Pedro de Guzman v. Court of AppealsG.R. No.

L-47822, December 22, 1988

BRIEF STATEMENT OF THE CASE: Breach of the contract to carry Extraordinary diligence needed over common carriers

FACTS:

Ernesto Cendana 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 (2) two six-
wheeler trucks which he owned for the purpose. Upon returning to Pangasinan, he would load his vehicle with cargo
belonging to different merchants to different establishments in Pangasinan which respondents charged a freight fee for.
Sometime in November 1970,herein petitioner Pedro de Guzman, a merchant and dealer of General Milk Company Inc.
in Pangasinan contracted with respondent for hauling 750 cartons of milk.

Unfortunately, only 150 cartons made it, as the other 600 cartons were intercepted by hijackers along Marcos Highway.
Hence, petitioners commenced an action against private respondent. In his defense, respondent argued that he cannot
be held liable due to force majuere, and that he is not a common carrier and hence is not required to exercise
extraordinary diligence. On appeal before the Court of Appeals, Cendana 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 Cendana 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.
DeGuzman came to the Supreme Court by way of a Petition for Review.

ISSUES: 1. Is respondent a common carrier? 2. Is the respondent liable for the loss of the cartons of milk due to force
majeure?

ARGUMENTS:

1. Herein respondent is considered as a common carrier. Article 1732 of the New Civil Code avoids any 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 a distinction between a person or enterprise offering transportation
services on a regular or scheduled basis and one offering such services on an occasional, episodic, and unscheduled
basis.

2. Respondent is not liable for the value of the undelivered merchandise. Article 1734 of the Civil Code- The general rule
is established by the article 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:

a. Flood, storm, earthquake, lightning or other natural disasters; b. Act of the public enemy, whether international or
civil ;c. Act or omission of the shipper or owner of the goods; d. Character of the goods or defects in the packing; e.
Order or act of competent public authority.

Applying the above article, 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, 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.

Article 1745: Any of the following or similar stipulations shall be considered unreasonable, unjust and contrary to public
policy:

CADIENTE v. MACAS G.R. No. 161946; November 14, 2008

FACTS:

Bithuel Macas while standing on the shoulder of the road was bumped and run over by a Ford Fiera, driven by
Cimafranca which resulted to the amputation of both legs up to the groins of the victim. Records showed that the Ford
Fiera was registered in the name of Atty. Cadiente, who However, claimed that when the accident happened, he was no
longer the owner of the Ford Fiera since he already sold it to Engr. Jalipa on March 28, 1994.
The victim's father, filed a complaint for torts and damages against Cimafranca and Cadiente before the RTC of Davao
City. Cadiente later filed a third-party complaint against Jalipa. Jalipa, however, filed a fourth-party complaint against
Abubakar, to whom Jalipa allegedly sold the vehicle on June 20, 1994.

The RTC rendered in favor of the plaintiff declaring Atty. Medardo Ag. Cadiente and Engr. Rogelio Jalipa jointly and
severally liable for damages to the plaintiff for their own negligence. The Court of Appeals denied their appeal and
subsequent motion for reconsideration.

ISSUES:

1.Whether there was contributory negligence on the part of the victim, hence not entitled to recover damages

2. Whether the petitioner and third-party defendant Jalipa are jointly and severally liable to the victim.

HELD:

1. NONE. Records show that when the accident happened, the victim was standing on the shoulder, which was the
uncemented portion of the highway. As noted by the trial court, the shoulder was intended for pedestrian use alone.
Only stationary vehicles, such as those loading or unloading passengers may use the shoulder. Running vehicles are not
supposed to pass through the said uncemented portion of the highway. However, the Ford Fiera in this case, without so
much as slowing down, took off from the cemented part of the highway, inexplicably swerved to the shoulder, and
recklessly bumped and ran over an innocent victim. The victim was just where he should be when the unfortunate event
transpired.

2.The registered owner of any vehicle, even if he had already sold it to someone else, is primarily responsible to the
public for whatever damage or injury the vehicle may cause. In the case of Villanueva v. Domingo, we said that the policy
behind vehicle registration is the easy identification of the owner who can be held responsible in case of accident,
damage or injury caused by the vehicle. This is so as not to inconvenience or prejudice a third party injured by one
whose identity cannot be secured. Therefore, since the Ford Fiera was still registered in the petitioner's name at the
time when the misfortune took place, the petitioner cannot escape liability for the permanent injury it caused the
respondent, who had since stopped schooling and is now forced to face life with nary but two remaining limbs

Filcar Transport Services vs. Jose A. Espinas

FACTS:

Respondent Jose A. Espinas was driving his car along Leon Guinto Street in Manila when he was suddenly hit by another
car. Upon verifying with the LTO, Espinas learned that the owner of the other car is Filcar. This car was assigned to
Filcar's Corporate Secretary Atty. Candido Flor and, at the time of the incident, was driven by Atty. Flor's personal driver,
Timoteo Floresca.

Espinas sued Filcar for damages. Filcar denied liability, claiming that the incident was not due to its fault or negligence
since Floresca was not its employee but that of Atty. Flor.

ISSUE: Whether or not Filcar, as registered owner of the motor vehicle which figured in an accident, may be held liable
for the damages caused to the Espinas

HELD:

Filcar, as registered owner, is deemed the employer of the driver, Floresca, and is thus vicariously liable under Article
2176 in relation with Article 2180 of the Civil Code

It is undisputed that Filcar is the registered owner of the motor vehicle which hit and caused damage to Espinas' car. It is
on this basis that Filcar is primarily and directly liable to Espinas for damages.

As a general rule, one is only responsible for his own act or omission. Thus, a person will generally be held liable only for
the torts committed by himself and not by another. This general rule is laid down in Article 2176 of the Civil Code, which
provides to wit:

Article 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay
for the damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is
called a quasi-delict and is governed by the provisions of this Chapter.
Based on the above-cited article, the obligation to indemnify another for damage caused by one's act or omission is
imposed upon the tortfeasor himself, i.e., the person who committed the negligent act or omission. The law, however,
provides for exceptions when it makes certain persons liable for the act or omission of another.

One exception is an employer who is made vicariously liable for the tort committed by his employee. Article 2180 of the
Civil Code states:

Article 2180. The obligation imposed by Article 2176 is demandable not only for one's own acts or omissions, but also for
those of persons for whom one is responsible.

xxxx

Employers shall be liable for the damages caused by their employees and household helpers acting within the scope of
their assigned tasks, even though the former are not engaged in any business or industry.

xxxx

The responsibility treated of in this article shall cease when the persons herein mentioned prove that they observed all
the diligence of a good father of a family to prevent damage.

Under Article 2176, in relation with Article 2180, of the Civil Code, an action predicated on an employee's act or
omission may be instituted against the employer who is held liable for the negligent act or omission committed by his
employee.

Although the employer is not the actual tortfeasor, the law makes him vicariously liable on the basis of the civil law
principle of pater familias for failure to exercise due care and vigilance over the acts of one's subordinates to prevent
damage to another. In the last paragraph of Article 2180 of the Civil Code, the employer may invoke the defense that he
observed all the diligence of a good father of a family to prevent damage.

It is well settled that in case of motor vehicle mishaps, the registered owner of the motor vehicle is considered as the
employer of the tortfeasor-driver, and is made primarily liable for the tort committed by the latter under Article 2176, in
relation with Article 2180, of the Civil Code.

In so far as third persons are concerned, the registered owner of the motor vehicle is the employer of the negligent
driver, and the actual employer is considered merely as an agent of such owner.

Thus, it is clear that for the purpose of holding the registered owner of the motor vehicle primarily and directly liable for
damages under Article 2176, in relation with Article 2180, of the Civil Code, the existence of an employer-employee
relationship, as it is understood in labor relations law, is not required. It is sufficient to establish that Filcar is the
registered owner of the motor vehicle causing damage in order that it may be held vicariously liable under Article 2180
of the Civil Code.

Rationale for holding the registered owner vicariously liable

The rationale for the rule that a registered owner is vicariously liable for damages caused by the operation of his motor
vehicle is explained by the principle behind motor vehicle registration, viz:

The main aim of motor vehicle registration is to identify the owner so that if any accident happens, or that any damage
or injury is caused by the vehicle on the public highways, responsibility therefor can be fixed on a definite individual, the
registered owner. Instances are numerous where vehicles running on public highways caused accidents or injuries to
pedestrians or other vehicles without positive identification of the owner or drivers, or with very scant means of
identification. It is to forestall these circumstances, so inconvenient or prejudicial to the public, that the motor vehicle
registration is primarily ordained, in the interest of the determination of persons responsible for damages or injuries
caused on public highways.

Employer-employee relationship between registered owner and driver is irrelevant

Thus, whether there is an employer-employee relationship between the registered owner and the driver is irrelevant in
determining the liability of the registered owner who the law holds primarily and directly responsible for any accident,
injury or death caused by the operation of the vehicle in the streets and highways.
The general public policy involved in motor vehicle registration is the protection of innocent third persons who may have
no means of identifying public road malefactors and, therefore, would find it difficult if not impossible to seek redress
for damages they may sustain in accidents resulting in deaths, injuries and other damages; by fixing the person held
primarily and directly liable for the damages sustained by victims of road mishaps, the law ensures that relief will always
be available to them.

To identify the person primarily and directly responsible for the damages would also prevent a situation where a
registered owner of a motor vehicle can easily escape liability by passing on the blame to anther who may have no
means to answer for the damages caused, thereby defeating the claims of victims of road accidents. We take note that
some motor vehicles running on our roads are driven not by their registered owners, but by employed drivers who, in
most instances, do not have the financial means to pay for the damages caused in case of accidents.

Filcar cannot pass on the liability to another party

The agreement between Filcar and Atty. Flor to assign the motor vehicle to the latter does not bind Espinas who was not
a party to and has no knowledge of the agreement, and whose only recourse is to the motor vehicle registration.

Filcar cannot use the defense that the employee acted beyond the scope of his assigned task or that it exercised the due
diligence of a good father of a family to prevent damage

Neither can Filcar use the defenses available under Article 2180 of the Civil Code – that the employee acts beyond the
scope of his assigned task or that it exercised the due diligence of a good father of a family to prevent damage – because
the motor vehicle registration law, to a certain extent, modified Article 2180 of the Civil Code by making these defenses
unavailable to the registered owner of the motor vehicle. Thus, for as long as Filcar is the registered owner of the car
involved in the vehicular accident, it could not escape primary liability for the damages caused to Espinas.

Filcar's recourse is against the actual employer of the driver and the driver himself

This does not mean, however, that Filcar is left without any recourse against the actual employer of the driver and the
driver himself. Under the civil law principle of unjust enrichment, the registered owner of the motor vehicle has a right
to be indemnified by the actual employer of the driver of the amount that he may be required to pay as damages for the
injury caused to another.

Registered owner is deemed employer of the driver and is thus vicariously liable under Article 2176 in relation with
Article 2180 of the Civil Code

The main aim of motor vehicle registration is to identify the owner so that if any accident happens, or that any damage
or injury is caused by the vehicle on public highways, responsibility therefor can be fixed on a definite individual, the
registered owner.

The motor vehicle registration law modified Article 2180 to a certain extent so that the defense available thereunder
cannot be used by the registered owner

The registered owner can recover from the actual owner and the driver under the doctrine of unjust enrichment

4. PAJARITO VS. SENERIS87 SCRA 275FACTS:On May 9, 1975, Joselito Aizon, the driver-employee of an Isuzu Passenger
Bus operated by Felipe Aizon, caused the bus to turn turtle as a result of which two of his passengers on board sustained
injuries which caused their death. Thereafter, an information was filed in the CFI of Zamboanga City charging the
accused with double homicide through reckless imprudence. Upon arraignment, respondent pleaded guilty and the
court rendered a judgment convicting him and to pay the amount of P12, 000.00. Due to the insolvency of the accused,
petitioner Lucia S. Pajarito, mother of the deceased passenger, filed with the court a motion for the issuance of
subsidiary writ of execution against the operator Felipe Aizon. The court denied petitioner's motion for subsidiary writ of
execution

ISSUE:WON the trial court erred in denying the motion for subsidiary writ of execution.

HELD: Yes, the institution of the criminal action carries with it the institution of the civil action arising therefrom.
Considering that Felipe Aizon does not deny that he was the registered operator of the bus, the proceeding for the
enforcement of the subsidiary civil liability may be considered as part of the proceeding for the execution of judgment.

British Airways vs. Court of Appeals

(285 SCRA 450)

Facts:

On April 16, 1989, Mahtani is on his way to Bombay, India from Manila. His trip was Manila-Hong Kong via PAL and
then Hong Kong-India via British Airways. Prior to his departure, he checked in two pieces of luggage containing his
clothing and other personal effects, confident that the same would be transferred to his BA flight.

Unfortunately, when he arrived in India, he discovered that his luggage was missing.

The RTC awarded Mahtani damages which was affirmed by CA.

Issue: Whether or not in a contract of air carriage a declaration by the passenger is needed to recover a greater
amount?

Held: American jurisprudence provides that an air carrier is not liable for the loss of baggage in an amount in excess
of the limits specified in the tariff which was filed with the proper authorities, such tariff being binding on the
passenger regardless of the passenger’s lack of knowledge thereof or assent thereto. This doctrine is recognized in
this jurisdiction.

The inescapable conclusion that BA had waived the defense of limited liability when it allowed Mahtani to testify as
to the actual damages he incurred due to misplacement of his luggage, without any objection.

It is a well-settled doctrine that where the proponent offers evidence deemed by counsel of the adverse party to be
inadmissible for any reason, the latter has the right to object. However, such right is a mere privilege which can be
waived. Necessarily, the objection must be made at the earliest opportunity, in case of silence when there is
opportunity to speak may operate as a waiver of objections

La Mallorca vs. Court of Appeals

(G.R. No. L-20761, 27 July 1966, 17 SCRA 739)

Facts:
Plaintiffs, husband and wife, together with their three minor daughters (Milagros, 13 years old, Raquel, about 4
years old and Fe, 2 years old) boarded the Pambusco at San Fernando Pampanga, bound for Anao, Mexico,
Pampanga. Such bus is owned and operated by the defendant.

They were carrying with them four pieces of baggage containing their personal belonging. The conductor of the b us
issued three tickets covering the full fares of the plaintiff and their eldest child Milagros. No fare was charged on
Raquel and Fe, since both were below the height which fare is charged in accordance with plaintiff’s rules and
regulations.

After about an hour’s trip, the bus reached Anao where it stopped to allow the passengers bound therefore, among
whom were the plaintiffs and their children to get off. Mariano Beltran, carrying some of their baggage was the first
to get down the bus, followed by his wife and children. Mariano led his companion to a shaded spot on the left
pedestrian side of the road about four or five meters away from the vehicle. Afterwards, he returned to the bus in
controversy to get his paying, which he had left behind, but in so doing, his daughter followed him unnoticed by his
father. While said Mariano Beltran was on he running board of the bus waiting for the conductor to hand him his
bayong which he left under one its seats near the door, the bus, whose motor was not shut off while unloading
suddenly started moving forward, evidently to resume its trip, notwithstanding the fact that the conductor was still
attending to the baggage left behind by Mariano Beltran. Incidentally, when the bus was again placed in a complete
stop, it had traveled about 10 meters from point where plaintiffs had gotten off.

Sensing the bus was again in motion; Mariano immediately jumped form the running board without getting his
bayong from conductor. He landed on the side of the road almost board in front of the shaded place where he left
his wife and his children. At that time, he saw people beginning to gather around the body of a child lying prostrate
on the ground, her skull crushed, and without life. The child was none other than his daughter Raquel, who was run
over by the bus in which she rode earlier together her parent.

For the death of the said child, plaintiffs comment the suit against the defendant to recover from the latter damages.

Issue: Whether or not the child was no longer the passenger of the bus involved in the incident, and therefore, the
contract of carriage was already terminated?

Held: There can be no controversy that as far as the father is concerned, when he returned to the bus for his
bayong which was not unloaded, the relation of passenger and carrier between him and the petitioner remained
subsisting. The relation of carrier and passenger does not necessarily cease where the latter, after alighting from the
car aids the carrier’s servant or employee in removing his baggage from the car.
It is a rule that the relation of carrier and passenger does not cease the moment the passenger alights from the
carrier’s vehicle at a place selected by the carrier at the point of destination but continues until the passenger has
had a reasonable time or a reasonable opportunity to leave the carrier’s premises.

The father returned to the bus to get one of his baggages which was not unloaded when they alighted from the bus.
Raquel must have followed her father. However, although the father was still on the running board of the bus
awaiting for the conductor to hand him the bag or bayong, the bus started to run, so that even he had jumped down
from the moving vehicle. It was that this instance that the child, who must be near the bus, was run over and killed.
In the circumstances, it cannot be claimed that the carrier’s agent had exercised the “utmost diligence” of a “very
cautious person” required by Article 1755 of the Civil Code to be observed by a common carrier in the discharge of
its obligation to transport safely its passengers. The driver, although stopping the bus, nevertheless did not put off
the engine. He started to run the bus even before the conductor gave him the signal to go and while the latter was
still unloading part of the baggage of the passengers Beltran and family. The presence of the said passengers near
the bus was not unreasonable and they are, therefore, to be considered still as passengers of the carrier, entitled to
the protection under their contract of carriage.

7. ABOITIZ SHIPPING CORPORATION vs. COURT OF APPEALS, LUCILA C. VIANA,

SPS. ANTONIO VIANA and GORGONIA VIANA, and PIONEER STEVEDORING
CORPORATION
(G.R. No. 84458 November 6, 1989)

FACTS:

Anacleto Viana boarded the vessel M/V Antonia, owned by Aboitiz Shipping
Corporation, at the port at San Jose, Occidental Mindoro, bound for Manila. After said
vessel had landed, the Pioneer Stevedoring Corporation took over the exclusive
control of the cargoes loaded on said vessel pursuant to the Memorandum of
Agreement between Pioneer and petitioner Aboitiz.

The crane owned by Pioneer was placed alongside the vessel and one (1) hour after
the passengers of said vessel had disembarked, it started operation by unloading the
cargoes from said vessel. While the crane was being operated, Anacleto Viana who
had already disembarked from said vessel obviously remembering that some of his
cargoes were still loaded in the vessel, went back to the vessel, and it was while he
was pointing to the crew of the said vessel to the place where his cargoes were loaded
that the crane hit him, pinning him between the side of the vessel and the crane. He
was thereafter brought to the hospital where he later expired three (3) days thereafter.

Private respondents Vianas filed a complaint for damages against petitioner for breach
of contract of carriage. Aboitiz denied responsibility contending that at the time of the
accident, the vessel was completely under the control of respondent Pioneer
Stevedoring Corporation as the exclusive stevedoring contractor of Aboitiz, which
handled the unloading of cargoes from the vessel of Aboitiz.

ISSUE:

Whether or not Aboitiz is negligent and is thus liable for the death.

HELD:

Yes.
x x x [T]he victim Anacleto Viana guilty of contributory negligence, but it was the
negligence of Aboitiz in prematurely turning over the vessel to the arrastre operator for
the unloading of cargoes which was the direct, immediate and proximate cause of the
victim's death.

