THIRD DIVISION

[G.R. No. 152122. July 30, 2003]

CHINA AIRLINES, petitioner, vs. DANIEL CHIOK, respondent.
D E C I S I O N
PANGANIBAN, J .:
A common carrier has a peculiar relationship with and an exacting responsibility to its passengers. For reasons of
public interest and policy, the ticket-issuing airline acts as principal in a contract of carriage and is thus liable for the acts
and the omissions of any errant carrier to which it may have endorsed any sector of the entire, continuous trip.
The Case
Before the Court is a Petition for Review on Certiorari
[1]
under Rule 45 of the Rules of Court, seeking to reverse the
August 7, 2001 Decision
[2]
and the February 7, 2002 Resolution
[3]
of the Court of Appeals (CA) in CA-GR CV No.
45832. The challenged Decision disposed as follows:
WHEREFORE, premises considered, the assailed Decision dated July 5, 1991 of Branch 31, Regional Trial Court, National Capital
Judicial Region, Manila, in Civil Case No. 82-13690, is hereby MODIFIED by deleting that portion regarding defendants-appellants
liabilities for the payment of the actual damages amounting to HK$14,128.80 and US$2,000.00 while all other respects are
AFFIRMED. Costs against defendants-appellants.
[4]

The assailed Resolution denied Petitioners Motion for Partial Reconsideration.
The Facts
The facts are narrated by the CA
[5]
as follows:
On September 18, 1981, Daniel Chiok (hereafter referred to as Chiok) purchased from China Airlines, Ltd. (CAL for brevity) airline
passenger ticket number 297:4402:004:278:5 for air transportation covering Manila-Taipei-Hongkong-Manila. Said ticket was
exclusively endorseable to Philippine Airlines, Ltd. (PAL for brevity).
Subsequently, on November 21, 1981, Chiok took his trip from Manila to Taipei using [the] CAL ticket. Before he left for said trip,
the trips covered by the ticket were pre-scheduled and confirmed by the former. When he arrived in Taipei, he went to the CAL
office and confirmed his Hongkong to Manila trip on board PAL Flight No. PR 311. The CAL office attached a yellow sticker
appropriately indicating that his flight status was OK.
When Chiok reached Hongkong, he went to the PAL office and sought to reconfirm his flight back to Manila. The PAL office
confirmed his return trip on board Flight No. PR 311 and attached its own sticker. On November 24, 1981, Chiok proceeded to
Hongkong International Airport for his return trip to Manila. However, upon reaching the PAL counter, Chiok saw a poster stating
that PAL Flight No. PR 311 was cancelled because of a typhoon in Manila. He was then informed that all the confirmed ticket
holders of PAL Flight No. PR 311 were automatically booked for its next flight, which was to leave the next day. He then informed
PAL personnel that, being the founding director of the Philippine Polysterene Paper Corporation, he ha[d] to reach Manila on
November 25, 1981 because of a business option which he ha[d] to execute on said date.
On November 25, 1981, Chiok went to the airport. Cathay Pacific stewardess Lok Chan (hereafter referred to as Lok) ha[d] taken
and received Chioks plane ticket and his luggage. Lok called the attention of Carmen Chan (hereafter referred to as Carmen), PALs
terminal supervisor, and informed the latter that Chioks name was not in the computer list of passengers. Subsequently, Carmen
informed Chiok that his name did not appear in PALs computer list of passengers and therefore could not be permitted to board PAL
Flight No. PR 307.
Meanwhile, Chiok requested Carmen to put into writing the alleged reason why he was not allowed to take his flight. The latter
then wrote the following, to wit: PAL STAFF CARMEN CHAN CHKD WITH R/C KENNY AT 1005H NO SUCH NAME IN
COMPUTER FOR 311/24 NOV AND 307/25 NOV. The latter sought to recover his luggage but found only 2 which were placed at
the end of the passengers line. Realizing that his new Samsonite luggage was missing, which contained cosmetics worth
HK$14,128.80, he complained to Carmen.
Thereafter, Chiok proceeded to PALs Hongkong office and confronted PALs reservation officer, Carie Chao (hereafter referred to
as Chao), who previously confirmed his flight back to Manila. Chao told Chiok that his name was on the list and pointed to the latter
his computer number listed on the PAL confirmation sticker attached to his plane ticket, which number was R/MN62.
Chiok then decided to use another CAL ticket with No. 297:4402:004:370:5 and asked Chao if this ticket could be used to book him
for the said flight. The latter, once again, booked and confirmed the formers trip, this time on board PAL Flight No. PR 311
scheduled to depart that evening. Later, Chiok went to the PAL check-in counter and it was Carmen who attended to him. As this
juncture, Chiok had already placed his travel documents, including his clutch bag, on top of the PAL check-in counter.
Thereafter, Carmen directed PAL personnel to transfer counters. In the ensuing commotion, Chiok lost his clutch bag containing
the following, to wit: (a) $2,000.00; (b) HK$2,000.00; (c) Taipei $8,000.00; (d)P2,000.00; (e) a three-piece set of gold (18 carats)
cross pens valued at P3,500; (f) a Cartier watch worth about P7,500.00; (g) a tie clip with a garnet birthstone and diamond
worth P1,800.00; and (h) a [pair of] Christian Dior reading glasses. Subsequently, he was placed on stand-by and at around 7:30
p.m., PAL personnel informed him that he could now check-in.
Consequently, Chiok as plaintiff, filed a Complaint on November 9, 1982 for damages, against PAL and CAL, as defendants,
docketed as Civil Case No. 82-13690, with Branch 31, Regional Trial Court, National Capital Judicial Region, Manila.
He alleged therein that despite several confirmations of his flight, defendant PAL refused to accommodate him in Flight No. 307,
for which reason he lost the business option aforementioned. He also alleged that PALs personnel, specifically Carmen, ridiculed
and humiliated him in the presence of so many people. Further, he alleged that defendants are solidarily liable for the damages he
suffered, since one is the agent of the other.
[6]

The Regional Trial Court (RTC) of Manila held CAL and PAL jointly and severally liable to respondent. It did not,
however, rule on their respective cross-claims. It disposed as follows:
WHEREFORE, judgment is hereby rendered in favor of plaintiff and against the defendants to jointly and severally pay:
1. Actual damages in the amount of HK$14,128.80 or its equivalent in Philippine Currency at the time of the
loss of the luggage consisting of cosmetic products;
2. US$2,000.00 or its equivalent at the time of the loss of the clutch bag containing the money;
3. P200,000.00 by way of moral damages;
4. P50,000.00 by way of exemplary damages or corrective damages;
5. Attorney[]s fees equivalent to 10% of the amounts due and demandable and awarded in favor of the
plaintiff; and
6. The costs of this proceedings.
[7]

The two carriers appealed the RTC Decision to the CA.
Ruling of the Court of Appeals
Affirming the RTC, the Court of Appeals debunked petitioners claim that it had merely acted as an issuing agent for
the ticket covering the Hong Kong-Manila leg of respondents journey. In support of its Decision, the CA quoted a
purported ruling of this Court in KLM Royal Dutch Airlines v. Court of Appeals
[8]
as follows:
Article 30 of the Warsaw providing that in case of transportation to be performed by various successive carriers, the passenger can
take action only against the carrier who performed the transportation during which the accident or the delay occurred presupposes the
occurrence of either an accident or delay in the course of the air trip, and does not apply if the damage is caused by the willful
misconduct on the part of the carriers employee or agent acting within the scope of his employment.
It would be unfair and inequitable to charge a passenger with automatic knowledge or notice of a condition which purportedly
would excuse the carrier from liability, where the notice is written at the back of the ticket in letters so small that one has to use a
magnifying glass to read the words. To preclude any doubt that the contract was fairly and freely agreed upon when the passenger
accepted the passage ticket, the carrier who issued the ticket must inform the passenger of the conditions prescribed in the ticket or,
in the very least, ascertain that the passenger read them before he accepted the passage ticket. Absent any showing that the carriers
officials or employees discharged this responsibility to the passenger, the latter cannot be bound by the conditions by which the
carrier assumed the role of a mere ticket-issuing agent for other airlines and limited its liability only to untoward occurrences in its
own lines.
Where the passage tickets provide that the carriage to be performed thereunder by several successive carriers is to be regarded as a
single operation, the carrier which issued the tickets for the entire trip in effect guaranteed to the passenger that the latter shall have
sure space in the various carriers which would ferry him through the various segments of the trip, and the ticket-issuing carrier
assumes full responsibility for the entire trip and shall be held accountable for the breach of that guaranty whether the breach
occurred in its own lines or in those of the other carriers.
[9]

On PALs appeal, the appellate court held that the carrier had reneged on its obligation to transport respondent
when, in spite of the confirmations he had secured for Flight PR 311, his name did not appear in the computerized list of
passengers. Ruling that the airlines negligence was the proximate cause of his excoriating experience, the appellate
court sustained the award of moral and exemplary damages.
The CA, however, deleted the RTCs award of actual damages amounting to HK$14,128.80 and US$2,000.00,
because the lost piece of luggage and clutch bag had not actually been checked in or delivered to PAL for
transportation to Manila.
On August 28, 2001, petitioner filed a Motion for Partial Reconsideration, contending that the appellate court had
erroneously relied on a mere syllabus of KLM v. CA, not on the actual ruling therein. Moreover, it argued that respondent
was fully aware that the booking for the PAL sector had been made only upon his request; and that only PAL, not CAL,
was liable for the actual carriage of that segment. Petitioner likewise prayed for a ruling on its cross-claim against PAL,
inasmuch as the latters employees had acted negligently, as found by the trial court.
Denying the Motion, the appellate court ruled that petitioner had failed to raise any new matter or issue that would
warrant a modification or a reversal of the Decision. As to the alleged misquotation, the CA held that while the portion it
had cited appeared to be different from the wording of the actual ruling, the variance was more apparent than real since
the difference [was] only in form and not in substance.
[10]

