Private respondent rejected the offer and
SECOND DIVISION
[G.R. No. 122494. October 8, 1998]
EVERETT STEAMSHIP
CORPORATION, petitioner,
vs. COURT OF APPEALS and
HERNANDEZ TRADING CO.
INC., respondents.
DECISION
MARTINEZ, J.:
Petitioner Everett Steamship Corporation,
through this petition for review, seeks the
reversal of the decision[1] of the Court of
Appeals, dated June 14, 1995, in CA-G.R. No.
428093, which affirmed the decision of the
Regional Trial Court of Kalookan City, Branch
126, in Civil Case No. C-15532, finding
petitioner liable to private respondent Hernandez
Trading Co., Inc. for the value of the lost cargo.
Private respondent imported three crates of
bus spare parts marked as MARCO C/No.
12, MARCO C/No. 13 and MARCO C/No. 14,
from its supplier, Maruman Trading Company,
Ltd. (Maruman Trading), a foreign corporation
based in Inazawa, Aichi, Japan. The crates were
shipped from Nagoya, Japan to Manila on board
ADELFAEVERETTE, a vessel owned by
petitioners principal, Everett Orient Lines. The
said crates were covered by Bill of Lading No.
NGO53MN.
Upon arrival at the port of Manila, it was
discovered that the crate marked MARCO C/No.
14 was missing. This was confirmed and
admitted by petitioner in its letter of January 13,
1992 addressed to private respondent, which
thereafter made a formal claim upon petitioner
for the value of the lost cargo amounting to One
Million Five Hundred Fifty Two Thousand Five
Hundred (Y1,552,500.00) Yen, the amount
shown in an Invoice No. MTM-941, dated
November 14, 1991. However, petitioner offered
to pay only One Hundred Thousand
(Y100,000.00) Yen, the maximum amount
stipulated under Clause 18 of the covering bill of
lading which limits the liability of petitioner.
thereafter instituted a suit for collection docketed
as Civil Case No. C-15532, against petitioner
before the Regional Trial Court of Caloocan City,
Branch 126.
At the pre-trial conference, both parties
manifested that they have no testimonial
evidence to offer and agreed instead to file their
respective memoranda.
On July 16, 1993, the trial court rendered
judgment[2] in favor of private respondent,
ordering petitioner to pay: (a) Y1,552,500.00; (b)
Y20,000.00 or its peso equivalent representing
the actual value of the lost cargo and the material
and packaging cost; (c) 10% of the total amount
as an award for and as contingent attorneys fees;
and (d) to pay the cost of the suit. The trial court
ruled:
Considering defendants categorical
admission of loss and its failure to
overcome the presumption of
negligence and fault, the Court
conclusively finds defendant liable to
the plaintiff. The next point of inquiry
the Court wants to resolve is the
extent of the liability of the
defendant. As stated earlier, plaintiff
contends that defendant should be
held liable for the whole value for the
loss of the goods in the amount of
Y1,552,500.00 because the terms
appearing at the back of the bill of
lading was so written in fine prints
and that the same was not signed by
plaintiff or shipper thus, they are not
bound by the clause stated in
paragraph 18 of the bill of lading. On
the other hand, defendant merely
admitted that it lost the shipment but
shall be liable only up to the amount
of Y100,000.00.
The Court subscribes to the provisions
of Article 1750 of the New Civil Code
-
Art. 1750. A contract fixing
the sum that may be
recovered by the owner or
shipper for the loss,
destruction or deterioration of
the goods is valid, if it is
reasonable and just under the
circumstances, and has been
fairly and freely agreed upon.
 It is required, however, that the
contract must be reasonable and just
under the circumstances and has been
fairly and freely agreed upon. The
requirements provided in Art. 1750 of
the New Civil Code must be complied
with before a common carrier can
claim a limitation of its pecuniary
liability in case of loss, destruction or
deterioration of the goods it has
undertaken to transport.
In the case at bar, the Court is of the
view that the requirements of said
article have not been met. The fact
that those conditions are printed at the
back of the bill of lading in letters so
small that they are hard to read would
not warrant the presumption that the
plaintiff or its supplier was aware of
these conditions such that he had
fairly and freely agreed to these
conditions. It can not be said that the
plaintiff had actually entered into a
contract with the defendant,
embodying the conditions as printed at
the back of the bill of lading that was
issued by the defendant to plaintiff.
On appeal, the Court of Appeals deleted
the award of attorneys fees but affirmed the trial
courts findings with the additional observation
that private respondent can not be bound by the
terms and conditions of the bill of lading
because it was not privy to the contract of
carriage. It said:
As to the amount of liability, no
evidence appears on record to show
that the appellee (Hernandez Trading
Co.) consented to the terms of the Bill
of Lading. The shipper named in the
Bill of Lading is Maruman Trading
Co., Ltd. whom the appellant (Everett
Steamship Corp.) contracted with for
the transportation of the lost goods.
Even assuming arguendo that the
shipper Maruman Trading Co., Ltd.
accepted the terms of the bill of lading
when it delivered the cargo to the
appellant, still it does not necessarily
follow that appellee Hernandez
Trading Company as consignee is
bound thereby considering that the
latter was never privy to the shipping
contract.
xxxxxxxxx
Never having entered into a contract
with the appellant, appellee should
therefore not be bound by any of the
terms and conditions in the bill of
lading.
Hence, it follows that the appellee
may recover the full value of the
shipment lost, the basis of which is not
the breach of contract as appellee was
never a privy to the any contract with
the appellant, but is based on Article
1735 of the New Civil Code, there
being no evidence to prove
satisfactorily that the appellant has
overcome the presumption of
negligence provided for in the law.
Petitioner now comes to us arguing that the
Court of Appeals erred (1) in ruling that the
consent of the consignee to the terms and
conditions of the bill of lading is necessary to
make such stipulations binding upon it; (2) in
holding that the carriers limited package liability
as stipulated in the bill of lading does not apply
in the instant case; and (3) in allowing private
respondent to fully recover the full alleged value
of its lost cargo.
We shall first resolve the validity of the
limited liability clause in the bill of lading.
A stipulation in the bill of lading limiting
the common carriers liability for loss or
destruction of a cargo to a certain sum, unless
the shipper or owner declares a greater value, is
sanctioned by law, particularly Articles 1749 and
1750 of the Civil Code which provide:
ART. 1749. A stipulation that the
common carriers liability is limited to
the value of the goods appearing in the
bill of lading, unless the shipper or
owner declares a greater value, is
binding.
ART. 1750. A contract fixing the sum
that may be recovered by the owner or
shipper for the loss, destruction, or
deterioration of the goods is valid, if it
is reasonable and just under the
circumstances, and has been freely
and fairly agreed upon.
Such limited-liability clause has also been
consistently upheld by this Court in a number of
cases.[3] Thus, in Sea Land Service, Inc. vs
Intermediate Appellate Court[4], we ruled:
It seems clear that even if said section 4 (5) of
the Carriage of Goods by Sea Act did not exist,
the validity and binding effect of the liability
limitation clause in the bill of lading here are
nevertheless fully sustainable on the basis alone
of the cited Civil Code Provisions. That said
stipulation is just and reasonable is arguable
from the fact that it echoes Art. 1750 itself in
providing a limit to liability only if a greater
value is not declared for the shipment in the bill
of lading. To hold otherwise would amount to
questioning the justness and fairness of the law
itself, and this the private respondent does not
pretend to do. But over and above that
consideration, the just and reasonable character
of such stipulation is implicit in it giving the
shipper or owner the option of avoiding accrual
of liability limitation by the simple and surely
far from onerous expedient of declaring the
nature and value of the shipment in the bill of
lading..
Pursuant to the afore-quoted provisions of
law, it is required that the stipulation limiting the
common carriers liability for loss must be
reasonable and just under the circumstances, and
has been freely and fairly agreed upon.
The bill of lading subject of the present
controversy specifically provides, among others:
18. All claims for which the carrier
may be liable shall be adjusted and
settled on the basis of the shippers net
invoice cost plus freight and insurance
premiums, if paid, and in no event
shall the carrier be liable for any loss
of possible profits or any
consequential loss.
The carrier shall not be liable for any
loss of or any damage to or in any
connection with, goods in an amount
exceeding One Hundred Thousand
Yen in Japanese Currency
(Y100,000.00) or its equivalent in any
other currency per package or
customary freight unit (whichever is
least) unless the value of the goods
higher than this amount is declared in
writing by the shipper before receipt
of the goods by the carrier and
inserted in the Bill of Lading and extra
freight is paid as required. (Emphasis
supplied)
The above stipulations are, to our mind,
reasonable and just. In the bill of lading, the
carrier made it clear that its liability would only
be up to One Hundred Thousand (Y100,000.00)
Yen. However, the shipper, Maruman
Trading, had the option to declare a higher
valuation if the value of its cargo was higher
than the limited liability of the
carrier. Considering that the shipper did not
declare a higher valuation, it had itself to
blame for not complying with the stipulations.
The trial courts ratiocination that private
respondent could not have fairly and freely
agreed to the limited liability clause in the bill of
lading because the said conditions were printed
in small letters does not make the bill of lading
invalid.
We ruled in PAL, Inc. vs. Court of
Appeals[5] that the jurisprudence on the matter
reveals the consistent holding of the court that
contracts of adhesion are not invalid per se and
that it has on numerous occasions upheld the
binding effect thereof. Also, in Philippine
American General Insurance Co., Inc. vs.
Sweet Lines , Inc.[6] this Court , speaking
through the learned Justice Florenz D. Regalado,
held:
x x x Ong Yiu vs. Court of Appeals,
et.al., instructs us that contracts of
adhesion wherein one party imposes a
ready-made form of contract on the
other x x x are contracts not entirely
prohibited. The one who adheres to
the contract is in reality free to reject it
entirely; if he adheres he gives his
consent. In the present case, not even
an allegation of ignorance of a party
excuses non-compliance with the
contractual stipulations since the
responsibility for ensuring full
comprehension of the provisions of a
contract of carriage devolves not on
the carrier but on the owner, shipper,
or consignee as the case may
be. (Emphasis supplied)
It was further explained in Ong Yiu vs
Court of Appeals[7] that stipulations in contracts
of adhesion are valid and binding.
While it may be true that petitioner
had not signed the plane ticket x x, he
 is nevertheless bound by the
provisions thereof. Such provisions
have been held to be a part of the
contract of carriage, and valid and
binding upon the passenger regardless
of the latters lack of knowledge or
assent to the regulation.It is what is
known as a contract of adhesion, in
regards which it has been said that
contracts of adhesion wherein one
party imposes a ready-made form of
contract on the other, as the plane
ticket in the case at bar, are contracts
not entirely prohibited. The one who
adheres to the contract is in reality
free to reject it entirely; if he adheres,
he gives his consent. x x x , a contract
limiting liability upon an agreed
valuation does not offend against the
policy of the law forbidding one from
contracting against his own negligence.
(Emphasis supplied)
Greater vigilance, however, is required of
the courts when dealing with contracts of
adhesion in that the said contracts must be
carefully scrutinized in order to shield the
unwary (or weaker party) from deceptive
schemes contained in ready-made
covenants,[8] such as the bill of lading in
question. The stringent requirement which the
courts are enjoined to observe is in recognition
of Article 24 of the Civil Code which mandates
that (i)n all contractual, property or other
relations, when one of the parties is at a
disadvantage on account of his moral
dependence, ignorance, indigence, mental
weakness, tender age or other handicap, the
courts must be vigilant for his protection.
The shipper, Maruman Trading, we assume,
has been extensively engaged in the trading
business. It can not be said to be ignorant of the
business transactions it entered into involving
the shipment of its goods to its customers. The
shipper could not have known, or should know
the stipulations in the bill of lading and there it
should have declared a higher valuation of the
goods shipped. Moreover, Maruman Trading has
not been heard to complain that it has been
deceived or rushed into agreeing to ship the
cargo in petitioners vessel. In fact, it was not
even impleaded in this case.
The next issue to be resolved is whether or
not private respondent, as consignee, who is not
a signatory to the bill of lading is bound by the
stipulations thereof.
Again, in Sea-Land Service, Inc. vs.
Intermediate Appellate Court (supra), we held
that even if the consignee was not a signatory to
the contract of carriage between the shipper and
the carrier, the consignee can still be bound by
the contract. Speaking through Mr. Chief Justice
Narvasa, we ruled:
To begin with, there is no question of
the right, in principle, of
a consignee in a bill of lading to
recover from the carrier or shipper for
loss of, or damage to goods being
transported under said bill, although
that document may have been- as in
practice it oftentimes is-drawn up
only by the consignor and the
carrier without the intervention of
the consignee. x x x.
x x x the right of a party in the same
situation as respondent here, to
recover for loss of a shipment
consigned to him under a bill of
lading drawn up only by and
between the shipper and the carrier,
springs from either a relation of
agency that may exist between him
and the shipper or consignor, or his
status as stranger in whose favor
some stipulation is made in said
contract, and who becomes a party
thereto when he demands
fulfillment of that stipulation, in this
case the delivery of the goods or
cargo shipped. In neither capacity
can he assert personally, in bar to
any provision of the bill of lading,
the alleged circumstance that fair
and free agreement to such
provision was vitiated by its being in
such fine print as to be hardly
readable. Parenthetically, it may be
observed that in one comparatively
recent case (Phoenix Assurance
Company vs. Macondray & Co., Inc.,
64 SCRA 15) where this Court found
that a similar package limitation
clause was printed in the smallest
type on the back of the bill of lading,
it nonetheless ruled that the
consignee was bound thereby on the
strength of authority holding that
such provisions on liability
 limitation are as much a part of a of the carrier under the limited liability clause
bill of lading as though physically in stands. The commercial Invoice No. MTM-941
it and as though placed therein by does not in itself sufficiently and convincingly
agreement of the parties. show that petitioner has knowledge of the value
of the cargo as contended by private
There can, therefore, be no doubt or
respondent. No other evidence was proffered by
equivocation about the validity and
private respondent to support is contention. Thus,
enforceability of freely-agreed-upon
we are convinced that petitioner should be liable
stipulations in a contract of carriage or
for the full value of the lost cargo.
bill of lading limiting the liability of
the carrier to an agreed In fine, the liability of petitioner for the
valuation unless the shipper declares loss of the cargo is limited to One Hundred
a higher value and inserts it into Thousand (Y100,000.00) Yen, pursuant to
said contract or bill.This proposition, Clause 18 of the bill of lading.
moreover, rests upon an almost
WHEREFORE, the decision of the Court
uniform weight of authority.
of Appeals dated June 14, 1995 in C.A.-G.R. CV
(Underscoring supplied)
No. 42803 is hereby REVERSED and SET
When private respondent formally claimed ASIDE.
reimbursement for the missing goods from
petitioner and subsequently filed a case against SO ORDERED.
the latter based on the very same bill of lading, Regalado, (Acting Chief Justice), Melo,
it (private respondent) accepted the provisions of Puno, and Mendoza, JJ., concur.
the contract and thereby made itself a party
thereto, or at least has come to court to enforce
it.[9] Thus, private respondent cannot now reject
or disregard the carriers limited liability
stipulation in the bill of lading. In other words,
private respondent is bound by the whole
stipulations in the bill of lading and must respect
the same.
Private respondent, however, insists that
the carrier should be liable for the full value of
the lost cargo in the amount of Y1,552,500.00,
considering that the shipper, Maruman Trading,
had "fully declared the shipment x x x, the
contents of each crate, the dimensions, weight
and value of the contents,"[10] as shown in the
commercial Invoice No. MTM-941.
This claim was denied by petitioner,
contending that it did not know of the contents,
quantity and value of "the shipment which
consisted of three pre-packed crates described in
Bill of Lading No. NGO-53MN merely as 3
CASES SPARE PARTS.[11]
The bill of lading in question confirms
petitioners contention. To defeat the carriers
limited liability, the aforecited Clause 18 of the
bill of lading requires that the shipper should
have declared in writing a higher valuation of
its goods before receipt thereof by the carrier
and insert the said declaration in the bill of
lading, with the extra freight paid. These
requirements in the bill of lading were never
complied with by the shipper, hence, the liability
 the vessel Hanjin Busan 0238W. The bill of lading
covering the shipment, i.e., Bill of Lading No.
HJSCPUSI14168303,[2] which was prepared by the
SECOND DIVISION
carrier Hanjin Shipping Co., Ltd. (Hanjin), named
respondent Shin Yang Brokerage Corp. (Shin Yang)
MOF COMPANY, G.R. No. 172822 as the consignee and indicated that payment was on a
INC., Freight Collect basis, i.e., that the consignee/receiver
Petitioner, of the goods would be the one to pay for the freight
Present: and other charges in the total amount of P57,646.00.[3]