The rule is that the relation of carrier and passenger continues until the passenger has
been landed at the port of destination and has left the vessel owner's dock or
premises. 11 Once created, the relationship will not ordinarily terminate until the
passenger has, after reaching his destination, safely alighted from the carrier's
conveyance or had a reasonable opportunity to leave the carrier's premises. All
persons who remain on the premises a reasonable time after leaving the conveyance
are to be deemed passengers, and what is a reasonable time or a reasonable delay
within this rule is to be determined from all the circumstances, and includes a
reasonable time to see after his baggage and prepare for his departure. 12 The carrier-
passenger relationship is not terminated merely by the fact that the person transported
has been carried to his destination if, for example, such person remains in the carrier's
premises to claim his baggage.

It is apparent from the foregoing that what prompted the Court to rule as it did in said
case is the fact of the passenger's reasonable presence within the carrier's premises.
That reasonableness of time should be made to depend on the attending
circumstances of the case, such as the kind of common carrier, the nature of its
business, the customs of the place, and so forth, and therefore precludes a
consideration of the time element per se without taking into account such other factors.
It is thus of no moment whether in the cited case of La Mallorca there was no
appreciable interregnum for the passenger therein to leave the carrier's premises
whereas in the case at bar, an interval of one (1) hour had elapsed before the victim
met the accident. The primary factor to be considered is the existence of a reasonable
cause as will justify the presence of the victim on or near the petitioner's vessel. We
believe there exists such a justifiable cause.

It is of common knowledge that, by the very nature of petitioner's business as a

shipper, the passengers of vessels are allotted a longer period of time to disembark
from the ship than other common carriers such as a passenger bus. With respect to
the bulk of cargoes and the number of passengers it can load, such vessels are
capable of accommodating a bigger volume of both as compared to the capacity of a
regular commuter bus. Consequently, a ship passenger will need at least an hour as is
the usual practice, to disembark from the vessel and claim his baggage whereas a bus
passenger can easily get off the bus and retrieve his luggage in a very short period of
time. Verily, petitioner cannot categorically claim, through the bare expedient of
comparing the period of time entailed in getting the passenger's cargoes, that the ruling
in La Mallorca is inapplicable to the case at bar. On the contrary, if we are to apply the
doctrine enunciated therein to the instant petition, we cannot in reason doubt that the
victim Anacleto Viana was still a passenger at the time of the incident. When the
accident occurred, the victim was in the act of unloading his cargoes, which he had
every right to do, from petitioner's vessel. As earlier stated, a carrier is duty bound not
only to bring its passengers safely to their destination but also to afford them a
reasonable time to claim their baggage.

G.R. No. L-22985 January 24, 1968

BATANGAS TRANSPORTATION COMPANY, petitioner,

vs.
GREGORIO CAGUIMBAL, PANCRACIO CAGUIMBAL, MARIA MARANAN DE CAGUIMBAL, BIÑAN
TRANSPORTATION COMPANY and MARCIANO ILAGAN, respondents.

8. Ozaeta, Ozaeta and Gibbs and Domingo E. de Lara for petitioner.

Victoriano H. Endaya for respondents.

CONCEPCION, C.J.:

Appeal by certiorari from a decision of the Court of Appeals.

The main facts are set forth in said decision from which we quote:

There is no dispute at all that the deceased Pedro Caguimbal, Barrio Lieutenant of Barrio Calansayan, San
Jose, Batangas, was a paying passenger of BTCO bus, with plate TPU-507, going south on its regular route
from Calamba, Laguna, to Batangas, Batangas, driven by Tomas Perez, its regular driver, at about 5:30
o'clock on the early morning of April 25, 1954. The deceased's destination was his residence at Calansayan,
San Jose, Batangas. The bus of the Biñan Transportation Company, bearing plate TPU-820, driven by
Marciano Ilagan, was coming from the opposite direction (north-bound). Along the national highway at Barrio
Daraza, Tanauan, Batangas, on the date and hour above indicated, a horse-driven rig (calesa) managed by
Benito Makahiya, which was then ahead of the Biñan bus, was also coming from the opposite direction,
meaning proceeding towards the north. As to what transpired thereafter, the lower court chose to give more
credence to defendant Batangas Transportation Company's version which, in the words of the Court a quo,
is as follows: "As the BTCO bus was nearing a house, a passenger requested the conductor to stop as he
was going to alight, and when he heard the signal of the conductor, the driver Tomas Perez slowed down his
bus swerving it farther to the right in order to stop; at this juncture, a calesa, then driven by Benito Makahiya
was at a distance of several meters facing the BTCO bus coming from the opposite direction; that at the
same time the Biñan bus was about 100 meters away likewise going northward and following the direction of
the calesa; that upon seeing the Biñan bus the driver of the BTCO bus dimmed his light as established by
Magno Ilaw, the very conductor of the Biñan bus at the time of the accident; that as the calesa and the
BTCO bus were passing each other from the opposite directions, the Biñan bus following
the calesa swerved to its left in an attempt to pass between the BTCO bus and the calesa; that without
diminishing its speed of about seventy (70) kilometers an hour, the Biñan bus passed through the space
between the BTCO bus and the calesahitting first the left side of the BTCO bus with the left front corner of its
body and then bumped and struck the calesa which was completely wrecked; that the driver was seriously
injured and the horse was killed; that the second and all other posts supporting the top of the left side of the
BTCO bus were completely smashed and half of the back wall to the left was ripped open. (Exhibits 1 and
2). The BTCO bus suffered damages for the repair of its damaged portion.

As a consequence of this occurrence, two (2) passengers of BTCO died, namely, Pedro Caguimbal and Guillermo
Tolentino, apart from others who were injured. The widow and children of Caguimbal instituted the present action,
which was tried jointly with a similar action of the Tolentinos, to recover damages from the Batangas Transportation
Company, hereinafter referred to as BTCO. The latter, in turn, filed a third-party complaint against the Biñan
Transportation Company — hereinafter referred to as Biñan — and its driver, Marciano Ilagan. Subsequently, the
Caguimbals amended their complaint, to include therein, as defendants, said Biñan and Ilagan.

After appropriate proceedings, the Court of First Instance of Batangas rendered a decision dismissing the complaint
insofar as the BTCO is concerned, without prejudice to plaintiff's right to sue Biñan — which had stopped
participating in the proceedings herein, owing apparently, to a case in the Court of First Instance of Laguna for the
insolvency of said enterprise — and Ilagan, and without pronouncement as to costs.

On appeal taken by the Caguimbals, the Court of Appeals reversed said decision and rendered judgment for them,
sentencing the BTCO, Biñan and Ilagan to, jointly and severally, pay to the plaintiffs the aggregate sum of
P10,500.00 1 and the costs in both instances. Hence, this appeal by BTCO, upon the ground that the Court of
Appeals erred: 1) in finding said appellant liable for damages; and 2) in awarding attorney's fees.

In connection with the first assignment of error, we note that the recklessness of defendant was, manifestly, a major
factor in the occurrence of the accident which resulted, inter alia, in the death of Pedro Caguimbal. Indeed, as driver
of the Biñan bus, he overtook Benito Makahiya's horse-driven rig or calesa and passed between the same and the
BTCO bus despite the fact that the space available was not big enough therefor, in view of which the Biñan bus hit
the left side of the BTCO bus and then the calesa. This notwithstanding, the Court of Appeals rendered judgment
against the BTCO upon the ground that its driver, Tomas Perez, had failed to exercise the "extraordinary diligence,"
required in Article 1733 of the new Civil Code, "in the vigilance for the safety" of his passengers. 2

The record shows that, in order to permit one of them to disembark, Perez drove his BTCO bus partly to the right
shoulder of the road and partly on the asphalted portion thereof. Yet, he could have and should have seen to it —
had he exercised "extraordinary diligence" — that his bus was completely outside the asphalted portion of the road,
and fully within the shoulder thereof, the width of which being more than sufficient to accommodate the bus. He
could have and should have done this, because, when the aforementioned passenger expressed his wish to alight
from the bus, Ilagan had seen the aforementioned "calesa", driven by Makahiya, a few meters away, coming from
the opposite direction, with the Biñan bus about 100 meters behind the rig cruising at a good speed. 3 When Perez
slowed down his BTCO bus to permit said passenger to disembark, he must have known, therefore, that the Biñan
bus would overtake the calesa at about the time when the latter and BTCO bus would probably be on the same line,
on opposite sides of the asphalted portions of the road, and that the space between the BTCO bus and the "calesa"
would not be enough to allow the Biñan bus to go through. It is true that the driver of the Biñan bus should have
slowed down or stopped, and, hence, was reckless in not doing so; but, he had no especial obligations toward the
passengers of the BTCO unlike Perez whose duty was to exercise "utmost" or "extraordinary" diligence for their
safety. Perez was thus under obligation to avoid a situation which would be hazardous for his passengers, and,
make their safety dependent upon the diligence of the Biñan driver. Such obligation becomes more patent when we
considered the fact — of which the Court may take judicial cognizance — that our motor vehicle drivers, particularly
those of public service utilities, have not distinguished themselves for their concern over the safety, the comfort or
the convenience of others. Besides, as correctly stated in the syllabus to Brito Sy vs. Malate Taxicab & Garage,
Inc., 4

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 for by the
passenger. By the contract of carriage, the carrier assumes the express obligation to transport the
passenger to his destination safely and to 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 (Article 1756, new Civil Code). 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 new Civil Code.

In the case at bar, BTCO has not proven the exercise of extraordinary diligence on its part. For this reason, the case
of Isaac vs. A. L. Ammen Trans. Co., Inc. 5 relied upon by BTCO, is not in point, for, in said case, the public utility
driver had done everything he could to avoid the accident, and could not have possibly avoided it, for he "swerved
the bus to the very extreme right of the road," which the driver, in the present case, had failed to do.

As regards the second assignment of error, appellant argues that the award of attorney's fees is not authorized by
law, because, of the eleven (11) cases specified in Article 1208 of the new Civil Code, only the fifth and the last are
relevant to the one under consideration; but the fifth case requires bad faith, which does not exist in the case at bar.
As regards the last case, which permits the award, "where the court deems it just and equitable that attorney's fees .
. . should be recovered," it is urged that the evidence on record does not show the existence of such just and
equitable grounds.

We, however, believe otherwise, for: (1) the accident in question took place on April 25, 1954, and the Caguimbals
have been constrained to litigate for over thirteen (13) years to vindicate their rights; and (2) it is high time to
impress effectively upon public utility operators the nature and extent of their responsibility in respect of the safety of
their passengers and their duty to exercise greater care in the selection of drivers and conductor and in supervising
the performance of their duties, in accordance, not only with Article 1733 of the Civil Code of the Philippines, but,
also, with Articles 1755 and 1756 thereof 6 and the spirit of these provisions, as disclosed by the letter thereof, and
elucidated by the Commission that drafted the same. 7

WHEREFORE, the decision appealed from, should be, as it is hereby, affirmed, with the costs of this instance
against appellant Batangas Transportation Company.

Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Angeles and Fernando, JJ., concur.
Bengzon, J.P., J., took no part.

NEGLIGENCE, AS PROXIMATE CAUSE OF INJURY. — While riding in a truck driven by petitioner’s chauffeur, the deceased
stretched her right arm beyond the railing of the bus and was caught and broken by another truck coming closely from the
opposite direction. Held: That driving at an appropriate speed, almost at the middle of a six-meter highway which, at the
time of the accident, was without traffic, is not negligence. Independently of the act of the deceased in stretching her right
arm beyond the railing of the bus, the manner the bus was driven could not have produced the injury. Petitioner’s driver at
the time that the other bus was passing closely from the opposite direction, did not know that the deceased’s arm was
extended beyond the railing of the bus. He has the right to assume that all his passengers are taking the usual precaution for
their o

9 . [G.R. No. 47933. July 29, 1942.]

PANAY AUTOBUS COMPANY, INC., Petitioner, v. CRISANTA PASTOR, ET AL., Respondents.

J. Jarantilla and B. Francisco, for Petitioner.
Federico
Jose C. Ganzon, for Respondents.

SYLLABUS

1. DAMAGES; PERSONAL INJURIES TO PASSENGER; ACT PERFORMED BY DECEASED, AND

NOT DRIVER’S wn safety. If, without such knowledge of the position of the deceased and on the
assurance of such assumption, the chauffeur drives his bus at a reasonably safe distance from that
coming from the opposite direction, and one of his passengers suffers an injury, the negligence
cannot be attributed to him. In other words, the act performed by the deceased at the time the
accident occurred must be regarded as the proximate cause of the injury.

DECISION

MORAN, J.:

Early in the morning of February 11, 1938, the deceased, Concepcion Gallopin, with her daughter-in-
law, Carmen Areda, left Estancia, Iloilo, for the City of Iloilo on truck No. 408 of the petitioner, Panay
Autobus Company, Inc., driven by one Felicisimo Tilos. Gallopin and Areda were seated at the
extreme right of the second bench behind the driver’s seat. In the course of transit, Gallopin stretched
her right arm beyond the railing of the bus, apparently pointing to her companion the rice fields
yonder. This arm was caught and broken by another truck driven by one Francisco Yap coming
closely from the opposite direction. Whether Gallopin stretched her right arm at the precise moment
that the two busses were about to cross each other or sometime prior thereto, and how close the two
busses were to each other, the record does not disclose. Her wrist bled profusely and notwithstanding
medical treatment at the Maternity Hospital at Sara and Mission Hospital at Jaro, Iloilo, where she
was brought after the accident, she died the following day, undoubtedly as a result of hemorrhage
and severe shock. Crisanta, Salome, and Jose, all surnamed Pastor, as heirs of the deceased,
instituted in the court below an action against the petitioner as owner of truck No. 408, seeking to
recover damages in the sum of P8,200 for the death of their mother. Petitioner having been absolved
of the complaint, plaintiffs below appealed to the Court of Appeals where the judgment of the trial
court was reversed and another entered in their favor awarding them damages in the sum of P2,000.
Hence, this appeal by certiorari by the petitioner.

The Court of Appeals rested its decision upon a finding of negligence on the part of petitioner’s
chauffeur in not having driven the bus in the proper place on the road, it having been found that the
bus was driven "almost in the middle of a 6-meter road, the space between the right edge of the ditch
on the left side of the road and the left side of the bus being two meters." And, on the basis of this
finding, the appellate court held petitioner guilty of breach of contractual duty to carry the deceased
safely to her destination.

We are unable to agree with this view. Driving at an appropriate speed, almost at the middle of a six-
meter highway which, at the time of the accident, was without traffic, is not, in our opinion,
negligence. Independently of the act of the deceased in stretching her right arm beyond the railing of
the bus, the manner the bus was driven could not have produced the injury. Petitioner’s driver at the
time that the other bus was passing closely from the opposite direction, did not know that the
deceased’s arm was extended beyond the railing of the bus. He has the right to assume that all his
passengers are taking the usual precaution for their own safety. If, without such knowledge of the
position of the deceased and on the assurance of such assumption, the chauffeur drives his bus at a
reasonably safe distance from that coming from the opposite direction, and one of his passengers
suffers an injury, the negligence cannot be attributed to him. In other words, the act performed by the
deceased at the time the accident occurred must be regarded as the proximate cause of the injury.

Judgment is reversed and petitioner is hereby absolved of the complaint, without costs.

Yulo, C.J., Ozaeta, Paras and Bocobo, JJ., concur.

10. Necessito vs. Paras Case Digest
Necessito vs. Paras
(104 Phil 75)

Facts: On January\y 28, 1954, Severina Garces and her one year old son, Precillano Necesito boarded passenger
auto truck bus of the Philippine Rabbit Bus Lines at Agno, Pangasinan.

After the bus entered a wooden bridge, the front wheels swerved to the right. The driver lost control, and after the
wrecking the bridge wooden rails, the truck fell on its right side into a creek where water was breast deep. The
mother, Severina was drowned and the son Precillano was injured.

Issue: Whether or nor the carrier is liable for manufacturing defect of the steering knuckle?

Held: It is clear that the carrier is not an insurer of the passenger’s safety. His liability rest upon negligence, that his
failure to exercise utmost degree of diligence that the law requires.

The passenger has neither choice nor control over the carrier in the selection and use of the equipment and the
appliances in use by the carrier. Having no privity whatever with the manufacturer or vendor of the defective
equipment, the passenger has no remedy against him, while carrier usually has. It is but logical, therefore, that the
carrier, while not an insurer of the safety of his passengers, should nevertheless be held to answer for flaws of his
equipment if such cause were at all discoverable.

11 . G.R. No. 161909 April 25, 2012

PHILTRANCO SERVICE ENTERPRISES, INC., Petitioner,

vs.
FELIX PARAS AND INLAND TRAILWAYS, INC., AND HON. COURT OF APPEALS, Respondents.

DECISION

BERSAMIN, J.:

In an action for breach of contract of carriage commenced by a passenger against his common carrier, the plaintiff
can recover damages from a third-party defendant brought into the suit by the common carrier upon a claim based
on tort or quasi-delict. The liability of the third-party defendant is independent from the liability of the common carrier
to the passenger.

Philtranco Service Enterprises, Inc. (Philtranco) appeals the affirmance with modifications by the Court of Appeals
(CA) of the decision of the Regional Trial Court (RTC) awarding moral, actual and temperate damages, as well as
attorney’s fees and costs of suit, to respondent Felix Paras (Paras), and temperate damages to respondent Inland
Trailways, Inc. (Inland), respectively the plaintiff and the defendant/third-party plaintiff in this action for breach of
contract of carriage, upon a finding that the negligence of the petitioner and its driver had caused the serious
physical injuries Paras sustained and the material damage Inland’s bus suffered in a vehicular accident.

Antecedents

The antecedent facts, as summarized by the CA, are as follows:

Plaintiff-appellant [respondent] Felix Paras (Paras for brevity), who hails from Cainta, Rizal is engaged in the buy
and sell of fish products. Sometime on 08 February 1987, on his way home to Manila from Bicol Region, he boarded
a bus with Body No. 101 and Plate No. EVE 508, owned and operated by Inland Trailways, Inc. (Inland for brevity)
and driven by its driver Calvin Coner (Coner for brevity).

At approximately 3:50 o’clock in the morning of 09 February 1987, while the said bus was travelling along Maharlika
Highway, Tiaong, Quezon, it was bumped at the rear by another bus with Plate No. EVB 259, owned and operated
by Philtranco Service Enterprises, Inc. (Philtranco for brevity). As a result of the strong and violent impact, the Inland
bus was pushed forward and smashed into a cargo truck parked along the outer right portion of the highway and the
shoulder thereof. Consequently, the said accident bought considerable damage to the vehicles involved and caused
physical injuries to the passengers and crew of the two buses, including the death of Coner who was the driver of
the Inland Bus at the time of the incident.
Paras was not spared from the pernicious effects of the accident. After an emergency treatment at the San Pablo
Medical Center, San Pablo City, Laguna, Paras was taken to the National Orthopedic Hospital. At the latter hospital,
he was found and diagnosed by Dr. Antonio Tanchuling, Jr. to be affected with the following injuries: a)
contusion/hematoma; b) dislocation of hip upon fracture of the fibula on the right leg; c) fractured small bone on the
right leg; and d) close fracture on the tibial plateau of the left leg. (Exh. "A", p. 157, record)

On 04 March 1987 and 15 April 1987, Paras underwent two (2) operations affecting the fractured portions of his
body. (Exhs. "A-2" and "A-3", pp. 159 and 160 respectively, record)

Unable to obtain sufficient financial assistance from Inland for the costs of his operations, hospitalization, doctors’
fees and other miscellaneous expenses, on 31 July 1989, Paras filed a complaint for damages based on breach of
contract of carriage against Inland.