CAL and PAL filed separate Petitions to assail the CA Decision. In its October 3, 2001 Resolution, this Court denied
PALs appeal, docketed as GR No. 149544, for failure to serve the CA a copy of the Petition as required by Section 3,
Rule 45, in relation to Section 5(d) of Rule 56 and paragraph 2 of Revised Circular No. 1-88 of this Court. PALs Motion
for Reconsideration was denied with finality on January 21, 2002.
Only the appeal of CAL
[11]
remains in this Court.
Issues
In its Memorandum, petitioner raises the following issues for the Courts consideration:
1. The Court of Appeals committed judicial misconduct in finding liability against the petitioner on the basis of a
misquotation from KLM Royal Dutch Airlines vs. Court of Appeals, et al., 65 SCRA 237 and in magnifying its
misconduct by denying the petitioners Motion for Reconsideration on a mere syllabus, unofficial at that.
2. The Court of Appeals committed an error of law when it did not apply applicable precedents on the case before it.
3. The Court of Appeals committed a non sequitur when it did not rule on the cross-claim of the petitioner.
[12]

The Courts Ruling
The Petition is not meritorious.
First Issue:
Alleged J udicial Misconduct
Petitioner charges the CA with judicial misconduct for quoting from and basing its ruling against the two airlines on
an unofficial syllabus of this Courts ruling in KLM v. CA. Moreover, such misconduct was allegedly aggravated when the
CA, in an attempt to justify its action, held that the difference between the actual ruling and the syllabus was more
apparent than real.
[13]

We agree with petitioner that the CA committed a lapse when it relied merely on the unofficial syllabus of our ruling
in KLM v. CA. Indeed, lawyers and litigants are mandated to quote decisions of this Court accurately.
[14]
By the same
token, judges should do no less by strictly abiding by this rule when they quote cases that support their judgments and
decisions. Canon 3 of the Code of Judicial Conduct enjoins them to perform official duties diligently by being faithful to
the law and maintaining their professional competence.
However, since this case is not administrative in nature, we cannot rule on the CA justices administrative liability, if
any, for this lapse. First, due process requires that in administrative proceedings, the respondents must first be given an
opportunity to be heard before sanctions can be imposed. Second, the present action is an appeal from the CAs
Decision, not an administrative case against the magistrates concerned. These two suits are independent of and
separate from each other and cannot be mixed in the same proceedings.
By merely including the lapse as an assigned error here without any adequate and proper administrative case
therefor, petitioner cannot expect the imposition of an administrative sanction.
In the case at bar, we can only determine whether the error in quotation would be sufficient to reverse or modify the
CA Decision.
Applicability of KLM v. CA
In KLM v. CA, the petitioner therein issued tickets to the Mendoza spouses for their world tour. The tour included a
Barcelona-Lourdes route, which was serviced by the Irish airline Aer Lingus. At the KLM office in Frankfurt, Germany,
they obtained a confirmation from Aer Lingus of their seat reservations on its Flight 861. On the day of their departure,
however, the airline rudely off-loaded them.
When sued for breach of contract, KLM sought to be excused for the wrongful conduct of Aer Lingus by arguing that
its liability for damages was limited only to occurrences on its own sectors. To support its argument, it cited Article 30 of
the Warsaw Convention, stating that when transportation was to be performed by various successive carriers, the
passenger could take action only against the carrier that had performed the transportation when the accident or delay
occurred.
In holding KLM liable for damages, we ruled as follows:
1. The applicability insisted upon by the KLM of article 30 of the Warsaw Convention cannot be sustained. That article
presupposes the occurrence of either an accident or a delay, neither of which took place at the Barcelona airport; what is here
manifest, instead, is that the Aer Lingus, through its manager there, refused to transport the respondents to their planned and
contracted destination.
2. The argument that the KLM should not be held accountable for the tortious conduct of Aer Lingus because of the provision
printed on the respondents' tickets expressly limiting the KLM's liability for damages only to occurrences on its own lines is
unacceptable. As noted by the Court of Appeals that condition was printed in letters so small that one would have to use a
magnifying glass to read the words. Under the circumstances, it would be unfair and inequitable to charge the respondents with
automatic knowledge or notice of the said condition so as to preclude any doubt that it was fairly and freely agreed upon by the
respondents when they accepted the passage tickets issued to them by the KLM. As the airline which issued those tickets with the
knowledge that the respondents would be flown on the various legs of their journey by different air carriers, the KLM was chargeable
with the duty and responsibility of specifically informing the respondents of conditions prescribed in their tickets or, in the very least,
to ascertain that the respondents read them before they accepted their passage tickets. A thorough search of the record, however,
inexplicably fails to show that any effort was exerted by the KLM officials or employees to discharge in a proper manner this
responsibility to the respondents. Consequently, we hold that the respondents cannot be bound by the provision in question by which
KLM unilaterally assumed the role of a mere ticket-issuing agent for other airlines and limited its liability only to untoward
occurrences on its own lines.
3. Moreover, as maintained by the respondents and the Court of Appeals, the passage tickets of the respondents provide that the
carriage to be performed thereunder by several successive carriers is to be regarded as a single operation, which is diametrically
incompatible with the theory of the KLM that the respondents entered into a series of independent contracts with the carriers which
took them on the various segments of their trip. This position of KLM we reject. The respondents dealt exclusively with the KLM
which issued them tickets for their entire trip and which in effect guaranteed to them that they would have sure space in Aer Lingus
flight 861. The respondents, under that assurance of the internationally prestigious KLM, naturally had the right to expect that their
tickets would be honored by Aer Lingus to which, in the legal sense, the KLM had indorsed and in effect guaranteed the performance
of its principal engagement to carry out the respondents' scheduled itinerary previously and mutually agreed upon between the
parties.
4. The breach of that guarantee was aggravated by the discourteous and highly arbitrary conduct of an official of the Aer Lingus
which the KLM had engaged to transport the respondents on the Barcelona-Lourdes segment of their itinerary. It is but just and in full
accord with the policy expressly embodied in our civil law which enjoins courts to be more vigilant for the protection of a contracting
party who occupies an inferior position with respect to the other contracting party, that the KLM should be held responsible for the
abuse, injury and embarrassment suffered by the respondents at the hands of a supercilious boor of the Aer Lingus.
[15]

In the instant case, the CA ruled that under the contract of transportation, petitioner -- as the ticket-issuing carrier
(like KLM) -- was liable regardless of the fact that PAL was to perform or had performed the actual carriage. It elucidated
on this point as follows:
By the very nature of their contract, defendant-appellant CAL is clearly liable under the contract of carriage with [respondent] and
remains to be so, regardless of those instances when actual carriage was to be performed by another carrier. The issuance of a
confirmed CAL ticket in favor of [respondent] covering his entire trip abroad concretely attests to this. This also serves as proof that
defendant-appellant CAL, in effect guaranteed that the carrier, such as defendant-appellant PAL would honor his ticket, assure him
of a space therein and transport him on a particular segment of his trip.
[16]

Notwithstanding the errant quotation, we have found after careful deliberation that the assailed Decision is
supported in substance by KLM v. CA. The misquotation by the CA cannot serve as basis for the reversal of its ruling.
Nonetheless, to avert similar incidents in the future, this Court hereby exhorts members of the bar and the bench to
refer to and quote from the official repository of our decisions, thePhilippine Reports, whenever practicable.
[17]
In the
absence of this primary source, which is still being updated, they may resort to unofficial sources like the SCRA.
[18]
We
remind them that the Courts ponencia, when used to support a judgment or ruling, should be quoted accurately.
[19]

Second Issue:
Liability of the Ticket-Issuing Airline
We now come to the main issue of whether CAL is liable for damages. Petitioner posits that the CA Decision must
be annulled, not only because it was rooted on an erroneous quotation, but also because it disregarded jurisprudence,
notably China Airlines v. Intermediate Appellate Court
[20]
and China Airlines v. Court of Appeals.
[21]

J urisprudence Supports
CA Decision
It is significant to note that the contract of air transportation was between petitioner and respondent, with the former
endorsing to PAL the Hong Kong-to-Manila segment of the journey. Such contract of carriage has always been treated
in this jurisdiction as a single operation. This jurisprudential rule is supported by the Warsaw Convention,
[22]
to which the
Philippines is a party, and by the existing practices of the International Air Transport Association (IATA).
Article 1, Section 3 of the Warsaw Convention states:
Transportation to be performed by several successive air carriers shall be deemed, for the purposes of this Convention, to be one
undivided transportation, if it has been regarded by the parties as a single operation, whether it has been agreed upon under the form
of a single contract or of a series of contracts, and it shall not lose its international character merely because one contract or a series
of contracts is to be performed entirely within a territory subject to the sovereignty, suzerainty, mandate, or authority of the same
High Contracting Party.
[23]

