G.R. No. L-9840 April 22, 1957 LU DO & LU YM CORPORATION, Petitioner-Defendant, Bautista Angelo, J.

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G.R. No. L-9840 April 22, 1957
LU DO & LU YM CORPORATION, petitioner-defendant,

vs. I. V. BINAMIRA, respondent-plaintiff.
BAUTISTA ANGELO, J.:
On April 4, 1954, plaintiff filed an action in the Court of First Instance of Cebu against defendant to recover the sum of P324.63
as value of certain missing shipment, P150 as actual and compensatory damages, and P600 as moral and pecuniary damages.
After trial, the court rendered judgment ordering defendant to pay plaintiff the sum of P216.84, with legal interest. On appeal, the
Court of Appeals affirmed the judgment, hence the present petition for review.
On August 10, 1951, the Delta Photo Supply Company of New York shipped on board the M/S "FERNSIDE" at New York, U.S.A.,
six cases of films and/or photographic supplies consigned to the order of respondent I. V. Binamira. For this shipment, Bill of
Lading No. 29 was issued. The ship arrived at the port of Cebu on September 23, 1951 and discharged her cargo on September
23, and 24, 1951, including the shipment in question, placing it in the possession and custody of the arrastre operator of said
port, the Visayan Cebu Terminal Company, Inc.
Petitioner, as agent of the carrier, hired the Cebu Stevedoring Company, Inc. to unload its cargo. During the discharge, good
order cargo was separated from the bad order cargo on board the ship, and a separate list of bad order cargo was prepared by
Pascual Villamor, checker of the stevedoring company. All the cargo unloaded was received at the pier by the Visayan Cebu
Terminal Company Inc, arrastre operator of the port. This terminal company had also its own checker, Romeo Quijano, who also
recorded and noted down the good cargo from the bad one. The shipment in question, was not included in the report of bad order
cargo of both checkers, indicating that it was discharged from the, ship in good order and condition.
On September 26, 1951, three days after the goods were unloaded from the ship, respondent took delivery of his six cases of
photographic supplies from the arrastre operator. He discovered that the cases showed signs of pilferage and, consequently, he
hired marine surveyors, R. J. del Pan & Company, Inc., to examine them. The surveyors examined the cases and made a
physical count of their contents in the presence of representatives of petitioner, respondent and the stevedoring company. The
surveyors examined the cases and made a physical count of their contents in the presence of representatives of petitioner,
respondent and the stevedoring company. The finding of the surveyors showed that some films and photographic supplies were
missing valued at P324.63.
It appears from the evidence that the six cases of films and photographic supplies were discharged from the ship at the port of
Cebu by the stevedoring company hired by petitioner as agent of the carrier. All the unloaded cargo, including the shipment in
question, was received by the Visayan Cebu Terminal Company Inc., the arrastre operator appointed by the Bureau of Customs.
It also appears that during the discharge, the cargo was checked both by the stevedoring company hired by petitioner as well as
by the arrastre operator of the port, and the shipment in question, when discharged from the ship, was found to be in good order
and condition. But after it was delivered to respondent three days later, the same was examined by a marine surveyor who found
that some films and supplies were missing valued at P324.63.
The question now to be considered is: Is the carrier responsible for the loss considering that the same occurred after the
shipment was discharged from the ship and placed in the possession and custody of the customs authorities?
The Court of Appeals found for the affirmative, making on this point the following comment:
In this jurisdiction, a common carrier has the legal duty to deliver goods to a consignee in the same condition in which it received
them. Except where the loss, destruction or deterioration of the merchandise was due to any of the cases enumerated in Article
1734 of the new Civil Code, a carrier is presumed to have been at fault and to have acted negligently, unless it could prove that it
observed extraordinary diligence in the care and handling of the goods (Article 1735, supra). Such presumption and the liability of
the carrier attach until the goods are delivered actually or constructively, to the consignee, or to the person who has a right to
receive them (Article 1736, supra), and we believe delivery to the customs authorities is not the delivery contemplated by Article
1736, supra, in connection with second paragraph of Article 1498, supra, because, in such a case, the goods are then still in the
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hands of the Government and their owner could not exercise dominion whatever over them until the duties are paid. In the case
at bar, the presumption against the carrier, represented appellant as its agent, has not been successfully rebutted.
It is now contended that the Court of Appeals erred in its finding not only because it made wrong interpretation of the law on the
matter, but also because it ignored the provisions of the bill of lading covering the shipment wherein it was stipulated that the
responsibility of the carrier is limited only to losses that may occur while the cargo is still under its custody and control.
We believe this contention is well taken. It is true that, as a rule, a common carrier is responsible for the loss, destruction or
deterioration of the goods it assumes to carry from one place to another unless the same is due to any to any of the causes
mentioned in Article 1734 on the new Civil Code, and that, if the goods are lost, destroyed or deteriorated, for causes other that
those mentioned, the common carrier is presumed to have been at fault or to have acted negligently, unless it proves that it has
observed extraordinary diligence in their care (Article 1735, Idem.), and that this extraordinary liability lasts from the time the
goods are placed in the possession of the carrier until they are delivered to the consignee, or "to the person who has the right to
receive them" (Article 1736, Idem.), but these provisions only apply when the loss, destruction or deterioration takes place while
the goods are in the possession of the carrier, and not after it has lost control of them. The reason is obvious. While the goods
are in its possession, it is but fair that it exercise extraordinary diligence in protecting them from damage, and if loss occurs, the
law presumes that it was due to its fault or negligence. This is necessary to protect the interest the interest of the owner who is at
its mercy. The situation changes after the goods are delivered to the consignee.
While we agree with the Court of Appeals that while delivery of the cargo to the consignee, or to the person who has a right to
receive them", contemplated in Article 1736, because in such case the goods are still in the hands of the Government and the
owner cannot exercise dominion over them, we believe however that the parties may agree to limit the liability of the carrier
considering that the goods have still to through the inspection of the customs authorities before they are actually turned over to
the consignee. This is a situation where we may say that the carrier losses control of the goods because of a custom regulation
and it is unfair that it be made responsible for what may happen during the interregnum. And this is precisely what was done by
the parties herein. In the bill of lading that was issued covering the shipment in question, both the carrier and the consignee have
stipulated to limit the responsibility of the carrier for the loss or damage that may because to the goods before they are actually
delivered by insert in therein the following provisions:
1. . . . The Carrier shall not be liable in any capacity whatsoever for any delay, nondelivery or misdelivery, or loss of or damage to
the goods occurring while the goods are not in the actual custody of the Carrier. . . . (Emphasis ours.)
(Paragraph 1, Exhibit "1")
2. . . . The responsibility of the Carrier in any capacity shall altogether cease and the goods shall be considered to be delivered
and at their own risk and expense in every respect when taken into the custody of customs or other authorities. The Carrier shall
not be required to give any notification of disposition of the goods. . . . (Emphasis ours.)
3. Any provisions herein to the contrary notwithstanding, goods may be . . . by Carrier at ship's tackle . . . and delivery beyond
ship's tackle shall been tirely at the option of the Carrier and solely at the expense of the shipper or consignee.

It therefore appears clear that the carrier does not assume liability for any loss or damage to the goods once they have been
"taken into the custody of customs or other authorities", or when they have been delivered at ship's tackle. These stipulations are
clear. They have been adopted precisely to mitigate the responsibility of the carrier considering the present law on the matter,
and we find nothing therein that is contrary to morals or public policy that may justify their nullification. We are therefore
persuaded to conclude that the carrier is not responsible for the loss in question, it appearing that the same happened after the
shipment had been delivered to the customs authorities.
Wherefore, the decision appealed from is reversed, without pronouncement as to costs.

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G.R. No. 85331 August 25, 1989
KAPALARAN BUS LINE, petitioner,

vs. ANGEL CORONADO, LOPE GRAJERA, DIONISIO SHINYO, and THE COURT OF APPEALS, respondents,
FELICIANO, J.:
Petitioner Kapalaran Bus Line ("Kapalaran") seeks the reversal or modification of the Court of Appeals' decision in CA G.R. CV
No. 12476 and the absolution of petitioner from all liability arising from the collision between one of petitioner's buses and a
jeepney owned by respondent Coronado, driven by respondent Grajera and in which jeepney respondent Shinyo was a
passenger.
The facts of this case as found by the trial court and adopted by the Court of Appeals, are summarized in the trial court's decision
and quoted in the Court of Appeals' own judgment in the following terms:
The accident happened on the National Highway at 10:30 A.M. on August 2, 1982. The jeepney driven by Lope Grajera was then
corning from Pila, Laguna on its way towards the direction of Sta. Cruz, traversing the old highway. As it reached the intersection
where there is a traffic sign 'yield,' it stopped and cautiously treated the intersection as a "Thru Stop' street, which it is not. The
KBL bus was on its way from Sta. Cruz, Laguna, driven by its regular driver Virgilio Llamoso, on its way towards Manila. The
regular itinerary of the KBL bus is through the town proper of Pila, Laguna, but at times it avoids this if a bus is already fully
loaded with passengers and can no longer accommodate additional passengers. As the KBL bus neared the intersection, Virgilio
Llamoso inquired from his conductor if they could still accommodate passengers and learning that they were already full, he
decided to bypass Pila and instead, to proceed along the national highway. Virgilio Llamoso admitted that there was another
motor vehicle ahead of him.
The general rule is that the vehicle on the national highway has the right-of-way as against a feeder road. Another general rule is
that the vehicle coming from the right has the right-of-way over the vehicle coming from the left. The general rules on right-of-way
may be invoked only if both vehicles approach the intersection at almost the same time. In the case at bar, both roads are
national roads. Also, the KBL bus was still far from the intersection when the jeepney reached the same. As testified to by Atty.
Conrado L. Manicad who was driving a Mustang car coming from the direction of Sta. Cruz and proceeding towards the direction
of Manila, he stopped at the intersection to give way to the jeepney driven by Grajera. Behind Manicad were two vehicles, a car
of his client and another car. A Laguna Transit bus had just entered the town of Pila ahead of Atty. Manicad.
The sketch marked Exhibit 'E' indicates very clearly that the jeepney had already traversed the intersection when it met the KBL
bus head-on. It is also obvious that the point of impact was on the right lane of the highway which is the lane properly belonging
to the jeepney. As testified to by Lope Grajera, the KBL bus ignored the stopped vehicles of Atty. Manicad and the other vehicles
behind Atty. Manicad and overtook both vehicles at the intersection, therefore, causing the accident.
Judging from the testimony of Atty. Conrado L. Manicad and the sketch (Exhibit 'E'), the sequence of events shows that the first
vehicle to arrive at the intersection was the jeepney. Seeing that the road was clear, the jeepney which had stopped at the
intersection began to move forward, and for his part, Atty. Manicad stopped his car at the intersection to give way to the jeepney.
At about this time, the KBL bus was approaching the intersection and its driver was engaged in determining from his conductor if
they would still pass through the town proper of Pila. Upon learning that they were already full, he turned his attention to the road
and found the stopped vehicles at the intersection with the jeepney trying to cross the intersection. The KBL bus had no more
room within which to stop without slamming into the rear of the vehicle behind the car of Atty. Manicad. The KBL driver chose to
gamble on proceeding on its way, unfortunately, the jeepney driven by Grajera, which had the right-of-way, was about to cross
the center of the highway and was directly on the path of the KBL bus. The gamble made by Llamoso did not pay off. The impact
indicates that the KBL bus was travelling at a fast rate of speed because, after the collision, it did not stop; it travelled for another
50 meters and stopped only when it hit an electric post (pp. 3-4, Decision; pp. 166167, Record). 1
On 14 September 1982, Kapalaran, apparently believing that the best defense was offense, filed a complaint for damage to
property and physical injuries through reckless imprudence against respondents Angel Coronado and Lope Grajera in the
Regional Trial Court, Branch 27, Sta. Cruz, Laguna. Respondents answered with their own claims (counter-claims) for damages.
4
A third-party complaint and/or a complaint for intervention was also filed in the same case against Kapalaran by jeepney
passenger Dionisio Shinyo.
On 15 October 1986, after trial, the trial court rendered a judgment in favor of private respondents and ordering Kapalaran
(a) to pay Angel Coronado the sum of P40,000.00 as compensation for the totally wrecked jeepney, plus the sum of P5,000.00 as
attorney's fees and litigation expenses, and
(b) to Dionisio Shinyo the sum of P35,000.00 representing the expenses incurred by said intervenor for his treatment including his
car-hire, the further sum of P30,000.00 representing the expenses said defendant will incur for his second operation to remove
the intramedulary nail from his femur, the additional sum of P50,000.00 to serve as moral damages for the pain and suffering
inflicted on said defendant, plus the sum of P10,000.00 in the concept of exemplary damages to serve as a deterrent to others
who, like the plaintiff, may be minded to induce accident victims to perjure themselves in a sworn statement, and the sum of
P15,000.00 as attorney's fees and litigation expenses.
From the above judgment, Kapalaran appealed to the Court of Appeals assailing the trial court's findings on the issue of fault and
the award of damages. The Court of Appeals, on 28 June 1988, affirmed the decision of the trial court but modified the award of
damages by setting aside the grant of exemplary damages as well as the award of attomey's fee and litigation expenses made to
Dionisio Shinyo. 2
This decision of the Court of Appeals is now before us on a Petition for Review, a motion for reconsideration by Kapalaran having
been denied by that court on 13 October 1988.
Kapalaran assails the findings of fact of the Regional Trial Court and of the Court of Appeals, and insists before this Court that
respondent Grajera, driver of the jeepney, was at fault and not the driver of Kapalaran's bus. It must be remembered that it is not
the function of this Court to analyze and weigh evidence presented by the parties all over again and that our jurisdiction is in
principle limited to reviewing errors of law that might have been committed by the Court of Appeals. Kapalaran has made no
compelling showing of any misapprehension of facts on the part of the Court of Appeals that would require us to review and
overturn the factual findings of that court. On the contrary, examination of the record shows that not only are the conclusions of
fact of the Court of Appeals and the trial court on who — the bus driver or the jeepney driver — had acted negligently and was at
fault in the collision of their vehicles, amply supported by the evidence of record, but also that Kapalaran's bus driver was grossly
negligent and had acted wantonly and in obvious disregard of the applicable rules on safety on the highway.
Kapalaran's driver had become aware that some vehicles ahead of the bus and travelling in the same direction had already
stopped at the intersection obviously to give way either to pedestrians or to another vehicle about to enter the intersection. The
bus driver, who was driving at a speed too high to be safe and proper at or near an intersection on the highway, and in any case
too high to be able to slow down and stop behind the cars which had preceded it and which had stopped at the intersection,
chose to swerve to the left lane and overtake such preceding vehicles, entered the intersection and directly smashed into the
jeepney within the intersection. Immediately before the collision, the bus driver was actually violating the following traffic rules and
regulations, among others, in the Land Transportation and Traffic Code, Republic Act No. 4136, as amended:
Sec. 35. Restriction as to speed. — (a) Any person driving a motor vehicle on a highway shall drive the same at a careful and
prudent speed, not greater nor less than is reasonable and proper, having due regard for the traffic, the width of the highway, and
or any other condition then and there existing; and no person shall drive any motor vehicle upon a highway at such a speed as to
endanger the life, limb and property of any person, nor at a speed greater than will permit him to bring the vehicle to a stop within
the assured clear distance ahead.
Sec. 41. Restrictions on overtaking and passing. _1 (a) The driver of a vehicle shall not drive to the left side of the center line of a
highway in overtaking or passing another vehicle, proceeding in the same direction, unless such left side is clearly visible, and is
free of oncoming traffic for a sufficient distance ahead to permit such overtaking or passing to be made in safety.
(c) The driver of a vehicle shall not overtake or pass any other vehicle proceeding in the same direction, at any railway grade
crossing, or at any intersection of highways, unless such intersection or crossing is controlled by traffic signal, or unless permitted
to do so by a watchman or a peace officer, except on a highway having two or more lanes for movement of traffic in one direction
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where the driver of a vehicle may overtake or pass another vehicle on the right. Nothing in this section shall be construed to
prohibit a driver overtaking or passing, upon the right, another vehicle which is making or about to make a left turn.
(Emphasis supplied)
Thus, a legal presumption arose that the bus driver was negligent 3 a presumption Kapalaran was unable to overthrow.
Petitioner's contention that the jeepney should have stopped before entering the "Y-intersection" because of the possibility that
another vehicle behind the cars which had stopped might not similarly stop and might swerve to the left to proceed to the
highway en route to Manila, is more ingenious than substantial. It also offers illustration of the familiar litigation tactic of shifting
blame from one's own shoulders to those of the other party. But the jeepney driver, seeing the cars closest to the intersection on
the opposite side of the highway come to a stop to give way to him, had the right to assume that other vehicles further away and
behind the stopped cars would similarly come to a stop and not seek illegally to overtake the stopped vehicles and come
careening into the intersection at an unsafe speed. 4 Petitioner's bus was still relatively far away from the intersection when the
jeepney entered the same; the bus collided head on into the jeepney because the bus had been going at an excessively high
velocity immediately before and at the time of overtaking the stopped cars, and so caught the jeepney within the intersection. It
was also the responsibility of the bus driver to see to it, when it overtook the two (2) cars ahead which had stopped at the
intersection, that the left lane of the road within the intersection and beyond was clear. The point of impact was on the left side of
the intersection (the light lane so far as concerns the jeepney coming from the opposite side), which was precisely the lane or
side on which the jeepney had a right to be.
Petitioner Kapalaran also assails the award of moral damages against itself, upon the ground that its own bus driver, third-party
defendant, was apparently not held liable by the trial court . 5 Hence, Kapalaran argues that there was no justification for holding
it, the employer, liable for damages, considering that such liability was premised upon the bus driver's negligence and that
petitioner "as mere employer" was not guilty of such negligence or imprudence. 6This contention in thoroughly unpersuasive. The
patent and gross negligence on the part of the petitioner Kapalaran's driver raised the legal presumption that Kapalaran as
employer was guilty of negligence either in the selection or in the supervision of its bus driver, 7 Where the employer is held liable
for damages, it has of course a right of recourse against its own negligent employee. If petitioner Kapalaran was interested in
maintaining its right of recourse against or reimbursement from its own driver, 8 it should have appealled from that portion of the
trial court's decision which had failed to hold the bus driver is not "merely subsidiary," and is not limited to cases where the
employee "cannot pay his liability" nor are private respondents compelled frist to proceed against the bus driver. The liability of
the employer under Article 2180 of the Civil Code is direct and immediate; it is not conditioned upon prior recourse against the
negligent employee and a prior showing of the insolvency of such employee. 9 So far as the record shows, petitioner Kapalaran
was unable to rebut the presumption of negligence on its own part. The award of moral damages against petitioner Kapalaran is
not only entirely in order; it is also quite modest consideirng Dionisio Shinyo's death during the pendency of this petition, a death
hastened by, if not directly due to, the grievous injuries sustained by him in the violent collision.
The Court of Appeals deleted the award of exemplary damages which the trial court had granted in order "to serve as a deterrent
to others who, like the plaintiff [Kapalaran], may be minded to induce accident victims to perjure themselves in a sworn
statement." The Court of Appeals held that htere was no basis for this award of exemplary damages, stating that it was not "such
a reprehensible act to try to gather witnesses for one's cause" and that there was no evidence of use of "presure or influence" to
induce the accident victims to perjure themselves While that might have been so, both the trial court and the Court of Appeals
overlook another and far more compelling basis for the award of exemplary damages against petitioner Kapalaran in this case.
There is no question that petitioner's bus driver was grossly and very probably criminally negligent in his reckless disregard of the
rights of other vehicles and their pasangers and of pedestrian as well The Court is entitled to take judicial notice of the gross
negligence and the appalling disregard of the physical safety and property of others so commonly exhibited today by the drivers
of passanger bussses and similar vehicles on our highways. The law requires petitioner as common carrier to exercise
extraordinary diligence incarrying and transporting their passanger safely "as far as human care and foresight can proved, using
the utmost diligence of very cautious persons, with due regard for all circumstances." 10 In requiring the highest possible degree
of diligence from common carriers and creating a presumption of negligence against them, the law compels them to curb the
recklessness of their drivers. 11 While the immediate beneficiaries of the standard of extraordinary diligence are, of course, the
passengers and owners of cargo carried by a common carrier, they are not only persons that the law seeks to benefit. For if
common carriers carefully observed the statutory standard of extraordinary diligence in respect of of their own passengers, they
6
cannot help but simultaneously benefit pedestrians and the owners and passengers of other vehicles who are equally entitled to
the safe and convenient use of our roads and highways. 12 The law seeks to stop and prevent the slaughter and maiming of
people (whether passengers or not) and the destruction of property (whether freight or not) on our highways by buses, the very
size and power of which seem often to inflame the minds of their drivers. Article 2231 of the Civil Code explicitly authorizes the
imposition of exemplary damages in cases of quasi-delicts "if the defendant acted with gross negligence." Thus we believe that
the award of exemplary damages by the trial court was quite proper, although granted for the wrong reason, and should not only
be restored but augmented in the present case. The Court is aware that respondent Shinyo did not file a separate petition for
review to set aside that portion of the Court of Appeals'decision which deleted the grant by the trial court of exemplary damages.
It is settled, however, that issues which must be resolved if substantial justice is to be rendered to the parties, may and should be
considered and decided by this Court even if those issues had not been explicitly raised by the party affected. 13 In the instant
case, it is not only the demands of substantial justice but also the compelling considerations of public policy noted above, which
impel us to the conclusion that the trial court's award of exemplary damages was erroneously deleted and must be restored and
brought more nearly to the level which public policy and substantial justice require.
In much the same vein, we believe that the award by the trial court of P15,000.00 as attorney's fees and litigation expenses,
deleted by the Court of Appeals, should similarly be restored, being both authorized by law 14 and demanded by substantial
justice in the instant case.
WHEREFORE, the Petition for Review on certiorari is DENIED for lack of merit and the Decision of the Court of Appeals is
hereby AFFIRMED, except (1) that the award of exemplary damages to Dionisio Shinyo shall be restored and increased from
P10,000.00 to P25,000.00, and (2) that the grant of attorney's fees and litigation expenses in the sum of P15,000.00 to Dionisio
Shinyo shall similarly be restored. Costs against petitioner.
G.R. No. 131166 September 30, 1999
CALTEX (PHILIPPINES), INC., petitioner,

vs. SULPICIO LINES, INC., GO SIOC SO, ENRIQUE S. GO, EUSEBIO S. GO, CARLOS S. GO, VICTORIANO S. GO,
DOMINADOR S. GO, RICARDO S. GO, EDWARD S. GO, ARTURO S. GO, EDGAR S. GO, EDMUND S. GO, FRANCISCO
SORIANO, VECTOR SHIPPING CORPORATION, TERESITA G. CAÑEZAL, AND SOTERA E. CAÑEZAL, respondents.
Is the charterer of a sea vessel liable for damages resulting from a collision between the chartered vessel and a passenger ship?
When MT Vector left the port of Limay, Bataan, on December 19, 1987 carrying petroleum products of Caltex (Philippines), Inc.
(hereinafter Caltex) no one could have guessed that it would collide with MV Doña Paz, killing almost all the passengers and
crew members of both ships, and thus resulting in one of the country's worst maritime disasters.
The petition before us seeks to reverse the Court of Appeals decision 1 holding petitioner jointly liable with the operator of MT
Vector for damages when the latter collided with Sulpicio Lines, Inc.'s passenger ship MV Doña Paz.
The facts are as follows:

