Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 122494 October 8, 1998

EVERETT STEAMSHIP CORPORATION, petitioner,

vs.
COURT OF APPEALS and HERNANDEZ TRADING CO. INC., respondents.

MARTINEZ, J.:

Petitioner Everett Steamship Corporation, through this petition for review, seeks the reversal of the
decision1 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 petitioner's 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.

Private respondent rejected the offer and 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
attorney's fees; and (d) to pay the cost of the suit. The trial court ruled:

Considering defendant's 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 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 attorney's fees but affirmed the trial court's 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.

xxx xxx xxx

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 carrier's 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 carrier's 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 carrier's 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 carrier's
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
shipper's 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 court's 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 Appeals5 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:

. . . 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 . . . are contracts not entirely prohibited. The one who adheres
to the contract is in reality free to reject it entirely; if the 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 . . ., 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 latter's 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. . . ., 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 petitioner's
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
onsignee. . . . .

. . . 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 bill of lading as through physically in it and as though placed therein by agreement of the
parties.
There can, therefore, be no doubt or equivocation about the validity and enforceability of freely-agreed-
upon stipulations in a contract of carriage or bill of lading limiting the liability of the carrier to an agreed
valuation unless the shipper declares a higher value and inserts it into said contract or bill. This proposition,
moreover, rests upon an almost uniform weight of authority. (Emphasis supplied).

When private respondent formally claimed reimbursement for the missing goods from petitioner and
subsequently filed a case against the latter based on the very same bill of lading, it (private respondent)
accepted the provisions of 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 carrier's 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 . . ., 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 petitioner's contention. To defeat the carrier's 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 extra freight paid. These requirements in the bill of lading were never complied with by the shipper,
hence, the liability of the carrier under the limited liability clause stands. The commercial Invoice No. MTM-
941 does not in itself sufficiently and convincingly show that petitioner has knowledge of the value of the
cargo as contended by private respondent. No other evidence was proffered by private respondent to
support is contention. Thus, we are convinced that petitioner should be liable for the full value of the lost
cargo.

In fine, the liability of petitioner for the loss of the cargo is limited to One Hundred Thousand (Y100,000.00)
Yen, pursuant to Clause 18 of the bill of lading.

WHEREFORE, the decision of the Court of Appeals dated June 14, 1995 in C.A.-G.R. CV No. 42803 is
hereby REVERSED and SET ASIDE.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 172822 Petitioner,

MOF COMPANY, INC., Petitioner,

vs.
SHIN YANG BROKERAGE CORPORATION Respondent.

DECISION

DEL CASTILLO, J.:

The necessity of proving lies with the person who sues.

The refusal of the consignee named in the bill of lading to pay the freightage on the claim that it is not privy
to the contract of affreightment propelled the shipper to sue for collection of money, stressing that its sole
evidence, the bill of lading, suffices to prove that the consignee is bound to pay. Petitioner now comes to
us by way of Petition for Review on Certiorari1 under Rule 45 praying for the reversal of the Court of
Appeals' (CA) judgment that dismissed its action for sum of money for insufficiency of evidence.

Factual Antecedents

On October 25, 2001, Halla Trading Co., a company based in Korea, shipped to Manila secondhand cars
and other articles on board 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 carrier Hanjin Shipping Co., Ltd.
(Hanjin), named respondent Shin Yang Brokerage Corp. (Shin Yang) as the consignee and indicated that
payment was on a "Freight Collect" basis, i.e., that the consignee/receiver of the goods would be the one
to pay for the freight and other charges in the total amount of ₱57,646.00.3

The shipment arrived in Manila on October 29, 2001. Thereafter, petitioner MOF Company, Inc. (MOF),
Hanjin’s exclusive general agent in the Philippines, repeatedly demanded the payment of ocean freight,
documentation fee and terminal handling charges from Shin Yang. The latter, however, failed and refused
to pay contending that it did not cause the importation of the goods, that it is only the Consolidator of the
said shipment, that the ultimate consignee did not endorse in its favor the original bill of lading and that the
bill of lading was prepared without its consent.

Thus, on March 19, 2003, MOF filed a case for sum of money before 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 Yang, a regular client, caused the importation and shipment of the goods and assured it that
ocean freight and other charges would be paid upon arrival of the goods in Manila. Yet, after Hanjin's
compliance, Shin Yang unjustly breached its obligation to pay. MOF argued that Shin Yang, as the named
consignee in the bill of lading, entered itself as a party to the contract and bound itself to the "Freight Collect"
arrangement. MOF thus prayed for the payment of ₱57,646.00 representing ocean freight, documentation
fee and terminal handling charges as well as damages and attorney’s fees.

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 Yang denied any involvement in shipping the goods or in
promising to shoulder the freightage. It asserted that it never authorized Halla Trading Co. to ship the
articles or to have its name included in the bill of 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 assured
payment of the shipping charges upon arrival of the goods in Manila.
Ruling of the Metropolitan Trial Court

On June 16, 2004, the MeTC of Pasay City, Branch 48 rendered its Decision4 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 defendant’s
letters dated 09 May 2002 and 13 May 2002 (Exhibits "1" and "2", defendant’s 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. ₱57,646.00 plus legal interest from the date of demand until fully paid,

2. ₱10,000.00 as and for attorney’s fees and

3. the cost of suit.

