts and
amounting to a grave abuse of discretion.
Petitioners submission is without merit.
As found by the respondent court, the following are the essential
facts of the case:
It appears that plaintiff, a licensee aviator, was employed by
defendant a few years prior to January 8, 1951 as a regular co-pilot
on a guaranteed basic salary of P750.00 a month. He was assigned
to and/or paired with pilot Delfin Bustamante.
Sometime in December 1950, he complained to defendant through
its authorized official about the slow reaction and poor judgment of
pilot Delfin Bustamante. Notwithstanding said complaint, defendant
allowed the pilot to continue flying.
On January 8, 1951, the two manned the regular afternoon flight of
defendants plane from Manila to Legaspi, with stops at Daet,
Camarines Norte, and Pili, Camarines Sur. Upon making a landing at
Daet, the pilot, with his slow reaction and poor judgment, overshot
the airfield and, as a result of and notwithstanding diligent efforts of
plaintiff to avert an accident, the airplane crash-landed beyond the
runway into a mangrove. The jolt and impact caused plaintiff to hit
his head upon the front windshield of the plane thereby causing his
brain concussions and wounds on the forehead, with concomittant
intense pain.
Plaintiff was not given proper medical attention and treatment
demanded by the nature and severity of his injuries. Defendant
merely referred him to its clinic attended by general practitioners
on his external injuries. His brain injury was never examined, much
less treated. On top of that negligence, defendant recalled plaintiff
to active duty as a co-pilot, completely ignoring his plea for expert
medical assistance.
Suffering periodic dizzy spells, headache and general debility,
plaintiff every now and then complained to defendant. To make
matters worst for plaintiff, defendant discharged him from his
employment on December 21, 1953. In consequence, plaintiff has
been beset with additional worries, basically financial. He is now a
liability instead of a provider, of his family.
On July 1, 1954, plaintiff filed a complaint for damages. Defendant
vainly sought to dismiss the complaint after filing an answer. Then,
the judgment and this appeal.
Continuing, the respondent Court of Appeals further held:
There is no question about the employment of plaintiff by
defendant, his age and salary, the overshooting by pilot Bustamante
of the airfield and crashlanding in a mangrove, his hitting his head
85

on the front windshield of the plane, his intermittent dizzy spells,
headache and general debility for which he was discharged from his
employment on December 21, 1953. As the lower court aptly
stated:
From the evidence adduced by the parties, the Court finds the
following facts to be uncontroverted: That the plaintiff Jesus V.
Samson, on January 8, 1951 and a few years prior thereto,
December 21, 1953, was a duly licensed pilot employed as a regular
co-pilot of the defendant with assignment in its domestic air service
in the Philippines; that on January 8, 1951, the defendants airplane
met an accident in crashlanding at the Daet Airport, Camarines
Norte by overshooting the runway and reaching the mangroves at
the edge of the landing strip; that the jolt caused plaintiffs head to
hit the front windshield of the airplane causing him to suffer
wounds and abrasion on the forehead; that the defendant, instead
of giving the plaintiff expert and proper medical treatment called
for by the nature and severity of the injuries of the plaintiff, simply
referred him to the clinic of the defendants physicians who are only
general medical practitioners and not brain specialists; that the
defendants physicians limited their treatment to the exterior
injuries on the forehead of the plaintiff and made no examination of
the severe concussion of the brain of the plaintiff; that the Medical
Director and Flight Surgeon of the defendant were not able to
definitely determine the cause of the complaint of the plaintiff as to
the periodic attack of dizziness, spells and headache; that due to
this laxity of the defendants physician and the continuous suffering
of the ailment of the plaintiff complained of, he demanded for
expert medical assistance for his brain injury and to send him to the
United States, which demand was turned down and in effect denied
by the defendant; that instead the defendant referred the plaintiff
to a neurologist, Dr. Victor Reyes; that from the time that said
accident occurred on January 21, 1953, he was ordered grounded
on several occasions because of his complaint of dizzy spells and
headache; that instead of submitting the plaintiff to expert medical
treatment as demanded by him and denied by the defendant, he
was discharged from its employment on December 21, 1953 on the
ground of physical disability, and that the plaintiff, at the time when
the defendants plane met the accident, up to the time he was
discharged, was regularly employed as a co-pilot and receiving a
basic salary of P750.00 a month plus extra pay for flying time, and
bonuses amounting to P300.00 a month.
Even defendant-appellant itself admits as not controverted the
following facts which generally admit what have been stated above
as not controverted.
In the case at bar, the following facts are not the subject of
controversy:
(1) First, that from July 1950 to 21 December 1953, plaintiff was
employed with defendant company as a first officer or co-pilot and
served in that capacity in defendants domestic services.
(2) Second, that on January 1951, plaintiff did fly on defendants PI-
C 94, as first officer or co-pilot, with the late Capt. Delfin
Bustamante in command as pilot; that while making a landing at the
Daet airport on that date, PI-C 94 did meet an accident as stated
above.
(3) Third, that at or about the time of the discharge from defendant
company, plaintiff had complained of spells of dizziness,
86

headaches and nervousness, by reason of which he was
grounded from flight duty. In short, that at that time, or
approximately from November 1953 up to the date of his discharge
on 21 December 1953, plaintiff was actually physically unfit to
discharge his duties as pilot.
(4) Fourth, that plaintiffs unfitness for flight duty was properly
established after a thorough medical examination by competent
medical experts.cralaw cranad(pp. 11-12, appellants brief)
hence, there can hardly be an issue, factual, legal or medical.
Taking exception from the rest of the essential facts of the case as
found by the respondent court PAL claims said facts are not fully
borne out by the evidence on record and insists that the injuries
suffered by private respondent during the accident on January 8,
1951 were superficial in nature; that the periodic spells, headache,
and general debility complaint of every now and then by private
respondent subsequent to the Jan. 8, 1951 incident were due to
emotional disturbances and that no negligence can be attributed to
Capt. Delfin Bustamante much less to PAL for the occurrence on
January 8, 1951, hence PAL cannot be held liable for damages.
Petitioner claims absence of any causal connection between private
respondents superficial injuries and his alleged subsequent
periodic spells, headache and general debility, pointing out that
these subsequent ailments were found by competent physician,
including an expert neuro-surgeon, to be due to emotional
disturbances insights the conclusions of Dr. Trajano V. Bernardo
that respondents complaints were psychosomatic symptoms on
the basis of declarations made by respondent himself, which
conclusions are supported by similar diagnosis made by Drs.
Damaceno J. Ago and Villaraza stating that respondent Samson was
suffering from neurosis as well as the report of Dr. Victor Reyes, a
neurological specialist, indicating that the symptoms were probably,
most probably due to psychogenic factors and have no organic
basis.
In claiming that there is no factual basis for the finding of the
respondent court that the crash-landing caused respondents brain
concussion . cra ., with concomittant intense pain, for on the
contrary, testimonial evidence establish the superficiality of the
injuries sustained by respondent during the accident of January 8,
1951, petitioner quotes portions of the testimony of Dr. Manuel S.
Sayas, who declared that he removed the band-aid on the forehead
of respondent and that he found out after removal that the latter
had two contussed superficial wounds over the supra orbiter
regions or just above the eyes measuring one centimeter long and
one millimeter deep. He examined and found his blood pressure
normal, no discharges from the nose and ears. Dr. Trajano V.
Bernardo also testified that when he examined respondent Samson
three days after the accident, the wound was already healed and
found nothing wrong with his ears, nose and throat so that he was
declared fit for duty after the sixth day.
Petitioner goes further. It contends that there is no causal
connection between respondents superficial injuries sustained
during the accident on January 8, 1951 and plaintiffs discharge
from employment with PAL on December 21, 1953. According to
PAL, it was the repeated recurrence of respondents neurasthenic
symptoms cranad(dizzy spells, headache, nervousness) which
prompted PALs Flight Surgeon, Dr. Bernardo, to recommend that
87

plaintiff be grounded permanently as respondent was
psychologically unfit to resume his duties as pilot. PAL concludes
that respondents eventual discharge from employment with PAL
was effected for absolutely valid reasons, and only after he was
thoroughly examined and found unfit to carry out his
responsibilities and duties as a pilot.:onad
We agree with the respondent court in finding that the dizzy spells,
headache and general debility of private respondent Samson was an
after-effect of the crash-landing and We find that such holding is
supported by substantial evidence, which We quote from the
courts decision, to wit:
Defendant would imply that plaintiff suffered only superficial
wounds which were treated and not brain injury. It would, by the
opinion of its company doctors, Dr. Bernardo and Dr. Reyes,
attribute the dizzy spells and headache to organic or as
phychosomatic, neurasthenic or psychogenic, which we find
outlandishly exaggerated.
That plaintiffs condition as psychosomatic rather than organic in
nature is allegedly confirmed by the fact that on six cranad(6)
separate occasions after the accident he passed the required CAA
physical examination for airmans certificate. cranad(Exhs. 78, 79,
80, 81, 83 and 92). We noticed, however, that there were other
similar physical examinations conducted by the CAA on the person
of plaintiff the report on which were not presented in evidence.
Obviously, only those which suited defendants cause were hand-
picked and offered in evidence.
We hesitate to accept the opinion of the defendants two
physicians, considering that Dr. Bernardo admittedly referred to Dr.
Reyes because he could not determine the cause of the dizzy spells
and headache and the latter admitted that it is extremely hard to
be certain of the cause of his dizzy spells, and suggested a
possibility that it was due to postraumatic syndrome, evidently due
to the injuries suffered by the plaintiff in hitting the forehead
against the windshield of the plane during the accident. Judgment
are not based on possibilities.
The admitted difficulty of defendants doctors in determining the
cause of the dizzy spells and headache cannot be a sound basis for
finding against the plaintiff and in favor of defendant. Whatever it
might be, the fact is that such dizzy spells, headache and general
debility was an after-effect of the crash-landing. Be it brain injury or
psychosomatic, neurasthenic or psychogenic, there is no gainsaying
the fact that it was caused by the crash-landing. As an effect of the
cause, not fabricated or concocted, plaintiff has to be indemnified.
The fact is that such effect caused his discharge.
We are prone to believe the testimony of the plaintiffs doctors.
Dr. Morales, a surgeon, found that blood was coming from
plaintiffs ears and nose. He testified that plaintiff was suffering
from cerebral concussion as a result of traumatic injury to the brain
caused by his head hitting on the windshield of the plane during the
crash-landing cranad(Exhibit G).
Dr. Conrado Aramil, a neurologist and psychiatrist with experience
in two hospitals abroad, found abnormality reflected by the
88