On December 19, 1987, motor tanker MT Vector left Limay, Bataan, at about 8:00 p.m., enroute to Masbate, loaded with 8,800
barrels of petroleum products shipped by petitioner Caltex. 2 MT Vector is a tramping motor tanker owned and operated by Vector
Shipping Corporation, engaged in the business of transporting fuel products such as gasoline, kerosene, diesel and crude oil.
During that particular voyage, the MT Vector carried on board gasoline and other oil products owned by Caltex by virtue of a
charter contract between
them. 3
On December 20, 1987, at about 6:30 a.m., the passenger ship MV Doña Paz left the port of Tacloban headed for Manila with a
complement of 59 crew members including the master and his officers, and passengers totaling 1,493 as indicated in the Coast
Guard Clearance. 4 The MV Doña Paz is a passenger and cargo vessel owned and operated by Sulpicio Lines, Inc. plying the
route of Manila/ Tacloban/ Catbalogan/ Manila/ Catbalogan/ Tacloban/ Manila, making trips twice a week.
7
At about 10:30 p.m. of December 20, 1987, the two vessels collided in the open sea within the vicinity of Dumali Point between
Marinduque and Oriental Mindoro. All the crewmembers of MV Doña Paz died, while the two survivors from MT Vector claimed
that they were sleeping at the time of the incident.1âwphi1.nêt
The MV Doña Paz carried an estimated 4,000 passengers; many indeed, were not in the passenger manifest. Only 24 survived
the tragedy after having been rescued from the burning waters by vessels that responded to distress calls. 5 Among those who
perished were public school teacher Sebastian Cañezal (47 years old) and his daughter Corazon Cañezal (11 years old), both
unmanifested passengers but proved to be on board the vessel.
On March 22, 1988, the board of marine inquiry in BMI Case No. 659-87 after investigation found that the MT Vector, its
registered operator Francisco Soriano, and its owner and actual operator Vector Shipping Corporation, were at fault and
responsible for its collision with MV Doña Paz. 6
On February 13, 1989, Teresita Cañezal and Sotera E. Cañezal, Sebastian Cañezal's wife and mother respectively, filed with the
Regional Trial Court, Branch 8, Manila, a complaint for "Damages Arising from Breach of Contract of Carriage" against Sulpicio
Lines, Inc. (hereafter Sulpicio). Sulpicio, in turn, filed a third party complaint against Francisco Soriano, Vector Shipping
Corporation and Caltex (Philippines), Inc. Sulpicio alleged that Caltex chartered MT Vector with gross and evident bad faith
knowing fully well that MT Vector was improperly manned, ill-equipped, unseaworthy and a hazard to safe navigation; as a result,
it rammed against MV Doña Paz in the open sea setting MT Vector's highly flammable cargo ablaze.
On September 15, 1992, the trial court rendered decision dismissing, the third party complaint against petitioner. The dispositive
portion reads:
WHEREFORE, judgment is hereby rendered in favor of plaintiffs and against defendant-3rd party plaintiff Sulpicio Lines, Inc., to
wit:
1. For the death of Sebastian E. Cañezal and his 11-year old daughter Corazon G. Cañezal, including loss of future earnings of
said Sebastian, moral and exemplary damages, attorney's fees, in the total amount of P 1,241,287.44 and finally;
2. The statutory costs of the proceedings.
Likewise, the 3rd party complaint is hereby DISMISSED for want of substantiation and with costs against the 3rd party plaintiff.
IT IS SO ORDERED.
DONE IN MANILA, this 15th day of September 1992.
ARSENIO M. GONONG
Judge 7
On appeal to the Court of Appeals interposed by Sulpicio Lines, Inc., on April 15, 1997, the Court of Appeal modified the trial
court's ruling and included petitioner Caltex as one of the those liable for damages. Thus:
WHEREFORE, in view of all the foregoing, the judgment rendered by the Regional Trial Court is hereby MODIFIED as follows:
WHEREFORE, defendant Sulpicio Lines, Inc., is ordered to pay the heirs of Sebastian E. Cañezal and Corazon Cañezal:
1. Compensatory damages for the death of Sebastian E. Cañezal and Corazon Cañezal the total amount of ONE HUNDRED
THOUSAND PESOS (P100,000);
2. Compensatory damages representing the unearned income of Sebastian E. Cañezal, in the total amount of THREE
HUNDRED SIX THOUSAND FOUR HUNDRED EIGHTY (P306,480.00) PESOS;
3. Moral damages in the amount of THREE HUNDRED THOUSAND PESOS (P300,000.00);
4. Attorney's fees in the concept of actual damages in the amount of FIFTY THOUSAND PESOS (P50,000.00);
8
5. Costs of the suit.
Third party defendants Vector Shipping Co. and Caltex (Phils.), Inc. are held equally liable under the third party complaint to
reimburse/indemnify defendant Sulpicio Lines, Inc. of the above-mentioned damages, attorney's fees and costs which the latter is
adjudged to pay plaintiffs, the same to be shared half by Vector Shipping Co. (being the vessel at fault for the collision) and the
other half by Caltex (Phils.), Inc. (being the charterer that negligently caused the shipping of combustible cargo aboard an
unseaworthy vessel).
SO ORDERED.
JORGE S. IMPERIAL
Associate Justice
WE CONCUR:
RAMON U. MABUTAS, JR. PORTIA ALIÑO HERMACHUELOS
Associate Justice Associate Justice. 8
Hence, this petition.
We find the petition meritorious.
First: The charterer has no liability for damages under Philippine Maritime laws.
The respective rights and duties of a shipper and the carrier depends not on whether the carrier is public or private, but on
whether the contract of carriage is a bill of lading or equivalent shipping documents on the one hand, or a charter party or similar
contract on the other. 9
Petitioner and Vector entered into a contract of affreightment, also known as a voyage charter. 10
A charter party is a contract by which an entire ship, or some principal part thereof, is let by the owner to another person for a
specified time or use; a contract of affreightment is one by which the owner of a ship or other vessel lets the whole or part of her
to a merchant or other person for the conveyance of goods, on a particular voyage, in consideration of the payment of freight. 11
A contract of affreightment may be either time charter, wherein the leased vessel is leased to the charterer for a fixed period of
time, or voyage charter, wherein the ship is leased for a single voyage. In both cases, the charter-party provides for the hire of the
vessel only, either for a determinate period of time or for a single or consecutive voyage, the ship owner to supply the ship's
store, pay for the wages of the master of the crew, and defray the expenses for the maintenance of the ship. 12
Under a demise or bareboat charter on the other hand, the charterer mans the vessel with his own people and becomes, in
effect, the owner for the voyage or service stipulated, subject to liability for damages caused by negligence.
If the charter is a contract of affreightment, which leaves the general owner in possession of the ship as owner for the voyage, the
rights and the responsibilities of ownership rest on the owner. The charterer is free from liability to third persons in respect of the
ship. 13
Second: MT Vector is a common carrier
Charter parties fall into three main categories: (1) Demise or bareboat, (2) time charter, (3) voyage charter. Does a charter party
agreement turn the common carrier into a private one? We need to answer this question in order to shed light on the
responsibilities of the parties.
In this case, the charter party agreement did not convert the common carrier into a private carrier. The parties entered into a
voyage charter, which retains the character of the vessel as a common carrier.
9
In Planters Products, Inc. vs. Court of Appeals, 14 we said:
It is therefore imperative that a public carrier shall remain as such, notwithstanding the charter of the whole portion of a vessel of
one or more persons, provided the charter is limited to the ship only, as in the case of a time-charter or the voyage charter. It is
only when the charter includes both the vessel and its crew, as in a bareboat or demise that a common carrier becomes private,
at least insofar as the particular voyage covering the charter-party is concerned. Indubitably, a ship-owner in a time or voyage
charter retains possession and control of the ship, although her holds may, for the moment, be the property of the charterer.
Later, we ruled in Coastwise Lighterage Corporation vs. Court of Appeals: 15
Although a charter party may transform a common carrier into a private one, the same however is not true in a contract of
affreightment . . .
A common carrier is a person or corporation whose regular business is to carry passengers or property for all persons who may
choose to employ and to remunerate him. 16 MT Vector fits the definition of a common carrier under Article 1732 of the Civil
Code. In Guzman vs. Court of Appeals, 17 we ruled:
The Civil Code defines "common carriers" in the following terms:
Art. 1732. Common carriers are persons, corporations, firms or associations engaged in the business of carrying or transporting
passengers for 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 services on an occasional, episodic or unscheduled basis. Neither does Article 1732 distinguish between a carrier
offering its services to the "general public," i.e., the general community or population, and one who offers services or solicits
business only from a narrow segment of the general population. We think that Article 1733 deliberately refrained from making
such distinctions.
It appears to the Court that private respondent is properly characterized as a common carrier even though he merely "back-
hauled" goods for other merchants from Manila to Pangasinan, although such backhauling was done on a periodic, occasional
rather than regular or scheduled manner, and even though respondent's principal occupation was not the carriage of goods for
others. There is no dispute that private respondent charged his customers a fee for hauling their goods; that the fee frequently fell
below commercial freight rates is not relevant here.
Under the Carriage of Goods by Sea Act :
Sec. 3. (1) The carrier shall be bound before and at the beginning of the voyage to exercise due diligence to —
(a) Make the ship seaworthy;
(b) Properly man, equip, and supply the ship;

Thus, the carriers are deemed to warrant impliedly the seaworthiness of the ship. For a vessel to be seaworthy, it must be
adequately equipped for the voyage and manned with a sufficient number of competent officers and crew. The failure of a
common carrier to maintain in seaworthy condition the vessel involved in its contract of carriage is a clear breach of its duty
prescribed in Article 1755 of the Civil Code. 18
The provisions owed their conception to the nature of the business of common carriers. This business is impressed with a special
public duty. The public must of necessity rely on the care and skill of common carriers in the vigilance over the goods and safety
of the passengers, especially because with the modern development of science and invention, transportation has become more
rapid, more complicated and somehow more hazardous. 19 For these reasons, a passenger or a shipper of goods is under no
obligation to conduct an inspection of the ship and its crew, the carrier being obliged by law to impliedly warrant its
seaworthiness.
10
This aside, we now rule on whether Caltex is liable for damages under the Civil Code.
Third: Is Caltex liable for damages under the Civil Code?
We rule that it is not.
Sulpicio argues that Caltex negligently shipped its highly combustible fuel cargo aboard an unseaworthy vessel such as the MT
Vector when Caltex:
1. Did not take steps to have M/T Vector's certificate of inspection and coastwise license renewed;
2. Proceeded to ship its cargo despite defects found by Mr. Carlos Tan of Bataan Refinery Corporation;
3. Witnessed M/T Vector submitting fake documents and certificates to the Philippine Coast Guard.
Sulpicio further argues that Caltex chose MT Vector transport its cargo despite these deficiencies.
1. The master of M/T Vector did not posses the required Chief Mate license to command and navigate the vessel;
2. The second mate, Ronaldo Tarife, had the license of a Minor Patron, authorized to navigate only in bays and rivers when the
subject collision occurred in the open sea;
3. The Chief Engineer, Filoteo Aguas, had no license to operate the engine of the vessel;
4. The vessel did not have a Third Mate, a radio operator and lookout; and
5. The vessel had a defective main engine. 20
As basis for the liability of Caltex, the Court of Appeals relied on Articles 20 and 2176 of the Civil Code, which provide:
Art. 20. — Every person who contrary to law, willfully or negligently causes damage to another, shall indemnify the latter for the
same.
Art. 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.
And what is negligence?
The Civil Code provides:

Art. 1173. The fault or negligence of the obligor consists in the omission of that diligence which is required by the nature of the
obligation and corresponds with the circumstances of the persons, of the time and of the place. When negligence shows bad
faith, the provisions of Article 1171 and 2201 paragraph 2, shall apply.
If the law does not state the diligence which is to be observed in the performance, that which is expected of a good father of a
family shall be required.
In Southeastern College, Inc. vs. Court of Appeals, 21 we said that negligence, as commonly understood, is conduct which
naturally or reasonably creates undue risk or harm to others. It may be the failure to observe that degree of care, precaution, and
vigilance, which the circumstances justly demand, or the omission to do something which ordinarily regulate the conduct of
human affairs, would do.
The charterer of a vessel has no obligation before transporting its cargo to ensure that the vessel it chartered complied with all
legal requirements. The duty rests upon the common carrier simply for being engaged in "public service." 22 The Civil Code
demands diligence which is required by the nature of the obligation and that which corresponds with the circumstances of the
11
persons, the time and the place. Hence, considering the nature of the obligation between Caltex and MT Vector, liability as found
by the Court of Appeals is without basis.1âwphi1.nêt
The relationship between the parties in this case is governed by special laws. Because of the implied warranty of
seaworthiness, 23 shippers of goods, when transacting with common carriers, are not expected to inquire into the vessel's
seaworthiness, genuineness of its licenses and compliance with all maritime laws. To demand more from shippers and hold them
liable in case of failure exhibits nothing but the futility of our maritime laws insofar as the protection of the public in general is
concerned. By the same token, we cannot expect passengers to inquire every time they board a common carrier, whether the
carrier possesses the necessary papers or that all the carrier's employees are qualified. Such a practice would be an absurdity in
a business where time is always of the essence. Considering the nature of transportation business, passengers and shippers
alike customarily presume that common carriers possess all the legal requisites in its operation.
Thus, the nature of the obligation of Caltex demands ordinary diligence like any other shipper in shipping his cargoes.
A cursory reading of the records convinces us that Caltex had reasons to believe that MT Vector could legally transport cargo that
time of the year.
Atty. Poblador: Mr. Witness, I direct your attention to this portion here containing the entries here under "VESSEL'S
DOCUMENTS
1. Certificate of Inspection No. 1290-85, issued December 21, 1986, and Expires December 7, 1987", Mr. Witness, what steps
did you take regarding the impending expiry of the C.I. or the Certificate of Inspection No. 1290-85 during the hiring of MT
Vector?
Apolinario Ng: At the time when I extended the Contract, I did nothing because the tanker has a valid C.I. which will expire on
December 7, 1987 but on the last week of November, I called the attention of Mr. Abalos to ensure that the C.I. be renewed and
Mr. Abalos, in turn, assured me they will renew the same.
Q: What happened after that?
A: On the first week of December, I again made a follow-up from Mr. Abalos, and said they were going to send me a copy as
soon as possible, sir. 24
Q: What did you do with the C.I.?

A: We did not insist on getting a copy of the C.I. from Mr. Abalos on the first place, because of our long business relation, we trust
Mr. Abalos and the fact that the vessel was able to sail indicates that the documents are in order. . . . 25
On cross examination —
Atty. Sarenas: This being the case, and this being an admission by you, this Certificate of Inspection has expired on December 7.
Did it occur to you not to let the vessel sail on that day because of the very approaching date of expiration?
Apolinar Ng: No sir, because as I said before, the operation Manager assured us that they were able to secure a renewal of the
Certificate of Inspection and that they will in time submit us a
copy. 26
Finally, on Mr. Ng's redirect examination:
Atty. Poblador: Mr. Witness, were you aware of the pending expiry of the Certificate of Inspection in the coastwise license on
December 7, 1987. What was your assurance for the record that this document was renewed by the MT Vector?
Atty. Sarenas: . . .
Atty. Poblador: The certificate of Inspection?

12
A: As I said, firstly, we trusted Mr. Abalos as he is a long time business partner; secondly, those three years; they were allowed to
sail by the Coast Guard. That are some that make me believe that they in fact were able to secure the necessary renewal.
Q: If the Coast Guard clears a vessel to sail, what would that mean?
Atty. Sarenas: Objection.
Court: He already answered that in the cross examination to the effect that if it was allowed, referring to MV Vector, to sail, where
it is loaded and that it was scheduled for a destination by the Coast Guard, it means that it has Certificate of Inspection extended
as assured to this witness by Restituto Abalos. That in no case MV Vector will be allowed to sail if the Certificate of inspection is,
indeed, not to be extended. That was his repeated explanation to the cross-examination. So, there is no need to clarify the same
in the re-direct examination. 27
Caltex and Vector Shipping Corporation had been doing business since 1985, or for about two years before the tragic incident
occurred in 1987. Past services rendered showed no reason for Caltex to observe a higher degree of diligence.
Clearly, as a mere voyage charterer, Caltex had the right to presume that the ship was seaworthy as even the Philippine Coast
Guard itself was convinced of its seaworthiness. All things considered, we find no legal basis to hold petitioner liable for
damages.
As Vector Shipping Corporation did not appeal from the Court of Appeals' decision, we limit our ruling to the liability of Caltex
alone. However, we maintain the Court of Appeals' ruling insofar as Vector is concerned.
WHEREFORE, the Court hereby GRANTS the petition and SETS ASIDE the decision of the Court of Appeals in CA-G.R. CV No.
39626, promulgated on April 15, 1997, insofar as it held Caltex liable under the third party complaint to reimburse/indemnify
defendant Sulpicio Lines, Inc. the damages the latter is adjudged to pay plaintiffs-appellees. The Court AFFIRMS the decision of
the Court of Appeals insofar as it orders Sulpicio Lines, Inc. to pay the heirs of Sebastian E. Cañezal and Corazon Cañezal
damages as set forth therein. Third-party defendant-appellee Vector Shipping Corporation and Francisco Soriano are held liable
to reimburse/indemnify defendant Sulpicio Lines, Inc. whatever damages, attorneys' fees and costs the latter is adjudged to pay
plaintiffs-appellees in the case.
G.R. No. 110398 November 7, 1997

NEGROS NAVIGATION CO., INC., petitioner,
vs. THE COURT OF APPEALS, RAMON MIRANDA, SPS. RICARDO and VIRGINIA DE LA VICTORIA, respondents.
This is a petition for review on certiorari of the decision of the Court of Appeals affirming with modification the Regional Trial
Court's award of damages to private respondents for the death of relatives as a result of the sinking of petitioner's vessel.
In April of 1980, private respondent Ramon Miranda purchased from the Negros Navigation Co., Inc. four special cabin tickets
(#74411, 74412, 74413 and 74414) for his wife, daughter, son and niece who were going to Bacolod City to attend a family
reunion. The tickets were for Voyage No. 457-A of the M/V Don Juan, leaving Manila at 1:00 p.m. on April 22, 1980.
The ship sailed from the port of Manila on schedule.
At about 10:30 in the evening of April 22, 1980, the Don Juan collided off the Tablas Strait in Mindoro, with the M/T Tacloban
City, an oil tanker owned by the Philippine National Oil Company (PNOC) and the PNOC Shipping and Transport Corporation
(PNOC/STC). As a result, the M/V Don Juan sank. Several of her passengers perished in the sea tragedy. The bodies of some of
the victims were found and brought to shore, but the four members of private respondents' families were never found.
Private respondents filed a complaint on July 16, 1980 in the Regional Trial Court of Manila, Branch 34, against the Negros
Navigation, the Philippine National Oil Company (PNOC), and the PNOC Shipping and Transport Corporation (PNOC/STC),
seeking damages for the death of Ardita de la Victoria Miranda, 48, Rosario V. Miranda, 19, Ramon V. Miranda, Jr., 16, and
Elfreda de la Victoria, 26.
13
In its answer, petitioner admitted that private respondents purchased ticket numbers 74411, 74412, 74413 and 74414; that the
ticket numbers were listed in the passenger manifest; and that the Don Juan left Pier 2, North Harbor, Manila on April 22, 1980
and sank that night after being rammed by the oil tanker M/T Tacloban City, and that, as a result of the collision, some of the
passengers of the M/V Don Juan died. Petitioner, however, denied that the four relatives of private respondents actually boarded
the vessel as shown by the fact that their bodies were never recovered. Petitioner further averred that the Don Juan was
seaworthy and manned by a full and competent crew, and that the collision was entirely due to the fault of the crew of the
M/T Tacloban City.
On January 20, 1986, the PNOC and petitioner Negros Navigation Co., Inc. entered into a compromise agreement whereby
petitioner assumed full responsibility for the payment and satisfaction of all claims arising out of or in connection with the collision
and releasing the PNOC and the PNOC/STC from any liability to it. The agreement was subsequently held by the trial court to be
binding upon petitioner, PNOC and PNOC/STC. Private respondents did not join in the agreement.
After trial, the court rendered judgment on February 21, 1991, the dispositive portion of which leads as follows:
WHEREFORE, in view of the foregoing, judgment is hereby rendered in favor of the plaintiffs, ordering all the defendants to pay
jointly and severally to the plaintiffs damages as follows:
To Ramon Miranda:
P42,025.00 for actual damages;
P152,654.55 as compensatory damages for loss of

earning capacity of his wife;
P90,000.00 as compensatory damages for wrongful

death of three (3) victims;
P300,000.00 as moral damages;
P50,000.00 as exemplary damages, all in the total

amount of P634,679.55; and
P40,000.00 as attorney's fees.
To Spouses Ricardo and Virginia de la Victoria:

earning capacity;

death;

On appeal, the Court of Appeals1 affirmed the decision of the Regional Trial Court with modification —
1. Ordering and sentencing defendants-appellants, jointly and severally, to pay plaintiff-appellee Ramon Miranda the amount of
P23,075.00 as actual damages instead of P42,025.00;
14
2. Ordering and sentencing defendants-appellants, jointly and severally, to pay plaintiff-appellee Ramon Miranda the amount of
P150,000.00, instead of P90,000.00, as compensatory damages for the death of his wife and two children;
3. Ordering and sentencing defendants-appellants, jointly and severally, to pay plaintiffs-appellees Dela Victoria spouses the
amount of P50,000.00, instead of P30,000.00, as compensatory damages for the death of their daughter Elfreda Dela Victoria;
Hence this petition, raising the following issues:
(1) whether the members of private respondents' families were actually passengers of the Don Juan;
(2) whether the ruling in Mecenas v. Court of Appeals,2 finding the crew members of petitioner to be grossly negligent in the
performance of their duties, is binding in this case;
(3) whether the total loss of the M/V Don Juan extinguished petitioner's liability; and
(4) whether the damages awarded by the appellate court are excessive, unreasonable and unwarranted.
First. The trial court held that the fact that the victims were passengers of the M/V Don Juan was sufficiently proven by private
respondent Ramon Miranda, who testified that he purchased tickets numbered 74411, 74412, 74413, and 74414 at P131.30
each from the Makati office of petitioner for Voyage No. 47-A of the M/V Don Juan, which was leaving Manila on April 22, 1980.
This was corroborated by the passenger manifest (Exh. E) on which the numbers of the tickets and the names of Ardita Miranda
and her children and Elfreda de la Victoria appear.
Petitioner contends that the purchase of the tickets does not necessarily mean that the alleged victims actually took the trip.
Petitioner asserts that it is common knowledge that passengers purchase tickets in advance but do not actually use them. Hence,
private respondent should also prove the presence of the victims on the ship. The witnesses who affirmed that the victims were
on the ship were biased and unreliable.
This contention is without merit. Private respondent Ramon Miranda testified that he personally took his family and his niece to
the vessel on the day of the voyage and stayed with them on the ship until it was time for it to leave. There is no reason he
should claim members of his family to have perished in the accident just to maintain an action. People do not normally lie about
so grave a matter as the loss of dear ones. It would be more difficult for private respondents to keep the existence of their
relatives if indeed they are alive than it is for petitioner to show the contrary. Petitioner's only proof is that the bodies of the
supposed victims were not among those recovered from the site of the mishap. But so were the bodies of the other passengers
reported missing not recovered, as this Court noted in the Mecenas3 case.
Private respondent Miranda's testimony was corroborated by Edgardo Ramirez. Ramirez was a seminarian and one of the
survivors of the collision. He testified that he saw Mrs. Miranda and Elfreda de la Victoria on the ship and that he talked with
them. He knew Mrs. Miranda who was his teacher in the grade school. He also knew Elfreda who was his childhood friend and
townmate. Ramirez said he was with Mrs. Miranda and her children and niece from 7:00 p.m. until 10:00 p.m. when the collision
happened and that he in fact had dinner with them. Ramirez said he and Elfreda stayed on the deck after dinner and it was there
where they were jolted by the collision of the two vessels. Recounting the moments after the collision, Ramirez testified that
Elfreda ran to fetch Mrs. Miranda. He escorted her to the room and then tried to go back to the deck when the lights went out. He
tried to return to the cabin but was not able to do so because it was dark and there was a stampede of passengers from the deck.
Petitioner casts doubt on Ramirez' testimony, claiming that Ramirez could not have talked with the victims for about three hours
and not run out of stories to tell, unless Ramirez had a "storehouse" of stories. But what is incredible about acquaintances thrown
together on a long journey staying together for hours on end, in idle conversation precisely to while the hours away?
Petitioner also points out that it took Ramirez three (3) days before he finally contacted private respondent Ramon Miranda to tell
him about the fate of his family. But it is not improbable that it took Ramirez three days before calling on private respondent
Miranda to tell him about the last hours of Mrs. Miranda and her children and niece, in view of the confusion in the days following
the collision as rescue teams and relatives searched for survivors.
15
Indeed, given the facts of this case, it is improper for petitioner to even suggest that private respondents' relatives did not board
the ill-fated vessel and perish in the accident simply because their bodies were not recovered.
Second. In finding petitioner guilty of negligence and in failing to exercise the extraordinary diligence required of it in the carriage
of passengers, both the trial court and the appellate court relied on the findings of this Court in Mecenas v. Intermediate Appellate
Court,4 which case was brought for the death of other passengers. In that case it was found that although the proximate cause of
the mishap was the negligence of the crew of the M/T Tacloban City, the crew of the Don Juan was equally negligent as it found
that the latter's master, Capt. Rogelio Santisteban, was playing mahjong at the time of collision, and the officer on watch, Senior
Third Mate Rogelio De Vera, admitted that he failed to call the attention of Santisteban to the imminent danger facing them. This
Court found that Capt. Santisteban and the crew of the M/V Don Juan failed to take steps to prevent the collision or at least delay
the sinking of the ship and supervise the abandoning of the ship.
Petitioner Negros Navigation was found equally negligent in tolerating the playing of mahjong by the ship captain and other crew
members while on board the ship and failing to keep the M/V Don Juan seaworthy so much so that the ship sank within 10 to 15
minutes of its impact with the M/T Tacloban City.
In addition, the Court found that the Don Juan was overloaded. The Certificate of Inspection, dated August 27, 1979, issued by
the Philippine Coast Guard Commander at Iloilo City stated that the total number of persons allowed on the ship was 864, of
whom 810 are passengers, but there were actually 1,004 on board the vessel when it sank, 140 persons more than the maximum
number that could be safely carried by it.
Taking these circumstances together, and the fact that the M/V Don Juan, as the faster and better-equipped vessel, could have
avoided a collision with the PNOC tanker, this Court held that even if the Tacloban City had been at fault for failing to observe an
internationally-recognized rule of navigation, the Don Juan was guilty of contributory negligence. Through Justice Feliciano, this
Court held:
The grossness of the negligence of the "Don Juan" is underscored when one considers the foregoing circumstances in the
context of the following facts: Firstly, the "Don Juan" was more than twice as fast as the "Tacloban City." The "Don Juan's" top
speed was 17 knots; while that of the "Tacloban City" was 6.3. knots. Secondly, the "Don Juan" carried the full complement of
officers and crew members specified for a passenger vessel of her class. Thirdly, the "Don Juan" was equipped with radar which
was functioning that night. Fourthly, the "Don Juan's officer on-watch had sighted the "Tacloban City" on his radar screen while
the latter was still four (4) nautical miles away. Visual confirmation of radar contact was established by the "Don Juan" while the
"Tacloban City" was still 2.7 miles away. In the total set of circumstances which existed in the instant case, the "Don Juan," had it
taken seriously its duty of extraordinary diligence, could have easily avoided the collision with the "Tacloban City." Indeed, the
"Don Juan" might well have avoided the collision even if it had exercised ordinary diligence merely.
It is true that the "Tacloban City" failed to follow Rule 18 of the International Rules of the Road which requires two (2) power-
driven vessels meeting end on or nearly end on each to alter her course to starboard (right) so that each vessel may pass on the
port side (left) of the other. The "Tacloban City," when the two (2) vessels were only three-tenths (0.3) of a mile apart, turned (for
the second time) 15° to port side while the "Don Juan" veered hard to starboard. . . . [But] "route observance" of the International
Rules of the Road will not relieve a vessel from responsibility if the collision could have been avoided by proper care and skill on
her part or even by a departure from the rules.
In the petition at bar, the "Don Juan" having sighted the "Tacloban City" when it was still a long way off was negligent in failing to
take early preventive action and in allowing the two (2) vessels to come to such close quarters as to render the collision inevitable
when there was no necessity for passing so near to the "Tacloban City" as to create that hazard or inevitability, for the "Don
Juan" could choose its own distance. It is noteworthy that the "Tacloban City," upon turning hard to port shortly before the
moment of collision, signalled its intention to do so by giving two (2) short blasts with its horn. The "Don Juan" gave no answering
horn blast to signal its own intention and proceeded to turn hard to starboard.
We conclude that Capt. Santisteban and Negros Navigation are properly held liable for gross negligence in connection with the
collision of the "Don Juan" and "Tacloban City" and the sinking of the "Don Juan" leading to the death of hundreds of passengers.
. . .5
16
Petitioner criticizes the lower court's reliance on the Mecenas case, arguing that, although this case arose out of the same
incident as that involved in Mecenas, the parties are different and trial was conducted separately. Petitioner contends that the
decision in this case should be based on the allegations and defenses pleaded and evidence adduced in it or, in short, on the
record of this case.
The contention is without merit. What petitioner contends may be true with respect to the merits of the individual claims against
petitioner but not as to the cause of the sinking of its ship on April 22, 1980 and its liability for such accident, of which there can
only be one truth. Otherwise, one would be subscribing to the sophistry: truth on one side of the Pyrenees, falsehood on the
other!
Adherence to the Mecenas case is dictated by this Court's policy of maintaining stability in jurisprudence in accordance with the
legal maxim "stare decisis et non quieta movere" (Follow past precedents and do not disturb what has been settled.) Where, as in
this case, the same questions relating to the same event have been put forward by parties similarly situated as in a previous case
litigated and decided by a competent court, the rule of stare decisis is a bar to any attempt to relitigate the same issue.6 In Woulfe
v. Associated Realties Corporation,7 the Supreme Court of New Jersey held that where substantially similar cases to the pending
case were presented and applicable principles declared in prior decisions, the court was bound by the principle of stare decisis.
Similarly, in State ex rel. Tollinger v. Gill,8 it was held that under the doctrine of stare decisis a ruling is final even as to parties
who are strangers to the original proceeding and not bound by the judgment under the res judicata doctrine. The Philadelphia
court expressed itself in this wise: "Stare decisis simply declares that, for the sake of certainty, a conclusion reached in one case
should be applied to those which follow, if the facts are substantially the same, even though the parties may be different." 9 Thus,
in J.M. Tuason v. Mariano, supra, this Court relied on its rulings in other cases involving different parties in sustaining the validity
of a land title on the principle of "stare decisis et non quieta movere."
Indeed, the evidence presented in this case was the same as those presented in the Mecenas case, to wit:
Document Mecenas case This case
Decision of Commandant, Exh. 10 10 Exh. 11-B-NN/X

