COMPANIA MARITIMA (Petitioner) VS.

CA (Respondent)| 1988
FACTS
- Private respondent Concepcion of Consolidated Construction had
a contract with the Civil Aeronautics Administration for the
construction of the airport in Cagayan de Oro.
- Being a Manila-based contractor, Concepcion had to ship his
construction equipment to CDO City. Concepcion negotiated with
petitioner Compania for the shipment of one (1) unit payloader. A Bill
of Lading was issued to him.
- The equipment was loaded aboard the MV. It arrived safely in CDO
City. While the payloader was about two (2) meters above the pier in
the course of unloading, the swivel pin of the heel block Hatch No. 2
gave way, causing the payloader to fall. The payloader was
completely damaged.
- Meanwhile, petitioner Compania shipped the payloader to Manila
where it was weighed at the SMC. Finding that the payloader
weighed 7.5 tons and not 2.5 tons as declared in the Bill of Lading,
petitioner denied the claim for damages, contending that had
Concepcion declared the actual weight of the payloader, damage to
the payloader could have been prevented.
- Concepcion filed an action for damages.
- CFI: dismissed; the proximate cause of the fall of the payloader
was Concepcion's act or omission in having misrepresented the
weight of the payloader, which underdeclaration led the Chief Officer
of the vessel to use the heel block of hatch No. 2 (which only has a
5-ton capacity) in unloading the payloader.
- CA reversed. Ordered Petitioner to pay Concepcion. But reduced
the value of the payloader by 20% due to Concepcions contributory
negligence.
ISSUE/S & HELD:
WON the act of private respondent Concepcion in furnishing
petitioner Compaia Maritima with an inaccurate weight was the
proximate cause of the damage, as would absolutely exempt
petitioner from liability for damages. NO.
RATIONALE
- Petitioner argues: The loss, destruction, or deterioration of the
goods was due to an act or omission of the shipper or owner of the

goods (Art. 1734).

- SC: Mere proof of delivery of the goods in good order to a common
carrier, and of their arrival at the place of destination in bad order,
makes out prima facie case against the common carrier, so that if no
explanation is given as to how the loss, deterioration or destruction
of the goods occurred, the common carrier must be held
responsible.
- The extraordinary diligence in the vigilance over goods requires
common carriers to render service with the greatest skill and
foresight and "to use all reasonable means to ascertain the nature
and characteristic of goods tendered for shipment, and to exercise
due care in the handling and stowage.
- In the case at bar: Petitioner, upon the testimonies of its own
crew, failed to take the necessary and adequate precautions for
avoiding damage to the payloader.
- CA found that petitioner used a 5-ton capacity lifting apparatus to
lift and unload a visibly heavy cargo like a payloader. There was
laxity and carelessness of petitioner's crew in their methods of
ascertaining the weight of heavy cargoes offered for shipment before
loading and unloading them.
- The weight submitted by private respondent Concepcion was
entered into the bill of lading by petitioners company collector,
without seeing the equipment to be shipped.
Mr. Mariano Gupana, assistant traffic manager of petitioner,
confirmed in his testimony that the company never checked the
information entered in the bill of lading.
- The Chief Officer took the bill of lading on its face value and
presumed the same to be correct by merely "seeing" it.
- Acknowledging that there was a "jumbo" in the MV Cebu (w/ a 2025 ton capacity), The Chief Officer chose not to use it. Extraordinary
care and diligence compel the use of the "jumbo" lifting apparatus as
the most prudent course for petitioner.
- Art. 1741. If the shipper or owner merely contributed to the loss,
destruction or deterioration of the goods, the proximate cause
thereof being the negligence of the common carrier, the latter shall
be liable in damages, which however, shall be equitably reduced.
- We find equitable the conclusion of the Court of Appeals reducing
the recoverable amount of damages by 20%. Decision AFFIMED.

DEL PRADO (plaintiff) v MANILA ELECTRIC CO. (defendant)