electroencephalogram examination in the frontal area on both sides
of plaintiffs head cranad(Exhibits K, K-1).
The opinion of these two specialist renders unnecessary that of
plaintiffs wife who is a physician in her own right and because of
her relation to the plaintiff, her testimony and opinion may not be
discussed here, although her testimony is crystallized by the
opinions of Dr. Ador Dionisio, Dr. Marquez, Dr. Jose O. Chan, Dr.
Yambao and Dr. Sandico.
Even the doctors presented by defendant admit vital facts about
plaintiffs brain injury. Dr. Bernardo admits that due to the incident,
the plaintiff continuously complained of his fainting spells, dizziness
and headache everytime he flew as a co-pilot and everytime he
went to defendants clinic no less than 25 timescranad(Exhibits 15
to 36), that he complained of the same to Dr. Reyes; that he
promised to help send plaintiff to the United States for expert
medical assistance provided that whatever finding thereat should
not be attributed to the crash-landing incident to which plaintiff did
not agree and that plaintiff was completely ignored by the
defendant in his plea for expert medical assistance. They admitted
that they could not determine definitely the cause of the fainting
spells, dizziness and headache, which justifies the demand for
expert medical assistance.
We also find the imputation of gross negligence by respondent
court to PAL for having allowed Capt. Delfin Bustamante to fly on
that fateful day of the accident on January 8, 1951 to be correct,
and We affirm the same, duly supported as it is by substantial
evidence, clearly established and cited in the decision of said court
which states as follows:
The pilot was sick. He admittedly had tumor of the
nasopharynx cranad(nose). He is now in the Great Beyond. The spot
is very near the brain and the eyes. Tumor on the spot will affect the
sinus, the breathing, the eyes which are very near it. No one will
certify the fitness to fly a plane of one suffering from the disease.
. cra . The fact First Pilot Bustamante has a long standing tumor of
the Nasopharynx for which reason he was grounded since
November 1947 is admitted in the letter cranad(Exh. 69-A) of Dr.
Bernardo to the Medical Director of the CAA requesting waiver of
physical standards. The request for waiver of physical standards is
itself a positive proof that the physical condition of Capt.
Bustamante is short of the standard set by the CAA. The Deputy
Administrator of the CAA granted the request relying on the
representation and recommendation made by Dr.
Bernardo cranad(See Exh. 69). We noted, however, that the
request cranad(Exh. 69-A) says that it is believed that his continuing
to fly as a co-pilot does not involve any hazard.cralaw cranad(Italics
supplied). Flying as a First Officer entails a very different
responsibility than flying as a mere co-pilot. Defendant requested
the CAA to allow Capt. Bustamante to fly merely as a co-pilot and it
is safe to conclude that the CAA approved the request thus allowing
Bustamante to fly only as a co-pilot. For having allowed Bustamante
to fly as a First Officer on January 8, 1951, defendant is guilty of
gross negligence and therefore should be made liable for the
resulting accident.
As established by the evidence, the pilot used to get treatments
from Dr. Sycangco. He used to complain of pain in the face more
particularly in the nose which caused him to have sleepless nights.
Plaintiffs observation of the pilot was reported to the Chief Pilot
89

who did nothing about it. Captain Carbonel of the defendant
corroborated plaintiff of this matter. The complaint against the slow
reaction of the pilot at least proved the observation. The
observation could be disregarded. The fact that the complaint was
not in writing does not detract anything from the seriousness
thereof, considering that a miscalculation would not only cause the
death of the crew but also of the passengers.
One month prior to the crash-landing, when the pilot was preparing
to land in Daet, plaintiff warned him that they were not in the
vicinity of Daet but above the town of Ligao. The plane hit outside
the airstrip. In another instance, the pilot would hit the Mayon
Volcano had not plaintiff warned him. These more than prove what
plaintiff had complained of. Disregard thereof by defendant is
condemnable.
To bolster the claim that Capt. Bustamante has not suffered from
any kind of sickness which hampered his flying ability, appellant
contends that for at least one or more years following the accident
of January 8, 1951, Capt. Bustamante continued to fly for defendant
company as a pilot, and did so with great skill and proficiency, and
without any further accident or mishap, citing tsn. pp. 756-765,
January 20, 1965. We have painstakingly perused the records,
particularly the transcript of stenographic notes cited, but found
nothing therein to substantiate appellants contention. Instead, We
discovered that the citation covers the testimony of Dr. Bernardo on
the physical condition of Bustamante and nothing about his skills or
proficiency to fly nor on the mishaps or accidents, matters which
are beyond Dr. Bernardos competence anyway.
Assuming that the pilot was not sick or that the tumor did not affect
the pilot in managing the plane, the evidence shows that the
overshooting of the runway and crash-landing at the mangrove was
caused by the pilot for which acts the defendant must answer for
damages caused thereby. And for this negligence of defendants
employee, it is liable cranad(Joaquin vs. Aniceto, 12 SCRA 308). At
least, the law presumes the employer negligent imposing upon it
the burden of proving that it exercised the diligence of a good
father of a family in the supervision of its employees.
Defendant would want to tie plaintiff to the report he signed about
the crash-landing. The report was prepared by his pilot and because
the latter pleaded that he had a family too and would have nowhere
to go if he lost his job, plaintiffs compassion would not upturn the
truth about the crash-landing. We are for the truth not logic of any
argumentation.
At any rate, it is incorrect to say that the Accident
Report cranad(Exh. 12 & 12-A), signed by plaintiff, exculpated Capt.
Bustamante from any fault. We observed that the Report does not
categorically state that Capt. Bustamante was not at fault. It merely
relates in chronological sequence what Capt. Bustamante and
plaintiff did from the take-off from Manila to the landing in Daet
which resulted in an accident. On the contrary, we may infer the
negligence of Bustamante from the following portion of the Report,
to wit:
. cra . I felt his brakes strong but as we neared the intersection of
the NE-SW runway, the brakes were not as strong and I glanced at
the system pressure which indicated 900 lbs. per sq. m.
90

It was during the above precise instance that Capt. Bustamante lost
his bearing and disposition. Had he maintained the pressure on the
brakes the plane would not have overshot the runway. Verily,
Bustamante displayed slow reaction and poor judgment.cranad(CA
decision, pp. 8-12).
This Court is not impressed by, much less can We accept petitioners
invocation to calibrate once again the evidence testified to in detail
and plucked from the voluminous transcript to support petitioners
own conclusion. It is not the task of this Court to discharge the
functions of a trier of facts much less to enter into a calibration of
the evidence, notwithstanding petitioners wail that the judgment
of the respondent court is based entirely on speculations, surmises
and conjectures. We are convinced that respondent courts
judgment is supported by strong, clear and substantial
evidence.:onad
Petitioner is a common carrier 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, as defined in
Art. 1732, New Civil Code. The law is clear in requiring a common
carrier to exercise the highest degree of care in the discharge of its
duty and business of carriage and transportation under Arts. 1733,
1755 and 1756 of the New Civil Code. These Articles provide:
Art. 1733. Common carriers, from the nature of their business and
for reasons of public policy, are bound to observe extraordinary
diligence in the vigilance over the goods and for the safety of the
passengers transported by them, according to all the circumstances
of each case.
Such extraordinary diligence in the vigilance over the goods is
further expressed in Articles 1734, and 1745, Nos. 5, 6, and 7, while
the extraordinary diligence for the safety of the passengers is
further set forth in articles 1755 and 1756.
Art. 1755. A common carrier is bound to carry the passenger safely
as far as human care and foresight can provide, using the utmost
diligence of very cautious persons, with a due regard for all the
circumstances.
Art. 1756. In case of death of or injuries to passengers, common
carriers are presumed to have been at fault or to have acted
negligently, unless they prove that they observed extraordinary
diligence as prescribed in Articles 1733 and 1755.
The duty to exercise the utmost diligence on the part of common
carriers is for the safety of passengers as well as for the members of
the crew or the complement operating the carrier, the airplane in
the case at bar. And this must be so for any omission, lapse or
neglect thereof will certainly result to the damage, prejudice, nay
injuries and even death to all aboard the plane, passengers and
crew members alike.
Now to the damages. The Court of Appeals affirmed the award of
damages made by the trial court, stating that the damages
awarded plaintiff by the lower court are in accordance with the
facts, law and jurisprudence. The court further observed that
defendant-appellant is still fortunate, considering that the
unearned income was reckoned with only up to 1968 and not up to
the present as plaintiff-appellee is still living. Whatever
mathematical error defendant-appellant could show by abstract
91

argumentation, the same must be compensated by such deficiency
of the damages awarded to plaintiff-appellee.
As awarded by the trial court, private respondent was entitled to
P198,000.00 as unearned income or compensatory damages;
P50,000.00 for moral damages, P20,000.00 as attorneys fees and
P5,000.00 as expenses of litigation, or a total of P273,000.00.
The trial court arrived at the sum of P198,000.00 as unearned
income or damages by considering that respondent Samson could
have continued to work as airline pilot for fifteen more years, he
being only 38 years at the time the services were terminated by the
defendant cranad(PAL) and he would have earned P120,000.00
from 1954 to 1963 or a period of ten cranad(10) years at the rate of
one thousand per month cranad(P750.00 basic salary plus P300.00
extra pay for extra flying time and bonuses; and considering further
that in 1964 the basic pay of defendants pilot was increased to
P12,000.00 annually, the plaintiff could have earned from 1964 to
1968 the sum of P60,000.00 in the form of salaries and another
P18,000.00 as bonuses and extra pay for extra flying time at the
same rate of P300 a month, or a grand total of P198,000.00 for the
entire period. This claim of the plaintiff for loss or impairment of
earning capacity is based on the provision of Article 2205 of the
New Civil Code of the Philippines which provides that damages
may be recovered for loss or impairment of earning capacity in
cases of temporary or permanent personal injury. This provision of
law has been construed and interpreted in the case of Aureliano
Ropato, et al. vs. La Mallorca General Partnership, 56 O.G., 7812,
which rules that law allows the recovery of damages for loss or
impairment of earning capacity in cases of temporary or permanent
personal injury. chanroblesvirtualawlibrary(Decision, CFI, pp. 98-
99, Record on Appeal)
The respondent appellate court modified the above award by
ordering payment of legal interest on the P198,000.00 unearned
income from the filing of the claim, citing Sec. 8, Rule 51 of the
Rules of Court.
Petitioner assails the award of the total sum of P198,000.00 as
unearned income up to 1968 as being tenuous because firstly, the
trial courts finding affirmed by the respondent court is allegedly
based on pure speculation and conjecture and secondly, the award
of P300.00 a month as extra pay for extra flying time from 1954 to
1968 is likewise speculative. PAL likewise rejects the award of moral
damages in the amount of P50,000.00 on the ground that private
respondents action before the trial court does not fall under any of
the cases enumerated in the law cranad(Art. 2219 of the New Civil
Code) for which moral damages are recoverable and that although
private respondents action gives the appearance that it is covered
under quasi-delict as provided in Art. 21 of the New Civil Code, the
definition of quasi-delict in Art. 2176 of the New Civil Code expressly
excludes cases where there is a pre-existing contractual relation
between the parties, as in the case under consideration, where an
employer-employee relationship existed between PAL and private
respondent. It is further argued that private respondents action
cannot be deemed to be covered by Art. 21, inasmuch as there is no
evidence on record to show that PAL wilfully cause(d) loss or injury
tocranad(private respondent) in a manner that is contrary to
morals, good customs or public policy . cra . Nor can private
respondents action be considered analogous to either of the
foregoing, for the reasons are obvious that it is
92