Phil. Coast Guard
in BMI Case No.
415-80 dated 3/26/81
Decision of the Minister Exh. 11 11 Exh. ZZ

of National Defense
dated 3/12/82
Resolution on the Exh. 13 12 Exh. AAA
motion for reconsideration (private
of the decision of the respondents)
Minister of National
defense dated 7/27/84
Certificate of Exh. 1-A 13 Exh. 19-NN

inspection dated
8/27/79
Certificate of Stability Exh. 6-A 14 Exh. 19-D-NN

dated 12/16/76
Nor is it true that the trial court merely based its decision on the Mecenas case. The trial court made its own independent findings
on the basis of the testimonies of witnesses, such as Senior Third Mate Rogelio de Vera, who incidentally gave substantially the
same testimony on petitioner's behalf before the Board of Marine Inquiry. The trial court agreed with the conclusions of the then
Minister of National Defense finding both vessels to be negligent.
17
Third. The next issue is whether petitioner is liable to pay damages notwithstanding the total loss of its ship. The issue is not one
of first impression. The rule is well-entrenched in our jurisprudence that a shipowner may be held liable for injuries to passengers
notwithstanding the exclusively real and hypothecary nature of maritime law if fault can be attributed to the shipowner. 15
In Mecenas, this Court found petitioner guilty of negligence in (1) allowing or tolerating the ship captain and crew members in
playing mahjong during the voyage, (2) in failing to maintain the vessel seaworthy and (3) in allowing the ship to carry more
passengers than it was allowed to carry. Petitioner is, therefore, clearly liable for damages to the full extent.
Fourth. Petitioner contends that, assuming that the Mecenas case applies, private respondents should be allowed to claim only
P43,857.14 each as moral damages because in the Mecenas case, the amount of P307,500.00 was awarded to the seven
children of the Mecenas couple. Under petitioner's formula, Ramon Miranda should receive P43,857.14, while the De la Victoria
spouses should receive P97,714.28.
Here is where the principle of stare decisis does not apply in view of differences in the personal circumstances of the victims. For
that matter, differentiation would be justified even if private respondents had joined the private respondents in the Mecenas case.
The doctrine of stare decisis works as a bar only against issues litigated in a previous case. Where the issue involved was not
raised nor presented to the court and not passed upon by the court in the previous case, the decision in the previous case is not
stare decisis of the question presently presented. 16 The decision in the Mecenas case relates to damages for which petitioner
was liable to the claimants in that case.
In the case at bar, the award of P300,000.00 for moral damages is reasonable considering the grief petitioner Ramon Miranda
suffered as a result of the loss of his entire family. As a matter of fact, three months after the collision, he developed a heart
condition undoubtedly caused by the strain of the loss of his family. The P100,000.00 given to Mr. and Mrs. de la Victoria is
likewise reasonable and should be affirmed.
As for the amount of civil indemnity awarded to private respondents, the appellate court's award of P50,000.00 per victim should
be sustained. The amount of P30,000.00 formerly set in De Lima v. Laguna Tayabas Co., 17 Heirs of Amparo delos Santos
v. Court of Appeals, 18 and Philippine Rabbit Bus Lines, Inc. v. Intermediate Appellate Court 19as benchmark was subsequently
increased to P50,000.00 in the case of Sulpicio Lines, Inc. v. Court of Appeals, 20which involved the sinking of another interisland
ship on October 24, 1988.
We now turn to the determination of the earning capacity of the victims. With respect to Ardita Miranda, the trial court awarded
damages computed as follows: 21
In the case of victim Ardita V. Miranda whose age at the time of the accident was 48 years, her life expectancy was computed to
be 21.33 years, and therefore, she could have lived up to almost 70 years old. Her gross earnings for 21.33 years based on
P10,224.00 per annum, would be P218,077.92. Deducting therefrom 30% as her living expenses, her net earnings would be
P152,654.55, to which plaintiff Ramon Miranda is entitled to compensatory damages for the loss of earning capacity of his wife. In
considering 30% as the living expenses of Ardita Miranda, the Court takes into account the fact that plaintiff and his wife were
supporting their daughter and son who were both college students taking Medicine and Law respectively.
In accordance with the ruling in Villa-Rey Transit, Inc. v. Court of Appeals, 22 we think the life expectancy of Ardita Miranda was
correctly determined to be 21.33 years, or up to age 69. Petitioner contends, however, that Mrs. Miranda would have retired from
her job as a public school teacher at 65, hence her loss of earning capacity should be reckoned up to 17.33 years only.
The accepted formula for determining life expectancy is 2/3 multiplied by (80 minus the age of the deceased). It may be that in
the Philippines the age of retirement generally is 65 but, in calculating the life expectancy of individuals for the purpose of
determining loss of earning capacity under Art. 2206(1) of the Civil Code, it is assumed that the deceased would have earned
income even after retirement from a particular job. In this case, the trial court took into account the fact that Mrs. Miranda had a
master's degree and a good prospect of becoming principal of the school in which she was teaching. There was reason to believe
that her income would have increased through the years and she could still earn more after her retirement, e.g., by becoming a
consultant, had she not died. The gross earnings which Mrs. Miranda could reasonably be expected to earn were it not for her
untimely death was, therefore, correctly computed by the trial court to be P218,077.92 (given a gross annual income of
P10,224.00 and life expectancy of 21.33 years).
18
Petitioner contends that from the amount of gross earnings, 60% should be deducted as necessary living expenses, not merely
30% as the trial court allowed. Petitioner contends that 30% is unrealistic, considering that Mrs. Miranda's earnings would have
been subject to taxes, social security deductions and inflation.
We agree with this contention. In Villa-Rey Transit, Inc. v. Court of Appeals, 23 the Court allowed a deduction of P1,184.00 for
living expenses from the P2,184.00 annual salary of the victim, which is roughly 54.2% thereof. The deceased was 29 years old
and a training assistant in the Bacnotan Cement Industries. In People v. Quilation, 24 the deceased was a 26-year old laborer
earning a daily wage. The court allowed a deduction of P120,000.00 which was 51.3% of his annual gross earnings of
P234,000.00. In People v. Teehankee, 25 the court allowed a deduction of P19,800.00, roughly 42.4% thereof from the
deceased's annual salary of P46,659.21. The deceased, Maureen Hultman, was 17 years old and had just received her first
paycheck as a secretary. In the case at bar, we hold that a deduction of 50% from Mrs. Miranda's gross earnings (P218,077.92)
would be reasonable, so that her net earning capacity should be P109,038.96. There is no basis for supposing that her living
expenses constituted a smaller percentage of her gross income than the living expenses in the decided cases. To hold that she
would have used only a small part of her income for herself, a larger part going to the support of her children would be conjectural
and unreasonable.
As for Elfreda de la Victoria, the trial court found that, at the time of her death, she was 26 years old, a teacher in a private school
in Malolos, Bulacan, earning P6,192.00 per annum. Although a probationary employee, she had already been working in the
school for two years at the time of her death and she had a general efficiency rating of 92.85% and it can be presumed that, if not
for her untimely death, she would have become a regular teacher. Hence, her loss of earning capacity is P111,456.00, computed
as follows:
net earning = life x gross less reasonable
capacity (x) expectancy annual & necessary
income living expenses
(50%)
x = [2(80-26)] x [P6,192.00 - P3,096.00]
————
= 36 x 3,096.00
= P111,456.00
On the other hand, the award of actual damages in the amount of P23,075.00 was determined by the Court of Appeals on the
basis receipts submitted by private respondents. This amount is reasonable considering the expenses incurred by private
respondent Miranda in organizing three search teams to look for his family, spending for transportation in going to places such as
Batangas City and Iloilo, where survivors and the bodies of other victims were found, making long distance calls, erecting a
monument in honor of the four victims, spending for obituaries in the Bulletin Today and for food, masses and novenas.
Petitioner's contention that the expenses for the erection of a monument and other expenses for memorial services for the victims
should be considered included in the indemnity for death awarded to private respondents is without merit. Indemnity for death is
given to compensate for violation of the rights of the deceased, i.e., his right to life and physical integrity. 26 On the other hand,
damages incidental to or arising out of such death are for pecuniary losses of the beneficiaries of the deceased.
As for the award of attorney's fees, we agree with the Court of Appeals that the amount of P40,000.00 for private respondent
Ramon Miranda and P15,000.00 for the de la Victoria spouses is justified. The appellate court correctly held:
The Mecenas case cannot be made the basis for determining the award for attorney's fees. The award would naturally vary or
differ in each case. While it is admitted that plaintiff-appellee Ramon Miranda who is himself a lawyer, represented also plaintiffs-
19
appellees Dela Victoria spouses, we note that separate testimonial evidence were adduced by plaintiff-appellee Ramon Miranda
(TSN, February 26, 1982, p. 6) and plaintiffs-appellees spouses Dela Victoria (TSN, August 13, 1981, p. 43). Considering the
amount of work and effort put into the case as indicated by the voluminous transcripts of stenographic notes, we find no reason to
disturb the award of P40,000.00 for plaintiff-appellee Ramon Miranda and P15,000.00 for plaintiffs-appellees Dela Victoria
spouses. 27
The award of exemplary damages should be increased to P300,000.00 for Ramon Miranda and P100,000.00 for the de la
Victoria spouses in accordance with our ruling in the Mecenas case:
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. The Court will take judicial notice
of the dreadful regularity with which grievous maritime disasters occur in our waters with massive loss of life. The bulk of our
population is too poor to afford domestic air transportation. So it is that notwithstanding the frequent sinking of passenger vessels
in our waters, crowds of people continue to travel by sea. This Court is prepared to use the instruments given to it by the law for
securing the ends of law and public policy. One of those instruments is the institution of exemplary damages; one of those ends,
of special importance in an archipelagic state like the Philippines, is the safe and reliable carriage of people and goods by sea. 28
WHEREFORE, the decision of the Court of Appeals is AFFIRMED with modification and petitioner is ORDERED to pay private
respondents damages as follows:
To private respondent Ramon Miranda:

earning capacity of his wife;
death of three (3) victims;

To private respondents Spouses Ricardo and Virginia de la Victoria:

earning capacity;

death;


20
Petitioners are further ordered to pay costs of suit.
In the event the Philippine National Oil Company and/or the PNOC Shipping and Transport Corporation pay or are required to
pay all or a portion of the amounts adjudged, petitioner Negros Navigation Co., Inc. shall reimburse either of them such amount
or amounts as either may have paid, and in the event of failure of Negros Navigation Co., Inc., to make the necessary
reimbursement, PNOC and/or PNOC/STC shall be entitled to a writ of execution without need of filing another action.
G.R. No. 106999 June 20, 1996