SO ORDERED.6

Ruling of the Regional Trial Court

The Regional Trial Court (RTC) of Pasay City, Branch 108 affirmed in toto the Decision of the MeTC. It held
that:

MOF and Shin Yang entered into a contract of affreightment which Black’s 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 ₱57,646.00, with interest until fully paid, attorney’s fees of ₱10,000.00
[and] cost of suit.

Considering all the foregoing, this Court affirms in toto the decision of the Court a quo.

SO ORDERED.7
Ruling of the Court of Appeals

Seeing the matter in a different light, the CA dismissed MOF’s complaint and refused to award any form of
damages or attorney’s fees. It opined that MOF failed to substantiate its claim that Shin Yang had a hand
in the importation of the articles to the Philippines or that it gave its consent to be a consignee of the subject
goods. In its March 22, 2006 Decision,8 the CA said:

This Court is persuaded [that except] for the Bill of Lading, respondent has not presented any other
evidence to bolster its claim that petitioner has entered [into] an agreement of affreightment with
respondent, be it verbal or written. It is noted that the Bill of Lading was prepared by Hanjin Shipping, not
the petitioner. Hanjin is the principal while respondent is the former’s agent. (p. 43, rollo)

The conclusion of the court a quo, which was upheld by the RTC Pasay City, Branch 108 xxx is purely
speculative and conjectural. A court cannot rely on speculations, conjectures or guesswork, but must
depend upon competent proof and on the basis of the best evidence obtainable under the circumstances.
Litigation cannot be properly resolved by suppositions, deductions or even presumptions, with no basis in
evidence, for the truth must have to be determined by the hard rules of admissibility and proof (Lagon vs.
Hooven Comalco Industries, Inc. 349 SCRA 363).

While it is true that a bill of lading serves two (2) functions: first, it is a receipt for the goods shipped; second,
it is a contract by which three parties, namely, the shipper, the carrier and the consignee who undertake
specific responsibilities and assume stipulated obligations (Belgian Overseas Chartering and Shipping N.V.
vs. Phil. First Insurance Co., Inc., 383 SCRA 23), x x x if the same is not accepted, it is as if one party does
not accept the contract. Said the Supreme Court:

"A bill of lading delivered and accepted constitutes the contract of carriage[,] even though not signed,
because the acceptance of a paper containing the terms of a proposed contract generally constitutes an
acceptance of the contract and of all its terms and conditions of which the acceptor has actual or
constructive notice" (Keng Hua Paper Products Co., Inc. vs. CA, 286 SCRA 257).

In the present case, petitioner did 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 Homeowner’s 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 Resolution10 dated May 25, 2006.
Hence, this petition for review on certiorari.

Petitioner’s Arguments

In assailing the CA’s 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 latter’s 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 carrier’s 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 Yang’s bare denials, the
bill of lading is the sufficient preponderance of evidence required to prove MOF’s 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 Yang’s 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.

Respondent’s 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 consignee’s availment of the stipulation pour autrui drawn
up by and between the shipper/ consignor and carrier upon the consignee’s 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 shipper’s 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.1avvphi1

In Mendoza v. Philippine Air Lines, Inc.,14 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 Mendoza’s 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:

‘Should 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 carriage and delivery. In this case he also made himself a party to the contract,
or at least has come to court to enforce it. His cause of action must necessarily be founded on its breach.15
(Emphasis Ours)
In sum, a consignee, although not a signatory to the contract of carriage between the shipper and the
carrier, becomes a party to the contract by reason of either a) the relationship of agency between the
consignee and the shipper/ consignor; b) the unequivocal acceptance of the bill of lading delivered 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 the carrier the fulfillment of the stipulation made by the
consignor/shipper in the consignee’s 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 all the details indicated in the bill of lading and that Shin Yang consented to
shoulder the shipment costs. There is also nothing in the records which would indicate that Shin Yang was
an agent of Halla Trading Co. or that it exercised any act that would bind it as a named consignee. Thus,
the CA correctly dismissed the suit for failure of petitioner to establish its cause against respondent.

WHEREFORE, the petition is DENIED. The assailed Decision of the Court of Appeals dated March 22,
2006 dismissing petitioner’s complaint and the Resolution dated May 25, 2006 denying the motion for
reconsideration are AFFIRMED.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 95582 October 7, 1991

DANGWA TRANSPORTATION CO., INC. and THEODORE LARDIZABAL y 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 this decretal
portion:

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 of the trial court and in finding petitioners negligent and liable for the damages claimed.

It is an established principle that the factual findings of the Court of Appeals as a rule are final and may not
be reviewed by this Court on appeal. However, this is subject to settled 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

In the case at bar, the trial court and the Court of Appeal have discordant positions as to who between the
petitioners an the victim is guilty of negligence. Perforce, we have had to conduct an evaluation of the
evidence in this case for the prope calibration of their conflicting factual findings and legal conclusions.

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

This Court is satisfied that Pedrito Cudiamat was negligent in trying to 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 motion if the door of said vehicle is closed. Here
lies the defendant's lack of diligence. Under such circumstances, equity demands that there must be
something given to the heirs of the victim to assuage their feelings. This, also considering that initially,
defendant common carrier had made overtures to amicably settle the case. It did offer a certain monetary
consideration to the victim's heirs. 7

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

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
where a certain Miss Abenoja alighted from the bus. Moreover, contrary to the assertion of the appellees,
the victim did indicate his intention to board 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 board the bus when
the latter was still at a distance from him. It was at the instance when Pedrito Cudiamat was closing his
umbrella at the platform of the bus when the latter made a sudden jerk movement (as) the driver
commenced to accelerate the bus.