not. chanroblesvirtualawlibrary(Memorandum of petitioner, pp.
418-421, Records)
Having affirmed the gross negligence of PAL in allowing Capt. Delfin
Bustamante to fly the plane to Daet on January 8, 1951 whose slow
reaction and poor judgment was the cause of the crash-landing of
the plane which resulted in private respondent Samson hitting his
head against the windshield and causing him injuries for which
reason PAL terminated his services and employment as pilot after
refusing to provide him with the necessary medical treatment of
respondents periodic spells, headache and general debility
produced from said injuries, We must necessarily affirm likewise the
award of damages or compensation under the provisions of Art.
1711 and Art. 1712 of the New Civil Code which provide:
Art. 1711. Owners of enterprises and other employers are obliged
to pay compensation for the death or injuries to their laborers,
workmen, mechanics or other employees, even though the event
may have been purely accidental or entirely due to a fortuitous
cause, if the death or personal injury arose out of and in the course
of the employment. The employer is also liable for compensation if
the employee contracts any illness or disease caused by such
employment or as the result of the nature of the employment. If the
mishap was due to the employees own notorious negligence, or
voluntary act, or drunkenness, the employer shall not be liable for
compensation. When the employees lack of due care contributed
to his death or injury, the compensation shall be equitably reduced.
Art. 1712. If the death or injury is due to the negligence of a fellow-
worker, the latter and the employer shall be solidarily liable for
compensation. If a fellow-workers intentional or malicious act is the
only cause of the death or injury, the employer shall not be
answerable, unless it should be shown that the latter did not
exercise due diligence in the selection or supervision of the plaintiffs
fellow-worker.
The grant of compensatory damages to the private respondent
made by the trial court and affirmed by the appellate court by
computing his basic salary per annum at P750.00 a month as basic
salary and P300.00 a month for extra pay for extra flying time
including bonus given in December every year is justified. The
correct computation however should be P750 plus P300 x 12
months = P12,600 per annum x 10 years = P126,000.00 cranad(not
P120,000.00 as computed by the court a quo). The further grant of
increase in the basic pay of the pilots to P12,000 annually for 1964
to 1968 totalling P60,000.00 and another P18,000.00 as bonuses
and extra pay for extra flying time at the same rate of P300.00 a
month totals P78,000.00. Adding P126,000.00 cranad(1964 to 1968
compensation) makes a grand total of P204,000.00 cranad(not
P198,000.00 as originally computed).
As to the grant of moral damages in the sum of P50,000.00 We also
approve the same. We have noted and considered the holding of
the appellate court in the matter of bad faith on the part of PAL,
stated hereunder, this wise:
None of the essential facts material to the determination of the
case have been seriously assailed: the overshooting of runway and
crash-landing into the mangroves; the hitting of plaintiffs head to
the front windshield of the plane; the oozing of blood out of his
ears, nose and mouth; the intermittent dizzy spells, headaches and
general debility thereafter for which he was discharged from his
93

employment; the condition of not to attribute the cause of the
ailment to the crash-landing imposed in bad faith for a demanded
special medical service abroad; and the resultant brain injury which
defendants doctors could not understand nor diagnose.
x x x
The act of defendant-appellant in unjustly refusing plaintiff-
appellees demand for special medical service abroad for the reason
that plaintiff-appellees deteriorating physical condition was not
due to the accident violates the provisions of Article 19 of the Civil
Code on human relations to act with justice, give everyone his due,
and observe honesty and good
faith. chanroblesvirtualawlibrary(CA Resolution, pp. 151-152,
Records)
We reject the theory of petitioner that private respondent is not
entitled to moral damages. Under the facts found by the trial court
and affirmed by the appellate court and under the law and
jurisprudence cited and applied, the grant of moral damages in the
amount of P50,000.00 is proper and justified.
The fact that private respondent suffered physical injuries in the
head when the plane crash-landed due to the negligence of Capt.
Bustamante is undeniable. The negligence of the latter is clearly a
quasi-delict and therefore Article 2219, cranad(2) New Civil Code is
applicable, justifying the recovery of moral damages.
Even from the standpoint of the petitioner that there is an
employer-employee relationship between it and private respondent
arising from the contract of employment, private respondent is still
entitled to moral damages in view of the finding of bad faith or
malice by the appellate court, which finding We hereby affirm,
applying the provisions of Art. 2220, New Civil Code which provides
that willful injury to property may be a legal ground for awarding
moral damages if the court should find that, under the
circumstances, such damages are justly due. The same rule applies
to breaches of contract where the defendant acted fraudulently or
in bad faith.
The justification in the award of moral damages under Art. 19 of the
New Civil Code on Human Relations which requires that every
person must, in the exercise of his rights and in the performance of
his duties, act with justice, give everyone his due, and observe
honesty and good faith, as applied by respondent court is also well-
taken and We hereby give Our affirmance thereto.
With respect to the award of attorneys fees in the sum of
P20,000.00 the same is likewise correct. As pointed out in the
decision of the Court of Appeals, the plaintiff is entitled to
attorneys fees because he was forced to litigate in order to enforce
his valid claim cranad(Ganaban vs. Bayle, 30 SCRA 365; De la Cruz
vs. De la Cruz, 22 SCRA 33; and many others); defendant acted in
bad faith in refusing plaintiffs valid claimcranad(Filipino Pipe
Foundry Corporation vs. Central Bank, 23 SCRA 1044); and plaintiff
was dismissed and was forced to go to court to vindicate his
right cranad(Nadura vs. Benguet Consolidated, Inc., 5 SCRA 879).
We also agree with the modification made by the appellate court in
ordering payment of legal interest from the date judicial demand
was made by Pilot Samson against PAL with the filing of the
complaint in the lower court. We affirm the ruling of the
respondent court which reads:
94

Lastly, the defendant-appellant claims that the legal rate of
interest on the unearned compensation should be computed from
the date of the judgment in the lower court, not from the filing of
the complaint, citing a case where the issue raised in the Supreme
Court was limited to when the judgment was rendered in the lower
court or in the appellate court, which does not mean that it should
not be computed from the filing of the complaint.
Articles 1169, 2209 and 2212 of the Civil Code govern when interest
shall be computed. Thereunder interest begins to accrue upon
demand, extrajudicial or judicial. A complaint is a judicial
demand cranad(Cabarroguis vs. Vicente, 107 Phil. 340). Under
Article 2212 of the Civil Code, interest due shall earn legal interest
from the time it is judicially demanded, although the obligation may
be silent upon this point. chanroblesvirtualawlibrary(CA
Resolution, pp. 153-154, Records).
The correct amount of compensatory damages upon which legal
interest shall accrue from the filing of the complaint is P204,000.00
as herein computed and not P198,000.00.
WHEREFORE, in view of all the foregoing, the judgment of the
appellate court is hereby affirmed with slight modification in that
the correct amount of compensatory damages is P204,000.00. With
costs against petitioner.
SO ORDERED.
Makasiar and De Castro, JJ., concur.
Teehankee and Melencio-Herrera, JJ., concur in the result.


[G.R. No. 127473. December 8, 2003]
PHILIPPINE AIRLINES, INC., petitioner, vs. COURT OF APPEALS, JUDY
AMOR, JANE GAMIL, minors GIAN CARLO AMOR represented by
ATTY. OWEN AMOR, and CARLO BENITEZ represented by JOSEPHINE
BENITEZ, respondents.

Before us is a petition for review on certiorari under Rule 45 of the
Rules of Court seeking the reversal of the decision[1] dated August
12, 1996, in CA-G.R. CV No. 38327[2] and the Resolution
dated November 15, 1996 denying the motion for reconsideration
of Philippine Airlines, Inc. (petitioner for brevity).
Private respondents Judy Amor, Jane Gamil, minor Gian Carlo Amor,
represented by his father, Atty. Owen Amor, and, minor Carlo
Benitez, represented by his mother, Josephine Benitez, filed with
the Regional Trial Court (Branch 53), Sorsogon, Sorsogon, a
complaint[3] for damages against petitioner due to the latters
failure to honor their confirmed tickets.
In support of their claim, private respondents presented evidence
establishing the following facts:
Private respondent Judy Amor purchased three confirmed plane
tickets for her and her infant son, Gian Carlo Amor as well as her
sister Jane Gamil for theMay 8, 1988, 7:10 a.m. flight, PR 178,
bound for Manila from defendants branch office
95

in Legaspi City. Judy Amor, a dentist and a member of the Board of
Directors of the Sorsogon Dental Association, was scheduled to
attend the National Convention of the Philippine Dental Association
from May 8 to 14, 1988 at the Philippine International Convention
Center. [4]
On May 8, 1988, Judy with Gian, Jane and minor Carlo Benitez,
nephew of Judy and Jane, arrived at the Legaspi Airport at 6:20 a.m.
for PR 178. Carlo Benitez was supposed to use the confirmed ticket
of a certain Dra. Emily Chua.[5] They were accompanied by Atty.
Owen Amor and the latters cousin, Salvador Gonzales who fell in
line at the check-in counter with four persons ahead of him and
three persons behind him[6] while plaintiff Judy went to the office
of the station manager to request that minor plaintiff Carlo Benitez
be allowed to use the ticket of Dra. Chua.[7] While waiting for his
turn, Gonzales was asked by Lloyd Fojas, the check-in clerk on duty,
to approach the counter. Fojas wrote something on the tickets
which Gonzales later read as late check-in 7:05. When Gonzales
turn came, Fojas gave him the tickets of private respondents Judy,
Jane and Gian and told him to proceed to the cashier to make
arrangements.[8]
Salvador then went to Atty. Amor and told him about the
situation. Atty. Amor pleaded with Fojas, pointing out that it is
only 6:45 a.m., but the latter did not even look at him or utter any
word. Atty. Amor then tried to plead with Delfin Canonizado and
George Carranza, employees of petitioner, but still to no
avail. Private respondents were not able to board said flight. The
plane left at 7:30 a.m., twenty minutes behind the original
schedule.[9]
Private respondents went to the bus terminals hoping to catch a
ride for Manila. Finding none, they went back to the airport and
tried to catch an afternoon flight.[10] Unfortunately, the 2:30
p.m. flight, PR 278, was cancelled due to aircraft
situation.[11] Private respondents were told to wait for the 5:30
p.m. flight, PR 180. They checked-in their bags and were told to
hand in their tickets. Later, a PAL employee at the check-in counter
called out the name of private respondent minor Carlo
Benitez. Plaintiff Judy approached the counter and was told by the
PAL personnel that they cannot be accommodated. Fojas who was
also at the counter then removed the boarding passes inserted in
private respondents tickets as well as the tags from
their luggages.[12]
Manuel Baltazar, a former Acting Manager of petitioner
in Legaspi City in May 1988, testified that based on his investigation,
the private respondents, although confirmed passengers, were not
able to board PR 178 in the morning of May 8, 1988 because there
were go-show or waitlisted and non-revenue passengers who
were accommodated in said flight. He also noted that there was
overbooking for PR 178.[13]
On the other hand, petitioner contends that private respondents
are not entitled to their claim for damages because they were late
in checking-in for PR 178; and that they were only chance or
waitlisted passengers for PR 180 and were not accommodated
because all confirmed passengers of the flight had checked-in. In
support thereof, petitioner presented Lloyd Fojas, who testified, as
follows:
96