In its answer, defendant Inland denied responsibility, by alleging, among others, that its driver Coner had observed
an utmost and extraordinary care and diligence to ensure the safety of its passengers. In support of its disclaimer of
responsibility, Inland invoked the Police Investigation Report which established the fact that the Philtranco bus driver
of [sic] Apolinar Miralles was the one which violently bumped the rear portion of the Inland bus, and therefore, the
direct and proximate cause of Paras’ injuries.

On 02 March 1990, upon leave of court, Inland filed a third-party complaint against Philtranco and Apolinar Miralles
(Third Party defendants). In this third-party complaint, Inland, sought for exoneration of its liabilities to Paras,
asserting that the latter’s cause of action should be directed against Philtranco considering that the accident was
caused by Miralles’ lack of care, negligence and reckless imprudence. (pp. 50 to 56, records).

After trial, the RTC (Branch 71) in Antipolo, Rizal rendered its judgment on July 18, 1997,1 viz:

WHEREFORE, third-party defendant Philtranco and Apolinar Miralles are hereby ordered to pay plaintiff jointly and
severally, the following amounts:

1.₱54,000.00 as actual damages;

2.₱50,000.00 as moral damages;

3.₱20,000.00 as attorney’s fees and costs.

SO ORDERED.

All the parties appealed to the CA on different grounds.

On his part, Paras ascribed the following errors to the RTC, to wit:

I. THE TRIAL COURT ERRED IN HOLDING THAT ONLY THIRD-PARTY DEFENDANT-APPELLANT

PHILTRANCO IS LIABLE FOR THE DAMAGES SUFFERED BY APPELLANT PARAS.

II. THE TRIAL COURT ERRED IN NOT HOLDING APPELLANT INLAND TRAILWAYS INC. TO BE
JOINTLY AND SEVERALLY LIABLE FOR THE DAMAGES SUFFERED BY PARAS.

III. THE TRIAL COURT ERRED IN NOT AWARDING UNEARNED INCOME AS ADDITIONAL ACTUAL
DAMAGES SUFFERED BY APPELLANT PARAS AS HIS PHYSICAL DISABILITY IS PERMANENT IN
NATURE.

IV. THE TRIAL COURT ERRED IN NOT AWARDING EXEMPLARY DAMAGES IN FAVOR OF
APPELLANT PARAS.

On the other hand, Inland assigned the following errors to the RTC, namely:

THE TRIAL COURT ERRED WHEN IT FAILED TO AWARD DAMAGES UNTO THE THIRD PARTY PLAINTIFF
NOTWITHSTANDING CLEAR FINDING THAT:

‘It is clear from the evidence that the plaintiff sustained injuries because of the reckless, negligence, and lack of
precaution of third party defendant Apolinar Miralles, an employee of Philtranco.’

AND, COMPLETELY DISREGARDED THE UNCONTROVERTED ORAL AND DOCUMENTARY EVIDENCES

ESTABLISHING THE EXTENT AND DEGREE OF DAMAGES SUSTAINED BY THE THIRD PARTY PLAINTIFF.

Lastly, Philtranco stated that the RTC erred thuswise:

I
 THE COURT A QUO MISERABLY ERRED IN AWARDING ACTUAL DAMAGES GREATER THAN WHAT
WAS ALLEGED IN THE COMPLAINT ITSELF, AND EVEN MUCH MORE GREATER THAN WHAT WERE
PROVED DURING THE TRIAL, HENCE, PERPETUATING UNJUST ENRICHMENT.

II

THE COURT A QUO SERIOUSLY ERRED IN AWARDING MORAL DAMAGES TO A CAUSE OF ACTION
OF CULPA-CONTRACTUAL EVEN WITHOUT ANY EVIDENCE OF GROSS BAD FAITH; HENCE,
CONTRARY TO THE ESTABLISHED DOCTRINE IN THE CASES OF PHIL. RABBIT BUS LINES VS.
ESGUERRA; SOBERANO VS. BENGUET AUTO LINE AND FLORES VS. MIRANDA.

III

THE COURT A QUO MISERABLY ERRED IN HOLDING THAT MIRALLES WAS THE ONE AT FAULT
MERELY ON THE STRENGHT OF THE TESTIMONY OF THE POLICE INVESTIGATOR WHICH IS IN
TURN BASED ON THE STATEMENTS OF ALLEGED WITNESSES WHO WERE NEVER PRESENTED
ON THE WITNESS STAND.

IV

THE COURT A QUO COMMITTED A GRIEVOUS ERROR IN DISREGARDING THE TESTIMONY OF

APPELLANTS’ WITNESSES WHO TESTIFIED AS TO THE DEFENSE OF EXERCISE OF DUE
DILIGENCE IN THE SELECTION AND SUPERVISION OF EMPLOYEES PURSUANT TO ART. 2180,
LAST PARAGRAPH, NEW CIVIL CODE.

On September 25, 2002, the CA promulgated its decision,2 disposing:

WHEREFORE, in consideration of the foregoing premises, the assailed decision dated 18 July 19(9)7 is perforce
affirmed with the following modifications:

1. Third party defendants-appellants Philtranco and Apolinar Miralles are ordered to pay plaintiff-appellant
Felix Paras jointly and severally the following amounts:

a) ₱1,397.95 as actual damages;

b) ₱50,000.00 as temperate damages;

c) ₱50,000.00 as moral damages; and

d) ₱20,000.00 as attorney’s fees and costs of suit.

2. On the third party plaintiff-appellant Inland’s claims, the third party defendant-appellants Philtranco and
Apolinar Miralles are hereby ordered to pay the former (Inland) jointly and severally the amount of
₱250,000.00 as and by way of temperate damages.

SO ORDERED.

The CA agreed with the RTC’s finding that no trace of negligence at the time of the accident was attributable to
Inland’s driver, rendering Inland not guilty of breach of contract of carriage; that faulty brakes had caused
Philtranco’s bus to forcefully bump Inland’s bus from behind, making it hit the rear portion of a parked cargo truck;
that the impact had resulted in considerable material damage to the three vehicles; and that Paras and others had
sustained various physical injuries.

Accordingly, the CA:– (a) sustained the award of moral damages of ₱50,000.00 in favor of Paras pursuant to Article
2219 of the Civil Code based on quasi-delict committed by Philtranco and its driver; (b) reduced the actual damages
to be paid by Philtranco to Paras from ₱54,000.00 to ₱1,397.95 because only the latter amount had been duly
supported by receipts; (c) granted temperate damages of ₱50,000.00 (in lieu of actual damages in view of the
absence of competent proof of actual damages for his hospitalization and therapy) to be paid by Philtranco to Paras;
and (d) awarded temperate damages of ₱250,000.00 under the same premise to be paid by Philtranco to Inland for
the material damage caused to Inland’s bus.

Philtranco moved for reconsideration,3 but the CA denied its motion for reconsideration on January 21, 2004.4

Issues

Hence, this appeal, in which the petitioner submits that the CA committed grave abuse of discretion amounting to
lack of jurisdiction in awarding moral damages to Paras despite the fact that the complaint had been anchored on
breach of contract of carriage; and that the CA committed a reversible error in substituting its own judgment by motu
proprio awarding temperate damages of ₱250,000.00 to Inland and ₱50,000.00 to Paras despite the clear fact that
temperate damages were not raised on appeal by Paras and Inland.

Ruling

The appeal lacks merit.

The Court does not disturb the unanimous findings by the CA and the RTC on the negligence of Philtranco and its
driver being the direct cause of the physical injuries of Paras and the material damage of Inland.

Nonetheless, we feel bound to pass upon the disparate results the CA and the RTC reached on the liabilities of
Philtranco and its driver.

1.

Paras can recover moral damages

in this suit based on quasi-delict

Philtranco contends that Paras could not recover moral damages because his suit was based on breach of contract
of carriage, pursuant to which moral damages could be recovered only if he had died, or if the common carrier had
been guilty of fraud or bad faith. It argues that Paras had suffered only physical injuries; that he had not adduced
evidence of fraud or bad faith on the part of the common carrier; and that, consequently, Paras could not recover
moral damages directly from it (Philtranco), considering that it was only being subrogated for Inland.

The Court cannot uphold the petitioner’s contention.

As a general rule, indeed, moral damages are not recoverable in an action predicated on a breach of contract. This
is because such action is not included in Article 2219 of the Civil Code5 as one of the actions in which moral
damages may be recovered. By way of exception, moral damages are recoverable in an action predicated on a
breach of contract: (a) where the mishap results in the death of a passenger, as provided in Article 1764,6 in relation
to Article 2206, (3),7 of the Civil Code; and (b) where the common carrier has been guilty of fraud or bad faith,8 as
provided in Article 22209 of the Civil Code.

Although this action does not fall under either of the exceptions, the award of moral damages to Paras was
nonetheless proper and valid. There is no question that Inland filed its third-party complaint against Philtranco and
its driver in order to establish in this action that they, instead of Inland, should be directly liable to Paras for the
physical injuries he had sustained because of their negligence. To be precise, Philtranco and its driver were brought
into the action on the theory of liability that the proximate cause of the collision between Inland’s bus and
Philtranco’s bus had been "the negligent, reckless and imprudent manner defendant Apolinar Miralles drove and
operated his driven unit, the Philtranco Bus with Plate No. 259, owned and operated by third-party defendant
Philtranco Service Enterprises, Inc."10 The apparent objective of Inland was not to merely subrogate the third-party
defendants for itself, as Philtranco appears to suggest,11 but, rather, to obtain a different relief whereby the third-party
defendants would be held directly, fully and solely liable to Paras and Inland for whatever damages each had
suffered from the negligence committed by Philtranco and its driver. In other words, Philtranco and its driver were
charged here as joint tortfeasors who would be jointly and severally be liable to Paras and Inland.

Impleading Philtranco and its driver through the third-party complaint filed on March 2, 1990 was correct. The device
of the third-party action, also known as impleader, was in accord with Section 12, Rule 6 of the Revised Rules of
Court, the rule then applicable, viz:

Section 12. Third-party complaint. – A third-party complaint is a claim that a defending party may, with leave of
court, file against a person not a party to the action, called the third-party defendant, for contribution, indemnity,
subrogation or any other relief, in respect of his opponent’s claim.12

Explaining the application of Section 12, Rule 6, supra, the Court said in Balbastro v. Court of Appeals,13 to wit:

Section 12 of Rule 6 of the Revised Rules of Court authorizes a defendant to bring into a lawsuit any person "not a
party to the action . . . for contribution, indemnity, subrogation or any other relief in respect of his opponent's claim."
From its explicit language it does not compel the defendant to bring the third-parties into the litigation, rather it
simply permits the inclusion of anyone who meets the standard set forth in the rule. The secondary or derivative
liability of the third-party is central — whether the basis is indemnity, subrogation, contribution, express or implied
warranty or some other theory. The impleader of new parties under this rule is proper only when a right to relief
exists under the applicable substantive law. This rule is merely a procedural mechanism, and cannot be utilized
unless there is some substantive basis under applicable law.

Apart from the requirement that the third-party complainant should assert a derivative or secondary claim for relief
from the third-party defendant there are other limitations on said party’s ability to implead. The rule requires that the
third-party defendant is "not a party to the action" for otherwise the proper procedure for asserting a claim against
one who is already a party to the suit is by means of counterclaim or cross-claim under sections 6 and 7 of Rule 6.
In addition to the aforecited requirement, the claim against the third-party defendant must be based upon plaintiff's
claim against the original defendant (third-party claimant). The crucial characteristic of a claim under section 12 of
Rule 6, is that the original "defendant is attempting to transfer to the third-party defendant the liability asserted
against him by the original plaintiff."

Accordingly, the requisites for a third-party action are, firstly, that the party to be impleaded must not yet be a party
to the action; secondly, that the claim against the third-party defendant must belong to the original defendant; thirdly,
the claim of the original defendant against the third-party defendant must be based upon the plaintiff’s claim against
the original defendant; and, fourthly, the defendant is attempting to transfer to the third-party defendant the liability
asserted against him by the original plaintiff.14

As the foregoing indicates, the claim that the third-party complaint asserts against the third-party defendant must be
predicated on substantive law. Here, the substantive law on which the right of Inland to seek such other relief
through its third-party complaint rested were Article 2176 and Article 2180 of the Civil Code, which read:

Article 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to
pay for the damage done. Such fault or negligence, if there is no pre-existing contractual relation between the
parties, is called a quasi-delict and is governed by the provisions of this chapter. (1902a)

Article 2180. The obligation imposed by article 2176 is demandable not only for one’s own acts or omissions, but
also for those of persons for whom one is responsible.

xxx

Employers shall be liable for the damages caused by their employees and household helpers acting within the
scope of their assigned tasks, even though the former are not engaged in any business or industry.

xxx

The responsibility treated of in this article shall cease when the persons herein mentioned prove that they observed
all the diligence of a good father of a family to prevent damage. (1903a)

Paras’ cause of action against Inland (breach of contract of carriage) did not need to be the same as the cause of
action of Inland against Philtranco and its driver (tort or quasi-delict) in the impleader. It is settled that a defendant in
a contract action may join as third-party defendants those who may be liable to him in tort for the plaintiff’s claim
against him, or even directly to the plaintiff.15 Indeed, Prof. Wright, et al., commenting on the provision of the Federal
Rules of Procedure of the United States from which Section 12, supra, was derived, observed so, to wit:16

The third-party claim need not be based on the same theory as the main claim. For example, there are cases in
which the third-party claim is based on an express indemnity contract and the original complaint is framed in terms
of negligence. Similarly, there need not be any legal relationship between the third-party defendant and any of the
other parties to the action. Impleader also is proper even though the third party’s liability is contingent, and
technically does not come into existence until the original defendant’s liability has been established. In addition, the
words ‘is or may be liable’ in Rule 14(a) make it clear that impleader is proper even though the third-party
defendant’s liability is not automatically established once the third-party plaintiff’s liability to the original plaintiff has
been determined.

Nor was it a pre-requisite for attachment of the liability to Philtranco and its driver that Inland be first declared and
found liable to Paras for the breach of its contract of carriage with him.17 As the Court has cogently discoursed in
Samala v. Judge Victor:18

Appellants argue that since plaintiffs filed a complaint for damages against the defendants on a breach of contract of
carriage, they cannot recover from the third-party defendants on a cause of action based on quasi-delict. The third
party defendants, they allege, are never parties liable with respect to plaintiff s claim although they are with respect
to the defendants for indemnification, subrogation, contribution or other reliefs. Consequently, they are not directly
liable to the plaintiffs. Their liability commences only when the defendants are adjudged liable and not when they are
absolved from liability as in the case at bar.

Quite apparent from these arguments is the misconception entertained by appellants with respect to the nature and
office of a third party complaint.

Section 16, Rule 6 of the Revised Rules of Court defines a third party complaint as a "claim that a defending party
may, with leave of court, file against a person not a party to the action, called the third-party defendant, for
contribution, indemnification, subrogation, or any other relief, in respect of his opponent’s claim." In the case
of Viluan vs. Court of Appeals, et al., 16 SCRA 742 [1966], this Court had occasion to elucidate on the subjects
covered by this Rule, thus:

... As explained in the Atlantic Coast Line R. Co. vs. U.S. Fidelity & Guaranty Co., 52 F. Supp. 177 (1943:)
‘From the sources of Rule 14 and the decisions herein cited, it is clear that this rule, like the admiralty rule, ‘covers
two distinct subjects, the addition of parties defendant to the main cause of action, and the bringing in of a third party
for a defendant’s remedy over’. xxx

‘If the third party complaint alleges facts showing a third party’s direct liability to plaintiff on the claim set out in
plaintiff’s petition, then third party ‘shall’ make his defenses as provided in Rule 12 and his counterclaims against
plaintiff as provided in Rule 13. In the case of alleged direct liability, no amendment (to the complaint) is necessary
or required. The subject-matter of the claim is contained in plaintiff's complaint, the ground of third party’s liability on
that claim is alleged in third party complaint, and third party’s defense to set up in his answer to plaintiff's complaint.
At that point and without amendment, the plaintiff and third party are at issue as to their rights respecting the claim.

The provision in the rule that, ‘The third-party defendant may assert any defense which the third-party plaintiff may
assert to the plaintiffs claim,’ applies to the other subject, namely, the alleged liability of third party defendant. The
next sentence in the rule, ‘The third-party defendant is bound by the adjudication of the third party plaintiffs liability to
the plaintiff, as well as of his own to the plaintiff or to the third-party plaintiff applies to both subjects. If third party is
brought in as liable only to defendant and judgment is rendered adjudicating plaintiff's right to recover against
defendant and defendant’s rights to recover against third party, he is bound by both adjudications.That part of the
sentence refers to the second subject. If third party is brought in as liable to plaintiff, then third party is bound by the
adjudication as between him and plaintiff. That refers to the first subject. If third party is brought in as liable to
plaintiff and also over to defendant, then third party is bound by both adjudications. xxx

Under this Rule, a person not a party to an action may be impleaded by the defendant either (a) on an allegation of
liability to the latter; (b) on the ground of direct liability to the plaintiff-; or, (c) both (a) and (b). The situation in (a) is
covered by the phrase "for contribution, indemnity or subrogation;" while (b) and (c) are subsumed under the catch
all "or any other relief, in respect of his opponent’s claim."

The case at bar is one in which the third party defendants are brought into the action as directly liable to the plaintiffs
upon the allegation that "the primary and immediate cause as shown by the police investigation of said vehicular
collision between (sic) the above-mentioned three vehicles was the recklessness and negligence and lack of
imprudence (sic) of the third-party defendant Virgilio (should be Leonardo) Esguerra y Ledesma then driver of the
passenger bus." The effects are that "plaintiff and third party are at issue as to their rights respecting the claim" and
"the third party is bound by the adjudication as between him and plaintiff." It is not indispensable in the premises that
the defendant be first adjudged liable to plaintiff before the third-party defendant may be held liable to the plaintiff, as
precisely, the theory of defendant is that it is the third party defendant, and not he, who is directly liable to plaintiff.
The situation contemplated by appellants would properly pertain to situation (a) above wherein the third party
defendant is being sued for contribution, indemnity or subrogation, or simply stated, for a defendant's "remedy
over".19

It is worth adding that allowing the recovery of damages by Paras based on quasi-delict, despite his complaint being
upon contractual breach, served the judicial policy of avoiding multiplicity of suits and circuity of actions by disposing
of the entire subject matter in a single litigation.20

2.

