Perena vs.

Nicolas Aug 29, 2012

FACTS:

Perenas were engaged in the business of transporting students to Don

Bosco. The Zarates engaged Perenas services to transport their son,
Aaron, to school.

While on the way to school, the van’s air-conditioned unit was turned on
and the stereo playing loudly. The driver took a detour because they were
running late due to the traffic in SLEX. The detour was through a narrow
path underneath the Magallanes Interchange used as short cut into
Makati. When the van was to traverse the PNR railroad crossing, the van
was tailing a large passenger bus so the driver’s view of the oncoming
train was blocked. The train hit the van at the rear end and the impact
threw 9 students including Aaron out of the van. Aaron landed in the path
of the train which dragged his body and severed his head, instantaneously
killing him.

The Zarates filed for damages against Alfaro, Perenas, PNR, and the train
driver. The cause of action against Perena was for contract of carriage
while for PNR, quasi delict. Perena posited the defense of diligence of a
good father in the selection and supervision of their driver

ISSUE/S: Were Perenas and PNR jointly and severally liable for
damages? Is the petitioner a common carrier?

RULING:

YES. A school bus operator is a common carrier.

Perena’s defense of diligence of a good father in the selection and

supervision of their driver is unavailable for breach of contract of carriage.
Perenas operated as a common carrier; and their standard of care was
extraordinary diligence, not only diligence of a good father.

A carrier is a person or corporation who undertakes to transport or convey

goods from one place to another, gratuitously or for hire. They may be
private or common

Private carrier is one who, without holding himself or itself out to the
public as ready to act for all who may desire his or its services,
undertakes, by special agreement in a particular instance only, to
transport goods or persons from one place to another either gratutitously
or for hire. The diligence required of a private carrier is only ordinary

Common Carrier is a person, corporation, firm or association engaged in

the business of carrying or transporting passengers or goods or both, by
land, water, or air, for compensation, offering such services to the public.
Diligence required is to observe extraordinary diligence, and is presumed
to be at fault or to have acted negligently in case of the loss of effects of
passengers, or death or injuries to passengers
The true test for a common carrier is not the quantity or extent of
business actually transacted, or the number of conveyances, BUT
WHETHER the undertaking is a part of the activity that he has held out to
the general public as his business or occupation.

The Perenas held themselves out as a ready transportation

indiscriminately to the students of a particular school living within or near
where they operated the service and for a fee. Perena, being a common
carrier, was already presumed to be negligent at the time of the accident
because death occurred to their passenger. The omissions of care on the
part of the driver constituted negligence.

FACTS:

In June 1996, Nicolas and Teresita Zarate contracted Teodoro and

Nanette Pereña to transport their (Zarate’s) son, Aaron Zarate, to and
from school. The Pereñas were owners of a van being used for private
school transport.
At about 6:45am of August 22, 1996, the driver of the said private
van, Clemente Alfaro, while the children were on board including Aaron,
decided to take a short cut in order to avoid traffic. The usual short cut
was a railroad crossing of the Philippine National Railway (PNR).
Alfaro saw that the barandilla (the pole used to block vehicles
crossing the railway) was up which means it was okay to cross. He then
tried to overtake a bus. However, there was in fact an oncoming train but
Alfaro no longer saw the train as his view was already blocked by the bus
he was trying to overtake. The bus was able to cross unscathed but the
van’s rear end was hit. During the collision, Aaron, was thrown off the
van. His body hit the railroad tracks and his head was severed. He was
only 15 years old.
It turns out that Alfaro was not able to hear the train honking from
50 meters away before the collision because the van’s stereo was playing
loudly.
The Zarates sued PNR and the Pereñas (Alfaro became at-large).
Their cause of action against PNR was based on quasi-delict. Their cause
of action against the Pereñas was based on breach of contract of common
carriage.
In their defense, the Pereñas invoked that as private carriers they
were not negligent in selecting Alfaro as their driver as they made sure
that he had a driver’s license and that he was not involved in any accident
prior to his being hired. In short, they observed the diligence of a good
father in selecting their employee.
PNR also disclaimed liability as they insist that the railroad crossing
they placed there was not meant for railroad crossing (really, that’s their
defense!).
The RTC ruled in favor of the Zarates. The Court of Appeals
affirmed the RTC. In the decision of the RTC and the CA, they awarded
damages in favor of the Zarates for the loss of earning capacity of their
dead son.
The Pereñas appealed. They argued that the award was improper
as Aaron was merely a high school student, hence, the award of such
damages was merely speculative. They cited the case of People vs
Teehankee where the Supreme Court did not award damages for the loss
of earning capacity despite the fact that the victim there was enrolled in a
pilot school.

ISSUES:
Whether or not the defense of due diligence of a good father by the
Pereñas is untenable.
Whether or not the award of damages for loss of income is proper.

HELD:
Yes, in both issues.

Defense of Due Diligence of a Good Father

This defense is not tenable in this case. The Pereñas are common
carriers. They are not merely private carriers. (Prior to this case, the
status of private transport for school services or school buses is not well
settled as to whether or not they are private or common carriers – but
they were generally regarded as private carriers). Private transport for
schools are common carriers. The Pereñas, as the operators of a school
bus service were: (a) engaged in transporting passengers generally as a
business, not just as a casual occupation; (b) undertaking to carry
passengers over established roads by the method by which the business
was conducted; and (c) transporting students for a fee. Despite catering
to a limited clientèle, the Pereñas operated as a common carrier because
they held themselves out as a ready transportation indiscriminately to the
students of a particular school living within or near where they operated
the service and for a fee.
Being a common carrier, what is required of the Pereñas is not
mere diligence of a good father. What is specifically required from them
by law is extraordinary diligence – a fact which they failed to prove in
court. Verily, their obligation as common carriers did not cease upon their
exercise of diligently choosing Alfaro as their employee.
(It is recommended that you read the full text, the Supreme Court
made an elaborate and extensive definition of common and private
carriers as well as their distinctions.)

Award of Damages for Aaron’s loss of earning capacity despite he being a

high school student at the time of his death
The award is proper. Aaron was enrolled in a reputable school (Don
Bosco). He was of normal health and was an able-bodied person. Further,
the basis of the computation of his earning capacity was not on what he
would have become. It was based on the current minimum wage. The
minimum wage was validly used because with his circumstances at the
time of his death, it is most certain that had he lived, he would at least be
a minimum wage earner by the time he starts working. This is not being
speculative at all.
The Teehankee case was different because in that case, the reason
why no damages were awarded for loss of earning capacity was that the
defendants there were already assuming that the victim would indeed
become a pilot – hence, that made the assumption speculative. But in the
case of Aaron, there was no speculation as to what he might be – but
whatever he’ll become, it is certain that he will at the least be earning
minimum wage.