FACTS:
Teodorico Florenciano, Meralcos motorman, was driving the
companys street car along Hidalgo Street. Plaintiff Ignacio Del
Prado ran across the street to catch the car. The motorman eased
up but did not put the car into complete stop. Plaintiff was able to get
hold of the rail and step his left foot when the car accelerated. As a
result, plaintiff slipped off and fell to the ground. His foot was
crushed by the wheel of the car. He filed a complaint for culpa
contractual.
ISSUES:
(1) Whether the motorman was negligent
(2) Whether Meralco is liable for breach of contract of carriage
(3) Whether there was contributory negligence on the part of the
plaintiff
HELD:
(1) We may observe at the outset that there is no obligation on the
part of a street railway company to stop its cars to let on intending
passengers at other points than those appointed for stoppage.
Nevertheless, although the motorman of this car was not bound to
stop to let the plaintiff on, it was his duty to do no act that would
have the effect of increasing the plaintiff's peril while he was
attempting to board the car. The premature acceleration of the car
was, in our opinion, a breach of this duty.
(2) The relation between a carrier of passengers for hire and its
patrons is of a contractual nature; and a failure on the part of the
carrier to use due care in carrying its passengers safely is a breach
of duty (culpa contractual). Furthermore, the duty that the carrier of
passengers owes to its patrons extends to persons boarding the
cars as well as to those alighting therefrom.
Where liability arises from a mere tort (culpa aquiliana), not involving
a breach of positive obligation, an employer, or master, may
exculpate himself by proving that he had exercised due diligence to
prevent the damage; whereas this defense is not available if the
liability of the master arises from a breach of contractual duty (culpa
contractual). In the case before us the company pleaded as a
special defense that it had used all the diligence of a good father of

a family to prevent the damage suffered by the plaintiff; and to

establish this contention the company introduced testimony showing
that due care had been used in training and instructing the
motorman in charge of this car in his art. But this proof is irrelevant
in view of the fact that the liability involved was derived from a
breach of obligation.
(3) It is obvious that the plaintiff's negligence in attempting to board
the moving car was not the proximate cause of the injury. The direct
and proximate cause of the injury was the act of appellant's
motorman in putting on the power prematurely. Again, the situation
before us is one where the negligent act of the company's servant
succeeded the negligent act of the plaintiff, and the negligence of
the company must be considered the proximate cause of the injury.
The rule here applicable seems to be analogous to, if not identical
with that which is sometimes referred to as the doctrine of "the last
clear chance." In accordance with this doctrine, the contributory
negligence of the party injured will not defeat the action if it be
shown that the defendant might, by the exercise of reasonable care
and prudence, have avoided the consequences of the negligence of
the injured party. The negligence of the plaintiff was, however,
contributory to the accident and must be considered as a mitigating
circumstance.
PNR VS.COURT OF APPEALS
(G.R. No. L-55347 October 4, 1985)
FACTS:
Winifredo Tupang, husband of respondent Rosario Tupang, boarded
'Train No. 516 of petitioner at Libmanan, Camarines Sur, as a paying
passenger bound for Manila. Due to some mechanical defect, the
train stopped at Sipocot, Camarines Sur, for repairs, taking some
two hours before the train could resume its trip to Manila.
Unfortunately, upon passing Iyam Bridge at Lucena, Quezon,
Winifredo Tupang fell off the train resulting in his death. The train did
not stop despite the alarm raised by the other passengers that
somebody fell from the train. Instead, the train conductor Perfecto
Abrazado, called the station agent at Candelaria, Quezon, and
requested for verification of the information. Police authorities of
Lucena City were dispatched to the Iyam Bridge where they found

the

lifeless

body

of

Winifredo

Tupang.

Upon complaint filed by the deceased's widow, Rosario Tupang, the

then Court of First Instance of Rizal, after trial, held the petitioner
PNR liable for damages for breach of contract of carriage and
ordered "to pay the plaintiff the sum of P12,000,00 for the death of
Winifredo Tupang, plus P20,000.00 for loss of his earning capacity
and the further sum of P10,000.00 as moral damages, and
P2,000.00
as
attorney's
fees,
and
costs.
On appeal, the Appellate Court sustained the holding of the trial
court that the PNR did not exercise the utmost diligence required by
law of a common carrier. It further increased the amount adjudicated
by the trial court by ordering PNR to pay the plaintiff an additional
sum
of
P5,000.00
as
exemplary
damages.
ISSUE:
Whether

or

not petitioner

is

liable

as

common

required by law, 8 it appears that the deceased was chargeable with

contributory negligence. Since he opted to sit on the open platform
between the coaches of the train, he should have held tightly and
tenaciously on the upright metal bar found at the side of said
platform to avoid falling off from the speeding train. Such
contributory negligence, while not exempting the PNR from liability,
nevertheless justified the deletion of the amount adjudicated as
moral damages. By the same token, the award of exemplary
damages must be set aside. Exemplary damages may be allowed
only in cases where the defendant acted in a wanton, fraudulent,
reckless, oppressive or malevolent manner. There being no
evidence of fraud, malice or bad faith on the part of petitioner, the
grant
of
exemplary
damages
should
be
discarded.
WHEREFORE, the decision of the respondent appellate court is
hereby modified by eliminating therefrom the amounts of P10,000.00
and P5,000.00 adjudicated as moral and exemplary damages,
respectively. No costs.

carrier.