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
into account that the platform of the bus was at the time slippery and wet because of a drizzle. The
defendants-appellees utterly failed to observe their duty and obligation as common carrier to the end that
they should observe extra-ordinary diligence in the vigilance over the goods and for the safety of the
passengers transported by them according to the circumstances of each case (Article 1733, New Civil
Code). 8

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 supported by the testimony of petitioners' own witnesses. One of
them, Virginia Abalos, testified on cross-examination as follows:
Q It is not a fact Madam witness, that at bunkhouse 54, that is before the place of the incident, there is a
crossing?

A The way going to the mines but it is not being pass(ed) by the bus.

Q And the incident happened before bunkhouse 56, is that not correct?

A It happened between 54 and 53 bunkhouses. 9

The bus conductor, Martin Anglog, also declared:

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 sought by the passenger. By contract of carriage, the carrier assumes the express obligation to
transport the passenger to his destination safely and observe extraordinary diligence with a due regard for
all the circumstances, 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 the general rule that negligence must be proved,
and it is therefore incumbent upon the carrier to prove that it has exercised extraordinary diligence as
prescribed in Articles 1733 and 1755 of the Civil Code. 18

Moreover, the circumstances under which the driver and the conductor 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 refrigerator,
despite the serious condition of the victim. The vacuous reason given by petitioners that it was the wife of
the deceased who caused the delay was tersely and correctly confuted by respondent court:

... 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 dressing herself up for
about twenty minutes before attending to help her distressed and helpless husband. 19

Further, it cannot be said that the main intention of petitioner Lardizabal in going to Bunk 70 was to inform
the victim's family of the mishap, since it was not said bus driver nor the conductor but the companion of
the victim 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
of Virginia Abalos again, to wit:

Q Why, what happened to your refrigerator at that particular time?

A I asked them to bring it down because that is the nearest place to our house and when I went down
and asked somebody to bring down the refrigerator, I also asked somebody to call the family of Mr.
Cudiamat.

COURT:
Q Why did you ask somebody to call the family of Mr. Cudiamat?

A Because Mr. Cudiamat met an accident, so I ask somebody to call for the family of Mr. Cudiamat.

Q But nobody ask(ed) you to call for the family of Mr. Cudiamat?

A No sir. 21

With respect to the award of damages, an oversight was, however, committed by respondent Court of
Appeals in computing the actual damages based on the gross income of the victim. The rule is that the
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

We are of the opinion that the deductible living and other expense of the deceased may fairly and
reasonably be fixed at P500.00 a month or 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, said award must be, as it hereby is, rectified
and reduced to P216,000.00. However, in accordance with prevailing jurisprudence, the death indemnity is
hereby increased to P50,000.00. 23

WHEREFORE, subject to the above modifications, the challenged judgment and resolution of respondent
Court of Appeals are hereby AFFIRMED in all other respects.

SO ORDERED.
 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.
 Republic of the Philippines
SUPREME COURT
Manila

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 o’clock in the evening, Nicanor Navidad, then drunk,
entered the EDSA LRT station after purchasing a "token" (representing payment of the fare). While Navidad
was standing on the platform near the LRT tracks, Junelito Escartin, the security guard assigned to the area
approached Navidad. A misunderstanding or an altercation between the two apparently ensued that led to
a fist fight. No evidence, however, was adduced to indicate how the fight started or who, between the two,
delivered the first blow or how Navidad later fell on the LRT tracks. At the exact moment that Navidad fell,
an LRT train, operated by petitioner Rodolfo Roman, was coming in. Navidad was struck by the moving
train, and he was killed instantaneously.

On 08 December 1994, the widow of Nicanor, herein respondent Marjorie Navidad, along with her children,
filed a complaint for damages against Junelito Escartin, Rodolfo Roman, the LRTA, the Metro Transit
Organization, Inc. (Metro Transit), and Prudent for the death of her husband. LRTA and Roman filed a
counterclaim against Navidad and a cross-claim against Escartin and Prudent. Prudent, in its answer,
denied liability and averred that it had exercised due diligence in the selection and supervision of its security
guards.

The LRTA and Roman presented their evidence while Prudent and Escartin, instead of presenting
evidence, filed a demurrer contending that Navidad had failed to prove that Escartin was negligent in his
assigned task. On 11 August 1998, the trial court rendered its decision; it adjudged:

"WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the defendants Prudent
Security and Junelito Escartin ordering the latter to pay jointly and severally the plaintiffs the following:

"a) 1) Actual damages of P44,830.00;

2) Compensatory damages of P443,520.00;

3) Indemnity for the death of Nicanor Navidad in the sum of P50,000.00;

"b) Moral damages of P50,000.00;

"c) Attorney’s fees of P20,000;

"d) Costs of suit.

"The complaint against defendants LRTA and Rodolfo Roman are dismissed for lack of merit.