CARPIO,* J., Chairpe

rson, The shipment arrived in Manila on October
- versus - LEONARDO-DE 29, 2001. Thereafter, petitioner MOF Company, Inc.
CASTRO,** (MOF), Hanjins exclusive general agent in
BRION, the Philippines, repeatedly demanded the payment of
DEL CASTILLO, and ocean freight, documentation fee and terminal
ABAD, JJ. handling charges from Shin Yang. The latter,
SHIN YANG
however, failed and refused to pay contending that it
BROKERAGE
did not cause the importation of the goods, that it is
CORPORATION, Promulgated:
Respondent. December 18, 2009 only the Consolidator of the said shipment, that the
x-------------------------------------- ultimate consignee did not endorse in its favor the
-----------------------------x original bill of lading and that the bill of lading was
prepared without its consent.

DECISION Thus, on March 19, 2003, MOF filed a case for sum
of money before
DEL CASTILLO, J.: the Metropolitan Trial Court of Pasay City (MeTC
Pasay) which was docketed as Civil Case No. 206-03
and raffled to Branch 48. MOF alleged that Shin
The necessity of proving lies with the person
Yang, a regular client, caused the importation and
who sues.
shipment of the goods and assured it that ocean freight
and other charges would be paid upon arrival of the
The refusal of the consignee named in
goods in Manila. Yet, after Hanjin's compliance, Shin
the bill of lading to pay the freightage on the claim
Yang unjustly breached its obligation to pay. MOF
that it is not privy to the contract of affreightment
argued that Shin Yang, as the named consignee in the
propelled the shipper to sue for collection of money,
bill of lading, entered itself as a party to the contract
stressing that its sole evidence, the bill of lading,
and bound itself to the Freight Collect
suffices to prove that the consignee is bound to
arrangement. MOF thus prayed for the payment
pay. Petitioner now comes to us by way of Petition for
of P57,646.00 representing ocean freight,
Review on Certiorari[1] under Rule 45 praying for the
documentation fee and terminal handling charges as
reversal of the Court of Appeals' (CA) judgment that
well as damages and attorneys fees.
dismissed its action for sum of money for
insufficiency of evidence.
Claiming that it is merely a consolidator/forwarder
and that Bill of Lading No. HJSCPUSI14168303 was
not endorsed to it by the ultimate consignee, Shin
Factual Antecedents
Yang denied any involvement in shipping the goods
or in promising to shoulder the freightage. It asserted
On October 25, 2001, Halla Trading Co., a
that it never authorized Halla Trading Co. to ship the
company based in Korea, shipped
articles or to have its name included in the bill of
to Manila secondhand cars and other articles on board
lading. Shin Yang also alleged that MOF failed to
present supporting documents to prove that it was
Shin Yang that caused the importation or the one that
Ruling of the Regional Trial Court
assured payment of the shipping charges upon arrival
of the goods in Manila.
The Regional Trial Court (RTC) of Pasay City,
Branch 108 affirmed in toto the Decision of the
Ruling of the Metropolitan Trial Court
MeTC. It held that:
On June 16, 2004, the MeTC of Pasay City, Branch
48 rendered its Decision[4] in favor of MOF. It ruled
that Shin Yang cannot disclaim being a party to the
contract of affreightment because:
x x x it would appear that
defendant has business
transactions with plaintiff. This is
evident from defendants letters
dated 09 May 2002 and 13 May
2002 (Exhibits 1 and 2,
defendants Position Paper) where
it requested for the release of
refund of container deposits x x
x. [In] the mind of the Court, by
analogy, a written contract need
not be necessary; a mutual
understanding [would
suffice]. Further, plaintiff would
have not included the name of the
defendant in the bill of lading, had
there been no prior agreement to
that effect.
In sum, plaintiff has
sufficiently proved its cause of
action against the defendant and
the latter is obliged to honor its
agreement with plaintiff despite
the absence of a written contract.[5]
The dispositive portion of the MeTC Decision reads:
WHEREFORE, premises
considered, judgment is hereby
rendered in favor of plaintiff and
against the defendant, ordering the
latter to pay plaintiff as follows:
1. P57,646.00 plus legal interest
from the date of demand until
fully paid,
2. P10,000.00 as and for attorneys
fees and
3. the cost of suit.
SO ORDERED.[6]
MOF and Shin Yang entered into
a contract of affreightment which
Blacks Law Dictionary defined as
a contract with the ship owner to
hire his ship or part of it, for the
carriage of goods and generally
take the form either of a charter
party or a bill of lading.
The bill of lading contain[s] the
information embodied in the
contract.
Article 652 of the Code of
Commerce provides that the
charter party must be in writing;
however, Article 653 says: If the
cargo should be received without
charter party having been signed,
the contract shall be understood as
executed in accordance with what
appears in the bill of lading, the
sole evidence of title with regard
to the cargo for determining the
rights and obligations of the ship
agent, of the captain and of the
charterer. Thus, the Supreme
Court opined in the Market
Developers, Inc. (MADE) vs.
Honorable Intermediate Appellate
Court and Gaudioso Uy, G.R. No.
74978, September 8, 1989, this
kind of contract may be oral. In
another case, Compania Maritima
vs. Insurance Company of North
America, 12 SCRA 213 the
contract of affreightment by
telephone was recognized where
the oral agreement was later
confirmed by a formal booking.
xxxx
Defendant is liable to pay the sum
of P57,646.00, with interest until
 fully paid, attorneys fees vs. Hooven Comalco Industries,
of P10,000.00 [and] cost of suit. Inc. 349 SCRA 363).