HELD:
The appellate court found, the petitioner does not deny, that the train
boarded by the deceased Winifredo Tupang was so over-crowded
that he and many other passengers had no choice but to sit on the
open platforms between the coaches of the train. It is likewise
undisputed that the train did not even slow down when it approached
the Iyam Bridge which was under repair at the time, Neither did the
train stop, despite the alarm raised by other passengers that a
person
had
fallen
off
the
train
at
lyam
Bridge.
The petitioner has the obligation to transport its passengers to their
destinations and to observe extraordinary diligence in doing so.
Death or any injury suffered by any of its passengers gives rise to
the presumption that it was negligent in the performance of its
obligation under the contract of carriage. Thus, as correctly ruled by
the respondent court, the petitioner failed to overthrow such
presumption of negligence with clear and convincing evidence.
But while petitioner failed to exercise extraordinary diligence as

TABACALERA INSURANCE CO. (petitioner) v NORTH FRONT

SHIPPING SERVICES (respondent)
FACTS:
On 2 August 1990, 20,234 sacks of corn grains valued at
P3,500,640.00 were shipped on board North Front 777, a vessel
owned by North Front Shipping Services, Inc. The cargo was
consigned to Republic Flour Mills Corporation in Manila 1and insured
with Tabacalera insurance companies. The vessel was inspected
prior to actual loading by representatives of the shipper and was
found fit to carry the merchandise. The cargo was covered with
tarpaulins and wooden boards. The hatches were sealed and could
only be opened by representatives of Republic Flour Mills
Corporation.
The vessel left Cagayan de Oro City on 2 August 1990 and arrived
Manila on 16 August 1990. Republic Flour Mills Corporation was
advised of its arrival but it did not immediately commence the
unloading operations. There were days when unloading had to be
stopped due to variable weather conditions and sometimes for no
apparent reason at all. When the cargo was eventually unloaded
there was a shortage of 26.333 metric tons. The remaining

merchandise was already moldy, rancid and deteriorating. The

unloading operations were completed on 5 September 1990 or
twenty (20) days after the arrival of the barge at the wharf of
Republic Flour Mills Corporation in Pasig City.
Republic Flour Mills Corporation rejected the entire cargo and
formally demanded from North Front Shipping Services, Inc.,
payment for the damages suffered by it. The demands however
were unheeded. The insurance companies were perforce obliged to
pay Republic Flour Mills Corporation P2,189,433.40.
ISSUE: WON NFSS is liable to pay for the damages. WON RFMC
has contributory negligence in this case.
HELD: Yes. North Front Shipping Services, Inc., is a corporation
engaged in the business of transporting cargo and offers its services
indiscriminately to the public. It is without doubt a common carrier.
As such it is required to observe extraordinary diligence in its
vigilance over the goods it transports. 3 When goods placed in its
care are lost or damaged, the carrier is presumed to have been at
fault or to have acted negligently. 4 North Front Shipping Services,
Inc.,
therefore
has
the
burden
of
proving
that
it
observed extraordinary diligence in order to avoid responsibility for
the lost cargo.
In fine, we find that the carrier failed to observe the
required extraordinary diligence in the vigilance over the goods
placed in its care. The proofs presented by North Front Shipping
Services, Inc., were insufficient to rebut the prima facie presumption
of private respondent's negligence, more so if we consider the
evidence adduced by petitioners.
Laboratory analysis revealed that the corn grains were contaminated
with salt water. North Front Shipping Services, Inc., failed to rebut all
these arguments. It did not even endeavor to establish that the loss,
destruction or deterioration of the goods was due to the following: (a)
flood, storm, earthquake, lightning, or other natural disaster or
calamity; (b) act of the public enemy in war, whether international or
civil; (c) act or omission of the shipper or owner of the goods; (d) the
character of the goods or defects in the packing or in the containers;
(e) order or act of competent public authority. 6 This is a closed list. If
the cause of destruction, loss or deterioration is other than the

enumerated circumstances, then the carrier is rightly liable therefor.