Award of temperate damages was in order

Philtranco assails the award of temperate damages by the CA considering that, firstly, Paras and Inland had not
raised the matter in the trial court and in their respective appeals; secondly, the CA could not substitute the
temperate damages granted to Paras if Paras could not properly establish his actual damages despite evidence of
his actual expenses being easily available to him; and, thirdly, the CA gravely abused its discretion in granting motu
proprio the temperate damages of ₱250,000.00 to Inland although Inland had not claimed temperate damages in its
pleading or during trial and even on appeal.

The Court cannot side with Philtranco.

Actual damages, to be recoverable, must not only be capable of proof, but must actually be proved with a
reasonable degree of certainty. The reason is that the court "cannot simply rely on speculation, conjecture or
guesswork in determining the fact and amount of damages," but "there must be competent proof of the actual
amount of loss, credence can be given only to claims which are duly supported by receipts."21

The receipts formally submitted and offered by Paras were limited to the costs of medicines purchased on various
times in the period from February 1987 to July 1989 (Exhibits E to E-35, inclusive) totaling only ₱1,397.95.22 The
receipts by no means included hospital and medical expenses, or the costs of at least two surgeries as well as
rehabilitative therapy. Consequently, the CA fixed actual damages only at that small sum of ₱1,397.95. On its part,
Inland offered no definite proof on the repairs done on its vehicle, or the extent of the material damage except the
testimony of its witness, Emerlinda Maravilla, to the effect that the bus had been damaged beyond economic
repair.23 The CA rejected Inland’s showing of unrealized income worth ₱3,945,858.50 for 30 months (based on
alleged average weekly income of ₱239,143.02 multiplied by its guaranteed revenue amounting to 55% thereof,
then spread over a period of 30 months, the equivalent to the remaining 40% of the vehicle’s un-depreciated or net
book value), finding such showing arbitrary, uncertain and speculative.24 As a result, the CA allowed no
compensation to Inland for unrealized income.

Nonetheless, the CA was convinced that Paras should not suffer from the lack of definite proof of his actual
expenses for the surgeries and rehabilitative therapy; and that Inland should not be deprived of recourse to recover
its loss of the economic value of its damaged vehicle. As the records indicated, Paras was first rushed for
emergency treatment to the San Pablo Medical Center in San Pablo City, Laguna, and was later brought to the
National Orthopedic Hospital in Quezon City where he was diagnosed to have suffered a dislocated hip, fracture of
the fibula on the right leg, fracture of the small bone of the right leg, and closed fracture on the tibial plateau of the
left leg. He underwent surgeries on March 4, 1987 and April 15, 1987 to repair the fractures.25 Thus, the CA awarded
to him temperate damages of ₱50,000.00 in the absence of definite proof of his actual expenses towards that end.
As to Inland, Maravilla’s testimony of the bus having been damaged beyond economic repair showed a definitely
substantial pecuniary loss, for which the CA fixed temperate damages of ₱250,000.00. We cannot disturb the CA’s
determination, for we are in no position today to judge its reasonableness on account of the lapse of a long time
from when the accident occurred.26

In awarding temperate damages in lieu of actual damages, the CA did not err, because Paras and Inland were
definitely shown to have sustained substantial pecuniary losses. It would really be a travesty of justice were the CA
now to be held bereft of the discretion to calculate moderate or temperate damages, and thereby leave Paras and
Inland without redress from the wrongful act of Philtranco and its driver.27 We are satisfied that the CA exerted effort
and practiced great care to ensure that the causal link between the physical injuries of Paras and the material loss
of Inland, on the one hand, and the negligence of Philtranco and its driver, on the other hand, existed in fact. It also
rejected arbitrary or speculative proof of loss. Clearly, the costs of Paras’ surgeries and consequential rehabilitation,
as well as the fact that repairing Inland’s vehicle would no longer be economical justly warranted the CA to calculate
temperate damages of ₱50,000.00 and ₱250,000.00 respectively for Paras and Inland.

There is no question that Article 2224 of the Civil Code expressly authorizes the courts to award temperate
damages despite the lack of certain proof of actual damages, to wit:

Article 2224. Temperate or moderate damages, which are more than nominal but less than compensatory damages,
may be recovered when the court finds that some pecuniary loss has been suffered but its amount cannot, from the
nature of the case, be proved with certainty.

The rationale for Article 2224 has been stated in Premiere Development Bank v. Court of Appeals28 in the following
manner:

Even if not recoverable as compensatory damages, Panacor may still be awarded damages in the concept of
temperate or moderate damages. When the court finds that some pecuniary loss has been suffered but the amount
cannot, from the nature of the case, be proved with certainty, temperate damages may be recovered. Temperate
damages may be allowed in cases where from the nature of the case, definite proof of pecuniary loss cannot be
adduced, although the court is convinced that the aggrieved party suffered some pecuniary loss.

The Code Commission, in explaining the concept of temperate damages under Article 2224, makes the following
comment:

In some States of the American Union, temperate damages are allowed. There are cases where from the nature of
the case, definite proof of pecuniary loss cannot be offered, although the court is convinced that there has been
such loss. For instance, injury to one’s commercial credit or to the goodwill of a business firm is often hard to show
with certainty in terms of money. Should damages be denied for that reason? The judge should be empowered to
calculate moderate damages in such cases, rather than that the plaintiff should suffer, without redress from the
defendant’s wrongful act.

3.

Paras’ loss of earning capacity

must be compensated

In the body of its decision, the CA concluded that considering that Paras had a minimum monthly income of
₱8,000.00 as a trader he was entitled to recover compensation for unearned income during the 3-month period of
his hospital confinement and the 6-month period of his recovery and rehabilitation; and aggregated his unearned
income for those periods to ₱72,000.00.29 Yet, the CA omitted the unearned income from the dispositive portion.

The omission should be rectified, for there was credible proof of Paras’ loss of income during his disability.
According to Article 2205, (1), of the Civil Code, damages may be recovered for loss or impairment of earning
capacity in cases of temporary or permanent personal injury. Indeed, indemnification for damages comprehends not
only the loss suffered (actual damages or damnum emergens) but also the claimant’s lost profits (compensatory
damages or lucrum cessans).30 Even so, the formula that has gained acceptance over time has limited recovery to
net earning capacity; hence, the entire amount of ₱72,000.00 is not allowable. The premise is obviously that net
earning capacity is the person’s capacity to acquire money, less the necessary expense for his own living.31 To
simplify the determination, therefore, the net earning capacity of Paras during the 9-month period of his
confinement, surgeries and consequential therapy is pegged at only half of his unearned monthly gross income of
₱8,000.00 as a trader, or a total of ₱36,000.00 for the 9-month period, the other half being treated as the necessary
expense for his own living in that period.

It is relevant to clarify that awarding the temperate damages (for the substantial pecuniary losses corresponding to
Paras’s surgeries and rehabilitation and for the irreparability of Inland’s damaged bus) and the actual damages to
compensate lost earnings and costs of medicines give rise to no incompatibility. These damages cover distinct
pecuniary losses suffered by Paras and Inland,32 and do not infringe the statutory prohibition against recovering
damages twice for the same act or omission.33

4.

Increase in award of attorney’s fees

Although it is a sound policy not to set a premium on the right to litigate,34 we consider the grant to Paras and Inland
of reasonable attorney’s fees warranted. Their entitlement to attorney’s fees was by virtue of their having been
compelled to litigate or to incur expenses to protect their interests,35 as well as by virtue of the Court now further
deeming attorney’s fees to be just and equitable.36

In view of the lapse of a long time in the prosecution of the claim,37 the Court considers it reasonable and proper to
grant attorney’s fees to each of Paras and Inland equivalent to 10% of the total amounts hereby awarded to them, in
lieu of only ₱20,000.00 for that purpose granted to Paras.

5.

Legal interest on the amounts awarded

Pursuant to Eastern Shipping Lines, Inc. v. Court of Appeals,38 legal interest at the rate of 6% per annum accrues on
the amounts adjudged reckoned from July 18, 1997, the date when the RTC rendered its judgment; and legal
interest at the rate of 12% per annum shall be imposed from the finality of the judgment until its full satisfaction, the
interim period being regarded as the equivalent of a forbearance of credit.

WHEREFORE, the Court AFFIRMS WITH MODIFICATION the decision of the Court of Appeals promulgated on
September 25, 2002, by ordering PHILTRANCO SERVICE ENTERPRISES, INC. and APOLINAR MIRALLES to
pay, jointly and severally, as follows:

1. To Felix Paras:

(a) ₱1,397.95, as reimbursement for the costs of medicines purchased between February 1987 and
July 1989;

(b) ₱50,000.00 as temperate damages;

(c) ₱50,000.00 as moral damages;

(d) ₱36,000.00 for lost earnings;

(e) 10% of the total of items (a) to (d) hereof as attorney’s fees; and

(f) Interest of 6% per annum from July 18, 1997 on the total of items (a) to (d) hereof until finality of
this decision, and 12% per annum thereafter until full payment.

2. To Inland Trailways, Inc.:

(a) ₱250,000.00 as temperate damages;

(b) 10% of item (a) hereof; and

(c) Interest of 6% per annum on item (a) hereof from July 18, 1997 until finality of this decision, and
12% per annum thereafter until full payment.

3. The petitioner shall pay the costs of suit.

SO ORDERED.

WE CONCUR:
12. G.R. No. L-28014-15 May 29, 1970

SPOUSES MARCELO LANDINGIN and RACQUEL BOCASAS, plaintiffs-appellees,

vs.
PANGASINAN TRANSPORTATION CO. and MARCELO OLIGAN, defendants-appellants.

SPOUSES PEDRO GARCIA and EUFRACIA LANDINGIN, plaintiffs-appellees,

vs.
PANGASINAN TRANSPORTATION CO. and MARCELO OLIGAN, defendants-appellants.

Gabriel A. Zabala for plaintiffs-appellees.

Vicente M. Erfe Law Office for defendants-appellants.

VILLAMOR, J.:

Direct appeal on a question of law from the portion of the judgment of the Court of First Instance of Manila ordering
the defendants Pangasinan Transportation Co. (PANTRANCO) and Marcelo Oligan to pay the plaintiffs in Civil Case
No. D-1468
(L-28014) the sum of P6,500.00, and the plaintiffs in Civil Case No. 1470 (L-28015) the sum of P3,500.00.

The complaints in said Civil Cases Nos. D-1468 and D-1470 were filed by the spouses Marcelo Landingin and
Racquel Bocasas, and the spouses Pedro Garcia and Eufracia Landingin, respectively, for damages allegedly
suffered by them in connection with the death of their respective daughter, Leonila Landingin and Estrella Garcia,
due to the alleged negligence of the defendants and/or breach of contract of carriage. In their complaints, plaintiffs
averred, among others, that in the morning of April 20, 1963, their above-mentioned daughters were among the
passengers in the bus driven by defendant Marcelo Oligan and owned and operated by defendant PANTRANCO on
an excursion trip from Dagupan City to Baguio City and back, that the bus was open on one side and enclosed on
the other, in gross violation of the rules of the Public Service Commission; that defendant PANTRANCO acted with
negligence, fraud and bad faith in pretending to have previously secured a special permit for the trip when in truth it
had not done so; that upon reaching an uphill point at Camp 8, Kennon Road, Baguio City, on the onward trip,
defendant driver, through utter lack of foresight, experience and driving knowledge, caused the bus to stall and stop
for a few moments; that through the said defendant's fault and mishandling, the motor ceased to function, causing
the bus to slide back unchecked; that when the said defendant suddenly swerved and steered the bus toward the
mountainside, Leonila and Estrella, together with several other passengers, were thrown out of the bus through its
open side unto the road, suffering serious injuries as a result of which Leonila and Estrella died at the hospital and
the same day; and that in connection with the incident, defendant driver had been charged with and convicted of
multiple homicide and multiple slight physical injuries on account of the death of Leonila and Estrella and of the
injuries suffered by four others, although it may be said, by way of parenthesis, that this case is now pending appeal
in a higher court. The plaintiffs prayed for awards of moral, actual and exemplary damages in the total sum of
P40,000.00 in Civil Case No. D-1468, and in the total sum of P25,000.00 in Civil Case No. D-1470 as well as
attorney's fees in the amounts of P5,000.00 and P4,000.00, respectively.

Defendants filed a joint answer to each of the two complaints alleging, among others, that at the time of the
accident, defendant driver was driving the bus at, the slow speed of about 10 kilometers per hour; that while the said
defendant was steering his bus toward the mountainside after hearing a sound coming from under the rear end of
the bus, Leonila and Estrella recklessly, and in disobedience to his shouted warnings and advice, jumped out of the
bus causing their heads to hit the road or pavement; that the bus was then being driven with extraordinary care,
prudence and diligence; that defendant PANTRANCO observed the care and diligence of a good father of a family
to prevent the accident as well as in the selection and supervision of its employees, particularly of defendant driver;
and that the decision convicting the said defendant was not yet final, the same having been appealed to the Court of
Appeals where it was still pending.

By agreement of the parties, the two cases were tried jointly. On October 17, 1966, the court a quo rendered its
decision therein in which it made the following findings; that upon reaching the fatal spot at Camp 8, a sudden
snapping or breaking of metal below the floor of the bus was heard, and the bus abruptly stopped, rolling back a few
moments later; that as a result, some of the passengers jumped out of the bus, while others stepped down; that
defendant driver maneuvered the bus safely to and against the side of the mountain where its rear end was made to
rest, ensuring the safety of the many passengers still inside the bus; that while defendant driver as steering the bus
towards the mountainside, he advised the passengers not to jump, but to remain seated; that Leonila and Estrella
were not thrown out of the bus, but that they panicked and jumped out; that the malfunctioning of the motor resulted
from the breakage of the cross-joint; that there was no negligence on the part of either of the defendants; that only
the day before, the said cross-joint was duly inspected and found to be in order; and that defendant PANTRANCO
had exercised the requisite care in the selection and supervision of its employees, including the defendant driver.
The court concluded that "the accident was caused by a fortuitous event or an act of God brought about by some
extra-ordinary circumstances independent of the will of the Pantranco or its employees."

One would wonder why in the face of such factual findings and conclusion of the trial court, the defendants, instead
of the plaintiffs, should come to this Court on appeal. The answer lies in the dispositive portion of the decision, to
wit:

IN VIEW OF THE FOREGOING CONSIDERATIONS, the Court hereby renders judgment: (a)
Absolving the defendants from any liability on account of negligence on their part and therefore
dismissing the complaints in these two cases; (b) However, as stated above, the Court hereby
orders the defendant Pantranco to pay to the plaintiffs spouses Marcelo Tandingin and Racquel
Bocasas in Civil Case No. D-1468 the amount of P6,500.00; and the amount of P3,500.00 to the
spouses Pedro Garcia and Eufracia Landingin in Civil Case No. D-1470, not in payment of liability
because of any negligence on the part of the defendants but as an expression of sympathy and
goodwill. (Emphasis supplied.)

As to what impelled the court below to include item (b) in the dispositive portion of its decision, can be gathered from
the penultimate paragraph of the decision, which reads:

However, there is evidence to the effect that an offer of P8,500.00 in the instant cases without any
admission of fault or negligence had been made by the defendant Pantranco and that actually in
Civil Case No. D-1469 for the death of Pacita Descalso, the other deceased passenger of the bus in
question, the heirs of the decease received P3,000.00 in addition to hospital and medical bills and
the coffin of the deceased for the dismissal of the said case without Pantranco accepting liability.
There was as a matter of fact during the pre-trial of these two cases a continuing offer of settlement
on the part of the defendant Pantranco without accepting any liability for such damages, and the
Court understood that the Pantranco would be willing still to pay said amounts even if these cases
were to be tried on the merits. It is well-known that the defendant Pantranco is zealous in the
preservation of its public relations. In the spirit therefore of the offer of the defendant Pantranco
aforesaid, to assuage the feelings of the herein plaintiffs an award of P6,500.00 for the spouses
Marcelo Landingin and Racquel Bocasas in Civil Case No. D-1468 whose daughter Leonila was,
when she died, a third-year Commerce student at the Far Eastern University, and P3,500.00 for the
spouses Pedro Garcia and Eufracia Landingin in Civil Case No. D-1470 whose daughter Estrella
was in the fourth year High at the Dagupan Colleges when she died, is hereby made in their favor.
This award is in addition to what Pantranco might have spent to help the parents of both deceased
after the accident.

Defendants-appellants complain that having found them to be absolutely free from fault or negligence, and having in
fact dismissed the complaints against them, the court should not have ordered them to assume any pecuniary
liability. There would be merit in his argument but for the fact that defendant-appellant PANTRANCO was guilty of
breach of contract of carriage. It will be noted that in each of the two complaints it is averred that two buses
including the one in which the two deceased girls were riding, were hired to transport the excursionist passengers
from Dagupan City to Baguio City, and return, and that the said two passengers did not reach destination safely.

As a common carrier, defendant-appellant PANTRANCO was duty bound to carry its 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 1755, Civil Code.) Did defendant-appellant PANTRANCO measure up to the degree of
care and foresight required it under the circumstances? We think not. The court below found that the cross-joint of
the bus in which the deceased were riding broke, which caused the malfunctioning of the motor, which in turn
resulted in panic among some of the passengers. This is a finding of fact which this Court may not disturb. We are
of the opinion, however, that the lower court's conclusion drawn from that fact, i.e., that "the accident was caused by
a fortuitous event or an act of God brought about by some extraordinary circumstances independent of the will of the
Pantranco or its employees," is in large measure conjectural and speculative, and was arrived at without due regard
to all the circumstances, as required by Article 1755. In Lasam vs. Smith (45 Phil. 660), this Court held that an
accident caused by defects in the automobile is not a caso fortuito. The rationale of the carrier's liability is the fact
that "the passenger has neither the choice nor control over the carrier in the selection and use of the equipment and
appliances in use by the carrier." (Necesito, et al. vs. Paras, et al., 104 Phil. 75.)

When a passenger dies or is injured, the presumption is that the common carrier is at fault or that it acted
negligently (Article 1756). This presumption is only rebutted by proof on the carrier's part that it observed the
"extraordinary diligence" required in Article 1733 and the "utmost diligence of very cautious persons" required in
Article 1755 (Article 1756). In the instant case it appears that the court below considered the presumption rebutted
on the strength of defendants-appellants' evidence that only the day before the incident, the crossjoint in question
was duly inspected and found to be in order. It does not appear, however, that the carrier gave due regard for all the
circumstances in connection with the said inspection. The bus in which the deceased were riding was heavily laden
with passengers, and it would be traversing mountainous, circuitous and ascending roads. Thus the entire bus,
including its mechanical parts, would naturally be taxed more heavily than it would be under ordinary circumstances.
The mere fact that the bus was inspected only recently and found to be in order would not exempt the carrier from
liability unless it is shown that the particular circumstances under which the bus would travel were also considered.
In the premises, it was error for the trial court to dismiss the complaints. The awards made by the court should be
considered in the concept of damages for breach of contracts of carriage.

IN VIEW OF THE FOREGOING CONSIDERATIONS, the judgment appealed from is modified as indicated above,
and defendant-appellant PANTRANCO is ordered to pay to plaintiffs-appellees the amounts stated in the judgment
appealed from, as damages for breach of contracts, with interest thereon at the legal rate from the date of the filing
of the complaints. Costs against defendant-appellant PANTRANCO.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Fernando, Teehankee and Barredo, JJ., concur.