Considering all the foregoing, this While it is true that a bill of lading
Court affirms in toto the decision serves two (2) functions: first, it is
of the Court a quo. a receipt for the goods shipped;
second, it is a contract by which
SO ORDERED.[7] three parties, namely, the shipper,
the carrier and the consignee who
undertake specific responsibilities
and assume stipulated obligations
(Belgian Overseas Chartering and
Ruling of the Court of Appeals Shipping N.V. vs. Phil. First
Insurance Co., Inc., 383 SCRA
Seeing the matter in a different light, the CA 23), x x x if the same is not
dismissed MOFs complaint and refused to award any accepted, it is as if one party does
form of damages or attorneys fees. It opined that not accept the contract. Said the
Supreme Court:
MOF failed to substantiate its claim that Shin Yang
had a hand in the importation of the articles to A bill of
the Philippines or that it gave its consent to be a lading
consignee of the subject goods. In its March 22, delivered and
2006 Decision,[8] the CA said: accepted
constitutes the
This Court is persuaded [that contract of
except] for the Bill of Lading, carriage[,]
respondent has not presented any even though
other evidence to bolster its claim not signed,
that petitioner has entered [into] because the
an agreement of affreightment acceptance of
with respondent, be it verbal or a paper
written. It is noted that the Bill of containing the
Lading was prepared by Hanjin terms of a
Shipping, not the proposed
petitioner. Hanjin is the principal contract
while respondent is the formers generally
agent. (p. 43, rollo) constitutes an
acceptance of
The conclusion of the court a quo, the contract
which was upheld by and of all its
the RTC Pasay City, Branch 108 terms and
xxx is purely speculative and conditions of
conjectural. A court cannot rely which the
on speculations, conjectures or acceptor has
guesswork, but must depend upon actual or
competent proof and on the basis constructive
of the best evidence obtainable notice (Keng
under the Hua Paper
circumstances. Litigation cannot Products Co.,
be properly resolved by Inc. vs. CA,
suppositions, deductions or even 286 SCRA
presumptions, with no basis in 257).
evidence, for the truth must have
to be determined by the hard rules In the present case, petitioner did
of admissibility and proof (Lagon not only [refuse to] accept the bill
of lading, but it likewise
 disown[ed] the shipment x x
x. [Neither did it] authorize Halla
Trading Company or anyone to
ship or export the same on its
behalf.
It is settled that a contract is
upheld as long as there is proof of
consent, subject matter and cause
(Sta. Clara Homeowners
Association vs. Gaston, 374
SCRA 396). In the case at bar,
there is not even any iota of
evidence to show that petitioner
had given its consent.
He who
alleges a fact
has the burden
of proving it
and a mere
allegation is
not evidence
(Luxuria
Homes Inc. vs.
CA, 302
SCRA 315).
The 40-footer van contains goods
of substantial value. It is highly
improbable for petitioner not to
pay the charges, which is very
minimal compared with the value
of the goods, in order that it could
work on the release thereof.
For failure to substantiate its claim
by preponderance of evidence,
respondent has not established its
case against petitioner.[9]
Petitioners filed a motion for reconsideration but it
was denied in a Resolution[10] dated May 25,
2006. Hence, this petition for review on certiorari.
Petitioners Arguments
In assailing the CAs Decision, MOF argues that the
factual findings of both the MeTC and RTC are
entitled to great weight and respect and should have
bound the CA. It stresses that the appellate court has
no justifiable reason to disturb the lower courts
judgments because their conclusions are
well-supported by the evidence on record.
MOF further argues that the CA erred in labeling the
findings of the lower courts as purely speculative and
conjectural. According to MOF, the bill of lading,
which expressly stated Shin Yang as the consignee, is
the best evidence of the latters actual participation in
the transportation of the goods. Such document,
validly entered, stands as the law among the shipper,
carrier and the consignee, who are all bound by the
terms stated therein. Besides, a carriers valid claim
after it fulfilled its obligation cannot just be rejected by
the named consignee upon a simple denial that it ever
consented to be a party in a contract of affreightment,
or that it ever participated in the preparation of the bill
of lading. As against Shin Yangs bare denials, the bill
of lading is the sufficient preponderance of evidence
required to prove MOFs claim. MOF maintains that
Shin Yang was the one that supplied all the details in
the bill of lading and acquiesced to be named
consignee of the shipment on a Freight Collect basis.
Lastly, MOF claims that even if Shin Yang
never gave its consent, it cannot avoid its obligation to
pay, because it never objected to being named as the
consignee in the bill of lading and that it only
protested when the shipment arrived in the Philippines,
presumably due to a botched transaction between it
and Halla Trading Co. Furthermore, Shin Yangs
letters asking for the refund of container deposits
highlight the fact that it was aware of the shipment
and that it undertook preparations for the intended
release of the shipment.
Respondents Arguments
Echoing the CA decision, Shin Yang insists that MOF
has no evidence to prove that it consented to take part
in the contract of affreightment. Shin Yang argues that
MOF miserably failed to present any evidence to
prove that it was the one that made preparations for
the subject shipment, or that it is an actual shipping
practice that forwarders/consolidators as consignees
are the ones that provide carriers details and
information on the bills of lading.
 Shin Yang contends that a bill of lading is
essentially a contract between the shipper and the
carrier and ordinarily, the shipper is the one liable for
the freight charges. A consignee, on the other hand, is
initially a stranger to the bill of lading and can be
liable only when the bill of lading specifies that the
charges are to be paid by the consignee. This liability
arises from either a) the contract of agency between
the shipper/consignor and the consignee; or b) the
consignees availment of the stipulation pour
autrui drawn up by and between the shipper/
consignor and carrier upon the consignees demand
that the goods be delivered to it. Shin Yang contends
that the fact that its name was mentioned as the
consignee of the cargoes did not make it automatically
liable for the freightage because it never benefited
from the shipment. It never claimed or accepted the
goods, it was not the shippers agent, it was not aware
of its designation as consignee and the original bill of
lading was never endorsed to it.
Issue
The issue for resolution is whether a consignee, who
is not a signatory to the bill of lading, is bound by the
stipulations thereof. Corollarily, whether respondent
who was not an agent of the shipper and who did not
make any demand for the fulfillment of the
stipulations of the bill of lading drawn in its favor is
liable to pay the corresponding freight and handling
charges.
Our Ruling
Since the CA and the trial courts arrived at different
conclusions, we are constrained to depart from the
general rule that only errors of law may be raised in a
Petition for Review on Certiorari under Rule 45 of
the Rules of Court and will review the evidence
presented.[11]
The bill of lading is oftentimes drawn up by the
shipper/consignor and the carrier without the
intervention of the consignee. However, the latter can
be bound by the stipulations of the bill of lading when
a) there is a relation of agency between the shipper or
consignor and the consignee or b) when the consignee
demands fulfillment of the stipulation of the bill of
lading which was drawn up in its favor.[12]
In Keng Hua Paper Products Co., Inc. v.
Court of Appeals,[13] we held that once the bill of
lading is received by the consignee who does not
object to any terms or stipulations contained therein, it
constitutes as an acceptance of the contract and of all
of its terms and conditions, of which the acceptor has
actual or constructive notice.
In Mendoza v. Philippine Air Lines,
[14]
Inc., the consignee sued the carrier for damages but
nevertheless claimed that he was never a party to the
contract of transportation and was a complete stranger
thereto. In debunking Mendozas contention, we held
that:
x x x First, he insists that the
articles of the Code of Commerce
should be applied; that he invokes
the provisions of said Code
governing the obligations of a
common carrier to make prompt
delivery of goods given to it under
a contract of transportation. Later,
as already said, he says that he
was never a party to the contract
of transportation and was a
complete stranger to it, and that he
is now suing on a tort or a
violation of his rights as a stranger
(culpa aquiliana). If he does not
invoke the contract of carriage
entered into with the defendant
company, then he would hardly
have any leg to stand on. His right
to prompt delivery of the can of
film at the Pili Air Port stems and
is derived from the contract of
carriage under which contract, the
PAL undertook to carry the can of
film safely and to deliver it to him
promptly. Take away or ignore
that contract and the obligation to
carry and to deliver and right to
prompt delivery disappear.
Common carriers are not
obligated by law to carry and to
deliver merchandise, and persons
are not vested with the right to
prompt delivery, unless such
common carriers previously
assume the obligation. Said rights
and obligations are created by a
specific contract entered into by
the parties. In the present case,
the findings of the trial court
which as already stated, are