In the morning of May 8, 1988, he was on duty at the check-in
counter of the Legaspi Airport. He was the one who attended to the
tickets of private respondents which were tendered by Salvador
Gonzales at 7:05 a.m. when the counter was already closed. The
clock at the check-in counter showed that it was already 7:05 and so
he told Gonzales that they are already late and wrote late check-in,
7:05 on private respondents tickets. The flight was scheduled to
leave at 7:10 a.m. and checking-in is allowed only until 30 minutes
before departure time. At the time private respondents went to the
check-in counter, passengers were already leaving the pre-
departure area and going towards the plane and there were no
more passengers in the check-in area, not even waitlisted
passengers. The baggages of the passengers have been loaded in
the aircraft. Gonzales left and later came back with Atty. Amor who
pleaded that plaintiffs be accommodated in the flight. He told
Atty. Amor to go to his supervisor to re-book the tickets because
there were no more boarding passes and it was already time for
boarding the plane. Atty. Amor then left the counter. [14]
On cross-examination, Fojas testified that he did not know how
many waitlisted or non-revenue passengers were accommodated or
issued boarding passes in the 7:00 a. m. and in the afternoon flight
of May 8, 1988.[15]
After trial, the RTC rendered judgment upholding the evidence
presented by private respondents, the dispositive portion of which
reads:
WHEREFORE, judgment is hereby rendered:
(a) ordering the defendant to reimburse the plaintiffs the amount
of P1,171.60 representing the purchase price of the four (4) plane
tickets;
(b) condemning the defendant to pay plaintiffs Judy Amor and
Jane Gamil the amount of P250,000.00 each as moral
damages, P200,000.00 as exemplary damages, plusP100,000.00 as
actual damages;
(c) for the defendant to pay plaintiffs the amount of P30,000.00
as attorneys fees, plus P500.00 for every appearance, or a total
of P10,500.00 for 21 actual appearance (sic) in court, P2,000.00 as
incidental litigation expenses, and to pay the cost of the suit.
SO ORDERED.[16]
Aggrieved, petitioner appealed to the Court of Appeals (CA for
brevity) which affirmed the judgment of the trial court in toto and
denied petitioners motion for reconsideration.
Hence, the present petition of PAL, raising the following issues:
I
WHETHER PRIVATE RESPONDENTS WERE LATE CHECKED-IN
PASSENGERS AND WHETHER THE FAILURE OF AN AIRLINE TO
ACCOMMODATE A PASSENGER WHO CHECKED IN LATE IS
ACTIONABLE SO AS TO ENTITLE THEM TO DAMAGES.
II
97

ASSUMING ARGUENDO THAT PETITIONER IS LIABLE, WHETHER THE
AMOUNT OF DAMAGES AWARDED TO PRIVATE RESPONDENTS IS
EXCESSIVE, UNCONSCIONABLE AND UNREASONABLE.[17]
In support of the first issue, petitioner argues:
(1) While ordinarily, the findings of the CA are accepted as
conclusive by this Court, there are instances when the Court may
make its own findings such as when the appellate court based its
findings on speculation, surmises or conjectures. The appellate
court erroneously gave too much reliance on the testimony
of Baltazar who is a disgruntled former employee and relative of
private respondent Amor. He was not present at the time of the
incident. Baltazarmerely interpreted the flight manifest and made a
lot of speculations which is undeserving of attention and merit.
(2) Its employees are adequately trained and service oriented
that they would not dare violate company rules and
regulations. They are aware of the drastic consequences that may
befall them as what happened to Baltazar.
(3) As to PR 180, private respondents were merely waitlisted
in said flight hence it was known to them that their accommodation
in said flight was dependent upon the failure of any confirmed
passenger to check-in within the regulation check-in
time. Unfortunately for them, all the confirmed passengers on PR
180 checked-in on time.
In support of the second issue, petitioner contends:
(1) The award of actual, moral and exemplary damages to
private respondents have no factual nor legal basis at all. Its failure
to accommodate private respondents on Flights PR 178, 278 and
180 was not motivated by bad faith or malice but due to a situation
which private respondents brought upon themselves. It had exerted
utmost and sincere effort to lessen the agony and predicament of
private respondents. They immediately made protective bookings
for private respondents on the 2:30 p.m. flight, PR 278, which
unfortunately was cancelled due to aircraft situation. Upon
cancellation of PR 278, they made special arrangements to enable
private respondents to have first priority in PR 180 in case of a no
show confirmed passenger.
(2) To award damages to a passenger who checked-in late
would place a premium or reward for breach of contract that would
encourage passengers to intentionally check-in late with the
expectation of an award of damages.
(3) Moral and exemplary damages as well as attorneys fees
are not recoverable in damage suits predicated on breach of
contract of carriage unless there is evidence of fraud, malice or bad
faith on the part of the carrier. Even assuming arguendo that
petitioner is liable for damages, the amounts awarded in favor of
private respondents are excessive, unreasonable and
unconscionable. The primary object of an award of damages in a
civil action is compensation or indemnity or to repair the wrong that
has been done. Damages awarded should be equal to, and
commensurate with, the injury sustained.
(4) It was erroneous to award damages in favor of
Jane Gamil when she never appeared before the trial court to prove
her claim for damages.
98

In their Comment, private respondents stress that the fact they
were not late in checking-in for PR 178 has been substantially
established in the hearing before the trial court and affirmed by the
CA. They maintain that, contrary to the assertion of petitioner, they
have established their case not only by a preponderance of
evidence but by proof that is more than what is required by law
justifying the factual findings of the trial court and the CA.
Private respondents point out that since the issues raised by this
petition are factual and do not fall under exceptional circumstances,
there is nothing left to be reviewed or examined by the Supreme
Court.
As to the damages awarded, private respondents contend that the
amounts awarded are not excessive, unconscionable or
unreasonable because of the high-handed, malicious, dictatorial and
savage act of petitioners employee which caused them untold
mental anguish, excruciating pain, public contempt and ridicule,
sleepless nights and other forms of moral suffering.
In its Reply, petitioner reiterates its earlier points and questions
once more the credibility of private respondents witnesses,
particularly Atty. Owen Amor, Salvador Gonzales and
Manuel Baltazar who are related to the respondents by blood or
affinity.
In their Rejoinder, private respondents aver that the findings of
facts of the courts a quo were based not only on the testimonies of
their witnesses but also on petitioners own employee, Lloyd Fojas,
who testified that there were non-revenue, go-show and waitlisted
passengers who were accommodated in PR 178. They reiterate their
position that where there is a question regarding the credibility of
witnesses, the findings of trial courts are generally not disturbed by
appellate courts. Finally, as to the damages awarded, private
respondents claim that there was substantial basis in awarding such
amounts.
Evidently, in resolving the two issues raised in the present petition,
it is inevitable and most crucial that we first determine the question
whether or not the CA erred in upholding the RTC ruling that private
respondents were late in checking-in. Both issues call for a review
of the factual findings of the lower courts.
In petitions for review on certiorari under Rule 45 of the Rules of
Court, the general rule is that only questions of law may be raised
by the parties and passed upon by this Court.[18] Factual findings of
the appellate court are generally binding on us especially when in
complete accord with the findings of the trial court.[19]This is
because it is not our function to analyze or weigh the evidence all
over again.[20] However, this general rule admits of exceptions, to
wit:
(a) where there is grave abuse of discretion; (b) when the finding is
grounded entirely on speculations, surmises or conjectures; (c)
when the inference made is manifestly mistaken, absurd or
impossible; (d) when the judgment of the Court of Appeals was
based on a misapprehension of facts; (e) when the factual findings
are conflicting; (f) when the Court of Appeals, in making its findings,
went beyond the issues of the case and the same are contrary to
the admissions of both appellant and appellee; (g) when the Court
of Appeals manifestly overlooked certain relevant facts not disputed
by the parties and which, if properly considered, would justify a
99

different conclusion; and, (h) where the findings of fact of the Court
of Appeals are contrary to those of the trial court, or are mere
conclusions without citation of specific evidence, or where the facts
set forth by the petitioner are not disputed by the respondent, or
where the findings of fact of the Court of Appeals are premised on
the absence of evidence and are contradicted by the evidence on
record.[21]
Petitioner invokes exception (b).
As to the first issue: Whether or not private respondents checked-in
on time for PR 178. The determination of this issue is necessary
because it is expressly stipulated in the airline tickets issued to
private respondents that PAL will consider the reserved seat
cancelled if the passenger fails to check-in at least thirty minutes
before the published departure time.[22]
After a careful review of the records, we find no reason to disturb
the affirmance by the CA of the findings of the trial court that the
private respondents have checked-in on time; that they reached the
airport at 6:20 a.m., based on the testimonies of private respondent
Judy Amor, and witnesses Salvador Gonzales and Atty.
Owen Amor who were consistent in their declarations on the
witness stand and corroborated one anothers statements; and that
the testimony of petitioners lone witness, Lloyd Fojas is not
sufficient to overcome private respondents evidence.
We have repeatedly held that the truth is established not by the
number of witnesses but by the quality of their testimonies.[23] In
the present case, it cannot be said that the quality of the testimony
of petitioners lone witness is greater than those of the private
respondents. Fojas testified that when respondents went to the
check-in counter, there were no more persons in that area
since all the passengers already boarded the plane.[24] However,
the testimonies of Manuel Baltazarand Judy Amor together with the
manifest, Exhibits E, E-1 and E-2, point to the fact that many
passengers were not able to board said flight, including confirmed
passengers, because of overbooking.[25]
It is a well-entrenched principle that absent any showing of grave
abuse of discretion or any palpable error in its findings, this Court
will not question the probative weight accorded by the lower courts
to the various evidence presented by the parties. As we explained
in Superlines Transportation Co. Inc., vs. ICC Leasing & Financing
Corporation:[26]
The Court is not tasked to calibrate and assess the probative weight
of evidence adduced by the parties during trial all over againSo
long as the findings of facts of the Court of Appeals are consistent
with or are not palpably contrary to the evidence on record, this
Court shall decline to embark on a review on the probative weight
of the evidence of the parties.[27] (Emphasis supplied)
It is also well established that findings of trial courts on the
credibility of witnesses is entitled to great respect and will not be
disturbed on appeal except on very strong and cogent
grounds.[28] Petitioner failed to demonstrate that the trial court
committed any error in upholding the testimonies of private
respondents witnesses. We find that the CA committed no
reversible error in sustaining the findings of facts of the trial court.
100