Heirs of Ochoa vs. G&S Transport G.R. No. 170071, March 9, 2011

An accident which claimed the life of a passenger is the root of these two
petitions - one brought before us by the common carrier and the other by
the heirs of the deceased.
These consolidated Petitions for Review on Certiorari assail the Court of
Appeals’ (CA) Decision1 dated June 29, 2005 in CA-G.R. CV No. 75602
which affirmed with modification the December 21, 2001 Decision and
March 5, 2002 Order of the trial court. Likewise assailed is the Resolution2
dated October 12, 2005 denying the parties’ respective Motions for
Reconsideration thereto.
Factual Antecedents
Jose Marcial K. Ochoa (Jose Marcial) died on the night of March 10, 1995
while on board an Avis taxicab owned and operated by G & S Transport
Corporation (G & S), a common carrier. As narrated by the trial court, the
circumstances attending Jose Marcial’s death are as follows:
It appears that sometime in the evening of March 10, 1995, at the Manila
Domestic Airport, the late Jose Marcial K. Ochoa boarded and rode a
taxicab with Plate No. PKR-534, a passenger vehicle for hire owned and
operated by defendant corporation under the business name "Avis Coupon
Taxi" (Avis) and driven by its employee and authorized driver Bibiano
Padilla, Jr. on his way home to Teacher’s Village, Diliman, Quezon City.
At about 11:00 p.m., the taxicab was cruising along Epifanio delos Santos
Avenue [EDSA], in front of Camp Aguinaldo in Quezon City at high speed.
While going up the Boni Serrano (Santolan) fly-over, it overtook another
cab driven by Pablo Clave and tried to pass another vehicle, a ten-wheeler
cargo truck. Because of the narrow space between the left side railing of
the fly-over and the ten-wheeler truck, the Avis cab was unable to pass
and because of its speed, its driver (Padilla) was unable to control it. To
avoid colliding with the truck, Padilla turned the wheel to the left causing
his taxicab to ram the railing throwing itself off the fly-over and fell on the
middle surface of EDSA below. The forceful drop of the vehicle on the floor
of the road broke and split it into two parts. Both driver Padilla and
passenger Jose Marcial K. Ochoa were injured and rushed to the hospital.
At the East Avenue Medical Center, Ochoa was not as lucky as Padilla who
was alive. He was declared dead on arrival from the accident. The death
certificate issued by the Office of the Civil Registrar of Quezon City cited
the cause of his death as vehicular accident.3
On May 13, 1999, Jose Marcial’s wife, Ruby Bueno Ochoa, and his two
minor children, Micaela B. Ochoa and Jomar B. Ochoa (the heirs), through
counsel, sent G & S a letter4 demanding that the latter indemnify them for
Jose Marcial’s death, his loss of earning capacity, and funeral expenses in
the total amount of ₱15,000,000.00. As G & S failed to heed the same,
the heirs filed a Complaint5 for Damages before the Regional Trial Court
(RTC) of Pasig City which was raffled to Branch 164 of said court.
The heirs alleged that G & S, as a common carrier, is under legal
obligation to observe and exercise extraordinary diligence in transporting
its passengers to their destination safely and securely. However, G & S
failed to observe and exercise this extraordinary diligence because its
employee failed to transport Jose Marcial to his destination safely. They
averred that G & S is liable to them for having breached the contract of
common carriage. As an alternative cause of action, they asserted that G
& S is likewise liable for damages based on quasi-delict pursuant to Article
21806 in relation to Article 21767 of the Civil Code. The heirs thus prayed
for G & S to pay them actual damages, moral damages, exemplary
damages, and attorney’s fees and expenses of litigation.
In its Answer With Compulsory Counterclaims,8 G & S claimed that Jose
Marcial boarded an Avis taxicab driven by its employee, Bibiano Padilla
(Padilla), at the Domestic Airport to bring him to Teacher’s Village in
Quezon City. While passing the Santolan fly-over, however, the Avis
taxicab was bumped by an on-rushing delivery van at the right portion
causing the taxicab to veer to the left, ram through the left side of the
railings of the fly-over and fall to the center of the island below. The
taxicab was split into two and Jose Marcial was thrown 10 meters away. G
& S posited that the proximate cause of Jose Marcial’s death is a
fortuitous event and/or the fault or negligence of the driver of the delivery
van that hit the taxicab. It likewise claimed that it exercised the diligence
required of a good father of a family in the selection and supervision of its
employees including Padilla. By way of compulsory counterclaim, G & S
sought to recover from the heirs the amount of ₱300,000.00 as attorney’s
fees and costs of suit.
Ruling of the Regional Trial Court
On December 27, 2001, the trial court rendered a Decision9 finding the
vehicular mishap not caused by a fortuitous event but by the negligence
of Padilla. It likewise found the evidence adduced by G & S to show that it
exercised the diligence of a good father of a family in the selection and
supervision of its employees as insufficient. Hence, the trial court declared
G & S civilly liable to the heirs. However, for lack of receipts or any proof
of funeral expenses and other actual damages, the trial court denied the
heirs’ claim for actual damages. It also denied them moral and exemplary
damages for lack of legal basis. The dispositive portion of said Decision
reads:
WHEREFORE, defendant is hereby adjudged guilty of breach of contract of
carriage and is ordered to pay plaintiffs the following amounts:
1. ₱50,000.00 as civil indemnity for the death of deceased Jose Marcial K.
Ochoa;
2. ₱6,537,244.96 for the loss of earning capacity of the deceased;
3. ₱100,00.00 for attorney’s fees;
4. And the cost of litigation.
SO ORDERED.10
G & S filed a Notice of Appeal11 while the heirs filed a Motion for Partial
Reconsideration.12 The heirs averred that they are entitled to moral
damages pursuant to Article 176413 in relation to Article 2206(3)14 of the
Civil Code. They also cited applicable jurisprudence providing that moral
damages are recoverable in a damage suit predicated upon a breach of
contract of carriage where the mishap results in the death of the
passenger. With respect to their claim for exemplary damages, the heirs
relied upon Article 2232 of the Civil Code which provides that in contracts
and quasi-contracts, the court may award exemplary damages if the
defendant acted in a wanton, fraudulent, reckless, oppressive or
malevolent manner. And, since Padilla was declared by the trial court to
have been grossly negligent in driving the taxicab, the heirs claimed that
they are likewise entitled to exemplary damages.
After G & S filed its Opposition (To Plaintiffs’ Motion for Partial
Reconsideration),15 the trial court issued an Order16 on March 5, 2002. It
found merit in the heirs’ Motion for Partial Reconsideration and thus
declared them entitled to moral and exemplary damages, viz:
WHEREFORE, the decision dated December 27, 2001 is hereby modified
so as to order defendant Corporation to pay plaintiffs the amount of
P300,000.00 as moral damages and P50,000.00 as exemplary damages.
The dispositive portion of said decision is hereby amended to read as
follows:
‘WHEREFORE, defendant is hereby adjudged guilty of breach of contract of
carriage and is ordered to pay plaintiffs the following amounts:
1. ₱50,000.00 as civil indemnity for the death of the deceased Jose
Marcial K. Ochoa;
2. ₱6,537,244.96 for the loss of earning capacity of the deceased.
3. ₱300,000.00 as moral damages;
4. ₱50,000.00 as exemplary damages;
5. ₱100,000.00 for attorney’s fees;
6. And the costs of litigation.’
SO ORDERED.17
Because of this, G & S filed another Notice of Appeal18 and same was
given due course by the trial court in an Order19 dated April 23, 2002.
Ruling of the Court of Appeals
Before the CA, G & S continued to insist that it exercised the diligence of a
good father of the family in the selection and supervision of its employees.
It averred that it has been carrying out not only seminars for its drivers
even before they were made to work, but also periodic evaluations for
their performance. Aside from these, it has also been conducting monthly
check-up of its automobiles and has regularly issued rules regarding the
conduct of its drivers. G & S claimed that it was able to establish a good
name in the industry and maintain a clientele.
In an effort to build up Padilla’s character as an experienced and careful
driver, G & S averred that: (1) before G & S employed Padilla, he was a
delivery truck driver of Inter Island Gas Service for 11 years; (2) Padilla
has been an employee of G & S from 1989 to 1996 and during said
period, there was no recorded incident of his being a negligent driver; (3)
despite his qualifications, G & S still required Padilla to submit an NBI
clearance, driver’s license and police clearance; (4) Padilla’s being a good
driver-employee was manifest in his years of service with G & S, as in
fact, he has received congratulatory messages from the latter as shown
by the inter-office memos dated August 23, 1990 and February 1, 1993;
and that (5) Padilla attended a seminar at the Pope Pius Center sometime
in December 1999 as part of the NAIA Taxi Operation Program.
G & S also argued that the proximate cause of Jose Marcial’s death is a
fortuitous event and/or the fault or negligence of another and not of its
employee. According to G & S, the collision was totally unforeseen since
Padilla had every right to expect that the delivery van would just overtake
him and not hit the right side of the taxicab. Therefore, what transpired
was beyond Padilla’s control. There was no negligence on his part but on
the part of the driver of the delivery van. For this reason, G & S opined
that it was not liable to the heirs.
On the other hand, the heirs maintained that Padilla was grossly negligent
in driving the Avis taxicab on the night of March 10, 1995. They claimed
that Padilla, while running at a very high speed, acted negligently when
he tried to overtake a ten-wheeler truck at the foot of the fly-over. This
forced him to swerve to the left and as a consequence, the Avis taxicab
hit the center of the railing and was split into two upon hitting the ground.
The manner by which Padilla drove the taxicab clearly showed that he
acted without regard to the safety of his passenger.
The heirs also averred that in order for a fortuitous event to exempt one
from liability, it is necessary that he has committed no negligence or
conduct that may have occasioned the loss. Thus, to be exempt from
liability for the death of Jose Marcial on this ground, G & S must clearly
show that the proximate cause of the casualty was entirely independent of
human will and that it was impossible to avoid. And since in the case at
bar it was Padilla’s inexcusable poor judgment, utter lack of foresight and
extreme negligence which were the immediate and proximate causes of
the accident, same cannot be considered to be due to a fortuitous event.
This is bolstered by the fact that the court trying the case for criminal
negligence arising from the same incident convicted Padilla for said
charge.20
At any rate, the heirs contended that regardless of whether G & S
observed due diligence in the selection of its employees, it should
nonetheless be held liable for the death of Jose Marcial pursuant to Article
1759 of the Civil Code which provides:
ART. 1759 – Common carriers are liable for the death of or injuries to
passengers through the negligence or willful acts of the former’s
employees, although such employees may have acted beyond the scope
of their authority or in violation of the orders of the common carriers.
This liability of the common carriers does not cease upon proof that they
exercised all the diligence of a good father of a family in the selection and
supervision of their employees.
In sum, the heirs prayed that the appeal be dismissed for lack of merit
and the assailed Decision and Order of the trial court be affirmed in toto.
In a Decision21 dated June 29, 2005, the CA ruled in favor of the heirs.
The appellate court gave weight to their argument that in order for a
fortuitous event to exempt one from liability, it is necessary that he
committed no negligence or misconduct that may have occasioned the
loss. In this case, the CA noted that Padilla failed to employ reasonable
foresight, diligence and care needed to exempt G & S from liability for
Jose Marcial’s death. Said court also quoted pertinent portions of the MTC
decision convicting Padilla of reckless imprudence resulting in homicide to
negate G & S’ claim that the proximate cause of the accident was the fault
of the driver of the delivery van who allegedly hit the right side of the
taxicab. And just like the trial court, the CA found insufficient the evidence
adduced by G & S to support its claim that it exercised due diligence in
the selection and supervision of its employees.
With respect to the award of ₱6,537,244.96 for Jose Marcial’s loss of
earning capacity, the CA declared the same unwarranted. It found the
Certification22 issued by Jose Marcial’s employer, the United States Agency
for International Development (USAID) through its Chief of Human
Resources Division Jonas Cruz (Cruz), as self-serving, unreliable, and
biased. While said certification states that Jose Marcial was earning an
annual salary of ₱450,844.49 at the time of his untimely demise, the CA
noted that same is unsupported by competent evidence such as income
tax returns or receipts. This is in view of the ruling in People v. Ereño23
where it was held that "there must be unbiased proof of the deceased’s
average income." Anent moral damages, the CA found the award of
₱300,000.00 excessive and thus reduced the same to ₱200,000.00 as to
make it proportionate to the award of exemplary damages which is
₱50,000.00. The dispositive portion of said Decision reads:
WHEREFORE, the assailed Decision dated December 27, 2001 and Order
dated March 5, 2002 are AFFIRMED with the following MODIFICATION:
appellant is ordered to pay appellees the sum of ₱50,000.00 as civil
indemnity for the death of the deceased Jose Marcial K. Ochoa,
₱200,000.00 as moral damages, ₱50,000.00 as exemplary damages,
₱100,000.00 for attorney’s fees and the costs of litigation. The trial court’s
award of ₱6,537,244.96 for the loss of earning capacity of the deceased is
DELETED for lack of basis.
SO ORDERED.
Both parties moved for reconsideration24 but the CA denied their
respective motions for reconsideration in a Resolution25 dated October 12,
2005.
Hence, G & S and the heirs filed their respective Petitions for Review on
Certiorari before this Court. The heirs’ petition was docketed as G.R. No.
170071 and that of G & S as G.R. No. 170125. These petitions were later
consolidated pursuant to this Court’s Resolution of November 21, 2005.26
G.R. No. 170125
G & S anchors its petition on the following grounds:
I. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT RULING
THAT THE PROXIMATE CAUSE OF DEATH OF MR. JOSE MARCIAL K.
OCHOA WAS A FORTUITOUS EVENT AND/OR WAS DUE TO THE FAULT OR
NEGLIGENCE OF ANOTHER AND SHOULD THUS EXEMPT THE PETITIONER
FROM LIABILITY.
II. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT TAKING
NOTE OF THE FACT THAT THE PETITIONER’S EMPLOYEE HAD BEEN
ACQUITTED OF THE CRIME OF RECKLESS IMPRUDENCE RESULTING (IN)
HOMICIDE.
III. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN
UPHOLDING THE TESTIMONY OF A WITNESS WHO SURFACED MONTHS
AFTER THE INCIDENT WHILE DISREGARDING THAT OF AN EYEWITNESS
WHO WAS PRESENT AT THE TIME AND PLACE OF THE ACCIDENT.
IV. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT
RULING THAT THE PETITIONER EXERCISED THE DILIGENCE OF A GOOD
FATHER OF A FAMILY IN THE SELECTION AND SUPERVISION OF ITS
EMPLOYEES PARTICULARLY MR. BIBIANO PADILLA.27
G & S reiterates its arguments that the proximate cause of the accident is
a fortuitous event and/or the negligence of the driver of the delivery van
which bumped the right portion of its taxicab and, that it exercised the
diligence of a good father of a family in the selection and supervision of its
employees. It faults the CA when it overlooked the fact that the MTC
Decision convicting Padilla of reckless imprudence has already been
reversed on appeal by the RTC with Padilla having been accordingly
acquitted of the crime charged. Moreover, it claims that the appellate
court erred in according respect to the testimony of the lone prosecution
witness, Pablo Clave (Clave), when it concluded that Padilla was driving
negligently at the time of the accident. It asserts that Clave is not a
credible witness and so is his testimony. Thus, G & S prays that the
assailed CA Decision and Resolution be reversed and set aside.
On the other hand, the heirs posit that the determination of the issues
raised by G & S necessarily entails a re-examination of the factual findings
which this Court cannot do in this petition for review on certiorari. At any
rate, they maintain that the trial court itself is convinced of Clave’s
credibility. They stress the settled rule that the evaluation of the
credibility of witnesses is a matter that particularly falls within the
authority of the trial court because it had the opportunity to observe the
demeanor of the witnesses on the stand.
The heirs assert that fortuitous event was not the proximate cause of the
mishap. They point out that as correctly found by the trial court, Padilla
was running at an extremely high speed. This was why the impact was so
strong when the taxicab rammed the fly-over railings and was split into
two when it hit the ground. Also, while it is true that the MTC Decision in
the criminal case for reckless imprudence has been reversed by the RTC,
this does not excuse G & S from its liability to the heirs because its
liability arises from its breach of contract of carriage and from its
negligence in the selection and supervision of its employees. Also, since
the acquittal of Padilla is based on reasonable doubt, same does not in
any way rule out his negligence as this may merely mean that the
prosecution failed to meet the requisite quantum of evidence to sustain
his conviction. Therefore, G & S cannot bank on said acquittal to disprove
its liability.
G.R. No. 170071
The heirs, on the other hand, advance the following grounds in support of
their petition:
THE COURT OF APPEALS MANIFESTLY AND GRAVELY ERRED IN
COMPLETELY DELETING THE TRIAL COURT’S AWARD FOR THE LOSS OF
EARNING CAPACITY OF THE DECEASED.
THE COURT OF APPEALS MANIFESTLY AND GRAVELY ERRED IN
REDUCING THE TRIAL COURT’S AWARD FOR MORAL DAMAGES.28
The focal point of the heirs’ petition is the CA’s deletion of the award of
₱6,537,244.96 for Jose Marcial’s loss of earning capacity as well as the
reduction of the award of moral damages from ₱300,000.00 to
₱200,000.00.
The heirs aver that the appellate court gravely erred in relying upon Ereño
as said case is not on all fours with the present case. They contend that in
Ereño, this Court disallowed the award for loss of income because the only
proof presented was a handwritten statement of the victim’s spouse
stating the daily income of the deceased as a self-employed fish vendor.
The heirs argue that the reason why this Court declared said handwritten
statement as self-serving is because the one who prepared it, the
deceased’s wife, was also the one who would directly and personally
benefit from such an award.29 This cannot be said in the case at bar since
the same bias and personal interest cannot be attributed to Jose Marcial’s
employer, the USAID. Unlike in Ereño, USAID here does not stand to be
benefited by an award for Jose Marcial’s loss of earning capacity. Clearly,
the Certification issued by it is far from being self-serving. At any rate, the
heirs contend that Ereño has already been superseded by Pleyto v.
Lomboy30 where this Court held that in awarding damages for loss of
earning capacity, "mere testimonial evidence suffices to establish a basis
for which the court can make a fair and reasonable estimate of the loss of
earning capacity". In addition, the heirs point out that the authenticity and
accuracy of said Certification was neither questioned by G & S nor
discredited by any controverting evidence. In fact, its admission by the
trial court was not even assigned by G & S as an error in their appeal
before the CA.
As to the reduction of moral damages, the heirs claim that since the CA
agreed with the factual circumstances of the case as found by the trial
court, there is therefore no reason for it to alter the award of damages
arising from such factual circumstances. They aver that the CA may only
modify the damages awarded by the trial court when it is excessive and
scandalous as held in Meneses v. Court of Appeals.31 Here, they claim that
the award of moral damages in the amount of ₱300,000.00 cannot be
considered as excessive and unreasonable but only commensurate to the
sufferings caused by the incident to a wife who became a young widow at
the age of 33 and to two minor children who lost a father. Moreover, the
heirs aver that the CA should not have reduced the award of moral
damages just to make said amount proportionate to the exemplary
damages awarded. This is because there is no such rule which dictates
that the amount of moral damages should be proportionate to that of the
exemplary damages. The heirs pray that the assailed CA Decision and
Resolution be reversed and set aside insofar as they deleted the award for
loss of earning capacity and reduced the award for moral damages.
For its part, G & S avers that the Certification issued by USAID is self-
serving because the USAID officer who issued it has not been put on the
witness stand to validate the contents thereof. Moreover, said Certification
was not supported by competent evidence such as income tax returns and
receipts. G & S likewise finds the reduction of the award of moral
damages appropriate in view of the settled rule that moral damages are
not meant to enrich the complainant at the expense of the defendant.
Hence, it prays that the petition be dismissed for lack of merit.
Our Ruling
We shall first tackle the issues raised by G & S in its petition.
The first, third and fourth issues raised by G & S involve questions of fact
We have reviewed said issues and we find that the determination of the
first, third and fourth issues raised entails re-examination of the evidence
presented because they all involve questions of fact. In Microsoft
Corporation v. Maxicorp, Inc.,32 we held that:
Once it is clear that the issue invites a review of the evidence presented,
the question posed is one of fact. If the query requires a re-evaluation of
the credibility of witnesses, or the existence or relevance of surrounding
circumstances and their relation to each other, the issue in that query is
factual. Our ruling in Paterno v. Paterno is illustrative on this point:
Such questions as whether certain items of evidence should be accorded
probative value or weight, or rejected as feeble or spurious, or whether or
not the proof on one side or the other are clear and convincing and
adequate to establish a proposition in issue, are without doubt questions
of fact. Whether or not the body of proofs presented by a party, weighed
and analyzed in relation to contrary evidence submitted by adverse party,
may be said to be strong, clear and convincing; whether or not certain
documents presented by one side should be accorded full faith and credit
in the face of protests as to their spurious character by the other side;
whether or not inconsistencies in the body of proofs of a party are of such
a gravity as to justify refusing to give said proofs weight – all these are
issues of fact. (Citations omitted)
In this case, the said three issues boil down to the determination of the
following questions: What is the proximate cause of the death of Jose
Marcial? Is the testimony of prosecution witness Clave credible? Did G & S
exercise the diligence of a good father of a family in the selection and
supervision of its employees? Suffice it to say that these are all questions
of fact which require this Court to inquire into the probative value of the
evidence presented before the trial court. As we have consistently held,
"[t]his Court is not a trier of facts. It is not a function of this court to
analyze or weigh evidence. When we give due course to such situations, it
is solely by way of exception. Such exceptions apply only in the presence
of extremely meritorious circumstances."33 Here, we note that although G
& S enumerated in its Consolidated Memorandum34 the exceptions35 to the
rule that a petition for review on certiorari should only raise questions of
law, it nevertheless did not point out under what exception its case falls.
And, upon review of the records of the case, we are convinced that it does
not fall under any. Hence, we cannot proceed to resolve said issues and
disturb the findings and conclusions of the CA with respect thereto. As we
declared in Diokno v. Cacdac:36
It is aphoristic that a re-examination of factual findings cannot be done
through a petition for review on certiorari under Rule 45 of the Rules of
Court because as earlier stated, this Court is not a trier of facts; it reviews
only questions of law. The Supreme Court is not duty-bound to analyze
and weigh again the evidence considered in the proceedings below. This is
already outside the province of the instant Petition for Certiorari.
[Citations omitted.]
There is a contract of carriage between G & S and Jose Marcial
What is clear from the records is that there existed a contract of carriage
between G & S, as the owner and operator of the Avis taxicab, and Jose
Marcial, as the passenger of said vehicle. As a common carrier, G & S "is
bound to carry [Jose Marcial] 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."37 However, Jose Marcial was not able to
reach his destination safely as he died during the course of the travel. "In
a contract of carriage, it is presumed that the common carrier is at fault
or is negligent when a passenger dies or is injured. In fact, there is even
no need for the court to make an express finding of fault or negligence on
the part of the common carrier. This statutory presumption may only be
overcome by evidence that the carrier exercised extraordinary
diligence."38 Unfortunately, G & S miserably failed to overcome this
presumption. Both the trial court and the CA found that the accident
which led to Jose Marcial’s death was due to the reckless driving and
gross negligence of G & S’ driver, Padilla, thereby holding G & S liable to
the heirs of Jose Marcial for breach of contract of carriage.
The acquittal of Padilla in the criminal case is immaterial to the instant
case for breach of contract
This thus now leaves us with the remaining issue raised by G & S, that is,
whether the CA gravely erred in not taking note of the fact that Padilla
has already been acquitted of the crime of reckless imprudence resulting
in homicide, a charge which arose from the same incident subject of this
case.
Article 31 of the Civil Code provides, viz:
When the civil action is based on an obligation not arising from the act or
omission complained of as a felony, such civil action may proceed
independently of the criminal proceedings and regardless of the result of
the latter.
Thus, in Cancio, Jr. v. Isip,39 we declared:
In the instant case, it must be stressed that the action filed by petitioner
is an independent civil action, which remains separate and distinct from
any criminal prosecution based on the same act. Not being deemed
instituted in the criminal action based on culpa criminal, a ruling on the
culpability of the offender will have no bearing on said
independent civil action based on an entirely different cause of
action, i.e., culpa contractual." (Emphasis supplied; Citations omitted.)
In this case, the action filed by the heirs is primarily for the recovery of
damages arising from breach of contract of carriage allegedly committed
by G & S. Clearly, it is an independent civil action arising from contract
which is separate and distinct from the criminal action for reckless
imprudence resulting in homicide filed by the heirs against Padilla by
reason of the same incident. Hence, regardless of Padilla’s acquittal or
conviction in said criminal case, same has no bearing in the resolution of
the present case. There was therefore no error on the part of the CA when
it resolved this case without regard to the fact that Padilla has already
been acquitted by the RTC in the criminal case. Moreover, while the CA
quoted some portions of the MTC Decision in said criminal case, we
however find that those quoted portions were only meant to belie G & S’
claim that the proximate cause of the accident was the negligence of the
driver of the delivery van which allegedly hit the Avis taxicab. Even
without those quoted portions, the appellate court’s ultimate finding that
it was Padilla’s negligence which was the proximate cause of the mishap
would still be the same. This is because the CA has, in fact, already made
this declaration in the earlier part of its assailed Decision. The fact that
the MTC Decision from which the subject quoted portions were lifted has
already been reversed by the RTC is therefore immaterial.
In view of the foregoing, we deny G & S’ petition for lack of merit.
The denial by the CA of the heirs’ claim for lost earnings is unwarranted
Going now to the petition filed by the heirs, we note at the outset that the
issues of whether the CA erred in deleting the award for loss of earning
capacity and in reducing the award for moral damages made by the trial
court likewise raise questions of fact as they "involve an examination of
the probative value of the evidence presented by the parties".40 However,
we find that the heirs’ case falls under one of the exceptions because the
findings of the CA conflict with the findings of the RTC.41 Since the heirs
properly raised the conflicting findings of the lower courts, it is proper for
this Court to resolve such contradiction.42
In Ereño, we denied the claim for loss of income because the handwritten
estimate of the deceased’s daily income as a self-employed vendor was
not supported by competent evidence like income tax returns or receipts.
This was in view of the rule that compensation for lost income is in the
nature of damages and as such requires due proof of damages suffered.
We reiterated this rule in People v. Yrat43 where we likewise denied the
same claim because the only evidence presented to show that the
deceased was earning ₱50,000.00 a month was the testimony of the wife.
There we stated that for lost income due to death, there must be
unbiased proof of the deceased’s average income. Self-serving, hence,
unreliable statement is not enough. In People v. Caraig,44 we declared
that "documentary evidence should be presented to substantiate the claim
for damages for loss of earning capacity. By way of exception, damages
therefor may be awarded despite the absence of documentary evidence,
provided that there is testimony that the victim was either (1) self-
employed earning less than the minimum wage under current labor laws,
and judicial notice may be taken of the fact that in the victim’s line of
work no documentary evidence is available; or (2) employed as a daily-
wage worker earning less than the minimum wage under current labor
laws". However, we subsequently ruled in Pleyto v. Lomboy45 that "failure
to present documentary evidence to support a claim for loss of earning
capacity of the deceased need not be fatal to its cause. Testimonial
evidence suffices to establish a basis for which the court can make a fair
and reasonable estimate of the loss of earning capacity". Hence, we held
as sufficient to establish a basis for an estimate of damages for loss of
earning capacity the testimony of the victim’s widow that her husband
was earning a monthly income of ₱8,000.00. Later, in Victory Liner, Inc.
v. Gammad,46 after finding that the deceased’s earnings does not fall
within the exceptions laid down in Caraig, we deleted the award for
compensatory damages for loss of earning capacity as same was awarded
by the lower courts only on the basis of the husband’s testimony that the
deceased was 39 years of age and a Section Chief of the Bureau of
Internal Revenue with a salary of ₱83,088.00 per annum at the time of
her death. This same rule was also applied in the 2008 case of Licyayo v.
People.47
In all of the cases mentioned except for Ereño, the sole basis for the claim
for loss of earning capacity were the testimonies of the claimants. This is
not the case here. Just like in Ereño where the testimony of the mother of
the deceased was accompanied by a handwritten estimate of her
daughter’s alleged income as a fish vendor, the testimony of Jose
Marcial’s wife that he was earning around ₱450,000.00 a year was
corroborated by a Certification issued by the USAID. However in Ereño,
we declared as self-serving the handwritten estimate submitted by the
mother hence we denied the claim for such award. Based on said ruling,
the CA in this case deleted the award for lost income after it found the
USAID Certification to be self-serving and unreliable.
We disagree. The CA sweepingly concluded that the USAID Certification is
self-serving and unreliable without elaborating on how it was able to
arrive at such a conclusion. A research on USAID reveals that it is the
"principal [United States] agency to extend assistance to countries
recovering from disaster, trying to escape poverty, and engaging in
democratic reforms."48 It is an "independent federal government agency
that receives over-all foreign policy guidance from the Secretary of the
State [of the United States]."49 Given this background, it is highly
improbable that such an agency will issue a certification containing
unreliable information regarding an employee’s income. Besides, there
exists a presumption that official duty has been regularly performed.50
Absent any showing to the contrary, it is presumed that Cruz, as Chief of
Human Resources Division of USAID, has regularly performed his duty
relative to the issuance of said certification and therefore, the correctness
of its contents can be relied upon. This presumption remains especially so
where the authenticity, due execution and correctness of said certification
have not been put in issue either before the trial court or the CA. As to its
being self-serving, our discussion on "self-serving evidence" in Heirs of
Pedro Clemeña y Zurbano v. Heirs of Irene B. Bien51 is enlightening, viz:
‘Self-serving evidence,’ perhaps owing to its descriptive formulation, is a
concept much misunderstood. Not infrequently, the term is employed as a
weapon to devalue and discredit a party's testimony favorable to his
cause. That, it seems, is the sense in which petitioners are using it now.
This is a grave error. "Self-serving evidence" is not to be taken literally to
mean any evidence that serves its proponent's interest. The term, if
used with any legal sense, refers only to acts or declarations made
by a party in his own interest at some place and time out of court
x x x. (Citations omitted; emphasis supplied.)
Verily, the USAID certification cannot be said to be self-serving because it
does not refer to an act or declaration made out of court by the heirs
themselves as parties to this case.1awphi1
Clearly, the CA erred in deleting the award for lost income on the ground
that the USAID Certification supporting such claim is self-serving and
unreliable. On the contrary, we find said certification sufficient basis for
the court to make a fair and reasonable estimate of Jose Marcial’s loss of
earning capacity just like in Tamayo v. Señora52 where we based the
victim’s gross annual income on his pay slip from the Philippine National
Police. Hence, we uphold the trial court’s award for Jose Marcial’s loss of
earning capacity.
While the trial court applied the formula generally used by the courts to
determine net earning capacity which is, to wit:
Net Earning Capacity = life expectancy* x (gross annual income -
reasonable living expenses),53
*
Life expectancy = 2/3 (80 – age of the deceased)
we, however, find incorrect the amount of ₱6,537, 244.96 arrived at. The
award should be ₱6,611,634.59 as borne out by the following
computation:
2 (80-
3654)
Net earning capacity = x 450,844.4955-50%56
3
 88
= x 225,422.25
3
= 29.33 x 225,422.25
= ₱6, 611,634.59
The award of moral damages should be modified
While we deemed it proper to modify the amount of moral damages
awarded by the trial court as discussed below, we nevertheless agree with
the heirs that the CA should not have pegged said award in proportion to
the award of exemplary damages. Moral and exemplary damages are
based on different jural foundations.57 They are different in nature and
require separate determination.58 The amount of one cannot be made to
depend on the other.
In Victory Liner Inc. v. Gammad59 we awarded ₱100,000.00 by way of
moral damages to the husband and three children of the deceased, a 39-
year old Section Chief of the Bureau of Internal Revenue, to compensate
said heirs for the grief caused by her death. This is pursuant to the
provisions of Articles 1764 and 2206(3) which provide:
Art. 1764. Damages in cases comprised in this Section shall be awarded in
accordance with Title XVIII of this Book, concerning Damages. Articles
2206 shall also apply to the death of a passenger caused by the breach of
contract by a common carrier.
Art. 2206. x x x
(3) The spouse, legitimate and illegitimate descendants and the
ascendants of the deceased may demand moral damages for mental
anguish by reason of the death of the deceased.
Here, there is no question that the heirs are likewise entitled to moral
damages pursuant to the above provisions, considering the mental
anguish suffered by them by reason of Jose Marcial’s untimely death, as
can be deduced from the following testimony of his wife Ruby:
Atty. Suarez:
Q: How would you describe Jose Marcial Ochoa?
(Ruby) A: My husband was a very loving husband, faithful husband, a
very [good] provider[.] I depended on him so much financially [and]
emotionally[.] He was practically my life then.
Q: How is he as a father?
A: A very good father, he is very committed to Micaela[. H]e has always
time for her[. H]e is a family man, so it’s really a great [loss] to me and
to Micaela.
Q: What was your reaction upon learning of your husband’s death?
A: Immediately after I learned of his death, I tried very hard to keep a
clear mind for my little girl, she was 3 ½ and she could not grasp what
death is, so I found [it] so hard to explain to her [at] that time what
happened [e]specially [because] she just talked to her father from the
airport telling her that he is coming home, tapos hindi na pala.
Q: How did it affect you?
A: It was a painful struggle everyday just to get up and move on when
someone who [you] really really love and [who] is important to you … it is
very hard to move on and [it is even] harder to move on [when] I found
out that I was pregnant with my second child, parang tinabunan ka [ng]
lahat eh[. I]t’s [too] hard to find happiness, you’re pregnant, when you
know wala naman talagang father yung bata later on x x x
xxxx
Q: How did this affect your family?
A: Yung effect kay Micaela, she [used] to be a gregarious child, yung
happy ganyan, but nung wala na yong father niya that time, [during]
graduation ng nursery that time naging very very [quiet] siya, so a lot of
emotional support from my own family was given to her at the time para
makacope-up siya sa loss kasi she is very close to the father.
Q: Financially, how did it affect you?
A: I had to make do of what was left by my husband, I couldn’t also work
so much at the time because I was….and hirap eh, I cannot find
enthusiasm in what I do, tapos pregnant pa ako, and hirap talaga.
Q: How else did it affect you?
A: We had to move houses like we used to live in Quezon City at (the)
time of his death, tapos kinuha kami ni Gorjie my brother-in-law sa
compound nila para hindi… [to] support us emotionally (at that time) kasi
nga I was pregnant and then I also decided to move (to make it easy for
me) to adjust yung lifestyle ng mga bata, because I cannot cope [here]
financially on my own[. N]ahihirapan na ako dito because the living
expenses here are quite high compared sa probinsiya so I decided to
move.
Q: If you would assign that pain and suffering that you suffered as a
result of the death of your husband, what will be the monetary
consideration?
A: I struggled with that kasi….I can honestly say no amount of money can
ever repay the [loss] that my children suffered, future nila yan eh, and
my son was not given a chance to get to know his father, so I cannot
imagine kung ano yung sinasabi n’yong amount that will compensate the
suffering that I have to go through and my children will go through, ‘yon
and mahirap bayaran.60
Under this circumstance, we thus find as sufficient and "somehow
proportional to and in approximation of the suffering inflicted"61 an award
of moral damages in an amount similar to that awarded in Victory which is
₱100,000.00.
From the above discussion, we, thus, partly grant the heirs’ petition.
WHEREFORE, the petition for review on certiorari in G.R. No. 170071 is
PARTLY GRANTED while the petition in G.R. No. 170125 is DENIED. The
assailed Decision and Resolution dated June 29, 2005 and October 12,
2005 of the Court of Appeals in CA-G.R. CV No. 75602 are AFFIRMED with
the MODIFICATIONS that G & S is ordered to pay the heirs of Jose Marcial
K. Ochoa the sum of ₱6,611,634.59 for loss of earning capacity of the
deceased and ₱100,000.00 as moral damages.
SO ORDERED.
MARIANO C. DEL CASTILLO