accepted by the parties and
which we must accept are to the
effect that the LVN Pictures Inc.
and Jose Mendoza on one side,
and the defendant company on
the other, entered into a
contract of transportation (p. 29,
Rec. on Appeal). One
interpretation of said finding is
that the LVN Pictures Inc.
through previous agreement
with Mendoza acted as the
latter's agent. When he
negotiated with the LVN
Pictures Inc. to rent the film
'Himala ng Birhen' and show it
during the Naga town fiesta, he
most probably authorized and
enjoined the Picture Company
to ship the film for him on the
PAL on September 17th.
Another interpretation is that
even if the LVN Pictures Inc. as
consignor of its own initiative,
and acting independently
of Mendoza for the time being,
made Mendoza a
consignee. [Mendoza made
himself a party to the contract
of transportaion when he
appeared at the Pili Air Port
armed with the copy of the Air
Way Bill (Exh. 1) demanding
the delivery of the shipment to
him.] The very citation made by
appellant in his memorandum
supports this view. Speaking of
the possibility of a conflict
between the order of the shipper
on the one hand and the order of
the consignee on the other, as
when the shipper orders the
shipping company to return or
retain the goods shipped while the
consignee demands their delivery,
Malagarriga in his book Codigo
de Comercio Comentado, Vol. 1,
p. 400, citing a decision of the
Argentina Court of Appeals on
commercial matters, cited by
Tolentino in Vol. II of his book
entitled 'Commentaries and
Jurisprudence on the Commercial
Laws of the Philippines' p. 209,
says that the right of the shipper
to countermand the shipment
terminates when the consignee
or legitimate holder of the bill of
lading appears with such bill of
lading before the carrier and
makes himself a party to the
contract. Prior to that time he is
a stranger to the contract.
Still another view of
this phase of the case is that
contemplated in Art. 1257,
paragraph 2, of the old Civil
Code (now Art. 1311, second
paragraph) which reads thus:
Sho
uld the
contract
contain any
stipulation in
favor of a
third person,
he may
demand its
fulfillment
provided he
has given
notice of his
acceptance to
the person
bound before
the
stipulation
has been
revoked.'
Here, the contract of
carriage between the LVN
Pictures Inc. and the defendant
carrier contains the stipulations
of delivery to Mendoza as
consignee. His demand for the
delivery of the can of film to
him at the Pili Air Port may be
regarded as a notice of his
acceptance of the stipulation of
the delivery in his favor
 contained in the contract of all the details indicated in the bill of lading and that
carriage and delivery. In this Shin Yang consented to shoulder the shipment
case he also made himself a
costs. There is also nothing in the records which
party to the contract, or at least
has come to court to enforce it. would indicate that Shin Yang was an agent of Halla
His cause of action must Trading Co. or that it exercised any act that would
necessarily be founded on its bind it as a named consignee. Thus, the CA correctly
breach.[15] (Emphasis Ours) dismissed the suit for failure of petitioner to establish
its cause against respondent.
In sum, a consignee, although not a signatory to the
WHEREFORE, the petition is DENIED. The
contract of carriage between the shipper and the
assailed Decision of the Court of Appeals
carrier, becomes a party to the contract by reason of
dated March 22, 2006 dismissing petitioners
either a) the relationship of agency between the
complaint and the Resolution dated May 25,
consignee and the shipper/ consignor; b) the
2006 denying the motion for reconsideration
unequivocal acceptance of the bill of lading delivered
are AFFIRMED.
to the consignee, with full knowledge of its contents
or c) availment of the stipulation pour autrui, i.e.,
when the consignee, a third person, demands before SO ORDERED.
the carrier the fulfillment of the stipulation made by
the consignor/shipper in the consignees favor,
specifically the delivery of the goods/cargoes
shipped.[16]

In the instant case, Shin Yang consistently

denied in all of its pleadings that it authorized Halla
Trading, Co. to ship the goods on its behalf; or that it
got hold of the bill of lading covering the shipment or
that it demanded the release of the cargo. Basic is the
rule in evidence that the burden of proof lies upon him
who asserts it, not upon him who denies, since, by the
nature of things, he who denies a fact cannot produce
any proof of it.[17] Thus, MOF has the burden to
controvert all these denials, it being insistent that Shin
Yang asserted itself as the consignee and the one that
caused the shipment of the goods to the Philippines.

In civil cases, the party having the burden of

proof must establish his case by preponderance of
evidence,[18] which means evidence which is of
greater weight, or more convincing than that which is
offered in opposition to it.[19] Here, MOF failed to
meet the required quantum of proof. Other than
presenting the bill of lading, which, at most, proves
that the carrier acknowledged receipt of the subject
cargo from the shipper and that the consignee named
is to shoulder the freightage, MOF has not adduced
any other credible evidence to strengthen its cause of
action. It did not even present any witness in support
of its allegation that it was Shin Yang which furnished
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 95582 October 7, 1991
DANGWA TRANSPORTATION CO., INC.
and THEODORE LARDIZABAL y this decretal portion:
MALECDAN, petitioners,
vs.
COURT OF APPEALS, INOCENCIA
CUDIAMAT, EMILIA CUDIAMAT
BANDOY, FERNANDO CUDLAMAT,
MARRIETA CUDIAMAT, NORMA
CUDIAMAT, DANTE CUDIAMAT,
SAMUEL CUDIAMAT and LIGAYA
CUDIAMAT, all Heirs of the late Pedrito
Cudiamat represented by Inocencia
Cudiamat, respondents.
Francisco S. Reyes Law Office for petitioners.
Antonio C. de Guzman for private respondents.
REGALADO, J.:
On May 13, 1985, private respondents filed a
complaint 1 for damages against petitioners for
the death of Pedrito Cudiamat as a result of a
vehicular accident which occurred on March 25,
1985 at Marivic, Sapid, Mankayan, Benguet.
Among others, it was alleged that on said date,
while petitioner Theodore M. Lardizabal was
driving a passenger bus belonging to petitioner
corporation in a reckless and imprudent manner
and without due regard to traffic rules and
regulations and safety to persons and property, it
ran over its passenger, Pedrito Cudiamat.
However, instead of bringing Pedrito
immediately to the nearest hospital, the said
driver, in utter bad faith and without regard to
the welfare of the victim, first brought his other
passengers and cargo to their respective
destinations before banging said victim to the
Lepanto Hospital where he expired.
On the other hand, petitioners alleged that they
had observed and continued to observe the
extraordinary diligence required in the operation
of the transportation company and the
supervision of the employees, even as they add
that they are not absolute insurers of the safety
of the public at large. Further, it was alleged that
it was the victim's own carelessness and
negligence which gave rise to the subject
incident, hence they prayed for the dismissal of
the complaint plus an award of damages in their
favor by way of a counterclaim.
On July 29, 1988, the trial court rendered a
decision, effectively in favor of petitioners, with
IN VIEW OF ALL THE FOREGOING,
judgment is hereby pronounced that Pedrito
Cudiamat was negligent, which negligence was
the proximate cause of his death. Nonetheless,
defendants in equity, are hereby ordered to pay
the heirs of Pedrito Cudiamat the sum of
P10,000.00 which approximates the amount
defendants initially offered said heirs for the
amicable settlement of the case. No costs.
SO ORDERED. 2
Not satisfied therewith, private respondents appealed to the Court of
Appeals which, in a decision 3
in CA-G.R. CV No. 19504
promulgated on August 14, 1990, set aside the
decision of the lower court, and ordered
petitioners to pay private respondents:
1. The sum of Thirty Thousand (P30,000.00)
Pesos by way of indemnity for death of the
victim Pedrito Cudiamat;
2. The sum of Twenty Thousand (P20,000.00)
by way of moral damages;
3. The sum of Two Hundred Eighty Eight
Thousand (P288,000.00) Pesos as actual and
compensatory damages;
4. The costs of this suit. 4
Petitioners' motion for reconsideration was denied by the Court of Appeals
in its resolution dated October 4, 1990, 5
hence this petition
with the central issue herein being whether
respondent court erred in reversing the decision
 where a certain Miss Abenoja alighted from the bus. Moreover, contrary to
of the trial court and in finding petitioners
the assertion of the appellees, the victim did indicate his intention to board
negligent and liable for the damages claimed.
the bus as can be seen from the testimony of the said witness when he
declared that Pedrito Cudiamat was no longer walking and made a sign to
It is an established principle that the factual
board the bus when the latter was still at a distance from him. It was at the
findings of the Court of Appeals as a rule are
instance when Pedrito Cudiamat was closing his umbrella at the platform
final and may not be reviewed by this Court on
of the bus when the latter made a sudden jerk movement (as) the driver
appeal. However, this is subject to settled
commenced to accelerate the bus.
exceptions, one of which is when the findings of
the appellate court are contrary to those of the
trial court, in which case a reexamination of the
facts and evidence may be undertaken. 6
Evidently, the incident took place due to the gross negligence of the
appellee-driver in prematurely stepping on the accelerator and in not
waiting for the passenger to first secure his seat especially so when we take