PHILIPPINE HOME ASSURANCE CORPORATION, petitioner,
vs. COURT OF APPEALS and EASTERN SHIPPING LINES, INC., respondents.
Eastern Shipping Lines, Inc. (ESLI) loaded on board SS Eastern Explorer in Kobe, Japan, the following shipment for carriage to
Manila and Cebu, freight pre-paid and in good order and condition, viz: (a) two (2) boxes internal combustion engine parts,
consigned to William Lines, Inc. under Bill of Lading No. 042283; (b) ten (l0) metric ton. (334 bags) ammonium chloride,
consigned to Orca's Company under Bill of Lading No. KCE-I2; (c) two hundred (200) bags Glue 300, consigned to Pan Oriental
Match Company under Bill of Lading No. KCE-8; and (d) garments, consigned to Ding Velayo under Bills of Lading Nos. KMA-73
and KMA-74.
While the vessel was off Okinawa, Japan, a small flame was detected on the acetylene cylinder located in the accommodation
area near the engine room on the main deck level. As the crew was trying to extinguish the fire, the acetylene cylinder suddenly
exploded sending a flash of flame throughout the accommodation area, thus causing death and severe injuries to the crew and
instantly setting fire to the whole superstructure of the vessel. The incident forced the master and the crew to abandon the ship.
Thereafter, SS Eastern Explorer was found to be a constructive total loss and its voyage was declared abandoned.
Several hours later, a tugboat under the control of Fukuda Salvage Co. arrived near the vessel and commenced to tow the vessel
for the port of Naha, Japan.
Fire fighting operations were again conducted at the said port. After the fire was extinguished, the cargoes which were saved
were loaded to another vessel for delivery to their original ports of destination. ESLI charged the consignees several amounts
corresponding to additional freight and salvage charges, as follows: (a) for the goods covered by Bill of Lading No. 042283, ESLI
charged the consignee the sum of P1,927.65, representing salvage charges assessed against the goods; (b) for the goods
covered by Bill of Lading No. KCE-12, ESLI charged the consignee the sum of P2,980.64 for additional freight and P826.14 for
salvage charges against the goods; (c) for the goods covered by Bill of Lading No. KCE-8, ESLI charged the consignee the sum
of P3,292.26 for additional freight and P4,130.68 for salvage charges against the goods; and
(d) for the goods under Bills of Lading Nos. KMA-73 and KMA-74, ESLI charged the consignee the sum of P8,337.06 for salvage
charges against the goods.
The charges were all paid by Philippine Home Assurance Corporation (PHAC) under protest for and in behalf of the consignees.
PHAC, as subrogee of the consignees, thereafter filed a complaint before the Regional Trial Court of Manila, Branch 39, against
ESLI to recover the sum paid under protest on the ground that the same were actually damages directly brought about by the
fault, negligence, illegal act and/or breach of contract of ESLI.
In its answer, ESLI contended that it exercised the diligence required by law in the handling, custody and carriage of the
shipment; that the fire was caused by an unforeseen event; that the additional freight charges are due and demandable pursuant
to the Bill of Lading; 1 and that salvage charges are properly collectible under Act No. 2616, known as the Salvage Law.
The trial court dismissed PHAC's complaint and ruled in favor of ESLI ratiocinating thus:
The question to be resolved is whether or not the fire on the vessel which was caused by the explosion of an acetylene cylinder
loaded on the same was the fault or negligence of the defendant.
21
Evidence has been presented that the SS "Eastern Explorer" was a seaworthy vessel (Deposition of Jumpei Maeda, October 23,
1980, p. 3) and before the ship loaded the Acetylene Cylinder No. NCW 875, the same has been tested, checked and examined
and was certified to have complied with the required safety measures and standards (Deposition of Senjei Hayashi, October 23,
1980, pp. 2-3). When the fire was detected by the crew, fire fighting operations was immediately conducted but due to the
explosion of the acetylene cylinder, the crew were unable to contain the fire and had to abandon the ship to save their lives and
were saved from drowning by passing vessels in the vicinity. The burning of the vessel rendering it a constructive total loss and
incapable of pursuing its voyage to the Philippines was, therefore, not the fault or negligence of defendant but a natural disaster
or calamity which nobody would like to happen. The salvage operations conducted by Fukuda Salvage Company (Exhibits "4-A"
and "6-A") was perfectly a legal operation and charges made on the goods recovered were legitimate charges.
Act No. 2616, otherwise known as the Salvage Law, is thus applicable to the case at bar. Section 1 of Act No. 2616 states:
Sec 1. When in case of shipwreck, the vessel or its cargo shall be beyond the control of the crew, or shall have been abandoned
by them, and picked up and conveyed to a safe place by other persons, the latter shall be entitled to a reward for the salvage.
Those who, not being included in the above paragraph, assist in saving a vessel or its cargo from shipwreck, shall be entitled to
like reward.
In relation to the above provision, the Supreme Court has ruled in Erlanger & Galinger v. Swedish East Asiatic Co., Ltd., 34 Phil.
178, that three elements are necessary to a valid salvage claim, namely (a)a marine peril (b) service voluntarily rendered when
not required as an existing duty or from a special contract and (c) success in whole or in part, or that the service rendered
contributed to such success.
The above elements are all present in the instant case. Salvage charges may thus be assessed on the cargoes saved from the
vessel. As provided for in Section 13 of the Salvage Law, "The expenses of salvage, as well as the reward for salvage or
assistance, shall be a charge on the things salvaged or their value." In Manila Railroad Co. v. Macondray Co., 37 Phil. 583, it was
also held that "when a ship and its cargo are saved together, the salvage allowance should be charged against the ship and
cargo in the proportion of their respective values, the same as in a case of general average . . ." Thus, the "compensation to be
paid by the owner of the cargo is in proportion to the value of the vessel and the value of the cargo saved." (Atlantic Gulf and
Pacific Co. v. Uchida Kisen Kaisha, 42 Phil. 321). (Memorandum for Defendant, Records, pp. 212-213).
With respect to the additional freight charged by defendant from the consignees of the goods, the same are also validly
demandable.
As provided by the Civil Code:
Art. 1174. Except in cases expressly specified by law, or when it is otherwise declared by stipulation, or when the nature of the
obligation require the assumption of risk, no person shall be responsible for those events which could not be foreseen, or which
though foreseen, were inevitable.
Art 1266. The debtor in obligations to do shall also be released when the prestation becomes legally or physically impossible
without the fault of the obligor."
The burning of "EASTERN EXPLORER" while off Okinawa rendered it physically impossible for defendant to comply with its
obligation of delivering the goods to their port of destination pursuant to the contract of carriage. Under Article 1266 of the Civil
Code, the physical impossibility of the prestation extinguished defendant's obligation..
It is but legal and equitable for the defendant therefore, to demand additional freight from the consignees for forwarding the
goods from Naha, Japan to Manila and Cebu City on board another vessel, the "EASTERN MARS." This finds support under
Article 844 of the Code of Commerce which provides as follows:
Art. 844. A captain who may have taken on board the goods saved from the wreck shall continue his course to the port of
destination; and on arrival should deposit the same, with judicial intervention at the disposal of their legitimate owners. . . .
22
The owners of the cargo shall defray all the expenses of this arrival as well as the payment of the freight which, after taking into
consideration the circumstances of the case, may be fixed by agreement or by a judicial decision.
Furthermore, the terms and conditions of the Bill of Lading authorize the imposition of additional freight charges in case of forced
interruption or abandonment of the voyage. At the dorsal portion of the Bills of Lading issued to the consignees is this stipulation:
12. All storage, transshipment, forwarding or other disposition of cargo at or from a port of distress or other place where there has
been a forced interruption or abandonment of the voyage shall be at the expense of the owner, shipper, consignee of the goods
or the holder of this bill of lading who shall be jointly and severally liable for all freight charges and expenses of every kind
whatsoever, whether payable in advance or not that may be incurred by the cargo in addition to the ordinary freight, whether the
service be performed by the named carrying vessel or by carrier's other vessels or by strangers. All such expenses and charges
shall be due and payable day by day immediately when they are incurred.
The bill of lading is a contract and the parties are bound by its terms (Gov't of the Philippine Islands vs. Ynchausti and Co., 40
Phil. 219). The provision quoted is binding upon the consignee.
Defendant therefore, can validly require payment of additional freight from the consignee. Plaintiff can not thus recover the
additional freight paid by the consignee to defendant. (Memorandum for Defendant, Record, pp. 215-216).2
On appeal to the Court of Appeals, respondent court affirmed the trial court's findings and conclusions, 3 hence, the present
petition for review before this Court on the following errors:
I. THE RESPONDENT COURT ERRONEOUSLY ADOPTED WITH APPROVAL THE TRIAL COURT'S FINDINGS THAT THE
BURNING OF THE SS "EASTERN EXPLORER", RENDERING ET A CONSTRUCTIVE TOTAL LOSS, IS A NATURAL
DISASTER OR CALAMITY WHICH NOBODY WOULD LIKE TO HAPPEN, DESPITE EXISTING JURISPRUDENCE TO THE
CONTRARY.
II. THE RESPONDENT COURT ARBITRARILY RULED THAT THE BURNING OF THE SS "EASTERN EXPLORER" WAS NOT
THE FAULT AND NEGLIGENCE OF RESPONDENT EASTERN SHIPPING LINES.
III. THE RESPONDENT COURT COMMITTED GRAVE ABUSE OF DISCRETION IN RULING THAT DEFENDANT HAD
EXERCISED THE EXTRAORDINARY DILIGENCE IN THE VIGILANCE OVER THE GOODS AS REQUIRED BY LAW.
IV. THE RESPONDENT COURT ARBITRARILY RULED THAT THE MARINE NOTE OF PROTEST AND STATEMENT OF
FACTS ISSUED BY THE VESSEL'S MASTER ARE NOT HEARSAY DESPITE THE FACT THAT THE VESSEL'S MASTER,
CAPT. LICAYLICAY WAS NOT PRESENTED COURT, WITHOUT EXPLANATION WHATSOEVER FOR HIS NON-
PRESENTATION, THUS, PETITIONER WAS DEPRIVED OF ITS RIGHT TO CROSS- EXAMINE THE AUTHOR THEREOF.
V. THE RESPONDENT COURT ERRONEOUSLY ADOPTED WITH APPROVAL THE TRIAL COURT'S CONCLUSION THAT
THE EXPENSES OR AVERAGES INCURRED IN SAVING THE CARGO CONSTITUTE GENERAL AVERAGE.
VI. THE RESPONDENT COURT ERRONEOUSLY ADOPTED THE TRIAL COURT'S RULING THAT PETITIONER WAS LIABLE
TO RESPONDENT CARRIER FOR ADDITIONAL FREIGHT AND SALVAGE CHARGES. 4
It is quite evident that the foregoing assignment of errors challenges the findings of fact and the appreciation of evidence made
by the trial court and later affirmed by respondent court. While it is a well-settled rule that only questions of law may be raised in a
petition for review under Rule 45 of the Rules of Court, it is equally well-settled that the same admits of the following exceptions,
namely: (a) when the conclusion is a finding grounded entirely on speculation, surmises or conjectures; (b) when the inference
made is manifestly mistaken, absurd or impossible; (c) where there is a grave abuse of discretion; (d) when the judgment is
based on a misapprehension of facts; (e) when the findings of fact are conflicting; (f) when the Court of Appeals, in making its
findings, went beyond the issues of the case and the same is contrary to the admissions of both appellant and appellee; (g) when
the findings of the Court of Appeals are contrary to those of the trial court; (h) when the findings of fact are conclusions without
citation of specific evidence on which they are based;
(i) when the facts set forth in the petition as well as in the petitioners' main and reply briefs are not disputed by the respondents;
and (j) when the finding of fact of the Court of Appeals is premised on the supposed absence of evidence and is contradicted by
23
the evidence on record. 5 Thus, if there is a showing, as in the instant case, that the findings complained of are totally devoid of
support in the records, or that they are so glaringly erroneous as to constitute grave abuse of discretion, the same may be
properly reviewed and evaluated by this Court.
It is worthy to note at the outset that the goods subject of the present controversy were neither lost nor damaged in transit by the
fire that razed the carrier. In fact, the said goods were all delivered to the consignees, even if the transshipment took longer than
necessary. What is at issue therefore is not whether or not the carrier is liable for the loss, damage, or deterioration of the goods
transported by them but who, among the carrier, consignee or insurer of the goods, is liable for the additional charges or
expenses incurred by the owner of the ship in the salvage operations and in the transshipment of the goods via a different carrier.
In absolving respondent carrier of any liability, respondent Court of Appeals sustained the trial court's finding that the fire that
gutted the ship was a natural disaster or calamity. Petitioner takes exception to this conclusion and we agree.
In our jurisprudence, fire may not be considered a natural disaster or calamity since it almost always arises from some act of man
or by human means.
It cannot be an act of God unless caused by lightning or a natural disaster or casualty not attributable to human agency. 6
In the case at bar, it is not disputed that a small flame was detected on the acetylene cylinder and that by reason thereof, the
same exploded despite efforts to extinguish the fire. Neither is there any doubt that the acetylene cylinder, obviously fully loaded,
was stored in the accommodation area near the engine room and not in a storage area considerably far, and in a safe distance,
from the engine room. Moreover, there was no showing, and none was alleged by the parties, that the fire was caused by a
natural disaster or calamity not attributable to human agency. On the contrary, there is strong evidence indicating that the
acetylene cylinder caught fire because of the fault and negligence of respondent ESLI, its captain and its crew.
First, the acetylene cylinder which was fully loaded should not have been stored in the accommodation area near the engine
room where the heat generated therefrom could cause the acetylene cylinder to explode by reason of spontaneous combustion.
Respondent ESLI should have easily foreseen that the acetylene cylinder, containing highly inflammable material was in real
danger of exploding because it was stored in close proximity to the engine room.
Second, respondent ESLI should have known that by storing the acetylene cylinder in the accommodation area supposed to be
reserved for passengers, it unnecessarily exposed its passengers to grave danger and injury. Curious passengers, ignorant of
the danger the tank might have on humans and property, could have handled the same or could have lighted and smoked
cigarettes while repairing in the accommodation area.
Third, the fact that the acetylene cylinder was checked, tested and examined and subsequently certified as having complied with
the safety measures and standards by qualified experts 7 before it was loaded in the vessel only shows to a great extent that
negligence was present in the handling of the acetylene cylinder after it was loaded and while it was on board the ship. Indeed,
had the respondent and its agents not been negligent in storing the acetylene cylinder near the engine room, then the same
would not have leaked and exploded during the voyage.
Verily, there is no merit in the finding of the trial court to which respondent court erroneously agreed that the fire was not the fault
or negligence of respondent but a natural disaster or calamity. The records are simply wanting in this regard.
Anent petitioner's objection to the admissibility of Exhibits "4'' and ''5", the Statement of Facts and the Marine Note of Protest
issued by Captain Tiburcio A. Licaylicay, we find the same impressed with merit because said documents are hearsay evidence.
Capt. Licaylicay, Master of S.S. Eastern Explorer who issued the said documents, was not presented in court to testify to the truth
of the facts he stated therein; instead, respondent ESLI presented Junpei Maeda, its Branch Manager in Tokyo and Yokohama,
Japan, who evidently had no personal knowledge of the facts stated in the documents at issue. It is clear from Section 36, Rule
130 of the Rules of Court that any evidence, whether oral or documentary, is hearsay if its probative value is not based on the
personal knowledge of the witness but on the knowledge of some other person not on the witness stand. Consequently, hearsay
evidence, whether objected to or not, has no probative value unless the proponent can show that the evidence falls within the
exceptions to the hearsay evidence rule. 8 It is excluded because the party against whom it is presented is deprived of his right
and opportunity to cross-examine the persons to whom the statements or writings are attributed.
24
On the issue of whether or not respondent court committed an error in concluding that the expenses incurred in saving the cargo
are considered general average, we rule in the affirmative. As a rule, general or gross averages include all damages and
expenses which are deliberately caused in order to save the vessel, its cargo, or both at the same time, from a real and known
risk 9 While the instant case may technically fall within the purview of the said provision, the formalities prescribed under Articles
813 10 and 814 11 of the Code of Commerce in order to incur the expenses and cause the damage corresponding to gross
average were not complied with. Consequently, respondent ESLI's claim for contribution from the consignees of the cargo at the
time of the occurrence of the average turns to naught.
Prescinding from the foregoing premises, it indubitably follows that the cargo consignees cannot be made liable to respondent
carrier for additional freight and salvage charges. Consequently, respondent carrier must refund to herein petitioner the amount it
paid under protest for additional freight and salvage charges in behalf of the consignees.
WHEREFORE, the judgment appealed from is hereby REVERSED and SET ASIDE. Respondent Eastern Shipping Lines, Inc. is
ORDERED to return to petitioner Philippine Home Assurance Corporation the amount it paid under protest in behalf of the
consignees herein.
G.R. No. 143133 June 5, 2002
BELGIAN OVERSEAS CHARTERING AND SHIPPING N.V. and JARDINE DAVIES TRANSPORT SERVICES,
INC., petitioners,
vs. PHILIPPINE FIRST INSURANCE CO., INC., respondents.
Proof of the delivery of goods in good order to a common carrier and of their arrival in bad order at their destination constitutes
prima facie fault or negligence on the part of the carrier. If no adequate explanation is given as to how the loss, the destruction or
the deterioration of the goods happened, the carrier shall be held liable therefor.
Statement of the Case
Before us is a Petition for Review under Rule 45 of the Rules of Court, assailing the July 15, 1998 Decision 1 and the May 2, 2000
Resolution2 of the Court of Appeals3 (CA) in CA-GR CV No. 53571. The decretal portion of the Decision reads as follows:
"WHEREFORE, in the light of the foregoing disquisition, the decision appealed from is hereby REVERSED and SET ASIDE.
Defendants-appellees are ORDERED to jointly and severally pay plaintiffs-appellants the following:
'1) FOUR Hundred Fifty One Thousand Twenty-Seven Pesos and 32/100 (P451,027.32) as actual damages, representing the
value of the damaged cargo, plus interest at the legal rate from the time of filing of the complaint on July 25, 1991, until fully paid;
'2) Attorney's fees amounting to 20% of the claim; and
'3) Costs of suit.'"4
The assailed Resolution denied petitioner's Motion for Reconsideration.
The CA reversed the Decision of the Regional Trial Court (RTC) of Makati City (Branch 134), which had disposed as follows:
"WHEREFORE, in view of the foregoing, judgment is hereby rendered, dismissing the complaint, as well as defendant's
counterclaim."5
The Facts
The factual antecedents of the case are summarized by the Court of Appeals in this wise:
"On June 13, 1990, CMC Trading A.G. shipped on board the M/V 'Anangel Sky' at Hamburg, Germany 242 coils of various Prime
Cold Rolled Steel sheets for transportation to Manila consigned to the Philippine Steel Trading Corporation. On July 28, 1990,
M/V Anangel Sky arrived at the port of Manila and, within the subsequent days, discharged the subject cargo. Four (4) coils were
25
found to be in bad order B.O. Tally sheet No. 154974. Finding the four (4) coils in their damaged state to be unfit for the intended
purpose, the consignee Philippine Steel Trading Corporation declared the same as total loss.1âwphi1.nêt
"Despite receipt of a formal demand, defendants-appellees refused to submit to the consignee's claim. Consequently, plaintiff-
appellant paid the consignee five hundred six thousand eighty six & 50/100 pesos (P506,086.50), and was subrogated to the
latter's rights and causes of action against defendants-appellees. Subsequently, plaintiff-appellant instituted this complaint for
recovery of the amount paid by them, to the consignee as insured.
"Impugning the propriety of the suit against them, defendants-appellees imputed that the damage and/or loss was due to pre-
shipment damage, to the inherent nature, vice or defect of the goods, or to perils, danger and accidents of the sea, or to
insufficiency of packing thereof, or to the act or omission of the shipper of the goods or their representatives. In addition thereto,
defendants-appellees argued that their liability, if there be any, should not exceed the limitations of liability provided for in the bill
of lading and other pertinent laws. Finally, defendants-appellees averred that, in any event, they exercised due diligence and
foresight required by law to prevent any damage/loss to said shipment."6
Ruling of the Trial Court
The RTC dismissed the Complaint because respondent had failed to prove its claims with the quantum of proof required by law. 7
It likewise debunked petitioners' counterclaim, because respondent's suit was not manifestly frivolous or primarily intended to
harass them.8
Ruling of the Court of Appeals
In reversing the trial court, the CA ruled that petitioners were liable for the loss or the damage of the goods shipped, because
they had failed to overcome the presumption of negligence imposed on common carriers.
The CA further held as inadequately proven petitioners' claim that the loss or the deterioration of the goods was due to pre-
shipment damage.9 It likewise opined that the notation "metal envelopes rust stained and slightly dented" placed on the Bill of
Lading had not been the proximate cause of the damage to the four (4) coils.10
As to the extent of petitioners' liability, the CA held that the package limitation under COGSA was not applicable, because the
words "L/C No. 90/02447" indicated that a higher valuation of the cargo had been declared by the shipper. The CA, however,
affirmed the award of attorney's fees.
Hence, this Petition.11
Issues
In their Memorandum, petitioners raise the following issues for the Court's consideration:
I "Whether or not plaintiff by presenting only one witness who has never seen the subject shipment and whose testimony is
purely hearsay is sufficient to pave the way for the applicability of Article 1735 of the Civil Code;
II "Whether or not the consignee/plaintiff filed the required notice of loss within the time required by law;
III "Whether or not a notation in the bill of lading at the time of loading is sufficient to show pre-shipment damage and to exempt
herein defendants from liability;
IV "Whether or not the "PACKAGE LIMITATION" of liability under Section 4 (5) of COGSA is applicable to the case at bar." 12
In sum, the issues boil down to three:
1. Whether petitioners have overcome the presumption of negligence of a common carrier
2. Whether the notice of loss was timely filed

26
3. Whether the package limitation of liability is applicable
This Court's Ruling
The Petition is partly meritorious.
First Issue: Proof of Negligence

Petitioners contend that the presumption of fault imposed on common carriers should not be applied on the basis of the lone
testimony offered by private respondent. The contention is untenable.
Well-settled is the rule that common carriers, from the nature of their business and for reasons of public policy, are bound to
observe extraordinary diligence and vigilance with respect to the safety of the goods and the passengers they transport.13 Thus,
common carriers are required to render service with the greatest skill and foresight and "to use all reason[a]ble means to
ascertain the nature and characteristics of the goods tendered for shipment, and to exercise due care in the handling and
stowage, including such methods as their nature requires."14 The extraordinary responsibility lasts from the time the goods are
unconditionally placed in the possession of and received for transportation by the carrier until they are delivered, actually or
constructively, to the consignee or to the person who has a right to receive them.15
This strict requirement is justified by the fact that, without a hand or a voice in the preparation of such contract, the riding public
enters into a contract of transportation with common carriers.16 Even if it wants to, it cannot submit its own stipulations for their
approval.17 Hence, it merely adheres to the agreement prepared by them.
Owing to this high degree of diligence required of them, common carriers, as a general rule, are presumed to have been at fault
or negligent if the goods they transported deteriorated or got lost or destroyed.18 That is, unless they prove that they exercised
extraordinary diligence in transporting the goods.19 In order to avoid responsibility for any loss or damage, therefore, they have
the burden of proving that they observed such diligence.20
However, the presumption of fault or negligence will not arise21 if the loss is due to any of the following causes: (1) flood, storm,
earthquake, lightning, or other natural disaster or calamity; (2) an act of the public enemy in war, whether international or civil; (3)
an act or omission of the shipper or owner of the goods; (4) the character of the goods or defects in the packing or the container;
or (5) an order or act of competent public authority.22 This is a closed list. If the cause of destruction, loss or deterioration is other
than the enumerated circumstances, then the carrier is liable therefor.23
Corollary to the foregoing, mere proof of delivery of the goods in good order to a common carrier and of their arrival in bad order
at their destination constitutes a prima facie case of fault or negligence against the carrier. If no adequate explanation is given as
to how the deterioration, the loss or the destruction of the goods happened, the transporter shall be held responsible.24
That petitioners failed to rebut the prima facie presumption of negligence is revealed in the case at bar by a review of the records
and more so by the evidence adduced by respondent.25
First, as stated in the Bill of Lading, petitioners received the subject shipment in good order and condition in Hamburg,
Germany.26
Second, prior to the unloading of the cargo, an Inspection Report27 prepared and signed by representatives of both parties
showed the steel bands broken, the metal envelopes rust-stained and heavily buckled, and the contents thereof exposed and
rusty.
Third, Bad Order Tally Sheet No. 15497928 issued by Jardine Davies Transport Services, Inc., stated that the four coils were in
bad order and condition. Normally, a request for a bad order survey is made in case there is an apparent or a presumed loss or
damage.29
Fourth, the Certificate of Analysis30 stated that, based on the sample submitted and tested, the steel sheets found in bad order
were wet with fresh water.
27
Fifth, petitioners -- in a letter31 addressed to the Philippine Steel Coating Corporation and dated October 12, 1990 -- admitted that
they were aware of the condition of the four coils found in bad order and condition.
These facts were confirmed by Ruperto Esmerio, head checker of BM Santos Checkers Agency. Pertinent portions of his
testimony are reproduce hereunder:
"Q. Mr. Esmerio, you mentioned that you are a Head Checker. Will you inform the Honorable Court with what company you
are connected?
A. BM Santos Checkers Agency, sir.
Q. How is BM Santos checkers Agency related or connected with defendant Jardine Davies Transport Services?
A. It is the company who contracts the checkers, sir.
Q. You mentioned that you are a Head Checker, will you inform this Honorable Court your duties and responsibilities?
A. I am the representative of BM Santos on board the vessel, sir, to supervise the discharge of cargoes.
Q. On or about August 1, 1990, were you still connected or employed with BM Santos as a Head Checker?
A. Yes, sir.
Q. And, on or about that date, do you recall having attended the discharging and inspection of cold steel sheets in coil on
board the MV/AN ANGEL SKY?
A. Yes, sir, I was there.
Q. Based on your inspection since you were also present at that time, will you inform this Honorable Court the condition or the
appearance of the bad order cargoes that were unloaded from the MV/ANANGEL SKY?
ATTY. MACAMAY:
Objection, Your Honor, I think the document itself reflects the condition of the cold steel sheets and the best evidence is the
document itself, Your Honor that shows the condition of the steel sheets.
COURT:
Let the witness answer.
A. The scrap of the cargoes is broken already and the rope is loosen and the cargoes are dent on the sides."32
All these conclusively prove the fact of shipment in good order and condition and the consequent damage to the four coils while
in the possession of petitioner,33 who notably failed to explain why.34
Further, petitioners failed to prove that they observed the extraordinary diligence and precaution which the law requires a
common carrier to know and to follow to avoid damage to or destruction of the goods entrusted to it for safe carriage and
delivery.35
True, the words "metal envelopes rust stained and slightly dented" were noted on the Bill of Lading; however, there is no showing
that petitioners exercised due diligence to forestall or lessen the loss.36 Having been in the service for several years, the master
of the vessel should have known at the outset that metal envelopes in the said state would eventually deteriorate when not
properly stored while in transit.37 Equipped with the proper knowledge of the nature of steel sheets in coils and of the proper way
of transporting them, the master of the vessel and his crew should have undertaken precautionary measures to avoid possible
deterioration of the cargo. But none of these measures was taken.38 Having failed to discharge the burden of proving that they
have exercised the extraordinary diligence required by law, petitioners cannot escape liability for the damage to the four coils.39
28
In their attempt to escape liability, petitioners further contend that they are exempted from liability under Article 1734(4) of the
Civil Code. They cite the notation "metal envelopes rust stained and slightly dented" printed on the Bill of Lading as evidence that
the character of the goods or defect in the packing or the containers was the proximate cause of the damage. We are not
convinced.
From the evidence on record, it cannot be reasonably concluded that the damage to the four coils was due to the condition noted
on the Bill of Lading.40 The aforecited exception refers to cases when goods are lost or damaged while in transit as a result of the
natural decay of perishable goods or the fermentation or evaporation of substances liable therefor, the necessary and natural
wear of goods in transport, defects in packages in which they are shipped, or the natural propensities of animals. 41 None of these
is present in the instant case.
Further, even if the fact of improper packing was known to the carrier or its crew or was apparent upon ordinary observation, it is
not relieved of liability for loss or injury resulting therefrom, once it accepts the goods notwithstanding such condition.42 Thus,
petitioners have not successfully proven the application of any of the aforecited exceptions in the present case.43
Second Issue: Notice of Loss
Petitioners claim that pursuant to Section 3, paragraph 6 of the Carriage of Goods by Sea Act44 (COGSA), respondent should
have filed its Notice of Loss within three days from delivery. They assert that the cargo was discharged on July 31, 1990, but that
respondent filed its Notice of Claim only on September 18, 1990.45
We are not persuaded. First, the above-cited provision of COGSA provides that the notice of claim need not be given if the state
of the goods, at the time of their receipt, has been the subject of a joint inspection or survey. As stated earlier, prior to unloading
the cargo, an Inspection Report46 as to the condition of the goods was prepared and signed by representatives of both parties.47
Second, as stated in the same provision, a failure to file a notice of claim within three days will not bar recovery if it is nonetheless
filed within one year.48 This one-year prescriptive period also applies to the shipper, the consignee, the insurer of the goods or
any legal holder of the bill of lading.49
In Loadstar Shipping Co., Inc, v. Court of Appeals,50 we ruled that a claim is not barred by prescription as long as the one-year
period has not lapsed. Thus, in the words of the ponente, Chief Justice Hilario G. Davide Jr.:
"Inasmuch as the neither the Civil Code nor the Code of Commerce states a specific prescriptive period on the matter, the
Carriage of Goods by Sea Act (COGSA)--which provides for a one-year period of limitation on claims for loss of, or damage to,
cargoes sustained during transit--may be applied suppletorily to the case at bar."
In the present case, the cargo was discharged on July 31, 1990, while the Complaint51 was filed by respondent on July 25, 1991,
within the one-year prescriptive period.
Third Issue: Package Limitation
Assuming arguendo they are liable for respondent's claims, petitioners contend that their liability should be limited to US$500 per
package as provided in the Bill of Lading and by Section 4(5)52 of COGSA.53
On the other hand, respondent argues that Section 4(5) of COGSA is inapplicable, because the value of the subject shipment
was declared by petitioners beforehand, as evidenced by the reference to and the insertion of the Letter of Credit or "L/C No.
90/02447" in the said Bill of Lading.54
A bill of lading serves two functions. First, it is a receipt for the goods shipped.53 Second, it is a contract by which three parties --
namely, the shipper, the carrier, and the consignee -- undertake specific responsibilities and assume stipulated obligations.56 In a
nutshell, the acceptance of the bill of lading by the shipper and the consignee, with full knowledge of its contents, gives rise to the
presumption that it constituted a perfected and binding contract.57
Further, a stipulation in the bill of lading limiting to a certain sum the common carrier's liability for loss or destruction of a cargo --
unless the shipper or owner declares a greater value58 -- is sanctioned by law.59 There are, however, two conditions to be
29
satisfied: (1) the contract is reasonable and just under the circumstances, and (2) it has been fairly and freely agreed upon by the
parties.60 The rationale for this rule is to bind the shippers by their agreement to the value (maximum valuation) of their goods. 61
It is to be noted, however, that the Civil Code does not limit the liability of the common carrier to a fixed amount per package.62 In
all matters not regulated by the Civil Code, the right and the obligations of common carriers shall be governed by the Code of
Commerce and special laws.63 Thus, the COGSA, which is suppletory to the provisions of the Civil Code, supplements the latter
by establishing a statutory provision limiting the carrier's liability in the absence of a shipper's declaration of a higher value in the
bill of lading.64 The provisions on limited liability are as much a part of the bill of lading as though physically in it and as though
placed there by agreement of the parties.65
In the case before us, there was no stipulation in the Bill of Lading66 limiting the carrier's liability. Neither did the shipper declare a
higher valuation of the goods to be shipped. This fact notwithstanding, the insertion of the words "L/C No. 90/02447 cannot be the
basis for petitioners' liability.
First, a notation in the Bill of Lading which indicated the amount of the Letter of Credit obtained by the shipper for the importation
of steel sheets did not effect a declaration of the value of the goods as required by the bill. 67 That notation was made only for the
convenience of the shipper and the bank processing the Letter of Credit.68
Second, in Keng Hua Paper Products v. Court of Appeals,69 we held that a bill of lading was separate from the Other Letter of
Credit arrangements. We ruled thus:
"(T)he contract of carriage, as stipulated in the bill of lading in the present case, must be treated independently of the contract of
sale between the seller and the buyer, and the contract of issuance of a letter of credit between the amount of goods described in
the commercial invoice in the contract of sale and the amount allowed in the letter of credit will not affect the validity and
enforceability of the contract of carriage as embodied in the bill of lading. As the bank cannot be expected to look beyond the
documents presented to it by the seller pursuant to the letter of credit, neither can the carrier be expected to go beyond the
representations of the shipper in the bill of lading and to verify their accuracy vis-à-vis the commercial invoice and the letter of
credit. Thus, the discrepancy between the amount of goods indicated in the invoice and the amount in the bill of lading cannot
negate petitioner's obligation to private respondent arising from the contract of transportation." 70
In the light of the foregoing, petitioners' liability should be computed based on US$500 per package and not on the per metric ton
price declared in the Letter of Credit.71 In Eastern Shipping Lines, Inc. v. Intermediate Appellate Court,72 we explained the
meaning of packages:
"When what would ordinarily be considered packages are shipped in a container supplied by the carrier and the number of such
units is disclosed in the shipping documents, each of those units and not the container constitutes the 'package' referred to in the
liability limitation provision of Carriage of Goods by Sea Act."
Considering, therefore, the ruling in Eastern Shipping Lines and the fact that the Bill of Lading clearly disclosed the contents of
the containers, the number of units, as well as the nature of the steel sheets, the four damaged coils should be considered as the
shipping unit subject to the US$500 limitation.1âwphi1.nêt
WHEREFORE, the Petition is partly granted and the assailed Decision MODIFIED. Petitioners' liability is reduced to US$2,000
plus interest at the legal rate of six percent from the time of the filing of the Complaint on July 25, 1991 until the finality of this
Decision, and 12 percent thereafter until fully paid. No pronouncement as to costs.
30
G.R. No. L-23733 October 31, 1969
HERMINIO L. NOCUM, plaintiff-appellee,