MOF Company, Inc. vs. Shin Yang Brokerage Corporation

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

Facts:

 Halla shipped to Manila secondhand cars and other articles on board

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

Issue:

Whether a consignee, who is not a signatory to the bill of lading, is

bound by the stipulations thereof? - Yes

Whether Shin Yang, who was not an agent of the shipper and who
did not make any demand for the fulfillment of the stipulations of
the bill of lading drawn in its favor, is liable to pay the
corresponding freight and handling charges? - No

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

The bill of lading is oftentimes drawn up by the shipper/consignor and the

carrier without the intervention of the consignee. However, the latter can
be bound by the stipulations of the bill of lading when a) there is a
relation of agency between the shipper or consignor and the consignee or
b) when the consignee demands fulfillment of the stipulation of the bill of
lading which was drawn up in its favor.

In sum, a consignee, although not a signatory to the contract of carriage

between the shipper and the carrier, becomes a party to the contract by
reason of either a) the relationship of agency between the consignee and
the shipper/ consignor; b) the unequivocal acceptance of the bill of lading
delivered to the consignee, with full knowledge of its contents or c)
availment of the stipulation pour autrui, i.e., when the consignee, a third
person, demands before the carrier the fulfillment of the stipulation made
by the consignor/shipper in the consignee’s favor, specifically the delivery
of the goods/cargoes shipped.

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

In civil cases, the party having the burden of proof must establish his case
by preponderance of evidence, which means evidence which is of greater
weight, or more convincing than that which is offered in opposition to it.
Here, MOF failed to meet the required quantum of proof. Other than
presenting the bill of lading, which, at most, proves that the carrier
acknowledged receipt of the subject cargo from the shipper and that the
consignee named is to shoulder the freightage, MOF has not adduced any
other credible evidence to strengthen its cause of action. It did not even
present any witness in support of its allegation that it was Shin Yang
which furnished all the details indicated in the bill of lading and that Shin
Yang consented to shoulder the shipment costs. There is also nothing in
the records which would indicate that Shin Yang was an agent of Halla
Trading Co. or that it exercised any act that would bind it as a named
consignee. Thus, the CA correctly dismissed the suit for failure of
petitioner to es tablish its cause against respondent

Cruz vs. Sun Holidays, June 29, 2010;

FACTS
Spouses Cruz files a complaint for damages against Sun Holidays arising
from the death of their son who perished with his wife on board the boat
M/B Coco Beach III that capsized en route Batangas from Puerto Galera
where the couple had stayed at Coco Beach Island Resort owned and
operated by respondent. Their stay was by virtue of a tour package-
contract with respondent that included transportation to and from the
Resort and the point of departure in Batangas. Eight of the passengers,
including petitioners’ son and his wife, died during the accident. Sun
denied any responsibility for the incident which it considered to be a
fortuitous event. Petitioners allege that as a common carrier, Sun was
negligent in allowing the boat to sail despite the storm warning bulletins
issued by PAGASA. Respondent denied being a common carrier, alleging
that its boats are not available to the public but are only used as ferry
resort carrier. It also claimed to have exercised the utmost diligence in
ensuring the safety of its passengers, and that contrary to petitioners’
allegation, there was no storm as the Coast Guard in fact cleared the
voyage. M/B Coco Beach III was not filled to capacity and had sufficient
life jackets for its passengers.

RTC dismissed the complaint. CA denied the appeal holding that Sun is a
private carrier which is only required to observe ordinary diligence and
that the proximate cause of the incident was a fortuitous event.

ISSUE
Whether M/B Coco Beach III breached a contract of carriage
HELD
Respondent is a common carrier. Its ferry services are so intertwined with
its business as to be properly considered ancillary thereto. The constancy
of respondent’s ferry services in its resort operations is underscored by its
having its own Coco Beach boats. And the tour packages it offers, which
include the ferry services, may be availed of by anyone who can afford to
pay the same. These services are thus available to the public.

In the De Guzman case, Article 1732 of the Civil Code defining “common
carriers” has deliberately refrained from making distinctions on whether
the carrying of persons or goods is the carrier’s principal business,
whether it is offered on a regular basis, or whether it is offered to the
general public.

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

Under the Civil Code, common carriers, from the nature of their business
and for reasons of public policy, are bound to observe extraordinary
diligence for the safety of the passengers transported by them, according
to all the circumstances of each case. They are 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.

When a passenger dies or is injured in the discharge of a contract of

carriage, it is presumed that the common carrier is at fault or negligent.
In fact, there is even no need for the court to make an express finding of
fault or negligence on the part of the common carrier. This statutory
presumption may only be overcome by evidence that the carrier exercised
extraordinary diligence.

Villanueva vs Domingo, Sept 20, 2004;

FACTS:

Priscilla Domingo is the registered owner of a silver Mitsubishi Lancer Car

model 1980 with Plate No. NDW 781 with co-respondent Leandro Luis
Domingo as authorized driver. Petitioner Nostradamus Villanueva was
then the registered “owner” of a green Mitsubishi Lancer bearing Plate No.
PHK 201.

On Oct. 22, 1991, 9:45 PM, following a green traffic light, Priscilla
Domingo silver Lancer then driven by Leandro Domingo was cruising the
middle lane of South Superhighway at moderate speed when suddenly, a
green Mitsubishi Lancer with Plate No. PHK 201 driven by Renato Dela
Cruz Ocfemia darted from Vito Cruz St. towards the South Superhighway
directly into the path of Domingo’s car thereby hitting and bumping its left
front portion. As a result of the impact, NDW 781 hit two parked vehicles
at the roadside, the second hitting another car parked in front of it.

Traffic accident report found Ocfemia driving with expired license and
positive for alcoholic breath. Manila Asst. Prosecutor Pascua recommended
filing of information for reckless imprudence resulting to damage to
property and physical injuries. The original complaint was amended twice:
first impleading Auto Palace Car Exchange as commercial agent and/or
buyer-seller and second, impleading Albert Jaucian as principal defendant
doing business under the name and style of Auto Palace Car Exchange.
Except Ocfemia, all defendants filed separate answers to the complaint.

Petitioner Nostradamus Villanueva claimed that he was no longer the

owner of the car at the time of the mishap because it was swapped with a
Pajero owned by Albert Jaucian/Auto Palace Car Exchange. Linda Gonzales
declared that her presence at the scene of the accident was upon the
request of the actual owner of the Mitsubishi Lancer PHK 201, Albert
Jaucian for whom she had been working as agent/seller. Auto Palace Car
Exchange represented by Albert Jaucian claimed that he was not the
registered owner of the car. Moreover, it could not be held subsidiarily
liable as employer of Ocfemia because the latter was off-duty as utility
employee at the time of the incident. Neither was Ocfemia performing a
duty related to his employment.

RTC found petitioner Villanueva liable and ordered him to pay respondent
actual, moral and exemplary damages plus appearance and attorney’s
fees. In conformity with equity and the ruling in First Malayan Lending and
Finance Corp. vs CA, Albert Jaucian is hereby ordered to indemnify
Villanueva for whatever amount the latter is hereby ordered to pay under
the judgment.

CA upheld trial court’s decision but deleted the award for appearance and
attorney’s fees as the same was not justified in the body of the decision.

ISSUE:
May the registered owner of a motor vehicle be held liable for damages
arising from a vehicular accident involving his motor vehicle while being
operated by the employee of its buyer without the latter’s consent and
knowledge?