Article 15 of IATA-Recommended Practice similarly provides:
Carriage to be performed by several successive carriers under one ticket, or under a ticket and any conjunction ticket issued
therewith, is regarded as a single operation.
In American Airlines v. Court of Appeals,
[24]
we have noted that under a general pool partnership agreement, the
ticket-issuing airline is the principal in a contract of carriage, while the endorsee-airline is the agent.
x x x Members of the IATA are under a general pool partnership agreement wherein they act as agent of each other in the issuance
of tickets to contracted passengers to boost ticket sales worldwide and at the same time provide passengers easy access to airlines
which are otherwise inaccessible in some parts of the world. Booking and reservation among airline members are allowed even by
telephone and it has become an accepted practice among them. A member airline which enters into a contract of carriage consisting
of a series of trips to be performed by different carriers is authorized to receive the fare for the whole trip and through t he required
process of interline settlement of accounts by way of the IATA clearing house an airline is duly compensated for the segment of the
trip serviced. Thus, when the petitioner accepted the unused portion of the conjunction tickets, entered it in the IATA clearing house
and undertook to transport the private respondent over the route covered by the unused portion of the conjunction tickets, i.e., Geneva
to New York, the petitioner tacitly recognized its commitment under the IATA pool arrangement to act as agent of the principal
contracting airline, Singapore Airlines, as to the segment of the trip the petitioner agreed to undertake. As such, the petitioner
thereby assumed the obligation to take the place of the carrier originally designated in the original conjunction ticket. The
petitioners argument that it is not a designated carrier in the original conjunction tickets and that it issued its own ticket is not
decisive of its liability. The new ticket was simply a replacement for the unused portion of the conjunction ticket, both tickets being
for the same amount of US$ 2,760 and having the same points of departure and destination. By constituting itself as an agent of the
principal carrier the petitioners undertaking should be taken as part of a single operation under the contract of carriage executed by
the private respondent and Singapore Airlines in Manila.
[25]

Likewise, as the principal in the contract of carriage, the petitioner in British Airways v. Court of Appeals
[26]
was held
liable, even when the breach of contract had occurred, not on its own flight, but on that of another airline. The Decision
followed our ruling in Lufthansa German Airlines v. Court of Appeals,
[27]
in which we had held that the obligation of the
ticket-issuing airline remained and did not cease, regardless of the fact that another airline had undertaken to carry the
passengers to one of their destinations.
In the instant case, following the jurisprudence cited above, PAL acted as the carrying agent of CAL. In the same
way that we ruled against British Airways and Lufthansa in the aforementioned cases, we also rule that CAL cannot
evade liability to respondent, even though it may have been only a ticket issuer for the Hong Kong-Manila sector.
Moral and Exemplary Damages
Both the trial and the appellate courts found that respondent had satisfactorily proven the existence of the factual
basis for the damages adjudged against petitioner and PAL. As a rule, the findings of fact of the CA affirming those of
the RTC will not be disturbed by this Court.
[28]
Indeed, the Supreme Court is not a trier of facts. As a rule also, only
questions of law -- as in the present recourse -- may be raised in petitions for review under Rule 45.
Moral damages cannot be awarded in breaches of carriage contracts, except in the two instances contemplated in
Articles 1764 and 2220 of the Civil Code, which we quote:
Article 1764. Damages in cases comprised in this Section shall be awarded in accordance with Title XVIII of this Book, concerning
Damages. Article 2206 shall also apply to the death of a passenger caused by the breach of contract by a common carrier.
x x x x x x x x x
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 damages are justly due. The same rule applies to breaches of contract where the defendant acted fraudulently or
in bad faith. (Italics supplied)
There is no occasion for us to invoke Article 1764 here. We must therefore determine if CAL or its agent (PAL) is
guilty of bad faith that would entitle respondent to moral damages.
In Lopez v. Pan American World Airways,
[29]
we defined bad faith as a breach of a known duty through some motive
of interest or ill will.
In the case at bar, the known duty of PAL was to transport herein respondent from Hong Kong to Manila. That duty
arose when its agent confirmed his reservation for Flight PR 311,
[30]
and it became demandable when he presented
himself for the trip on November 24, 1981.
It is true that due to a typhoon, PAL was unable to transport respondent on Flight PR 311 on November 24, 1981.
This fact, however, did not terminate the carriers responsibility to its passengers. PAL voluntarily obligated itself to
automatically transfer all confirmed passengers of PR 311 to the next available flight, PR 307, on the following
day.
[31]
That responsibility was subsisting when respondent, holding a confirmed ticket for the former flight, presented
himself for the latter.
The records amply establish that he secured repeated confirmations of his PR 311 flight on November 24,
1981. Hence, he had every reason to expect that he would be put on the replacement flight as a confirmed
passenger. Instead, he was harangued and prevented from boarding the original and the replacement flights. Thus,
PAL breached its duty to transport him. After he had been directed to pay the terminal fee, his pieces of luggage were
removed from the weighing-in counter despite his protestations.
[32]

It is relevant to point out that the employees of PAL were utterly insensitive to his need to be in Manila on November
25, 1981, and to the likelihood that his business affairs in the city would be jeopardized because of a mistake on their
part. It was that mistake that had caused the omission of his name from the passenger list despite his confirmed flight
ticket. By merely looking at his ticket and validation sticker, it is evident that the glitch was the airlines fault. However,
no serious attempt was made by PAL to secure the all-important transportation of respondent to Manila on the following
day. To make matters worse, PAL allowed a group of non-revenue passengers, who had no confirmed tickets or
reservations, to board Flight PR 307.
[33]

Time and time again, this Court has stressed that the business of common carriers is imbued with public interest
and duty; therefore, the law governing them imposes an exacting standard.
[34]
In Singson v. Court of Appeals,
[35]
we
said:
x x x [T]he carrier's utter lack of care and sensitivity to the needs of its passengers, clearly constitutive of gross negligence,
recklessness and wanton disregard of the rights of the latter, [are] acts evidently indistinguishable or no different from fraud, malice
and bad faith. As the rule now stands, where in breaching the contract of carriage the defendant airline is shown to have acted
fraudulently, with malice or in bad faith, the award of moral and exemplary damages, in addition to actual damages, is
proper.
[36]
(Italics supplied)
In Saludo v. Court of Appeals,
[37]
the Court reminded airline companies that due to the nature of their business, they
must not merely give cursory instructions to their personnel to be more accommodating towards customers, passengers
and the general public; they must require them to be so.
The acts of PALs employees, particularly Chan, clearly fell short of the extraordinary standard of care that the law
requires of common carriers.
[38]
As narrated in Chans oral deposition,
[39]
the manner in which the airline discharged its
responsibility to respondent and its other passengers manifested a lack of the requisite diligence and due regard for their
welfare. The pertinent portions of the Oral Deposition are reproduced as follows:
Q Now you said that flight PR 311 on 24th November was cancelled due to [a] typhoon and naturally the
passengers on said flight had to be accommodated on the first flight the following day or the first flight
subsequently. [W]ill you tell the Honorable Deposition Officer the procedure followed by Philippine Airlines
in the handling of passengers of cancelled flight[s] like that of PR 311 which was cancelled due to [a]
typhoon?
A The procedure will be: all the confirmed passengers from [PR] 311 24th November [are] automatically
transfer[red] to [PR] 307, 25th November[,] as a protection for all disconfirmed passengers.
Q Aside from this procedure[,] what do you do with the passengers on the cancelled flight who are expected
to check-in on the flights if this flight is cancelled or not operating due to typhoon or other reasons[?] In
other words, are they not notified of the cancellation?
A I think all these passengers were not notified because of a typhoon and Philippine Airlines Reservation
were [sic] not able to call every passenger by phone.
Atty. Fruto:
Q Did you say were not notified?
A I believe they were not, but believe me, I was on day-off.
Atty. Calica:
Q Per procedure, what should have been done by Reservations Office when a flight is cancelled for one
reason or another?
A If there is enough time, of course, Reservations Office x x x call[s] up all the passengers and tell[s] them
the reason. But if there [is] no time[,] then the Reservations Office will not be able to do that.
[40]

x x x x x x x x x
Q I see. Miss Chan, I [will] show you a ticket which has been marked as Exh. A and A-1. Will you please go
over this ticket and tell the court whether this is the ticket that was used precisely by Mr. Chiok when he
checked-in at [F]light 307, 25 November 81?
A [Are you] now asking me whether he used this ticket with this sticker?
Q No, no, no. That was the ticket he used.
A Yes, [are you] asking me whether I saw this ticket?
Atty. Fruto: Yes.
A I believe I saw it.
Q You saw it, O.K. Now of course you will agree with me Miss Chan that this yellow stub here which has
been marked as Exh. A-1-A, show[s] that the status on flight 311, 24th November, is O.K., correct?
A Yes.
Q You agree with me. And you will also agree with me that in this ticket of flight 311, on this, another sticker
Exh. A-1-B for 24 November is O.K.?
A May I x x x look at them. Yes, it says O.K. x x x, but [there is] no validation.
Q O.K. Miss Chan what do you understand by these entries here R bar M N 6 V?
[41]

A This is what we call a computer reference.
Q I see. This is a computer reference showing that the name of Mr. Chiok has been entered in Philippine
Airlines computer, and this is his computer number.
A Yes.
Q Now you stated in your answer to the procedure taken, that all confirmed passengers on flight 311, 24
November[,] were automatically transferred to 307 as a protection for the passengers, correct?
A Correct.
Q So that since following the O.K. status of Mr. Chioks reservation [on] flight 311, [he] was also automatically
transferred to flight 307 the following day?
A Should be.
Q Should be. O.K. Now do you remember how many passengers x x x were transferred from flight 311, 24
November to flight 307, 25 November 81?
A I can only give you a very brief idea because that was supposed to be air bus so it should be able to
accommodate 246 people; but how many [exactly], I dont know.
[42]

x x x x x x x x x
Q So, between six and eight oclock in the evening of 25 November 81, Mr. Chiok already told you that he
just [came] from the Swire Building where Philippine Airlines had [its] offices and that he told you that his
space for 311 25 November 81 was confirmed?
A Yes.
Q That is what he told you. He insisted on that flight?
A Yes.
Q And did you not try to call up Swire Building-- Philippine Airlines and verify indeed if Mr. Chiok was there?
A Swire House building is not directly under Philippine Airlines. it is just an agency for selling Philippine
Airlines ticket. And besides around six o clock theyre close[d] in Central.
Q So this Swire Building is an agency authorized by Philippine Airlines to issue tickets for and on behalf of
Philippine Airlines and also...
A Yes.
Q And also to confirm spaces for and on behalf of Philippine Airlines.
A Yes.
[43]