However, we cannot attribute the destruction, loss or deterioration of
the cargo solely to the carrier. We find the consignee Republic Flour
Mills Corporation guilty of contributory negligence. It was seasonably
notified of the arrival of the barge but did not immediately start the
unloading operations. No explanation was proffered by the
consignee as to why there was a delay of six (6) days. Had the
unloading been commenced immediately the loss could have been
completely avoided or at least minimized.
The corn grains were not yet toxic or unfit for consumption. For its
contributory negligence, Republic Flour Mills Corporation should
share at least 40% of the loss.
KAPALARAN BUS LINES v CORONADO, et al
FACTS:
On August, 1982, the jeepney driven by Lope Grajera was coming
from Laguna on its way to Sta. Cruz. As it reached the intersection
where there is a traffic sign yield, it stopped an cautiously treated
the intersection as a Thru Stop street, which it is not.
The Kapalaran Bus Line was on its way from Sta. Cruz, Laguna
driven by its driver, Virgilio Llamoso, on its way towards Manila. As
the KBL neared the intersection, 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 admitted that there was
another 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 a
vehicle coming from the right has the right of way voer the vehicle
coming from the left.The general rules on right of way may be
invoked only if both the 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 by Atty. Conrado Manicad,
he stopped at the intersection to give way to the jeepney driven by
Grajera. However, there was a collision between the jeepney and
the bus. The KBL bus ignored the stopped vehicles and the other
vehicles behind Atty. Manicad and overtook both vehicles at the

intersection therefore causing the accident.

Kapalaran filed a suit against the owner of the jeepney and its driver.
However, it lost the case. Furthermore, the Court did not hold as
liable the driver of the bus.
ISSUE: Whether or not KBL is accountable, considering the driver of
the bus was not held liable by the Courts.
HELD: Yes, Kapalaran is liable. The driver violated certain general
rules, and provisions in the Land Transportation and Traffice Code.
Hence, he can be presumed negligent. The patent and gross
negligence on the part of Kapalarans driver raised the legal
presumption that Kapalaran as employer was guilty of negligene
either in the selection or supervision of its bus drivers. 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, it should have appealed from that
portion of the trial courts decision which had failed to hold the bus
driver accountable for damages. The liability of employer under
Article 2180 of the Civil Code is direct and immediate; it is not
conditioned upon prior recourse against the negligent on its own
part.
The law requires Kapalaran as common carrier to exercise
extraordinary diligence in carrying and transporting their 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 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. 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.
JUNTILLA v FONTANAR

Facts: Herein plaintiff was a passenger of the public utility jeepney

on course from Danao City to Cebu City. The jeepney was driven by
driven by defendant Berfol Camoro and registered under the
franchise of Clemente Fontanar. When the jeepney reached
Mandaue City, the right rear tire exploded causing the vehicle to turn
turtle. In the process, the plaintiff who was sitting at the front seat
was thrown out of the vehicle. Plaintiff suffered a lacerated wound on
his right palm aside from the injuries he suffered on his left arm, right
thigh, and on his back.
Plaintiff filed a case for breach of contract with damages before the
City Court of Cebu City. Defendants, in their answer, alleged that the
tire blow out was beyond their control, taking into account that the
tire that exploded was newly bought and was only slightly used at
the time it blew up.
Issue: Whether or not the tire blow-out is a fortuitous event?
Held: No. In the case at bar, the cause of the unforeseen and
unexpected occurrence was not independent of the human will. The
accident was caused either through the negligence of the driver or
because of mechanical defects in the tire. Common carriers should
teach drivers not to overload their vehicles, not to exceed safe and
legal speed limits, and to know the correct measures to take when a
tire blows up thus insuring the safety of passengers at all tines.
EASTERN SHIPPING LINES v IAC
Facts: On June, 1977 M/S ASIATICA, a Vessel operated by Eastern
Shipping Lines was bound for Manila from Kobe, Japan. It loaded ,
5,000 pieces of colorized lance pipes in 28 packages valued at
P256,039.00 consigned to Philippine Blooming Mills Co., Inc., and 7
cases of spare parts valued at P92,361.75, consigned to Central
Textile Mills, Inc. Both were insured from marine risks with
Development Insurance and Surety Corp. It also took 128 cartoons
of garment fabrics and accessories in 2 containers consigned to
Mariveles Apparel Corp and 2 Cases of surveying instruments
consigned to Aman Enterprises and General Merchandise. The
shipments were insured with DOWA Fire and Marine Insurance Co.