RULING:

YES, the registered owner of any vehicle is directly and primarily

responsible for the public and third persons while it is being operated. The
rationale behind such doctrine was explained way back in 1957 in Erezo
vs. Jepte.

The principle upon which this doctrine is based is that in dealing with
vehicles registered under the Public Service Law, the public has the right
to assume or presume that the registered owner is the actual owner
thereof, for it would be difficult for the public to enforce the actions that
they may have for injuries caused to them by the vehicles being
negligently operated if the public should be required to prove who the
actual owner is. How would the public or third persons know against
whom to enforce their rights in case of subsequent transfers of the
vehicles? We do not imply by his doctrine, however, that the registered
owner may not recover whatever amount he had paid by virtue of his
liability to third persons from the person to whom he had actually sold,
assigned or conveyed the vehicle.

Under the same principle the registered owner of any vehicle, even if not
used for a public service, should primarily be responsible to the public or
to third persons for injuries caused the latter while the vehicle is being
driven on the highways or streets. The members of the Court are in
agreement that the defendant-appellant should be held liable to plaintiff-
appellee for the injuries occasioned to the latter because of the negligence
of the driver, even if the defendant-appellant was no longer the owner of
the vehicle at the time of the damage because he had previously sold it to
another.

A registered owner who has already sold or transferred a vehicle has the
recourse to a third-party complaint, in the same action brought against
him to recover for the damage or injury done, against the vendee or
transferee of the vehicle. The inconvenience of the suit is no justification
for relieving him of liability; said inconvenience is the price he pays for
failure to comply with the registration that the law demands and requires.

In synthesis, we hold that the registered owner, the defendant-appellant

herein, is primarily responsible for the damage caused to the vehicle of
the plaintiff-appellee, but he (defendant-appellant) has a right to be
indemnified by the real or actual owner of the amount that he may be
required to pay as damage for the injury caused to the plaintiff-appellant.

PETITION DENIED.

UCPB Gen Insurance vs. Aboitiz Shipping, GR 168433;

Facts:
On June 1991, 3 units of waste water treatment plant with accessories
were purchased by San Miguel Corp from Super Max Engineering. The
goods came from Charleston, USA and arrived in port of Manila on board
MV Scandutch Star. From Manila it was transported to Cebu on board of
Aboitiz Supercon II. In Cebu, with clearance from the Bureau of Customs,
the goods were delivered and received by San Miguel at its plant site. It
was then discovered that the motor of the unit was damaged.

Pursuant to the insurance agreement, UCPB General Insurance paid San

Miguel P1,703,381.40 representing the value of the damaged unit. In
turn, San Miguel executed a subrogation form in favor of UCPB. Then,
UCPB filed a complaint on Kuly 1992 as subrogee of San Miguel seeking to
recover from Aboitiz. Aboitiz moved to admit East Asiatic Co. as general
agent of DAMCO Intermodal System. RTC held Aboitiz, East Asiatic and
DAMCO solidarily liable.
CA reversed the decision of the RTC and ruled that UCPBs right of action
did not accrue because UCPB failed to file a formal notice within 24 hours
from the damaged. In a memorandum, UCPB asserts that the claim
requirement does not apply to cases concerning damages to the
merchandise had already been known to the carrier. UCPB revealed that
the damage to the cargo was found upon discharge from the foreign
carrier witnessed by the carrier’s representative who signed the request
for bad order survey and the turnover of bad order cargoes. This
knowledge, UCPB argues, dispenses with the need to give the carrier a
formal notice of claim. Incidentally, the carrier’s representative mentioned
by UCPB as present at the time the merchandise was unloaded was in fact
a representative of respondent Eagle Express Lines (Eagle Express). UCPB
further claims that the issue of the applicability of Art. 366 of the Code of
Commerce was never raised before the trial court and should, therefore,
not have been considered by the CA.

Eagle Express, in its Memorandum dated February 7, 2007, asserts that it

cannot be held liable for the damage to the merchandise as it acted
merely as a freight forwarders agent in the transaction. It allegedly
facilitated the transhipment of the cargo from Manila to Cebu but
represented the interest of the cargo owner, and not the carriers.

Aboitiz, on the other hand, points out, in its Memorandum dated March
29, 2007, that it obviously cannot be held liable for the damage to the
cargo which, by UCPBs admission, was incurred not during transhipment
to Cebu on board one of Aboitizs vessels, but was already existent at the
time of unloading in Manila. Aboitiz also argues that Art. 366 of the Code
of Commerce is applicable and serves as a condition precedent to the
accrual of UCPBs cause of action against it.

Issue: Whether any of the remaining parties may still be held liable by
UCPB.

Ruling:
UCPB obviously made a gross misrepresentation to the Court when it
claimed that the issue regarding the applicability of the Code of
Commerce, particularly the 24-hour formal claim rule, was not raised as
an issue before the trial court. The appellate court, therefore, correctly
looked into the validity of the arguments raised by Eagle Express, Aboitiz
and Pimentel Customs on this point after the trial court had so ill-
advisedly centered its decision merely on the matter of extraordinary
diligence.

Interestingly enough, UCPB itself has revealed that when the shipment
was discharged and opened at the ICTSI in Manila in the presence of an
Eagle Express representative, the cargo had already been found damaged.
In fact, a request for bad order survey was then made and a turnover
survey of bad order cargoes was issued, pursuant to the procedure in the
discharge of bad order cargo. The shipment was then repacked and
transhipped from Manila to Cebu on board MV Aboitiz Supercon II. When
the cargo was finally received by SMC at its Mandaue City warehouse, it
was found in bad order, thereby confirming the damage already
uncovered in Manila.

We have construed the 24-hour claim requirement as a condition

precedent to the accrual of a right of action against a carrier for loss of, or
damage to, the goods. The shipper or consignee must allege and prove
the fulfilment of the condition. Otherwise, no right of action against the
carrier can accrue in favor of the former.

The shipment in this case was received by SMC on August 2, 1991.

However, as found by the Court of Appeals, the claims were dated
October 30, 1991, more than three (3) months from receipt of the
shipment and, at that, even after the extent of the loss had already been
determined by SMCs surveyor. The claim was, therefore, clearly filed
beyond the 24-hour time frame prescribed by Art. 366 of the Code of
Commerce.

Petition was denied. CA's decision was affirmed.

PAL vs. Savillo, GR 149547;- manila-singapore-singapore-jakarta

Crisostomo vs. CA, GR 138334

Estela L. Crisostomo contracted the services of Caravan Travel and Tours
International, Inc. to arrange and facilitate her booking, ticketing and
accommodation in a tour dubbed "Jewels of Europe". The package tour
cost her P74, 322.70. She was given a 5% discount on the amount, which
included airfare, and the booking fee was also waived because petitioner’s
niece, Meriam Menor, was former’s company’s ticketing manager.

Menor went to her aunt’s residence on a Wednesday to deliver petitioner’s

travel documents and plane tickets. Estela, in turn, gave Menor the full
payment for the package tour. Menor then told her to be at the Ninoy
Aquino International Airport (NAIA) on Saturday, two hours before her
flight on board British Airways.

Without checking her travel documents, Estela went to NAIA on Saturday,

to take the flight for the first leg of her journey from Manila to Hongkong.
She discovered that the flight she was supposed to take had already
departed the previous day. She learned that her plane ticket was for the
flight scheduled on June 14, 1991. She thus called up Menor to complain.
Subsequently, Menor prevailed upon Estela to take another tour the
"British Pageant”, which cost P20, 881.00. She gave caravan travel and
tours P7, 980.00 as partial payment and commenced the trip in July 1991.

Upon petitioner’s return from Europe, she demanded from respondent the
reimbursement of P61, 421.70, representing the difference between the
sum she paid for "Jewels of Europe" and the amount she owed respondent
for the "British Pageant" tour. Despite several demands, respondent
company refused to reimburse the amount, contending that the same was
non-refundable.
Estela filed a complaint against Caravan travel and Tours for breach of
contract of carriage and damages.

A) Will the action prosper?

B) Will she be entitled to damages?

Answer:

No, for there was no contract of carriage.

By definition, a contract of carriage or transportation is one whereby a

certain person or association of persons obligate themselves to transport
persons, things, or news from one place to another for a fixed price.

From the above definition, Caravan Travel and Tours is not an entity
engaged in the business of transporting either passengers or goods and is
therefore, neither a private nor a common carrier. Caravan Travel and
Tours did not undertake to transport Estela from one place to another
since its covenant with its customers is simply to make travel
arrangements in their behalf. Caravan travel and tour’s services as a
travel agency include procuring tickets and facilitating travel permits or
visas as well as booking customers for tours.

While Estela concededly bought her plane ticket through the efforts of
respondent company, this does not mean that the latter ipso facto is a
common carrier. At most, Caravan Travel and Tours acted merely as an
agent of the airline, with whom the former ultimately contracted for her
carriage to Europe.

B) No.

The negligence of the obligor in the performance of the obligation renders

him liable for damages for the resulting loss suffered by the obligee. Fault
or negligence of the obligor consists in his failure to exercise due care and
prudence in the performance of the obligation as the nature of the
obligation so demands.

In the case at bar, Caravan Travel and Tours exercised due diligence in
performing its obligations under the contract and followed standard
procedure in rendering its services to Estela. The plane ticket issued to
petitioner clearly reflected the departure date and time, contrary to
Estela’s contention. The travel documents, consisting of the tour itinerary,
vouchers and instructions, were likewise delivered to her two days prior to
the trip. The Caravan Travel and Tours also properly booked Estela for the
tour, prepared the necessary documents and procured the plane tickets. It
arranged Estela’s hotel accommodation as well as food, land transfers and
sightseeing excursions, in accordance with its avowed undertaking.

From the foregoing, it is clear that the Caravan Travel and Tours
performed its prestation under the contract as well as everything else that
was essential to book Estela for the tour.
Hence, Estela cannot recover and must bear her own damage.

PCI Leasing and Finance vs UCPB General Insurance, GR 162267;

Singapore Airlines vs. Andion Fernandez GR 142305;

FACTS:

Respondent Andion Fernandez is an acclaimed soprano in the Philippines

and abroad. At the time of the incident she was availing of an educational
grant from the Federal Republic of Germany pursuing a Master’s Degree in
Music major in Voice. She was invited to sing before the King and Queen
of Malaysia on Feb. 3-4, 1991. For this purpose, she took an airline ticket
from Singapore Airlines (SAL) FOR THE Frankfurt-Manila-Malaysia route.
Respondent had to pass by Manila in order to gather her wardrobe and
rehearse with the pianist. SAL issued ticket for Flight SQ 27 leaving
Frankfurt on Jan. 27, 1991 for Singapore with connections to Manila in the
morning of Jan. 28, 1991. On Jan. 27, 1991 SQ 27 LEFT Frankfurt but
arrived two hours late in Singapore on Jan. 28, 1991. By then, the aircraft
bound for Manila had already left. Upon deplaning in Singapore,
Fernandez approached the transit counter at Changi Airport and was told
by a lady employee that there were no more flights to Manila on that day
and that she had to stay in Singapore, if she wanted, she could fly to HK
but at her own expense. Respondent stayed with a relative in Singapore
for the night. The next day, she was brought back to the airport and
approached a counter for immediate booking but was told by a male
employee: “Can’t you see I am doing something.” She explained her
predicament but was told: “It’s your problem, not ours.”

The respondent never made it to Manila and was forced to take a direct
flight to Malaysia on Jan. 29, 1991 through the efforts of her mother and
a travel agency in Manila. Her mother had to travel to Malaysia with the
wardrobe which caused them to incur expenses of ₱ 50,000.

RTC Manila ordered SAL to pay respondent ₱ 50k as actual damages, ₱

250k as moral damages, ₱ 100k as exemplary damages, ₱ 75k as
attorney’s fees and costs of suit.

CA affirmed RTC decision.

ISSUE:
Did SAL break the contract of carriage?

RULING:

Yes, when an airline issues a ticket to a passenger, confirmed for a

particular flight on a certain date, a contract of carriage arises. The
passenger has every right to expect that he be transported on that flight
and on that date. If he does not, then the carrier opens itself to a suit for
a breach of contract of carriage. A contract of carriage requires common
carriers to transport passengers safely as human care and foresight can
provide (Art. 1755, NCC). In an action for breach of a contract of carriage,
the aggrieved party does not have to prove that the common carrier was
at fault or was negligent. All that is necessary is to prove the existence of
the contract and the fact of its non-performance by the carrier.
SAL failed to inform of the delay in the turnaround aircraft in Frankfurt,
neither did it ask if the respondent and 25 other delayed passengers are
amenable to a stay in Singapore. Even SAL’s manual mandates that in
cases of urgent connections the head office of defendant in Singapore has
to be informed of delays so as to make needed arrangements for
connecting passengers.

When respondent conveyed her apprehension in Frankfurt of the

impending delay, she was assured by petitioner’s personnel in Frankfurt
that she will be transported to Manila on the same date. The lady
employee at the counter in Singapore only allowed respondent to use the
phone upon threat of suit, the male employee at the counter marked
“Immediate Attention to Passengers with Immediate Booking” was rude to
her.

Petition is denied. CA decision affirmed.

Japan Airlines vs. Asuncion GR 161730;

Facts: Petitioner failed to pass the interview for the shorepass. Instead of
staying in Manila Hotel, they stayed in a rest house. Petitioner sued for
breach of contract.

Held: The airline has no duty to inquire into the veracity of the details the
petitioner entered into their travel papers. Power to admit or not an alien
is a sovereign act which cannot be interfered with even by the airlines. It
is beyond the ambit of the contract of carriage.

Airworthiness:

- the aircraft and its engines and propellers as well as its accessions
and equipments are of proper design and constructions safe for air
navigation, consistent with accepted engineering aircrafts service.

Maranan vs. Perez GR 22272;

Facts of the Case:
The carrier was charged for damages due to the case where his former
employee executed homicide.

According the Civil code of the Philippines, made a point that the
common carrier is "liable for the damages done by his employees to their
passengers" by the wording of Art. 1759 which states that:

"Common carriers are liable for the death or of injuries to

passengers through negligence or willful acts of the former's employers,
although
such employees may have acted beyond the scope of their authority
or in violation of the Common carriers."

Antonia Maranan, the mother of the victim filed an action in the court
of First Instance of Batangas to recover damages from Perez who is the
carrier and Valenzuela, who is the suspect found guilty of homicide for
the death of Rogelio Corachea, her son. In defense of Perez claimed that
deceased was killed in self-defense because he was the first who
assaulted the driver. In addition to that, the defendant claimed that the
death was caso foruito which means Perez, the carrier is not liable for the
damages done. In the end, the lower court adjudged the defendant carrier
liable pursuant to Article 1759 of the Civil Code

Issues:

1 Whether the carrier did not partake on the crime scene, is

responsible for the protection of the passengers?
2 Whether the carrier is not involve in that event, is responsible for
the action of his employees?
3 Whether it is not the fault of the carrier committing the crime, is
liable due to the fact that he hired the employee who
failed transporting the passenger to safety?
1 Whether it's the employee's fault, the carrier will bear the risk of
wrongful acts or negligence of the carrier's employees against
passengers?

Decisions:

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

Compania Maritima vs. CA GR 31379;

Facts: Vicente E. Concepcion, a civil engineer doing business under the
name and style of Consolidated Construction with office address at Room
412, Don Santiago Bldg., Taft Avenue, Manila, had a contract with the
Civil Aeronautics Administration (CAA) sometime in 1964 for the
construction of the airport in Cagayan de Oro City, Misamis Oriental.
Being a Manila-based contractor, Concepcion had to ship his construction
equipment to Cagayan de Oro City. Having shipped some of his equipment
through Compania Maritima and having settled the balance of P2,628.77
with respect to said shipment, Concepcion negotiated anew with
Concepcion, thru its collector, Pacifico Fernandez, on 28 August 1964 for
the shipment to Cagayan de Oro City of 1 unit payloader, 4 units 6x6 Reo
trucks and 2 pieces of water tanks. He was issued Bill of Lading 113 on
the same date upon delivery of the equipment at the Manila North Harbor.
These equipment were loaded aboard the MV Cebu in its Voyage 316,
which left Manila on 30 August 1964 and arrived at Cagayan de Oro City
in the afternoon of 1 September 964. The Reo trucks and water tanks
were safely unloaded within a few hours after arrival, but while the
payloader was about 2 meters above the pier in the course of unloading,
the swivel pin of the heel block of the port block of Hatch 2 gave way,
causing the payloader to fall. The payloader was damaged and was
thereafter taken to Compania Maritima’s compound in Cagayan de Oro
City. On 7 September 1964, Consolidated Construction, thru Concepcion,
wrote Compania Maritima to demand a replacement of the payloader
which it was considering as a complete loss because of the extent of
damage. Consolidated Construction likewise notified Compania Maritima of
its claim for damages. Unable to elicit response, the demand was
repeated in a letter dated 2 October 1964. Meanwhile, Compania Maritima
shipped the payloader to Manila where it was weighed at the San Miguel
Corporation. Finding that the payloader weighed 7.5 tons and not 2.5 tons
as declared in the Bill of Lading, Compania Maritima denied the claim for
damages of Consolidated Construction in its letter dated 7 October 1964,
contending that had Concepcion declared the actual weight of the
payloader, damage to their ship as well as to his payloader could have
been prevented. To replace the damaged payloader, Consolidated
Construction in the meantime bought a new one at P45,000.00 from
Bormaheco, Inc. on 3 December 1964.