In the case at bar, the trial court and the Court of Appeal have discordant into account that the platform of the bus was at the time slippery and wet

positions as to who between the petitioners an the victim is guilty of because of a drizzle. The defendants-appellees utterly failed to observe

negligence. Perforce, we have had to conduct an evaluation of the evidence their duty and obligation as common carrier to the end that they should

in this case for the prope calibration of their conflicting factual findings observe extra-ordinary diligence in the vigilance over the goods and for the

and legal conclusions. safety of the passengers transported by them according to the
circumstances of each case (Article 1733, New Civil Code). 8

The lower court, in declaring that the victim was negligent, made the
following findings:

After a careful review of the evidence on record, we find no reason to

disturb the above holding of the Court of Appeals. Its aforesaid findings are

This Court is satisfied that Pedrito Cudiamat was negligent in trying to supported by the testimony of petitioners' own witnesses. One of them,
Virginia Abalos, testified on cross-examination as follows:
board a moving vehicle, especially with one of his hands holding an
umbrella. And, without having given the driver or the conductor any
indication that he wishes to board the bus. But defendants can also be
found wanting of the necessary diligence. In this connection, it is safe to
assume that when the deceased Cudiamat attempted to board defendants'
bus, the vehicle's door was open instead of being closed. This should be so,
for it is hard to believe that one would even attempt to board a vehicle (i)n Q It is not a fact Madam witness, that at bunkhouse 54, that is before the

motion if the door of said vehicle is closed. Here lies the defendant's lack place of the incident, there is a crossing?

of diligence. Under such circumstances, equity demands that there must be

something given to the heirs of the victim to assuage their feelings. This, A The way going to the mines but it is not being pass(ed) by the bus.
also considering that initially, defendant common carrier had made
overtures to amicably settle the case. It did offer a certain monetary Q And the incident happened before bunkhouse 56, is that not correct?
consideration to the victim's heirs. 7

A It happened between 54 and 53 bunkhouses. 9

However, respondent court, in arriving at a different opinion, declares that:

The bus conductor, Martin Anglog, also declared:

From the testimony of appellees'own witness in the person of Vitaliano

Safarita, it is evident that the subject bus was at full stop when the victim
Pedrito Cudiamat boarded the same as it was precisely on this instance
Q When you arrived at Lepanto on March 25, 1985, will you please inform
this Honorable Court if there was anv unusual incident that occurred?
A When we delivered a baggage at Marivic because a person alighted
there between Bunkhouse 53 and 54.
Q What happened when you delivered this passenger at this particular
place in Lepanto?
A When we reached the place, a passenger alighted and I signalled my
driver. When we stopped we went out because I saw an umbrella about a
split second and I signalled again the driver, so the driver stopped and we
went down and we saw Pedrito Cudiamat asking for help because he was
lying down.
Q How far away was this certain person, Pedrito Cudiamat, when you saw
him lying down — from the bus how far was he?
A It is about two to three meters.
Q On what direction of the bus was he found about three meters from the
bus, was it at the front or at the back?
A At the back, sir. 10 (Emphasis supplied.)
The foregoing testimonies show that the place of the accident and the place
where one of the passengers alighted were both between Bunkhouses 53
and 54, hence the finding of the Court of Appeals that the bus was at full
stop when the victim boarded the same is correct. They further confirm the
conclusion that the victim fell from the platform of the bus when it
suddenly accelerated forward and was run over by the rear right tires of the
vehicle, as shown by the physical evidence on where he was thereafter
found in relation to the bus when it stopped. Under such circumstances, it
cannot be said that the deceased was guilty of negligence.
The contention of petitioners that the driver and the conductor had no
knowledge that the victim would ride on the bus, since the latter had
supposedly not manifested his intention to board the same, does not merit
consideration. When the bus is not in motion there is no necessity for a
person who wants to ride the same to signal his intention to board. A public
utility bus, once it stops, is in effect making a continuous offer to bus riders.
Hence, it becomes the duty of the driver and the conductor, every time the
bus stops, to do no act that would have the effect of increasing the peril to a
passenger while he was attempting to board the same. The premature
acceleration of the bus in this case was a breach of such duty. 11
It is the duty of common carriers of passengers, including common carriers
by railroad train, streetcar, or motorbus, to stop their conveyances a
reasonable length of time in order to afford passengers an opportunity to
board and enter, and they are liable for injuries suffered by boarding
passengers resulting from the sudden starting up or jerking of their
conveyances while they are doing so. 12
Further, even assuming that the bus was moving, the act of the victim in
boarding the same cannot be considered negligent under the circumstances.
As clearly explained in the testimony of the aforestated witness for
petitioners, Virginia Abalos, th bus had "just started" and "was still in slow
motion" at the point where the victim had boarded and was on its platform.
13
It is not negligence per se, or as a matter of law, for one attempt to board a
train or streetcar which is moving slowly. 14
An ordinarily
prudent person would have made the attempt
board the moving conveyance under the same or
similar circumstances. The fact that passengers
board and alight from slowly moving vehicle is a
matter of common experience both the driver
and conductor in this case could not have been
unaware of such an ordinary practice.
The victim herein, by stepping and standing on
the platform of the bus, is already considered a
passenger and is entitled all the rights and
protection pertaining to such a contractual
relation. Hence, it has been held that the duty
which the carrier passengers owes to its patrons
extends to persons boarding cars as well as to
those alighting therefrom. 15
Common carriers, from the nature of their business and reasons of public
policy, are bound to observe extraordina diligence for the safety of the
passengers transported by the according to all the circumstances of each
case. 16
A common carrier is bound to carry the
passengers safely as far as human care and
foresight can provide, using the utmost diligence
very cautious persons, with a due regard for all
the circumstances. 17
It has also been repeatedly held that in an action based on a contract of
carriage, the court need not make an express finding of fault or negligence
on the part of the carrier in order to hold it responsible to pay the damages
COURT:
sought by the passenger. By contract of carriage, the carrier assumes the
express obligation to transport the passenger to his destination safely and
Q Why did you ask somebody to call the family
observe extraordinary diligence with a due regard for all the circumstances,
of Mr. Cudiamat?
and any injury that might be suffered by the passenger is right away
attributable to the fault or negligence of the carrier. This is an exception to
A Because Mr. Cudiamat met an accident, so I
the general rule that negligence must be proved, and it is therefore
ask somebody to call for the family of Mr.
incumbent upon the carrier to prove that it has exercised extraordinary
Cudiamat.
diligence as prescribed in Articles 1733 and 1755 of the Civil Code. 18