Under the foregoing circumstances, we cannot apply our 1989 ruling in China Airlines v. Intermediate Appellate
Court,
[44]
which petitioner urges us to adopt. In that case, the breach of contract and the negligence of the carrier in
effecting the immediate flight connection for therein private respondent was incurred in good faith.
[45]
Having found no
gross negligence or recklessness, we thereby deleted the award of moral and exemplary damages against it.
[46]

This Courts 1992 ruling in China Airlines v. Court of Appeals
[47]
is likewise inapplicable. In that case, we found no
bad faith or malice in the airlines breach of its contractual obligation.
[48]
We held that, as shown by the flow of telexes
from one of the airlines offices to the others, petitioner therein had exercised diligent efforts in assisting the private
respondent change his flight schedule. In the instant case, petitioner failed to exhibit the same care and sensitivity to
respondents needs.
In Singson v. Court of Appeals,
[49]
we said:
x x x Although the rule is that moral damages predicated upon a breach of contract of carriage may only be recoverable in instances
where the mishap results in the death of a passenger, or where the carrier is guilty of fraud or bad faith, there are situations where the
negligence of the carrier is so gross and reckless as to virtually amount to bad faith, in which case, the passenger likewise becomes
entitled to recover moral damages.
In the present case, we stress that respondent had repeatedly secured confirmations of his PR 311 flight on
November 24, 1981 -- initially from CAL and subsequently from the PAL office in Hong Kong. The status of this flight
was marked OK on a validating sticker placed on his ticket. That sticker also contained the entry RMN6V. Ms Chan
explicitly acknowledged that such entry was a computer reference that meant that respondents name had been entered
in PALs computer.
Since the status of respondent on Flight PR 311 was OK, as a matter of right testified to by PALs witness, he
should have been automatically transferred to and allowed to board Flight 307 the following day. Clearly resulting from
negligence on the part of PAL was its claim that his name was not included in its list of passengers for the November 24,
1981 PR 311 flight and, consequently, in the list of the replacement flight PR 307. Since he had secured confirmation of
his flight -- not only once, but twice -- by personally going to the carriers offices where he was consistently assured of a
seat thereon -- PALs negligence was so gross and reckless that it amounted to bad faith.
In view of the foregoing, we rule that moral and exemplary
[50]
damages were properly awarded by the lower
courts.
[51]

Third Issue:
Propriety of the Cross-Claim
We now look into the propriety of the ruling on CALs cross-claim against PAL. Petitioner submits that the CA should
have ruled on the cross-claim, considering that the RTC had found that it was PALs employees who had acted
negligently.
Section 8 of Rule 6 of the Rules of Court reads:
Sec. 8. Cross-claim. - A cross claim is any claim by one party against a co-party arising out of the transaction or occurrence that is
the subject matter either of the original action or of a counterclaim therein. Such cross-claim may include a claim that the party
against whom it is asserted is or may be liable to the cross-claimant for all or part of a claim asserted in the action against the cross-
claimant.
For purposes of a ruling on the cross-claim, PAL is an indispensable party. In BA Finance Corporation v. CA,
[52]
the
Court stated:
x x x. An indispensable party is one whose interest will be affected by the courts action in the litigation, and without whom no
final determination of the case can be had. The partys interest in the subject matter of the suit and in the relief sought are so
inextricably intertwined with the other parties that his legal presence as a party to the proceeding is an absolute necessity. In his
absence there cannot be a resolution of the dispute of the parties before the court which is effective, complete, or equitable.
x x x x x x x x x
Without the presence of indispensable parties to a suit or proceeding, judgment of a court cannot attain real finality.
PALs interest may be affected by any ruling of this Court on CALs cross-claim. Hence, it is imperative and in
accordance with due process and fair play that PAL should have been impleaded as a party in the present proceedings,
before this Court can make a final ruling on this matter.
Although PAL was petitioners co-party in the case before the RTC and the CA, petitioner failed to include the airline
in the present recourse. Hence, the Court has no jurisdiction over it. Consequently, to make any ruling on the cross-
claim in the present Petition would not be legally feasible because PAL, not being a party in the present case, cannot be
bound thereby.
[53]

WHEREFORE, the Petition is DENIED. Costs against petitioner.
SO ORDERED.
Puno, (Chairman), Corona, and Carpio-Morales, JJ., concur.
Sandoval-Gutierrez, J., on official leave.



Republic of the Philippines
Supreme Court
Baguio City

THIRD DIVISION


JAPAN AIRLINES, G.R. No. 170141
Petitioner,
Present:

- versus - YNARES-SANTIAGO, J.,
Chairperson,
MARTINEZ,
CHICO-NAZARIO,
NACHURA, and
REYES, JJ.

Promulgated:
JESUS SIMANGAN,
Respondent. April 22, 2008
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

D E C I S I O N


REYES, R.T., J.:


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


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

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

The Facts

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


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


Having obtained an emergency U.S. visa, respondent purchased a round trip plane ticket from petitioner JAL for US$1,485.00 and was
issued the corresponding boarding pass.
[9]
He was scheduled to a particular flight bound for Los Angeles, California, U.S.A. via Narita, Japan.
[10]


On July 29, 1992, the date of his flight, respondent went to Ninoy Aquino International Airport in the company of several relatives and
friends.
[11]
He was allowed to check-in at JALs counter.
[12]
His plane ticket, boarding pass, travel authority and personal articles were subjected to
rigid immigration and security routines.
[13]
After passing through said immigration and security procedures, respondent was allowed by JAL to
enter its airplane.
[14]


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

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



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


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


JAL also lodged a counterclaim anchored on respondents alleged wrongful institution of the complaint. It prayed for litigation
expenses, exemplary damages and attorneys fees.
[28]


On September 21, 2000, the RTC presided by Judge Floro P. Alejo rendered its decision in favor of respondent (plaintiff), disposing as
follows:

WHEREFORE, judgment is hereby rendered ordering the defendant to pay the plaintiff the amount of P1,000,000.00
as moral damages, the amount of P500,000.00 as exemplary damages and the amount of P250,000.00 as attorneys fees, plus
the cost of suit.
[29]



The RTC explained:

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

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

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


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


CA Ruling

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


WHEREFORE, the appealed Decision is AFFIRMED with MODIFICATION. Appellant JAPAN AIR LINES is ordered to pay
appellee JESUS SIMANGAN the reduced sums, as follows: Five Hundred Thousand Pesos (P500,000.00) as moral damages, and
Two Hundred Fifty Thousand Pesos (P250,000.00) as exemplary damages. The award of attorneys fees is hereby DELETED.
[34]


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


The CA ratiocinated:

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

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

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

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


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

Fundamental in the law on damages is that one injured by a breach of a contract, or by a wrongful or negligent act
or omission shall have a fair and just compensation commensurate to the loss sustained as consequence of the defendants
act. Being discretionary on the court, the amount, however, should not be palpably and scandalously excessive.

Here, the trial courts award of P1,000,000.00 as moral damages appears to be overblown. No other proof of
appellees social standing, profession, financial capabilities was presented except that he was single and a businessman. To
Us, the sum of 500,000.00 is just and fair. For, moral damages are emphatically not intended to enrich a complainant at the
expense of the defendant. They are awarded only to enable the injured party to obtain means, diversion or amusements that
will serve to alleviate the moral suffering he has undergone, by reason of the defendants culpable action.

Moreover, the grant of P500,000.00 as exemplary damages needs to be reduced to a reasonable level. The award of
exemplary damages is designed to permit the courts to mould behavior that has socially deleterious consequences and its
imposition is required by public policy to suppress the wanton acts of the offender. Hence, the sum of P250,000.00 is
adequate under the circumstances.

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

When JALs motion for reconsideration was denied, it resorted to the petition at bar.

Issues

JAL poses the following issues

I.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN RULING THAT RESPONDENT WAS ENTITLED TO MORAL DAMAGES,
CONSIDERING THAT:

A. JAL WAS NOT GUILTY OF BREACH OF CONTRACT.

B. MORAL DAMAGES MAY BE AWARDED IN BREACH OF CONTRACT CASES ONLY WHEN THE BREACH IS
ATTENDED BY FRAUD OR BAD FAITH. ASSUMINGARGUENDO THAT JAL WAS GUILTY OF BREACH, JAL DID
NOT ACT FRAUDULENTLY OR IN BAD FAITH AS TO ENTITLE RESPONDENT TO MORAL DAMAGES.

C. THE LAW DISTINGUISHES A CONTRACTUAL BREACH EFFECTED IN GOOD FAITH FROM ONE ATTENDED BY
BAD FAITH.

II.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN RULING THAT RESPONDENT WAS ENTITLED TO EXEMPLARY
DAMAGES CONSIDERING THAT:

A. EXEMPLARY DAMAGES ARE NOT RECOVERABLE IN BREACH OF CONTRACT OF CARRIAGE UNLESS THE
CARRIER IS GUILTY OF WANTON, FRAUDULENT, RECKLESS, OPPRESSIVE OR MALEVOLENT CONDUCT.

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

III.
ASSUMING ARGUENDO THAT RESPONDENT WAS ENTITLED TO AN AWARD OF DAMAGES, WHETHER OR NOT THE COURT OF
APPEALS AWARD OF P750,000 IN DAMAGES WAS EXCESSIVE AND UNPRECEDENTED.

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

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

Our Ruling

This Court is not a trier of facts.

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

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


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


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

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

JAL is guilty of breach of
contract of carriage.