vs. LAGUNA TAYABAS BUS COMPANY, defendant-appellant.
Appeal of the Laguna Tayabas Bus Co., defendant in the Court below, from a judgment of the said court (Court of First Instance
of Batangas) in its Civil Case No. 834, wherein appellee Herminio L. Nocum was plaintiff, sentencing appellant to pay appellee
the sum of P1,351.00 for actual damages and P500.00 as attorney's fees with legal interest from the filing of the complaint plus
costs. Appellee, who was a passenger in appellant's Bus No. 120 then making a trip within the barrio of Dita, Municipality of Bay,
Laguna, was injured as a consequence of the explosion of firecrackers, contained in a box, loaded in said bus and declared to its
conductor as containing clothes and miscellaneous items by a co-passenger. The findings of fact of the trial court are not
assailed. The appeal is purely on legal questions.
Appellee has not filed any brief. All that We have before Us is appellant's brief with the following assignment of errors:
I BASED ON THE FACTS THE LOWER COURT FOUND AS ESTABLISHED, IT ERRED AS A MATTER OF LAW IN NOT
ABSOLVING APPELLANT FROM LIABILITY RESULTING FROM THE EXPLOSION OF FIRECRACKERS CONTAINED IN A
PACKAGE, THE CONTENTS OF WHICH WERE MISREPRESENTED BY A PASSENGER.
II THE LOWER COURT ERRED, AS A MATTER OF LAW, IN AWARDING DAMAGES WITH LEGAL INTEREST IN FAVOR OF
THE APPELLEE.
III THE LOWER COURT ERRED IN NOT DISMISSING THE COMPLAINT, WITH COSTS AGAINST THE APPELLEE.
Upon consideration of the points raised and discussed by appellant, We find the appeal to be well taken.
The main basis of the trial court's decision is that appellant did not observe the extraordinary or utmost diligence of a very
cautious person required by the following articles of the Civil Code:
ART. 1733. Common carriers, from the nature of their business and for reasons of public policy, are bound to observe
extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them, according to all
the circumstances of each case.
Such extraordinary diligence in the vigilance over the goods is further expressed in articles 1734, 1735, and 1745, Nos. 5, 6, and
7, while the extraordinary diligence for the safety of the passengers is further set forth in articles 1755 and 1756.
ART. 1755. A common carrier is bound to carry the 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.
ART 1756. In case of death of or injuries to passengers, common carriers are presumed to have been at fault or to have acted
negligently, unless they prove that they observed extraordinary diligence as prescribed in articles 1733 and 1755.
Analyzing the evidence presented by the parties, His Honor found:
According to Severino Andaya, a witness for the plaintiff, a man with a box went up the baggage compartment of the bus where
he already was and said box was placed under the seat. They left Azcarraga at about 11:30 in the morning and when the
explosion occurred, he was thrown out. PC investigation report states that thirty seven (37) passengers were injured (Exhibits "O"
and "2").
The bus conductor, Sancho Mendoza, testified that the box belonged to a passenger whose name he does not know and who
told him that it contained miscellaneous items and clothes. He helped the owner in loading the baggage which weighed about
twelve (12) kilos and because of company regulation, he charged him for it twenty-five centavos (P0.25). From its appearance
there was no indication at all that the contents were explosives or firecrackers. Neither did he open the box because he just relied
on the word of the owner.
31
Dispatcher Nicolas Cornista of defendant company corroborrated the testimony of Mendoza and he said, among other things,
that he was present when the box was loaded in the truck and the owner agreed to pay its fare. He added that they were not
authorized to open the baggages of passengers because instruction from the management was to call the police if there were
packages containing articles which were against regulations.
There is no question that Bus No. 120 was road worthy when it left its Manila Terminal for Lucena that morning of December 5,
1960. The injuries suffered by the plaintiff were not due to mechanical defects but to the explosion of firecrackers inside the bus
which was loaded by a co-passenger.
... Turning to the present case, it is quite clear that extraordinary or utmost diligence of a very cautious person was not observed
by the defendant company. The service manual, exhibits "3" and "3-A," prohibits the employees to allow explosives, such as
dynamite and firecrackers to be transported on its buses. To implement this particular rule for 'the safety of passengers, it was
therefore incumbent upon the employees of the company to make the proper inspection of all the baggages which are carried by
the passengers.
But then, can it not be said that the breach of the contract was due to fortuitous event? The Supreme Court in the case of Lasam
vs. Smith, 45 Phil. 657, quoted Escriche's definition of caso fortuito as "an unexpected event or act of God which could neither be
foreseen nor resisted, such as floods, torrents, shipwrecks, conflagrations, lightning, compulsions, insurrections, destructions of
buildings by unforeseen accidents and other occurrences of a similar nature." In other words, the cause of the unexpected event
must be independent of the will of man or something which cannot be avoided. This cannot be said of the instant case. If proper
and rigid inspection were observed by the defendant, the contents of the box could have been discovered and the accident
avoided. Refusal by the passenger to have the package opened was no excuse because, as stated by Dispatcher Cornista,
employees should call the police if there were packages containing articles against company regulations. Neither was failure by
employees of defendant company to detect the contents of the packages of passengers because like the rationale in the
Necesito vs. Paras case (supra), a passenger has neither choice nor control in the exercise of their discretion in determining what
are inside the package of co-passengers which may eventually prove fatal.
We cannot agree. No doubt, the views of His Honor do seem to be in line with the reasons that the Code Commission had for
incorporating the above-quoted provisions in its draft of the Civil Code. Indeed, in approving the said draft, Congress must have
concurred with the Commission that by requiring the highest degree of diligence from common carriers in the safe transport of
their passengers and by creating a presumption of negligence against them, the recklessness of their drivers which is a common
sight even in crowded areas and, particularly, on the highways throughout the country may, somehow, if not in a large measure,
be curbed. We are not convinced, however, that the exacting criterion of said provisions has not been met by appellant in the
circumstances of this particular case.
It is undisputed that before the box containing the firecrackers were allowed to be loaded in the bus by the conductor, inquiry was
made with the passenger carrying the same as to what was in it, since its "opening ... was folded and tied with abaca." (Decision
p. 16, Record on Appeal.) According to His Honor, "if proper and rigid inspection were observed by the defendant, the contents of
the box could have been discovered and the accident avoided. Refusal by the passenger to have the package opened was no
excuse because, as stated by Dispatcher Cornista, employees should call the police if there were packages containing articles
against company regulations." That may be true, but it is Our considered opinion that the law does not require as much. Article
1733 is not as unbending as His Honor has held, for it reasonably qualifies the extraordinary diligence required of common
carriers for the safety of the passengers transported by them to be "according to all the circumstances of each case." In fact,
Article 1755 repeats this same qualification: "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 due regard for all the circumstances."
In this particular case before Us, it must be considered that while it is true the passengers of appellant's bus should not be made
to suffer for something over which they had no control, as enunciated in the decision of this Court cited by His Honor, 1 fairness
demands that in measuring a common carrier's duty towards its passengers, allowance must be given to the reliance that should
be reposed on the sense of responsibility of all the passengers in regard to their common safety. It is to be presumed that a
passenger will not take with him anything dangerous to the lives and limbs of his co-passengers, not to speak of his own. Not to
be lightly considered must be the right to privacy to which each passenger is entitled. He cannot be subjected to any unusual
search, when he protests the innocuousness of his baggage and nothing appears to indicate the contrary, as in the case at bar.
32
In other words, inquiry may be verbally made as to the nature of a passenger's baggage when such is not outwardly perceptible,
but beyond this, constitutional boundaries are already in danger of being transgressed. Calling a policeman to his aid, as
suggested by the service manual invoked by the trial judge, in compelling the passenger to submit to more rigid inspection, after
the passenger had already declared that the box contained mere clothes and other miscellaneous, could not have justified
invasion of a constitutionally protected domain. Police officers acting without judicial authority secured in the manner provided by
law are not beyond the pale of constitutional inhibitions designed to protect individual human rights and liberties. Withal, what
must be importantly considered here is not so much the infringement of the fundamental sacred rights of the particular passenger
herein involved, but the constant threat any contrary ruling would pose on the right of privacy of all passengers of all common
carriers, considering how easily the duty to inspect can be made an excuse for mischief and abuse. Of course, when there are
sufficient indications that the representations of the passenger regarding the nature of his baggage may not be true, in the
interest of the common safety of all, the assistance of the police authorities may be solicited, not necessarily to force the
passenger to open his baggage, but to conduct the needed investigation consistent with the rules of propriety and, above all, the
constitutional rights of the passenger. It is in this sense that the mentioned service manual issued by appellant to its conductors
must be understood.
Decisions in other jurisdictions cited by appellant in its brief, evidently because of the paucity of local precedents squarely in
point, emphasize that there is need, as We hold here, for evidence of circumstances indicating cause or causes for apprehension
that the passenger's baggage is dangerous and that it is failure of the common carrier's employee to act in the face of such
evidence that constitutes the cornerstone of the common carrier's liability in cases similar to the present one.
The principle that must control the servants of the carrier in a case like the one before us is correctly stated in the opinion in the
case of Clarke v. Louisville & N.R. Co. 20 Ky L. Rep. 839, 49 S.W. 1120. In that case Clarke was a passenger on the defendant's
train. Another passenger took a quantity of gasoline into the same coach in which Clarke was riding. It ignited and exploded, by
reason of which he was severely injured. The trial court peremptorily instructed the jury to find for the defendant. In the opinion,
affirming the judgment, it is said: "It may be stated briefly, in assuming the liability of a railroad to its passengers for injury done by
another passenger, only where the conduct of this passenger had been such before the injury as to induce a reasonably prudent
and vigilant conductor to believe that there was reasonable ground to apprehend violence and danger to the other passengers,
and in that case asserting it to be the duty of the conductor of the railroad train to use all reasonable means to prevent such
injury, and if he neglects this reasonable duty, and injury is done, that then the company is responsible; that otherwise the
railroad is not responsible."
The opinion quotes with approval from the case of Gulf, C. & S. F. R. Co. vs. Shields, 9 Tex. Civ. App. 652, 29 S. W. 652, in
which case the plaintiff was injured by alcohol which had been carried upon the train by another passenger. In the opinion in that
case it is said: "It was but a short period of time after the alcohol was spilt when it was set on fire and the accident occurred, and
it was not shown that appellant's employees knew that the jug contained alcohol. In fact, it is not shown that the conductor or any
other employee knew that Harris had a jug with him until it fell out of the sack, though the conductor had collected ... (his) fare,
and doubtless knew that he had the sack on the seat with him. ... It cannot be successfully denied that Harris had the right as a
passenger to carry baggage on the train, and that he had a right to carry it in a sack if he chose to do so. We think it is equally
clear that, in the absence of some intimation or circumstance indicating that the sack contained something dangerous to other
passengers, it was not the duty of appellant's conductor or any other employee to open the sack and examine its contents."
Quinn v. Louisville & N. R. Co. 98 Ky. 231, 32 S. W. 742; Wood v. Louisville & N. R. Co. 101 Ky. 703, 42 S. W. 349; Louisville &
N. R. Co. v. Vincent, 29 Ky. L. Rep. 1049, 96 S. W. 898; Louisville & N. R. Co. v. Renfro, 142 Ky. 590, 33 L. R. A. (N. S.) 133,
135 S. W. 266.2 (Emphasis supplied)
Explosive or Dangerous Contents. — A carrier is ordinarily not liable for injuries to passengers from fires or explosions caused by
articles brought into its conveyances by other passengers, in the absence of any evidence that the carrier, through its employees,
was aware of the nature of the article or had any reason to anticipate danger therefrom. (Bogard v. Illinois C. R Co. 144 Ky. 649,
139 S. W. 855, 36 L. R. A.[N. S.] 337; Clarke v. Louisville & N. R. Co. 101 Ky. 34, 39 S. W. 840, 36 L. R. A. 123 [explosion of can
of gasoline]; East Indian R. Co. v. Mukerjee [1901] A. C. [Eng.] 396, 3 B. R. C. 420 — P. C. [explosion of fireworks]; Annotation:
37 L. R. A. [N. S.] 725.)3
Appellant further invokes Article 1174 of the Civil Code which relieves all obligors, including, of course, common carriers like
appellant, from the consequence of fortuitous events. The court a quo held that "the breach of contract (in this case) was not due
33
to fortuitous event and that, therefore, the defendant is liable in damages." Since We hold that appellant has succeeded in
rebutting the presumption of negligence by showing that it has exercised extraordinary diligence for the safety of its passengers,
"according to the circumstances of the (each) case", We deem it unnecessary to rule whether or not there was any fortuitous
event in this case.
ACCORDINGLY, the appealed judgment of the trial court is reversed and the case is dismissed, without costs.
G.R. No. L-12191 October 14, 1918

JOSE CANGCO, plaintiff-appellant,
vs.
MANILA RAILROAD CO., defendant-appellee.
At the time of the occurrence which gave rise to this litigation the plaintiff, Jose Cangco, was in the employment of Manila
Railroad Company in the capacity of clerk, with a monthly wage of P25. He lived in the pueblo of San Mateo, in the province of
Rizal, which is located upon the line of the defendant railroad company; and in coming daily by train to the company's office in the
city of Manila where he worked, he used a pass, supplied by the company, which entitled him to ride upon the company's trains
free of charge. Upon the occasion in question, January 20, 1915, the plaintiff arose from his seat in the second class-car where
he was riding and, making, his exit through the door, took his position upon the steps of the coach, seizing the upright guardrail
with his right hand for support.
On the side of the train where passengers alight at the San Mateo station there is a cement platform which begins to rise with a
moderate gradient some distance away from the company's office and extends along in front of said office for a distance
sufficient to cover the length of several coaches. As the train slowed down another passenger, named Emilio Zuñiga, also an
employee of the railroad company, got off the same car, alighting safely at the point where the platform begins to rise from the
level of the ground. When the train had proceeded a little farther the plaintiff Jose Cangco stepped off also, but one or both of his
feet came in contact with a sack of watermelons with the result that his feet slipped from under him and he fell violently on the
platform. His body at once rolled from the platform and was drawn under the moving car, where his right arm was badly crushed
and lacerated. It appears that after the plaintiff alighted from the train the car moved forward possibly six meters before it came to
a full stop.
The accident occurred between 7 and 8 o'clock on a dark night, and as the railroad station was lighted dimly by a single light
located some distance away, objects on the platform where the accident occurred were difficult to discern especially to a person
emerging from a lighted car.
The explanation of the presence of a sack of melons on the platform where the plaintiff alighted is found in the fact that it was the
customary season for harvesting these melons and a large lot had been brought to the station for the shipment to the market.
They were contained in numerous sacks which has been piled on the platform in a row one upon another. The testimony shows
that this row of sacks was so placed of melons and the edge of platform; and it is clear that the fall of the plaintiff was due to the
fact that his foot alighted upon one of these melons at the moment he stepped upon the platform. His statement that he failed to
see these objects in the darkness is readily to be credited.
The plaintiff was drawn from under the car in an unconscious condition, and it appeared that the injuries which he had received
were very serious. He was therefore brought at once to a certain hospital in the city of Manila where an examination was made
and his arm was amputated. The result of this operation was unsatisfactory, and the plaintiff was then carried to another hospital
where a second operation was performed and the member was again amputated higher up near the shoulder. It appears in
evidence that the plaintiff expended the sum of P790.25 in the form of medical and surgical fees and for other expenses in
connection with the process of his curation.
Upon August 31, 1915, he instituted this proceeding in the Court of First Instance of the city of Manila to recover damages of the
defendant company, founding his action upon the negligence of the servants and employees of the defendant in placing the
sacks of melons upon the platform and leaving them so placed as to be a menace to the security of passenger alighting from the
34
company's trains. At the hearing in the Court of First Instance, his Honor, the trial judge, found the facts substantially as above
stated, and drew therefrom his conclusion to the effect that, although negligence was attributable to the defendant by reason of
the fact that the sacks of melons were so placed as to obstruct passengers passing to and from the cars, nevertheless, the
plaintiff himself had failed to use due caution in alighting from the coach and was therefore precluded form recovering. Judgment
was accordingly entered in favor of the defendant company, and the plaintiff appealed.
It can not be doubted that the employees of the railroad company were guilty of negligence in piling these sacks on the platform
in the manner above stated; that their presence caused the plaintiff to fall as he alighted from the train; and that they therefore
constituted an effective legal cause of the injuries sustained by the plaintiff. It necessarily follows that the defendant company is
liable for the damage thereby occasioned unless recovery is barred by the plaintiff's own contributory negligence. In resolving this
problem it is necessary that each of these conceptions of liability, to-wit, the primary responsibility of the defendant company and
the contributory negligence of the plaintiff should be separately examined.
It is important to note that the foundation of the legal liability of the defendant is the contract of carriage, and that the obligation to
respond for the damage which plaintiff has suffered arises, if at all, from the breach of that contract by reason of the failure of
defendant to exercise due care in its performance. That is to say, its liability is direct and immediate, differing essentially, in legal
viewpoint from that presumptive responsibility for the negligence of its servants, imposed by article 1903 of the Civil Code, which
can be rebutted by proof of the exercise of due care in their selection and supervision. Article 1903 of the Civil Code is not
applicable to obligations arising ex contractu, but only to extra-contractual obligations — or to use the technical form of
expression, that article relates only to culpa aquiliana and not to culpa contractual.
Manresa (vol. 8, p. 67) in his commentaries upon articles 1103 and 1104 of the Civil Code, clearly points out this distinction,
which was also recognized by this Court in its decision in the case of Rakes vs. Atlantic, Gulf and Pacific Co. (7 Phil. rep., 359). In
commenting upon article 1093 Manresa clearly points out the difference between "culpa, substantive and independent, which of
itself constitutes the source of an obligation between persons not formerly connected by any legal tie" and culpa considered as
an accident in the performance of an obligation already existing . . . ."
In the Rakes case (supra) the decision of this court was made to rest squarely upon the proposition that article 1903 of the Civil
Code is not applicable to acts of negligence which constitute the breach of a contract.
Upon this point the Court said:
The acts to which these articles [1902 and 1903 of the Civil Code] are applicable are understood to be those not growing out of
pre-existing duties of the parties to one another. But where relations already formed give rise to duties, whether springing from
contract or quasi-contract, then breaches of those duties are subject to article 1101, 1103, and 1104 of the same code.
(Rakes vs. Atlantic, Gulf and Pacific Co., 7 Phil. Rep., 359 at 365.)
This distinction is of the utmost importance. The liability, which, under the Spanish law, is, in certain cases imposed upon
employers with respect to damages occasioned by the negligence of their employees to persons to whom they are not bound by
contract, is not based, as in the English Common Law, upon the principle of respondeat superior — if it were, the master would
be liable in every case and unconditionally — but upon the principle announced in article 1902 of the Civil Code, which imposes
upon all persons who by their fault or negligence, do injury to another, the obligation of making good the damage caused. One
who places a powerful automobile in the hands of a servant whom he knows to be ignorant of the method of managing such a
vehicle, is himself guilty of an act of negligence which makes him liable for all the consequences of his imprudence. The
obligation to make good the damage arises at the very instant that the unskillful servant, while acting within the scope of his
employment causes the injury. The liability of the master is personal and direct. But, if the master has not been guilty of any
negligence whatever in the selection and direction of the servant, he is not liable for the acts of the latter, whatever done within
the scope of his employment or not, if the damage done by the servant does not amount to a breach of the contract between the
master and the person injured.
It is not accurate to say that proof of diligence and care in the selection and control of the servant relieves the master from liability
for the latter's acts — on the contrary, that proof shows that the responsibility has never existed. As Manresa says (vol. 8, p. 68)
the liability arising from extra-contractual culpa is always based upon a voluntary act or omission which, without willful intent, but
by mere negligence or inattention, has caused damage to another. A master who exercises all possible care in the selection of
35
his servant, taking into consideration the qualifications they should possess for the discharge of the duties which it is his purpose
to confide to them, and directs them with equal diligence, thereby performs his duty to third persons to whom he is bound by no
contractual ties, and he incurs no liability whatever if, by reason of the negligence of his servants, even within the scope of their
employment, such third person suffer damage. True it is that under article 1903 of the Civil Code the law creates
a presumption that he has been negligent in the selection or direction of his servant, but the presumption is rebuttable and yield
to proof of due care and diligence in this respect.
The supreme court of Porto Rico, in interpreting identical provisions, as found in the Porto Rico Code, has held that these articles
are applicable to cases of extra-contractual culpa exclusively. (Carmona vs. Cuesta, 20 Porto Rico Reports, 215.)
This distinction was again made patent by this Court in its decision in the case of Bahia vs. Litonjua and Leynes, (30 Phil. rep.,
624), which was an action brought upon the theory of the extra-contractual liability of the defendant to respond for the damage
caused by the carelessness of his employee while acting within the scope of his employment. The Court, after citing the last
paragraph of article 1903 of the Civil Code, said:
From this article two things are apparent: (1) That when an injury is caused by the negligence of a servant or employee there
instantly arises a presumption of law that there was negligence on the part of the master or employer either in selection of the
servant or employee, or in supervision over him after the selection, or both; and (2) that that presumption is juris tantum and
not juris et de jure, and consequently, may be rebutted. It follows necessarily that if the employer shows to the satisfaction of the
court that in selection and supervision he has exercised the care and diligence of a good father of a family, the presumption is
overcome and he is relieved from liability.
This theory bases the responsibility of the master ultimately on his own negligence and not on that of his servant. This is the
notable peculiarity of the Spanish law of negligence. It is, of course, in striking contrast to the American doctrine that, in relations
with strangers, the negligence of the servant in conclusively the negligence of the master.
The opinion there expressed by this Court, to the effect that in case of extra-contractual culpa based upon negligence, it is
necessary that there shall have been some fault attributable to the defendant personally, and that the last paragraph of article
1903 merely establishes a rebuttable presumption, is in complete accord with the authoritative opinion of Manresa, who says (vol.
12, p. 611) that the liability created by article 1903 is imposed by reason of the breach of the duties inherent in the special
relations of authority or superiority existing between the person called upon to repair the damage and the one who, by his act or
omission, was the cause of it.
On the other hand, the liability of masters and employers for the negligent acts or omissions of their servants or agents, when
such acts or omissions cause damages which amount to the breach of a contact, is not based upon a mere presumption of the
master's negligence in their selection or control, and proof of exercise of the utmost diligence and care in this regard does not
relieve the master of his liability for the breach of his contract.
Every legal obligation must of necessity be extra-contractual or contractual. Extra-contractual obligation has its source in the
breach or omission of those mutual duties which civilized society imposes upon it members, or which arise from these relations,
other than contractual, of certain members of society to others, generally embraced in the concept of status. The legal rights of
each member of society constitute the measure of the corresponding legal duties, mainly negative in character, which the
existence of those rights imposes upon all other members of society. The breach of these general duties whether due to willful
intent or to mere inattention, if productive of injury, give rise to an obligation to indemnify the injured party. The fundamental
distinction between obligations of this character and those which arise from contract, rests upon the fact that in cases of non-
contractual obligation it is the wrongful or negligent act or omission itself which creates the vinculum juris, whereas in contractual
relations the vinculum exists independently of the breach of the voluntary duty assumed by the parties when entering into the
contractual relation.
With respect to extra-contractual obligation arising from negligence, whether of act or omission, it is competent for the legislature
to elect — and our Legislature has so elected — whom such an obligation is imposed is morally culpable, or, on the contrary, for
reasons of public policy, to extend that liability, without regard to the lack of moral culpability, so as to include responsibility for the
negligence of those person who acts or mission are imputable, by a legal fiction, to others who are in a position to exercise an
absolute or limited control over them. The legislature which adopted our Civil Code has elected to limit extra-contractual liability
36
— with certain well-defined exceptions — to cases in which moral culpability can be directly imputed to the persons to be
charged. This moral responsibility may consist in having failed to exercise due care in the selection and control of one's agents or
servants, or in the control of persons who, by reason of their status, occupy a position of dependency with respect to the person
made liable for their conduct.
The position of a natural or juridical person who has undertaken by contract to render service to another, is wholly different from
that to which article 1903 relates. When the sources of the obligation upon which plaintiff's cause of action depends is a negligent
act or omission, the burden of proof rests upon plaintiff to prove the negligence — if he does not his action fails. But when the
facts averred show a contractual undertaking by defendant for the benefit of plaintiff, and it is alleged that plaintiff has failed or
refused to perform the contract, it is not necessary for plaintiff to specify in his pleadings whether the breach of the contract is due
to willful fault or to negligence on the part of the defendant, or of his servants or agents. Proof of the contract and of its
nonperformance is sufficient prima facie to warrant a recovery.
As a general rule . . . it is logical that in case of extra-contractual culpa, a suing creditor should assume the burden of proof of its
existence, as the only fact upon which his action is based; while on the contrary, in a case of negligence which presupposes the
existence of a contractual obligation, if the creditor shows that it exists and that it has been broken, it is not necessary for him to
prove negligence. (Manresa, vol. 8, p. 71 [1907 ed., p. 76]).
As it is not necessary for the plaintiff in an action for the breach of a contract to show that the breach was due to the negligent
conduct of defendant or of his servants, even though such be in fact the actual cause of the breach, it is obvious that proof on the
part of defendant that the negligence or omission of his servants or agents caused the breach of the contract would not constitute
a defense to the action. If the negligence of servants or agents could be invoked as a means of discharging the liability arising
from contract, the anomalous result would be that person acting through the medium of agents or servants in the performance of
their contracts, would be in a better position than those acting in person. If one delivers a valuable watch to watchmaker who
contract to repair it, and the bailee, by a personal negligent act causes its destruction, he is unquestionably liable. Would it be
logical to free him from his liability for the breach of his contract, which involves the duty to exercise due care in the preservation
of the watch, if he shows that it was his servant whose negligence caused the injury? If such a theory could be accepted, juridical
persons would enjoy practically complete immunity from damages arising from the breach of their contracts if caused by negligent
acts as such juridical persons can of necessity only act through agents or servants, and it would no doubt be true in most
instances that reasonable care had been taken in selection and direction of such servants. If one delivers securities to a banking
corporation as collateral, and they are lost by reason of the negligence of some clerk employed by the bank, would it be just and
reasonable to permit the bank to relieve itself of liability for the breach of its contract to return the collateral upon the payment of
the debt by proving that due care had been exercised in the selection and direction of the clerk?
This distinction between culpa aquiliana, as the source of an obligation, and culpa contractual as a mere incident to the
performance of a contract has frequently been recognized by the supreme court of Spain. (Sentencias of June 27, 1894;
November 20, 1896; and December 13, 1896.) In the decisions of November 20, 1896, it appeared that plaintiff's action arose ex
contractu, but that defendant sought to avail himself of the provisions of article 1902 of the Civil Code as a defense. The Spanish
Supreme Court rejected defendant's contention, saying:
These are not cases of injury caused, without any pre-existing obligation, by fault or negligence, such as those to which article
1902 of the Civil Code relates, but of damages caused by the defendant's failure to carry out the undertakings imposed by the
contracts . . . .
A brief review of the earlier decision of this court involving the liability of employers for damage done by the negligent acts of their
servants will show that in no case has the court ever decided that the negligence of the defendant's servants has been held to
constitute a defense to an action for damages for breach of contract.
In the case of Johnson vs. David (5 Phil. Rep., 663), the court held that the owner of a carriage was not liable for the damages
caused by the negligence of his driver. In that case the court commented on the fact that no evidence had been adduced in the
trial court that the defendant had been negligent in the employment of the driver, or that he had any knowledge of his lack of skill
or carefulness.
37
In the case of Baer Senior & Co's Successors vs. Compania Maritima (6 Phil. Rep., 215), the plaintiff sued the defendant for
damages caused by the loss of a barge belonging to plaintiff which was allowed to get adrift by the negligence of defendant's
servants in the course of the performance of a contract of towage. The court held, citing Manresa (vol. 8, pp. 29, 69) that if the
"obligation of the defendant grew out of a contract made between it and the plaintiff . . . we do not think that the provisions of
articles 1902 and 1903 are applicable to the case."
In the case of Chapman vs. Underwood (27 Phil. Rep., 374), plaintiff sued the defendant to recover damages for the personal
injuries caused by the negligence of defendant's chauffeur while driving defendant's automobile in which defendant was riding at
the time. The court found that the damages were caused by the negligence of the driver of the automobile, but held that the
master was not liable, although he was present at the time, saying:
. . . unless the negligent acts of the driver are continued for a length of time as to give the owner a reasonable opportunity to
observe them and to direct the driver to desist therefrom. . . . The act complained of must be continued in the presence of the
owner for such length of time that the owner by his acquiescence, makes the driver's acts his own.
In the case of Yamada vs. Manila Railroad Co. and Bachrach Garage & Taxicab Co. (33 Phil. Rep., 8), it is true that the court
rested its conclusion as to the liability of the defendant upon article 1903, although the facts disclosed that the injury complaint of
by plaintiff constituted a breach of the duty to him arising out of the contract of transportation. The express ground of the decision
in this case was that article 1903, in dealing with the liability of a master for the negligent acts of his servants "makes the
distinction between private individuals and public enterprise;" that as to the latter the law creates a rebuttable presumption of
negligence in the selection or direction of servants; and that in the particular case the presumption of negligence had not been
overcome.
It is evident, therefore that in its decision Yamada case, the court treated plaintiff's action as though founded in tort rather than as
based upon the breach of the contract of carriage, and an examination of the pleadings and of the briefs shows that the questions
of law were in fact discussed upon this theory. Viewed from the standpoint of the defendant the practical result must have been
the same in any event. The proof disclosed beyond doubt that the defendant's servant was grossly negligent and that his
negligence was the proximate cause of plaintiff's injury. It also affirmatively appeared that defendant had been guilty of
negligence in its failure to exercise proper discretion in the direction of the servant. Defendant was, therefore, liable for the injury
suffered by plaintiff, whether the breach of the duty were to be regarded as constituting culpa aquiliana or culpa contractual. As
Manresa points out (vol. 8, pp. 29 and 69) whether negligence occurs an incident in the course of the performance of a
contractual undertaking or its itself the source of an extra-contractual undertaking obligation, its essential characteristics are
identical. There is always an act or omission productive of damage due to carelessness or inattention on the part of the
defendant. Consequently, when the court holds that a defendant is liable in damages for having failed to exercise due care, either
directly, or in failing to exercise proper care in the selection and direction of his servants, the practical result is identical in either
case. Therefore, it follows that it is not to be inferred, because the court held in the Yamada case that defendant was liable for the
damages negligently caused by its servants to a person to whom it was bound by contract, and made reference to the fact that
the defendant was negligent in the selection and control of its servants, that in such a case the court would have held that it
would have been a good defense to the action, if presented squarely upon the theory of the breach of the contract, for defendant
to have proved that it did in fact exercise care in the selection and control of the servant.
The true explanation of such cases is to be found by directing the attention to the relative spheres of contractual and extra-
contractual obligations. The field of non- contractual obligation is much more broader than that of contractual obligations,
comprising, as it does, the whole extent of juridical human relations. These two fields, figuratively speaking, concentric; that is to
say, the mere fact that a person is bound to another by contract does not relieve him from extra-contractual liability to such
person. When such a contractual relation exists the obligor may break the contract under such conditions that the same act which
constitutes the source of an extra-contractual obligation had no contract existed between the parties.
The contract of defendant to transport plaintiff carried with it, by implication, the duty to carry him in safety and to provide safe
means of entering and leaving its trains (civil code, article 1258). That duty, being contractual, was direct and immediate, and its
non-performance could not be excused by proof that the fault was morally imputable to defendant's servants.
The railroad company's defense involves the assumption that even granting that the negligent conduct of its servants in placing
an obstruction upon the platform was a breach of its contractual obligation to maintain safe means of approaching and leaving its
38
trains, the direct and proximate cause of the injury suffered by plaintiff was his own contributory negligence in failing to wait until
the train had come to a complete stop before alighting. Under the doctrine of comparative negligence announced in the Rakes
case (supra), if the accident was caused by plaintiff's own negligence, no liability is imposed upon defendant's negligence and
plaintiff's negligence merely contributed to his injury, the damages should be apportioned. It is, therefore, important to ascertain if
defendant was in fact guilty of negligence.
It may be admitted that had plaintiff waited until the train had come to a full stop before alighting, the particular injury suffered by
him could not have occurred. Defendant contends, and cites many authorities in support of the contention, that it is
negligence per se for a passenger to alight from a moving train. We are not disposed to subscribe to this doctrine in its absolute
form. We are of the opinion that this proposition is too badly stated and is at variance with the experience of every-day life. In this
particular instance, that the train was barely moving when plaintiff alighted is shown conclusively by the fact that it came to stop
within six meters from the place where he stepped from it. Thousands of person alight from trains under these conditions every
day of the year, and sustain no injury where the company has kept its platform free from dangerous obstructions. There is no
reason to believe that plaintiff would have suffered any injury whatever in alighting as he did had it not been for defendant's
negligent failure to perform its duty to provide a safe alighting place.
We are of the opinion that the correct doctrine relating to this subject is that expressed in Thompson's work on Negligence (vol. 3,
sec. 3010) as follows:
The test by which to determine whether the passenger has been guilty of negligence in attempting to alight from a moving railway
train, is that of ordinary or reasonable care. It is to be considered whether an ordinarily prudent person, of the age, sex and
condition of the passenger, would have acted as the passenger acted under the circumstances disclosed by the evidence. This
care has been defined to be, not the care which may or should be used by the prudent man generally, but the care which a man
of ordinary prudence would use under similar circumstances, to avoid injury." (Thompson, Commentaries on Negligence, vol. 3,
sec. 3010.)
Or, it we prefer to adopt the mode of exposition used by this court in Picart vs. Smith (37 Phil. rep., 809), we may say that the test
is this; Was there anything in the circumstances surrounding the plaintiff at the time he alighted from the train which would have
admonished a person of average prudence that to get off the train under the conditions then existing was dangerous? If so, the
plaintiff should have desisted from alighting; and his failure so to desist was contributory negligence.1awph!l.net
As the case now before us presents itself, the only fact from which a conclusion can be drawn to the effect that plaintiff was guilty
of contributory negligence is that he stepped off the car without being able to discern clearly the condition of the platform and
while the train was yet slowly moving. In considering the situation thus presented, it should not be overlooked that the plaintiff
was, as we find, ignorant of the fact that the obstruction which was caused by the sacks of melons piled on the platform existed;
and as the defendant was bound by reason of its duty as a public carrier to afford to its passengers facilities for safe egress from
its trains, the plaintiff had a right to assume, in the absence of some circumstance to warn him to the contrary, that the platform
was clear. The place, as we have already stated, was dark, or dimly lighted, and this also is proof of a failure upon the part of the
defendant in the performance of a duty owing by it to the plaintiff; for if it were by any possibility concede that it had right to pile
these sacks in the path of alighting passengers, the placing of them adequately so that their presence would be revealed.
As pertinent to the question of contributory negligence on the part of the plaintiff in this case the following circumstances are to be
noted: The company's platform was constructed upon a level higher than that of the roadbed and the surrounding ground. The
distance from the steps of the car to the spot where the alighting passenger would place his feet on the platform was thus
reduced, thereby decreasing the risk incident to stepping off. The nature of the platform, constructed as it was of cement material,
also assured to the passenger a stable and even surface on which to alight. Furthermore, the plaintiff was possessed of the vigor
and agility of young manhood, and it was by no means so risky for him to get off while the train was yet moving as the same act
would have been in an aged or feeble person. In determining the question of contributory negligence in performing such act —
that is to say, whether the passenger acted prudently or recklessly — the age, sex, and physical condition of the passenger are
circumstances necessarily affecting the safety of the passenger, and should be considered. Women, it has been observed, as a
general rule are less capable than men of alighting with safety under such conditions, as the nature of their wearing apparel
obstructs the free movement of the limbs. Again, it may be noted that the place was perfectly familiar to the plaintiff as it was his
daily custom to get on and of the train at this station. There could, therefore, be no uncertainty in his mind with regard either to
39
the length of the step which he was required to take or the character of the platform where he was alighting. Our conclusion is
that the conduct of the plaintiff in undertaking to alight while the train was yet slightly under way was not characterized by
imprudence and that therefore he was not guilty of contributory negligence.
The evidence shows that the plaintiff, at the time of the accident, was earning P25 a month as a copyist clerk, and that the
injuries he has suffered have permanently disabled him from continuing that employment. Defendant has not shown that any
other gainful occupation is open to plaintiff. His expectancy of life, according to the standard mortality tables, is approximately
thirty-three years. We are of the opinion that a fair compensation for the damage suffered by him for his permanent disability is
the sum of P2,500, and that he is also entitled to recover of defendant the additional sum of P790.25 for medical attention,
hospital services, and other incidental expenditures connected with the treatment of his injuries.
The decision of lower court is reversed, and judgment is hereby rendered plaintiff for the sum of P3,290.25, and for the costs of
both instances. So ordered.
G.R. No. L-30309 November 25, 1983
CLEMENTE BRIÑAS, petitioner,