On 6 July 1965, Concepcion filed an action for damages against Compania

Maritima with the then CFI of Manila (Branch VII, Civil Case 61551),
seeking to recover damages in the amount of P41,225.00 allegedly
suffered for the period of 97 days that he was not able to employ a
payloader in the construction job at the rate of P450.00 a day;
P34,000.00 representing the cost of the damaged payloader; P11,000.00
representing the difference between the cost of the damaged payloader
and that of the new payloader; P20,000.00 representing the losses
suffered by him due to the diversion of funds to enable him to buy a new
payloader; P10,000.00 as attorney’s fees; P5,000.00 as exemplary
damages; and cost of the suit. After trial, the then CFI dismissed on 24
April 1968 the complaint with costs against Concepcion, stating that the
proximate cause of the fall of the payloader was Concepcion’s act or
omission in having misrepresented the weight of the payloader as 2.5
tons, which underdeclaration was intended to defraud Compañia Maritima
of the payment of the freight charges and which likewise led the Chief
Officer of the vessel to use the heel block of hatch 2 in unloading the
payloader.

From the adverse decision against him, Concepcion appealed to the Court
of Appeals which, on 5 December 1965 rendered a decision, reversing the
trial court, and ordering Compania Maritima to pay unto Concepcion the
sum in damages of P24,652.07 with legal interest from the date the
decision shall have become final; and declared the payloader abandoned
to Compania Maritima; with costs against the latter. Hence, the petition
for review on certiorari.

The Supreme Court denied the petition; affirmed the decision of the Court
of Appeals in all respects with costs against Compania Maritima, and in
view of the length of time this case has been pending, ordered that the
decision is immediately executory.

1. Article 1734 (3) NCC

Paragraph 3 of Article 1734 of the Civil Code provides that “Common

carriers are responsible for the loss, destruction, or deterioration of the
goods, unless the same is due to any of the following causes only: xxx
“(3) Act or omission of the shipper or owner of the goods.”

2. General rule under Articles 1735 and 1752 NCC; Negligence

presumed

The general rule under Articles 1735 and 1752 of the Civil Code is that
common carriers are presumed to have been at fault or to have acted
negligently in case the goods transported by them are lost, destroyed or
had deteriorated. To overcome the presumption of liability for the loss,
destruction or deterioration of the goods under Article 1735, the common
carriers must prove that they observed extraordinary diligence as required
in Article 1733 of the Civil Code. The responsibility of observing
extraordinary diligence in the vigilance over the goods is further
expressed in Article 1734 of the same Code.

3. Burden of proof incumbent on common carrier

Corollary is the rule that 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.
Otherwise stated, it is incumbent upon the common carrier to prove that
the loss, deterioration or destruction was due to accident or some other
circumstances inconsistent with its liability.

4. Rationale for the requirement of extraordinary diligence; Article

1733 NCC

Extraordinary diligence is required of common carriers in the vigilance

over the goods transported by them by virtue of the nature of their
business, which is impressed with a special public duty. Article 1733 of the
Civil Code provides that “Common carriers, from the nature of their
business and for reason 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...”

5. Precaution required of common carrier to avoid damage or

destruction to goods

The extraordinary diligence in the vigilance over the goods tendered for
shipment requires the common carrier to know and to follow the required
precaution for avoiding damage to, or destruction of the goods entrusted
to it for safe carriage and delivery. It requires common carriers to render
service with the greatest skill and foresight and “to use all reasonable
means to ascertain the nature and characteristic of goods tendered for
shipment, and to exercise due care in the handling and stowage, including
such methods as their nature requires.” Under Article 1736 of the Civil
Code, the responsibility to observe extraordinary diligence commences
and lasts from the time the goods are unconditionally placed in the
possession of, and received by the carrier for transportation until the
same are delivered, actually or constructively, by the carrier to the
consignee, or to the person who has the right to receive them without
prejudice to the provisions of Article 1738.

6. Compania Maritima negligent due to its laxity and carelessness

in method to ascertain weight of heavy cargoes

Herein, there was laxity and carelessness among Compania Maritima’s

crew in their methods of ascertaining the weight of heavy cargoes offered
for shipment before loading and unloading them, as is customary among
careful persons. The weight submitted by shipper Concepcion as an
addendum to the original enumeration of equipment to be shipped was
entered into the bill of lading by Compania Maritima,

thru Pacifico Fernandez, a company collector, without seeing the

equipment to be shipped. Mr. Mariano Gupana, assistant traffic manager
of Maritima Compania, confirmed that the company never checked the
information entered in the bill of lading. Worse, the weight of the
payloader as entered in the bill of lading was assumed to be correct by
Mr. Felix Pisang, Chief Officer of MV Cebu. The weights stated in a bill of
lading are prima facie evidence of the amount received and the fact that
the weighing was done by another will not relieve the common carrier
where it accepted such weight and entered it on the bill of lading. Besides,
common carriers can protect themselves against mistakes in the bill of
lading as to weight by exercising diligence before issuing the same.

7. Compania Maritima negligent in using 5-ton capacity lifting

apparatus to unload payloader

Herein, Compania Maritima failed to take the necessary and adequate

precautions for avoiding damage to, or destruction of, the payloader
entrusted to it for safe carriage and delivery to Cagayan de Oro City. It
used a 5-ton capacity lifting apparatus to lift and unload a visibly heavy
cargo like a payloader. Mr. Felix Pisang, Chief Officer of the MV Cebu, 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 which has the capacity of lifting 20 to 25 ton cargoes, Mr. Felix
Pisang chose not to use it, because according to him, since the ordinary
boom has a capacity of 5 tons while the payloader was only 2.5 tons, he
did not bother to use the “jumbo” anymore.

8. Misdeclaration as to weight not an excuse for common carrier to

avoid liability

Herein, Concepcion’s act of furnishing Compania Maritima with an

inaccurate weight of the payloader cannot be used by the latter as an
excuse to avoid liability for the damage caused, as the same could have
been avoided had the latter utilized the “jumbo” lifting apparatus which
has a capacity of lifting 20 to 25 tons of heavy cargoes. It is a fact known
to the Chief Officer of MV Cebu that the payloader was loaded aboard the
MV Cebu at the Manila North Harbor on 28 August 1964 by means of a
terminal crane. Even if Compania Maritima chose not to take the
necessary precaution to avoid damage by checking the correct weight of
the payloader, extraordinary care and diligence compel the use of the
“jumbo” lifting apparatus as the most prudent course for Compania
Maritima.

9. Article 1741; Contributory negligence

Article 1741 of the Code provides that “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.”

10. Contributory negligence of shipper mitigates liability of

common carrier

While Concepcion’s act of furnishing Compania Maritima with an

inaccurate weight of the payloader cannot successfully be used as an
excuse by the latter to avoid liability to the damage thus caused, said act
constitutes a contributory circumstance to the damage caused on the
payloader, which mitigates the liability for damages of the latter.

11. Award of recoverable amount of damages reduced

The conclusion of the Court of Appeals – reducing the recoverable amount

of damages by 20% or 1/5 of the value of the payloader, valued at
P34,000.00, thereby reducing the recoverable amount at 80% or 4/5 of
P34,000.00 or the sum of P27,200.00 – was equitable. Considering that
the freight charges for the entire cargoes shipped by Concepcion
amounting to P2,318.40 remained unpaid, the same would be deducted
from the P27,000.00 plus an additional deduction of P228.63 representing
the freight charges for the undeclared weight of 5 tons (difference
between 7.5 and 2.5 tons) leaving, therefore, a final recoverable amount
of damages of P24,652.97 due to Concepcion.

12. Assignment of errors by appellee only to maintain judgment

on other grounds; Appeal required to modify or reverse judgment

It is well-settled that an appellee, who is not an appellant, may assign

errors in his brief where his purpose is to maintain the judgment on other
grounds, but he may not do so if his purpose is to have the judgment
modified or reversed, for, in such case, he must appeal. Herein, since
Concepcion did not appeal from the judgment insofar as it limited the
award of damages due him, the reduction of 20% or 1/5 of the value of
the payloader stands.

Sulpicio Lines vs. Curso 615 SCRA 575

CASE:
Dr.Curso was among those who died when MV Dona Marilyn sank while
traversing the seas to Tacloban. His brothers and sisters filed a case for
damages based on breach of contract by carriage of sea against Sulpicio
Lines on the ground that its negligence was the cause of Dr. Curso’s
death. The respondents here claim that they were the only living heirs
of Dr. Curso and as such entitled to recover damages. The trial court
initially absolved Sulpicio lines but this was reversed by the CA who then
awarded in favor of the respondents the ffg: death indemnity, loss of
earning capacity, moral damages and costs of suit. Sulpicio lines then
came to the SC questioning only the capacity of respondents to receive
moral damages ( so other awards were no longer questioned).

The SC ruled that the respondents, being only brothers and sisters, are
not entitled to receive moral damages in accordance with Article 2206 of
the Civil Code. Also, to be entitled to moral damages,, one must have a
right founded in law. In this case, the respondents have no right under
Artivcle 2219 either.

Doctrine: moral damages may be recovered in an action upon breach of

contact of carriage only when:
a. where death of a passenger results
b. it is proved that the carrier was guilty of fraud and bad faith, even
if death does not result.
Article 2206 of the CC entitles the descendants, ascendants, illegitimate
children, and surviving spouse of the deceased passenger to demand
moral damages for mental anguish by reason of the death of the
deceased.

NOTE: there is no mention of brothers and sisters here!

BACKGROUND:
 October 23, 1988- Dr. Curso boarded MV Dona Marilyn, as inter-
island vessel owned and operated by petitioner Sulpicio Lines Inc
bound for Tacloban.
 October 24, 1988 (afternoon)- the ship sank while at sea and many
 bodies of its ill-fated passengers (including Dr. Curso were never
found.
o Dr. curso was 48 years onld, and employed as a resident
physician at the Naval District Hospital in Naval, Biliran. He
had a basic monthly salary at P3,940.00 and would have
retired from government service by December 20, 2004 at
the age of 65.
 January 21, 1993- Respondents sued the petitioner in the RTC in
Naval Biliran to claim damages based on breach of contract of
carriage by sea, averring that the petitioner had acted negligently
in transporting Dr. Curso and other passengers.
o They claim that since Dr. Curso died single and with out
issue, they were his surviving heirs and successors in interest
who are entitled to recover moral and other damages (their
claims are: compensatory, exemplary, expenses of
litigations, costs of suit)
 Pet denied liability insisting that the sinking of the vessel was due
to force majeure which exempted a common carrier from liability. It
averred that the MV Dona Marilyn was seaworthy in all respects,
and was in fact cleared by the Phil coast guard for the voyage; and
that after the accident it conducted intensive search and rescue
operations and extended assistance and aid to the victims and their
families.
 July 28, 1995- the RTC dismissed the complaint finding that the
vessel sank due to force majeure, and that the ship was seaworthy.
 September 16, 2002- the CA reversed the decision stating that
there was inadequate proof to show that Sulpicio Lines or its
officers and crew, had exercise the required degree of diligence to
acquit the appellee of liability. Ot claims that the mishap would not
have occurred If the crew had been monitoring the weather reports.
As such, Sulpicio Lines was ordered to pay death indemnity, loss of
earning capacity, moral damages and costs of suit.

ISSUE: whether or not the surviving brothers and sisters of a passenger

of a vessel that sinks during a voyage is entitled to recover moral
damages from the vessel owner as common carrier.

RESOLUTIONS:
NO. as a general rule, moral damages are not recoverable in actions for
damages predicated on a breach of contract, unless there is fraud or BF.
As an exception, moral damages may be awarded in case of breach of
contract of carriage that results in the death of a passenger, in accordance
withArticle 1764 in relation to Article 2206 of the CC which states that the
spouse, legitimate and illegitimate descendants and ascendants of the
brothers and sisters of the deceased passenger reveals the legislative
intent to exclude them from the recovery of moral damages for mental
anguish by reason of death of the deceased.
Receiver for north negros sugar company- in case of death caused by
quasi delict, the brother if the deceased was not entitled to the award of
moral damages based on Article 2206.

TO BE ENTITLED TO MORAL DAMAGES, the respondents must have a right

based upon the law. It is true that under Article 1003 of CC, they
succeeded to the entire estate of the late Dr. Curso in the absence of the
latter’s descendants, ascendants, illegitimate children, and surviving
spouse. However, they were not included among the persons entitled to
recover moral damages, as enumerated in Article 2219 of the CC.

Article 2219 circumscribes the instance in which moral damages may be

awarded and the provision does not include succession in the collateral
line as a source of the right to recover moral damages.

Air France vs. Gallego 638 SCRA 472

CASE DIGEST: AIR FRANCE v. BONIFACIO H. GILLEGO

FACTS: Gillego, then incumbent Congressman and Chairman of the House

of Representatives Committee on Civil, Political and Human Rights, was
invited to participate as one of the keynote speakers at the 89th Inter-
Parliamentary Conference Symposium on Parliament Guardian of Human
Rights to be held in Budapest, Hungary and Tokyo, Japan.

On May 16, 1993, Gillego left Manila on board Air Frances aircraft bound
for Paris, France. While waiting at the Airport for his connecting flight to
Budapest scheduled a few hours after his arrival learned that Air France
had another aircraft bound for Budapest with an earlier departure time
than his scheduled flight. He then made arrangements for the change in
his booking. He was given a corresponding ticket and boarding pass and
also a new baggage claim stub for his checked-in luggage. However, his
baggage despite numerous follow-up was never delivered to him
prompting Gillego to purchase new set of clothes and other personal
effects.

Gillego filed a complaint for damages against the Air France alleging that
by reason of its negligence and breach of obligation to transport and
deliver his luggage, Gillego suffered inconvenience, serious anxiety,
physical suffering and sleepless nights. It was further alleged that due to
the physical, mental and emotional strain resulting from the loss of his
luggage, aggravated by the fact that he failed to take his regular
medication, Gillego had to be taken to a medical clinic in Tokyo, Japan for
emergency treatment.

The RTC found there was gross negligence on the part of Air France. It
likewise found Air France guilty of willful misconduct as it persistently
disregarded the rights of Gillego. As to the applicability of the limited
liability for lost baggage under the Warsaw Convention, the trial court
rejected the argument of Air France. The CA affirmed the trial courts
decision.

ISSUES:

I. Was there legal and factual basis that Air France's actions were
attended by gross negligence, bad faith and willful misconduct and that it
acted in a wanton, fraudulent, reckless, oppressive or malevolent manner
to justify award of moral and exemplary damages?

II. Is the amount of damages awarded by the RTC and affirmed by the CA
as moral and exemplary damages excessive, unconscionable and
unreasonable?

HELD: I. In an action based on a breach of contract of carriage, the

aggrieved party does not have to prove that the common carrier was at
fault or was negligent. All that he has to prove is the existence of the
contract and the fact of its non-performance by the carrier.

The action filed by the respondent is founded on such breach of the

contract of carriage with petitioner who offered no satisfactory explanation
for the unreasonable delay in the delivery of respondents baggage. The
presumption of negligence was not overcome by the petitioner and hence
its liability for the delay was sufficiently established.

The Court held that the trial and appellate courts did not err in finding
that petitioner acted in bad faith in repeatedly ignoring respondents
follow-up calls. Clearly, Air France did not give the attention and care due
to its passenger whose baggage was not transported and delivered to him
at his travel destination and scheduled time; inattention to and lack of
care for the interest of its passengers who are entitled to its utmost
consideration, particularly as to their convenience, amount to bad faith
which entitles the passenger to an award of moral damages.

HELD: II. The amount of damages must be fair, reasonable and

proportionate to the injury suffered. The purpose of awarding moral
damages is to enable the injured party to obtain means, diversion or
amusement that will serve to alleviate the moral suffering he has
undergone by reason of defendant's culpable action. On the other hand,
the aim of awarding exemplary damages is to deter serious wrongdoings.
Hence, the Court held that the sum of P1,000,000.00 awarded by the trial
court is excessive and not proportionate to the loss or suffering inflicted
on the passenger under the circumstances.