Private respondents who had confirmed tickets for PR 178 were
bumped-off in favor of non-revenue passengers. Witness
Manuel Baltazar, a former Acting Manager of petitioner, evaluated
the manifest for PR 178 and found that there were non-revenue
passengers allowed to go on board. He specifically identified the
family of Labanda, a certain Mr. Luz, petitioners former branch
manager, and, a certain Mr. Moyo. [29] Although petitioner had
every opportunity to refute such testimony, it failed to present any
countervailing evidence. Instead, petitioner merely focused on
assailing the credibility of Baltazar on the ground that he was a
disgruntled employee and a relative of private respondents. Apart
from the bare allegations in petitioners pleadings, no evidence was
ever presented in court to substantiate its claim that Baltazar was a
disgruntled employee that impelled him to testify against
petitioner.
As to his relationship with private respondents, this Court has
repeatedly held that a witness relationship to the victim does not
automatically affect the veracity of his or her testimony.[30] While
this principle is often applied in criminal cases, we deem that the
same principle may apply in this case, albeit civil in nature. If a
witness relationship with a party does not ipso facto render him a
biased witness in criminal cases where the quantum of evidence
required is proof beyond reasonable doubt, there is no reason why
the same principle should not apply in civil cases where the
quantum of evidence is only preponderance of evidence.
As aptly observed by the CA which we hereby adopt:
Ironically for the defendant, aside from appellants assumption
that Baltazar could be a disgruntled former employee of their
company and could be biased (which same reason could be
attributed to Lloyd Fojas) due to a distant relationship with the
plaintiff, it offered no proof or evidence to rebut, demean and
contradict the substance of the testimony of Baltazar on the crucial
point that plaintiffs-appellees were bumped off to accommodate
non-revenue, waitlisted or go-show passengers. On this fact alone,
defendants position weakens while credibly establishing that
indeed plaintiffs arrived at the airport on time to check-in for Flight
PR 178. Further emphasis must be made that Lloyd Fojas even
affirmed in court that he can not recall how many PR 178 boarding
passes he had at the check-in counter because management has
authority to accommodate in any flight and correspondingly issue
boarding passes to non-revenue passengers (pages 15-16,
TSN, January 24, 1990).[31]
Indeed, petitioner, through its lone witness Fojas, could only answer
during his examination on the witness stand that he is unable to
recall the circumstances recommending the issuances of boarding
passes to waitlisted and that it is the management which has the
authority to issue boarding passes to non-revenue
passengers.[32] Even in the afternoon flight, PR 180, Fojas could not
squarely deny that confirmed paying passengers were bumped-off
in favor of non-revenue ones.[33]
The CA likewise correctly concluded that there was overbooking in
the morning flight on the basis of the testimony of private
respondents witness ManuelBaltazar, to wit:
ATTY. CALICA:
101

Q- There was a memorandum order of the PAL prohibiting
overbooking. Are you aware of CAB Regulation No. 7 on boarding
passengers?
WITNESS:
A- Yes.
ATTY. CALICA:
Q- You will agree with me that this regulation allows only
overbooking by 10%?
WITNESS:
A- Yes, that is a government regulation and the company
regulation is different.
COURT:
Q- But in the morning flight of May 8, 1988, granting that the
government regulation allows only 10% overbooking, can you tell
the Court from the manifest itself whether it exceeded the 10%
overbooking allowed by the regulation reckoning from the 109
passenger seater?
WITNESS:
A- With the capacity of 109, 10% of it will be 10 or 11, so if we add
this it will not exceed 120 passengers.
COURT:
Q- In that flight how many were confirmed?
WITNESS:
Q- In that flight those passengers that were confirmed have a total
of 126.
COURT:
Q- Even if when allowed the government regulation of
overbooking, you will still exceed the allowable overbooking
number?
WITNESS:
A- Yes.[34] (Emphasis supplied)
This fact of overbooking, again, was not adequately refuted by
petitioners evidence.
The appellate court aptly sustained the trial court in giving
probative weight to the testimony of private respondent
Judy Amor that there were other passengers who were not
accommodated in flight PR 178, to wit:
Q: And how about you, what did you do when you arrived at
the Legaspi Airport at 6:20 while Salvador Gonzales was at the
check-in counter to pay the tickets?
A: I went to the Office of the OIC Manager at the right side of
the Legaspi Terminal.

Q: Who was that Manager?
102

A: I was able to know his name as Delfin Canonizado.
Q: There were also people there near the table of Mr. Canonizado,
do you know what were they doing?
A: They were making complaints also because they were also
scheduled for flight on that day. They were not
accommodated.[35] (Emphasis supplied)
We have noted an inconsistency in the testimony of private
respondents witness, Salvador Gonzales in the direct and cross-
examinations. In his direct testimony, Gonzales stated that while he
was waiting in line at the check-in counter, with four persons still
ahead of him, Lloyd Fojas asked him to approach the counter, took
private respondents tickets and wrote something on them. It was
only later on when his turn came, that he found out that
what Fojas wrote on the tickets was late check-n 7:05. On cross-
examination, Gonzales testified that it was only after the four
persons ahead of him were accommodated that Fojaswrote on the
tickets late check-in 7:05. However, upon clarificatory questions
propounded by the trial court, Gonzales was able to clarify
that Fojas had written the time on the ticket before the four
persons ahead of him were entertained at the
counter.[36] Understandably, the lower courts found no cogent
reason to discredit the testimony of witness Gonzales.
We have held in an earlier case that a witness may contradict
himself on the circumstances of an act or different acts due to a
long series of questions on cross-examination during which the
mind becomes tired to such a degree that the witness does not
understand what he is testifying about, especially if the questions,
in their majority are leading and tend to make him ratify a former
contrary declaration.[37]
In fine, the findings of fact of the trial court, as sustained by the CA,
have to be respected. As we have consistently held, trial courts
enjoy the unique advantage of observing at close range the
demeanor, deportment and conduct of witnesses as they give their
testimonies. Thus, assignment to declarations on the witness stand
is best done by them who, unlike appellate magistrates, can weigh
firsthand the testimony of a witness.[38]
Anent the second issue as to whether or not the damages awarded
are excessive, we rule in the affirmative. The Court of Appeals
committed an error in sustaining the ruling of the trial court
requiring petitioner to reimburse private respondents the amount
of four plane tickets, including the ticket for private respondent
minor Carlo Benitez.
As admitted by private respondent Judy in her testimony, the only
confirmed tickets for the morning flight (PR 178) are the tickets for
herself, her infant son,Gian Carlo and her sister Jane Gamil. They
had another ticket which Judy bought for a certain Dra. Emily Chua
who backed out and whose ticket they had intended to be
transferred to Carlo Benitez.[39] Although it is clearly stated in the
ticket that the same is non-transferrable,[40] Judy testified that a
PAL employee issued another ticket in the name of Carlo Benitez in
lieu of the ticket issued for Dra. Chua. However, an examination of
the ticket issued, Exhibit C, discloses that it does not state therein
the flight number or time of departure. Consequently, in the
absence of competent evidence, private respondent Carlo Benitez
complaint should be dismissed.
103

We find no justifiable reason that warrants the award
of P100,000.00 as actual damages in favor of all private
respondents. Article 2199 of the Civil Code, provides that actual or
compensatory damages may only be given for such pecuniary loss
suffered by him as he has duly proved. We explained in Chan
vs.Maceda[41] that:
A court cannot rely on speculations, conjectures or guesswork as
to the fact and amount of damages, but must depend upon
competent proof that they have been suffered by the injured party
and on the best obtainable evidence of the actual amount thereof.
It must point out specific facts which could afford a basis for
measuring whatever compensatory or actual damages are
borne.[42]
All that was proved by herein private respondents was the amount
of the purchase price of the plane tickets of private respondents
Judy, Jane and Gian Carlo. Only said amounts should therefore be
considered in awarding actual damages. As borne by the records,
private respondent Judy Amor paid P466.00 each for her ticket and
that of Jane; while she paid P46.60 for her
infant Gian Carlo.[43] The amount of actual damages should
therefore be reduced to P978.60, payable to private respondent
Judy Amor.
As to moral damages.
It should be stressed that moral damages are not intended to enrich
a plaintiff at he expense of the defendant but are awarded only to
allow the former to obtain means, diversion or amusements that
will serve to alleviate the moral suffering he has undergone due to
the defendants culpable action.[44] We emphasized in Philippine
National Bank vs. Court of Appeals that moral damages are not
punitive in nature but are designed to somehow alleviate the
physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock, social
humiliation and similar injury unjustly caused to a person. We have
held that even though moral damages are incapable of pecuniary
computation, it should nevertheless be proportional to and in
approximation of the suffering inflicted. And, to be recoverable,
such damage must be the proximate result of a wrongful act or
omission the factual basis for which is satisfactorily established by
the aggrieved party. [45]
In the case at bar, private respondent Judy Amor testified that she
felt ashamed when the plane took off and they were left at the
airport since there were many people there who saw them
including dentists like her. She also related that she missed the
Philippine Dental Convention scheduled on the 8th of May,
1988 where she was supposed to attend as a dentist and officer of
the Sorsogon Dental Association. They tried to look for buses
bound for Manila but missed those scheduled in the morning. They
went back to the airport but still failed to take an afternoon
flight. Hence, she was forced to take a bus that evening
forManila which did not allow her to sleep that night.[46] Private
respondent Judy however did not miss the whole convention as she
was able to leave on the night of the first day of the week-long
convention.
While there is no hard and fast rule for determining what would be
a fair amount of moral damages, generally, the amount awarded
should be commensurate with the actual loss or injury suffered.[47]
104

The CA erred in upholding the trial courts award of moral damages
based on Judy Amors claim that there was a denigration of her
social and financial standing. Private respondent Judy failed to
show that she was treated rudely or disrespectfully by petitioners
employees despite her stature as a dentist. As we held in Kierulf vs.
Court of Appeals[48]
The social and financial standing of Lucila cannot be considered in
awarding moral damages. The factual circumstances prior to the
accident show that no rude and rough reception, no menacing
attitude, no supercilious manner, no abusive language and
highly scornful reference was given her. The social and financial
standing of a claimant of moral damages may be considered in
awarding moral damages only if he or she was subjected to
contemptuous conduct despite the offenders knowledge of his or
her social and financial standing.[49] (Emphasis supplied)
Nevertheless, we hold that private respondent Judy Amor is entitled
to moral damages. In a number of cases, we have pronounced that
air carriage is a business possessed with special
qualities. In Singson vs. Court of Appeals,[50] we explained that:
A contract of air carriage is a peculiar one. Imbued with public
interest, common carriers are required by law to carry passengers
safely as far as human care and foresight can provide, using the
utmost diligence of a very cautious person, with due regard for all
the circumstances. A contract to transport passengers is quite
different in kind and degree from any other contractual
relation. And this because its business is mainly with the traveling
public. It invites people to avail of the comforts and advantages it
offers. The contract of carriage, therefore, generates a relation
attended with a public duty. Failure of the carrier to observe this
high degree of care and extraordinary diligence renders it liable for
any damage that may be sustained by its passengers.[51]
As the lower courts have found, evidence positively show that
petitioner has accommodated waitlisted and non-revenue
passengers and had overbooked more than what is allowed by law,
to the prejudice of private respondents who had confirmed
tickets. Overbooking amounts to bad faith[52] and therefore
petitioner is liable to pay moral damages to respondent Judy Amor.
Considering all the foregoing, we deem that the award
of P250,000.00 as moral damages in favor of private respondent
Judy Amor is exorbitant. Where the damages awarded are far too
excessive compared to the actual losses sustained by the aggrieved
party, the same should be reduced to a more reasonable
amount.[53] We find the amount of P100,000.00 to be sufficient,
just and reasonable.
We consider the award of actual damages in favor of private
respondent Jane Gamil to be inappropriate considering the
testimony of Judy Amor that she was the one who paid for the
tickets.[54] Likewise, the appellate court erred in sustaining the
award of moral damages in favor of Jane Gamil as she never
testified in court. It has been held that where the plaintiff fails to
take the witness stand and testify as to his social humiliation,
wounded feelings and anxiety, moral damages cannot be
recovered.[55]
As to the award of exemplary damages, Article 2234 of the Civil
Code provides that the claimant must show that he would be
105