"The compulsory counterclaim of LRTA and Roman are likewise dismissed."1

Prudent appealed to the Court of Appeals. On 27 August 2000, the appellate court promulgated its now
assailed decision exonerating Prudent from any liability for the death of Nicanor Navidad and, instead,
holding the LRTA and Roman jointly and severally liable thusly:

"WHEREFORE, the assailed judgment is hereby MODIFIED, by exonerating the appellants from any
liability for the death of Nicanor Navidad, Jr. Instead, appellees Rodolfo Roman and the Light Rail Transit
Authority (LRTA) are held liable for his death and are hereby directed to pay jointly and severally to the
plaintiffs-appellees, the following amounts:

a) P44,830.00 as actual damages;

b) P50,000.00 as nominal damages;

c) P50,000.00 as moral damages;

d) P50,000.00 as indemnity for the death of the deceased; and

e) P20,000.00 as and for attorney’s fees."2

The appellate court ratiocinated that while the deceased might not have then as yet boarded the train, a
contract of carriage theretofore had already existed when the victim entered the place where passengers
were supposed to be after paying the fare and getting the corresponding token therefor. In exempting
Prudent from liability, the court stressed that there was nothing to link the security agency to the death of
Navidad. It said that Navidad failed to show that Escartin inflicted fist blows upon the victim and the evidence
merely established the fact of death of Navidad by reason of his having been hit by the train owned and
managed by the LRTA and operated at the time by Roman. The appellate court faulted petitioners for their
failure to present expert evidence to establish the fact that the application of emergency brakes could not
have stopped the train.

The appellate court denied petitioners’ motion for reconsideration in its resolution of 10 October 2000.

In their present recourse, petitioners recite alleged errors on the part of the appellate court; viz:

"I.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED BY DISREGARDING THE FINDINGS OF

FACTS BY THE TRIAL COURT

"II.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT PETITIONERS ARE
LIABLE FOR THE DEATH OF NICANOR NAVIDAD, JR.

"III.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT RODOLFO ROMAN IS
AN EMPLOYEE OF LRTA."3
Petitioners would contend that the appellate court ignored the evidence and the factual findings of the trial
court by holding them liable on the basis of a sweeping conclusion that the presumption of negligence on
the part of a common carrier was not overcome. Petitioners would insist that Escartin’s assault upon
Navidad, which caused the latter to fall on the tracks, was an act of a stranger that could not have been
foreseen or prevented. The LRTA would add that the appellate court’s conclusion on the existence of an
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 former’s employees, although such employees may have acted beyond the scope of
their authority or in violation of the orders of the common carriers.

"This liability of the common carriers does not cease upon proof that they exercised all the diligence of a
good father of a family in the selection and supervision of their employees."

"Article 1763. A common carrier is responsible for injuries suffered by a passenger on account of the willful
acts or negligence of other passengers or of strangers, if the common carrier’s employees through the
exercise of the diligence of a good father of a family could have prevented or stopped the act or omission."

The law requires common carriers to carry passengers safely using the utmost diligence of very cautious
persons with due regard for all circumstances.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 carrier’s 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, and8 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 LRTA’s 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 217612 and related provisions, in conjunction with Article 2180,13 of the Civil Code. The premise,
however, for the employer’s 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 219414 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.
 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. L-47822 December 22, 1988

PEDRO DE GUZMAN, petitioner,

vs.
COURT OF APPEALS and ERNESTO CENDANA, respondents.

Vicente D. Millora for petitioner.

Jacinto Callanta for private respondent.

FELICIANO, J.:

Respondent Ernesto Cendana, a junk dealer, was engaged in buying up used bottles and scrap metal in
Pangasinan. Upon gathering sufficient quantities of such scrap material, respondent would bring such
material to Manila for resale. He utilized two (2) six-wheeler trucks which he owned for hauling the material
to Manila. On the return trip to Pangasinan, respondent would load his vehicles with cargo which various
merchants wanted delivered to differing establishments in Pangasinan. For that service, respondent
charged freight rates which were commonly lower than regular commercial rates.

Sometime in November 1970, petitioner Pedro de Guzman a merchant and authorized dealer of General
Milk Company (Philippines), Inc. in Urdaneta, Pangasinan, contracted with respondent for the hauling of
750 cartons of Liberty filled milk from a warehouse of General Milk in Makati, Rizal, to petitioner's
establishment in Urdaneta on or before 4 December 1970. Accordingly, on 1 December 1970, respondent
loaded in Makati the merchandise on to his trucks: 150 cartons were loaded on a truck driven by respondent
himself, while 600 cartons were placed on board the other truck which was driven by Manuel Estrada,
respondent's driver and employee.

Only 150 boxes of Liberty filled milk were delivered to petitioner. The other 600 boxes never reached
petitioner, since the truck which carried these boxes was hijacked somewhere along the MacArthur
Highway in Paniqui, Tarlac, by armed men who took with them the truck, its driver, his helper and the cargo.

On 6 January 1971, petitioner commenced action against private respondent in the Court of First Instance
of Pangasinan, demanding payment of P 22,150.00, the claimed value of the lost merchandise, plus
damages and attorney's fees. Petitioner argued that private respondent, being a common carrier, and
having failed to exercise the extraordinary diligence required of him by the law, should be held liable for the
value of the undelivered goods.

In his Answer, private respondent denied that he was a common carrier and argued that he could not be
held responsible for the value of the lost goods, such loss having been due to force majeure.

On 10 December 1975, the trial court rendered a Decision 1 finding private respondent to be a common
carrier and holding him liable for the value of the undelivered goods (P 22,150.00) as well as for P 4,000.00
as damages and P 2,000.00 as attorney's fees.

On appeal before the Court of Appeals, respondent urged that the trial court had erred in considering him
a common carrier; in finding that he had habitually offered trucking services to the public; in not exempting
him from liability on the ground of force majeure; and in ordering him to pay damages and attorney's fees.