and Nisshin Fire and marine Insurance Co. respectably. En Route

from Kobe to Manila the vessel caught fire and sank losing all its
shipment. The insurance companies paid for the insurance of the
above mentioned shipments. They Then instituted a case to redeem
the insurance that they paid to the various companies against
Eastern Shipping Lines. They contend that Eastern should not be
exempted from liability because it was not able to exercise
duediligence in preventing the occurrence of the fire as well as its
unseaworthiness.
Eastern Shipping invoked the Carriage of Goods by Sea Act as a
defense wherein it is said to be exempt from the said liability. The
Fire was said to be one of the exempting circumstance under the
act. It also contended that it the fire occurred as a fortuitous event
such as a natural disaster or calamity which leads them to conclude
that they should not be made liable.
Issues: Which law should govern the case is it the Civil Code
provisions or the specific law which is the Carriage of Goods by Sea
Act? Who has the burden of proof to show the negligence of the
carrier?
Held: It is the law of the country to which the goods are to be
transported which shall apply in this case. The Carriage of Goods by
Sea Act will be supplementary to the Civil Code provision.
Common carriers are bound to observe extraordinary diligencewhen
transporting goods. Common carriers are responsible for the loss,
destruction, or deterioration of the goods unless it is due to the ff
events: flood, storm, earthquake, lightning, or other natural
disaster or calamity. In this case fire may not be considered anatural
disaster or calamity. This is because the occurrence may be due to
an act by man or the actual fault of the carrier. The common
carrier is presumed to have been at fault or have acted negligently
unless it proves that it has observed the extraordinary diligence
required by law. Evidence presented by the witness failed to
establish the extraordinary diligence which was required of the
carrier. The fire started 24 hours before discovery and upon
discovery it was already too big to suppress. It appears that after the
cargoes were stored no regular inspections were done to see to it

that the cargoes are well kept. The crew could not even explain how
the fire started. Because of this the carrier was not able to prove that
it has exercised extraordinary diligence making it liable of the costs
and damages. Even if fire were to be considered a "natural disaster"
within the meaning of Article 1734 of the Civil Code, it is required
under Article 1739 of the same Code that the "natural disaster" must
have been the "proximate and only cause of the loss," and that the
carrier has "exercised due diligence to prevent or minimize the loss
before, during or after the occurrence of the disaster. " This
Petitioner Carrier has also failed to establish satisfactorily. They are
bound to pay the insurance companies as well as 5K for attorneys
fees.
EXTRAORDINARY DILIGENCE; PRESUMPTION OF FAULT OR
NEGLIGENCE
REBUTTABLE
REPUBLIC OF THE PHIL., represented by the DEPARTMENT OF
HEALTH,
NATIONAL
TRUCKING
AND
FORWARDING
CORPORATION (NTFC) and COOPERATIVE FOR AMERICAN
RELIEF EVERYWHERE, INC. (CARE) VS. LORENZO SHIPPING
CORPORATION
(LSC)
G.R.
No.
153563.
February
7,
2005
FACTS: The Philippine government entered into a contract of
carriage of goods with petitioner NTFC whereby the latter shipped
bags of non-fat dried milk through respondent LSC. The consignee
named in the bills of lading issued by the respondent was
Abdurahma Jama, petitioners branch supervisor in Zamboanga City.
On reaching the port of Zamboanga City, the respondents agent
unloaded the goods and delivered the same to petitioners
warehouse. Before each delivery, the delivery checkers of
respondents agent requested Jama to surrender the original bills of
lading, but the latter merely presented certified true copies thereof.
Upon completion of each delivery, the delivery checkers asked Jama
to sign the delivery receipts. However, at times when Jama had to
attend to other business before a delivery was completed, he
instructed his subordinates to sign the delivery receipts for him.
Notwithstanding the precautions taken, petitioner NTFC allegedly did
not receive the good and filed a formal claim for non-delivery of the
goods shipped through respondent. Respondent explained that the

cargo had already been delivered to Jama. The government through

the DOH, CARE and NTFC as plaintiffs filed an action for breach of
contract of carriage against respondent as defendant.
ISSUE: Whether or not respondent is presumed at fault or negligent
as common carrier for the loss or deterioration of the goods.
HELD: Article 1733 of the Civil Code demands that a common
carrier observe extraordinary diligence over the goods transported
by it. Extraordinary diligence is that extreme measure of care and
caution which persons of unusual prudence and circumspection use
for securing and preserving their own property or rights. This
exacting standard imposed on common carriers in a contract of
carriage of goods is intended to tilt the scales in favor of the shipper
who is at the mercy of the common carrier once the goods have
been lodged for shipment. Hence, in case of loss of goods in transit,
the common carrier is presumed under the law to have been at fault
or negligent. However, the presumption of fault or negligence may
be overturned by competent evidence showing that the common
carrier has observed extraordinary diligence over the goods.
The respondent has observed such extraordinary diligence in the
delivery of the goods. Prior to releasing the goods to Jama, the
delivery checkers required the surrender of the original bills of
lading, and in their absence, the certified true copies showing that
Jama was indeed the consignee of the goods. In addition, they
required Jama or his designated subordinates to sign the delivery
receipts upon completion of each delivery.