entitled to moral, temperate or compensatory damages before the
court may consider the question whether or not exemplary
damages should be awarded.
Consequently, private respondent Jane Gamil, not being entitled to
actual and moral damages, is not entitled to exemplary damages.
The award of exemplary damages in favor of private respondent
Judy Amor is warranted in this case.[56] Waitlisted and non-
revenue passengers were accommodated while private respondent
Judy Amor who had fully paid her fare and was a confirmed
passenger was unduly deprived of enplaning. Petitioner was guilty
of overbooking its flight to the prejudice of its confirmed
passengers. This practice cannot be countenanced especially
considering that the business of air carriage is imbued with public
character. We have ruled that where in breaching the contract of
carriage, the airline is shown to have acted in bad faith, as in this
case,[57] the award of exemplary damages in addition to moral and
actual damages is proper.[58] However, as in the matter of the
moral damages awarded by the trial court, we consider the amount
of P200,000.00 as exemplary damages to be far too excessive. The
amount of P25,000.00 is just and proper.
We find the award of attorneys fees in this case to be in order since
it is well settled that the same may be awarded when the
defendants act or omission has compelled the plaintiff to litigate
with third persons or to incur expenses to protect his interest.[59]
WHEREFORE, we affirm the decision of the Court of Appeals with
the following MODIFICATIONS:
1. Petitioner is ordered to pay private respondent Judy Amor the
amount of P978.60 as and for actual damages; P100,000.00 as
moral damages;P25,000.00 as exemplary damages; and attorneys
fees in the amount of P30,000.00 plus P500.00 for every
appearance of private respondents lawyer, or a total of P10,500.00
for 21 actual appearances in court; P2,000.00 as incidental litigation
expenses; and costs of suit.
2. The claim for damages of private respondent Jane Gamil is
DENIED for lack of evidence.
3. The complaint of private respondent Carlo Benitez is DISMISSED
for lack of cause of action.
No pronouncement as to costs.


G.R. No. 94149 May 5, 1992
AMERICAN HOME vs. CA
This is a petition for review on certiorari which seeks to annul and
set aside the (a) decision 1 dated May 30, 1990 of the Court of
Appeals in C.A. G.R. SP. No. 20043 entitled "American Home
Assurance Company v. Hon. Domingo D. Panis, Judge of the
Regional Trial Court of Manila, Branch 41 and National Marine
Corporation and/or National Marine Corporation (Manila)",
dismissing petitioner's petition for certiorari, and (b)
resolution 2 dated June 29, 1990 of the Court of Appeals denying
petitioner's motion for reconsideration.
106

The undisputed facts of the case are follows:
Both petitioner American Home Assurance Co. and the respondent
National Marine Corporation are foreign corporations licensed to do
business in the Philippines, the former through its branch. The
American Home Assurance Company (Philippines), Inc. and the
latter through its branch. The National Marine Corporation (Manila)
(Rollo, p. 20, Annex L, p.1).
That on or about June 19, 1988, Cheng Hwa Pulp Corporation
shipped 5,000 bales (1,000 ADMT) of bleached kraft pulp from
Haulien, Taiwan on board "SS Kaunlaran", which is owned and
operated by herein respondent National Marine Corporation with
Registration No. PID-224. The said shipment was consigned to
Mayleen Paper, Inc. of Manila, which insured the shipment with
herein petitioner American Home Assurance Co. as evidenced by Bill
of Lading No. HLMN-01.
On June 22, 1988, the shipment arrived in Manila and was
discharged into the custody of the Marina Port Services, Inc., for
eventual delivery to the consignee-assured. However, upon delivery
of the shipment to Mayleen Paper, Inc., it was found that 122 bales
had either been damaged or lost. The loss was calculated to be
4,360 kilograms with an estimated value of P61,263.41.
Mayleen Paper, Inc. then duly demanded indemnification from
respondent National Marine Corporation for the aforesaid
damages/losses in the shipment but, for apparently no justifiable
reason, said demand was not heeded (Petition, p. 4).
As the shipment was insured with petitioner in the amount of
US$837,500.00, Mayleen Paper, Inc. sought recovery from the
former. Upon demand and submission of proper documentation,
American Home Assurance paid Mayleen Paper, Inc. the adjusted
amount of P31,506.75 for the damages/losses suffered by the
shipment, hence, the former was subrogated to the rights and
interests on Mayleen Paper, Inc.
On June 6, 1989, the petitioner, as subrogee, then brought suit
against respondent for the recovery of the amount of P31.506.75
and 25% of the total amount due as attorney's fees, by filing a
complaint for recovery of sum of money (Petition, p. 4).
Respondent, National Marine Corporation, filed a motion to dismiss
dated August 7, 1989 stating that American Home Assurance
Company had no cause of action based on Article 848 of the Code of
Commerce which provides "that claims for averages shall not be
admitted if they do not exceed 5% of the interest which the
claimant may have in the vessel or in the cargo if it be gross average
and 1% of the goods damaged if particular average, deducting in
both cases the expenses of appraisal, unless there is an agreement
to the contrary." It contended that based on the allegations of the
complaint, the loss sustained in the case was P35,506.75 which is
only .18% of P17,420,000.00, the total value of the cargo.
On the other hand, petitioner countered that Article 848 does not
apply as it refers to averages and that a particular average
presupposes that the loss or damages is due to an inherent defect
of the goods, an accident of the sea, or a force majeure or the
negligence of the crew of the carrier, while claims for damages due
to the negligence of the common carrier are governed by the Civil
Code provisions on Common Carriers.
107

In its order dated November 23, 1989, the Regional Trial Court
sustained private respondent's contention. In part it stated:
Before the Court for resolution is a motion for reconsideration filed
by defendant through counsel dated October 6, 1989.
The record shows that last August 8, 1989, defendant through
counsel filed a motion to dismiss plaintiff's complaint.
Resolving the said motion last September 18, 1989, the court ruled
to defer resolution thereof until after trial on the merits. In the
motion now under consideration, defendant prays for the
reconsideration of the order of September 18, 1989 and in lieu
thereof, another order be entered dismissing plaintiff's complaint.
There appears to be good reasons for the court to take a second
look at the issues raised by the defendant.
xxx xxx xxx
It is not disputed defendants that the loss suffered by the shipment
is only .18% or less that 1% of the interest of the consignee on the
cargo Invoking the provision of the Article 848 of the Code of
Commerce which reads:
Claims for average shall not be admitted if they do not exceed five
percent of the interest which the claimant may have in the vessels
or cargo if it is gross average, and one percent of the goods
damaged if particular average, deducting in both cases the expenses
of appraisal, unless there is an agreement to the contrary.
(Emphasis supplied)
defendant claims that plaintiff is barred from suing for recovery.
Decisive in this case in whether the loss suffered by the cargo in
question is a "particular average."
Particular average, is a loss happening to the ship, freight, or cargo
which is not be (sic) shared by contributing among all those
interested, but must be borne by the owner of the subject to which
it occurs. (Black's Law Dictionary, Revised Fourth Edition, p. 172,
citing Bargett v. Insurance Co. 3 Bosw. [N.Y.] 395).
as distinguished from general average which
is a contribution by the several interests engaged in the maritime
venture to make good the loss of one of them for the voluntary
sacrifice of a part of the ship or cargo to save the residue of the
property and the lives of those on board, or for extraordinary
expenses necessarily incurred for the common benefit and safety of
all (Ibid., citing California Canneries Co. v. Canton Ins. Office 25 Cal.
App. 303, 143 p. 549-553).
From the foregoing definition, it is clear that the damage on the
cargo in question, is in the nature of the "particular average." Since
the loss is less than 1% to the value of the cargo and there appears
to be no allegations as to any agreement defendants and the
consignee of the goods to the contrary, by express provision of the
law, plaintiff is barred from suing for recovery.
WHEREOF, plaintiff's complaint is hereby dismissed for lack of cause
of action. (Rollo, p. 27; Annex A, pp. 3-4).
The petitioner then filed a motion for reconsideration of the order
of dismissal but same was denied by the court in its order dated
January 26, 1990 (supra).
108

Instead of filing an appeal from the order of the court a
quo dismissing the complaint for recovery of a sum of money,
American Home Assurance Company filed a petition
for certiorari with the Court of Appeals to set aside the two orders
or respondent judge in said court (Rollo, p. 25).
But the Court of Appeals in its decision dated May 30, 1990,
dismissed the petition as constituting plain errors of law and not
grave abuse of discretion correctible by certiorari (a Special Civil
Action). If at all, respondent court ruled that there are errors of
judgment subject to correction by certiorari as a mode of appeal but
the appeal is to the Supreme Court under Section 17 of the Judiciary
Act of 1948 as amended by Republic Act No. 5440. Otherwise
stated, respondent Court opined that the proper remedy is a
petition for review on certiorari with the Supreme Court on pure
questions of law (Rollo, p. 30).
Hence, this petition.
In a resolution dated December 10, 1990, this Court gave due
course to the petition and required both parties to file their
respective memoranda (Rollo, p. 58).
The procedural issue in this case is whether or not certiorari was the
proper remedy in the case before the Court of Appeals.
The Court of Appeals ruled that appeal is the proper remedy, for
aside from the fact that the two orders dismissing the complaint for
lack of cause of action are final orders within the meaning of Rule
41, Section 2 of the Rules of Court, subject petition raised questions
which if at all, constituting grave abuse of discretion correctible
bycertiorari.
Evidently, the Court of Appeals did not err in dismissing the petition
for certiorari for as ruled by this Court, an order of dismissal
whether right or wrong is a final order, hence, a proper subject of
appeal, not certiorari(Marahay v. Melicor, 181 SCRA 811 (1990]).
However, where the fact remains that respondent Court of Appeals
obviously in the broader interests of justice, nevertheless
proceeded to decide the petition for certiorari and ruled on specific
points raised therein in a manner akin to what would have been
done on assignments of error in a regular appeal, the petition
therein was therefore disposed of on the merits and not on a
dismissal due to erroneous choice of remedies or technicalities
(Cruz v. I.A.C., 169 SCRA 14 (1989]). Hence, a review of the decision
of the Court of Appeals on the merits against the petitioner in this
case is in order.
On the main controversy, the pivotal issue to be resolved is the
application of the law on averages (Articles 806, 809 and 848 of the
Code of Commerce).
Petitioner avers that respondent court failed to consider that
respondent National Marine Corporation being a common carrier, in
conducting its business is regulated by the Civil Code primarily and
suppletorily by the Code of Commerce; and that respondent court
refused to consider the Bill of Lading as the law governing the
parties.
Private respondent countered that in all matters not covered by the
Civil Code, the rights and obligations of the parties shall be
governed by the Code of Commerce and by special laws
as provided for in Article 1766 of the Civil Code; that Article 806,
809 and 848 of the Code of Commerce should be applied
109