The Court of Appeals reversed the judgment of the trial court and held that respondent had been engaged
in transporting return loads of freight "as a casual
occupation — a sideline to his scrap iron business" and not as a common carrier. Petitioner came to this
Court by way of a Petition for Review assigning as errors the following conclusions of the Court of Appeals:

1. that private respondent was not a common carrier;

2. that the hijacking of respondent's truck was force majeure; and

3. that respondent was not liable for the value of the undelivered cargo. (Rollo, p. 111)

We consider first the issue of whether or not private respondent Ernesto Cendana may, under the facts
earlier set forth, be properly characterized as a common carrier.

The Civil Code defines "common carriers" in the following terms:

Article 1732. Common carriers are persons, corporations, firms or associations engaged in the business
of carrying or transporting passengers or goods or both, by land, water, or air for compensation, offering
their services to the public.

The above article makes no distinction between one whose principal business activity is the carrying of
persons or goods or both, and one who does such carrying only as an ancillary activity (in local Idiom as "a
sideline"). Article 1732 also carefully avoids making any distinction between a person or enterprise offering
transportation service on a regular or scheduled basis and one offering such service on an occasional,
episodic or unscheduled basis. Neither does Article 1732 distinguish between a carrier offering its services
to the "general public," i.e., the general community or population, and one who offers services or solicits
business only from a narrow segment of the general population. We think that Article 1733 deliberaom
making such distinctions.

So understood, the concept of "common carrier" under Article 1732 may be seen to coincide neatly with
the notion of "public service," under the Public Service Act (Commonwealth Act No. 1416, as amended)
which at least partially supplements the law on common carriers set forth in the Civil Code. Under Section
13, paragraph (b) of the Public Service Act, "public service" includes:

... every person that now or hereafter may own, operate, manage, or control in the Philippines, for hire or
compensation, with general or limited clientele, whether permanent, occasional or accidental, and done for
general business purposes, any common carrier, railroad, street railway, traction railway, subway motor
vehicle, either for freight or passenger, or both, with or without fixed route and whatever may be its
classification, freight or carrier service of any class, express service, steamboat, or steamship line, pontines,
ferries and water craft, engaged in the transportation of passengers or freight or both, shipyard, marine
repair shop, wharf or dock, ice plant,
ice-refrigeration plant, canal, irrigation system, gas, electric light, heat and power, water supply and power
petroleum, sewerage system, wire or wireless communications systems, wire or wireless broadcasting
stations and other similar public services. ... (Emphasis supplied)

It appears to the Court that private respondent is properly characterized as a common carrier even though
he merely "back-hauled" goods for other merchants from Manila to Pangasinan, although such back-hauling
was done on a periodic or occasional rather than regular or scheduled manner, and even though private
respondent's principal occupation was not the carriage of goods for others. There is no dispute that private
respondent charged his customers a fee for hauling their goods; that fee frequently fell below commercial
freight rates is not relevant here.

The Court of Appeals referred to the fact that private respondent held no certificate of public convenience,
and concluded he was not a common carrier. This is palpable error. A certificate of public convenience is
not a requisite for the incurring of liability under the Civil Code provisions governing common carriers. That
liability arises the moment a person or firm acts as a common carrier, without regard to whether or not such
carrier has also complied with the requirements of the applicable regulatory statute and implementing
regulations and has been granted a certificate of public convenience or other franchise. To exempt private
respondent from the liabilities of a common carrier because he has not secured the necessary certificate
of public convenience, would be offensive to sound public policy; that would be to reward private respondent
precisely for failing to comply with applicable statutory requirements. The business of a common carrier
impinges directly and intimately upon the safety and well being and property of those members of the
general community who happen to deal with such carrier. The law imposes duties and liabilities upon
common carriers for the safety and protection of those who utilize their services and the law cannot allow
a common carrier to render such duties and liabilities merely facultative by simply failing to obtain the
necessary permits and authorizations.

We turn then to the liability of private respondent as a common carrier.

Common carriers, "by the nature of their business and for reasons of public policy" 2 are held to a very high
degree of care and diligence ("extraordinary diligence") in the carriage of goods as well as of passengers.
The specific import of extraordinary diligence in the care of goods transported by a common carrier is,
according to Article 1733, "further expressed in Articles 1734,1735 and 1745, numbers 5, 6 and 7" of the
Civil Code.

Article 1734 establishes the general rule that common carriers are responsible for the loss, destruction or
deterioration of the goods which they carry, "unless the same is due to any of the following causes only:

(1) Flood, storm, earthquake, lightning or other natural disaster or calamity;

(2) Act of the public enemy in war, whether international or civil;
(3) Act or omission of the shipper or owner of the goods;
(4) The character-of the goods or defects in the packing or-in the containers; and
(5) Order or act of competent public authority.

It is important to point out that the above list of causes of loss, destruction or deterioration which exempt
the common carrier for responsibility therefor, is a closed list. Causes falling outside the foregoing list, even
if they appear to constitute a species of force majeure fall within the scope of Article 1735, which provides
as follows:

In all cases other than those mentioned in numbers 1, 2, 3, 4 and 5 of the preceding article, if the goods
are lost, destroyed or deteriorated, common carriers are presumed to have been at fault or to have acted
negligently, unless they prove that they observed extraordinary diligence as required in Article 1733.
(Emphasis supplied)

Applying the above-quoted Articles 1734 and 1735, we note firstly that the specific cause alleged in the
instant case — the hijacking of the carrier's truck — does not fall within any of the five (5) categories of
exempting causes listed in Article 1734. It would follow, therefore, that the hijacking of the carrier's vehicle
must be dealt with under the provisions of Article 1735, in other words, that the private respondent as
common carrier is presumed to have been at fault or to have acted negligently. This presumption, however,
may be overthrown by proof of extraordinary diligence on the part of private respondent.

