Trans-Asia Shipping vs.

Court of Appeals (254 SCRA 260)

Facts:

Plaintiff (herein private respondent Atty. Renato Arroyo) bought a ticket from herein petitioner for the
voyage of M/V Asia Thailand Vessel to Cagayan de Oro from Cebu City. Arroyo boarded the vessel in the
evening of November 12, 1991 at around 5:30. At that instance, plaintiff noticed that some repair works
were being undertaken on the evening of the vessel. The vessel departed at around 11:00 in the evening
with only one engine running. After an hour of slow voyage, vessel stopped near Kawit Island and dropped
its anchor threat. After an hour of stillness, some passenger demanded that they should be allowed to
return to Cebu City for they were no longer willing to continue their voyage to Cagayan de Oro City. The
captain acceded to their request and thus the vessel headed back to Cebu City. At Cebu City, the plaintiff
together with the other passengers who requested to be brought back to Cebu City was given 10 minutes
to disembark. Thereafter, the vessel proceeded to Cagayan de Oro City. Plaintiff, the next day boarded
the M/V Asia Japan for its voyage to Cagayan de Oro City, likewise a vessel of the defendant. On account
of this failure of defendant to transport him to the place of destination on November 12, 1991, plaintiff
filed before the trial court a complaint for damages against the defendant.

After due trial, the trial court rendered its decision and ruled that the action was only for breach of
contract, with Articles 1170, 1172, and 1173 of the Civil Code as applicable law — not Article 2180 of the
same Code. It was of the opinion that Article 1170 made a person liable for damages if, in the performance
of his obligation, he was guilty of fraud, negligence, or delay, or in any manner contravened the tenor
thereof; moreover, pursuant to Article 2201 of the same Code, to be entitled to damages, the non-
performance of the obligation must have been tainted not only by fraud, negligence, or delay, but also
bad faith, malice, and wanton attitude. It then disposed of the case as follows:

WHEREFORE, it not appearing from the evidence that plaintiff was left in the Port
of Cebu because of the fault, negligence, malice or wanton attitude of
defendant's employees, the complaint is DISMISSED. Defendant's counterclaim is
likewise dismissed it not appearing also that filing of the case by plaintiff was
motivated by malice or bad faith.

The Court of Appeals reversed the trial court's decision by applying Article 1755 in relation to Articles
2201, 2208, 2217, and 2232 of the Civil Code and, accordingly, awarded compensatory, moral, and
exemplary damages as follows:

WHEREFORE, premises considered, the appealed decision is hereby REVERSED

and SET ASIDE and another one is rendered ordering defendant-appellee to pay
plaintiff-appellant:

1. P20,000.00 as moral damages;

2. P10,000.00 as exemplary damages;

3. P5,000.00 as attorney's fees;

4. Cost of suit.
Issue:

Whether or not the failure of a common carrier to maintain in seaworthy condition its vessel involved in
a contract of carriage a breach of its duty?

Held:

Undoubtedly, there was, between the petitioner and private respondent a contract of carriage. Under
Article 1733 of the Civil Code, the petitioner was bound to observed extraordinary diligence in ensuring
the safety of the private respondent. That meant that the petitioner was pursuant to the Article 1755 of
the said Code, bound to carry the private respondent safely as far as human care and foresight could
provide, using the utmost diligence of very cautious persons, with due regard for all the circumstances. In
this case, the Supreme Court is in full accord with the Court of Appeals that the petitioner failed or
discharged this obligation.

Before commencing the contact of voyage, the petitioner undertook some repairs on the cylinder head of
one of the vessel’s engines. But even before it could finish these repairs it allowed the vessel to leave the
port of origin on only one functioning engine, instead of two. Moreover, even the lone functioning engine
was not in perfect condition at sometime after it had run its course, in conked out. Which cause the vessel
to stop and remain adrift at sea, thus in order to prevent the ship from capsizing, it had to drop anchor.
Plainly, the vessel was unseaworthy even before the voyage begun. For the vessel to be seaworthy, it
must be adequately equipped for the voyage and manned with the sufficient number of competent
officers and crew. The Failure of the common carrier to maintain in seaworthy condition its vessel involved
in a contract of carriage is a clear breach of its duty prescribed in Article 1755 of the Civil Code.