Q But nobody ask(ed) you to call for the family

of Mr. Cudiamat?
Moreover, the circumstances under which the driver and the conductor
A No sir. 21
failed to bring the gravely injured victim immediately to the hospital for
medical treatment is a patent and incontrovertible proof of their negligence.
It defies understanding and can even be stigmatized as callous indifference.
The evidence shows that after the accident the bus could have forthwith
turned at Bunk 56 and thence to the hospital, but its driver instead opted to
first proceed to Bunk 70 to allow a passenger to alight and to deliver a
With respect to the award of damages, an oversight was, however,
refrigerator, despite the serious condition of the victim. The vacuous reason
committed by respondent Court of Appeals in computing the actual
given by petitioners that it was the wife of the deceased who caused the
damages based on the gross income of the victim. The rule is that the
delay was tersely and correctly confuted by respondent court:
amount recoverable by the heirs of a victim of a tort is not the loss of the
entire earnings, but rather the loss of that portion of the earnings which the
beneficiary would have received. In other words, only net earnings, not
gross earnings, are to be considered, that is, the total of the earnings less
expenses necessary in the creation of such earnings or income and minus
living and other incidental expenses. 22
... The pretension of the appellees that the delay was due to the fact that
they had to wait for about twenty minutes for Inocencia Cudiamat to get
dressed deserves scant consideration. It is rather scandalous and deplorable
for a wife whose husband is at the verge of dying to have the luxury of
We are of the opinion that the deductible living and other expense of the
dressing herself up for about twenty minutes before attending to help her
deceased may fairly and reasonably be fixed at P500.00 a month or
distressed and helpless husband. 19
P6,000.00 a year. In adjudicating the actual or compensatory damages,
respondent court found that the deceased was 48 years old, in good health
with a remaining productive life expectancy of 12 years, and then earning
P24,000.00 a year. Using the gross annual income as the basis, and
multiplying the same by 12 years, it accordingly awarded P288,000.
Applying the aforestated rule on computation based on the net earnings,
Further, it cannot be said that the main intention of petitioner Lardizabal in
said award must be, as it hereby is, rectified and reduced to P216,000.00.
going to Bunk 70 was to inform the victim's family of the mishap, since it
However, in accordance with prevailing jurisprudence, the death indemnity
was not said bus driver nor the conductor but the companion of the victim
is hereby increased to P50,000.00. 23
who informed his family thereof. 20
In fact, it was only after
the refrigerator was unloaded that one of the
passengers thought of sending somebody to the
house of the victim, as shown by the testimony
WHEREFORE, subject to the above modifications, the challenged
of Virginia Abalos again, to wit:
judgment and resolution of respondent Court of Appeals are hereby
AFFIRMED in all other respects.
Q Why, what happened to your refrigerator at
that particular time?
SO ORDERED.

A I asked them to bring it down because that is

Melencio-Herrera (Chairperson), Paras, Padilla and Sarmiento, JJ.,
the nearest place to our house and when I went
concur.
down and asked somebody to bring down the
refrigerator, I also asked somebody to call the
family of Mr. Cudiamat.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 114061 August 3, 1994
KOREAN AIRLINES CO., LTD., petitioner,
vs.
COURT OF APPEALS and JUANITO C.
LAPUZ, respondents.
G.R. No. 113842 August 3, 1994
JUANITO C. LAPUZ, petitioner,
vs.
COURT OF APPEALS and KOREAN
AIRLINES CO., LTD., respondents.
M.A. Aguinaldo and Associates for Korean
Airlines Co., Ltd.
Camacho and Associates for Juanito Lapuz.
CRUZ, J.:
Sometime in 1980, Juanito C. Lapuz, an
automotive electrician, was contracted for
employment in Jeddah, Saudi Arabia, for a
period of one year through Pan Pacific Overseas
Recruiting Services, Inc. Lapuz was supposed to
leave on November 8, 1980, via Korean Airlines.
Initially, he was "wait-listed," which meant that
he could only be accommodated if any of the
confirmed passengers failed to show up at the
airport before departure. When two of such
passengers did not appear, Lapuz and another
person by the name of Perico were given the two
unclaimed seats.
According to Lapuz, he was allowed to check in
with one suitcase and one shoulder bag at the
check-in counter of KAL. He passed through the
customs and immigration sections for routine
check-up and was cleared for departure as
Passenger No. 157 of KAL Flight No. KE 903.
Together with the other passengers, he rode in
the shuttle bus and proceeded to the ramp of the
KAL aircraft for boarding. However, when he
was at the third or fourth rung of the stairs, a
KAL officer pointed to him and shouted "Down!
Down!" He was thus barred from taking the
flight. When he later asked for another booking,
his ticket was canceled by KAL. Consequently,
he was unable to report for his work in Saudi
Arabia within the stipulated 2-week period and
so lost his employment.
KAL, on the other hand, alleged that on
November 8, 1980, Pan Pacific Recruiting
Services Inc. coordinated with KAL for the
departure of 30 contract workers, of whom only
21 were confirmed and 9 were wait-listed
passengers. The agent of Pan Pacific, Jimmie
Joseph, after being informed that there was a
possibility of having one or two seats becoming
available, gave priority to Perico, who was one
of the supervisors of the hiring company in
Saudi Arabia. The other seat was won through
lottery by Lapuz. However, only one seat
became available and so, pursuant to the earlier
agreement that Perico was to be given priority,
he alone was allowed to board.
After trial, the Regional Trial Court of Manila,
Branch 30, 1 adjudged KAL liable for damages,
disposing as follows:
WHEREFORE, in view of the foregoing
consideration, judgment is hereby rendered
sentencing the defendant Korean Air Lines to
pay plaintiff Juanito C. Lapuz the following:
1. The amount of TWO HUNDRED
SEVENTY-TWO THOUSAND ONE
HUNDRED SIXTY (P272,160.00) PESOS as
actual/compensatory damages, with legal interest
thereon from the date of the filing of the
complaint until fully paid.
2. The sum of TWENTY-FIVE THOUSAND
(P25,000.00) PESOS as and for attorney's fees;
and
3. The costs of suit.
The case is hereby dismissed with respect to
defendant Pan Pacific Overseas Recruiting
Services, Inc.
The counterclaims and cross-claim of defendant
Korean Air Lines Co., Ltd. are likewise
dismissed.
On appeal, this decision was modified by the
Court of Appeals 2 as follows:
WHEREFORE, in view of all the foregoing, the
appealed judgment is hereby AFFIRMED with
the following modifications: the amount of
actual damages and compensatory damages is
reduced to P60,000.00 and defendant-appellant
is hereby ordered to pay plaintiff-appellant the
sum of One Hundred Thousand Pesos
(P100,000.00) by way of moral and exemplary
damages, at 6% interest per annum from the date
of the filing of the Complaint until fully paid.
KAL and Lapuz filed their respective motions
for reconsideration, which were both denied for
lack of merit. Hence, the present petitions for
review which have been consolidated because of
the identity of the parties and the similarity of
the issues.
In G. R. No. 114061, KAL assails the decision
of the appellate court on the following grounds:
1. That the Court of Appeals erred in concluding
that petitioner committed a breach of contract of
carriage notwithstanding lack of proper,
competent and sufficient evidence of the
existence of such contract.
2. That the Court of Appeals erred in not
according the proper evidentiary weight to some
evidence presented and the fact that private
respondent did not have any boarding pass to
prove that he was allowed to board and to prove
that his airline ticket was confirmed.
3. That the Court of Appeals erred in concluding
that the standby passenger status of private
respondent Lapuz was changed to a confirmed
status when his name was entered into the
passenger manifest.
4. That the Court of Appeals abused its
discretion in awarding moral and exemplary
damages in the amount of P100,000.00 in favor
of private respondent notwithstanding its lack of
basis and private respondent did not state such
amount in his complaint nor had private
respondent proven the said damages.
5. That the Court of Appeals erred in dismissing
the counterclaims.
6. That the Court of Appeals erred in dismissing
the counterclaim of petitioner against Pan
Pacific.
7. That the Court of Appeals erred in ruling that
the 6% per annum legal interest on the judgment
shall be computed from the filing of the
complaint.
In G. R. No. 113842, Lapuz seeks: (a) the setting
aside of the decision of the Court of Appeals
insofar as it modifies the award of damages; b)
actual and compensatory damages in the sum
equivalent to 5 years' loss of earnings based on
the petitioner's monthly salary of 1,600 Saudi
rials at the current conversion rate plus the cost
of baggage and personal belongings worth
P2,000 and the service fee of P3,000 paid to the
recruiting agency, all with legal interest from the
filing of the complaint until fully paid; c) moral
damages of not less than P1 million and
exemplary damages of not less than P500,000.00,
both with interest at 6% per annum from the
filing of the complaint; and d) attorney's fees in
the sum equivalent to 30% of the award of
damages.
It is evident that the issues raised in these
petitions relate mainly to the correctness of the
factual findings of the Court of Appeals and the