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

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



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


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


Since JAL definitely declared that the flight could not wait for respondent, it gave respondent no choice but to be left behind. The latter
was unceremoniously bumped off despite his protestations and valid travel documents and notwithstanding his contract of carriage with
JAL. Damage had already been done when respondent was offered to fly the next day on July 30, 1992. Said offer did not cure JALs default.

Considering that respondent was forced to get out of the plane and left behind against his will, he could not have freely consented to be
rebooked the next day. In short, he did not agree to the alleged novation. Since novation implies a waiver of the right the creditor had before the
novation, such waiver must be express.
[58]
It cannot be supposed, without clear proof, that respondent had willingly done away with his right to
fly on July 29, 1992.

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


Apart from the fact that respondents plane ticket, boarding pass, travel authority and personal articles already passed the rigid
immigration and security routines,
[60]
JAL, as a common carrier, ought to know the kind of valid travel documents respondent carried. As provided
in Article 1755 of the New Civil Code: A common carrier is bound to carry the passengers safely as far as human care and foresight can
provide, using the utmost diligence of very cautious persons, with a due regard for all the circumstances.
[61]
Thus, We find untenable JALs
defense of verification of respondents documents in its breach of contract of carriage.

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


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

Respondent is entitled to moral and exemplary damages and attorneys fees plus
legal interest.

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

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


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

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

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



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


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


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




Neglect or malfeasance of the carriers employees could give ground for an action for damages. Passengers have a right to be treated
by the carriers employees with kindness, respect, courtesy and due consideration and are entitled to be protected against personal misconduct,
injurious language, indignities and abuses from such employees.
[70]


The assessment of P500,000.00 as moral damages and P100,000.00 as exemplary damages in respondents favor is, in Our view,
reasonable and realistic. This award is reasonably sufficient to indemnify him for the humiliation and embarrassment he suffered. This also serves
as an example to discourage the repetition of similar oppressive acts.

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

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

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




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

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

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

Regarding the imposition of legal interest at the rate of 6% from the time of the filing of the complaint, we held
in Eastern Shipping Lines, Inc. v. Court of Appeals, that when an obligation, regardless of its source, i.e., law, contracts, quasi-
contracts, delicts or quasi-delicts is breached, the contravenor can be held liable for payment of interest in the concept of
actual and compensatory damages, subject to the following rules, to wit

1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a
loan or forbearance of money, the interest due should be that which may have been stipulated in writing.
Furthermore, the interest due shall itself earn legal interest from the time it is judicially demanded. In the
absence of stipulation, the rate of interest shall be 12% per annum to be computed from default, i.e., from
judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code.

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

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

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

JAL is not entitled to its counterclaim for damages.

The counterclaim of JAL in its Answer
[79]
is a compulsory counterclaim for damages and attorneys fees arising from the filing of the
complaint. There is no mention of any other counter claims.

This compulsory counterclaim of JAL arising from the filing of the complaint may not be granted inasmuch as the complaint against it is
obviously not malicious or unfounded. It was filed by respondent precisely to claim his right to damages against JAL. Well-settled is the rule that
the commencement of an action does not per se make the action wrongful and subject the action to damages, for the law could not have meant
to impose a penalty on the right to litigate.
[80]


We reiterate case law that if damages result from a partys exercise of a right, it is damnum absque injuria.
[81]
Lawful acts give rise to no
injury. Walang perhuwisyong maaring idulot ang paggamit sa sariling karapatan.

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


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

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

Nevertheless, JALs counterclaim cannot be granted.

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

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

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

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

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




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


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

WHEREFORE, the petition is DENIED. The appealed Decision of the Court of Appeals is AFFIRMED WITH MODIFICATION. As modified,
petitioner Japan Airlines is ordered to pay respondent Jesus Simangan the following: (1) P500,000.00 as moral
damages; (2) P100,000.00 as exemplary damages; and (3) P200,000.00 as attorneys fees.

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

SO ORDERED.

_________________________________________________________________________________________________________
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 155550 January 31, 2008
NORTHWEST AIRLINES, INC., petitioner,
vs.
STEVEN P. CHIONG, respondent.
D E C I S I O N
NACHURA, J .:
Before us is a petition for review on certiorari under Rule 45 of the Rules of Court seeking the reversal of the Court of Appeals (CA)
Decision
1
in CA-G.R. CV No. 50308
2
which affirmed in toto the Regional Trial Court (RTC) Decision
3
holding petitioner Northwest
Airlines, Inc. (Northwest) liable for breach of contract of carriage.
On March 14, 1989, Philimare Shipping and Seagull Maritime Corporation (Philimare), as the authorized Philippine agent of
TransOcean Lines (TransOcean), hired respondent Steven Chiong as Third Engineer of TransOceans vessel M/V Elbia at the San
Diego, California Port. Under the service crew agreement, Chiong was guaranteed compensation at a monthly salary of US$440.00
and a monthly overtime pay of US$220.00, or a total of US$7,920.00 for one year.
Subsequently, on March 27, 1989, Philimare dispatched a Letter of Guarantee to CL Hutchins & Co., Inc., TransOceans agent at the
San Diego Port, confirming Chiongs arrival thereat in time to board the M/V Elbiawhich was set to sail on April 1, 1989 (California,
United States time). For this purpose, Philimare purchased for Chiong a Northwest plane ticket for San Diego, California with a
departure date of April 1, 1989 from Manila. Ten (10) days before his scheduled departure, Chiong fetched his entire family from
Samar and brought them to Manila to see him off at the airport.
On April 1, 1989, Chiong arrived at the Manila International Airport
4
(MIA), at about 6:30 a.m., three (3) hours before the scheduled
time of departure. Marilyn Calvo, Philimares Liaison Officer, met Chiong at the departure gate, and the two proceeded to the
Philippine Coast Guard (PCG) Counter to present Chiongs seaman service record book for clearance. Thereafter, Chiongs passport
was duly stamped, after complying with government requirements for departing seafarers.
Calvo remained at the PCG Counter while Chiong proceeded to queue at the Northwest check-in counter. When it was Chiongs turn,
the Northwest personnel
5
informed him that his name did not appear in the computers list of confirmed departing passengers. Chiong
was then directed to speak to a "man in barong" standing outside Northwests counters from whom Chiong could allegedly obtain a
boarding pass. Posthaste, Chiong approached the "man in barong" who demanded US$100.00 in exchange therefor. Without the said
amount, and anxious to board the plane, Chiong queued a number of times at Northwests Check-in Counter and presented his ticket.
However, the Northwest personnel at the counter told him to simply wait and that he was being a pest.
Frustrated, Chiong went to Calvo at the PCG counter and inquired if she had money so he could obtain a boarding pass from the "man
in barong." Calvo, who already saw that something was amiss, insisted that Chiongs plane ticket was confirmed and as such, he
could check-in smoothly and board the plane without shelling out US$100.00 for a boarding pass. Ultimately, Chiong was not allowed
to board Northwest Flight No. 24 bound for San Diego that day and, consequently, was unable to work at the M/V Elbia by April 1,
1989 (California, U.S.A. time).
It appears that Chiongs name was crossed out and substituted with "W. Costine" in Northwests Air Passenger Manifest.
6

In a letter dated April 3, 1989, Chiongs counsel demanded as recompense: (1) the amount equivalent to Chiongs salary under the
latters Crew Agreement
7
with TransOcean; (2) P15,000.00 for Chiongs expenses in fetching and bringing his family from Samar to
Manila; (3) P500,000.00 as moral damages; and (4) P500,000.00 as legal fees.
8

Northwest demurred. Thus, on May 24, 1989, Chiong filed a Complaint for breach of contract of carriage before the RTC. Northwest
filed a Motion to Dismiss
9
the complaint citing the trial courts lack of jurisdiction over the subject matter of the case, but the trial court
denied the same.
10

In its Answer,
11
Northwest contradicted the claim that it breached its contract of carriage with Chiong, reiterating that Chiong had no
cause of action against it because per its records, Chiong was a "no-show" passenger for Northwest Flight No. 24 on April 1, 1989.
In the RTCs Pre-trial Order
12
based on the parties respective Pre-trial Briefs,
13
the triable issues were limited to the following:
(a) Whether [Chiong] was bumped-off by [Northwest] from Flight NW 24 or whether [Chiong] "no-showed" for said flight.
(b) If defendant is found guilty of having breached its contract of carriage with plaintiff, what damages are awardable to
plaintiff and how much.
In the course of proceedings, Northwest, on September 14, 1990, filed a separate criminal complaint for False Testimony
14
against
Chiong based on the latters testimony that he did not leave the Philippines after April 1, 1989 contrary to the notations in his seaman
service record book that he had left the country on April 17, 1989, and returned on October 5 of the same year. Chiong did not
participate in the preliminary investigation; thus, on December 14, 1990, the City Prosecutor of Manila filed an Information against
Chiong with the RTC Manila, Branch 54, docketed as Criminal Case No. 90-89722.
In the meantime, after a flurry of motions filed by Northwest in the civil case were denied by the RTC, Northwest filed a Petition
for Certiorari before the CA imputing grave abuse of discretion to the RTC.
15
Correlatively, Northwest moved for a suspension of the
proceedings before the trial court. However, both the Petition forCertiorari and Motion for Suspension of the proceedings were denied
by the CA and RTC, respectively.
16