suppletorily as they provide for the extent of the common carriers'
liability.
This issue has been resolved by this Court in National Development
Co. v. C.A. (164 SCRA 593 [1988]; citingEastern Shipping Lines,
Inc. v. I.A.C., 150 SCRA 469, 470 [1987] where it was held that "the
law of the country to which the goods are to be transported persons
the liability of the common carrier in case of their loss, destruction
or deterioration." (Article 1753, Civil Code). Thus, for cargoes
transported to the Philippines as in the case at bar, the liability of
the carrier is governed primarily by the Civil Code and in all matters
not regulated by said Code, the rights and obligations of common
carrier shall be governed by the Code of Commerce and by special
laws (Article 1766, Civil Code).
Corollary thereto, the Court held further that under Article 1733 of
the Civil Code, common carriers from the nature of their business
and for reasons of public policy are bound to observe extraordinary
diligence in the vigilance over the goods and for the safety of
passengers transported by them according to all circumstances of
each case. Thus, under Article 1735 of the same Code, in all cases
other than those mentioned in Article 1734 thereof, the common
carrier shall be presumed to have been at fault or to have acted
negligently, unless it proves that it has observed the extraordinary
diligence required by law (Ibid., p. 595).
But more importantly, the Court ruled that common carriers cannot
limit their liability for injury or loss of goods where such injury or
loss was caused by its own negligence. Otherwise stated, the law on
averages under the Code of Commerce cannot be applied in
determining liability where there is negligence (Ibid., p. 606).
Under the foregoing principle and in line with the Civil Code's
mandatory requirement of extraordinary diligence on common
carriers in the car care of goods placed in their stead, it is but
reasonable to conclude that the issue of negligence must first be
addressed before the proper provisions of the Code of Commerce
on the extent of liability may be applied.
The records show that upon delivery of the shipment in question of
Mayleen's warehouse in Manila, 122 bales were found to be
damaged/lost with straps cut or loose, calculated by the so-called
"percentage method" at 4,360 kilograms and amounting to
P61,263.41 (Rollo, p. 68). Instead of presenting proof of the exercise
of extraordinary diligence as required by law, National Marine
Corporation (NMC) filed its Motion to Dismiss dated August 7, 1989,
hypothetically admitting the truth of the facts alleged in the
complaint to the effect that the loss or damage to the 122 bales was
due to the negligence or fault of NMC (Rollo, p. 179). As ruled by
this Court, the filing of a motion to dismiss on the ground of lack of
cause of action carries with it the admission of the material facts
pleaded in the complaint (Sunbeam Convenience Foods, Inc. v. C.A.,
181 SCRA 443 [1990]). Such being the case, it is evident that the
Code of Commerce provisions on averages cannot apply.
On the other hand, Article 1734 of the Civil Code provides that
common carriers are responsible for loss, destruction or
deterioration of the goods, unless due to any of the causes
enumerated therein. It is obvious that the case at bar does not fall
under any of the exceptions. Thus, American Home Assurance
Company is entitled to reimbursement of what it paid to Mayleen
Paper, Inc. as insurer.
110

Accordingly, it is evident that the findings of respondent Court of
Appeals, affirming the findings and conclusions of the court a
quo are not supported by law and jurisprudence.
PREMISES CONSIDERED, (1) the decisions of both the Court of
Appeals and the Regional Trial Court of Manila, Branch 41, appealed
from are REVERSED; and (2) private respondent National Marine
Corporation is hereby ordered to reimburse the subrogee,
petitioner American Home Assurance Company, the amount of
P31,506.75.
SO ORDERED.
G.R. No. 15652,
Ynchausti Steamship Company v. Dexter and Unson, 41 Phil. 289

This a petition for a writ of mandamus filed in this court of the
Ynchausti Steamship Company to compel the Purchasing Agent of
the Philippine Islands and the Insular Auditor to sign, countersign,
and deliver to the petitioner a warrant upon the Treasurer of the
Philippine Islands for the sum of P82.79 in satisfaction of a claim for
that amount, which is alleged to be due the petitioner as a common
carrier for freight earned in transporting for the Government two
distinct consignments of mineral oil from Manila to two other ports
in the Philippine Islands. After the defendants had duly answered,
denying all the allegations of the petition except such as relate to
the character and places of residence of the parties to the petition
(which are admitted) the controversy was submitted for
determination by this court upon an agreed statement of facts as
follows:
On July 23, 1918, the Government of the Philippine Islands, acting
by and through the respondent Insular Purchasing Agent, employed
the services of the petitioner, Ynchausti Steamship Co., a common
carrier, for the transportation, on board the steamship Venus, from
the port of Manila to the port of Aparri, Cagayan, of a consignment
of merchandise, consisting of thirty (30) cases of "White Rose"
mineral oil of two five-gallon cans to the case; and on September
18, 1918, the said Government likewise employed the services of
petitioner for the transportation on board the steamship Venus,
from Manila to Aparri, Cagayan, of ninety-six cases of "Cock" Brand
mineral oil, ten gallons to the case. The goods were delivered by the
shipper to the carrier, which accordingly received them, and to
evidence the contract of transportation, the parties duly executed
and delivered what is popularly called the Government bill of lading
(General Form 9-A), hereto attached, marked Exhibit A and made a
part hereof, wherein and whereby it was stipulated that the carrier,
the petitioner Ynchausti & Co., received the above-mentioned
supplies in apparent good condition, obligating itself to carry said
supplies to the place agreed upon, in accordance with the
authorized and prescribed rates and classifications, and subject to
the law of common carriers in force on the date of the shipment,
and to the conditions prescribed by the Insular Collector of Customs
in Philippine Marine Regulations at page 16 under the heading of
"Bill of Lading Conditions," hereto attached, marked Exhibit B and
made a part hereof.
Upon the delivery of the said shipment of "Cock" brand oil and
consignee claimed that one case was delivered empty, and noted
111

such claim upon the bill of lading; and upon the delivery of the said
shipment of "White Rose," brand oil the consignee claimed that one
case was delivered empty, and noted said claim upon the bill of
lading.
Thereafter, notwithstanding the protestations of the petitioner,
Ynchausti Steamship Co., that said shortages were due to causes
entirely unknown to it, and were not due to any fault or negligence
on its part, or on the part of its agents or servants, the Acting Insular
Purchasing Agent of the Philippine Islands notified the petitioners
herein that after due investigation the Insular Auditor found and
decided that the leakages of the two whole cases were due to its
negligence and that the deduction of the sum of P22.53, the invoice
value of the goods lost, and held by the Auditor to be the true value
thereof had been authorized by the said Insular Auditor.
Petitioner thereupon protested against the threatened deduction,
and demanded that it be paid the full amount due for the
transportation of the two said shipments of merchandise, to wit,
the sum of P82.79, as shown by its transportation voucher
presented in this cause, hereto attached. marked Exhibit C and
made a part hereof.
Thereafter, notwithstanding the protest and demand of the
petitioner as aforesaid, the Insular Auditor, in conformity with his
ruling, declined and still declines to issue to the petitioner a warrant
for the full sum of P82.79, and has tendered to it a warrant for the
sum of P60.26, which the petitioner has refused to accept.
The sum of P22.53 authorized to be deducted by the Insular
Auditor, as appears herein, has not at any time been liquidated by
consent, agreement, or by the judgment of any court of competent
jurisdiction.
Upon a perusal of the foregoing agreed statement it will be seen
that the present litigation had its origin in a situation practically
identical with that considered by this court in Compaia General de
Tabacos vs. French and Unson (39 Phil., 34). It will be noted,
however, that the case mentioned was decided upon demurrer,
while the one now before us is to be heard and determined upon
the petition, answer, and the admitted facts.
We note that in this case, as in the case of Compaia General de
Tabacos vs. French and Unson (supra), the petition alleges that the
leakage of the lost gasoline was due to causes unknown to the
petitioner and was not due to any fault or negligence of petitioner,
its agents, or servants. The respondents, by demurring to the
petition in the earlier case, admitted that allegation. In the case
now before us that allegation is put in issue, and we find nothing in
the admitted statement of facts to support it. It results that if that
allegation is material to the relief here sought, the petition must
fail.
We are of the opinion that the allegation in question is material and
that the belief sought in this case cannot be granted.
In section 646 of the Administrative Code it is provided that when
Government property is transmitted from one place to another by
carrier, it shall be upon proper bill of lading, or receipt, from such
carrier, and it shall be the duty of the consignee, or his
representative, to make full notation of any evidence of loss,
shortage, or damage, upon the bill of lading, or receipt, before
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accomplishing it. It is admitted by the petitioner in the agreed
statement of facts that the consignee, at the time the oil was
delivered, noted the loss in the present case upon the two
respective bills of lading. The notation of these losses by the
consignee, in obedience to the precept of section 646 of the
Administrative Code, is competent evidence to show that the
shortage in fact existed. As the petitioner admits that the oil was
received by it for carriage and inasmuch as the fact of loss is proved
in the manner just stated, it results that there is a presumption that
the petitioner was to blame for the loss; and it was incumbent upon
the petitioner in order to entitle it to relief in the case to rebut that
presumption by proving, as is alleged in the petition, that the loss
was not due to any fault or negligence of the petitioner.
The mere proof of delivery of goods in good order to a carrier, and
of their arrival at the place of destination in bad order, makes out a
prima facie case against the carrier, so that if no explanation is given
as to how the injury occurred, the carrier must be held responsible.
(4 R. C. L., p. 917.) It is incumbent upon the carrier to prove that the
loss was due to accident or some other circumstance inconsistent
with its liability. (Articles
361-363, Code of Commerce.) Indeed, if the Government of the
Philippine Islands had instituted an action in a court of law against
the petitioner to recover the value of the oil lost while these
consignments were in the court of transportation, it would, upon
the facts appearing before us, have been entitled to judgment.
From this it is apparent that the mandamus prayed for cannot be
granted. It is a rule of universal application that a petition for
extraordinary relief of the character here sought must show merit.
That is, the petitioner's right to relief must be clear. Such cannot be
said to be the case where, as here, a presumption of responsibility
on the part of the petitioner stands unrefuted upon the record.
We are of the opinion that, in the absence of proof showing that the
carrier was not at fault in respect to the matter under discussion,
the Insular Auditor was entitled to withhold, from the amount
admittedly due to the petitioner for the freight charges, a sum
sufficient to cover the value of the oil lost in transit.
The petition will be dismissed, with costs against the petitioner. So
ordered.