EN BANC

13. G.R. No. L-22272 June 26, 1967

ANTONIA MARANAN, plaintiff-appellant,

vs.
PASCUAL PEREZ, ET AL., defendants.
PASCUAL PEREZ, defendant appellant.

Pedro Panganiban for plaintiff-appellant.

Magno T. Bueser for defendant-appellant.

BENGZON, J.P., J.:

Rogelio Corachea, on October 18, 1960, was a passenger in a taxicab owned and operated by Pascual Perez when
he was stabbed and killed by the driver, Simeon Valenzuela.

Valenzuela was prosecuted for homicide in the Court of First Instance of Batangas. Found guilty, he was sentenced
to suffer imprisonment and to indemnify the heirs of the deceased in the sum of P6,000. Appeal from said conviction
was taken to the Court of Appeals. 1äwphï1.ñët

On December 6 1961, while appeal was pending in the Court of Appeals, Antonia Maranan, Rogelio's mother, filed
an action in the Court of First Instance of Batangas to recover damages from Perez and Valenzuela for the death of
her son. Defendants asserted that the deceased was killed in self-defense, since he first assaulted the driver by
stabbing him from behind. Defendant Perez further claimed that the death was a caso fortuito for which the carrier
was not liable.

The court a quo, after trial, found for the plaintiff and awarded her P3,000 as damages against defendant Perez. The
claim against defendant Valenzuela was dismissed. From this ruling, both plaintiff and defendant Perez appealed to
this Court, the former asking for more damages and the latter insisting on non-liability. Subsequently, the Court of
Appeals affirmed the judgment of conviction earlier mentioned, during the pendency of the herein appeal, and on
May 19, 1964, final judgment was entered therein. (Rollo, p. 33).

Defendant-appellant relies solely on the ruling enunciated in Gillaco v. Manila Railroad Co., 97 Phil. 884, that the
carrier is under no absolute liability for assaults of its employees upon the passengers. The attendant facts and
controlling law of that case and the one at bar are very different however. In the Gillaco case, the passenger was
killed outside the scope and the course of duty of the guilty employee. As this Court there found:

x x x when the crime took place, the guard Devesa had no duties to discharge in connection with the
transportation of the deceased from Calamba to Manila. The stipulation of facts is clear that when Devesa
shot and killed Gillaco, Devesa was assigned to guard the Manila-San Fernando (La Union) trains, and he
was at Paco Station awaiting transportation to Tutuban, the starting point of the train that he was engaged to
guard. In fact, his tour of duty was to start at 9:00 two hours after the commission of the crime. Devesa was
therefore under no obligation to safeguard the passengers of the Calamba-Manila train, where the deceased
was riding; and the killing of Gillaco was not done in line of duty. The position of Devesa at the time was that
of another would be passenger, a stranger also awaiting transportation, and not that of an employee
assigned to discharge any of the duties that the Railroad had assumed by its contract with the deceased. As
a result, Devesa's assault can not be deemed in law a breach of Gillaco's contract of transportation by a
servant or employee of the carrier. . . . (Emphasis supplied)

Now here, the killing was perpetrated by the driver of the very cab transporting the passenger, in whose hands the
carrier had entrusted the duty of executing the contract of carriage. In other words, unlike the Gillaco case, the killing
of the passenger here took place in the course of duty of the guilty employee and when the employee was acting
within the scope of his duties.

Moreover, the Gillaco case was decided under the provisions of the Civil Code of 1889 which, unlike the present
Civil Code, did not impose upon common carriers absolute liability for the safety of passengers against wilful
assaults or negligent acts committed by their employees. The death of the passenger in the Gillaco case was truly a
fortuitous event which exempted the carrier from liability. It is true that Art. 1105 of the old Civil Code on fortuitous
events has been substantially reproduced in Art. 1174 of the Civil Code of the Philippines but both articles clearly
remove from their exempting effect the case where the law expressly provides for liability in spite of the occurrence
of force majeure. And herein significantly lies the statutory difference between the old and present Civil Codes, in
the backdrop of the factual situation before Us, which further accounts for a different result in the Gillaco case.
Unlike the old Civil Code, the new Civil Code of the Philippines expressly makes the common carrier liable for
intentional assaults committed by its employees upon its passengers, by the wording of Art. 1759 which
categorically states that

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.

The Civil Code provisions on the subject of Common Carriers1 are new and were taken from Anglo-American
Law.2There, the basis of the carrier's liability for assaults on passengers committed by its drivers rests either on (1)
the doctrine of respondeat superior or (2) the principle that it is the carrier's implied duty to transport the passenger
safely.3

Under the first, which is the minority view, the carrier is liable only when the act of the employee is within the scope
of his authority and duty. It is not sufficient that the act be within the course of employment only.4

Under the second view, upheld by the majority and also by the later cases, it is enough that the assault happens
within the course of the employee's duty. It is no defense for the carrier that the act was done in excess of authority
or in disobedience of the carrier's orders.5 The carrier's liability here is absolute in the sense that it practically
secures the passengers from assaults committed by its own employees.6

As can be gleaned from Art. 1759, the Civil Code of the Philippines evidently follows the rule based on the second
view. At least three very cogent reasons underlie this rule. As explained in Texas Midland R.R. v. Monroe, 110 Tex.
97, 216 S.W. 388, 389-390, and Haver v. Central Railroad Co., 43 LRA 84, 85: (1) the special undertaking of the
carrier requires that it furnish its passenger that full measure of protection afforded by the exercise of the high
degree of care prescribed by the law, inter alia from violence and insults at the hands of strangers and other
passengers, but above all, from the acts of the carrier's own servants charged with the passenger's safety; (2) said
liability of the carrier for the servant's violation of duty to passengers, is the result of the formers confiding in the
servant's hands the performance of his contract to safely transport the passenger, delegating therewith the duty of
protecting the passenger with the utmost care prescribed by law; and (3) as between the carrier and the passenger,
the former must bear the risk of wrongful acts or negligence of the carrier's employees against passengers, since it,
and not the passengers, has power to select and remove them.

Accordingly, it is the carrier's strict obligation to select its drivers and similar employees with due regard not only to
their technical competence and physical ability, but also, no less important, to their total personality, including their
patterns of behavior, moral fibers, and social attitude.

Applying this stringent norm to the facts in this case, therefore, the lower court rightly adjudged the defendant carrier
liable pursuant to Art. 1759 of the Civil Code. The dismissal of the claim against the defendant driver was also
correct. Plaintiff's action was predicated on breach of contract of carriage7 and the cab driver was not a party
thereto. His civil liability is covered in the criminal case wherein he was convicted by final judgment.

In connection with the award of damages, the court a quo granted only P3,000 to plaintiff-appellant. This is the
minimum compensatory damages amount recoverable under Art. 1764 in connection with Art. 2206 of the Civil
Code when a breach of contract results in the passenger's death. As has been the policy followed by this Court, this
minimal award should be increased to P6,000. As to other alleged actual damages, the lower court's finding that
plaintiff's evidence thereon was not convincing,8 should not be disturbed. Still, Arts. 2206 and 1764
award moral damages in addition to compensatory damages, to the parents of the passenger killed to compensate
for the mental anguish they suffered. A claim therefor, having been properly made, it becomes the court's duty to
award moral damages.9 Plaintiff demands P5,000 as moral damages; however, in the circumstances, We consider
P3,000 moral damages, in addition to the P6,000 damages afore-stated, as sufficient. Interest upon such damages
are also due to plaintiff-appellant. 10

Wherefore, with the modification increasing the award of actual damages in plaintiff's favor to P6,000, plus
P3,000.00 moral damages, with legal interest on both from the filing of the complaint on December 6, 1961 until the
whole amount is paid, the judgment appealed from is affirmed in all other respects. No costs. So ordered.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez and Castro, JJ., concur.
 14. [ G.R. No. L-22272, June 26, 1967 ]

13. ANTONIA MARANAN PLAINTIFF-APPELLANT, VS. PASCUAL PEREZ, ET AL.,

DEFENDANTS, PASCUAL PEREZ, DEFENDANT-APPELLANT.

DECISION

BENGZON, J.P., J.:

Rogelio Corachea, on October 18, 1960, was a passenger in a taxicab owned and
operated by Pascual Perez when he was stabbed and killed by the driver, Simeon
Valenzuela.
Valenzuela was prosecuted for homicide in the Court of First Instance
of Batangas. Found guilty, he was sentenced to suffer imprisonment and to indemnify
the heirs of the deceased in the sum of P6,000. Appeal from said conviction was taken
to the Court of Appeals.
On December 6, 1961, while appeal was pending in the Court of Appeals,
Antonia Maranan, Rogelio's mother, filed an action in the Court of First Instance
of Batangas to recover damages from Perez and Valenzuela for the death of her
son. Defendants asserted that the deceased was killed in self-defense, since he first
assaulted the driver by stabbing him from behind. Defendant Perez further claimed
that the death was a caso fortuito for which the carrier was not liable.
The court a quo, after trial, found for the plaintiff and awarded her P3,000 as damages
against defendant Perez. The claim against defendant Valenzuela was dis-
missed. From this ruling, both plaintiff and defendant Perez appealed to this Court,
the former asking for more damages and the latter insisting on non-liability. Sub-
sequently, the Court of Appeals affirmed the judgment of conviction earlier mentioned,
during the pendency of the herein appeal, and on May 19, 1964, final judgment was
entered therein. (Rollo, p. 33)
Defendant-appellant relies solely on the ruling enunciated in Gillaco v. Manila Railroad
Co., 97 Phil. 884, that the carrier is under no absolute liability for assaults of its
employees upon the passengers. The attendant facts and controlling law of that case
and the one at bar are very different however. In the Gillaco case, the passenger was
killed outside the scope and the course of duty of the guilty employee. As this Court
there found:
"x x x when the crime took place, the guard Devesa had no duties to discharge in
connection with the transportation of the deceased from Calamba to Manila. The
stipulation of facts is clear that when Devesa shot and killed Gillaco, Devesa was
assigned to guard the Manila-San Fernando (La Union) trains, and he was
at Paco Station awaiting transportation to Tutuban, the starting point of the train that
he was engaged to guard. In fact, his tour of duty was to start at 9:00 a.m., two
hours after the commission of the crime. Devesawas therefore under no obligation to
safeguard the passengers of the Calamba-Manila train, where the deceased was riding;
and the killing of Gillaco was not done in line of duty. The position of Devesa at the
time was that of another would be passenger, a stranger also awaiting transportation,
and not that of an employee assigned to discharge any of the duties that the Railroad
had assumed by its contract with the deceased. As a result, Devesa's assault can not be
deemed in law a breach of Gillaco's contract of transportation by a servant or employee
of the carrier. x x x" (Emphasis supplied)
Now here, the killing was perpetrated by the driver of the very cab transporting the
passenger, in whose hands the carrier had entrusted the duty of executing the contract
of carriage. In other words, unlike the Gillaco case, the killing of the passenger here
took place in the course of duty of the guilty employee and when the employee was
acting within the scope of his duties.
Moreover, the Gillaco case was decided under the provisions of the Civil Code of 1889
which, unlike the present Civil Code, did not impose upon common carriers absolute
liability for the safety of passengers against willful assaults or negligent acts committed
by their employees. The death of the passenger in the Gillaco case was truly a
fortuitous event which exempted the carrier from liability. It is true that Art. 1105 of
the old Civil Code on fortuitous events has been substantially reproduced in Art. 1174 of
the Civil Code of the Philippinesbut both articles clearly remove from their exempting
effect the case where the law expressly provides for liability inspite of the occurrence of
force majeure. And herein significantly lies the statutory difference between the old
and present Civil Codes, in the backdrop of the factual situation before Us, which
further accounts for a different result in the Gillaco case. Unlike the old Civil Code, the
new Civil Code of the Philippines expressly makes the common carrier liable for
intentional assaults committed by its employees upon its passengers, by the wording of
Art. 1759 which categorically states that
"Common carriers are liable for the death of or injuries to passengers through the
negligence or wilful 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."

The Civil Code provisions on the subject of Common Carriers[1] are new and were taken
from Anglo-American Law.[2] There, the basis of the carrier's liability for assaults on
passengers committed by its drivers rests either on (1) the doctrine
of respondent superior or (2) the principle that it is the carrier's implied duty to
transport the passenger safely.[3]
Under the first, which is the minority view, the carrier is liable only when the act of the
employee is within the scope of his authority and duty. It is not sufficient that the act
be within the course of employment only.[4]
Under the second view, upheld by the majority and also by the later cases, it is enough
that the assault happens within the course of the employee's duty. It is no defense for
the carrier that the act was done in excess of authority or in disobedience of the
carrier's orders.[5]The carrier's liability here is absolute in the sense that it practically
secures the passengers from assaults committed by its own employees.[6]
As can be gleaned from Art. 1759, the Civil Code of the Philippines evidently follows the
rule based on the second view. At least three very cogent reasons underlie this rule. As
explained in Texas Midland R.R. v. Monroe, 110 Tex. 97, 216 S.W. 388, 389-
390, and Haver v.Central Railroad Co., 43 LRA 84, 85: (1) the special undertaking of
the carrier requires that it furnish its passenger that full measure of protection afforded
by the exercise of the high degree of care prescribed by the law, inter alia from violence
and insults at the hands of strangers and other passengers, but above all, from the acts
of the carrier's own servants charged with the passenger's safety; (2) said liability of the
carrier for the servant's violation of duty to passengers, is the result of
the former's confiding in the servant's hands the performance of his contract to safely
transport the passenger, delegating therewith the duty of protecting the passenger with
the utmost care prescribed by law; and (3) as between the carrier and the passenger,
the former must bear the risk of wrongful acts or negligence of the carrier's employees
against passengers, since it, and not the passengers, has power to select and remove
them.
Accordingly, it is the carrier's strict obligation to select its drivers and similar
employees with due regard not only to their technical competence and physical ability,
but also, no less important, to their total personality, including their patterns of
behavior, moral fibers, and social attitude.
Applying this stringent norm to the facts in this case, therefore, the lower court rightly
adjudged the defendant carrier liable pursuant to Art. 1759 of the Civil Code. The
dismissal of the claim against the defendant driver was also correct. Plaintiff's action
was predicated on breach of contract of carriage[7] and the cab driver was not a party
thereto. His civil liability is covered in the criminal case wherein he was convicted by
final judgment.
In connection with the award of damages, the court a quo granted only P3,000 to
plaintiff-appellant. This is the minimum compensatory damages amount recoverable
under Art. 1764 in connection with Art. 2206 of the Civil Code when a breach of
contract results in the passenger's death. As has been the policy followed by this Court,
this minimal award should be increased to P6,000. As to other alleged actual damages,
the lower court's finding that plaintiff's evidence thereon was not convincing,[8] should
not be disturbed. Still, Arts. 2206and 1764 award moral damages in addition to
compensatory damages, to the parents of the passenger killed to compensate for the
mental anguish they suffered. A claim therefor having been properly made, it becomes
the court's duty to award moral damages.[9] Plaintiff demands P5,000 as moral
damages; however, in the circumstances, We consider P3,000 moral damages, in
addition to the P6,000 damages afore-stated, as sufficient. Interest upon such
damages are also due to plaintiff-appellant.[10]
WHEREFORE, with the modification increasing the award of actual damages in
plaintiff's favor to P6,000, plus P3,000 moral damages, with legal interest on both
from the filing of the complaint on December 6, 1961 until the whole amount is paid,
the judgment appealed from is affirmed in all other respects. No costs.
SO ORDERED.
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, and Ruiz
Castro, JJ.,concur.

PHILIPPINE AIRLINES, INC. vs. COURT OF APPEALS and PEDRO

ZAPATOS G.R. No. L-82619 September 15, 1993 BELLOSILLO, J.:

Facts: On 25 November 1976, private respondent filed a complaint for damages for breach of contract of
carriage2 against Philippine Airlines, Inc. (PAL), before the then Court of First Instance. Zapatos purchased a
ticket from Philippine Air Lines (PAL) wherein it was agreed that the latter would transport him to Ozamiz City.
The plane’s route was from Cebu -Ozamiz-Cotabato. However, due to unfavoarable weather conditions and
the fact that PAL did nothave an all-weather airport, PAL had bypassed Ozamiz City. PAL then informed
Zapatos ofhis options, to return to Cebu on the same day, or take the next flight to Cebu the followingday, or
to take the next available flight to Ozamiz City.

Zapatos chose to return to OzamizCity on the same day. However, there were only six (6) seats available and,
the seats weregiven to the passengers according to their check-in sequence at Cebu. Consequently,Zapatos
was stranded in Cotabato City, where a battle between the government and theMuslims was ongoing.During
his stay in Cotabato City, PAL also failed to provide accomodations for Zapatos. Italso refused to have the
latter hitch a ride with its employees on a ford truck bound for the City. It also failed to return Zapatos’
luggage. This prompted Zapatos to file a complaint for damages against Philippine Air Lines forbreach of
contract.PAL claimed that it should not be charged with the task of looking after the passengers'comfort and
convenience because the diversion of the flight was due to a fortuitous event,and that if made liable, an
added burden is given to PAL which is over and beyond its dutiesunder the contract of carriage

ISSUE:Is PAL liable for the breach of contract of carriage?

Held: YES. Undisputably, PAL's diversion of its flight due to inclement weather was a fortuitous event.
Nonetheless, such occurrence did not terminate PAL's contract with its passengers. Being in the business of air
carriage and the sole one to operate in the country, PAL is deemed equipped to deal with situations as in the
case at bar. What we said in one case once again must be stressed, i.e., the relation of carrier and passenger
continues until the latter has been landed at the port of destination and has left the carrier's premises. Hence,
PAL necessarily would still have to exercise extraordinary diligence in safeguarding the comfort, convenience
and safety of its stranded passengers until they have reached their final destination. On this score, PAL grossly
failed considering the then ongoing battle between government forces and Muslim rebels in Cotabato City and
the fact that the private respondent was a stranger to the place. While we find PAL remiss in its duty of
extending utmost care to private respondent while being stranded in Cotabato City, there is no sufficient basis
to conclude that PAL failed to inform him about his non-acc

NOCUM V. LAGUNA TAYABAS BUS

COMPANY, G.R. NO. L-23733, OCT.
31, 1969
Category: Transportation Laws

In a jeepney, Angela, a passenger, was injured because of the flammable material

brought by Antonette, another passenger. Antonette denied her baggage to be
inspected invoking her right to privacy. Should the jeepney operator be held liable
for damages?