considered resigned, and was offered consideration of P50,000.00,

which he rejected.
Before Christmas 1998: Victory Liner reiterated that he was
regarded as resigned, this time, offering him P100,000.00, which he
again rejected.
30 June 1999: Race sent a letter to Victory Liner demanding
employment-related money claims; no response from Victory Liner.
1 September 1999: Race filed a complaint before the Labor Arbiter
for:
Unfair labor practice;
Illegal dismissal;
Underpayment of wages;
Nonpayment of overtime and holiday premium, service incentive
leave pay, vacation and sick leave benefits, 13th month pay;
Excessive deduction of withholding tax and SSS premium; and
Moral and exemplary damages and attorneys fees.
LABOR ARBITER: Dismissed; stating that the prescriptive period for
filing a case for illegal dismissal had elapsedconsidered dismissed
on 24 November 1994.
NLRC: Reversed Labor Arbiter; cause of action accrued in January
1998, when Race reported for work but was rejected; Also stated
that Victory Liner failed to accord Race due process in terminating
his employment.
ISSUE: WoN Race was illegally dismissed, thus entitled to
reinstatement with full back wages and other benefits.

VICTORY LINER v RACE (March 28, 2007)

HELD: YES. But separation pay in lieu of reinstatement.

FACTS:
Pablo M. Race was employed by Victory Liner, Inc. as a bus driver
for the Alaiminos, Pangasinan Cubao, Quezon City evening route.
24 August 1994: Races bus figured in an accident, wherein Race
suffered a fractured leg, for which he was confined in the hospital
until 10 October 1994.
10 November 1994: Race was confined again for further treatment
for another month.
Victory Liner shouldered all of Races medical expenses for both
instances.
January 1998: Race reported for work, but was informed that he was

Illegal dismissal
The Labor Code mandates that before an employer may legally
dismiss an employee from the service, the requirement of
substantial and procedural due process must be complied with.
Substantial due processthe grounds for termination of
employment must be based on just or authorized causes.
Although abandonment of work is within the scope of the just causes
for termination (under gross and habitual neglect by the emlployee
of his duties), the court found that there was not abandonment on
the part of Race.
The records also failed to show that the said charges were proven

and that respondent was duly informed and heard with regard to the
accusations.
And as Victory Liner is the employer, it is its burdened to prove just
cause for terminating the employment of respondent with clear and
convincing evidence, and that Victory Liner failed to discharge this
burden, we hold that respondent was dismissed without just cause
by the petitioner.

AFFIRMED with the following MODIFICATIONS: Petitioner is

ordered to pay the respondent, in lieu of reinstatement, separation
pay of ONE (1) MONTH PAY for every year of service, and full
backwages inclusive of allowances and other benefits or their
monetary equivalent from 1 January 1998 up to the finality of this
Decision. No costs.[1]

Reinstatement
Race was willing to be hired as a dispatcher or conductor, and was
no longer requesting to be reinstated as a driver since he cannot
drive anymore due to his leg injury.
Even assuming that Race was willing, reinstatement would still be
unwarranted.
Since Victory Liner is a common carrier, and is obliged to exercise
extra-ordinary diligence in transporting its passengers, it would be a
violation of this diligence to reinstate an incapacitated driver.
An employer may not be compelled to continue to employ such
persons whose continuance in the service will patently be
inimical to his interests.
Therefore, in lieu of reinstatement, payment to respondent of
separation pay equivalent to one month pay for every year of
service.

Petitioner impugns the Decision on two grounds: (1) the award of full
backwages inclusive of allowances and other benefits or their
monetary equivalent to respondent is not warranted; and (2) the
dismissal of respondent is authorized under Article 284 of the Labor
Code.
ISSUE: WON the 2 grounds are meritorious.

FACTS: Petitioner Victory Liner, Inc. filed the present Motion for
Reconsideration seeking modification of our Decision dated 28
March 2007. In the said Decision, we found that respondent Pablo
Race, employed as one of petitioners bus drivers, was illegally
dismissed by petitioner since petitioner failed to comply with both
substantive and procedural due process in terminating respondents
employment. However, considering the leg injury sustained by
respondent in an accident which already rendered him incapable of
driving a bus, we ordered payment of his separation pay instead of
his reinstatement. The dispositive portion of our Decision reads:

HELD:
The employer cannot be compelled to continuously pay an
employee who can no longer perform the tasks for which he was
hired. Seeing as petitioner continued to pay respondent his salaries
and medical expenses for four years following the accident which
caused his leg injury, despite the fact that respondent was unable to
render actual service to petitioner, it would be the height of injustice
to still require petitioner to pay respondent full backwages from the
time of his termination in 1998 until the finality of this
Decision. Reasons of fairness and equity, as well as the particular
factual circumstances attendant in this case, dictate us to modify our
Decision by ordering petitioner to pay respondent limited backwages
(inclusive of allowances and other benefits or their monetary
equivalent) for five years, from 1 January 1998 to 31 December
2002, in addition to the separation pay of one month for every year
of service awarded in lieu of reinstatement. We must clarify,
however, that for purposes of computing respondents separation
pay, he must still be deemed in petitioners employ until the finality of
this Decision since his termination remains illegal, and is only
mitigated by petitioners good faith.