DENIED

Edna Diago lhuillier vs. british airways G.R. No. 171092; March 15,
2010
FACTS: On April 28, 2005, petitioner Edna Diago Lhuillier filed a
Complaint for damages against respondent British Airways before the
Regional Trial Court (RTC) of Makati City. The tortuous conduct by the
flight attendants of said Airways, which prompted petitioner to file a case
for damages, allegedly transpired when petitioner boarded respondent’s
flight 548 from London, United Kingdom to Rome, Italy. On May 30, 2005,
respondent, by way of special appearance through counsel, filed a Motion
to Dismiss on grounds of lack of jurisdiction over the case and over the
person of the respondent. Respondent alleged that only the courts of
London, United Kingdom or Rome, Italy, have jurisdiction over the
complaint for damages pursuant to the Warsaw Convention, Article 28(1)
of which provides:
“An action for damages must be brought at the option of the plaintiff,
either before the court of domicile of the carrier or his principal place of
business, or where he has a place of business through which the contract
has been made, or before the court of the place of destination.”
ISSUE: Whether or not Philippines, a signatory to the Warsaw Convention,
should adhere to the provision of the Warsaw Convention in the
determination of its jurisdiction with respect to a case for damages
involving a tortuous conduct committed by an airline personnel while in an
international carrier against a Filipino citizen.
HELD: Yes. It is settled that the Warsaw Convention has the force and
effect of law in this country.
In Santos III v. Northwest Orient Airlines, 210 SCRA 256 (1992), we held
that: The Republic of the Philippines is a party to the Convention for the
Unification of Certain Rules Relating to International Transportation by Air,
otherwise known as the Warsaw Convention. It took effect on February
13, 1933. The Convention was concurred in by the Senate, through its
Resolution No. 19, on May 16, 1950. The Philippine instrument of
accession was signed by President Elpidio Quirino on October 13, 1950,
and was deposited with the Polish government on November 9, 1950. The
Convention became applicable to the Philippines on February 9, 1951. On
September 23, 1955, President Ramon Magsaysay issued Proclamation
No. 201, declaring our formal adherence thereto, “to the end that the
same and every article and clause thereof may be observed and fulfilled in
good faith by the Republic of the Philippines and the citizens thereof.”
The Convention is thus a treaty commitment voluntarily assumed by the
Philippine government and, as such, has the force and effect of law in this
country.

Ramos vs. China Southern Airlines Co., Ltd., G.R. No. 213418,
September 21, 2016
FACTS: On 7 August 2003, petitioners purchased five China Southern
Airlines from Active Travel Agency for a roundtrip plane tickets from
Manila to Xiamen, China. On their way back to the Manila, however,
petitioners were prevented from taking their designated flight despite the
fact that earlier that day an agent from Active Tours informed them that
their bookings for China Southern Airlines flight are confirmed. The refusal
came after petitioners already checked in all their baggages and were
given the corresponding claim stubs and after they had paid the terminal
fees. According to the airlines' agent with whom they spoke at the airport,
petitioners were merely chance passengers but they may be allowed to
join the flight if they are willing to pay an additional 500 Renminbi (RMB)
per person. When petitioners refused to defray the additional cost, their
baggages were offloaded from the plane and China Southern Airlines flight
then left Xiamen International Airport without them.
Petitioners were able to fly back to Manila and upon arrival, they went to
China Southern Airlines to demand for the reimbursement of their airfare
and travel expenses in the amount of P87,375.00. When the airline
refused to accede to their demand, petitioners initiated an action for
damages before the RTC of Manila and sought for the payment of actual,
moral and exemplary damages.
In their Answer, China Southern Airlines denied liability by alleging that
petitioners were not confirmed passengers of the airlines but were merely
chance passengers.
RTC ruled in favor of the petitioners and granted the award of actual,
moral and exemplary damages.
CA modified the decision. Deleting the award of moral and exemplary
damages.
ISSUE: Whether or not the award of moral and exemplary damages
should be granted.
RULING: Yes. A contract of carriage, in this case, air transport, is
intended to serve the traveling public and thus, imbued with public
interest. The law governing common carriers consequently imposes an
exacting standard of conduct as provided in Article 1755 of the Civil Code.
With respect to moral damages, the following provision of the New Civil
Code is instructive: Article 2220. Willful injury to property may be a legal
ground for awarding moral damages if the court should find that, under
the circumstances, such damag.es are justly due. The same rule applies
to breaches of contract where the defendant acted fraudulently or in bad
faith.
Bad faith does not simply connote bad judgment or negligence. It imports
dishonest purpose or some moral obliquity and conscious doing of a
wrong. It means breach of a known duty through some motive, interest or
ill will that partakes the nature of fraud. Bad faith is in essence a question
of intention.
We find that the airline company acted in bad faith in insolently bumping
petitioners off the flight after they have completed all the pre-departure
routine. Bad faith is evident when the ground personnel of the airline
company unjustly and unreasonably refused to board petitioners to the
plane which compelled them to rent a car and take the train to the
nearest airport where they bought new sets of plane tickets from another
airline that could fly them home. Petitioners have every reason to expect
that they would be transported to their intended destination after they
had checked in their luggage and had gone through all the security
checks. Instead, China Southern Airlines offered to allow them to join the
flight if they are willing to pay additional cost; this amount is on top of the
purchase price of the plane tickets. The requirement to pay an additional
fare was insult upon injury. It is an aggravation of the breach of contract.
Undoubtedly, petitioners are entitled to the award of moral damages.
China Southern Airlines is also liable for exemplary damages as it acted in
a wantonly oppressive manner as succinctly discussed above against the
petitioners. Exemplary damages which are awarded by way of example or
correction for the public good, may be recovered in contractual
obligations, as in this case, if defendant acted in wanton, fraudulent,
reckless, oppressive or malevolent manner.

Sulpicio Lines, Inc. vs. Sesante, 798 SCRA 459, G.R. No. 172682
July 27, 2016
Nature of Action: Action for damages for breach of contract of carriage.
FACTS:
The M/V Princess of the Orient, a passenger vessel owned and
operated by the petitioner, sank near Fortune Island in Batangas. Of the
388 recorded passengers, 150 were lost. Napoleon Sesante, then a
member of the Philippine National Police (PNP) and a lawyer, was one of
the passengers who survived the sinking. He sued the petitioner for
breach of contract and damages. In its defense, the petitioner insisted on
the seaworthiness of the M/V Princess of the Orient due to its having been
cleared to sail from the Port of Manila by the proper authorities; that the
sinking had been due to force majeure; that it had not been negligent;
and that its officers and crew had also not been negligent because they
had made preparations to abandon the vessel because they had launched
life rafts and had provided the passengers assistance in that regard. The
RTC rendered judgement in favor of plaintiff Napoleon Sesante and
ordered defendant to pay temperate and moral damages. The RTC
observed that the petitioner, being negligent, was liable to Sesante
pursuant to Articles 1739 and 1759 of the Civil Code. The CA reduced the
award of the temperate damages to the approximate cost of Sesante's
lost personal belongings and held that petitioner remained civilly liable.
The petitioner has attributed the sinking of the vessel to the storm
notwithstanding its position on the seaworthiness of M/V Princess of the
Orient. Yet, the findings of the BMI directly contradicted the petitioner's
attribution, as the BMI found that petitioner’s fault was the immediate and
proximate cause of the sinking due to the Captain's erroneous maneuvers
of the M/V Princess of the Orient minutes before she sunk.

ISSUE:
Whether or not the petitioner is liable for moral damages.

RULING:
Yes. The Court awarded moral damages due to the totality of the
negligence by the officers and crew of the Princess of the Orient coupled
with the seeming indifference of the petitioner to render assistance to
Sesante.
The petitioner argues that moral damages could be meted against a
common carrier only in the following instances, to wit: (1) in the
situations enumerated by Article 2201 of the Civil Code; (2) in cases of
the death of a passenger; or (3) where there was bad faith on the part of
the common carrier. It contends that none of these instances obtained
herein; hence, the award should be deleted.
We agree with the petitioner that moral damages may be recovered
in an action upon breach of contract of carriage only when: (a) death of a
passenger results, or (b) it is proved that the carrier was guilty of fraud
and bad faith, even if death does not result. However, moral damages
may be awarded if the contractual breach is found to be wanton and
deliberately injurious, or if the one responsible acted fraudulently or with
malice or bad faith.
The negligent acts of the officers and crew of M/V Princess of the
Orient could not be ignored in view of the extraordinary duty of the
common carrier to ensure the safety of the passengers. The totality of the
negligence by the officers and crew of M/V Princess of the Orient, coupled
with the seeming indifference of the petitioner to render assistance to
Sesante, warranted the award of moral damages.

Torres-Madrid Brokerage v. FEB Mitsu Marine Insurance &

Manalastas, G.R. No. 194121, July 11, 2016
We resolve the petition for review on certiorari challenging the Court of
Appeals' (CA) October 14, 2010 decision in CA-G.R. CV No. 91829.
1
chanrobleslaw

The CA affirmed the Regional Trial Court's (RTC) decision in Civil Case
No. 01-1596, and found petitioner Torres-Madrid Brokerage, Inc. (TMBI)
and respondent Benjamin P. Manalastas jointly and solidarily liable to
respondent FEB Mitsui Marine Insurance Co., Inc. (Mitsui) for damages
from the loss of transported cargo.

Antecedents

On October 7, 2000, a shipment of various electronic goods from Thailand

and Malaysia arrived at the Port of Manila for Sony Philippines, Inc.
(Sony). Previous to the arrival, Sony had engaged the services of TMBI to
facilitate, process, withdraw, and deliver the shipment from the port to its
warehouse in Binan, Laguna.2chanrobleslaw

TMBI - who did not own any delivery trucks - subcontracted the services
of Benjamin Manalastas' company, BMT Trucking Services (BMT), to
transport the shipment from the port to the Binan warehouse.3
Incidentally, TMBI notified Sony who had no objections to the
arrangement.4chanrobleslaw

Four BMT trucks picked up the shipment from the port at about 11:00
a.m. of October 7, 2000. However, BMT could not immediately undertake
the delivery because of the truck ban and because the following day was a
Sunday. Thus, BMT scheduled the delivery on October 9, 2000.

In the early morning of October 9, 2000, the four trucks left BMT's garage
for Laguna.5 However, only three trucks arrived at Sony's Binan
warehouse.

At around 12:00 noon, the truck driven by Rufo Reynaldo Lapesura (NSF-
391) was found abandoned along the Diversion Road in Filinvest, Alabang,
Muntinlupa City.6 Both the driver and the shipment were missing.

Later that evening, BMT's Operations Manager Melchor Manalastas

informed Victor Torres, TMBI's General Manager, of the development.7
They went to Muntinlupa together to inspect the truck and to report the
matter to the police.8chanrobleslaw

Victor Torres also filed a complaint with the National Bureau of

Investigation (NBI) against Lapesura for "hijacking." 9 The complaint
resulted in a recommendation by the NBI to the Manila City Prosecutor's
Office to prosecute Lapesura for qualified theft.10chanrobleslaw

TMBI notified Sony of the loss through a letter dated October 10, 2000,11
It also sent BMT a letter dated March 29, 2001, demanding payment for
the lost shipment. BMT refused to pay, insisting that the goods were
"hijacked."
In the meantime, Sony filed an insurance claim with the Mitsui, the
insurer of the goods. After evaluating the merits of the claim, Mitsui paid
Sony PHP7,293,386.23 corresponding to the value of the lost
goods.12chanrobleslaw

After being subrogated to Sony's rights, Mitsui sent TMBI a demand letter
dated August 30, 2001 for payment of the lost goods. TMBI refused to pay
Mitsui's claim. As a result, Mitsui filed a complaint against TMBI on
November 6, 2001,

TMBI, in turn, impleaded Benjamin Manalastas, the proprietor of BMT, as

a third-party defendant. TMBI alleged that BMT's driver, Lapesura, was
responsible for the theft/hijacking of the lost cargo and claimed BMT's
negligence as the proximate cause of the loss. TMBI prayed that in the
event it is held liable to Mitsui for the loss, it should be reimbursed by
BMT,

At the trial, it was revealed that BMT and TMBI have been doing business
with each other since the early 80's. It also came out that there had been
a previous hijacking incident involving Sony's cargo in 1997, but neither
Sony nor its insurer filed a complaint against BMT or TMBI.13chanrobleslaw

On August 5, 2008, the RTC found TMBI and Benjamin Manalastas jointly
and solidarity liable to pay Mitsui PHP 7,293,386.23 as actual damages,
attorney's fees equivalent to 25% of the amount claimed, and the costs of
the suit.14 The RTC held that TMBI and Manalastas were common carriers
and had acted negligently.

Both TMBI and BMT appealed the RTC's verdict.

TMBI denied that it was a common carrier required to exercise

extraordinary diligence. It maintains that it exercised the diligence of a
good father of a family and should be absolved of liability because the
truck was "hijacked" and this was a fortuitous event.

BMT claimed that it had exercised extraordinary diligence over the lost
shipment, and argued as well that the loss resulted from a fortuitous
event.

On October 14, 2010, the CA affirmed the RTC's decision but reduced the
award of attorney's fees to PHP 200,000.

The CA held: (1) that "hijacking" is not necessarily a fortuitous event

because the term refers to the general stealing of cargo during transit;15
(2) that TMBI is a common carrier engaged in the business of transporting
goods for the general public for a fee; 16 (3) even if the "hijacking" were a
fortuitous event, TMBI's failure to observe extraordinary diligence in
overseeing the cargo and adopting security measures rendered it liable for
the loss; 17 and (4) even if TMBI had not been negligent in the handling,
transport and the delivery of the shipment, TMBI still breached its
contractual obligation to Sony when it failed to deliver the
shipment.18chanrobleslaw
TMBI disagreed with the CA's ruling and filed the present petition on
December 3, 2010.

The Arguments

TMBI's Petition

TMBI insists that the hijacking of the truck was a fortuitous event. It
contests the CA's finding that neither force nor intimidation was used in
the taking of the cargo. Considering Lapesura was never found, the Court
should not discount the possibility that he was a victim rather than a
perpetrator.19chanrobleslaw

TMBI denies being a common carrier because it does not own a single
truck to transport its shipment and it does not offer transport services to
the public for compensation.20 It emphasizes that Sony knew TMBI did not
have its own vehicles and would subcontract the delivery to a third-party.

Further, TMBI now insists that the service it offered was limited to the
processing of paperwork attendant to the entry of Sony's goods. It denies
that delivery of the shipment was a part of its obligation.21chanrobleslaw

TMBI solely blames BMT as it had full control and custody of the cargo
when it was lost.22 BMT, as a common carrier, is presumed negligent and
should be responsible for the loss.

BhtT's Comment

BMT insists that it observed the required standard of care.23 Like the
petitioner, BMT maintains that the hijacking was a fortuitous event - a
force majeure - that exonerates it from liability.24 It points out that
Lapesura has never been seen again and his fate remains a mystery. BMT
likewise argues that the loss of the cargo necessarily showed that the
taking was with the use of force or intimidation.25cralawredchanrobleslaw

If there was any attendant negligence, BMT points the finger on TMBI who
failed to send a representative to accompany the shipment.26 BMT further
blamed TMBI for the latter's failure to adopt security measures to protect
Sony's cargo.27chanrobleslaw

Mitsui's Comment

Mitsui counters that neither TMBI nor BMT alleged or proved during the
trial that the taking of the cargo was accompanied with grave or
irresistible threat, violence, or force.28 Hence, the incident cannot be
considered "force majeure" and TMBI remains liable for breach of
contract.

Mitsui emphasizes that TMBI's theory - that force or intimidation must

have been used because Lapesura was never found - was only raised for
the first time before this Court.29 It also discredits the theory as a mere
conjecture for lack of supporting evidence.

Mitsui adopts the CA's reasons to conclude that TMBI is a common carrier.
It also points out Victor Torres' admission during the trial that TMBI's
brokerage service includes the eventual delivery of the cargo to the
consignee.30chanrobleslaw

Mitsui invokes as well the legal presumption of negligence against TMBI,

pointing out that TMBI simply entrusted the cargo to BMT without
adopting any security measures despite: (1) a previous hijacking incident,
when TMBI lost Sony's cargo; and (2) TMBI's knowledge that the cargo
was worth more than 10 million pesos.31chanrobleslaw

Mitsui affirms that TMBI breached the contract of carriage through its
negligent handling of the cargo, resulting in its loss.