G.R. No. 29721,
Mirasol v. The Robert Dollar Co., 53 Phil. 124
STATEMENT
After the promulgation of the decision rendered by the Second
Division of February 13, 1929,[[1]] the defendant filed a motion to
have the case heard and decided in banc, and inasmuch as the legal
questions involved are important to the shipping interests, the court
thought it best to do so.
After the formal pleas, plaintiff alleges that he is the owner and
consignee of two cases of books, shipped in good order and
condition at New York, U.S.A., on board the defendant's
steamship President Garfield, for transport and delivery to the
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plaintiff in the City of Manila, all freight charges paid. That the two
cases arrived in Manila on September 1, 1927, in bad order and
damaged condition, resulting in the total loss of one case and a
partial loss of the other. That the loss in one case is P1,630, and the
other P700, for which he filed his claims, and defendant has refused
and neglected to pay, giving as its reason that the damage in
question "was caused by sea water." That plaintiff never entered
into any contract with the defendant limiting defendant's liability as
a common carrier, and when he wrote the letter of September 3,
1927, he had not then ascertained the contents of the damaged
case, and could not determine their value. That he never intended
to ratify or confirm any agreement to limit the liability of the
defendant. That on September 9, 1927, when the other case was
found, plaintiff filed a claim for the real damage of the books
therein named in the sum of $375.
Plaintiff prays for corresponding judgment, with legal interest from
the filing of the complaint and costs.
For answer the defendant made a general and specific denial, and
as a separate and special defense alleges that the
steamship President Garfield at all the times alleged was in all
respects seaworthy and properly manned, equipped and supplied,
and fit for the voyage. That the damage to plaintiff's merchandise, if
any, was not caused through the negligence of the vessel, its
master, agent, officers, crew, tackle or appurtenances, nor by
reason of the vessel being unseaworthy or improperly manned, "but
that such damage, if any, resulted from faults or errors in navigation
or in the management of said vessel." As a second separate and
special defense, defendant alleges that in the bill of lading issued by
the defendant to plaintiff, it was agreed in writing that defendant
should not be "held liable for any loss of, or damage to, any of said
merchandise resulting from any of the following causes, to wit: Acts
of God, perils of the sea or other waters," and that plaintiff's
damage, if any, was caused by "Acts of God" or "perils of the sea."
As a third special defense, defendant quoted clause 13 of the bill of
lading, in which it is stated that in no case shall it be held liable "for
or in respect to said merchandise or property beyond the sum of
two hundred and fifty dollars for any piece, package or any article
not enclosed in a package, unless a higher value is stated herein and
ad valorem freight paid or assessed thereon," and that there was no
other agreement. That on September 3, 1927 the plaintiff wrote the
defendant a letter as follows:
Therefore, I wish to file claim of damage to the meager maximum
value that your bills of lading will indemnify me, that is $250 as per
condition 13.
As a fourth special defense, defendant alleges that the damage, if
any, was caused by "sea water," and that the bill of lading exempts
defendant from liability for that cause. That damage by "sea water"
is a shipper's risk, and that defendant is not liable.
As a result of the trial upon such issues, the lower court rendered
judgment for the plaintiff for P2,080, with legal interest thereon
from the date of the final judgment, with costs, from which both
parties appealed, and the plaintiff assigns the following errors:
I. The lower court erred in holding that plaintiff's damage on
account of the loss of the damaged books in the partially damaged
case can be compensated with an indemnity of P450 instead of
P750 as claimed by plaintiff.
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II. The lower court, consequently, also erred in giving judgment for
plaintiff for only P2,080 instead of P2,380.
III. The lower court erred in not sentencing defendant to pay legal
interest on the amount of the judgment, at least, from the date of
the rendition of said judgment, namely, January 30, 1928.
The defendant assigns the following errors:
I. The lower court erred in failing to recognize the validity of the
limited liability clause of the bill of lading, Exhibit 2.
II. The lower court erred in holding defendant liable in any amount
and in failing to hold, after its finding as a fact that the damage was
caused by sea water, that the defendant is not liable for such
damage by sea water.
III. The lower court erred in awarding damages in favor of plaintiff
and against defendant for P2,080 or in any other amount, and in
admitting, over objection, Exhibits G, H, I and J.
JOHNS, J.:
Plaintiff's contention that he is entitled to P700 for his Encyclopedia
Britannica is not tenable. The evidence shows that the P400 that the
court allowed, he could buy a new set which could contain all of the
material and the subject matter of the one which he lost. Plaintiff's
third assignment of error is well taken, as under all of the
authorities, he is entitled to legal interest from the date of his
judgement rendered in the lower court and not the date when it
becomes final. The lower court found that plaintiff's damage was
P2,080, and that finding is sustained by that evidence. There was a
total loss of one case and a partial loss of the other, and in the very
nature of the things, plaintiff could not prove his loss in any other
way or manner that he did prove it, and the trial court who heard
him testify must have been convinced of the truth of his testimony.
There is no claim or pretense that the plaintiff signed the bill of
lading or that he knew of his contents at the time that it was issued.
In that situation he was not legally bound by the clause which
purports to limit defendant's liability. That question was squarely
met and decided by this court in banc in Juan Ysmael and Co., vs.
Gabino Baretto and Co., (51 Phil., 90; see numerous authorities
there cited).
Among such authorities in the case of The Kengsington decided by
the Supreme Court of the U.S. January 6, 1902 (46 Law. Ed., 190), in
which the opinion was written by the late Chief Justice White, the
syllabus of which is as follows:
1. Restrictions of the liability of a steamship company for its own
negligence or failure of duty toward the passenger, being against
the public policy enforced by the courts of the United States, will
not to be upheld, though the ticket was issued and accepted in a
foreign country and contained a condition making it subject to the
law thereof, which sustained such stipulation.
2. The stipulation in a steamship passenger's ticket, which compels
him to value his baggage, at a certain sum, far less than it is worth,
or, in order to have a higher value put upon it, to subject it to the
provisions of the Harter Act, by which the carrier would be
exempted from all the liability therefore from errors in navigation or
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management of the vessel of other negligence is unreasonable and
in conflict with public policy.
3. An arbitrary limitation of 250 francs for the baggage of any
steamship passenger unaccompanied by any right to increase the
amount of adequate and reasonable proportional payment, is void
as against public policy.
Both the facts upon which it is based and the legal principles
involved are square in point in this case.
The defendant having received the two boxes in good condition, its
legal duty was to deliver them to the plaintiff in the same condition
in which it received them. From the time of their delivery to the
defendant in New York until they are delivered to the plaintiff in
Manila, the boxes were under the control and supervision of the
defendant and beyond the control of the plaintiff. The defendant
having admitted that the boxes were damaged while in transit and
in its possession, the burden of proof then shifted, and it devolved
upon the defendant to both allege and prove that the damage was
caused by reason of some fact which exempted it from liability. As
to how the boxes were damaged, when or where, was a matter
peculiarly and exclusively within the knowledge of the defendant
and in the very nature of things could not be in the knowledge of
the plaintiff. To require the plaintiff to prove as to when and how
the damage was caused would force him to call and rely upon the
employees of the defendant's ship, which in legal effect would be to
say that he could not recover any damage for any reason. That is
not the law.
Shippers who are forced to ship goods on an ocean liner or any
other ship have some legal rights, and when goods are delivered on
board ship in good order and condition, and the shipowner delivers
them to the shipper in bad order and condition, it then devolves
upon the shipowner to both allege and prove that the goods were
damaged by the reason of some fact which legally exempts him
from liability; otherwise, the shipper would be left without any
redress, no matter what may have caused the damage.
The lower court in its opinion says:
The defendant has not even attempted to prove that the two cases
were wet with sea water by fictitious event, force majeure or nature
and defect of the things themselves. Consequently, it must be
presumed that it was by causes entirely distinct and in no manner
imputable to the plaintiff, and of which the steamerPresident
Garfield or any of its crew could not have been entirely unaware.
And the evidence for the defendant shows that the damage was
largely caused by "sea water," from which it contends that it is
exempt under the provisions of its bill of lading and the provisions
of the article 361 of the Code of Commerce, which is as follows:
Merchandise shall be transported at the risk and venture of the
shipper, if the contrary was not expressly stipulated.
Therefore, all damages and impairment suffered by the goods
during the transportation, by reason of accident, force majeure, or
by virtue of the nature or defect of the articles, shall be for the
account and risk of the shipper.
The proof of these accidents is incumbent on the carrier.
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In the final analysis, the cases were received by the defendant in
New York in good order and condition, and when they arrived in
Manila, they were in bad condition, and one was a total loss. The
fact that the cases were damaged by "sea water," standing alone
and within itself, is not evidence that they were damaged by force
majeure or for a cause beyond the defendant's control. The words
"perils of the sea," as stated in defendant's brief apply to "all kinds
of marine casualties, such as shipwreck, foundering, stranding," and
among other things, it is said: "Tempest, rocks, shoals, icebergs and
other obstacles are within the expression," and "where the peril is
the proximate cause of the loss, the shipowner is excused."
"Something fortuitous and out of the ordinary course is involved in
both words 'peril' or 'accident'."
Defendant also cites and relies on the case of Government of the
Philippine Islands vs. Ynchausti & Company (40 Phil., 219), but it
appears from a reading of that case that the facts are very different
and, hence, it is not in point. In the instant case, there is no claim or
pretense that the two cases were not in good order when received
on board the ship, and it is admitted that they were in bad order on
their arrival at Manila. Hence, they must have been damaged in
transit. In the very nature of things, if they were damaged by reason
of a tempest, rocks, icebergs, foundering, stranding or the perils of
the sea, that would be a matter exclusively within the knowledge of
the officers of defendant's ship, and in the very nature of things
would not be within plaintiff's knowledge, and upon all of such
questions, there is a failure of proof.
The judgment of the lower court will be modified, so as to give the
plaintiff legal interest on the amount of his judgment from the date
of its rendition in the lower court, and in all respects affirmed, with
costs. So ordered.
Johnson, Malcolm, Ostrand, Romualdez, and Villa-Real, JJ., concur.
Separate Opinions
STREET, J., dissenting in part:
I gave a hesitating adherence to the decision of this case in division,
and upon further reflection, I am now constrained to record my
belief that the decision is in part erroneous. I agree with the court
that the defendant is liable to the plaintiff, but I think that its
liability is limited, under clause 13, printed on the back of the bill of
lading, to the amount of 250 dollars for each of the two boxes of
books comprising this consignment. While the law does not permit
a carrier gratuitously to exempt itself from liability for the
negligence of its servants, it cannot effectually do so for a valuable
consideration; and where freight rates are adjusted upon the basis
of a reasonable limited value per package, where a higher value is
not declared by the shipper, the limitation as to the
value is binding. This court in two well
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considered decisions has heretofore upheld a limitation of exactly
the character of that indicated in clause 13 (H.E. Heacock Co. vs.
Macondray & Co., 42 Phil., 205; Freixas & Co. vs. Pacific Mail
Steamship Co., 42 Phil., 198); and I am unable to see any sufficient
reason for ignoring those decisions.