WHEREFORE, the petition is PARTLY GRANTED insofar as it prays

for the non-reinstatement of respondent. The Decision of the Court
of Appeals dated 26 April 2004 in CA-G.R. SP No. 74010, is hereby

With respect to the second ground, petitioner invokes Article 284 of

the Labor Code which provides that an employer may terminate the
services of an employee who has been found to be suffering from

VICTORY LINER v RACE (Dec 8, 2008)

any disease and whose continued employment is prohibited by law

or is prejudicial to his health as well as to the health of his coemployees.According to petitioner, the dismissal of respondent on
account of his physical infirmity may be deemed analogous to a
termination for health reasons because respondents physical
disability rendered him incapable of performing his job as a bus
driver. Moreover, respondents continued employment under such
circumstance is prohibited by law because it would place petitioner
in jeopardy of violating its common carrier obligation to observe
extra-ordinary diligence.
We note that petitioner cites Article 284 of the Labor Code as an
authorized cause in dismissing respondent for the first time in its
Motion for Reconsideration before us. Petitioner did not raise Article
284 as an authorized cause in terminating respondents employment
during the proceedings before the Labor Arbiter, NLRC, and Court of
Appeals, and even in its Petition for Review before us. To reiterate,
petitioner alleged causes for dismissing respondent were
abandonment of work, insubordination and gross and habitual
neglect of duty. Petitioners reference to Article 284 of the Labor
Code at such a belated stage cannot be allowed.
the Motion is PARTIALLY GRANTED. The dispositive portion of the
Decision dated 28 March 2007 in G.R. No. 164820 is MODIFIED in
that petitioner is ordered to pay the respondent, in lieu of
reinstatement, SEPARATION PAY of one (1) month pay for every
year of service, and LIMITED BACKWAGES, inclusive of
allowances and other benefits or their monetary equivalent, for a
period of five (5) years, computed from 1 January 1998 to 31
December 2002.
PAL vs CA
FACTS
Amelia Tan was found to have been wronged by Philippine Air Lines
(PAL). She filed her complaint in 1967. After ten (10) years of
protracted litigation in the Court of First Instance and the Court of
Appeals, Ms. Tan won her case. Almost twenty-two (22) years later,
Ms. Tan has not seen a centavo of what the courts have solemnly
declared as rightfully hers. Through absolutely no fault of her own,

Ms. Tan has been deprived of what, technically, she should have
been paid from the start, before 1967, without need of her going to
court to enforce her rights. And all because PAL did not issue the
checks intended for her, in her name. Petitioner PAL filed a petition
for review on certiorari the decision of Court of Appeals dismissing
the petition for certiorari against the order of the Court of First
Instance (CFI) which issued an alias writ of execution against them.
Petitioner alleged that the payment in check had already been
effected to the absconding sheriff, satisfying the judgment.
ISSUE
Whether or not payment by check to the sheriff extinguished the
judgment debt.
RULING
NO. The payment made by the petitioner to the absconding sheriff
was not in cash or legal tender but in checks. The checks were not
payable to Amelia Tan or Able Printing Press but to the
absconding sheriff.In the absence of an agreement, either express
or implied, payment means the discharge of a debt or obligation in
money and unless the parties so agree, a debtor has no rights,
except at his own peril, to substitute something in lieu of cash as
medium of payment of his debt. Strictly speaking, the acceptance by
the sheriff of the petitioners checks, in the case at bar, does not, per
se, operate as a discharge of the judgment debt. The check as a
negotiable instrument is only a substitute for money and not money,
the delivery of such an instrument does not, by itself, operate as
payment. A check, whether a managers check or ordinary cheek, is
not legal tender, and an offer of a check in payment of a debt is not a
valid tender of payment and may be refused receipt by the obligee
or creditor. Mere delivery of checks does not discharge the
obligation under a judgment. The obligation is not extinguished and
remains suspended until the payment by commercial document is
actually realized (Art. 1249, Civil Code, par. 3)
CANGCO vs MANILA RAILROAD CO.
FACTS:
On January 20, 1915, Cangco was riding the train of
Manila Railroad Co (MRC). He was an employee of the latter and he
was given a pass so that he could ride the train for free. When he
was nearing his destination at about 7pm, he arose from his seat