vs. THE PEOPLE OF THE PHILIPPINES and HONORABLE COURT OF APPEALS, respondents.
This is a petition to review the decision of respondent Court of Appeals, now Intermediate Appellate Court, affirming the decision
of the Court of First Instance of Quezon, Ninth Judicial District, Branch 1, which found the accused Clemente Briñas guilty of the
crime of DOUBLE HOMICIDE THRU RECKLESS IMPRUDENCE prior the deaths of Martina Bool and Emelita Gesmundo.
The information charged the accused-appellant. and others as follows:
That on or about the 6th day of January, 1957, in the Municipality of Tiaong, Province of Quezon, Philippines, and within the
jurisdiction of this Hon. Court, the said accused Victor Milan, Clemente Briñas and Hermogenes Buencamino, being then persons
in charge of passenger Train No. 522-6 of the Manila Railroad Company, then running from Tagkawayan to San Pablo City, as
engine driver, conductor and assistant conductor, respectively, wilfully and unlawfully drove and operated the same in a
negligent, careless and imprudent manner, without due regard to existing laws, regulations and ordinances, that although there
were passengers on board the passenger coach, they failed to provide lamps or lights therein, and failed to take the necessary
precautions for the safety of passengers and to prevent accident to persons and damage to property, causing by such
negligence, carelessness and imprudence, that when said passenger Train No. 522-6 was passing the railroad tracks in the
Municipality of Tiaong, Quezon, two of its passengers, Martina Bool, an old woman, and Emelita Gesmundo, a child about three
years of age, fell from the passenger coach of the said train, as a result of which, they were over run, causing their instantaneous
death. "
The facts established by the prosecution and accepted by the respondent court as basis for the decision are summarized as
follows:
The evidence of the prosecution tends to show that in the afternoon of January 6, 1957, Juanito Gesmundo bought a train ticket
at the railroad station in Tagkawayan, Quezon for his 55-year old mother Martina Bool and his 3-year old daughter Emelita
Gesmundo, who were bound for Barrio Lusacan, Tiaong, same province. At about 2:00 p.m., Train No. 522 left Tagkawayan with
the old woman and her granddaughter among the passengers. At Hondagua the train's complement were relieved, with Victor
Millan taking over as engineman, Clemente Briñas as conductor, and Hermogenes Buencamino as assistant conductor. Upon
approaching Barrio Lagalag in Tiaong at about 8:00 p.m. of that same night, the train slowed down and the conductor shouted
'Lusacan', 'Lusacan'. Thereupon, the old woman walked towards the left front door facing the direction of Tiaong, carrying the
child with one hand and holding her baggage with the other. When Martina and Emelita were near the door, the train suddenly
picked up speed. As a result the old woman and the child stumbled and they were seen no more. It took three minutes more
before the train stopped at the next barrio, Lusacan, and the victims were not among the passengers who disembarked thereat
.têñ.£îhqwâ£
40
Next morning, the Tiaong police received a report that two corpses were found along the railroad tracks at Barrio Lagalag.
Repairing to the scene to investigate, they found the lifeless body of a female child, about 2 feet from the railroad tracks,
sprawled to the ground with her belly down, the hand resting on the forehead, and with the back portion of the head crushed. The
investigators also found the corpse of an old woman about 2 feet away from the railroad tracks with the head and both legs
severed and the left hand missing. The head was located farther west between the rails. An arm was found midway from the
body of the child to the body of the old woman. Blood, pieces of scattered brain and pieces of clothes were at the scene. Later,
the bodies were Identified as those of Martina Bool and Emelita Gesmundo. Among the personal effects found on Martina was a
train ticket (Exhibits "B").
On January 7, 1957, the bodies of the deceased were autopsied by Dr. Pastor Huertas, the Municipal Health Officer of Tiaong.
Dr. Huertas testified on the cause of death of the victims as follows: têñ.£îhqwâ£
FISCAL YNGENTE:
Q What could have caused the death of those women?
A Shock.
Q What could have caused that shock?
A Traumatic injury.
Q What could have caused traumatic injury?
A The running over by the wheel of the train.
Q With those injuries, has a person a chance to survive?
A No chance to survive.
Q What would you say death would come?
A Instantaneous.
Q How about the girl, the young girl about four years old, what could have caused the death?
A Shock too.
Q What could have caused the shock?
A Compound fracture of the skull and going out of the brain.
Q What could have caused the fracture of the skull and the going out of the brain?
A That is the impact against a steel object. (TSN., pp. 81-82, July 1, 1959)
The Court of First Instance of Quezon convicted defendant-appellant Clemente Briñas for double homicide thru reckless
imprudence but acquitted Hermogenes Buencamino and Victor Millan The dispositive portion of the decision reads: têñ.£îhqwâ£
WHEREFORE, the court finds the defendant Clemente Briñas guilty beyond doubt of the crime of double homicide thru reckless
imprudence, defined and punished under Article 305 in connection with Article 249 of the Revised Penal Code, and sentences
him to suffer six (6) months and one (1) day ofprision correccional to indemnify the heirs of the deceased Martina Bool and
Emelita Gesmundo in the amounts of P6,000 and P3,000, respectively, with subsidiary imprisonment in case of insolvency not to
exceed one-third of the principal penalty, and to pay the costs.
41
For lack of sufficient evidence against the defendant Hermogenes Buencamino and on the ground of reasonable doubt in the
case of defendant Victor Millan the court hereby acquits them of the crime charged in the information and their bail bonds
declared cancelled.
As to the responsibility of the Manila Railroad Company in this case, this will be the subject of court determination in another
proceeding.
On appeal, the respondent Court of Appeals affirmed the judgment of the lower court.
During the pendency of the criminal prosecution in the Court of First Instance of Quezon, the heirs of the deceased victims filed
with the same court, a separate civil action for damages against the Manila Railroad Company entitled "Civil Case No. 5978,
Manaleyo Gesmundo, et al., v. Manila Railroad Company". The separate civil action was filed for the recovery of P30,350.00 from
the Manila Railroad Company as damages resulting from the accident.
The accused-appellant alleges that the Court of Appeals made the following errors in its decision:
I THE HONORABLE COURT OF APPEALS ERRED IN CONVICTING PETITIONER-APPELLANT UNDER THE FACTS AS
FOUND BY SAID COURT; and
II THE HONORABLE COURT OF APPEALS ERRED IN INCLUDING THE PAYMENT OF DEATH INDEMNITY BY THE
PETITIONER- APPELLANT, WITH SUBSIDIARY IMPRISONMENT IN CASE OF INSOLVENCY, AFTER THE HEIRS OF THE
DECEASED HAVE ALREADY COMMENCED A SEPARATE CIVIL ACTION FOR DAMAGES AGAINST THE RAILROAD
COMPANY ARISING FROM THE SAME MISHAP.
We see no error in the factual findings of the respondent court and in the conclusion drawn from those findings.
It is undisputed that the victims were on board the second coach where the petitioner-appellant was assigned as conductor and
that when the train slackened its speed and the conductor shouted "Lusacan, Lusacan", they stood up and proceeded to the
nearest exit. It is also undisputed that the train unexpectedly resumed its regular speed and as a result "the old woman and the
child stumbled and they were seen no more.
In finding petitioner-appellant negligent, respondent Court têñ.£îhqwâ£

The appellant's announcement was premature and erroneous, for it took a full three minutes more before the next barrio of
Lusacan was reached. In making the erroneous and premature announcement, appellant was negligent. He ought to have known
that train passengers invariably prepare to alight upon notice from the conductor that the destination was reached and that the
train was about to stop. Upon the facts, it was the appellant's negligent act which led the victims to the door. Said acts virtually
exposed the victims to peril, for had not the appellant mistakenly made the announcement, the victims would be safely
ensconced in their seats when the train jerked while picking up speed, Although it might be argued that the negligent act of the
appellant was not the immediate cause of, or the cause nearest in time to, the injury, for the train jerked before the victims
stumbled, yet in legal contemplation appellant's negligent act was the proximate cause of the injury. As this Court held in Tucker
v. Milan, CA G.R. No. 7059-R, June 3, 1953: 'The proximate cause of the injury is not necessarily the immediate cause of, or the
cause nearest in time to, the injury. It is only when the causes are independent of each other that the nearest is to be charged
with the disaster. So long as there is a natural, direct and continuous sequence between the negligent act the injury (sic) that it
can reasonably be said that but for the act the injury could not have occurred, such negligent act is the proximate cause of the
injury, and whoever is responsible therefore is liable for damages resulting therefrom. One who negligently creates a dangerous
condition cannot escape liability for the natural and probable consequences thereof, although the act of a third person, or an act
of God for which he is not responsible intervenes to precipitate the loss.
It is a matter of common knowledge and experience about common carriers like trains and buses that before reaching a station or
flagstop they slow down and the conductor announces the name of the place. It is also a matter of common experience that as
the train or bus slackens its speed, some passengers usually stand and proceed to the nearest exit, ready to disembark as the
train or bus comes to a full stop. This is especially true of a train because passengers feel that if the train resumes its run before
they are able to disembark, there is no way to stop it as a bus may be stopped.
42
It was negligence on the conductor's part to announce the next flag stop when said stop was still a full three minutes ahead. As
the respondent Court of Appeals correctly observed, "the appellant's announcement was premature and erroneous.
That the announcement was premature and erroneous is shown by the fact that immediately after the train slowed down, it
unexpectedly accelerated to full speed. Petitioner-appellant failed to show any reason why the train suddenly resumed its regular
speed. The announcement was made while the train was still in Barrio Lagalag.
The proximate cause of the death of the victims was the premature and erroneous announcement of petitioner' appelant Briñas.
This announcement prompted the victims to stand and proceed to the nearest exit. Without said announcement, the victims
would have been safely seated in their respective seats when the train jerked as it picked up speed. The connection between the
premature and erroneous announcement of petitioner-appellant and the deaths of the victims is direct and natural, unbroken by
any intervening efficient causes.
Petitioner-appellant also argues that it was negligence per se for Martina Bool to go to the door of the coach while the train was
still in motion and that it was this negligence that was the proximate cause of their deaths.
We have carefully examined the records and we agree with the respondent court that the negligence of petitioner-appellant in
prematurely and erroneously announcing the next flag stop was the proximate cause of the deaths of Martina Bool and Emelita
Gesmundo. Any negligence of the victims was at most contributory and does not exculpate the accused from criminal liability.
With respect to the second assignment of error, the petitioner argues that after the heirs of Martina Bool and Emelita Gesmundo
had actually commenced the separate civil action for damages in the same trial court during the pendency of the criminal action,
the said court had no more power to include any civil liability in its judgment of conviction.
The source of the obligation sought to be enforced in Civil Case No. 5978 is culpa contractual, not an act or omission punishable
by law. We also note from the appellant's arguments and from the title of the civil case that the party defendant is the Manila
Railroad Company and not petitioner-appellant Briñas Culpa contractual and an act or omission punishable by law are two
distinct sources of obligation.
The petitioner-appellant argues that since the information did not allege the existence of any kind of damages whatsoever
coupled by the fact that no private prosecutors appeared and the prosecution witnesses were not interrogated on the issue of
damages, the trial court erred in awarding death indemnity in its judgment of conviction.
A perusal of the records clearly shows that the complainants in the criminal action for double homicide thru reckless imprudence
did not only reserve their right to file an independent civil action but in fact filed a separate civil action against the Manila Railroad
Company.
The trial court acted within its jurisdiction when, despite the filing with it of the separate civil action against the Manila Railroad
Company, it still awarded death indemnity in the judgment of conviction against the petitioner-appellant.
It is well-settled that when death occurs as a result of the commission of a crime, the following items of damages may be
recovered: (1) an indemnity for the death of the victim; (2) an indemnity for loss of earning capacity of the deceased; (3) moral
damages; (4) exemplary damages; (5) attorney's fees and expenses of litigation, and (6) interest in proper cases.
The indemnity for loss of earning capacity, moral damages, exemplary damages, attorney's fees, and interests are recoverable
separately from and in addition to the fixed slim of P12,000.00 corresponding to the indemnity for the sole fact of death. This
indemnity arising from the fact of death due to a crime is fixed whereas the others are still subject to the determination of the
court based on the evidence presented. The fact that the witnesses were not interrogated on the issue of damages is of no
moment because the death indemnity fixed for death is separate and distinct from the other forms of indemnity for damages.
WHEREFORE, the judgment appealed from is modified in that the award for death indemnity is increased to P12,000.00 for the
death of Martina Bool instead of P6,000.00 and P12,000.00 for the death of Emelita Gesmundo instead of P3,000.00, but
deleting the subsidiary imprisonment in case of insolvency imposed by the lower court. The judgment is AFFIRMED in all other
respects.
43
G.R. No. 70547 January 22, 1993
PHILIPPINE NATIONAL RAILWAYS and HONORIO CABARDO, petitioners,