However, attorney’s fees under Article 2208 of the Civil Code, these are recoverable only in the concept
of actual damages, not as moral damages nor judicial costs. Hence, to merit such an award, it is settled
that the amount thereof must be proven. Moreover, such must be specifically prayed for — as was not
done in this case—and may not be deemed incorporated within a general prayer for "such other relief
and remedy as this court may deem just and equitable." Finally, it must be noted that aside from the
following, the body of the respondent Court's decision was devoid of any statement regarding attorney's
fees:

Art. 2208. In the absence of stipulation, attorney's fees and expenses of litigation, other than judicial costs
cannot be recovered except:

1. When exemplary damages are awarded;

2. When the defendant's act or omission has compelled the plaintiff to litigate with third persons or to
incur expenses to protect his interest.

This Court holds that the above does not satisfy the benchmark of "factual, legal and equitable
justification" needed as basis for an award of attorney's fees. In sum, for lack of factual and legal basis,
the award of attorney's fees must be deleted.
WHEREFORE, the instant petition is DENIED and the challenged decision of the Court of Appeals in CA-
G.R. CV No. 39901 is AFFIRMED subject to the modification as to the award for attorney's fees which is
hereby SET ASIDE.

Costs against the petitioner.

Yupangco Cotton Mills, Inc. vs. CA (2002)

Facts:

Petitioner contended that a sheriff of the NLRC “erroneously and unlawfully levied” certain properties
which it claims as its own. It filed a 3rd party claim with the Labor Arbiter and recovery of property and
damages with the RTC. The RTC dismissed the case. In the CA, the court dismissed the petition on the
ground of forum shopping and that the proper remedy was appeal in due course, not certiorari or
mandamus. Petitioner filed a MFR and argued that the filing of a complaint for accion reinvindicatoria
with the RTC was proper because it is a remedy specifically granted to an owner (whose properties were
subjected to a writ of execution to enforce a decision rendered in a labor dispute in which it was not a
party). The MFR was denied. Hence, petitioner filed this appeal.

Issue:

Whether the CA has jurisdiction over the case

Held:

YES. A third party whose property has been levied upon by a sheriff to enforce a decision against a
judgment debtor is afforded with several alternative remedies to protect its interests. The third party may
avail himself of alternative remedies cumulatively, and one will not preclude the third party from availing
himself of the other alternative remedies in the event he failed in the remedy first availed of. Thus, a third
party may avail himself of the following alternative remedies: a) File a third party claim with the sheriff of
the Labor Arbiter, and b) If the third party claim is denied, the third party may appeal the denial to the
NLRC. Even if a third party claim was denied, a third party may still file a proper action with a competent
court to recover ownership of the property illegally seized by the sheriff. The filing of a third party claim
with the Labor Arbiter and the NLRC did not preclude the petitioner from filing a subsequent action for
recovery of property and damages with the Regional Trial Court. And, the institution of such complaint
will not make petitioner guilty of forum shopping.
Litex Employees Association vs George A. Eduvala (1977)

Facts:

In this and certiorari and prohibition proceeding, what is sought to be nullified is an Order of respondent
George A. Eduvala, the then Officer-in-Charge of the Bureau of Labor Relations, requiring that a
memorandum election be held among the members of the Litex Employees Association, petioner labor
union, to ascertain their wishes as to their wishes as to their affiliation with respondent Federation of Free
Workers. It is the contention of petitioner Union that there is no statutory authorization for the holding
of such a referendum election. This later dispute originated from a petition of respondent Federation of
Free Workers filed with the Bureau of labor Relations against petitioner labor Union to hold a referendum
among the members of the union for the of determining whether they desired to be affiliated with such
Federation.

Issue:

Whether or not there is a statute authorizing the respondent Bureau to require a referendum election
and giving them jurisdiction to do so.

Held:

Yes. Article 226 of the New Labor Code cannot be misread to signify that the authority conferred on the
Secretary of labor and the officials of the Department is limited in character. On the contrary, even a
cursory reading thereof readily yields the conclusion that in the interest of industrial peace and for the
promotion of the salutary constitutional objectives of social justice and protection to labor, the
competence of the governmental entrusted with supervision over disputes involving employers and
employees as well as "inter-union and intra-union conflicts," is broad and expensive. Thereby its purpose
becomes crystal-clear. As is quite readily discernible where it concerns the promotion of social and
economy rights, the active participation in the implementation of the codal objective is entrusted to the
executive department.