After trial, the RTC rendered a Decision finding preponderance of evidence in favor of Chiong, and holding Northwest liable for breach
of contract of carriage. The RTC ruled that the evidence adduced by the parties supported the conclusion that Chiong was deliberately
prevented from checking-in and his boarding pass unjustifiably withheld to accommodate an American passenger by the name of W.
Costine.
The dispositive portion of the RTC decision reads:
WHEREFORE, premises considered, in consideration of all the foregoing, judgment is hereby rendered, ordering the
defendant liable to plaintiff in damages by reason of the latters inability to take defendants NW Flight No. 24 on April 1,
1989, for the following amounts:
1) U.S.$8,447.00
17
or its peso equivalent at the time of finality of this judgment with legal interests until fully paid,
representing compensatory damages due to plaintiffs loss of income for one (1) year as a direct result of
defendants breach of contract of carriage;
2) P15,000.00, Philippine Currency, representing plaintiffs actual incurred damages as a consequence of his failure
to avail of defendants Flight No. 24 on April 1, 1989;
3) P200,000.00, Philippine Currency, representing moral damages suffered and sustained by the plaintiff as a result
of defendants breach of contract of carriage;
4) P200,000.00, Philippine Currency, representing exemplary or punitive damages due to plaintiff from defendant,
owing to the latters breach of contract of carriage with malice and fraud; and
5) P200,000.00, Philippine Currency, for and as attorneys fees, plus costs of suit.
SO ORDERED.
On appeal, the CA affirmed in toto the ruling of the RTC. Identical to the RTCs findings, those of the CA were as follows: on April 1,
1989, Chiong was at the MIA three hours before the 10:15 a.m. departure time for Northwest Flight No. 24. Contrary to Northwests
claim that Chiong was a "no-show" passenger, the CA likewise concluded, as the RTC did, that Chiong was not allowed to check-in
and was not issued a boarding pass at the Northwest check-in counter to accommodate a certain W. Costine. As for Northwests
defense that Chiong had left the country after April 1, 1989 and worked for M/V Elbia, the CA ruled that Northwests failure to raise this
defense in its Answer or Motion to Dismiss is equivalent to a waiver thereof. The CA declared that, in any event, Northwest failed to
present any evidence to prove that Chiong had worked under the original crew agreement.
Hence, this recourse.
Northwest ascribes grievous errors to the CA when the appellate court ruled that: (1) Northwest breached the contract of carriage with
Chiong who was present at the MIA on April 1, 1989 to board Northwests Flight No. 24; (2) As a result of the breach, Northwest is
liable to Chiong for compensatory, actual, moral and exemplary damages, attorneys fees, and costs of suit; and (3) Northwests
Exhibits "2" and "3," the Flight Manifest and the Passenger Name Record, respectively, were hearsay evidence and ought to be
excluded from the records.
The petition must fail.
We are in complete accord with the common ruling of the lower courts that Northwest breached the contract of carriage with Chiong,
and as such, he is entitled to compensatory, actual, moral and exemplary damages, attorneys fees and costs of suit.
Northwest contends that Chiong, as a "no-show" passenger on April 1, 1989, already defaulted in his obligation to abide by the terms
and conditions of the contract of carriage;
18
and thus, Northwest could not have been in breach of its reciprocal obligation to transport
Chiong. In sum, Northwest insists that Chiongs testimony is a complete fabrication, supposedly demonstrated by the following: (1)
Chiongs seaman service record book reflects that he left the Philippines after April 1, 1989, specifically on April 17, 1989, to board
the M/V Elbia, and was discharged therefrom upon his personal request; (2) the Information filed against Chiong for False Testimony;
and (3) the Flight Manifest and the Passenger Name Record both indicate that he was a "no-show" passenger.
We are not convinced.
The records reveal that Chiong, as plaintiff in the trial court, satisfied the burden of proof required in civil cases, i.e., preponderance of
evidence. Section 1 of Rule 133 provides:
SECTION 1. Preponderance of evidence, how determined. In civil cases, the party having the burden of proof must
establish his case by a preponderance of evidence. In determining where the preponderance or superior weight of evidence
on the issues involved lies, the court may consider all the facts and circumstance of the case, the witnesses manner of
testifying, their intelligence, their means and opportunity of knowing the facts to which they are testifying, the nature of the
facts to which they testify, the probability or improbability of their testimony, their interest or want of interest, and also their
personal credibility so far as the same may legitimately appear upon the trial. The court may also consider the number of
witnesses, though preponderance is not necessarily with the greater number.
In this regard, the Court notes that, in addition to his testimony, Chiongs evidence consisted of a Northwest ticket for the April 1, 1989
Flight No. 24, Chiongs passport and seaman service record book duly stamped at the PCG counter, and the testimonies of Calvo,
Florencio Gomez,
19
and Philippine Overseas Employment and Administration (POEA) personnel who all identified the signature and
stamp of the PCG on Chiongs passport.
We have scoured the records, and found no reason to depart from the well-settled rule that factual findings of the lower courts deserve
the utmost respect and are not to be disturbed on appeal.
20
Indeed, Chiongs Northwest ticket for Flight No. 24 on April 1, 1989,
coupled with the PCG stamps on his passport showing the same date, is direct evidence that he was present at MIA on said date as
he intended to fly to the United States on board that flight. As testified to by POEA personnel and officers, the PCG stamp indicates
that a departing seaman has passed through the PCG counter at the airport, surrendered the exit pass, and complied with government
requirements for departing seafarers. Calvo, Philimares liaison officer tasked to assist Chiong at the airport, corroborated Chiongs
testimony on the latters presence at the MIA and his check-in at the PCG counter without a hitch. Calvo further testified that she
purposely stayed at the PCG counter to confirm that Chiong was able to board the plane, as it was part of her duties as Philimares
liaison officer, to confirm with their principal, TransOcean in this case, that the seafarer had left the country and commenced travel to
the designated port where the vessel is docked.
21
Thus, she had observed that Chiong was unable to check-in and board Northwest
Flight No. 24, and was actually being given the run-around by Northwest personnel.
It is of no moment that Chiongs witnesses who all corroborated his testimony on his presence at the airport on, and flight details for,
April 1, 1989, and that he was subsequently bumped-off are, likewise, employees of Philimare which may have an interest in the
outcome of this case. We intoned in Philippine Airlines, Inc. v. Court of Appeals,
22
thus:
(T)his Court has repeatedly held that a witness relationship to the victim does not automatically affect the veracity
of his or her testimony. While this principle is often applied in criminal cases, we deem that the same principle may apply in
this case, albeit civil in nature. If a witness relationship with a party does not ipso facto render him a biased witness in
criminal cases where the quantum of evidence required is proof beyond reasonable doubt, there is no reason why
the same principle should not apply in civil cases where the quantum of evidence is only preponderance of
evidence.
The foregoing documentary and testimonial evidence, taken together, amply establish the fact that Chiong was present at MIA on April
1, 1989, passed through the PCG counter without delay, proceeded to the Northwest check-in counter, but when he presented his
confirmed ticket thereat, he was not issued a boarding pass, and ultimately barred from boarding Northwest Flight No. 24 on that day.
In stark contrast is Northwests bare-faced claim that Chiong was a "no-show" passenger, and was scheduled to leave the country
only on April 17, 1989. As previously discussed, the records belie this assertion. It is also noteworthy that Northwest did not present
any evidence to support its belated defense that Chiong departed from the Philippines on April 17, 1989 to work as Third Engineer on
board M/V Elbia under the original crew agreement.
It is true that Chiongs passport and seaman service record book indicate that he had left the country on April 17, 1989 and come back
on October 5 of the same year. However, this evidence fails to debunk the facts established to have transpired on April 1, 1989, more
particularly, Chiongs presence at the airport and his subsequent bumping-off by Northwest despite a confirmed ticket. Although
initially, the burden of proof was with Chiong to prove that there was a breach of contract of carriage, the burden of evidence shifted to
Northwest when Chiong adduced sufficient evidence to prove the facts he had alleged. At that point, Northwest had the burden of
going forward
23
to controvert Chiongs prima facie case. As the party asserting that Chiong was a "no-show" passenger, Northwest
then had the burden of evidence to establish its claim. Regrettably, Northwest failed to do so.
Furthermore, it has not escaped our attention that Northwest, despite the declaration in its Pre-Trial Brief, did not present as a witness
their check-in agent on that contentious date.
24
This omission was detrimental to Northwests case considering its claim that Chiong
did not check-in at their counters on said date. It simply insisted that Chiong was a "no-show" passenger and totally relied on the Flight
Manifest, which, curiously, showed a horizontal line drawn across Chiongs name, and the name W. Costine written above it. The
reason for the insertion, or for Chiongs allegedly being a "no-show" passenger, is not even recorded on the remarks column of the
Flight Manifest beside the Passenger Name column. Clearly, the categorical declaration of Chiong and his other witnesses, coupled
with the PCG stamp on his passport and seaman service record book, prevails over Northwests evidence, particularly the Flight
Manifest. Thus, we are perplexed why, despite the evidence presented by Chiong, and the RTCs specific order to Northwests
counsel to present the person(s) who prepared the Flight Manifest and Passenger Name Record for a proper identification of, and to
testify on, those documents, Northwest still insisted on presenting Gonofredo Mendoza and Amelia Meris who were, admittedly, not
competent to testify thereon.
25