The Court's Ruling

A brokerage may be considered a common

carrier if it also undertakes to deliver the
goods for its customers

Common carriers are persons, corporations, firms or associations engaged

in the business of transporting passengers or goods or both, by land,
water, or air, for compensation, offering their services to the public.32 By
the nature of their business and for reasons of public policy, they are
bound to observe extraordinary diligence in the vigilance over the goods
and in the safety of their passengers.33chanrobleslaw

In A.F. Sanchez Brokerage Inc. v. Court of Appeals,34we held that a

customs broker - whose principal business is the preparation of the
correct customs declaration and the proper shipping documents - is still
considered a common carrier if it also undertakes to deliver the goods for
its customers. The law does not distinguish between one whose principal
business activity is the carrying of goods and one who undertakes this
task only as an ancillary activity.35 This ruling has been reiterated in
Schmitz Transport & Brokerage Corp. v. Transport Venture, Inc.,36
Loadmasters Customs Services, Inc. v. Glodel Brokerage Corporation,37
and Wesrwind Shipping Corporation v. UCPB General Insurance Co.,
Inc.38chanrobleslaw

Despite TMBI's present denials, we find that the delivery of the goods is
an integral, albeit ancillary, part of its brokerage services. TMBI admitted
that it was contracted to facilitate, process, and clear the shipments from
the customs authorities, withdraw them from the pier, then transport and
deliver them to Sony's warehouse in Laguna.39chanrobleslaw

Further, TMBI's General Manager Victor Torres described the nature of its
services as follows:

chanRoblesvirtualLawlibrary
ATTY. VIRTUDAZO: Could you please tell the court what is the nature of
the business of [TMBI]?

Witness MR. Victor Torres of Torres Madrid: We are engaged in

customs brokerage business. We acquire the release documents from the
Bureau of Customs and eventually deliver the cargoes to the
consignee's warehouse and we are engaged in that kind of business,
sir. 40

That TMBI does not own trucks and has to subcontract the delivery of its
clients' goods, is immaterial. As long as an entity holds itself to the public
for the transport of goods as a business, it is considered a common carrier
regardless of whether it owns the vehicle used or has to actually hire
one.41chanrobleslaw

Lastly, TMBI's customs brokerage services - including the

transport/delivery of the cargo - are available to anyone willing to pay its
fees. Given these circumstances, we find it undeniable that TMBI is a
common carrier.

Consequently, TMBI should be held responsible for the loss, destruction,

or deterioration of the goods it transports unless it results from:

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

(2) Act of the public enemy in war, whether international or civil;

(3) Act of omission of the shipper or owner of the goods;

(4) The character of the goods or defects in the packing or in the

containers;

(5) Order or act of competent public

authority.42chanroblesvirtuallawlibrary

For all other cases - such as theft or robbery - a common carrier is

presumed to have been at fault or to have acted negligently, unless it can
prove that it observed extraordinary diligence.43chanrobleslaw

Simply put, the theft or the robbery of the goods is not considered a
fortuitous event or a force majeure. Nevertheless, a common carrier may
absolve itself of liability for a resulting loss: (1) if it proves that it
exercised extraordinary diligence in transporting and safekeeping the
goods;44 or (2) if it stipulated with the shipper/owner of the goods to limit
its liability for the loss, destruction, or deterioration of the goods to a
degree less than extraordinary diligence.45chanrobleslaw

However, a stipulation diminishing or dispensing with the common

carrier's liability for acts committed by thieves or robbers who do not act
with grave or irresistible threat, violence, or force is void under Article
1745 of the Civil Code for being contrary to public policy.
46
Jurisprudence, too, has expanded Article 1734's five exemptions. De
Guzman v. Court of Appeals47 interpreted Article 1745 to mean that a
robbery attended by "grave or irresistible threat, violence or force" is a
fortuitous event that absolves the common carrier from liability.

In the present case, the shipper, Sony, engaged the services of TMBI, a
common carrier, to facilitate the release of its shipment and deliver the
goods to its warehouse. In turn, TMBI subcontracted a portion of its
obligation - the delivery of the cargo - to another common carrier, BMT.

Despite the subcontract, TMBI remained responsible for the cargo. Under
Article 1736, a common carrier's extraordinary responsibility over the
shipper's goods lasts from the time these goods are unconditionally placed
in the possession of, and received by, the carrier for transportation, until
they are delivered, actually or constructively, by the carrier to the
consignee. 48chanrobleslaw

That the cargo disappeared during transit while under the custody of BMT
- TMBI's subcontractor - did not diminish nor terminate TMBFs
responsibility over the cargo. Article 1735 of the Civil Code presumes that
it was at fault.

Instead of showing that it had acted with extraordinary diligence, TMBI

simply argued that it was not a common carrier bound to observe
extraordinary diligence. Its failure to successfully establish this premise
carries with it the presumption of fault or negligence, thus rendering it
liable to Sony/Mitsui for breach of contract.

Specifically, TMBI's current theory - that the hijacking was attended by

force or intimidation - is untenable.

First, TMBI alleged in its Third Party Complaint against BMT that Lapesura
was responsible for hijacking the shipment.49 Further, Victor Torres filed a
criminal complaint against Lapesura with the NBI.50 These actions
constitute direct and binding admissions that Lapesura stole the cargo.
Justice and fair play dictate that TMBI should not be allowed to change its
legal theory on appeal.

Second, neither TMBI nor BMT succeeded in substantiating this theory

through evidence. Thus, the theory remained an unsupported allegation
no better than speculations and conjectures. The CA therefore correctly
disregarded the defense of force majeure.

TMBI and BMT are not solidarity liable

to Mitsui�

We disagree with the lower courts" ruling that TMBI and BMT are
solidarity liable to Mitsui for the loss as joint tortfeasors. The ruling was
based on Article 2194 of the Civil Code:

chanRoblesvirtualLawlibrary
Art. 2194. The responsibility of two or more persons who are liable for
quasi-delict is solidary.

Notably, TMBI's liability to Mitsui does not stem from a quasi-delict (culpa
aquiliana) but from its breach of contract (culpa contractual). The tie that
binds TMBI with Mitsui is contractual, albeit one that passed on to Mitsui
as a result of TMBI's contract of carriage with Sony to which Mitsui had
been subrogated as an insurer who had paid Sony's insurance claim. The
legal reality that results from this contractual tie precludes the application
of quasi-delict based Article 2194.

A third party may recover from a

common carrier for quasi-delict
but must prove actual n egligence

We likewise disagree with the finding that BMT is directly liable to

Sony/Mitsui for the loss of the cargo. While it is undisputed that the cargo
was lost under the actual custody of BMT (whose employee is the primary
suspect in the hijacking or robbery of the shipment), no direct contractual
relationship existed between Sony/Mitsui and BMT. If at all, Sony/Mitsui's
cause of action against BMT could only arise from quasi-delict, as a third
party suffering damage from the action of another due to the latter's fault
or negligence, pursuant to Article 2176 of the Civil Code.51chanrobleslaw

We have repeatedly distinguished between an action for breach of

contract {culpa contractual) and an action for quasi-delict (culpa
aquiliana).

In culpa contractual, the plaintiff only needs to establish the existence of

the contract and the obligor's failure to perform his obligation. It is not
necessary for the plaintiff to prove or even allege that the obligor's non-
compliance was due to fault or negligence because Article 1735 already
presumes that the common carrier is negligent. The common carrier can
only free itself from liability by proving that it observed extraordinary
diligence. It cannot discharge this liability by shifting the blame on its
agents or servants.52chanrobleslaw

On the other hand, the plaintiff in culpa aquiliana must clearly establish
the defendant's fault or negligence because this is the very basis of the
action.53 Moreover, if the injury to the plaintiff resulted from the act or
omission of the defendant's employee or servant, the defendant may
absolve himself by proving that he observed the diligence of a good father
of a family to prevent the damage,54chanrobleslaw

In the present case, Mitsui's action is solely premised on TMBl's breach of

contract. Mitsui did not even sue BMT, much less prove any negligence on
its part. If BMT has entered the picture at all, it 'is because TMBI sued it
for reimbursement for the liability that TMBI might incur from its contract
of carriage with Sony/Mitsui. Accordingly, there is no basis to directly hold
BMT liable to Mitsui for quasi-delict.

BMT is liable to TMBI for breach

of their contract of carriage
We do not hereby say that TMBI must absorb the loss. By subcontracting
the cargo delivery to BMT, TMBI entered into its own contract of carriage
with a fellow common carrier.

The cargo was lost after its transfer to BMT's custody based on its
contract of carriage with TMBI. Following Article 1735, BMT is presumed
to be at fault. Since BMT failed to prove that it observed extraordinary
diligence in the performance of its obligation to TMBI, it is liable to TMBI
for breach of their contract of carriage.

In these lights, TMBI is liable to Sony (subrogated by Mitsui) for breaching

the contract of carriage. In turn, TMBI is entitled to reimbursement from
BMT due to the latter's own breach of its contract of carriage with TMBI.
The proverbial buck stops with BMT who may either: (a) absorb the loss,
or (b) proceed after its missing driver, the suspected culprit, pursuant to
Article 2181,55chanrobleslaw

WHEREFORE, the Court hereby ORDERS petitioner Torres- Madrid

Brokerage, Inc. to pay the respondent FEB Mitsui Marine Insurance Co.,
Inc. the following:

chanRoblesvirtualLawlibrary
4 Actual damages in the amount of PHP 7,293,386.23 plus legal interest
from the time the complaint was filed until it is fully paid;
5
6 Attorney's fees in the amount of PHP 200,000.00; and cralawlawlibrary
7
8 Costs of suit.

Respondent Benjamin P. Manalastas is in turn ORDERED to REIMBURSE

Torres-Madrid Brokerage, Inc. of the above-mentioned amounts.