award of damages. The Court has consistently
affirmed that the findings of fact of the Court of
Appeals and the other lower courts are as a rule
binding upon it, subject to certain exceptions. As
nothing in the record indicates any of such
exceptions, the factual conclusions of the
appellate court must be affirmed.
The status of Lapuz as standby passenger was
changed to that of a confirmed passenger when
his name was entered in the passenger manifest
of KAL for its Flight No. KE 903. His clearance
through immigration and customs clearly shows
that he had indeed been confirmed as a
passenger of KAL in that flight. KAL thus
committed a breach of the contract of carriage
between them when it failed to bring Lapuz to
his destination.
This Court has held that a contract to transport
passengers is different in kind and degree from
any other contractual relation. 3 The business of
the carrier is mainly with the traveling public. It
invites people to avail themselves of the
comforts and advantages it offers. The contract
of air carriage generates a relation attended with
a public duty. Passengers have the right to be
treated by the carrier's employees with kindness,
respect, courtesy and due consideration. They
are entitled to be protected against personal
misconduct, injurious language, indignities and
abuses from such employees. 4 So it is that any
discourteous conduct on the part of these
employees toward a passenger gives the latter an
action for damages against the carrier.
The breach of contract was aggravated in this
case when, instead of courteously informing
Lapuz of his being a "wait-listed" passenger, a
KAL officer rudely shouted "Down! Down!"
while pointing at him, thus causing him
embarrassment and public humiliation.
KAL argues that "the evidence of confirmation
of a chance passenger status is not through the
entry of the name of a chance passenger in the
passenger manifest nor the clearance from the
Commission on Immigration and Deportation,
because they are merely means of facilitating the
boarding of a chance passenger in case his status
is confirmed." We are not persuaded.
The evidence presented by Lapuz shows that he
had indeed checked in at the departure counter,
passed through customs and immigration,
boarded the shuttle bus and proceeded to the
ramp of KAL's aircraft. In fact, his baggage had
already been loaded in KAL's aircraft, to be
flown with him to Jeddah. The contract of
carriage between him and KAL had already been
perfected when he was summarily and insolently
prevented from boarding the aircraft.
KAL's allegation that the respondent court
abused its discretion in awarding moral and
exemplary damages is also not tenable.
The Court of Appeals granted moral and
exemplary damages because:
The findings of the court a quo that the
defendant-appellant has committed breach of
contract of carriage in bad faith and in wanton,
disregard of plaintiff-appellant's rights as
passenger laid the basis and justification of an
award for moral damages.
xxxx
In the instant case, we find that
defendant-appellant Korean Air Lines acted in a
wanton, fraudulent, reckless, oppressive or
malevolent manner when it "bumped off"
plaintiff-appellant on November 8, 1980, and in
addition treated him rudely and arrogantly as a
"patay gutom na contract worker fighting
Korean Air Lines," which clearly shows malice
and bad faith, thus entitling plaintiff-appellant to
moral damages.
xxxx
Considering that the plaintiff-appellant's
entitlement to moral damages has been fully
established by oral and documentary evidence,
exemplary damages may be awarded. In fact,
exemplary damages may be awarded, even
though not so expressly pleaded in the complaint
(Kapoe vs. Masa, 134 SCRA 231). By the same
token, to provide an example for the public good,
an award of exemplary damages is also proper
(Armovit vs. Court of Appeals, supra).
On the other hand, Lapuz's claim that the award
of P100,000.00 as moral and exemplary
damages is inadequate is not acceptable either.
His prayer for moral damages of not less than P1
million and exemplary damages of not less than
P500,000.00 is overblown.
The well-entrenched principle is that moral
damages depend upon the discretion of the court
based on the circumstances of each case. 5 This
discretion is limited by the principle that the
"amount awarded should not be palpably and
scandalously excessive" as to indicate that it was
the result of prejudice or corruption on the part
of the trial court. 6 Damages are not intended to
enrich the complainant at the expense of the
defendant. They are awarded only to alleviate
the moral suffering that the injured party had
undergone by reason of the defendant's culpable
action. 7 There is no hard-and-fast rule in the
determination of what would be a fair amount of
moral damages since each case must be
governed by its own peculiar facts.
A review of the record of this case shows that
the injury suffered by Lapuz is not so serious or
extensive as to warrant an award of P1.5 million.
The assessment of P100,000 as moral and
exemplary damages in his favor is, in our view,
reasonable and realistic.
Lapuz likewise claims that the respondent court
could not rule upon the propriety of the award of
actual damages because it had not been assigned
as an error by KAL. Not so. The rule is that only
errors specifically assigned and properly argued
in the brief will be considered except errors
affecting jurisdiction over the subject matter and
plain as well as clerical errors. 8 But this is not
without qualification for, as the Court held
in Vda. de Javellana vs. Court of Appeals: 9
. . . [T]he Court is clothed with ample authority
to review matters, even if they are not assigned
as errors in their appeal, if it finds that their
consideration is necessary in arriving at a just
decision of the case.
A similar pronouncement was made in Baquiran
vs. Court of Appeals 10 in this wise:
Issues, though not specifically raised in the
pleading in the appellate court, may, in the
interest of justice, be properly considered by said
court in deciding a case, if they are questions
raised in the trial court and are matters of record
having some bearing on the issue submitted
which the parties failed to raise or the lower
court ignored.
The Court of Appeals was therefore justified in
decreasing the award of actual damages even if
the issue was not assigned as an error by KAL.
Consideration of this question was necessary for
the just and complete resolution of the present
case. Furthermore, there was enough evidence to
warrant the reduction of the original award, as
the challenged decision correctly observed:
A perusal of the plaintiff-appellant's contract of
employment shows that the effectivity of the
contract is for only one year, renewable every
year for five years. Although plaintiff-appellant
intends to renew his contract, such renewal will
still be subject to his foreign employer.
Plaintiff-appellant had not yet started working
with his foreign employer, hence, there can be
no basis as to whether his contract will be
renewed by his foreign employer or not. Thus,
the damages representing the loss of earnings of
plaintiff-appellant in the renewal of the contract
of employment is at most speculative. Damages
may not be awarded on the basis of speculation
or conjecture (Gachalian vs. Delim, 203 SCRA
126). Hence, defendant-appellant's liability is
limited to the one year contract only.
Plaintiff-appellant is, therefore, entitled only to
his lost earnings for one year, i.e., P60,000.00,
which is 1/5 of P300,000.00, the total amount of
actual damages, representing lost earnings for
five years prayed for in the Complaint.
Plaintiff-appellant's contention that in computing
his lost earnings, the current rate of the Saudi
Rial to the Philippine Peso at the time of
payment should be used, is untenable,
considering that in his Complaint,
plaintiff-appellant has quantified in Philippine
Peso his lost earnings for five years.
We disagree with the respondent court, however,
on the date when the legal interest should
commence to run. The rule is that the legal
interest of six percent (6%) on the amounts
adjudged in favor of Lapuz should resume from
the time of the rendition of the trial court's
decision instead of November 28, 1980, the date
of the filing of the complaint.
On this matter, the Court has held:
If suit were for payment of a definite sum of
money, the contention might be tenable.
However, if it is for damages, unliquidated and
not known until definitely ascertained, assessed
and determined by the courts after proof, interest
should be from the date of the decision. 11
xxxx
The obligation to pay interest on a sum filed in a
judgment exists from the date of the sentence,
when so declared; for until the net amount of the
debtor's liability has been determined, he cannot
he considered delinquent in the fulfillment of his
obligation to pay the debt with interest
thereon. 12
Finally, we find that the respondent court did not
err in sustaining the trial court's dismissal of
KAL's counterclaim against Pan Pacific
Overseas Recruiting Services Inc., whose
responsibility ended with the confirmation by
KAL of Lapuz as its passenger in its Flight No.
903.
This is still another case of the maltreatment of
our overseas contract workers, this time by the
airline supposed to bring the passenger to his
foreign assignment. Our OCW's sacrifice much
in seeking employment abroad, where they are
deprived of the company of their loved ones, the
direct protection of our laws, and the comfort of
our own native culture and way of life. This
Court shall exert every effort to vindicate their
rights when they are abused and shall accord
them the commensurate reparation of their
injuries consistent with their dignity and worth
as members of the working class.