No. The operator is not liable for damages. In overland transportation, the common carrier is not bound nor empowered
to make an examination on the contents of packages or bags, particularly those handcarried by passengers. (Nocum v.
Laguna Tayabas Bus Company, G.R. No. L-23733, Oct. 31, 1969)

17.Bachelor Express, Inc. v. Court of Appeals

G.R. No. 85691, 31 July 1990, 188 SCRA 216

FACTS:

– On Aug 1980, a bus owned by Bachelor Express, Inc. (BEI) and driven by Cresencio Rivera came from Davao
City on its way to Cagayan de Oro City passing Butuan City.
– While at Tabon-Tabon, Butuan City, the bus picked up a passenger and about 15 mins later, a passenger at the
rear portion suddenly stabbed a PC soldier which caused commotion and panic among the passengers.
– When the bus stopped, passengers Ornominio Beter and Narcisa Rautraut were found lying down the road, the
former already dead as a result of head injuries and the latter also suffering from severe injuries which caused her
death later.
– The passenger assailant alighted from the bus and ran toward the bushes but was killed by the police. Thereafter,
the heirs of Ornominio Beter and Narcisa Rautraut, private respondents herein the parents of Beter and Rautraut.
– RTC dismissed the complaint. Upon appeal, the decision was reversed and set aside. CA found BEI and Rivera
solidarily liable to pay the private respondents herein.
ISSUE:

1. What was the proximate cause of the whole incident?

2. Whether or not the petitioner’ common carrier observed extraordinary diligence to safeguard the lives of its
passengers? NO

RULING:

1. Petitioner, in order to overcome the presumption of fault/negligence under the law, states that the vehicular
incident resulting in the death of the passengers Beter and Rautraut was caused by force majeure/casa fortuito.

The following essential characteristics of casa fortuito are: (1) The cause of the unforeseen and unexpected
occurrence, or of the failure of the debtor to comply with his obligation, must be independent of the human will; (2) It
must be impossible to foresee the event which constitutes the caso fortuito, or if it can be foreseen, it must be
impossible to avoid; (3) The occurrence must be such as to render it impossible for the debtor to fulfill his obligation
in a normal manner. and (4) the obligor (debtor) must be free from any participation in the aggravation of the injury
resulting to the creditor.

The running amuck of the passenger was the proximate cause of the incident as it triggered off a commotion and
panic among passengers started running to the sole exit shoving each other resulting in the falling off the
passengers Beter and Rautraut causing them fatal injuries. The sudden act of the passenger who stabbed another
passenger in the bus is within context of force majeure.

18. Fabre vs CA Case Digest

Fabre vs. Court of Appeals

259 SCRA 426

G.R. No. 111127

July 26, 1996

Facts: Petitioners Engracio Fabre, Jr. and his wife were owners of a Mazda minibus. They used the bus principally
in connection with a bus service for school children which they operated in Manila. It was driven by Porfirio Cabil.

On November 2, 1984 private respondent Word for the World Christian Fellowship Inc. (WWCF) arranged with the
petitioners for the transportation of 33 members of its Young Adults Ministry from Manila to La Union and back in
consideration of which private respondent paid petitioners the amount of P3,000.00.

The usual route to Caba, La Union was through Carmen, Pangasinan. However, the bridge at Carmen was under
repair, so that petitioner Cabil, who was unfamiliar with the area (it being his first trip to La Union), was forced to
take a detour through the town of Ba-ay in Lingayen, Pangasinan. At 11:30 that night, petitioner Cabil came upon a
sharp curve on the highway. The road was slippery because it was raining, causing the bus, which was running at
the speed of 50 kilometers per hour, to skid to the left road shoulder. The bus hit the left traffic steel brace and sign
along the road and rammed the fence of one Jesus Escano, then turned over and landed on its left side, coming to a
full stop only after a series of impacts. The bus came to rest off the road. A coconut tree which it had hit fell on it and
smashed its front portion. Because of the mishap, several passengers were injured particularly Amyline Antonio.

Criminal complaint was filed against the driver and the spouses were also made jointly liable. Spouses Fabre on the
other hand contended that they are not liable since they are not a common carrier. The RTC of Makati ruled in favor
of the plaintiff and the defendants were ordered to pay jointly and severally to the plaintiffs. The Court of Appeals
affirmed the decision of the trial court.

Issue: Whether the spouses Fabre are common carriers?

Held: Petition was denied. Spouses Fabre are common carriers.

The Supreme Court held that this case actually involves a contract of carriage. Petitioners, the Fabres, did not have
to be engaged in the business of public transportation for the provisions of the Civil Code on common carriers to
apply to them. As this Court has held: 10 Art. 1732, Common carriers are persons, corporations, firms or
associations engaged in the business of carrying or transporting passengers or goods or both, by land, water, or air
for compensation, offering their services to the public.

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

19.

CASE DIGEST (Transportation Law): Baliwag vs. Court of

Appeals
Baliwag Transit vs. CA

(GR 116110, 15 May 1996)

FACTS:

On 31 July 1980, Leticia Garcia, and her 5-year old son, Allan Garcia, boarded Baliwag
Transit Bus 2036 bound for Cabanatuan City driven by Jaime Santiago. They took the
seat behind the driver.

At about 7:30 p.m., in Malimba, Gapan, Nueva Ecija, the bus passengers saw a cargo
truck, owned by A & J Trading, parked at the shoulder of the national highway. Its left
rear portion jutted to the outer lane, as the shoulder of the road was too narrow to
accommodate the whole truck. A kerosene lamp appeared at the edge of the road
obviously to serve as a warning device. The truck driver, and his helper were then
replacing a flat tire.

Bus driver Santiago was driving at an inordinately fast speed and failed to notice the
truck and the kerosene lamp at the edge of the road. Santiago’s passengers urged him
to slow down but he paid them no heed. Santiago even carried animated conversations
with his co-employees while driving. When the danger of collision became imminent,
the bus passengers shouted “Babangga tayo!”. Santiago stepped on the brake, but it
was too late. His bus rammed into the stalled cargo truck killing him instantly and the
truck’s helper, and injury to several others among them herein respondents.

Thus, a suit was filed against Baliwag Transit, Inc., A & J Trading and Julio Recontique
for damages in the RTC of Bulacan. After trial, it found Baliwag Transit, Inc. liable for
having failed to deliver Garcia and her son to their point of destination safely in
violation of Garcia’s and Baliwag Transit’s contractual relation; and likewise found A &
J and its truck driver liable for failure to provide its cargo truck with an early warning
device in violation of the Motor Vehicle Law. All were ordered to pay solidarily the
Garcia spouses.

On appeal, the CA modified the trial court’s Decision by absolving A & J Trading from
liability.

ISSUE:

Whether or not Baliwag should be held solely liable for the injuries.

HELD:

Yes.

As a common carrier, Baliwag breached its contract of carriage when it failed to deliver
its passengers, Leticia and Allan Garcia to their destination safe and sound. A common
carrier is bound to carry its passengers safely as far as human care and foresight can
provide, using the utmost diligence of a very cautious person, with due regard for all
the circumstances. In a contract of carriage, it is presumed that the common carrier
was at fault or was negligent when a passenger dies or is injured. Unless the
presumption is rebutted, the court need not even make an express finding of fault or
negligence on the part of the common carrier. This statutory presumption may only be
overcome by evidence that the carrier exercised extraordinary diligence as prescribed
in Articles 1733 and 1755 of the Civil Code.

Article 1759 of the Civil Code provides that “Common carriers are liable for the death of
or injuries to passengers through the negligence or willfull 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 do not cease upon proof that they exercised all the diligence of a
good father of a family in the selection or supervision of their employees.”

Section 34 (g) of the Land Transportation and Traffic Code provides “Lights and
reflector when parked or disabled. — Appropriate parking lights or flares visible one
hundred meters away shall be displayed at the corner of the vehicle whenever such
vehicle is parked on highways or in places that are not well-lighted or, is placed in such
manner as to endanger passing traffic. Furthermore, every motor vehicle shall be
provided at all times with built-in reflectors or other similar warning devices either
pasted, painted or attached at its front and back which shall likewise be visible at night
at least one hundred meters away. No vehicle not provided with any of the
requirements mentioned in this subsection shall be registered. ”

x x x However, the evidence shows that Recontique and Ecala placed a kerosene lamp
or torch at the edge of the road, near the rear portion of the truck to serve as an early
warning device. This substantially complies with Section 34 (g) of the Land
Transportation and Traffic Code. The law clearly allows the use not only of an early
warning device of the triangular reflectorized plates variety but also parking lights or
flares visible 100 meters away. Indeed, Col. dela Cruz himself admitted that a
kerosene lamp is an acceptable substitute for the reflectorized plates. No negligence,
therefore, may be imputed to A & J Trading and its driver, Recontique.

The Supreme Court affirmed the Decision of the Court of Appeals (CA-GR CV-31246)
with the modification reducing the actual damages for hospitalization and medical fees
to P5,017.74; without cost

20. De Guzman vs. Court of Appeals et. al.

G.R. No. L
-
47822, December 22, 1988
FACTS:
Respondent Cenena was engaed in buying bottles and scrap metal in Pangasinan. He utilized
two (2) six-wheeler trucks which he owned for hauling the material to Manila. In 1970, petitioner
De Guzman, an authorized dealer of General Milk Company in Pangasinan, contracted with
respondent for the hauling of 750 cartons of Liberty filled milk from a warehouse in Makati, Rizal, to the
petitioner’s establishment in Pangasinan.
150 cartons were loaded on a truck driven by respondent himself while 600 cartons were loaded
to the other truck which was driven by
respondent’s driver. Only 150 boxes of milk were delivered and the other 600 boxes never reached the
petitioner
because the said truck was hijacked on its way to Pangasinan. Petitioner commenced an action
againts respon
dent
Cendena demanding payment of the value of the lost merchandise plus damages and attorney’s fees.
Respondent
however denied that he was a common carrier and argued that he could not be held liable for the lost
goods since it
was due to force majeure.
The trial court found respondent Cendena to be a common carrier and held him liable. The
Court of Appelas, however, reversed the decision of the trial court and held that Cendena is not
a common carrier
because he just entered into a “sideline” only in d
elivering the goods. Hence, this Petition for Review.
ISSUES:
(1)
WON respondent Cenmdena may be properly characterized as a common carrier.
(2)
WON
the absence of a certificate of public convenience concludes that respondent is not a common carrier
.
HELD:
(1) YES
. According to Art. 1732 of the Civil Code,
“
Common carriers are persons, corporations, firms or Associations
engaged in the businedd of carrying or transporting passengers or goods or both, by land, water,
or air for compensation, offering the
ir services to the public”
. The said 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 as and
ANCILLIARY or “sideline” activity. Nor does the article mak
e any distinction between a carrier offering its services on a
REGULAR BASISor on an
OCCASSIONAL BASIS
.
The meaning of “public service” under the Public Service Act was used to supplement the concept of
“common carrier” which inludes “xxx every person that now or hereafter may own, operate, manage,
or control in the Philippines, for hire or compensation,
with general pr limited clientele, whether permanent, occasional, or accidental, and done for
general business purposes
xxx”. It appears that respondent is properly characterized as a common carrier even though he merely
“back
-
hauled” goods for other merchants from Manila to Pangasinan, althoughsuch was done on an occasional
manner and even though respondent’s principal occupation was not the carriage of goods for others.
(2)
NO
. The Court ruled that 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 mo
ment 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.
Ruling
: The hijacking cannot be considered an
exception to the liability of the common carrier because Article 1734 is
a closed list. However, due to the grave or irresistible force by the thieves, the occurrence of the loss
must reasonably
be regarded as quite beyond the control of the common carri
er and properly regarded as a fortuitous event. Hence,
Cendena was not held liable for the loss of the merchandise.
[G.R. No. 186312. June 29, 2010.]

SPOUSES DANTE CRUZ and LEONORA CRUZ,

Petitioners,
vs
. SUN HOLIDAYS, INC.respondent
.

21. Zulueta Vs. Pan American

Facts:
 Zulueta and his family were passengers of Pan American World Airways travelling from Honolulu
to Manila.
 In one stopover, they were advised that they could disembark for about 30 minutes.
 However, Zulueta almost missed the flight because he came late (due to the defective
announcing system).
 He was asked to open his bags but the employees of the airlines found nothing. Later on, he
was asked to go out of the plane.
 He was left at Wake Island and was able to return to the Philippines 2 days after.
 He filed an action for damages.

Issue: WON there must be an award for damages. YES

Held:

Award for exemplary damages:

It is urged by the defendant that exemplary damages are not recoverable in quasi-delicts, pursuant to
Article 2231 of our Civil Code, except when the defendant has acted with "gross negligence," and that
there is no specific finding that it had so acted. It is obvious, however, that in off-loading plaintiff at
Wake Island, under the circumstances heretofore adverted to, defendant's agents had acted with
malice aforethought and evident bad faith. If "gross negligence" warrants the award of exemplary
damages, with more reason is its imposition justified when the act performed is deliberate, malicious
and tainted with bad faith.

Thus, in Lopez v. PANAM, We held:

The rationale behind exemplary or corrective damages is, as the name implies, to provide an
example or correction for public good. Defendant having breached its contracts in bad faith, the court,
as stated earlier, may award exemplary damages in addition to moral damages (Articles 2229, 2232,
New Civil Code.)

Award for moral damages:

In fact, Article 2217 of the Civil Code of the Philippines explicitly provides that "(t)hough incapable of
pecuniary computation, moral damages may be recovered if they are the proximate result of the
defendant's wrongful act or omission." Hence, "(n)o proof pecuniary loss necessary" — pursuant to
Article 2216 of the same Code — "in order that moral ... damages may be adjudicated." And "(t)he
assessment of such damages ... is left to the discretion of the court" - said article adds - "according to
the circumstances of each case."

From the 1972 case:

The records amply establish plaintiffs' right to recover both moral and exemplary damages. Indeed,
the rude and rough reception plaintiff received at the hands of Sitton or Captain Zentner when the
latter met him at the ramp ("what in the hell do you think you are? Get on that plane"); the menacing
attitude of Zentner or Sitton and the supercilious manner in which he had asked plaintiff to open his
bags ("open your bag," and when told that a fourth bag was missing, "I don't give a damn"); the
abusive language and highly scornful reference to plaintiffs as monkeys by one of PANAM's
employees (who turning to Mrs. Zulueta and Miss Zulueta remarked, "will you pull these three
monkeys out of here?"); the unfriendly attitude, the ugly stares and unkind remarks to which plaintiffs
were subjected, and their being cordoned by men in uniform as if they were criminals, while plaintiff
was arguing with Sitton; the airline officials' refusal to allow plaintiff to board the plane on the pretext
that he was hiding a bomb in his luggage and their arbitrary and high-handed decision to leave him in
Wake; Mrs. Zulueta's having suffered a nervous breakdown for which she was hospitalized as a result
of the embarrassment, insults and humiliations to which plaintiffs were exposed by the conduct of
PANAM's employees; Miss Zulueta's having suffered shame, humiliation and embarrassment for the
treatment received by her parents at the airport — all these justify an award for moral damages
resulting from mental anguish, serious anxiety, wounded feelings, moral shock, and social humiliation
thereby suffered by plaintiffs

22. HON. GEMILIANO C. LOPEZ, JR., in his capacity as City Mayor of Manila, petitioner,
vs. THE CIVIL SERVICE COMMISSION, HON. DANILO R. LACUNA, in his capacity as
Vice-Mayor and Presiding Officer of the City Council of Manila, and THE CITY COUNCIL
OF MANILA, respondents

G.R. No. 87119 – April 16, 1991

Facts: On September 13, 1988, the Vice-Mayor of Manila and Presiding Officer of the City
Council of Manila, the Hon. Danilo R. Lacuna, submitted to the Civil Service Commission,
through the Regional Director of the National Capital Region, the appointments of
nineteen officers and employees in the Executive Staff of the Office of the Presiding
Officer, City Council of Manila, pursuant to the provisions of Section 15, of said Republic
Act No. 409, as amended, which reads:

Sec. 15. The Board shall appoint and the Vice Mayor shall sign all appointments of the
other employees of the Board.
The City Budget Officer of Manila later sought from the Personnel Bureau of the Mayor’s
office “comment and/or recommendation” on whether the payroll of the newly appointed
employees of the City Council may be paid on the basis of appointments signed by the
Vice-Mayor.2 The Personnel Bureau then forwarded the query to the City Legal Officer
who, in a 3rd endorsement dated September 19, 1988,3 rendered an opinion that the
proper appointing officer is the City Mayor and not the City Council. This opinion was
transmitted by the Secretary to the City Mayor to the Commission.

On February 1, 1989, the Commission promulgated Resolution No. 89-075, and held that
contrary to the opinion of the City Legal Officer, it is the City Council to which the
appointing power is vested. The dispositive portion thereof is as follows:

WHEREFORE, foregoing premises considered, the Commission resolved to rule, as it

hereby rules that the proper appointing authority of the officers and employees of the City
Council of Manila is the City Council and the signatory of individual appointments thus
issued is the City Vice-Mayor of Manila.

As the petitioner contends, Section 15 of Republic Act No. 409 as amended has
supposedly been repealed by Republic Act No. 5185, specifically, Section 4 thereof, which
we quote, in part:

The City Assessor, City Agriculturist, City Chief of Police and City Chief of Fire
Department and other heads of offices entirely paid out of city funds and their respective
assistants or deputies shall, subject to civil service law, rules and regulations, be
appointed by the City Mayor: Provided, however, That this section shall not apply to
Judges, Auditors, Fiscals, City Superintendents of Schools, Supervisors, Principals, City
Treasurers, City Health Officers and City Engineers.

All other employees, except teachers, paid out of provincial, city or municipal general
funds, road and bridge funds, school funds, and other local funds, shall, subject to civil
service law, rules and regulations, be appointed by the Provincial Governor, City or
Municipal Mayor upon recommendation of the office head concerned. . . .

and by Batas Blg. 337, we likewise quote:

Sec. 171. Chief Executive; Compensation, Powers, and Duties. —

(2) The city mayor shall:
(h) Appoint, in accordance with civil service law, rules and regulations, all officers and
employees of the city, whose appointments are not otherwise provided in this Code;

Issue: The only question in this petition, denominated as a “direct appeal under Article
VIII, Section 5 (2) (e), of the Constitution and Section 9(3), of Batas Blg. 129,” is whether
the City Council of Manila still has the power to appoint Council officers and employees
under Republic Act No. 409, otherwise known as the Charter of the City of Manila, or
whether the power is now vested with the City Mayor pursuant to Republic Act No. 5185,
the Decentralization Law, and Batas Blg. 337, the Local Government Code. The facts are
as follows:

Ruling: There is no doubt that Republic Act No. 409, which provides specifically for the
organization of the Government of the City of Manila, is a special law, and whereas
Republic Act No. 5185 and Batas Blg. 337, which apply to municipal governments in
general, are general laws. As the Solicitor General points out, and we agree with him, it is
a canon of statutory construction that a special law prevails over a general law —
regardless of their dates of passage — and the special is to be considered as remaining
an exception to the general.

23. Case Digest for TRANSPORTATION LAW:Japan Airlines V. Asuncion (G.R No.
161730, January 28,2005) 449 SCRA 544
FACTS:
This petition for review seeks to reverse and set aside the October 9, 2002 decision of the Court of Appeals and its January 12, 2004 resolution, which
affirmed in toto the June 10, 1997 decision of the Regional Trial Court of Makati City, Branch 61 in Civil Case No. 92-3635.