Petitioner insists that private respondent had not observed extraordinary diligence in the care of petitioner's
goods. Petitioner argues that in the circumstances of this case, private respondent should have hired a
security guard presumably to ride with the truck carrying the 600 cartons of Liberty filled milk. We do not
believe, however, that in the instant case, the standard of extraordinary diligence required private
respondent to retain a security guard to ride with the truck and to engage brigands in a firelight at the risk
of his own life and the lives of the driver and his helper.

The precise issue that we address here relates to the specific requirements of the duty of extraordinary
diligence in the vigilance over the goods carried in the specific context of hijacking or armed robbery.

As noted earlier, the duty of extraordinary diligence in the vigilance over goods is, under Article 1733, given
additional specification not only by Articles 1734 and 1735 but also by Article 1745, numbers 4, 5 and 6,
Article 1745 provides in relevant part:
Any of the following or similar stipulations shall be considered unreasonable, unjust and contrary to public
policy:

xxx xxx xxx

(5) that the common carrier shall not be responsible for the acts or omissions of his or its employees;

(6) that the common carrier's liability for acts committed by thieves, or of robbers who do not act with
grave or irresistible threat, violence or force, is dispensed with or diminished; and

(7) that the common carrier shall not responsible for the loss, destruction or deterioration of goods on
account of the defective condition of the car vehicle, ship, airplane or other equipment used in the contract
of carriage. (Emphasis supplied)

Under Article 1745 (6) above, a common carrier is held responsible — and will not be allowed to divest or
to diminish such responsibility — even for acts of strangers like thieves or robbers, except where such
thieves or robbers in fact acted "with grave or irresistible threat, violence or force." We believe and so hold
that the limits of the duty of extraordinary diligence in the vigilance over the goods carried are reached
where the goods are lost as a result of a robbery which is attended by "grave or irresistible threat, violence
or force."

In the instant case, armed men held up the second truck owned by private respondent which carried
petitioner's cargo. The record shows that an information for robbery in band was filed in the Court of First
Instance of Tarlac, Branch 2, in Criminal Case No. 198 entitled "People of the Philippines v. Felipe
Boncorno, Napoleon Presno, Armando Mesina, Oscar Oria and one John Doe." There, the accused were
charged with willfully and unlawfully taking and carrying away with them the second truck, driven by Manuel
Estrada and loaded with the 600 cartons of Liberty filled milk destined for delivery at petitioner's store in
Urdaneta, Pangasinan. The decision of the trial court shows that the accused acted with grave, if not
irresistible, threat, violence or force.3 Three (3) of the five (5) hold-uppers were armed with firearms. The
robbers not only took away the truck and its cargo but also kidnapped the driver and his helper, detaining
them for several days and later releasing them in another province (in Zambales). The hijacked truck was
subsequently found by the police in Quezon City. The Court of First Instance convicted all the accused of
robbery, though not of robbery in band. 4

In these circumstances, we hold that the occurrence of the loss must reasonably be regarded as quite
beyond the control of the common carrier and properly regarded as a fortuitous event. It is necessary to
recall that even common carriers are not made absolute insurers against all risks of travel and of transport
of goods, and are not held liable for acts or events which cannot be foreseen or are inevitable, provided
that they shall have complied with the rigorous standard of extraordinary diligence.

We, therefore, agree with the result reached by the Court of Appeals that private respondent Cendana is
not liable for the value of the undelivered merchandise which was lost because of an event entirely beyond
private respondent's control.

ACCORDINGLY, the Petition for Review on certiorari is hereby DENIED and the Decision of the Court of
Appeals dated 3 August 1977 is AFFIRMED. No pronouncement as to costs.

SO ORDERED.
DIGESTED CASES

Everett Steamship Corporation vs. CA

G.R. No.122494, October 8, 1998

PARTIES:
Everett Steamship Corporation, petitioner
Court of Appeals and Hernandez Trading Co. Inc., respondents

BRIEF STATEMENT OF THE CASE:

Validity of the Bill of lading in a contract of carriage

FACTS:
Private respondent imported 3 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 crateswere shipped from
Nagoya, Japan to Manila on board "ADELFAEVERETTE," a vesselowned by petitioner's
principal, Everett Orient Lines. Upon arrival at the port of Manila,it was discovered that the crate
marked MARCO C/No. 14 was missing. Privaterespondent claim upon petitioner for the value of
the lost cargo amounting to OneMillion Five Hundred Fifty Two Thousand Five Hundred (Y1,
552,500.00) Yen, theamount 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
maximumamount stipulated under Clause 18 of the covering bill of lading which limits the liabilityof
petitioner. Private respondent rejected the offer and thereafter instituted a suit forcollection. The
trial court rendered a decision in favour of the private respondents andthis was affirmed by the
Court of Appeals. Thus, this instant petition.

ISSUES:
Is private respondent, as consignee, who is not a signatory to the bill of lading bound by the
stipulations thereof?