WHEREFORE, the appealed judgment is

AFFIRMED, but with the modification that the
legal interest on the damages awarded to private
respondent should commence from the date of
the decision of the trial court on November 14,
1990. The parties shall bear their own costs.

SO ORDERED.

Davide, Jr., Quiason and Kapunan, JJ., concur.

Bellosillo, J., is on official leave.

FIRST DIVISION
[G.R. No. 145804. February 6, 2003]
LIGHT RAIL TRANSIT AUTHORITY &
RODOLFO ROMAN, petitioners,
vs. MARJORIE NAVIDAD, Heirs of
the Late NICANOR NAVIDAD &
PRUDENT SECURITY
AGENCY, respondents.
DECISION
VITUG, J.:
The case before the Court is an appeal from
the decision and resolution of the Court of
Appeals, promulgated on 27 April 2000 and 10
October 2000, respectively, in CA-G.R. CV No.
60720, entitled Marjorie Navidad and Heirs of
the Late Nicanor Navidad vs. Rodolfo Roman, et.
al., which has modified the decision of 11
August 1998 of the Regional Trial Court, Branch
266, Pasig City, exonerating Prudent Security
Agency (Prudent) from liability and finding
Light Rail Transit Authority (LRTA) and
Rodolfo Roman liable for damages on account
of the death of Nicanor Navidad.
On 14 October 1993, about half an hour
past seven oclock in the evening, Nicanor
Navidad, then drunk, entered the EDSA LRT
station after purchasing a token (representing
payment of the fare). While Navidad was
standing on the platform near the LRT tracks,
Junelito Escartin, the security guard assigned to
the area approached Navidad. A
misunderstanding or an altercation between the
two apparently ensued that led to a fist fight. No
evidence, however, was adduced to indicate how
the fight started or who, between the two,
delivered the first blow or how Navidad later fell
on the LRT tracks. At the exact moment that
Navidad fell, an LRT train, operated by
petitioner Rodolfo Roman, was coming
in. Navidad was struck by the moving train, and
he was killed instantaneously.
On 08 December 1994, the widow of
Nicanor, herein respondent Marjorie Navidad,
along with her children, filed a complaint for
damages against Junelito Escartin, Rodolfo
Roman, the LRTA, the Metro Transit
Organization, Inc. (Metro Transit), and Prudent
for the death of her husband. LRTA and Roman
filed a counterclaim against Navidad and a
cross-claim against Escartin and
Prudent. Prudent, in its answer, denied liability
and averred that it had exercised due diligence in
the selection and supervision of its security
guards.
The LRTA and Roman presented their
evidence while Prudent and Escartin, instead of
presenting evidence, filed a demurrer contending
that Navidad had failed to prove that Escartin
was negligent in his assigned task. On 11 August
1998, the trial court rendered its decision; it
adjudged:
WHEREFORE, judgment is hereby rendered in
favor of the plaintiffs and against the defendants
Prudent Security and Junelito Escartin ordering
the latter to pay jointly and severally the
plaintiffs the following:
a) 1) Actual damages of P44,830.00;
2) Compensatory damages of
P443,520.00;
3) Indemnity for the death of
Nicanor Navidad in
the sum of
P50,000.00;
b) Moral damages of P50,000.00;
c) Attorneys fees of P20,000;
d) Costs of suit.
The complaint against defendants LRTA and
Rodolfo Roman are dismissed for lack of merit.
The compulsory counterclaim of LRTA and
Roman are likewise dismissed.[1]
Prudent appealed to the Court of
Appeals. On 27 August 2000, the appellate court
promulgated its now assailed decision
exonerating Prudent from any liability for the
death of Nicanor Navidad and, instead, holding
the LRTA and Roman jointly and severally
liable thusly:
WHEREFORE, the assailed judgment is
hereby MODIFIED, by exonerating the
appellants from any liability for the death of
Nicanor Navidad, Jr. Instead, appellees Rodolfo
Roman and the Light Rail Transit Authority
(LRTA) are held liable for his death and are
hereby directed to pay jointly and severally to
the plaintiffs-appellees, the following amounts:
a) P44,830.00 as actual damages;
b) P50,000.00 as nominal damages;
c) P50,000.00 as moral damages;
d) P50,000.00 as indemnity for the death of the
deceased; and
e) P20,000.00 as and for attorneys fees.[2]
The appellate court ratiocinated that while
the deceased might not have then as yet boarded
the train, a contract of carriage theretofore had
already existed when the victim entered the
place where passengers were supposed to be
after paying the fare and getting the
corresponding token therefor. In exempting
Prudent from liability, the court stressed that
there was nothing to link the security agency to
the death of Navidad. It said that Navidad failed
to show that Escartin inflicted fist blows upon
the victim and the evidence merely established
the fact of death of Navidad by reason of his
having been hit by the train owned and managed
by the LRTA and operated at the time by
Roman. The appellate court faulted petitioners
for their failure to present expert evidence to
establish the fact that the application of
emergency brakes could not have stopped the
train.
The appellate court denied petitioners
motion for reconsideration in its resolution of 10
October 2000.
In their present recourse, petitioners recite
alleged errors on the part of the appellate
court; viz:
I.
THE HONORABLE COURT OF APPEALS
GRAVELY ERRED BY DISREGARDING
THE FINDINGS OF FACTS BY THE TRIAL
COURT
II.
THE HONORABLE COURT OF APPEALS
GRAVELY ERRED IN FINDING THAT
PETITIONERS ARE LIABLE FOR THE
DEATH OF NICANOR NAVIDAD, JR.
III.
THE HONORABLE COURT OF APPEALS
GRAVELY ERRED IN FINDING THAT
RODOLFO ROMAN IS AN EMPLOYEE OF
LRTA.[3]
Petitioners would contend that the appellate
court ignored the evidence and the factual
findings of the trial court by holding them liable
on the basis of a sweeping conclusion that the
presumption of negligence on the part of a
common carrier was not overcome. Petitioners
would insist that Escartins assault upon Navidad,
which caused the latter to fall on the tracks, was
an act of a stranger that could not have been
foreseen or prevented. The LRTA would add
that the appellate courts conclusion on the
existence of an employer-employee relationship
between Roman and LRTA lacked basis because
Roman himself had testified being an employee
of Metro Transit and not of the LRTA.
Respondents, supporting the decision of the
appellate court, contended that a contract of
carriage was deemed created from the moment
Navidad paid the fare at the LRT station and
entered the premises of the latter, entitling
Navidad to all the rights and protection under a
contractual relation, and that the appellate court
had correctly held LRTA and Roman liable for
the death of Navidad in failing to exercise
extraordinary diligence imposed upon a common
carrier.
Law and jurisprudence dictate that a
common carrier, both from the nature of its
business and for reasons of public policy, is
burdened with the duty of exercising utmost
diligence in ensuring the safety of
passengers.[4] The Civil Code, governing the
liability of a common carrier for death of or
injury to its passengers, provides:
Article 1755. A common carrier is bound to
carry the passengers safely as far as human care
and foresight can provide, using the utmost
diligence of very cautious persons, with a due
regard for all the circumstances.
Article 1756. In case of death of or injuries to
passengers, common carriers are presumed to
have been at fault or to have acted negligently,
unless they prove that they observed
extraordinary diligence as prescribed in articles
1733 and 1755.
Article 1759. Common carriers are liable for the
death of or injuries to passengers through the
negligence or willful acts of the formers
employees, although such employees may have
acted beyond the scope of their authority or in
violation of the orders of the common carriers.
This liability of the common carriers does not
cease upon proof that they exercised all the
diligence of a good father of a family in the
selection and supervision of their employees.
Article 1763. A common carrier is responsible
for injuries suffered by a passenger on account
of the willful acts or negligence of other
passengers or of strangers, if the common
carriers employees through the exercise of the
diligence of a good father of a family could have
prevented or stopped the act or omission.
The law requires common carriers to carry
passengers safely using the utmost diligence of
very cautious persons with due regard for all
circumstances.[5] Such duty of a common carrier
to provide safety to its passengers so obligates it
not only during the course of the trip but for so
long as the passengers are within its premises
and where they ought to be in pursuance to the
contract of carriage.[6] The statutory provisions
render a common carrier liable for death of or
injury to passengers (a) through the negligence
or wilful acts of its employees or b) on account
of wilful acts or negligence of other
passengers or of strangers if the common
carriers employees through the exercise of
due diligence could have prevented or
stopped the act or omission.[7] In case of such
death or injury, a carrier is presumed to have
been at fault or been negligent, and[8] by simple
proof of injury, the passenger is relieved of the
duty to still establish the fault or negligence of
the carrier or of its employees and the burden
shifts upon the carrier to prove that the injury is
due to an unforeseen event or to force
majeure.[9] In the absence of satisfactory
explanation by the carrier on how the accident
occurred, which petitioners, according to the
appellate court, have failed to show, the
presumption would be that it has been at
fault,[10] an exception from the general rule that
negligence must be proved.[11]
The foundation of LRTAs liability is the
contract of carriage and its obligation to
indemnify the victim arises from the breach of
that contract by reason of its failure to exercise
the high diligence required of the common
carrier. In the discharge of its commitment to
ensure the safety of passengers, a carrier may
choose to hire its own employees or avail itself
of the services of an outsider or an independent
firm to undertake the task. In either case, the
common carrier is not relieved of its
responsibilities under the contract of carriage.
Should Prudent be made likewise liable? If
at all, that liability could only be for tort under
the provisions of Article 2176[12] and related
provisions, in conjunction with Article
2180,[13] of the Civil Code. The premise,
however, for the employers liability is
negligence or fault on the part of the
employee. Once such fault is established, the
employer can then be made liable on the basis of
the presumption juris tantum that the employer
failed to exercise diligentissimi patris families in
the selection and supervision of its
employees. The liability is primary and can only
be negated by showing due diligence in the
selection and supervision of the employee, a
factual matter that has not been shown. Absent
such a showing, one might ask further, how then
must the liability of the common carrier, on the
one hand, and an independent contractor, on the
other hand, be described? It would be
solidary. A contractual obligation can be
breached by tort and when the same act or
omission causes the injury, one resulting
in culpa contractual and the other in culpa
aquiliana, Article 2194[14] of the Civil Code can
well apply.[15] In fine, a liability for tort may
arise even under a contract, where tort is that
which breaches the contract.[16] Stated differently,
when an act which constitutes a breach of
contract would have itself constituted the source
of a quasi-delictual liability had no contract
existed between the parties, the contract can be
said to have been breached by tort, thereby
allowing the rules on tort to apply.[17]
Regrettably for LRT, as well as perhaps the
surviving spouse and heirs of the late Nicanor
Navidad, this Court is concluded by the factual
finding of the Court of Appeals that there is
nothing to link (Prudent) to the death of Nicanor
(Navidad), for the reason that the negligence of
its employee, Escartin, has not been duly proven
x x x. This finding of the appellate court is not
without substantial justification in our own
review of the records of the case.
There being, similarly, no showing that
petitioner Rodolfo Roman himself is guilty of
any culpable act or omission, he must also be
absolved from liability. Needless to say, the
contractual tie between the LRT and Navidad is
not itself a juridical relation between the latter
and Roman; thus, Roman can be made liable
only for his own fault or negligence.
The award of nominal damages in addition
to actual damages is untenable. Nominal
damages are adjudicated in order that a right of
the plaintiff, which has been violated or invaded
by the defendant, may be vindicated or
recognized, and not for the purpose of
indemnifying the plaintiff for any loss suffered
by him.[18] It is an established rule that nominal
damages cannot co-exist with compensatory
damages.[19]
WHEREFORE, the assailed decision of
the appellate court is AFFIRMED with
MODIFICATION but only in that (a) the award
of nominal damages is DELETED and (b)
petitioner Rodolfo Roman is absolved from
liability. No costs.
SO ORDERED.
Davide, Jr., C.J., (Chairman),
Ynares-Santiago, Carpio and Azcuna,
JJ., concur.