On March 27, 1992, respondents Michael and Jeanette Asuncion left Manila on board Japan Airlines’ (JAL) Flight 742 bound for Los Angeles. Their itinerary
included a stop-over in Narita and an overnight stay at Hotel Nikko Narita. Upon arrival at Narita, Mrs. Noriko Etou-Higuchi of JAL endorsed their
applications for shore pass and directed them to the Japanese immigration official. A shore pass is required of a foreigner aboard a vessel or aircraft who
desires to stay in the neighborhood of the port of call for not more than 72 hours.

During their interview, the Japanese immigration official noted that Michael appeared shorter than his height as indicated in his passport. Because of this
inconsistency, respondents were denied shore pass entries and were brought instead to the Narita Airport Rest House where they were billeted overnight.

Mr. Atsushi Takemoto of the International Service Center (ISC), the agency tasked by Japan’s Immigration Department to handle passengers who were
denied shore pass entries, brought respondents to the Narita Airport Rest House where they stayed overnight until their departure the following day for Los
Angeles. Respondents were charged US$400.00 each for their accommodation, security service and meals.

On December 12, 1992, respondents filed a complaint for damages claiming that JAL did not fully apprise them of their travel requirements and that they
were rudely and forcibly detained at Narita Airport.

Issue: Whether or not JAL is liable of breach of contract of carriage.

Side Issues:
· Whether or not JAL is liable for moral, exemplary damages,
· Whether or not the plaintiff is liable for attorney’s fee and cost of suit incurred (JAL counterclaim)

Ruling:
The court finds that JAL did not breach its contract of carriage with respondents. It may be true that JAL has the duty to inspect whether its passengers have
the necessary travel documents, however, such duty does not extend to checking the veracity of every entry in these documents. JAL could not vouch for
the authenticity of a passport and the correctness of the entries therein. The power to admit or not an alien into the country is a sovereign act which cannot
be interfered with even by JAL. This is not within the ambit of the contract of carriage entered into by JAL and herein respondents. As such, JAL should not
be faulted for the denial of respondents’ shore pass applications.

In the Respondents claim that petitioner breached its contract of carriage when it failed to explain to the immigration authorities that they had overnight
vouchers at the Hotel Nikko Narita. They imputed that JAL did not exhaust all means to prevent the denial of their shore pass entry applications. JAL or any
of its representatives have no authority to interfere with or influence the immigration authorities. The most that could be expected of JAL is to endorse
respondents’ applications, which Mrs. Higuchi did immediately upon their arrival in Narita.

Moral damages may be recovered in cases where one willfully causes injury to property, or in cases of breach of contract where the other party acts
fraudulently or in bad faith. Exemplary damages are imposed by way of example or correction for the public good, when the party to a contract acts in
wanton, fraudulent, oppressive or malevolent manner. Attorney’s fees are allowed when exemplary damages are awarded and when the party to a suit is
compelled to incur expenses to protect his interest.[17] There being no breach of contract nor proof that JAL acted in wanton, fraudulent or malevolent
manner, there is no basis for the award of any form of damages.

Neither should JAL be held liable to reimburse respondents the amount of US$800.00. It has been sufficiently proven that the amount pertained to ISC, an
agency separate and distinct from JAL, in payment for the accommodations provided to respondents. The payments did not in any manner accrue to the
benefit of JAL.

However, we find that the Court of Appeals correctly dismissed JAL’s counterclaim for litigation expenses, exemplary damages and attorney’s fees. The
action was filed by respondents in utmost good faith and not manifestly frivolous. Respondents honestly believed that JAL breached its contract. A person’s
right to litigate should not be penalized by holding him liable for damages. This is especially true when the filing of the case is to enforce what he believes to
be his rightful claim against another although found to be erroneous.[

WHEREFORE, in view of the foregoing, the instant petition is PARTLY GRANTED. The October 9, 2002 decision of the Court of Appeals and its January 12,
2004 resolution in CA-G.R. CV No. 57440, are REVERSED and SET ASIDE insofar as the finding of breach on the part of petitioner and the award of damages,
attorney’s fees and costs of the suit in favor of respondents is concerned. Accordingly, there being no breach of contract on the part of petitioner, the
award of actual, moral and exemplary damages, as well as attorney’s fees and costs of the suit in favor of respondents Michael and Jeanette Asuncion, is
DELETED for lack of basis. However, the dismissal for lack of merit of petitioner’s counterclaim for litigation expenses, exemplary damages and attorney’s
fees, is SUSTAINED. No pronouncement as to costs.

24
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DIVISION

[ GR No. 170141, Apr 22, 2008 ]

JAPAN AIRLINES v. JESUS SIMANGAN +

DECISION
575 Phil. 359

REYES, R.T., J.:

WHEN an airline issues a ticket to a passenger confirmed on a particular flight on a
certain date, a contract of carriage arises, and the passenger has every right to expect
that he would fly on that flight and on that date. If he does not, then the carrier opens
itself to a suit for breach of contract of carriage.[1]

The power to admit or not an alien into the country is a sovereign act which cannot be
interfered with even by Japan Airlines (JAL).[2]

In this petition for review on certiorari,[3] petitioner JAL appeals the: (1)
Decision[4] dated May 31, 2005 of the Court of Appeals (CA) ordering it to pay
respondent Jesus Simangan moral and exemplary damages; and (2) Resolution[5] of the
same court dated September 28, 2005 denying JAL's motion for reconsideration.

The Facts

In 1991, respondent Jesus Simangan decided to donate a kidney to his ailing cousin,
Loreto Simangan, in UCLA School of Medicine in Los Angeles, California, U.S.A. Upon
request of UCLA, respondent undertook a series of laboratory tests at the National
Kidney Institute in Quezon City to verify whether his blood and tissue type are
compatible with Loreto's.[6] Fortunately, said tests proved that respondent's blood and
tissue type were well-matched with Loreto's.[7]

Respondent needed to go to the United States to complete his preliminary work-up and
donation surgery. Hence, to facilitate respondent's travel to the United States, UCLA
wrote a letter to the American Consulate in Manila to arrange for his visa. In due time,
respondent was issued an emergency U.S. visa by the American Embassy in Manila.[8]

Having obtained an emergency U.S. visa, respondent purchased a round trip plane
ticket from petitioner JAL for US$1,485.00 and was issued the corresponding boarding
pass.[9] He was scheduled to a particular flight bound for Los Angeles, California,
U.S.A. via Narita, Japan.[10]
On July 29, 1992, the date of his flight, respondent went to Ninoy Aquino International
Airport in the company of several relatives and friends.[11] He was allowed to check-in
at JAL's counter.[12] His plane ticket, boarding pass, travel authority and personal
articles were subjected to rigid immigration and security routines.[13] After passing
through said immigration and security procedures, respondent was allowed by JAL to
enter its airplane.[14]

While inside the airplane, JAL's airline crew suspected respondent of carrying a
falsified travel document and imputed that he would only use the trip to the United
States as a pretext to stay and work in Japan.[15] The stewardess asked respondent to
show his travel documents. Shortly after, the stewardess along with a Japanese and a
Filipino haughtily ordered him to stand up and leave the plane.[16] Respondent
protested, explaining that he was issued a U.S. visa. Just to allow him to board the
plane, he pleaded with JAL to closely monitor his movements when the aircraft stops
over in Narita.[17] His pleas were ignored. He was then constrained to go out of the
plane.[18] In a nutshell, respondent was bumped off the flight.

Respondent went to JAL's ground office and waited there for three hours. Meanwhile,
the plane took off and he was left behind.[19] Afterwards, he was informed that his
travel documents were, indeed, in order.[20] Respondent was refunded the cost of his
plane ticket less the sum of US$500.00 which was deducted by JAL.[21] Subsequently,
respondent's U.S. visa was cancelled.[22]

Displeased by the turn of events, respondent filed an action for damages against JAL
with the Regional Trial Court (RTC) in Valenzuela City, docketed as Civil Case No.
4195-V-93. He claimed he was not able to donate his kidney to Loreto; and that he
suffered terrible embarrassment and mental anguish.[23] He prayed that he be awarded
P3 million as moral damages, P1.5 million as exemplary damages and P500,000.00 as
attorney's fees.[24]

JAL denied the material allegations of the complaint. It argued, among others, that its
failure to allow respondent to fly on his scheduled departure was due to "a need for his
travel documents to be authenticated by the United States Embassy"[25] because no one
from JAL's airport staff had encountered a parole visa before.[26] It posited that the
authentication required additional time; that respondent was advised to take the flight
the following day, July 30, 1992. JAL alleged that respondent agreed to be rebooked on
July 30, 1992.[27]

JAL also lodged a counterclaim anchored on respondent's alleged wrongful institution

of the complaint. It prayed for litigation expenses, exemplary damages and attorney's
fees.[28]

On September 21, 2000, the RTC presided by Judge Floro P. Alejo rendered its
decision in favor of respondent (plaintiff), disposing as follows:
WHEREFORE, judgment is hereby rendered ordering the defendant to pay the plaintiff
the amount of P1,000,000.00 as moral damages, the amount of P500,000.00 as
exemplary damages and the amount of P250,000.00 as attorney's fees, plus the cost of
suit.[29]

The RTC explained:

In summarily and insolently ordering the plaintiff to disembark while the latter was
already settled in his assigned seat, the defendant violated the contract of carriage; that
when the plaintiff was ordered out of the plane under the pretext that the genuineness
of his travel documents would be verified it had caused him embarrassment and
besmirched reputation; and that when the plaintiff was finally not allowed to take the
flight, he suffered more wounded feelings and social humiliation for which the plaintiff
was asking to be awarded moral and exemplary damages as well as attorney's fees.

The reason given by the defendant that what prompted them to investigate the
genuineness of the travel documents of the plaintiff was that the plaintiff was not then
carrying a regular visa but just a letter does not appear satisfactory. The defendant is
engaged in transporting passengers by plane from country to country and is therefore
conversant with the travel documents. The defendant should not be allowed to
pretend, to the prejudice of the plaintiff not to know that the travel documents of the
plaintiff are valid documents to allow him entry in the United States.

The foregoing act of the defendant in ordering the plaintiff to deplane while already
settled in his assigned seat clearly demonstrated that the defendant breached its
contract of carriage with the plaintiff as passenger in bad faith and as such the plaintiff
is entitled to moral and exemplary damages as well as to an award of attorney's fees.[30]

Disagreeing with the RTC judgment, JAL appealed to the CA contending that it is not
guilty of breach of contract of carriage, hence, not liable for damages.[31] It posited that
it is the one entitled to recover on its counterclaim.[32]

CA Ruling

In a Decision[33] dated May 31, 2005, the CA affirmed the decision of the RTC with
modification in that it lowered the amount of moral and exemplary damages and
deleted the award of attorney's fees. The fallo of the CA decision reads:

WHEREFORE, the appealed Decision is AFFIRMED with MODIFICATION. Appellant

JAPAN AIR LINES is ordered to pay appellee JESUS SIMANGAN the reduced sums, as
follows: Five Hundred Thousand Pesos (P500,000.00) as moral damages, and Two
Hundred Fifty Thousand Pesos (P250,000.00) as exemplary damages. The award of
attorney's fees is hereby DELETED.[34]

The CA elucidated that since JAL issued to respondent a round trip plane ticket for a
lawful consideration, "there arose a perfected contract between them."[35] It found that
respondent was "haughtily ejected"[36] by JAL and that "he was certainly embarrassed
and humiliated"[37] when, in the presence of other passengers, JAL's airline staff
"shouted at him to stand up and arrogantly asked him to produce his travel papers,
without the least courtesy every human being is entitled to";[38] and that "he was
compelled to deplane on the grounds that his papers were fake."[39]

The CA ratiocinated:

While the protection of passengers must take precedence over convenience, the
implementation of security measures must be attended by basic courtesies.

In fact, breach of the contract of carriage creates against the carrier a presumption of
liability, by a simple proof of injury, relieving the injured passenger of the duty to
establish the fault of the carrier or of his employees; and placing on the carrier the
burden to prove that it was due to an unforeseen event or to force majeure.

That appellee possessed bogus travel documents and that he might stay illegally in
Japan are allegations without substantiation. Also, appellant's attempt to rebook
appellee the following day was too late and did not relieve it from liability. The damage
had been done.Besides, its belated theory of novation, i.e., that appellant's original
obligation to carry appellee to Narita and Los Angeles on July 29, 1992 was
extinguished by novation when appellant and appellant agreed that appellee will
instead take appellant's flight to Narita on the following day, July 30, 1992, deserves
little attention. It is inappropriate at bar. Questions not taken up during the trial
cannot be raised for the first time on appeal.[40] (Underscoring ours and citations were
omitted)

Citing Ortigas, Jr. v. Lufthansa German Airlines,[41] the CA declared that "(i)n
contracts of common carriage, inattention and lack of care on the part of the carrier
resulting in the failure of the passenger to be accommodated in the class contracted for
amounts to bad faith or fraud which entitles the passengers to the award of moral
damages in accordance with Article 2220 of the Civil Code."[42]

Nevertheless, the CA modified the damages awarded by the RTC. It explained:

Fundamental in the law on damages is that one injured by a breach of a contract, or by

a wrongful or negligent act or omission shall have a fair and just compensation
commensurate to the loss sustained as consequence of the defendant's act. Being
discretionary on the court, the amount, however, should not be palpably and
scandalously excessive.

Here, the trial court's award of P1,000,000.00 as moral damages appears to be

overblown. No other proof of appellee's social standing, profession, financial
capabilities was presented except that he was single and a businessman. To Us, the
sum of 500,000.00 is just and fair. For, moral damages are emphatically not intended
to enrich a complainant at the expense of the defendant. They are awarded only to
enable the injured party to obtain means, diversion or amusements that will serve to
alleviate the moral suffering he has undergone, by reason of the defendant's culpable
action.

Moreover, the grant of P500,000.00 as exemplary damages needs to be reduced to a

reasonable level. The award of exemplary damages is designed to permit the courts to
mould behavior that has socially deleterious consequences and its imposition is
required by public policy to suppress the wanton acts of the offender. Hence, the sum
of P250,000.00 is adequate under the circumstances.

The award of P250,000.00 as attorney's fees lacks factual basis. Appellee was definitely
compelled to litigate in protecting his rights and in seeking relief from appellant's
misdeeds. Yet, the record is devoid of evidence to show the cost of the services of his
counsel and/or the actual expenses incurred in prosecuting his action.[43] (Citations
were omitted)

When JAL's motion for reconsideration was denied, it resorted to the petition at bar.

Issues

JAL poses the following issues -

I.

WHETHER OR NOT THE COURT OF APPEALS ERRED IN RULING THAT

RESPONDENT WAS ENTITLED TO MORAL DAMAGES, CONSIDERING THAT:

A. JAL WAS NOT GUILTY OF BREACH OF CONTRACT.

B. MORAL DAMAGES MAY BE AWARDED IN BREACH OF CONTRACT CASES

ONLY WHEN THE BREACH IS ATTENDED BY FRAUD OR BAD
FAITH. ASSUMING ARGUENDO THAT JAL WAS GUILTY OF BREACH, JAL DID
NOT ACT FRAUDULENTLY OR IN BAD FAITH AS TO ENTITLE RESPONDENT TO
MORAL DAMAGES.

C. THE LAW DISTINGUISHES A CONTRACTUAL BREACH EFFECTED IN GOOD

FAITH FROM ONE ATTENDED BY BAD FAITH.

II.

WHETHER OR NOT THE COURT OF APPEALS ERRED IN RULING THAT

RESPONDENT WAS ENTITLED TO EXEMPLARY DAMAGES CONSIDERING THAT:
A. EXEMPLARY DAMAGES ARE NOT RECOVERABLE IN BREACH OF CONTRACT
OF CARRIAGE UNLESS THE CARRIER IS GUILTY OF WANTON, FRAUDULENT,
RECKLESS, OPPRESSIVE OR MALEVOLENT CONDUCT.

B. ASSUMING ARGUENDO THAT JAL WAS GUILTY OF BREACH, JAL DID NOT
ACT IN A WANTON FRAUDULENT, RECKLESS, OPPRESSIVE OR MALEVOLENT
MANNER AS TO ENTITLE RESPONDENT TO EXEMPLARY DAMAGES.

III.

ASSUMING ARGUENDO THAT RESPONDENT WAS ENTITLED TO AN AWARD OF

DAMAGES, WHETHER OR NOT THE COURT OF APPEALS AWARD OF P750,000
IN DAMAGES WAS EXCESSIVE AND UNPRECEDENTED.

IV.

WHETHER OR NOT THE COURT OF APPEALS ERRED IN NOT FINDING FOR JAL
ON ITS COUNTERCLAIM.[44] (Underscoring Ours)

Basically, there are three (3) issues to resolve here: (1) whether or not JAL is guilty of
contract of carriage; (2) whether or not respondent is entitled to moral and exemplary
damages; and (3) whether or not JAL is entitled to its counterclaim for damages.

Our Ruling

This Court is not a trier of facts.

Chiefly, the issues are factual. The RTC findings of facts were affirmed by the CA. The
CA also gave its nod to the reasoning of the RTC except as to the awards of damages,
which were reduced, and that of attorney's fees, which was deleted.

We are not a trier of facts. We generally rely upon, and are bound by, the conclusions
on this matter of the lower courts, which are better equipped and have better
opportunity to assess the evidence first-hand, including the testimony of the
witnesses.[45]

We have repeatedly held that the findings of fact of the CA are final and conclusive and
cannot be reviewed on appeal to the Supreme Court provided they are based on
substantial evidence.[46] We have no jurisdiction, as a rule, to reverse their
findings.[47] Among the exceptions to this rule are: (a) when the conclusion is a finding
grounded entirely on speculations, surmises or conjectures; (b) when the inference
made is manifestly mistaken, absurd or impossible; (c) where there is grave abuse of
discretion; (d) when the judgment is based on a misapprehension of facts; (e) when the
findings of facts are conflicting; (f) when the CA, in making its findings, went beyond
the issues of the case and the same is contrary to the admissions of both appellant and
appellee.[48]

The said exceptions, which are being invoked by JAL, are not found here. There is no
indication that the findings of the CA are contrary to the evidence on record or that
vital testimonies of JAL's witnesses were disregarded. Neither did the CA commit
misapprehension of facts nor did it fail to consider relevant facts. Likewise, there was
no grave abuse of discretion in the appreciation of facts or mistaken and absurd
inferences.

We thus sustain the coherent facts as established by the courts below, there being no
sufficient showing that the said courts committed reversible error in reaching their
conclusions.

JAL is guilty of breach of

contract of carriage.

That respondent purchased a round trip plane ticket from JAL and was issued the
corresponding boarding pass is uncontroverted.[49] His plane ticket, boarding pass,
travel authority and personal articles were subjected to rigid immigration and security
procedure.[50] After passing through said immigration and security procedure, he was
allowed by JAL to enter its airplane to fly to Los Angeles, California, U.S.A. via Narita,
Japan.[51] Concisely, there was a contract of carriage between JAL and respondent.

Nevertheless, JAL made respondent get off the plane on his scheduled departure on
July 29, 1992. He was not allowed by JAL to fly. JAL thus failed to comply with its
obligation under the contract of carriage.