In its desperate attempt to evade liability for the breach, Northwest claims that Chiong worked at M/V Elbia when he left the Philippines
on April 17, 1989. The argument was not only belatedly raised, as we have repeatedly stated, but is off-tangent.
On this point, we uphold the RTCs and CAs ruling that the failure of Northwest to raise the foregoing defense in its Motion to Dismiss
or Answer constituted a waiver thereof. Section 1, Rule 9 of the Rules of Court provides:
SECTION 1. Defenses and objections not pleaded. Defenses and objections not pleaded either in a motion to dismiss
or in the answer are deemed waived. However, when it appears from the pleadings or the evidence on record that the court
has no jurisdiction over the subject matter, that there is another action pending between the same parties for the same cause,
or that the action is barred by a prior judgment or by statute of limitations, the court shall dismiss the claim. (Emphasis
supplied)
Similarly, Section 8, Rule 15 of the Rules of Court reads:
SECTION 8. Omnibus Motion. Subject to the provisions of section 1 of Rule 9, a motion attacking a pleading, order,
judgment, or proceeding shall include all objections then available, and all objections not so included shall be deemed
waived.
Moreover, Northwest paints a scenario that ostensibly transpired on a different date. Even if Chiong left the Philippines on April 17,
1989, it would not necessarily prove that Chiong was a "no-show" on April 1, 1989. Neither does it negate the already established fact
that Chiong had a confirmed ticket for April 1, 1989, and first passed through the PCG counter without delay, then reached and was at
the Northwest check-in counters on time for the scheduled flight.
Essentially, Northwest argues that Chiong was a "no-show" passenger on two (2) separate occasions, March 28 and April 1, 1989
because he was actually scheduled to depart for the US on April 17, 1989 as ostensibly evidenced by his passport and seaman record
book. Had this new matter alleged been proven by Northwest, it would prevent or bar recovery by Chiong. Unfortunately, Northwest
was unsuccessful in proving not only the "no-show" claim, but that Chiong, likewise, worked under the original crew agreement.
Northwest likewise insists now that there is a pending criminal case for False Testimony against Chiong that a falsified part of
Chiongs testimony would indicate the falsity of his entire testimony, consistent with the "falsus in uno, falsus in omnibus"
26
doctrine.
Following Northwests flawed logic, this would invariably lead to the conclusion that the corroborating testimonies of Chiongs
witnesses are also false.
The legal maxim falsus in uno, falsus in omnibus, cited by Northwest, is not a positive rule of law and is not strictly applied in this
jurisdiction. Before this maxim can be applied, the witness must be shown to have willfully falsified the truth on one or more material
points. The principle presupposes the existence of a positive testimony on a material point contrary to subsequent declarations in the
testimony. However, the records show that Chiongs testimony did not contain inconsistencies on what occurred on April 1, 1989. Yet,
Northwest never even attempted to explain or impugn the evidence that Chiong passed through the PCG counter on April 1, 1989, and
that his passport was accordingly stamped, obviously for purposes of his departure on that day.
As to the criminal case, it is well to note that there is no final determination, as yet, of Chiongs guilt by the courts. But even if Chiong is
adjudged guilty, it will have little effect on the outcome of this case. As we held in Leyson v. Lawa:
27

The testimony of a witness must be considered in its entirety instead of in truncated parts. The technique in deciphering a
testimony is not to consider only its isolated parts and anchor a conclusion on the basis of said parts. In ascertaining the facts
established by a witness, everything stated by him on direct, cross and redirect examinations must be calibrated and
considered.
It must be stressed that facts imperfectly or erroneously stated in answer to one question may be supplied or explained as
qualified by his answer to other question. The principle falsus in uno, falsus in omnibus is not strictly applied in this
jurisdiction. The doctrine deals only with the weight of evidence and is not a positive rule of law, and the same is not an
inflexible one of universal application. The testimony of a witness can be believed as to some facts and disbelieved as to
others:
x x x x
Professor Wigmore gives the following enlightening commentary:
It may be said, once for all, that the maxim is in itself worthless first, in point of validity, because in one form it
merely contains in loose fashion a kernel of truth which no one needs to be told, and in the others, it is absolutely
false as a maxim of life; and secondly, in point of utility, because it merely tells the jury what they may do in any
event, not what they must do or must not do, and therefore it is a superfluous form of words. It is also in practice
pernicious, first, because there is frequently a misunderstanding of its proper force, and secondly, because it has
become in the hands of many counsel a mere instrument for obtaining new trials upon points wholly unimportant in
themselves.
From the foregoing disquisition, the ineluctable conclusion is that Northwest breached its contract of carriage with Chiong.
Time and again, we have declared that a contract of carriage, in this case, air transport, is primarily 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 the aggrieved party, Chiong only had to prove the existence of the contract and the fact of its non-performance by
Northwest, as carrier, in order to be awarded compensatory and actual damages.
We reiterate that Northwest failed to prove its claim that Chiong worked on M/V Elbia from April 17 to October 5, 1989 under the
original crew agreement. Accordingly, we affirm the lower courts finding on Chiongs entitlement to actual and compensatory
damages.
We, likewise, uphold the findings of both courts on Northwests liability for moral and exemplary damages, and attorneys fees.
Under Article 2220 of the Civil Code of the Philippines, an award of moral damages, in breaches of contract, is in order upon a
showing that the defendant acted fraudulently or in bad faith. Bad faith does not simply connote bad judgment or negligence.
28
It
imports a dishonest purpose or some moral obliquity and conscious doing of a wrong.
29
It means breach of a known duty through
some motive, interest or ill will that partakes of the nature of fraud.
30
Bad faith is in essence a question of intention.
31

In the case at bench, the courts carefully examined the evidence as to the conduct and outward acts of Northwest indicative of its
inward motive. It is borne out by the records that Chiong was given the run-around at the Northwest check-in counter, instructed to
deal with a "man in barong" to obtain a boarding pass, and eventually barred from boarding Northwest Flight No. 24 to accommodate
an American, W. Costine, whose name was merely inserted in the Flight Manifest, and did not even personally check-in at the
counter.
32

Under the foregoing circumstances, the award of exemplary damages is also correct given the evidence that Northwest acted in an
oppressive manner towards Chiong.
33

As for the award of attorneys fees, while we recognize that it is sound policy not to set a premium on the right to litigate,
34
we sustain
the lower courts award thereof.
Attorneys fees may be awarded when a party is compelled to litigate or incur expenses to protect his interest,
35
or where the
defendant acted in gross and evident bad faith in refusing to satisfy the plaintiffs plainly valid, just and demandable clai m.
36
In the
case at bench, Northwest deliberately breached its contract of carriage with Chiong and then repeatedly refused to satisfy Chiongs
valid, just and demandable claim. This unjustified refusal constrained Chiong to not only lose income under the crew agreement, but to
further incur expenses and exert effort for almost two (2) decades in order to protect his interests and vindicate his right. Therefore,
this Court deems it just and equitable to grant Chiong P200,000.00 as attorneys fees. The award is reasonable in view of the time it
has taken for this case to be resolved.
37

Finally, the issue of the exclusion of Northwests Exhibits "2" and "3" need not detain us long. Suffice it to state that the RTC and CA
correctly excluded these documents as hearsay evidence. We quote with favor the CAs holding thereon, thus:
As a rule, "entries made at, or near the time of the transactions to which they refer, by a person deceased, or unable to
testify, who was in a position to know the facts therein stated, may be received as prima facie evidence, if such person made
the entries in his professional capacity or in the performance of a duty and in the ordinary or regular course of business or
duty". [Rule 130, Section 43, Revised Rules of Court]
Otherwise stated, in order to be admissible as entries in the course of business, it is necessary that: (a) the person who made
the entry must be dead or unable to testify; (b) the entries were made at or near the time of the transactions to which they
refer; (c) the entrant was in a position to know the facts stated in the entries; (d) the entries were made in his professional
capacity or in the performance of a duty; and (e) the entries were made in the ordinary or regular course of business or duty.
Tested by these requirements, we find the manifest and passenger name record to be mere hearsay evidence. While there is
no necessity to bring into court all the employees who individually made the entries, it is sufficient that the person who
supervised them while they were making the entries testify that the account was prepared under his supervision and that the
entries were regularly entered in the ordinary course of business. In the case at bench, while MENDOZA was the
supervisor on-duty on April 1, 1989, he has no personal knowledge of the entries in the manifest since he did not
supervise the preparation thereof. More importantly, no evidence was presented to prove that the employee who
made the entries was dead nor did the defendant-appellant set forth the circumstances that would show the
employees inability to testify.
38

WHEREFORE, premises considered, the petition is hereby DENIED. The ruling of the Court of Appeals in CA-G.R. CV No. 50308 is
hereby AFFIRMED. Costs against the petitioner.
SO ORDERED.
SECOND DIVISION
[G.R. No. 142305. December 10, 2003]
SINGAPORE AIRLINES LIMITED, petitioner, vs. ANDION FERNANDEZ, respondent.
D E C I S I O N
CALLEJO, SR., J .:
This is a petition for review on certiorari assailing the Decision
[1]
of the Court of Appeals which affirmed in toto the decision
[2]
of
the Regional Trial Court of Pasig City, Branch 164 in Civil Case No. 60985 filed by the respondent for damages.
The Case for the Respondent
Respondent Andion Fernandez is an acclaimed soprano here in the Philippines and abroad. At the time of the incident, she was
availing an educational grant from the Federal Republic of Germany, pursuing a Masters Degree in Music majoring in Voice.
[3]

She was invited to sing before the King and Queen of Malaysia on February 3 and 4, 1991. For this singing engagement, an
airline passage ticket was purchased from petitioner Singapore Airlines which would transport her
to Manila from Frankfurt, Germany on January 28, 1991. From Manila, she would proceed to Malaysia on the next day.
[4]
It was
necessary for the respondent to pass by Manila in order to gather her wardrobe; and to rehearse and coordinate with her pianist her
repertoire for the aforesaid performance.
The petitioner issued the respondent a Singapore Airlines ticket for Flight No. SQ 27, leaving Frankfurt, Germany on January 27,
1991 bound for Singapore with onward connections fromSingapore to Manila. Flight No. SQ 27 was scheduled to
leave Frankfurt at 1:45 in the afternoon of January 27, 1991, arriving at Singapore at 8:50 in the morning of January 28, 1991. The
connecting flight from Singapore to Manila, Flight No. SQ 72, was leaving Singapore at 11:00 in the morning of January 28, 1991,
arriving in Manila at 2:20 in the afternoon of the same day.
[5]