even though the train was not at full stop. When he was about to
alight from the train (which was still slightly moving) he accidentally
stepped on a sack of watermelons which he failed to notice due to
the fact that it was dim. This caused him to lose his balance at the
door and he fell and his arm was crushed by the train and he
suffered other serious injuries. He was dragged a few meters more
as the train slowed down.
It was established that the employees of MRC were negligent in
piling the sacks of watermelons. MRC raised as a defense the fact
that Cangco was also negligent as he failed to exercise diligence in
alighting from the train as he did not wait for it to stop.
ISSUE: Whether or not Manila Railroad Co is liable for damages.
HELD: Yes. Alighting from a moving train while it is slowing down is
a common practice and a lot of people are doing so every day
without suffering injury. Cangco has 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. He was also ignorant of the fact that sacks of
watermelons were there as there were no appropriate warnings and
the place was dimly lit.
The Court also elucidated on the distinction between the liability of
employers under Article 2180 and their liability for breach of contract
[of carriage]:

NOTES: 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.
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.
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.
Manresa: Whether negligence occurs an incident in the course of
the performance of a contractual undertaking or in itself the source
of an extra-contractual undertaking obligation, its essential
characteristics are identical.
Vinculum Juris: (def) It means an obligation of law, or the right of
the obligee to enforce a civil matter in a court of law.
SOLIDBANK CORP. v SPS.TAN
FACTS: On December 2, 1991, respondents representative,
Remigia Frias, deposited with petitioner ten checks worth P455,962.
Grace Neri, petitioners teller no. 8 in its Juan Luna, Manila Branch,
received two deposit slips for the checks, an original and a duplicate.
Neri verified the checks and their amounts in the deposit slips then
returned the duplicate copy to Frias and kept the original copy for
petitioner.
In accordance with the usual practice between petitioner and
respondents, the latters passbook was left with petitioner for the
recording of the deposits on the banks ledger. Later, respondents
retrieved the passbook and discovered that one of the checks,
Metropolitan Bank and Trust Company (Metrobank) check no.
403954, payable to cash in the sum of P250,000 was not posted

therein.
Immediately, respondents notified petitioner of the problem.
Petitioner showed respondent Peter Tan a duplicate copy of a
deposit slip indicating the list of checks deposited by Frias. But it did
not include the missing check. The deposit slip bore the stamp mark
teller no. 7 instead of teller no. 8 who previously received the
checks.
Peter Tan learned from Metrobank (where he maintained an
account) that Metrobank check no. 403954 had cleared after it was
inexplicably deposited by a certain Dolores Lagsac in Premier Bank
in San Pedro, Laguna. Respondents demanded that petitioner pay
the amount of the check but it refused, hence, they filed a case for
collection of a sum of money in the RTC of Manila, Branch 31.
ISSUE: WON Solidbank is liable. What kind of diligence is required
involving banking transactions? Are awards for moral and exemplary
damages proper?
HELD: Yes.
Upon examination of the oral, as well as of the documentary
evidence which the parties presented at the trial in support of their
respective contentions, and after taking into consideration all the
circumstances of the case, this Court believes that the loss of
Metrobank Check No. 403954 in the sum of P250,000.00 was due to
the fault of [petitioner][It] retained the original copy of the [deposit
slip marked by Teller No. 7]. There is a presumption in law that
evidence willfully suppressed would be adverse if produced.
Art. 1173 of the Civil Code states that 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 person of the time and of the place; and that if the law or
contract does not state the diligence which is to be observed in the
performance, the same as expected of a good father of a family shall
be required.
For failure to comply with its obligation, [petitioner] is presumed to
have been at fault or to have acted negligently unless they prove
that they observe extraordinary diligence as prescribed in Arts. 1733
and 1735 of the Civil Code (Art. 1756)
Moreover, in presenting a false deposit slip in its attempt to feign
innocence, petitioners bad faith was apparent and unmistakable.
Bad faith imports a dishonest purpose or some moral obliquity or
conscious doing of a wrong that partakes of the nature of fraud.
In citing the different provisions of the Civil Code on common
carriers,[15] the trial court merely made reference to the kind of
diligence that petitioner should have performed under the
circumstances. In other words, like a common carrier whose
business is also imbued with public interest, petitioner should have
exercised extraordinary diligence to negate its liability to
respondents.
We find no compelling reason to disallow the application of the
provisions on common carriers to this case if only to emphasize the
fact that banking institutions (like petitioner) have the duty to
exercise the highest degree of diligence when transacting with the
public. By the nature of their business, they are required to observe
the highest standards of integrity and performance, and utmost
assiduousness as well.