JAL justifies its action by arguing that there was "a need to verify the authenticity of
respondent's travel document."[52] It alleged that no one from its airport staff had
encountered a parole visa before.[53] It further contended that respondent agreed to fly
the next day so that it could first verify his travel document, hence, there was
novation.[54] It maintained that it was not guilty of breach of contract of carriage as
respondent was not able to travel to the United States due to his own voluntary
desistance.[55]

We cannot agree. JAL did not allow respondent to fly. It informed respondent that
there was a need to first check the authenticity of his travel documents with the U.S.
Embassy.[56] As admitted by JAL, "the flight could not wait for Mr. Simangan because
it was ready to depart."[57]

Since JAL definitely declared that the flight could not wait for respondent, it gave
respondent no choice but to be left behind. The latter was unceremoniously bumped
off despite his protestations and valid travel documents and notwithstanding his
contract of carriage with JAL. Damage had already been done when respondent was
offered to fly the next day on July 30, 1992. Said offer did not cure JAL's default.
Considering that respondent was forced to get out of the plane and left behind against
his will, he could not have freely consented to be rebooked the next day. In short, he
did not agree to the alleged novation. Since novation implies a waiver of the right the
creditor had before the novation, such waiver must be express.[58] It cannot be
supposed, without clear proof, that respondent had willingly done away with his right
to fly on July 29, 1992.

Moreover, the reason behind the bumping off incident, as found by the RTC and CA,
was that JAL personnel imputed that respondent would only use the trip to the United
States as a pretext to stay and work in Japan.[59]

Apart from the fact that respondent's plane ticket, boarding pass, travel authority and
personal articles already passed the rigid immigration and security routines,[60] JAL, as
a common carrier, ought to know the kind of valid travel documents respondent
carried. As provided in Article 1755 of the New Civil Code: "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."[61] Thus, We find untenable JAL's defense of "verification of
respondent's documents" in its breach of contract of carriage.

It bears repeating that the power to admit or not an alien into the country is a sovereign
act which cannot be interfered with even by JAL.[62]

In an action for breach of contract of carriage, all that is required of plaintiff is to prove
the existence of such contract and its non-performance by the carrier through the
latter's failure to carry the passenger safely to his destination.[63] Respondent has
complied with these twin requisites.

Respondent is entitled to moral and exemplary damages and attorney's

fees plus legal
interest.

With reference to moral damages, JAL alleged that they are not recoverable in
actions ex contractu except only when the breach is attended by fraud or bad faith. It is
contended that it did not act fraudulently or in bad faith towards respondent, hence, it
may not be held liable for moral damages.

As a general rule, moral damages are not recoverable in actions for damages predicated
on a breach of contract for it is not one of the items enumerated under Article 2219 of
the Civil Code.[64] As an exception, such damages are recoverable: (1) in cases in which
the mishap results in the death of a passenger, as provided in Article 1764, in relation
to Article 2206(3) of the Civil Code; and (2) in the cases in which the carrier is guilty of
fraud or bad faith, as provided in Article 2220.[65]

The acts committed by JAL against respondent amounts to bad faith. As found by the
RTC, JAL breached its contract of carriage with respondent in bad faith. JAL
personnel summarily and insolently ordered respondent to disembark while the latter
was already settled in his assigned seat. He was ordered out of the plane under the
alleged reason that the genuineness of his travel documents should be verified.

These findings of facts were upheld by the CA, to wit:

x x x he was haughtily ejected by appellant. He was certainly embarrassed and

humiliated when, in the presence of other passengers, the appellant's airline staff
shouted at him to stand up and arrogantly asked him to produce his travel papers,
without the least courtesy every human being is entitled to. Then, he was compelled to
deplane on the grounds that his papers were fake. His protestation of having been
issued a U.S. visa coupled with his plea to appellant to closely monitor his movements
when the aircraft stops over in Narita, were ignored. Worse, he was made to wait for
many hours at the office of appellant only to be told later that he has valid travel
documents.[66] (Underscoring ours)

Clearly, JAL is liable for moral damages. It is firmly settled that moral damages are
recoverable in suits predicated on breach of a contract of carriage where it is proved
that the carrier was guilty of fraud or bad faith, as in this case. Inattention to and lack
of care for the interests of its passengers who are entitled to its utmost consideration,
particularly as to their convenience, amount to bad faith which entitles the passenger to
an award of moral damages. What the law considers as bad faith which may furnish
the ground for an award of moral damages would be bad faith in securing the contract
and in the execution thereof, as well as in the enforcement of its terms, or any other
kind of deceit.[67]

JAL is also liable for exemplary damages as its above-mentioned acts constitute
wanton, oppressive and malevolent acts against respondent. Exemplary damages,
which are awarded by way of example or correction for the public good, may be
recovered in contractual obligations, as in this case, if defendant acted in wanton,
fraudulent, reckless, oppressive, or malevolent manner.[68]

Exemplary damages are designed by our civil law to permit the courts to reshape
behaviour that is socially deleterious in its consequence by creating negative incentives
or deterrents against such behaviour. In requiring compliance with the standard of
extraordinary diligence, a standard which is, in fact, that of the highest possible degree
of diligence, from common carriers and in creating a presumption of negligence against
them, the law seeks to compel them to control their employees, to tame their reckless
instincts and to force them to take adequate care of human beings and their
property.[69]

Neglect or malfeasance of the carrier's employees could give ground for an action for
damages. Passengers have a right to be treated by the carrier's employees with
kindness, respect, courtesy and due consideration and are entitled to be protected
against personal misconduct, injurious language, indignities and abuses from such
employees.[70]
The assessment of P500,000.00 as moral damages and P100,000.00 as exemplary
damages in respondent's favor is, in Our view, reasonable and realistic. This award is
reasonably sufficient to indemnify him for the humiliation and embarrassment he
suffered. This also serves as an example to discourage the repetition of similar
oppressive acts.

With respect to attorney's fees, they may be awarded when defendant's act or omission
has compelled plaintiff to litigate with third persons or to incur expenses to protect his
interest.[71] The Court, in Construction Development Corporation of the Philippines v.
Estrella,[72] citing Traders Royal Bank Employees Union-Independent v. National
Labor Relations Commission,[73] elucidated thus:

There are two commonly accepted concepts of attorney's fees, the so-called ordinary
and extraordinary. In its ordinary concept, an attorney's fee is the reasonable
compensation paid to a lawyer by his client for the legal services he has rendered to the
latter. The basis of this compensation is the fact of his employment by and his
agreement with the client.

In its extraordinary concept, an attorney's fee is an indemnity for damages

ordered by the court to be paid by the losing party in a litigation. The basis
of this is any of the cases provided by law where such award can be made, such as those
authorized in Article 2208, Civil Code, and is payable not to the lawyer but to the
client, unless they have agreed that the award shall pertain to the lawyer as
additional compensation or as part thereof.[74]

It was therefore erroneous for the CA to delete the award of attorney's fees on the
ground that the record is devoid of evidence to show the cost of the services of
respondent's counsel. The amount is actually discretionary upon the Court so long as it
passes the test of reasonableness. They may be recovered as actual or compensatory
damages when exemplary damages are awarded and whenever the court deems it just
and equitable,[75] as in this case.

Considering the factual backdrop of this case, attorney's fees in the amount of
P200,000.00 is reasonably modest.

The above liabilities of JAL in the total amount of P800,000.00 earn legal interest
pursuant to the Court's ruling in Construction Development Corporation of the
Philippines v. Estrella,[76] citing Eastern Shipping Lines, Inc. v. Court of Appeals,[77] to
wit:

Regarding the imposition of legal interest at the rate of 6% from the time of the filing of
the complaint, we held in Eastern Shipping Lines, Inc. v. Court of Appeals, that when
an obligation, regardless of its source, i.e., law, contracts, quasi-contracts, delicts or
quasi-delicts is breached, the contravenor can be held liable for payment of interest in
the concept of actual and compensatory damages, subject to the following rules, to wit -
1. When the obligation is breached, and it consists in the payment of a sum of money,
i.e., a loan or forbearance of money, the interest due should be that which may have
been stipulated in writing. Furthermore, the interest due shall itself earn legal interest
from the time it is judicially demanded. In the absence of stipulation, the rate of
interest shall be 12% per annum to be computed from default, i.e., from judicial or
extrajudicial demand under and subject to the provisions of Article 1169 of the Civil
Code.

2. When an obligation, not constituting a loan or forbearance of money, is breached, an

interest on the amount of damages awarded may be imposed at the discretion of the
court at the rate of 6% per annum. No interest, however, shall be adjudged on
unliquidated claims or damages except when or until the demand can be established
with reasonable certainty. Accordingly, where the demand is established with
reasonable certainty, the interest shall begin to run from the time the claim is made
judicially or extrajudicially (Art. 1169, Civil Code) but when such certainty cannot be so
reasonably established at the time the demand is made, the interest shall begin to
run only from the date the judgment of the court is made (at which time
the quantification of damages may be deemed to have been reasonably
ascertained). The actual base for the computation of legal interest shall, in any case,
be on the amount finally adjudged.

3. When the judgment of the court awarding a sum of money becomes final
and executory, the rate of legal interest, whether the case falls under
paragraph 1 or paragraph 2, above, shall be 12% per annum from such
finality until its satisfaction, this interim period being deemed to be by
then an equivalent to a forbearance of credit.[78] (Emphasis supplied and
citations omitted)

Accordingly, in addition to the said total amount of P800,000.00, JAL is liable to pay
respondent legal interest. Pursuant to the above ruling of the Court, the legal interest
is 6% and it shall be reckoned from September 21, 2000 when the RTC rendered its
judgment. From the time this Decision becomes final and executory, the interest rate
shall be 12% until its satisfaction.

JAL is not entitled to its counterclaim for damages.

The counterclaim of JAL in its Answer[79] is a compulsory counterclaim for damages

and attorney's fees arising from the filing of the complaint. There is no mention of any
other counter claims.

This compulsory counterclaim of JAL arising from the filing of the complaint may not
be granted inasmuch as the complaint against it is obviously not malicious or
unfounded. It was filed by respondent precisely to claim his right to damages against
JAL. Well-settled is the rule that the
commencement of an action does not per se make the action wrongful and subject the
action to damages, for the law could not have meant to impose a penalty on the right to
litigate.[80]
We reiterate case law that if damages result from a party's exercise of a right, it
is damnum absque injuria.[81] Lawful acts give rise to no injury. Walang
perhuwisyong maaring idulot ang paggamit sa sariling karapatan.

During the trial, however, JAL presented a witness who testified that JAL suffered
further damages. Allegedly, respondent caused the publications of his subject
complaint against JAL in the newspaper for which JAL suffered damages.[82]

Although these additional damages allegedly suffered by JAL were not incorporated in
its Answer as they arose subsequent to its filing, JAL's witness was able to testify on the
same before the RTC.[83] Hence, although these issues were not raised by the
pleadings, they shall be treated in all respects as if they had been raised in the
pleadings.

As provided in Section 5, Rule 10 of the Rules of Court, "(w)hen issues not raised by the
pleadings are tried with the express or implied consent of the parties, they shall be
treated in all respects as if they had been raised in the pleadings."

Nevertheless, JAL's counterclaim cannot be granted.

JAL is a common carrier. JAL's business is mainly with the traveling public. It invites
people to avail themselves of the comforts and advantages it offers.[84] Since JAL deals
with the public, its bumping off of respondent without a valid reason naturally drew
public attention and generated a public issue.

The publications involved matters about which the public has the right to be informed
because they relate to a public issue. This public issue or concern is a legitimate topic
of a public comment that may be validly published.

Assuming that respondent, indeed, caused the publication of his complaint, he may not
be held liable for damages for it. The constitutional guarantee of freedom of the speech
and of the press includes fair commentaries on matters of public interest. This is
explained by the Court in Borjal v. Court of Appeals,[85] to wit:

To reiterate, fair commentaries on matters of public interest are privileged and

constitute a valid defense in an action for libel or slander. The doctrine of fair
comment means that while in general every discreditable imputation publicly made is
deemed false, because every man is presumed innocent until his guilt is judicially
proved, and every false imputation is deemed malicious, nevertheless, when the
discreditable imputation is directed against a public person in his public capacity, it is
not necessarily actionable. In order that such discreditable imputation to a public
official may be actionable, it must either be a false allegation of fact or a comment
based on a false supposition. If the comment is an expression of opinion, based on
established facts, then it is immaterial that the opinion happens to be mistaken, as long
as it might reasonably be inferred from the facts.[86] (Citations omitted and
underscoring ours)

Even though JAL is not a public official, the rule on privileged commentaries on
matters of public interest applies to it. The privilege applies not only to public officials
but extends to a great variety of subjects, and includes matters of public concern, public
men, and candidates for office.[87]

Hence, pursuant to the Borjal case, there must be an actual malice in order that a
discreditable imputation to a public person in his public capacity or to a public official
may be actionable. To be considered malicious, the libelous statements must be shown
to have been written or published with the knowledge that they are false or in reckless
disregard of whether they are false or not.[88]

Considering that the published articles involve matters of public interest and that its
expressed opinion is not malicious but based on established facts, the imputations
against JAL are not actionable. Therefore, JAL may not claim damages for them.

WHEREFORE, the petition is DENIED. The appealed Decision of the Court of

Appeals is AFFIRMED WITH MODIFICATION. As modified, petitioner Japan
Airlines is ordered to pay respondent Jesus Simangan the following: (1) P500,000.00
as moral damages; (2) P100,000.00 as exemplary damages; and (3) P200,000.00 as
attorney's fees.

The total amount adjudged shall earn legal interest at the rate of 6% per annum from
the date of judgment of the Regional Trial Court on September 21, 2000 until the
finality of this Decision. From the time this Decision becomes final and executory, the
unpaid amount, if any, shall earn legal interest at the rate of 12% per annum until its
satisfaction.

SO ORDERED.

Ynares-Santiago, (Chairperson), Austria-Martinez, Chico-Nazario, and Nachura, JJ.,

concur.

25
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 decision 1 of the Court of Appeals, dated June 14, 1995, in CA-G.R. No. 428093, which
affirmed the decision of the Regional Trial Court of Kalookan City, Branch 126, in Civil Case No.
C-15532, finding petitioner liable to private respondent Hernandez Trading Co., Inc. for the
value of the lost cargo.

Private respondent imported three crates of bus spare parts marked as MARCO C/No. 12,
MARCO C/No. 13 and MARCO C/No. 14, from its supplier, Maruman Trading Company, Ltd.
(Maruman Trading), a foreign corporation based in Inazawa, Aichi, Japan. The crates were
shipped from Nagoya, Japan to Manila on board "ADELFAEVERETTE," a vessel owned by
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. 3Thus, 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 Appeals 5 that the "jurisprudence on the matter reveals the
consistent holding of the court that contracts of adhesion are not invalid per se and that it has
on numerous occasions upheld the binding effect thereof." Also, in Philippine American General
Insurance Co., Inc. vs. Sweet Lines, Inc. 6 this Court, speaking through the learned Justice
Florenz D. Regalado, held:

. . . Ong Yiu vs. Court of Appeals, et. al., instructs us that "contracts of adhesionwherein 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.

26. CASE DIGEST (Transportation Law): Philippine Charter Insurance Corp. vs. Unknown Owner
PHILIPPINE CHARTER INSURANCE CORPORATION vs. UNKNOWN OWNER OF THE VESSEL M/V
“NATIONAL HONOR,” NATIONAL SHIPPING CORPORATION OF THE PHILIPPINES and INTERNATIONAL
CONTAINER SERVICES, INC.
[G.R. No. 161833. July 8, 2005]

FACTS:
Petitioner Philippine Charter Insurance Corporation (PCIC) is the insurer of a shipment on board the vessel
M/V “National Honor,” represented in the Philippines by its agent, National Shipping Corporation of the
Philippines (NSCP).

The M/V “National Honor” arrived at the Manila International Container Terminal (MICT). The International
Container Terminal Services, Incorporated (ICTSI) was furnished with a copy of the crate cargo list and bill of
lading, and it knew the contents of the crate. The following day, the vessel started discharging its cargoes
using its winch crane. The crane was operated by Olegario Balsa, a winchman from the ICTSI, exclusive
arrastre operator of MICT.

Denasto Dauz, Jr., the checker-inspector of the NSCP, along with the crew and the surveyor of the ICTSI,
conducted an inspection of the cargo. They inspected the hatches, checked the cargo and found it in apparent
good condition. Claudio Cansino, the stevedore of the ICTSI, placed two sling cables on each end of Crate No.
1. No sling cable was fastened on the mid-portion of the crate. In Dauz’s experience, this was a normal
procedure. As the crate was being hoisted from the vessel’s hatch, the mid-portion of the wooden flooring
suddenly snapped in the air, about five feet high from the vessel’s twin deck, sending all its contents crashing
down hard, resulting in extensive damage to the shipment.

PCIC paid the damage, and as subrogee, filed a case against M/V National Honor, NSCP and ICTSI. Both
RTC and CA dismissed the complaint.

ISSUE:
Whether or not the presumption of negligence is applicable in the instant case.

HELD:
No.
We agree with the contention of the petitioner that common carriers, from the nature of
their business and for reasons of public policy, are mandated to observe extraordinary
diligence in the vigilance over the goods and for the safety of the passengers
transported by them, according to all the circumstances of each case. he Court has
defined extraordinary diligence in the vigilance over the goods as follows:

The extraordinary diligence in the vigilance over the goods tendered for shipment
requires the common carrier to know and to follow the required precaution for avoiding
damage to, or destruction of the goods entrusted to it for sale, carriage and delivery. It
requires common carriers to render service with the greatest skill and foresight and “to
use all reasonable means to ascertain the nature and characteristic of goods tendered
for shipment, and to exercise due care in the handling and stowage, including such
methods as their nature requires.”
The common carrier’s duty to observe the requisite diligence in the shipment of goods
lasts from the time the articles are surrendered to or unconditionally placed in the
possession of, and received by, the carrier for transportation until delivered to, or until
the lapse of a reasonable time for their acceptance, by the person entitled to receive
them.] >When the goods shipped are either lost or arrive in damaged condition, a
presumption arises against the carrier of its failure to observe that diligence, and there
need not be an express finding of negligence to hold it liable. To overcome the
presumption of negligence in the case of loss, destruction or deterioration of the goods,
the common carrier must prove that it exercised extraordinary diligence.

However, under Article 1734 of the New Civil Code, the presumption of negligence
does not apply to any of the following causes:

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;
5. Order or act of competent public authority.

It bears stressing that the enumeration in Article 1734 of the New Civil Code which
exempts the common carrier for the loss or damage to the cargo is a closed list. To
exculpate itself from liability for the loss/damage to the cargo under any of the causes,
the common carrier is burdened to prove any of the aforecited causes claimed by it by
a preponderance of evidence. If the carrier succeeds, the burden of evidence is shifted
to the shipper to prove that the carrier is negligent.

“Defect” is the want or absence of something necessary for completeness or

perfection; a lack or absence of something essential to completeness; a deficiency in
something essential to the proper use for the purpose for which a thing is to be used.
On the other hand, inferior means of poor quality, mediocre, or second rate. A thing
may be of inferior quality but not necessarily defective. In other words, “defectiveness”
is not synonymous with “inferiority.”

27.