LTFRB vs. G.V. Florida Transport, G.R. No. 213088, June 28, 2017
Before the Court is a petition for review on certiorari seeking the reversal
and setting aside of the Decision 1 of the Court of Appeals (CA), dated
June 26, 2014 in CA-G.R. SP No. 134772.
The pertinent factual and procedural antecedents of the case are as
follows:
Around 7:20 in the morning of February 7, 2014, a vehicular accident
occurred at Sitio Paggang, Barangay Talubin, Bontoc, Mountain Province
involving a public utility bus coming from Sampaloc, Manila, bound for
Poblacion Bontoc and bearing a "G.V. Florida" body mark with License
Plate No. TXT-872. The mishap claimed the lives of fifteen (15)
passengers and injured thirty-two (32) others.
An initial investigation report, which came from the Department of
Transportation and Communications of the Cordillera Administrative
Region (DOTC-CAR), showed that based on the records of the Land
Transportation Office (LTO) and herein petitioner, License Plate No. TXT-
872 actually belongs to a different bus owned by and registered under the
name of a certain Norberto Cue, Sr. (Cue) under Certificate of Public
Convenience (CPC) Case No. 2007-0407 and bears engine and chassis
numbers LX004564 and KN2EAM12PK004452, respectively; and that the
bus involved in the accident is not duly authorized to operate as a public
transportation.
Thus, on the same day of the accident, herein petitioner, pursuant to its
regulatory powers, immediately issued an Order2 preventively suspending,
for a period not exceeding thirty (30) days, the operations of ten (10)
buses of Cue under its CPC Case No. 2007-0407, as well as respondent's
entire fleet of buses, consisting of two hundred and twenty-eight (228)
units, under its twenty-eight (28) CPCs. In the same Order, respondent
and Cue were likewise directed to comply with the following:
1. Inspection and determination of road worthiness of the authorized PUB
unit of respondents-operators bringing the said buses to the Motor Vehicle
Inspection Service (MVIS) of the Land Transportation Office, together with
the authorized representatives of the Board;
2. Undergo Road Safety Seminar of respondents-operators' drivers and
conductors to be conducted or scheduled by the Board and/or its
authorized seminar provider;
3. Compulsory Drug Testing of the respondents-operators' drivers and
conductors to be conducted by authorized/accredited agency of the
Department of Health and the Land Transportation Office;
4. Submit the Certificates of Registration and latest LTO Official Receipts
of the units, including the names of the respective drivers and conductors;
and
5. Submit the video clippings of roadworthiness inspection, Road Safety
Seminar and Drug Testing. 3
Furthermore, respondent and Cue were ordered to show cause why their
respective CPCs should not be suspended, canceled or revoked due to the
said accident.
Thereafter, in its Incident Report dated February 12, 2014, the DOTC-CAR
stated, among others: that the License Plate Number attached to the ill-
fated bus was indeed TXT-872, which belongs to a different unit owned by
Cue; that the wrecked bus had actual engine and chassis numbers DE12T-
601104BD and KTP1011611C,4 respectively; that, per registration
records, the subject bus was registered as "private" on April 4, 2013 with
issued License Plate No. UDO 762; and that the registered owner is
Dagupan Bus Co., Inc. (Dagupan Bus) while the previous owner is herein
respondent bus company.
As a result, Dagupan Bus was also ordered to submit an Answer on the
DOTC-CAR Incident Report, particularly, to explain why the bus involved
in the above accident, which is registered in its name, was sporting the
name "G.V. Florida" at the time of the accident.
Subsequently, Dagupan Bus filed its Answer claiming that: it is not the
owner of the bus which was involved in the accident; the owner is G.V.
Florida; Dagupan Bus entered into a Memorandum of Agreement with
G.V. Florida, which, among others, facilitated the exchange of its CPC
covering the Cagayan route for the CPC of Florida covering the Bataan
route; and the subsequent registration of the subject bus in the name of
Dagupan Bus is a mere preparatory act on the part of G.V. Florida to
substitute the old authorized units of Dagupan Bus plying the Cagayan
route which are being operated under the abovementioned CPC which has
been exchanged with G. V. Florida.
On the other hand, Cue filed his Position Paper contending that: License
Plate No. TXT-872 was issued by the LTO to one among ten public utility
buses under CPC No. 2007-040i issued to him as operator of the Mountain
Province Cable Tours; the application for the extension of the validity of
the said CPC is pending with petitioner; the subject CPC, together with all
authorized units, had been sold to G.V. Florida in September 2013; and
thereafter, Cue completely ceded the operation and maintenance of the
subject buses in favor of G.R. Florida.
In its Position Paper, herein respondent alleged that: it, indeed, bought
Cue's CPC and the ten public utility buses operating under the said CPC,
including the one which bears License Plate No. TXT-872; since Cue's
buses were already old and dilapidated, and not wanting to stop its
operations to the detriment of the riding public, it replaced these buses
with new units using the License Plates attached to the old buses, pending
approval by petitioner of the sale and transfer of Cue's CPC in its favor;
and it exercised utmost good faith in deciding to dispatch the ill-fated bus
notwithstanding the absence of prior adequate compliance with the
requirements that will constitute its operation legal.
On March 14, 2014, herein petitioner rendered its Decision canceling
Cue's CPC No. 2007-0407 and suspending the operation of respondent's
186 buses under 28 of its CPCs for a period of six (6) months. Pertinent
portions of the dispositive portion of the said Decision read as follows:
WHEREFORE, premises considered and by virtue of Commonwealth Act
146 (otherwise known as "The Public Service Law"), as amended, and
Executive Order No. 202, the Board hereby ORDERS that:
a. The Certificate of Public Convenience of respondentoperator NORBERTO
M. CUE, SR. under Case No. 2007- 0407, now under the beneficial
ownership of respondentoperator G.V. FLORIDA TRANSPORT, INC., be
CANCELLED and REVERTED to the State. Therefore, upon receipt of this
Decision, respondent-operator G.V. FLORIDA TRANSPORT, INC. is hereby
directed to CEASE and DESIST from operating the Certificate of Public
Convenience under Case No. 2007-0407 involving ten (10) authorized
units, to wit:
xxxx
b. Upon finality of this Decision, the above-mentioned for hire plates of
respondent-operator NORBERTO M. CUE, SR. are hereby ordered
DESTRUCTED (sic) and DESTROYED prior to their turn over to the Land
Transportation Office (LTO).
xxxx
c. All existing Certificates of Public Convenience of respondent-operator
G.V. FLORIDA TRANSPORT, INC. under case numbers listed under case
numbers listed below are hereby SUSPENDED for a period of SIX (6)
MONTHS commencing from March 11, 2014, which is the lapse of the 30-
day preventive suspension order issued by this Board, to wit:
xxxx
[d.] During the period of suspension of its CPCs and as a condition for the
lifting thereof, respondent-operator G.V. FLORIDA TRANSPORT, INC. must
comply with the following:
1. All its authorized drivers must secure the National Competency III
issued by the Technical Education and Skills Development Authority
(TESDA)
2. All its conductors must secure Conductor's License from the Land
Transportation Office (LTO);
3. Submit all its authorized units that have not undergone inspection and
determination of roadworthiness to the Motor Vehicle Inspection Service
of the LTO, together with the authorized representatives of the Board; and
4. Compulsory Drug Testing of all its authorized drivers and conductors to
be conducted by the authorized accredited agency of the Department of
Health and the Land Transportation Office at least thirty (30) days before
the expiration of its suspension.
[e.] The Show Cause Order issued against respondent-operator
DAGUPAN BUS CO., INC. is hereby SET ASIDE.
The Information Systems Management Division (ISMD) is also directed to
make proper recording of this Decision for future reference against subject
vehicles and respondents-operators. During the period of suspension of its
CPCs, respondent-operator G.V. FLORIDA TRANSPORT, INC. is allowed to
confirm its authorized units subject to submission of all requirements for
confirmation.
The Law Enforcement Unit of this Board, the Land Transportation
Office (LTO), the Metro Manila Development Authority (MMDA), the
Philippine National Police-Highway Patrol Group (PNP-HPG), and
other authorized traffic enforcement agencies are hereby ordered to
APPREHEND and IMPOUND the said vehicles, if found operating.
SO ORDERED.6
Respondent then filed with the CA a petition for certiorari under Rule 65 of
the Rules of Court, with prayer for the issuance of a preliminary
mandatory injunction, assailing petitioner's above Decision.
On June 26, 2014, the CA promulgated its questioned Decision, disposing
as follows:
WHEREFORE, the instant petition is PARTIALLY GRANTED. The Decision
dated March 14, 2014 of the Land Transportation Franchising and
Regulatory Board is MODIFIED as follows:
1. The Order canceling and reverting to the State of the Certificate of
Public Convenience of operator Cue under Case No. 2007-0407, under the
beneficial ownership of petitioner G.V. Florida Transport, Inc. is
AFFIRMED;
2. The penalty of suspension for a period of six (6) months against all
existing 28 Certificates of Public Convenience of petitioner G.V. Florida,
Transport, Inc., is REVERSED and SET ASIDE;
3. The condition set forth in the Decision for the lifting of the penalty of
suspension is DELETED; and
4. The order to apprehend and impound petitioner G.V. Florida Transport,
Inc.'s 186 authorized bus units under the 28 CPCs if found operating is
RECALLED
Accordingly, petitioner G.V. Florida Transport, Inc. prayer for mandatory
injunctive relief is hereby GRANTED. The Land Transportation and
Franchising Regulatory Board is hereby ordered to immediately LIFT the
order of suspension and RETURN or CAUSE the RETURN of the confiscated
license plates of petitioner G.V. Florida Transport, Inc.'s 186 authorized
bus units under its 28 Certificates of Public Convenience without need of
further order from this Court. Said Office is further DIRECTED to submit
its Compliance within five (5) days from receipt thereof.
SO ORDERED.7
Hence, the present petition grounded on a lone issue, to wit:
DOES THE LTFRB HAVE THE POWER TO SUSPEND THE FLEET OF A PUBLIC
UTILITY THAT VIOLATES THE LAW, TO THE DAMAGE OF THE PUBLIC?8
The main issue brought before this Court is whether or not petitioner is
justified in suspending respondent's 28 CPCs for a period of six (6)
months. In other words, is the suspension within the powers of the LTFRB
to impose and is it reasonable?
Petitioner contends that it is vested by law with jurisdiction to regulate the
operation of public utilities; that under Section 5(b) of Executive Order
No. 202 (E. 0. 202),9 it is authorized "[t]o issue, amend, revise, suspend
or cancel Certificates of Public Convenience or permits authorizing the
operation of public land transportation services provided by motorized
vehicles, and to prescribe the appropriate terms and conditions therefor;"
and that petitioner's authority to impose the penalty of suspension of
CPCs of bus companies found to have committed violations of the law is
broad and is consistent with its mandate and regulatory capability.
On the other hand, respondent, in its Comment to the present Petition,
contends that the suspension of its 28 CPCs is tantamount to an outright
confiscation of private property without due process of law; and that
petitioner cannot simply ignore respondent's property rights on the
pretext of promoting public safety. Respondent insists that the penalty
imposed by petitioner is not commensurate to the infraction it had
committed.
The Court rules in favor of petitioner.
Section 16(n) of Commonwealth Act. No. 146, otherwise known as the
Public Service Act, provides:
Section 16. Proceedings of the Commission, upon notice and hearing. -
The Commission shall have power, upon proper notice and hearing in
accordance with the rules and provisions of this Act, subject to the
limitations and exceptions mentioned and saving provisions to the
contrary:
xxxx
(n) To suspend or revoke any certificate issued under the provisions of
this Act whenever the holder thereof has violated or willfully and
contumaciously refused to comply with any order rule or regulation of the
Commission or any provision of this Act: Provided, That the Commission,
for good cause, may prior to the hearing suspend for a period not to
exceed thirty days any certificate or the exercise of any right or authority
issued or granted under this Act by order of the Commission, whenever
such step shall in the judgment of the Commission be necessary to avoid
serious and irreparable damage or inconvenience to the public or to
private interests.
xxxx
Also, Section 5(b) of E.O. 202 states:
Sec. 5. Powers and Functions of the Land Transportation Franchising and
Regulatory Board. The Board shall have the following powers and
functions:
Also, Section 5(b) of E.O. 202 states:
Sec. 5. Powers and Functions of the Land Transportation Franchising and
Regulatory Board. The Board shall have the following powers and
functions:
xxxx
b. To issue, amend, revise, suspend or cancel Certificates of Public
Convenience or permits authorizing the operation of public land
transportation services provided by motorized vehicles, and to prescribe
the appropriate terms and conditions therefor;
xxxx
In the present case, respondent is guilty of several violations of the law,
to wit: lack of petitioner's approval of the sale and transfer of the CPC
which respondent bought from Cue; operating the ill-fated bus under its
name when the same is registered under the name of Dagupan Bus Co.,
Inc.; attaching a vehicle license plate to the ill-fated bus when such plate
belongs to a different bus owned by Cue; and operating the subject bus
under the authority of a different CPC. What makes matters worse is that
respondent knowingly and blatantly committed these violations. How then
can respondent claim good faith under these circumstances?
Respondent, nonetheless, insists that it is unreasonable for petitioner to
suspend the operation of 186 buses covered by its 28 CPCs, considering
that only one bus unit, covered by a single CPC, was involved in the
subject accident.
The Court is not persuaded. It bears to note that the suspension of
respondent's 28 CPCs is not only because of the findings of petitioner that
the ill-fated bus was not roadworthy. 10 Rather, and more importantly, the
suspension of the 28 CPCs was also brought about by respondent's
wanton disregard and obstinate defiance of the regulations issued by
petitioner, which is tantamount to a willful and contumacious refusal to
comply with the requirements of law or of the orders, rules or regulations
issued by petitioner and which is punishable, under the law, by
suspension or revocation of any of its CPCs.
The Court agrees with petitioner that its power to suspend the CPCs
issued to public utility vehicles depends on its assessment of the gravity
of the violation, the potential and actual harm to the public, and the policy
impact of its own actions. In this regard, the Court gives due deference to
petitioner's exercise of its sound administrative discretion in applying its
special knowledge, experience and expertise to resolve respondent's case.
Indeed, the law gives to the LTFRB (previously known, among others, as
Public Service Commission or Board of Transportation) ample power and
discretion to decree or refuse the cancellation of a certificate of public
convenience issued to an operator as long as there is evidence to support
its action. 11 As held by this Court in a long line of cases, 12 it was even
intimated that, in matters of this nature so long as the action is justified,
this Court will not substitute its discretion for that of the regulatory
agency which, in this case, is the LTFRB.
Moreover, the Court finds the ruling in Rizal Light & Ice Co., Inc. v. The
Municipality of Morang, Rizal and The Public Service Commission, 13
instructive, to wit:
xxxx
It should be observed that Section 16(n) of Commonwealth Act No. 146,
as amended, confers upon the Commission ample power and discretion to
order the cancellation and revocation of any certificate of public
convenience issued to an operator who has violated, or has willfully and
contumaciously refused to comply with, any order, rule or regulation of
the Commission or any provision of law. What matters is that there is
evidence to support the action of the Commission. In the instant case, as
shown by the evidence, the contumacious refusal of the petitioner since
1954 to comply with the directives, rules and regulations of the
Commission, its violation of the conditions of its certificate and its
incapability to comply with its commitment as shown by its inadequate
service, were the circumstances that warranted the action of the
Commission in not merely imposing a fine but in revoking altogether
petitioner's certificate. To allow petitioner to continue its operation would
be to sacrifice public interest and convenience in favor of private interest.
A grant of a certificate of public convenience confers no property rights
but is a mere license or privilege, and such privilege is forfeited when the
grantee fails to comply with his commitments behind which lies the
paramount interest of the public, for public necessity cannot be made to
wait, nor sacrificed for private convenience. (Collector of Internal Revenue
v. Estate of F. P. Buan, et al., L-11438 and Santiago Sambrano, et al. v.
PSC, et al., L-11439 & L- 11542-46, July 31, 1958)
(T)he Public Service Commission, . . . has the power to specify and define
the terms and conditions upon which the public utility shall be operated,
and to make reasonable rules and regulations for its operation and the
compensation which the utility shall receive for its services to the public,
and for any failure to comply with such rules and regulations or the
violation of any of the terms and conditions for which the license was
granted, the Commission has ample power to enforce the provisions of
the license or even to revoke it, for any failure or neglect to comply with
any of its terms and provisions. x xx x x x14
Respondent likewise contends that, in suspending its 28 CPCs, the LTFRB
acted in reckless disregard of the property rights of respondent as a
franchise holder, considering that it has put in substantial investments
amounting to hundreds of millions in running its operations. In this
regard, the Court's ruling in the case of Luque v. Villegas 15 is apropos:
xxxx
Contending that they possess valid and subsisting certificates of public
convenience, the petitioning public services aver that they acquired a
vested right to operate their public utility vehicles to and from Manila as
appearing in their said respective certificates of public convenience.
Petitioner's argument pales on the face of the fact that the very nature of
a certificate of public convenience is at cross purposes with the concept of
vested rights. To this day, the accepted view, at least insofar as the State
is concerned, is that "a certificate of public convenience constitutes
neither a franchise nor a contract, confers no property right, and is a
mere license or privilege." The holder of such certificate does not acquire
a property right in the route covered thereby. Nor does it confer upon the
holder any proprietary right or interest of franchise in the public highways.
Revocation of this certificate deprives him of no vested right. Little
reflection is necessary to show that the certificate of public convenience is
granted with so many strings attached. New and additional burdens,
alteration of the certificate, and even revocation or annulment thereof is
reserved to the State.
We need but add that the Public Service Commission, a government
agency vested by law with "jurisdiction, supervision, and control over all
public services and their franchises, equipment, and other properties" is
empowered, upon proper notice and hearing, amongst others: (1) "[t]o
amend, modify or revoke at any time a certificate issued under the
provisions of this Act [Commonwealth Act 146, as amended], whenever
the facts and circumstances on the strength of which said certificate was
issued have been misrepresented or materially changed"; and (2) "[t]o
suspend or revoke any certificate issued under the provisions of this Act
whenever the holder thereof has violated or wilfully and contumaciously
refused to comply with any order, rule or regulation of the Commission or
any provision of this Act: Provided, That the Commission, for good cause,
may prior to the hearing suspend for a period not to exceed thirty days
any certificate or the exercise of any right or authority issued or granted
under this Act by order of the Commission, whenever such step shall in
the judgment of the Commission be necessary to avoid serious and
irreparable damage or inconvenience to the public or to private interests."
Jurisprudence echoes the rule that the Commission is authorized to make
reasonable rules and regulations for the operation of public services and
to enforce them. In reality, all certificates of public convenience issued are
subject to the condition that all public services "shall observe and comply
[with] ... all the rules and regulations of the Commission relative to" the
service. To further emphasize the control imposed on public services,
before any public service can "adopt, maintain, or apply practices or
measures, rules, or regulations to which the public shall be subject in its
relation with the public service," the Commission's approval must first be
had.
And more. Public services must also reckon with provincial resolutions and
municipal ordinances relating to the operation of public utilities within the
province or municipality concerned. The Commission can require
compliance with these provincial resolutions or municipal ordinances.
Illustrative of the lack of "absolute, complete, and unconditional" right on
the part of public services to operate because of the delimitations and
restrictions which circumscribe the privilege afforded a certificate of public
convenience is the following from the early (March 31, 1915) decision of
this Court in Fisher vs. Yangco Steamship Company, 31 Phil. 1, 18-19:
Common carriers exercise a sort of public office, and have duties to
perform in which the public is interested. Their business is, therefore,
affected with a public interest, and is subject of public regulation. (New
Jersey Steam Nav. Co. vs. Merchants Banks, 6 How. 344, 382; Munn vs.
Illinois, 94 U.S. 113, 130.) Indeed, this right of regulation is so far beyond
question that it is well settled that the power of the state to exercise
legislative control over railroad companies and other carriers 'in all
respects necessary to protect the public against danger, injustice and
oppression' may be exercised through boards of commissioners. (New
York, etc. R. Co. vs. Bristol, 151 U.S. 556, 571; Connecticut, etc. R. Co.
vs. Woodruff, 153 U.S. 689.).
xxxx
.... The right to enter the public employment as a common carrier and to
offer one's services to the public for hire does not carry with it the right to
conduct that business as one pleases, without regard to the interests of
the public and free from such reasonable and just regulations as may be
prescribed for the protection of the public from the reckless or careless
indifference of the carrier as to the public welfare and for the prevention
of unjust and unreasonable discrimination of any kind whatsoever in the
performance of the carrier's duties as a servant of the public.
Business of certain kinds, including the business of a common carrier,
holds such a peculiar relation to the public interest that there is
superinduced upon it the right of public regulation. (Budd vs. New York,
143 U.S. 517, 533.) When private property is "affected with a public
interest it ceases to be Juris privati only." Property becomes clothed with
a public interest when used in a manner to make it of public consequence
and affect the community at large. "When, therefore, one devotes his
property to a use in which the public has an interest, he, in effect, grants
to the public an interest in that use, and must submit to be controlled by
the public for the common good, to the extent of the interest he has thus
created. He may withdraw his grant by discontinuing the use, but so long
as he maintains the use he must submit to control." (Munn vs. Illinois, 94
U.S. 113; Georgia R. & Bkg. Co. vs. Smith, 128 U.S. 174; Budd vs. New
York, 143 U.S. 517; Louisville, etc. Ry. Co. vs. Kentucky, 161 U.S. 677,
695.).
The foregoing, without more, rejects the vested rights theory espoused by
petitioning bus operators.
x x x16
Neither is the Court convinced by respondent's contention that the
authority given to petitioner, under the abovequoted Section 16(n) of the
Public Service Act does not mean that petitioner is given the power to
suspend the entire operations of a transport company. Respondent must
be reminded that, as quoted above, the law clearly states that petitioner
has the power "[t]o suspend or revoke any certificate issued under the
provisions of [the Public Service Act] whenever the holder thereof has
violated or willfully and contumaciously refused to comply with
any order rule or regulation of the Commission or any provision of
this Act x x x" This Court has held that when the context so indicates, the
word "any" may be construed to mean, and indeed it has been frequently
used in its enlarged and Plural sense as meaning "all " "all or every" "each
" "each one of all " ' ' ' ' ' "every" without limitation; indefinite number or
quantity, an indeterminate unit or number of units out of many or all, one
or more as the case may be, several, some. 17 Thus, in the same vein, the
Merriam-Webster Dictionary defines the word "any" as "one, some, or all
indiscriminately of whatever quantity"; "used to indicate a maximum or
whole"; "unmeasured or unlimited in amount, number, or extent." 18
Hence, under the above definitions, petitioner undoubtedly wields
authority, under the law, to suspend not only one but all of respondent's
CPCs if warranted, which is proven to be the case here.
As to whether or not the penalty imposed by petitioner is reasonable,
respondent appears to trivialize the effects of its deliberate and shameless
violations of the law. Contrary to its contention, this is not simply a case
of one erring bus unit. Instead, the series or combination of violations it
has committed with respect to the ill-fated bus is indicative of its design
and intent to blatantly and maliciously defy the law and disregard, with
impunity, the regulations imposed by petitioner upon all holders of CPCs.
Thus, the Court finds nothing irregular in petitioner's imposition of the
penalty of sixmonths suspension of the operations of respondent's 28
CPCs. In other words, petitioner did not commit grave abuse of discretion
in imposing the questioned penalty.
Lastly, the suspension of respondent's CPCs finds relevance in light of the
series of accidents met by different bus units owned by different operators
in recent events. This serves as a reminder to all operators of public utility
vehicles that their franchises and CPCs are mere privileges granted by the
government. As such, they are sternly warned that they should always
keep in mind that, as common carriers, they bear the responsibility of
exercising extraordinary diligence in the transportation of their
passengers. Moreover, they should conscientiously comply with the
requirements of the law in the conduct of their operations, failing which
they shall suffer the consequences of their own actions or inaction.
WHEREFORE, the instant petition is GRANTED. The Decision of the
Court of Appeals, dated June 26, 2014 in CA-GR. SP No. 134772, is
REVERSED and SET ASIDE. The March 14, 2014 Decision of the Land
Transportation Franchising and Regulatory Board is REINSTATED.
SO ORDERED