vs.INTERMEDIATE APPELLATE COURT, and BALIWAG TRANSIT, INC., respondents.
The imputation of culpa on the part of herein petitioners as a result of the collision between its strain, bound for Manila from La
Union, with a Baliwag transit bus at the railroad crossing on the road going to Hagonoy, Bulacan on August l0, 1974, is the
subject of the petition at bar directed against the judgment of affirmance rendered by respondent court, through the Fourth Civil
Cases Division (Sison, Bidin (P), Veloso, JJ.), vis-a-vis the decretal portion handed down by the court of origin in:
1. Ordering the defendants, jointly and severally to pay the plaintiff the amount of P179,511.52 as actual damages.
2. Ordering the defendants jointly and severally to pay the plaintiff P436,642.03 as reimbursement for the damages paid by the
plaintiff to death, injury and damage claimants.
3. Ordering the defendants jointly and severally to pay exemplary damages in the amount of P50, 000.00 to the plaintiff.
4. Ordering the defendants jointly and severally to pay the plaintiff attorney's fees in the amount of P5, 000.00.
5. Ordering the defendants, jointly and severally to pay the plaintiff interest at the legal rate on the above amounts due the
plaintiff from August 10, 1974 until fully paid.
6. Ordering the defendants to pay the cost of this suit.
7. Ordering the dismissal of the defendants' counterclaim for lack of factual and legal basis. (p. 101, Record on Appeal; p.
103. Rollo.)
Culled from the text of the assailed disposition are the facts of the case at bar which are hereunder adopted verbatim:
The case arose from a collision of a passenger express train of defendant Philippine National Railways, (PNR) coming from San
Fernando, La Union and bound for Manila and a passenger bus of Baliwag Transit, Inc. which was on its way to Hagonoy,
Bulacan, from Manila, but upon reaching the railroad crossing at Barrio Balungao, Calumpit, Bulacan at about 1:30 in the
afternoon of August 10, 1974, got stalled and was hit by defendant's express train causing damages to plaintiff's bus and its
passengers, eighteen (18) of whom died and fifty-three (53) others suffered physical injuries. Plaintiff alleging that the proximate
cause of the collision was the negligence and imprudence of defendant PNR and its locomotive engineer, Honorio Cirbado, in
operating its passenger train in a busy intersection without any bars, semaphores, signal lights, flagman or switchman to warn the
public of approaching train that would pass through the crossing, filed the instant action for Damages against defendants. The
defendants, in their Answer traversed the material allegation of the Complaint and as affirmative defense alleged that the collision
was caused by the negligence, imprudence and lack of foresight of plaintiff's bus driver, Romeo Hughes.
At the pre-trial conference held on June 23, 1976, the parties agreed on a partial stipulation of facts and issues which as
amplified at the continuation of the pre-trial conference, on July 12, 1976, are as follows:
1 That plaintiff is a duly constituted corporation registered with the Securities and Exchange Commission engaged in the
business of transportation and operating public utility buses for the public with lines covering Manila, Caloocan City, Quezon City,
Malabon, Rizal, Bulacan, Pampanga and Nueva Ecija, and particularly from Manila to Hagonoy, Bulacan and return in the month
of August, l974 passing thru the town of Calumpit Bulacan, temporarily while the bridge at Hagonoy, Bulacan was under
construction;
2 That defendant Philippine National Railways is a purely government owned and controlled corporation duly registered and
existing virtue of Presidential Decree No. 741, with capacity to sue and be sued, and is likewise engaged in transporting
passengers and cargoes by trains and buses and that, it operates a train line between San Fernando, La Union and Manila
particularly Passenger Express Train with Body No. 73, passing along the intersection of Barrio Balungao, Calumpit, Bulacan, in
going to San Fernando, La Union from Manila and return;
44
3. That on August 10, 1974, at about 1:20 o'clock in the afternoon, a Baliuag Transit Bus with Body No. 1066 and Plate No. XS-
929 PUB-Bulacan '74 was driven by its authorized driver Romeo Hughes and PNR Train No. 73 was operated by Train Engineer
Honorio Cabardo alias Honorio Cirbado and at the railroad intersection at Barrio Balungao, Calumpit, Bulacan, said passenger
train No. 73 hit and bumped the right mid portion of the plaintiff's passenger bus No. 1066, while the rear portion of said bus was
at the railroad track and its direction was towards Hagonoy, Bulacan at about 1:30 o'clock in the afternoon;
4. That at the time of the collision there was a slight rainfall in the vicinity of the scene of the accident and that there was at said
intersection no bars, semaphores, and signal lights that would warn the public of the approaching train that was about to pass
through the intersection and likewise there was no warning devices to passing trains showing that they were about to pass an
intersection in going to Manila from San Fernando, La Union and back;
5. That on account of said collision, the Baliuag Transit Bus with Body No. 1066 driven by Romeo Hughes was damaged and
eighteen (18) of its passengers died and the rest who were more than fifty three (53) passengers suffered physical injuries;
6. That after the investigation the Chief of Police of Calumpit, Bulacan, filed a criminal case of Reckless Imprudence Causing
Multiple Homicide with Multiple Physical Injuries and Damage to Property against Romeo Hughes y Parfan, driver of the Baliuag
Transit bus docketed under Crim. Case No. 2392; while the train Engineer Honorio Cabardo alias Honorio Cirbado was not
included as an accused in said case, although his train No. 73 was the one that hit and bumped the right rear portion of the said
bus;
7. That immediately after the said accident Major Manuel A. Macam, Chief of the Municipal Police of Calumpit, Bulacan, together
with some of his policemen conducted an investigation of the accident;
8. That at the railroad crossing in Calumpit, Bulacan where the accident took place there is no railroad crossing bar, however,
during the pre-war days there was a railroad crossing bar at said intersection; that, however, there was only one sign of railroad
crossing "Stop, Look and Listen" placed on a concrete slab and attached to a concrete post existing at the approach of the
railroad track from the Highway going towards Hagonoy, Bulacan and that after the said railroad track there was a designated
jeep parking area at the right side in the direction from the Highway to Hagonoy Bulacan;
9. That the train No. 73 driven by Train Engineer Honorio Cabardo alias Honorio Cirbado stopped after passing the railroad
crossing at a distance of about 50 meters from the said intersection after the collision on August, 1974;
10. That the expected time of arrival of said Train No. 73 in Manila was 2:41 P.M. and its departure time from San Fernando, La
Union was 9:00 A.M. and its expected arrival at Calumpit, Bulacan was 1:41 P.M. with no stop at Calumpit, Bulacan.
SIMPLIFICATION OF ISSUES
11. That the principal issue in the instant case is who between the driver Romeo Hughes of Baliuag Transit, Incorporated and the
train engineer Honorio Cabardo alias Honorio Cirbado of the Philippine National Railways was negligent or whether or not both
are negligent; that likewise which of said companies was negligent at said railroad intersection;
12. That another additional issue is whether the Baliuag Transit Incorporated has exercised the diligence of a good father of the
family in the selection and supervision of its employees. (pp.
85-87, Record on Appeal). ( Annex A, Petition; pp. 79-82, Rollo)
In addition, respondent court deemed it necessary to reflect the salient findings of the case for damages as formulated by the trial
court:
Posed for resolution are the following issues: Who between the driver Romeo Hughes of the Baliuag Transit Incorporated and
Honorio Cabardo, train Engineer of the Philippine National Railways was negligent in the operation of their respective vehicles, or
whether or both were negligent? Could either of the companies Baliuag Transit Incorporated and the Philippine National Railways
be held accountable for the collision because of negligence?
The defendants presented several statements or affidavits of alleged witnesses to the collision, specifically Exhibits 2, 3, 4, 5, 6,
11, 13, 14, 15, 16, 17, 18 and 19; the Court is at a loss as to why the persons who gave the said statements were not presented
45
as witnesses during the trial of the

case, as aptly said, the statements are hearsay evidence (Azcueta v. Cabangbang, — 45 O.G. 144); at most they be taken as
proof only of the fact that statements of said persons were taken and that investigation was conducted of the incident; the Court
cannot consider the averments in said statements as testimonies or evidence of truth.
Defendants endeavored to show that the proximate and immediate cause of the collision was the negligence of the bus driver
because the driver did not make a stop before ascending the railtrack; he did not heed the warning or shoutings of bystanders
and passengers and proceeded in traversing the railtrack at a fast speed; that the bus driver was in fact violating Section 42(d) of
R.A. 4136, otherwise known as the Land Transportation and Traffic Code for failure to "stop, look, and listen" at the intersection,
before crossing the railtrack; that it is incumbent upon him to take the necessary precautions at the intersection because the
railroad track is in itself a warning; and the bus driver ignored such a warning and must assume the responsibility for the result of
the motion taken by him (U.S. v. Mananquil, 42 Phil. 90)
Except the testimony of the train engineer Cabardo, there is no admissible evidence to show that indeed, the bus driver did not
take the necessary precaution in traversing the track. Note that he first noticed the bus when it was only 15 meters away from
him; he could not have possibly noticed the position of the bus before negotiating the track.
On the other hand, it was shown by plaintiff that the bus driver Romeo Hughes took the necessary precautions in traversing the
track.
The bus driver had stopped before traversing the track and in fact asked the conductor to alight and made a "Look and Listen"
before proceeding; the conductor had done just that and made a signal to proceed when he did not see any oncoming train.
(TSN, October 2l, 1976, p. 4); plaintiff's bus drivers and conductors are enjoined to observe such a precautionary measure in
seminars conducted by the company. (TSN, September 23, 1976. pp. 26-27).
The evidence disclosed that the train was running fast because by his own testimony, the train engineer had testified that before
reaching the station of Calumpit the terrain was downgrade and levelled only after passing the Calumpit bridge (TSN, July 28,
1976, p. 14 ); the tendency of the train, coming from a high point is to accelerate as the gravity will necessarily make it so,
especially when it is pulling seven coaches loaded with goods and passengers.
Moreover, upon impact, the bus loaded with passengers was dragged and thrown into a ditch several meters away; the train had
stopped only after the engine portion was about 190 meters away from the fallen bus; several passengers were injured and at
least 20 died; such facts conclusively indicate that the train was speeding, because if it were moving at moderate speed, it would
not run some 190 meters after impact and throw the bus at quite a distance especially so when it is claimed that the train's
emergency brakes were applied.
Further, the train was an express train; its departure was 9:00 A.M. at San Fernando, La Union and expected in Manila at 2:41
P.M.; the collision occurred at 1:30 P.M. or 4 1/2 hours after it left La Union; surely, the train could have not negotiated such a
distance in so short a time if it were not running at fast speed.
It may be argued that a railroad is not subject to the same restrictions to the speed of its train as a motorists (Mckelvey v.
Delaware L. and W.R. Co. 253 App. D.V. 109, 300 NYS 1263 ); but it does not follow that a train will be permitted to run fast
under all conditions at any rate of speed it may choose. It must regulate its speed with proper regard for the safety of human life
and property (Johnson v. Southern Pacific Company (Cal. App. 288 p. 81), considering the surrounding circumstances
particularly the nature of the locality (Atchinson, T. and SFR Co. v. Nicks (Arts) 165 p. 2d 167).
Cabardo's route included the passage over the said intersection; he could have noticed that it is a very busy intersection because
the crossroad leads to the Calumpit Poblacion as well as to the neighboring town of Hagonoy; there was a parking lot by the side
of the track whereat passengers board jeepneys for the neighboring barrios and towns; stalls abound in the vicinity and
bystanders congregate nearby. A prudent train operator must, under the circumstances, slacken his speed almost for the
protection of motorists and pedestrians, not only when a collision is inevitable but even if no hindrance is apparent on the way;
Moreover, there was an intermittent rain at the time of the collision (see stipulation of facts and photographs); the condition of the
weather was such that even if for this reason alone, the train engineer should have foreseen that danger of collision lurked
46
because of poor visibility of slippery road; he should have taken extra precaution by considerably slackening its speed. This he
failed to do even if the nature of his job required him to observe care exercised by a prudent man.
Contributory negligence may not be ascribed to the bus driver; it was evident that he had taken the necessary precautions before
passing over the railway track; if the bus was hit, it was for reasons beyond the control of the bus driver because he had no place
to go; there were vehicles to his left which prevented him in swerving towards that direction; his bus stalled in view of the
obstructions in his front where a sand and gravel truck stopped because of a jeep maneuvering into a garage up front. All the
wheels at the bus have already passed the rail portion of the track and only the rear portion of the bus' body occupied or covered
the railtrack. This was evident because the part of the bus hit by the train was the rear since the bus fell on a nearby ditch.
Otherwise, if the bus was really hit in mid-body, the bus could have been halved into two because of the force of the impact.
The stipulation of facts between the parties show that there was no crossing bar at the railroad intersection at Calumpit, Bulacan
at the time of collision (par. 8, Stipulation of Facts); the plaintiff contended and the defendants did not deny, that there were no
signal lights, semaphores, flagman or switchman thereat; the absence of such devices, the plaintiff argues constitute negligence
on the part of the Philippine National Railways.
A railroad is not required to have a gate (crossing bar) or a flagman, or to maintain signals at every intersection; only at such
places reasonably necessary; what is considered reasonably necessary will depend on the amount of travel upon the road, the
frequency with which trains pass over it and the view which could be obtained of trains as they approach the crossing, and other
conditions (Pari v. Los Angeles, Ry. Corporation (Cal A2d) 128 p2d 563; Swdyk v. Indiana Harbor Belt R. Co. 148 F. 2d 795, and
others).
As has been amply discussed, the crossroad at the intersection at Calumpit is one which is a busy thoroughfare; it leads to the
Poblacion at Calumpit and other barrios as well as the town of Hagonoy; the vicinity is utilized as a parking and waiting area for
passengers of jeepneys that ply between the barrios, clearly, the flow of vehicular traffic thereat is huge. It can be said also that,
since there is no other railtrack going North except that one passing at Calumpit, trains pass over it frequently;
A portion of the intersection is being used as a parking area with stalls and other obstructions present making it difficult, if not
impossible, to see approaching trains (see photographs).
The failure of the Philippine National Railways to put a cross bar, or signal light, flagman or switchman, or semaphores is
evidence of negligence and disregard of the safety of the public, even if there is no law or ordinance requiring it, because public
safety demands that said devices or equipments be installed, in the light of aforesaid jurisprudence. In the opinion of this Court
the X sign or the presence of "STOP, LOOK, LISTEN" warnings would not be sufficient protection of the motoring public as well
as the pedestrians, in the said intersection;
The parties likewise have stipulated that during the pre-war days, there was a railroad crossing bar at the said intersection (Par-8,
Stipulation of Facts). It appears that it was a self imposed requirement which has been abandoned. In a case it was held that
where the use of a flagman was self imposed, the abandonment thereof may constitute negligence. (Fleming v. Missouri and A.
Ry. Co. 198 ARDC 290, 128 S.W. 2d 286 and others; cited in Sec. 1082 SCRWARTZ, Vol. 2). Similarly, the abandonment by the
PNR of the use of the crossing bar at the intersection at Calumpit constitutes negligence, as its installation has become
imperative, because of the prevailing circumstances in the place.
A railroad company has been adjudged guilty of negligence and civilly liable for damages when it failed to install semaphores, or
where it does not see to it that its flagman or switchman comply with their duties faithfully, to motorist injured by a crossing train
as long as he had crossed without negligence on his part (Lilius vs. MRR, 39 Phil. 758). (Decision, pages 94-100, R A.; pp. 83-
89, Rollo).
On the aspect of whether the Philippine National Railways enjoys immunity from suit, respondent court initially noted that an
exculpation of this nature that was raised for the first time on appeal may no longer be entertained in view of the proscription
under Section 2, Rule 9 of the Revised Rules of Court, apart from the fact that the lawyer of petitioner agreed to stipulate inter
alia that the railroad company had capacity to sue and be sued. This being so, respondent court continued, PNR was perforce
estopped from disavowing the prejudicial repercussion of an admission in judicio. Even as the laws governing the creation and
rehabilitation of the PNR were entirely mute on its power to sue and be sued, respondent court nonetheless opined that such
47
prerogative was implied from the general power to transact business pertinent or indispensable to the attainment of the goals of
the railroad company under Section 4 of Republic Act No. 4156 as amended by Republic Act No. 6366:
Sec. 4 General Powers — The Philippine National Railways shall have the following general powers:
(a) To do all such other things and to transact all such business directly or indirectly necessary, incidental or conducive to the
attainment of the purpose of the corporation; and
(b) Generally, to exercise all powers of a railroad corporation under the Corporation law.
in conjunction with Section 2(b) of Presidential Decree No. 741:

(b) To own or operate railroad transways, bus lines, trucklines, subways, and other kinds of land transportation, vessels, and
pipelines, for the purpose of transporting for consideration, passengers, mail and property between any points in the Philippines;
Thus, respondent court utilized the doctrine of implied powers announced in National Airports Corporation vs. Teodoro, Sr. and
Philippine Airlines, Inc. (91 Phil. 203 [1952]), to the effect that the power to sue and be sued is implicit from the faculty to transact
private business. At any rate, respondent court characterized the railroad company as a private entity created not to discharge a
governmental function but, among other things, to operate a transport service which is essentially a business concern, and thus
barred from invoking immunity from suit.
In brushing aside petitioners' asseveration that the bus driver outraced the train at the crossing, respondent court observed that
the bus was hit by the train at its rear portion then protruding over the tracks as the bus could not move because another truck at
its front was equally immobile due to a jeep maneuvering into a nearby parking area. Under these tight conditions, respondent
court blamed the train engineer who admitted to have seen the maneuvering jeep at a distance (TSN, July 28, 1976, page 18)
and had the last clear chance to apply the brakes, knowing fully well that the vehicles following the jeep could not move away
from the path of the train. Apart from these considerations, it was perceived below that the train was running fast during the entire
trip since the train stopped 190 meters from the point of impact and arrived at Calumpit, Bulacan earlier than its expected time of
arrival thereat.
Moreover, respondent court agreed with the conclusion reached by the trial court that the absence of a crossing bar, signal light,
flagman or switchman to warn the public of an approaching train constitutes negligence per the pronouncement of this Court
in Lilius vs. Manila Railroad Company (59 Phil 758 [1934]).
Concerning the exercise of diligence normally expected of an employer in the selection and supervision of its employees,
respondent court expressed the view that PNR was remiss on this score since it allowed Honorio Cabardo, who finished only
primary education and became an engineer only through sheer experience, to operate the locomotive, not to mention the fact that
such plea in avoidance was not asserted in the answer and was thus belatedly raised on appeal.
Petitioner moved to reconsider, but respondent court was far from persuaded. Hence, the petition before Us which, in essence,
incorporates similar disputations anent PNR's immunity from suit and the attempt to toss the burden of negligence from the train
engineer to the bus driver of herein private respondent.
The bone of contention for exculpation is premised on the familiar maxim in political law that the State, by virtue of its sovereign
nature and as reaffirmed by constitutional precept, is insulated from suits without its consent (Article 16, Section 3, 1987
Constitution). However, equally conceded is the legal proposition that the acquiescence of the State to be sued can be
manifested expressly through a general or special law, or indicated implicitly, as when the State commences litigation for the
purpose of asserting an affirmative relief or when it enters into a contract (Cruz,Philippine Political Law, 1991 edition, page
33; Sinco, Philippine Political Law, Eleventh Edition, 1962, page 34). When the State participates in a covenant, it is deemed to
have descended from its superior position to the level of an ordinary citizen and thus virtually opens itself to judicial process. Of
course, We realize that this Court qualified this form of consent only to those contracts concluded in a proprietary capacity and
therefore immunity will attach for those contracts entered into in a governmental capacity, following the ruling in the 1985 case
of United States of America vs. Ruiz (136 SCRA 487 [1985]; cited by Cruz, supra at pages 36-37). But the restrictive
interpretation laid down therein is of no practical worth nor can it give rise to herein petitioner PNR's exoneration since the case
of Malong vs. Philippine National Railways (138 SCRA 63, [1985]); 3 Padilla, 1987 Constitution with Comments and Cases, 1991
48
edition, page 644), decided three months after Ruiz was promulgated, was categorical enough to specify that the Philippine
National Railways "is not performing any governmental function" (supra, at page 68).
In Malong, Justice Aquino, speaking for the Court en banc, declared:

The Manila Railroad Company, the PNR's predecessor, as a common carrier, was not immune from suit under Act No. 1510, its
charter.
The PNR Charter, Republic Act No. 4156, as amended by Republic Act No. 6366 and Presidential Decree No. 741, provides that
the PNR is a government instrumentality under government ownership during its 50-year term, 1964 to 2014. It is under the
Office of the President of the Philippines. Republic Act No. 6366 provides:
Sec. 1-a. Statement of policy. — The Philippine National Railways, being a factor for socio-economic development and growth,
shall be a part of the infrastructure program of the government and as such shall remain in and under government ownership
during its corporate existence. The Philippine National Railways must be administered with the view of serving the interests of the
public by providing them the maximum of service and, while aiming at its greatest utility by the public, the economy of operation
must be ensured so that service can be rendered at the minimum passenger and freight prices possible.
The charter also provides:
Sec. 4. General powers. — The Philippine National Railways shall have the following general powers:
(a) To do all such other things and to transact all such business directly or indirectly necessary, incidental or conducive to the
attainment of the purpose of the corporation; and
(b) Generally, to exercise all powers of a railroad corporation under the Corporation Law. (This refers to Sections 81 to 102 of the
Corporation Law on railroad corporations, not reproduced in the Corporation Code.)
Section 36 of the Corporation Code provides that every corporation has the power to sue and be sued in its corporate name.
Section 13(2) of the Corporation Law provides that every corporation has the power to sue and be sued in any court.
A sovereign is exempt from suit, not because of any formal conception or obsolete theory, but on the logical and practical ground
that there can be no legal right as against the authority that makes the law on which the right depends (Justice Holmes in
Kawananakoa vs. Polyblank, 205 U.S. 353, 51 L. 3d 834).
The public service would be hindered, and public safety endangered, if the supreme authority could be subjected to suit at the
instance of every citizen and, consequently, controlled in the use and disposition of the means required for the proper
administration of the Government (The Siren vs. U.S., 7 Wall. 152, 19 L. ed. 129). (at pp.
65-66).
To the pivotal issue of whether the State acted in a sovereign capacity when it organized the PNR for the purpose of engaging in
transportation, Malong continued to hold that:
. . . in the instant case the State divested itself of its sovereign capacity when it organized the PNR which is no different from its
predecessor, the Manila Railroad Company. The PNR did not become immune from suit. It did not remove itself from the
operation of Articles 1732 to 1766 of the Civil Code on common carriers.
The correct rule is that "not all government entities, whether corporate or noncorporate, are immune from suits. Immunity from
suit is determined by the character of the objects for which the entity was organized." (Nat. Airports Corp. vs. Teodoro and Phil.
Airlines, Inc., 91 Phil. 203, 206; Santos vs. Santos, 92 Phil. 281, 285; Harry Lyons, Inc. vs. USA, 104 Phil. 593).
Suits against State agencies with respect to matters in which they have assumed to act in a private or nongovernmental capacity
are not suits against the State (81 C.J.S. 1319).
Suits against State agencies with relation to matters in which they have assumed to act in a private or nongovernmental capacity,
and various suits against certain corporations created by the State for public purposes, but to engage in matters partaking more
49
of the nature of ordinary business rather than functions of a governmental or political character, are not regarded as suits against
the State.
The latter is true, although the State may own the stock or property of such a corporation, for by engaging in business operations
through a corporation the State divests itself so far of its sovereign character, and by implicating consents to suits against the
corporation. (81 C.J.S. 1319).
The foregoing rule was applied to State Dock Commissions carrying on business relating to pilots, terminals and transportation
(Standard Oil Co. of New Jersey vs. U.S., 27 Fed. 2nd 370) and to State Highways Commissions created to build public roads
and given appropriations in advance to discharge obligations incurred in their behalf (Arkansas State Highway Commission vs.
Dodge, 26 SW 2nd 879 and State Highway Commission of Missouri vs. Bates, 296 SW 418, cited in National Airports case).
The point is that when the government enters into a commercial business it abandons its sovereign capacity and is to be treated
like any other private corporation (Bank of the U.S. vs. Planters' Bank, 9 Wheat. 904, 6 L ed. 244, cited in Manila Hotel
Employees Association vs. Manila Hotel Company, et al., 73 Phil. 374, 388). The Manila Hotel case also relied on the following
rulings:
By engaging in a particular business through the instrumentality of a corporation, the government divests itself pro hac vice of its
sovereign character, so as to render the corporation subject to the rules of law governing private corporations.
When the State acts in its proprietary capacity, it is amenable to all the rules of law which bind private individuals.
There is not one law for the sovereign and another for the subject, but when the sovereign engages in business and the conduct
of business enterprises, and contracts with individuals, whenever the contract in any form comes before the courts, the rights and
obligation of the contracting parties must be adjusted upon the same principles as if both contracting parties were private
persons. Both stand upon equality before the law, and the sovereign is merged in the dealer, contractor and suitor (People vs.
Stephens, 71 N.Y. 549).
It should be noted that in Philippine National Railways vs. Union de Maquinistas, etc., L-31948, July 25, 1978, 84 SCRA 223, it
was held that the PNR funds could be garnished at the instance of a labor union.
It would be unjust if the heirs of the victim of an alleged negligence of the PNR employees could not sue the PNR for damages.
Like any private common carrier, the PNR is subject to the obligations of persons engaged in that private enterprise. It is not
performing any governmental function.
Thus, the National Development Company is not immune from suit. It does not exercise sovereign functions. It is an agency for
the performance of purely corporate, proprietary or business functions (National Development Company vs. Tobias, 117 Phil.
703, 705 and cases cited therein; National Development Company vs. NDC Employees and Workers' Union, L-32387, August 19,
1975, 66 SCRA 18l, 184).
Other government agencies not enjoying immunity from suit are the Social Security System (Social Security System vs. Court of
Appeals,
L-41299, February 21, 1983, 120 SCRA 707) and the Philippine National Bank (Republic vs. Philippine National Bank, 121 Phil.
26). (at pp. 66-68).
We come now to the question of whether respondent court properly agreed with the trial court in imputing negligence on the part
of the train engineer and his employer.
It was demonstrated beyond cavil in the course of the pre-trial hearings held for the purpose of stipulating on crucial facts that the
bus was hit on the rear portion thereof after it crossed the railroad tracks. Then, too the train engineer was frank enough to say
that he saw the jeep maneuvering into a parking area near the crossing which caused the obstruction in the flow of traffic such
that the gravel and sand truck including the bus of herein private respondent were not able to move forward or to take the
opposite lane due to other vehicles. The unmindful demeanor of the train engineer in surging forward despite the obstruction
before him is definitely anathema to the conduct of a prudent person placed under the same set of perceived danger. Indeed:
50
When it is apparent, or when in the exercise of reasonable diligence commensurate with the surroundings it should be apparent,
to the company that a person on its track or to get on its track is unaware of his danger or cannot get out of the way, it becomes
the duty of the company to use such precautions, by warnings, applying brakes, or otherwise, as may be reasonably necessary
to avoid injury to him. (65 Am. Jur., Second Edition. p. 649).
Likewise, it was established that the weather condition was characterized with intermittent rain which should have prompted the
train engineer to exercise extra precaution. Also, the train reached Calumpit, Bulacan ahead of scheduled arrival thereat,
indicating that the train was travelling more than the normal speed of 30 kilometers per hour. If the train were really running at 30
kilometers per hour when it was approaching the intersection, it would probably not have travelled 190 meters more from the
place of the accident (page 10, Brief for Petitioners). All of these factors, taken collectively, engendered the concrete and yes,
correct conclusion that the train engineer was negligent who, moreover, despite the last opportunity within his hands vis-a-vis the
weather condition including the presence of people near the intersection, could have obviated the impending collision had he
slackened his speed and applied the brakes (Picart vs. Smith, 37 Phil. 809 [1918]).Withal, these considerations were addressed
to the trial judge who, unlike appellate magistrates, was in a better position to assign weight on factual questions. Having
resolved the question of negligence between the train engineer and the bus driver after collating the mass of evidence, the
conclusion reached thereafter thus commands great respect especially so in this case where respondent court gave its nod of
approval to the findings of the court of origin (Co vs. Court of Appeals, 193 SCRA 198; 206 [1991]); Amigo vs. Teves, 50 O.G.
5799; Regalado, Remedial Law Compendium, Fifth edition, page 353).
What exacerbates against petitioners' contention is the authority in this jurisdiction to the effect that the failure of a railroad
company to install a semaphore or at the very least, to post a flagman or watchman to warn the public of the passing train
amounts to negligence (Lilius vs. Manila Railroad Company, 59 Phil. 758 [1934]).
WHEREFORE, the petition is hereby DISMISSED and the decision of respondent court AFFIRMED.
G.R. No. L-37044 March 29, 1933
CONSOLACION JUNIO, plaintiff-appellant,

vs.
THE MANILA RAILROAD COMPANY, defendant-appellee.
-----------------------------
G.R. No. L-37045 March 29, 1933
BEATRIZ SOLORIA, plaintiff-appellant,

vs.
THE MANILA RAILROAD COMPANY, defendant-appellee.
R. Monserrat for appellant.