RULINGS:
Yes. The consignee who is not a signatory to the contract of carriage between the shipper and
the carrier, the consignee can still be bound by the contract.

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 in the consignee 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 the 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 the 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.

When private respondent formally claimed reimbursement for the missing goods from petitioner
and subsequently filed a case against the latter based on the very same bill of lading, it (private
respondent) accepted the provisions of the contract and thereby made itself a party thereto, or at
least has come to court to enforce it. Thus private respondent cannot now reject or disregard the
carrier’s limited liability stipulation in the bill of lading. In other words, private respondents is bound
by the whole stipulations in the bill of lading and must respect the same.

MOF COMPANY, INC. vs. SHIN YANG BROKERAGE CORPORATION

G.R. No. 172822, December 18, 2009

FACTS:
Halla shipped to Manila secondhand cars and other articles on board the vessel Hanjin Busan.
The bill of lading wasprepared by the carrier Hanjin where Shin Yang was named as the
consignee and indicated that payment was on a "Freight Collect" basis (meaning the
consignee/receiver of the goods would be the one to pay for the freight and other charges). When
the shipmentarrived in Manila MOF, HanjinFte’s exclusive general agent in the Philippines,
demanded the payment from Shin Yang. Shin Yang
refused to pay the freight and other charges. Shin Yang is saying that it is not the ultimate
consignee but merely theconsolidator/forwarder. Shin Yang contends that the fact that its name
was mentioned as the consignee of the cargoes did not makeit automatically liable for the
freightage because it never benefited from the shipment. It never claimed or accepted the goods,
it was
not the shipper’s agent, it was n
ot aware of its designation as consignee and the original bill of lading was never endorsed to it.

ISSUE:
1. Whether a consignee, who is not a signatory to the bill of lading, is bound by the stipulations
thereof?
YES
2. Whether Shin Yang, 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? NO

RULINGS:
While it is true that a bill of lading serves two (2) functions: first, it is a receipt for the goods
shipped; second, it is a contract by which three parties, namely, the shipper, the carrier and the
consignee who undertake specific responsibilities and assume stipulated obligations.

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.

In sum, a consignee, although not a signatory to the contract of carriage between the shipper and
the carrier, becomes a party to the contract by reason of either a) the relationship of agency
between the consignee and the shipper/ consignor; b) the unequivocalacceptance of the bill of
lading delivered 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 the carrier the
fulfillment of the stipulation made by the consignor/shipper in the consignee’s favor, specifically
the delivery of the goods/cargoes shipped.

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. Thus, MOF has the burden to controvert all
these denials, it being insistent that ShinYang 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, which means evidence which is of greater weight, or more convincing than that which
is offered in opposition to it. 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 all the details
indicated in the bill of lading and that Shin Yang consented to shoulder the shipment costs. There
is also nothing in the records which would indicate that Shin Yang was an agent of Halla Trading
Co. or that it exercised any act that would bind it as a named consignee. Thus, the CA correctly
dismissed the suit for failure of petitioner to establish its cause against respondent.

DANGWA TRANSPORTATION CO., INC. vs.COURT OF APPEALS, all Heirs of the late
Pedrito Cudiamat
G.R. No. 95582, October 7, 1991

Contributory Negligence – Arts. 1761-1762 –

FACTS:
Pedrito Cudiamat tried to board the bus of Dangwa while it was slowly moving. When Pedrito
stepped on theplatform in an attempt to enter therein, the bus suddenly accelerated forward.
Pedrito fell from the platform and was ran over by the bus. Subsequently, he died. The heirs of
Pedrito filed an action for damages against Dangwa based on the latter’s negligence. Dangwa
said that it was not liable because the proximate cause of Pedrito’s death was his own negligence
in trying toboard a moving vehicle.

ISSUE:
WON Pedrito is guilty of contributory negligence.

RULINGS:
NO. The act of Pedrito in attempting to board a slowly moving vehicle was not negligence per se.
The fact that passengers board and alight from a slowly moving vehicle is a matter of common
experience and both the driver and conductor in this case could not have been unaware of such
an ordinary practice. Pedrito, by stepping and standing on the platform of the bus, is already
considered a passenger and is entitled to all the rights and protection pertaining to such a
contractual relation. Hence, it has been held that the duty, which the carrier of passengers owes
to its patrons, extends to persons boarding the cars as well as to those alighting therefrom.

ARTICLE 1762 provides that the contributory negligence of the passenger does not bar recovery
of damages for his death or injuries, if the proximate cause thereof is the negligence of the
common carrier, but the amount of damages shall be equitably reduced.

The aforesaid provision applies only where both parties are guilty of negligence and not, as in this
case, where only the negligence of the CC was the proximate cause of Pedrito’s death.

The SC said that only Dangwa was negligent. Thus, it was solely answerable for Pedrito’s death.

Korean Airlines Co. LTd V. CA

G.R. No. 114061 August 3, 1994

Lessons Applicable: Actionable Document (Transportation)

FACTS:
1980: Juanito C. Lapuz, an automotive electrician, was contracted for employment in Jeddah,
Saudi Arabia, for a period of 1 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,"
(accommodated if any of the confirmed passengers failed to show up).

When 2 passengers did not appear, Lapuz and another person by the name of Perico were given
the seats. Lapuz was allowed to check in with 1 suitcase and 1 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: 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.