Petition lacks merit.

Kapisanan ng Manggagawang Pinagyakap (KMP) vs. Trajano (1985)

Facts:

On June 30, 1981, a written request for accounts examination of the financial status of KMP Labor Union,
the existing labor union at Franklin Baker Company in San Pablo City, was filed by private respondent
Silvestre and 13 other employees, who are members of the union. Acting on said request, Union Account
Examiner Vicedo of the MOLE conducted the investigation and thereafter submitted a report. Respondent
union officers have disallowed expenditures; failed to keep, maintain and submit for verification the
records of union accounts for the years 1977, and 1978, 1979, or purposely suppressed the same; failed
to maintain segregated disbursement receipts in accordance with the five (5) segregated union funds
(general fund, educational funds, mutual aid fund, burial assistance fund and union building fund) for
which they maintained a distinct and separate bank accounts for each; and the Union's constitution and
by-laws is not ratified by the general membership hence, illegal. (pp. 27-28, Rollo)

Based on the revelations, private respondents filed with the Regional Office QC, MOLE, a petition for the
expulsion of the union officers. They committed gross violation of the Labor Code, specifically pars. (a),
(b), (g), (h), (j), and (k) of Article 242; and, the constitution and by-laws of the union, Sections 6 and 7

Union Officers denied imputation and argued that the disallowed expenditures were made in good faith;
that the same conduced the benefit of members. They are willing to reimburse the same from their own
personal funds. They argue that they should not be held accountable for the non-production of books of
accounts of the Union for years 1977, 1978, and 1979 because they were not the officers then and not
one of the former officers of the Union had turned over to them the records. And that non-ratification of
the constitution and by-laws of the Union and the non-segregation of the Union funds occurred before
they became officers and that they have already been correcting the same.

Med-Arbiter Cabibihan ordered the holding of a referendum, to be conducted under the supervision of
BLR. Petitioners appealed the order to respondent Trajano of BLR the disallowed expenditures of
P1,278.00 were made in good faith and not used for the personal benefit of herein union officers but,
instead, contributed to the benefit of the members they were elected in 1980 only and, therefore, they
could not be made responsible for the omissions of their predecessors who failed to turn over union
records for the questioned period there would be a general election on Oct. 4, 1982, at which time, both
the election and the desired referendum could be undertaken to determine the membership at minimum
expense they prayed that resolution on the issue be held in abeyance

Respondents claimed that Med-Arbiter erred in calling a referendum to decide issue; the appropriate
action should be the expulsion of union officers. Trajano dismissed both appeals and affirmed in toto the
order of Med-Arbiter.

Issue:

Whether or not union officers were guilty of the alleged acts imputed against them thus expulsion was
proper

HELD:
NO. If herein union officers were guilty of the alleged acts imputed against them, said public respondent
pursuant to Article 242 of the New Labor Code and in the light of Our ruling in Duyag vs. Inciong, 98 SCRA
522, should have meted out the appropriate penalty on them, i.e., to expel them from the Union, as
prayed for, and not call for a referendum to decide the issue. The alleged falsification and
misrepresentation of herein union officers were not supported by substantial evidence. The fact that they
disbursed the amount of P1,278.00 from Union funds and later on was disallowed for failure to attach
supporting papers thereon did not of itself constitute falsification and/or misrepresentation. The
expenditures appeared to have been made in good faith and the amount spent for the purpose mentioned
in the report, if concurred in or accepted by the members, are reasonable; and the repudiation of both
private respondents to the highly sensitive position of auditor at the October 4, 1982 election, is a
convincing manifestation and demonstration of the union membership's faith in the herein officers'
leadership on one hand and a clear condonation of an act they had allegedly committed.

By and large, the holding of the referendum in question has become moot and academic. This is in line
with Our ruling in Pascual vs. Provincial Board of Nueva Ecija, 106 Phil. 471, which We quote:

The Court should never remove a public officer for acts done prior to his present term of office. To do
otherwise would be to deprive the people of their right to elect their officers. When the people have
elected a man to office, it must be assumed that they did this with knowledge of his life and character,
and that they disregarded or forgave misfaults or misconduct, if he had been guilty of any. It is not for the
court, by reason of such faults or misconduct to practically overrule the will of the people.