Jose C. Abreu for appellee.
IMPERIAL, J.:
Consolacion Junio, a young woman 22 years of age, and Beatriz Soloria, another young woman of 18 years, represented by her
father, Faustino Soloria, who was appointed her guardian ad litem, brought these actions in the Court of First Instance of
Pangasinan to recover from the defendant, Manila Railroad Company, damages suffered by them in an accident that occurred at
the railroad crossing situated at the outskirts of the town of Calasiao, Pangasinan, when the automobile in which they were
passengers collided with a locomotive belonging to the aforementioned defendant. This is an appeal taken by them from the
judgment rendered by the trial court absolving the defendant, without costs.
The two cases were tried jointly and only one decision was rendered for both cases.
51
The trial court summarizes the fact established by the evidence as follows:
At about 11:40 o'clock on the night of April 13, 1930, the plaintiffs herein with some other persons were traveling in a PU-Car on
the road between Calasiao and Santa Barbara. When they arrived at the intersection of the road of the defendant's railway, the
car tried to cross the track and collided while the engine of the night express which left Dagupan for Manila at 11 o'clock that
same night and which was then passing over the crossing in question at great speed. As a result of the collision, the car was
thrown some distance, plaintiff Junio's right leg was amputated and her right arm fractured, and Soloria received various injuries
on her head.
The aforementioned crossing is situated in the town of Calasiao and the same is presumed to be dangerous due to the fact that
gates were required at that crossing. (Section 83, Act No. 1459, as amended by Act No. 2100.) On the night of the accident, the
gates were not lowered and there was no notice to the effect that they were not operated at night or that they were temporarily
out of order. However, a notice to the effect that that was a railroad crossing was there.
As a general rule, the rights and obligations between the public and a railroad company at a public crossing are mutual and
reciprocal. Both are under mutual obligation to exercise due care to avoid causing or receiving injury. Each is in duty bound to
exercise reasonable or ordinary care commensurate with the risk and danger involved.
In the case under consideration, the driver alleges that he slowed down from 19 miles an hour, at which rate he was then going,
to 16 miles, and that he was on the lookout for any approaching train, while the engineer insists that he rang the bell and
sounded the whistle before reaching the crossing. Both parties claim to be free from guilt, and if the defendant company were
completely so, the plaintiffs would have no cause of action against it.
In addition to the facts mentioned above, it has also been proved that the gate in question was about three hundred (300) meters
from the railroad station at Calasiao; that on each side of the crossing there was a wooden bar operated only during the daytime
by a woman employee of defendant, and that just before the crossing on one side, of the road leading from the town of Calasiao
there was a signpost bearing the notice, "RAILROAD CROSSING", written crosswise.
The evidence also show that the car driven by the chauffeur, Pedro Talbo, was an old Ford bearing number plates. PU-3636,
which meant that it was a hired car. The plate, Exhibit 2, was found by the engineer on the side of the engine upon arrival at
Paniqui, the next station, which indicates that it was torn from the front of the radiator when the auto collided with the right side of
the engine of the night express.
The appellants were passengers who took the car in Bayambang and were bound for Asingan, via Dagupan.
The plaintiffs' attorney assigns in his brief the following alleged errors:
First. The trial court erred in finding that the defendant company was not negligent in leaving its gates open at the moment of the
accident when a special night express train was passing.
Second. The trial court erred in holding that the driver of the car occupied by the plaintiffs was negligent.
Third. The trial court erred in holding that the plaintiffs were negligent or in making them responsible for the driver's alleged
negligence.
Fourth. The trial court erred in holding that the main question in the accident was the driver's alleged negligence.
Fifth. The trial court erred in absolving the defendant instead of ordering it to pay the damages proven which are the subject of
these actions.
From the evidence, it is obvious that the defendant as well as the driver of the car in which the plaintiffs were passengers were
negligent, the former because, by installing the gates at the place or crossing where the accident occurred, it had voluntarily
imposed upon itself the obligation to operate them even at night and to close them every time a train passed in order to avoid
causing injury to the public. It has been said that the gates constitute an invitation to the public to pass without fear of danger,
and failure to operate them conveniently constitutes negligence on the part of the company.
52
The driver was, likewise, negligent because he did not comply with his duty to slacken the speed of the car and to "look and
listen" before crossing the intersection and above all, because he did not maintain a reasonable speed so as to permit him to stop
any moment if it were necessary in order to avoid an accident. If, in the present case, the car had been running at a reasonable
speed, there is no doubt that he could have stopped it instantly upon seeing the train from a distance of five meters.
If the action for damages were brought by the driver, it is certain that it would not prosper in view of the fact that he had incurred
in a notorious contributory negligence. But the persons who instituted the action are the appellants who were mere passengers of
the car. Therefore, the question raised is whether the driver's negligence is imputable to them so as to bar them from the right to
recover damages suffered by them by reason of the accident.
Although this question is, perhaps, raised in this jurisdiction for the first time, it is, nevertheless, a well recognized principle of law
that the negligence of a driver, who, in turn, is guilty of contributory negligence, cannot be imputed to a passenger who has no
control over him in the management of the vehicle and with whom he sustains no relation of master and servant. This rule is
applied more strictly when, as in the present case, hired cars or those engaged in the public service, are involved.
The doctrine prevails in a few states that the contributory negligence of the driver of a private conveyance is imputable to a
person voluntarily riding with him. But the general rule is that the negligence of the driver of a vehicle is not to be imputed to an
occupant thereof who is ]injured at a crossing through the combined negligence of the driver and the railroad company when
such occupant is without fault and has no control over the driver. And the law almost universally now recognized is that when one
accepts an invitation to ride in the vehicle of another, without any authority or purpose to direct or control the driver or the
movements of the team, and without any reason to doubt the competency of the driver, the contributory negligence of the owner
or driver of the conveyance will not be imputed to the guest or passenger, so as to bar him of the right to recover damages from a
railroad company whose negligence occasions injury to him at a crossing while he is so riding. This rule has been applied in a
number of cases involving the corresponding relation between the driver of an automobile and an occupant having no control
over him. The rule is not confined to cases of gratuitous transportation, but has been applied where a conveyance is hired, and
the passenger exercises no further control over the driver than to direct him to the place to which he wishes to be taken. Nor is
any distinction made between private and public vehicles, such as street cars and stages. (22 R. C. L., pp. 1047, 1048.)
As a general rule the negligence of a driver of a vehicle approaching a railroad crossing, in failing to look and listen for
approaching trains, cannot be imputed to an occupant of the vehicle who is without personal fault, unless such driver is the
servant or agent of the occupant, unless they are engaged in a joint enterprise whereby responsibility for each other's acts exists,
or unless the occupant is under the driver's care or control or has the right to direct and control the driver's actions, or where the
driver is of obvious or known imprudence or incompetency. This rule that negligence of the driver is not imputable to an occupant
only applies to cases in which the relation of master and servant or principal and agent does not exist between the parties, or
where the occupant has no right to direct or control the driver's action, as where the occupant is a passenger for hire or is the
guest of the owner or driver and has no reason to believe the driver careless or imprudent, or where the occupant is seated away
from the driver or is separated from him by an inclosure so that he is without opportunity to discover danger and inform the driver
thereof. . . . (52 C.J., pp. 315, 316 and 317.)
A passenger in the automobile of another having no control over the owner driving the car or the operation of the car which he
occupied merely as passenger was not chargeable with contributory negligence of the owner and driver at a railroad crossing.
(Carpenter vs. Atchison 195 Pac, 1073).
In railroad crossing accident, negligence of truck driver was not imputable to truck passenger not himself guilty of contributory
negligence. (Lucchese vs. Spingola, 289 Pac., 189.)
In the case of Little vs. Hackett (116 U.S. 366; 29 Law. ed., 652, 654, 657), the United States Supreme Court said:
That one cannot recover damages for an injury to the commission of which he has directly contributed is a rule of established law
and a principle of common justice. And it matters not whether that contribution consists in his participation in the direct cause of
the injury, or in his omission of duties which, if performed, would have prevented it. If his fault, whether of omission or
commission, has been the proximate cause of the injury, he is without remedy against one also in the wrong. It would seem that
the converse of this doctrine should be accepted as sound; that when one has been injured by the wrongful act of another, to
which he has in no respect contributed, he should be entitled to compensation in damages from the wrongdoer. And such in the
53
generally received doctrine, unless a contributory cause of the injury has been the negligence or fault of some person towards
whom he sustains the relation of superior or master, in which case the negligence is imputed to him, though he may not have
personally participated in or had knowledge of it; and he must bear the consequences. the doctrine may also be subject to other
exceptions growing out of the relation of parent and child, or guardian and ward, and the like. Such a relation involves
considerations which have no bearing upon the question before us.
There is no distinction in principle whether the passengers be on a public conveyance like a railroad train or an omnibus or be on
a hack hired from a public stand in the street for a drive. Those on hack do not become responsible for the negligence of the
driver, if they exercise no control over him further than to indicate the route they wish to travel or the places to which they wish to
go. If he is their agent so that this negligence can be imputed to them to prevent their recovery against a third party, he must be
their agent in all other respects, so far as the management of the carriage is concerned; and responsibility to third parties would
attach to them for injuries caused by his negligence in the course of his employment. But as we have already stated,
responsibility cannot, within any recognized rules of law, be fastened upon one who has in no way interfered with and controlled
in the matter causing the injury. From the simple fact of hiring the carriage or riding in it no such liability can arise. The party hiring
or riding must in some way have cooperated in producing the injury complained of before he incurs any liability for it. "If the law
were otherwise," as said by Mr. Justice Depue in his elaborate opinion in the latest case in New Jersey, "not only the hirer of the
coach but also all the passengers in it would be under a constraint to mount the box and superintend the conduct of the driver in
the management and control of his team, or be put for remedy exclusively to an action against the irresponsible driver or equally
irresponsible owner of a coach taken, it may be, from a coach stand, for the consequences of an injury which was the product of
the cooperating wrongful acts of the driver and a third person; and that too, although the passengers were ignorant of the
character of the driver, and of the responsibility of the owner of the team, and strangers to the route over which they were to be
carried." (18 Vroom, 171.)"
There is nothing of record to show that the appellants herein have incurred in any negligence imputable to them and we do not
see any reason whatsoever why they should be made responsible for the driver's negligence. The doctrine established in the
cases cited above should be applied to the case at bar and it should be held that the appellants herein are entitled to recover
from the appellee damages occasioned by the accident of which they were victims.
We shall now proceed to determine the amount of the damages. With respect to Soloria, we do not find any difficulty because the
evidence shows that she spent only three hundred pesos (P300) for her treatment and stay in the hospital. Her injuries are not of
such a nature as to entitle her to a further indemnity. The damages to which she is entitled may, therefore, be assessed at the
amount stated above.
Such is not the case with respect to Consolacion Junio. According to the evidence presented, she was a dancer earning from six
pesos (P6) to eight pesos (P8) a day for two or three days every week that she danced. She lost her right leg which was
amputated, suffered a fracture of her right arm and was wounded on her occipital region. With these details in view, the members
of this court are of the opinion that she may justly be awarded the sum of two thousand five hundred pesos (P2,500) as damages
and five hundred pesos (P500) as indemnity for expenses incurred by her in her treatment, medical attendance and stay in the
hospital, making the total amount she is entitled to recover aggregating three thousand pesos (P3,000).
Wherefore, the judgment appealed from is hereby reversed and it is ordered that the appellee pay to Consolacion Junio the sum
of three thousand pesos (P3,000) and to Beatriz Soloria three hundred pesos (P300), with costs of both instances. So ordered.
54
G.R. No. 149038 April 9, 2003
PHILIPPINE AMERICAN GENERAL INSURANCE COMPANY, petitioner,

vs. PKS SHIPPING COMPANY, respondent.
The petition before the Court seeks a review of the decision of the Court of Appeals in C.A. G.R. CV No. 56470, promulgated on
25 June 2001, which has affirmed in toto the judgment of the Regional Trial Court (RTC), Branch 65, of Makati, dismissing the
complaint for damages filed by petitioner insurance corporation against respondent shipping company.
Davao Union Marketing Corporation (DUMC) contracted the services of respondent PKS Shipping Company (PKS Shipping) for
the shipment to Tacloban City of seventy-five thousand (75,000) bags of cement worth Three Million Three Hundred Seventy-
Five Thousand Pesos (P3,375,000.00). DUMC insured the goods for its full value with petitioner Philippine American General
Insurance Company (Philamgen). The goods were loaded aboard the dumb barge Limar I belonging to PKS Shipping. On the
evening of 22 December 1988, about nine o’clock, while Limar Iwas being towed by respondent’s tugboat, MT Iron Eagle, the
barge sank a couple of miles off the coast of Dumagasa Point, in Zamboanga del Sur, bringing down with it the entire cargo of
75,000 bags of cement.
DUMC filed a formal claim with Philamgen for the full amount of the insurance. Philamgen promptly made payment; it then sought
reimbursement from PKS Shipping of the sum paid to DUMC but the shipping company refused to pay, prompting Philamgen to
file suit against PKS Shipping with the Makati RTC.
The RTC dismissed the complaint after finding that the total loss of the cargo could have been caused either by a fortuitous
event, in which case the ship owner was not liable, or through the negligence of the captain and crew of the vessel and that,
under Article 587 of the Code of Commerce adopting the "Limited Liability Rule," the ship owner could free itself of liability by
abandoning, as it apparently so did, the vessel with all her equipment and earned freightage.
Philamgen interposed an appeal to the Court of Appeals which affirmed in toto the decision of the trial court. The appellate court
ruled that evidence to establish that PKS Shipping was a common carrier at the time it undertook to transport the bags of cement
was wanting because the peculiar method of the shipping company’s carrying goods for others was not generally held out as a
business but as a casual occupation. It then concluded that PKS Shipping, not being a common carrier, was not expected to
observe the stringent extraordinary diligence required of common carriers in the care of goods. The appellate court, moreover,
found that the loss of the goods was sufficiently established as having been due to fortuitous event, negating any liability on the
part of PKS Shipping to the shipper.
In the instant appeal, Philamgen contends that the appellate court has committed a patent error in ruling that PKS Shipping is not
a common carrier and that it is not liable for the loss of the subject cargo. The fact that respondent has a limited clientele,
petitioner argues, does not militate against respondent’s being a common carrier and that the only way by which such carrier can
be held exempt for the loss of the cargo would be if the loss were caused by natural disaster or calamity. Petitioner avers that
typhoon "APIANG" has not entered the Philippine area of responsibility and that, even if it did, respondent would not be exempt
from liability because its employees, particularly the tugmaster, have failed to exercise due diligence to prevent or minimize the
loss.
PKS Shipping, in its comment, urges that the petition should be denied because what Philamgen seeks is not a review on points
or errors of law but a review of the undisputed factual findings of the RTC and the appellate court. In any event, PKS Shipping
points out, the findings and conclusions of both courts find support from the evidence and applicable jurisprudence.
The determination of possible liability on the part of PKS Shipping boils down to the question of whether it is a private carrier or a
common carrier and, in either case, to the other question of whether or not it has observed the proper diligence (ordinary, if a
private carrier, or extraordinary, if a common carrier) required of it given the circumstances.
The findings of fact made by the Court of Appeals, particularly when such findings are consistent with those of the trial court, may
not at liberty be reviewed by this Court in a petition for review under Rule 45 of the Rules of Court.1The conclusions derived from
those factual findings, however, are not necessarily just matters of fact as when they are so linked to, or inextricably intertwined
with, a requisite appreciation of the applicable law. In such instances, the conclusions made could well be raised as being
55
appropriate issues in a petition for review before this Court. Thus, an issue whether a carrier is private or common on the basis of
the facts found by a trial court or the appellate court can be a valid and reviewable question of law.
The Civil Code defines "common carriers" in the following terms:

"Article 1732. Common carriers are persons, corporations, firms or associations engaged in the business of carrying or
transporting passengers or goods or both, by land, water, or air for compensation, offering their services to the public."
Complementary to the codal definition is Section 13, paragraph (b), of the Public Service Act; it defines "public service" to be –
"x x x every person that now or hereafter may own, operate, manage, or control in the Philippines, for hire or compensation, with
general or limited clientele, whether permanent, occasional or accidental, and done for general business purposes, any common
carrier, railroad, street railway, subway motor vehicle, either for freight or passenger, or both, with or without fixed route and
whatever may be its classification, freight or carrier service of any class, express service, steamboat, or steamship, or steamship
line, pontines, ferries and water craft, engaged in the transportation of passengers or freight or both, shipyard, marine repair
shop, wharf or dock, ice plant, ice refrigeration plant, canal, irrigation system, gas, electric light, heat and power, water supply and
power petroleum, sewerage system, wire or wireless communication systems, wire or wireless broadcasting stations and other
similar public services. x x x. (Underscoring supplied)."
The prevailing doctrine on the question is that enunciated in the leading case of De Guzman vs. Court of Appeals.2Applying
Article 1732 of the Code, in conjunction with Section 13(b) of the Public Service Act, this Court has held:
"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.
"So understood, the concept of `common carrier’ under Article 1732 may be seen to coincide neatly with the notion of `public
service,’ under the Public Service Act (Commonwealth Act No. 1416, as amended) which at least partially supplements the law
on common carriers set forth in the Civil Code."
Much of the distinction between a "common or public carrier" and a "private or special carrier" lies in the character of the
business, such that if the undertaking is an isolated transaction, not a part of the business or occupation, and the carrier does not
hold itself out to carry the goods for the general public or to a limited clientele, although involving the carriage of goods for a
fee,3 the person or corporation providing such service could very well be just a private carrier. A typical case is that of a charter
party which includes both the vessel and its crew, such as in a bareboat or demise, where the charterer obtains the use and
service of all or some part of a ship for a period of time or a voyage or voyages4 and gets the control of the vessel and its
crew.5 Contrary to the conclusion made by the appellate court, its factual findings indicate that PKS Shipping has engaged itself
in the business of carrying goods for others, although for a limited clientele, undertaking to carry such goods for a fee. The
regularity of its activities in this area indicates more than just a casual activity on its part.6 Neither can the concept of a common
carrier change merely because individual contracts are executed or entered into with patrons of the carrier. Such restrictive
interpretation would make it easy for a common carrier to escape liability by the simple expedient of entering into those distinct
agreements with clients.
Addressing now the issue of whether or not PKS Shipping has exercised the proper diligence demanded of common carriers,
Article 1733 of the Civil Code requires common carriers to observe extraordinary diligence in the vigilance over the goods they
carry. In case of loss, destruction or deterioration of goods, common carriers are presumed to have been at fault or to have acted
negligently, and the burden of proving otherwise rests on them.7 The provisions of Article 1733, notwithstanding, common carriers
are exempt from liability for loss, destruction, or deterioration of the goods due to any of the following causes:
(1) Flood, storm, earthquake, lightning, or other natural disaster or calamity;

56
(2) Act of the public enemy in war, whether international or civil;
(3) Act or omission of the shipper or owner of the goods;
(4) The character of the goods or defects in the packing or in the containers; and
(5) Order or act of competent public authority.8

The appellate court ruled, gathered from the testimonies and sworn marine protests of the respective vessel masters of Limar
I and MT Iron Eagle, that there was no way by which the barge’s or the tugboat’s crew could have prevented the sinking of Limar
I. The vessel was suddenly tossed by waves of extraordinary height of six (6) to eight (8) feet and buffeted by strong winds of 1.5
knots resulting in the entry of water into the barge’s hatches. The official Certificate of Inspection of the barge issued by the
Philippine Coastguard and the Coastwise Load Line Certificate would attest to the seaworthiness of Limar I and should
strengthen the factual findings of the appellate court.
Findings of fact of the Court of Appeals generally conclude this Court; none of the recognized exceptions from the rule - (1) when
the factual findings of the Court of Appeals and the trial court are contradictory; (2) when the conclusion is a finding grounded
entirely on speculation, surmises, or conjectures; (3) when the inference made by the Court of Appeals from its findings of fact is
manifestly mistaken, absurd, or impossible; (4) when there is a grave abuse of discretion in the appreciation of facts; (5) when the
appellate court, in making its findings, went beyond the issues of the case and such findings are contrary to the admissions of
both appellant and appellee; (6) when the judgment of the Court of Appeals is premised on a misapprehension of facts; (7) when
the Court of Appeals failed to notice certain relevant facts which, if properly considered, would justify a different conclusion; (8)
when the findings of fact are themselves conflicting; (9) when the findings of fact are conclusions without citation of the specific
evidence on which they are based; and (10) when the findings of fact of the Court of Appeals are premised on the absence of
evidence but such findings are contradicted by the evidence on record – would appear to be clearly extant in this instance.
All given then, the appellate court did not err in its judgment absolving PKS Shipping from liability for the loss of the DUMC cargo.
WHEREFORE, the petition is DENIED. No costs.

G.R. No. L-9840 April 22, 1957 LU DO & LU YM CORPORATION, Petitioner-Defendant, Bautista Angelo, J.

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G.R. No. L-9840 April 22, 1957 LU DO & LU YM CORPORATION, Petitioner-Defendant, Bautista Angelo, J.

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1

G.R. No. L-9840 April 22, 1957

LU DO & LU YM CORPORATION, petitioner-defendant,

BAUTISTA ANGELO, J.:

(Paragraph 1, Exhibit "1")

(Paragraph 12, Exhibit "1")

(Paragraph 22, Exhibit "1")

Wherefore, the decision appealed from is reversed, without pronouncement as to costs.

G.R. No. 85331 August 25, 1989

KAPALARAN BUS LINE, petitioner,

G.R. No. 131166 September 30, 1999

CALTEX (PHILIPPINES), INC., petitioner,

The facts are as follows:

2. The statutory costs of the proceedings.

DONE IN MANILA, this 15th day of September 1992.

3. Moral damages in the amount of THREE HUNDRED THOUSAND PESOS (P300,000.00);

5. Costs of the suit.

RAMON U. MABUTAS, JR. PORTIA ALIÑO HERMACHUELOS

Associate Justice Associate Justice. 8

Hence, this petition.

We find the petition meritorious.

Second: MT Vector is a common carrier

In Planters Products, Inc. vs. Court of Appeals, 14 we said:

Later, we ruled in Coastwise Lighterage Corporation vs. Court of Appeals: 15

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

Under the Carriage of Goods by Sea Act :

(a) Make the ship seaworthy;

(b) Properly man, equip, and supply the ship;

Third: Is Caltex liable for damages under the Civil Code?

We rule that it is not.

5. The vessel had a defective main engine. 20

And what is negligence?

The Civil Code provides:

Q: What happened after that?

Q: What did you do with the C.I.?

Finally, on Mr. Ng's redirect examination:

Atty. Poblador: The certificate of Inspection?

Atty. Sarenas: Objection.

G.R. No. 110398 November 7, 1997

The ship sailed from the port of Manila on schedule.

P42,025.00 for actual damages;

P152,654.55 as compensatory damages for loss of

P90,000.00 as compensatory damages for wrongful

P300,000.00 as moral damages;

P50,000.00 as exemplary damages, all in the total

P40,000.00 as attorney's fees.

To Spouses Ricardo and Virginia de la Victoria:

P12,000.00 for actual damages;

P30,000.00 as compensatory damages for wrongful

P100,000.00 as moral damages;

P15,000.00 as attorney's fees.

Hence this petition, raising the following issues:

Document Mecenas case This case

Decision of Commandant, Exh. 10 10 Exh. 11-B-NN/X

Decision of the Minister Exh. 11 11 Exh. ZZ

Certificate of Exh. 1-A 13 Exh. 19-NN

Certificate of Stability Exh. 6-A 14 Exh. 19-D-NN

net earning = life x gross less reasonable

capacity (x) expectancy annual & necessary

income living expenses

x = [2(80-26)] x [P6,192.00 - P3,096.00]

To private respondent Ramon Miranda:

P23,075.00 for actual damages;