RTC: KAL to pay Lapuz

CA: Affirmed with modifications - the amount of actual damages and compensatory damages is
reduced to P60K and P100,000.00 moral and exemplary damages, at 6% interest per annum
from the date of the filing of the Complaint until fully paid.
ISSUE:
WON there was a contract of carriage

HELD:
YES. 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. His baggage had already been loaded in KAL's aircraft, to be flown
with him to Jeddah. KAL thus committed a breach of the contract of carriage between them when
it failed to bring Lapuz to his destination.

Contract to transport passengers is different in kind and degree from any other contractual
relation. 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. 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.

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. Amount awarded should
not be palpably and scandalously excessive.

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.

CA 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.
 LRT vs. NAVIDAD
G.R. No. 145804. February 6, 2003

FACTS:
Navidad was drunk when he entered the boarding platform of the LRT. He got into an altercation
with the SG Escartin. They had a fistfight and Navidad fell onto the tracks and was killed when a
train came and ran over him.

The Heirs of Navidad filed a complaint for damages against Escartin, the train driver, (Roman)
the LRTA, the Metro Transit Organization and Prudent Security Agency (Prudent). The trial court
found Prudent and Escartin jointly and severally liable for damages to the heirs. The CA
exonerated Prudent and instead held the LRTA and the train driver Romero jointly and severally
liable as well as removing the award for compensatory damages and replacing it with nominal
damages.

The reasoning of the CA was that a contract of carriage already existed between Navidad and
LRTA (by virtue of his havA ing purchased train tickets and the liability was caused by the mere
fact of Navidad's death after being hit by the train being managed by the LRTA and operated by
Roman. The CA also blamed LRTA for not having presented expert evidence showing that the
emergency brakes could not have stopped the train on time.

ISSUES:

(1) Whether or not LRTA and/or Roman is liable for the death.
(2) Whether or not Escartin and/or Prudent are liable.
(3) Whether or not nominal damages may coexist with compensatory damages.

RULINGS:
(1) Yes. The foundation of LRTA's liability is the contract of carriage and its obligation to indemnify
the victim arising from the breach of that contract by reason of its failure to exercise the high
diligence required of a common carrier.
(2) Fault was not established. Liability will be based on Tort under Art. 2176 of the New Civil Code.
(3) No. It is an established rule that nominal damages cannot co-exist with compensatory
damages.

RATIO:
Liability of LRTA – Read Arts. 1755,1756, 1759 and 1763 of the New Civil Code

A common carrier is required by these above statutory provisions to use utmost diligence in
carrying passengers with due regard for all circumstances. This obligation exists not only during
the course of the trip but for so long as the passengers are within its premises where they ought
to be in pursuance to then contract of carriage.

Art. 1763 renders 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 willful acts or negligence of other
passengers or of strangers if the common carrier’s employees through theexercise of due
diligence could have prevented or stopped the act or omission. In case of such death or injury, a
carrier is presumed to have been at fault or been negligent, and 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.

Liability of Security Agency – If Prudent is to be held liable, it would be for a tort under Art. 2176
in conjunction with Art. 2180. Once the fault of the employee Escartin is established, the employer,
Prudent, would be held liable on the presumption that it did not exercise the diligence of a good
father of the family in the selection and supervision of its employees.

Relationship between contractual and non-contractual breach – How then must the liability of the
common carrier, on the one hand, and an independent contractor, on the other hand, be
described? It would be solidary. A contractual obligation can be breached by tort and when the
same act or omission causes the injury, one resulting in culpa contractual and the other in culpa
aquiliana, Article 2194 of the Civil Code can well apply. In fine, a liability for tort may arise even
under a contract, where tort is that which breaches the contract. Stated differently, when an act
which constitutes a breach of ontract 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.

Nominal Damages - 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. It is an established rule that nominal
damages cannot co-exist with compensatory damages. The award was deleted/\.

DE GUZMAN VS. COURT OF APPEALS

G.R. No. L-47822, December 22, 1988

FACTS:
Cendena was a junk dealer and was engaged in buying used bottles and scrap materials in
Pangasinan and brought these to Manila for resale. He used two 6-wheeler trucks. On the return
trip to Pangasinan, he would load his vehicles with cargo which various merchants wanted
delivered to Pangasinan. For that service, he charged freight lower than regular rates. General
Milk Co. contacted with him for the hauling of 750 cartons of milk. On the way to Pangasinan, one
of the trucks was hijacked by armed men who took with them the truck and its cargo and
kidnapped the driver and his helper. Only 150 cartons of milk were delivered. The Milk Co. sued
to claim the value of the lost merchandise based on an alleged contract of carriage. Cendena
denied that he was a common carrier and contended that he could not be liable for the loss it was
due to force majeure. The trial court ruled that he was a common carrier. The CA reversed.

ISSUE:
Whether or not Cendena is a common carrier?
RULINGS:
Yes, Cendena is properly characterized as a common carrier even though he merely backhauled
goods for other merchants, and even if it was done on a periodic basis rather than on a regular
basis, and even if his principal occupation was not the carriage of goods.

Article 1732 makes no distinction between one whose principal business activity is the carrying
of persons or goods or both, and one who does such carrying only as an ancillary activity. It also
avoids making a distinction between a person or enterprise offering transportation services on a
regular or scheduled basis and one offering service on an occasional, episodic or unscheduled
basis. Neither does it make a distinction between a carrier offering its services to the general
public and one who offers services or solicits business only from a narrow segment of population.