On January 27, 1991, Flight No. SQ 27 left Frankfurt but arrived in Singapore two hours late or at about 11:00 in the morning
of January 28, 1991. By then, the aircraft bound for Manila had left as scheduled, leaving the respondent and about 25 other
passengers stranded in the Changi Airport in Singapore.
[6]

Upon disembarkation at Singapore, the respondent approached the transit counter who referred her to the nightstop counter and
told the lady employee thereat that it was important for her to reach Manila on that day, January 28, 1991. The lady employee told her
that there were no more flights to Manila for that day and that respondent had no choice but to stay in Singapore. Upon respondents
persistence, she was told that she can actually fly to Hong Kong going to Manila but since her ticket was non-transferable, she would
have to pay for the ticket. The respondent could not accept the offer because she had no money to pay for it.
[7]
Her pleas for the
respondent to make arrangements to transport her to Manila were unheeded.
[8]

The respondent then requested the lady employee to use their phone to make a call to Manila. Over the employees reluctance,
the respondent telephoned her mother to inform the latter that she missed the connecting flight. The respondent was able to contact
a family friend who picked her up from the airport for her overnight stay in Singapore.
[9]

The next day, after being brought back to the airport, the respondent proceeded to petitioners counter which says: Immediate
Attention To Passengers with Immediate Booking. There were four or five passengers in line. The respondent approached
petitioners male employee at the counter to make arrangements for immediate booking only to be told: Cant you see I am doing
something. She explained her predicament but the male employee uncaringly retorted: Its your problem, not ours.
[10]

The respondent never made it to Manila and was forced to take a direct flight from Singapore to Malaysia on January 29, 1991,
through the efforts of her mother and travel agency in Manila. Her mother also had to travel to Malaysia bringing with her respondents
wardrobe and personal things needed for the performance that caused them to incur an expense of about P50,000.
[11]

As a result of this incident, the respondents performance before the Royal Family of Malaysia was below par. Because of the
rude and unkind treatment she received from the petitioners personnel in Singapore, the respondent was engulfed with fear, anxiety,
humiliation and embarrassment causing her to suffer mental fatigue and skin rashes. She was thereby compelled to seek immediate
medical attention upon her return to Manila for acute urticaria.
[12]

On June 15, 1993, the RTC rendered a decision with the following dispositive portion:
ACCORDINGLY and as prayed for, defendant Singapore Airlines is ordered to pay herein plaintiff Andion H. Fernandez the sum of:
1. FIFTY THOUSAND (P50,000.00) PESOS as compensatory or actual damages;
2. TWO HUNDRED and FIFTY THOUSAND (P250,000.00) PESOS as moral damages considering plaintiffs
professional standing in the field of culture at home and abroad;
3. ONE HUNDRED THOUSAND (P100,000.00) PESOS as exemplary damages;
4. SEVENTY-FIVE THOUSAND (P75,000.00) PESOS as attorneys fees; and
5. To pay the costs of suit.
SO ORDERED.
[13]

The petitioner appealed the decision to the Court of Appeals.
On June 10, 1998, the CA promulgated the assailed decision finding no reversible error in the appealed deci sion of the trial
court.
[14]

Forthwith, the petitioner filed the instant petition for review, raising the following errors:
I
THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING IN TOTO THE DECISION OF THE TRIAL COURT THAT AWARDED
DAMAGES TO RESPONDENT FOR THE ALLEGED FAILURE OF THE PETITIONER TO EXERCISE EXTRAORDINARY DILIGENCE.
II
THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE PETITIONER ACTED IN BAD FAITH.
III
THE HONORABLE COURT OF APPEALS ERRED IN DISMISSING THE PETITIONERS COUNTERCLAIMS.
[15]

The petitioner assails the award of damages contending that it exercised the extraordinary diligence required by law under the
given circumstances. The delay of Flight No. SQ 27 fromFrankfurt to Singapore on January 28, 1991 for more than two hours was
due to a fortuitous event and beyond petitioners control. Inclement weather prevented the petitioners plane coming
fromCopenhagen, Denmark to arrive in Frankfurt on time on January 27, 1991. The plane could not take off from the airport as the
place was shrouded with fog. This delay caused a snowball effect whereby the other flights were consequently delayed. The plane
carrying the respondent arrived in Singapore two (2) hours behind schedule.
[16]
The delay was even compounded when the plane
could not travel the normal route which was through the Middle East due to the raging Gulf War at that time. It had to pass through the
restricted Russian airspace which was more congested.
[17]

Under these circumstances, petitioner therefore alleged that it cannot be faulted for the delay in arriving in Singapore on January
28, 1991 and causing the respondent to miss her connecting flight to Manila.
The petitioner further contends that it could not also be held in bad faith because its personnel did their best to look after the
needs and interests of the passengers including the respondent. Because the respondent and the other 25 passengers missed their
connecting flight to Manila, the petitioner automatically booked them to the flight the next day and gave them free hotel
accommodations for the night. It was respondent who did not take petitioners offer and opted to stay with a family friend
in Singapore.
The petitioner also alleges that the action of the respondent was baseless and it tarnished its good name and image earned
through the years for which, it was entitled to damages in the amount of P1,000,000; exemplary damages of P500,000; and attorneys
fees also in the amount of P500,000.
[18]

The petition is barren of merit.
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 then 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.
[19]

The contract of air carriage is a peculiar one. Imbued with public interest, the law requires common carriers 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.
[20]
In an action for 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 is necessary to prove is the existence of the contract and the fact of its non-
performance by the carrier.
[21]

In the case at bar, it is undisputed that the respondent carried a confirmed ticket for the two-legged trip
from Frankfurt to Manila: 1) Frankfurt-Singapore; and 2) Singapore-Manila. In her contract of carriage with the petitioner, the
respondent certainly expected that she would fly to Manila on Flight No. SQ 72 on January 28, 1991. Since the petitioner did not
transport the respondent as covenanted by it on said terms, the petitioner clearly breached its contract of carriage with the
respondent. The respondent had every right to sue the petitioner for this breach. The defense that the delay was due to fortuitous
events and beyond petitioners control is unavailing. In PAL vs. CA,
[22]
we held that:
.... Undisputably, PALs diversion of its flight due to inclement weather was a fortuitous event. Nonetheless, such occurrence did not terminate
PALs contract with its passengers. Being in the business of air carriage and the sole one to operate in the country, PAL is deemed to be equipped
to deal with situations as in the case at bar. What we said in one case once again must be stressed, i.e., the relation of carrier and passenger
continues until the latter has been landed at the port of destination and has left the carriers premises. Hence, PAL necessarily would still have to
exercise extraordinary diligence in safeguarding the comfort, convenience and safety of its stranded passengers until they have reached their final
destination...
...
...If the cause of non-fulfillment of the contract is due to a fortuitous event, it has to be the sole and only cause (Art. 1755 C.C., Art. 1733
C.C.). Since part of the failure to comply with the obligation of common carrier to deliver its passengers safely to their destination lay in the
defendants failure to provide comfort and convenience to its stranded passengers using extraordinary diligence, the cause of non-fulfillment is not
solely and exclusively due to fortuitous event, but due to something which defendant airline could have prevented, defendant becomes liable to
plaintiff.
Indeed, in the instant case, petitioner was not without recourse to enable it to fulfill its obligation to transport the respondent
safely as scheduled as far as human care and foresight can provide to her destination. Tagged as a premiere airline as it claims to be
and with the complexities of air travel, it was certainly well-equipped to be able to foresee and deal with such situation. The petitioners
indifference and negligence by its absence and insensitivity was exposed by the trial court, thus:
(a) Under Section 9.1 of its Traffic Manual (Exhibit 4) flights can be delayed to await the uplift of connecting cargo and
passengers arriving on a late in-bound flight As adverted to by the trial court,Flight SQ-27/28 maybe delayed
for about half an hour to transfer plaintiff to her connecting flight. As pointed out above, delay is normal in
commercial air transportation (RTC Decision, p. 22); or
(b) Petitioner airlines could have carried her on one of its flights bound for Hongkong and arranged for a connecting flight
from Hongkong to Manila all on the same date. But then the airline personnel who informed her of such possibility
told her that she has to pay for that flight. Regrettably, respondent did not have sufficient funds to pay for it. (TSN,
30 March 1992, pp.8-9; RTC Decision, pp. 22-23) Knowing the predicament of the respondent, petitioner did not
offer to shoulder the cost of the ticket for that flight; or
(c) As noted by the trial court from the account of petitioners witness, Bob Khkimyong, that a passenger such as the
plaintiff could have been accommodated in another international airline such as Lufthansa to bring the plaintiff to
Singapore early enough from Frankfurt provided that there was prior communication from that station to enable her
to catch the connecting flight to Manila because of the urgency of her business in Manila(RTC Decision, p. 23)
The petitioners diligence in communicating to its passengers the consequences of the delay in their flights was wanting. As
elucidated by the trial court:
It maybe that delay in the take off and arrival of commercial aircraft could not be avoided and may be caused by diverse factors such as those
testified to by defendants pilot. However, knowing fully well that even before the plaintiff boarded defendants Jumbo aircraft in Frankfurt bound
for Singapore, it has already incurred a delay of two hours. Nevertheless, defendant did not take the trouble of informing plaintiff, among its other
passengers of such a delay and that in such a case, the usual practice of defendant airline will be that they have to stay overnight at their connecting
airport; and much less did it inquire from the plaintiff and the other 25 passengers bound for Manila whether they are amenable to stay overnight in
Singapore and to take the connecting flight to Manila the next day. Such information should have been given and inquiries made in Frankfurt
because even the defendant airlines manual provides that in case of urgency to reach his or her destination on the same date, the head office of
defendant in Singapore must be informed by telephone or telefax so as the latter may make certain arrangements with other airlines in Frankfurt to
bring such a passenger with urgent business to Singapore in such a manner that the latter can catch up with her connecting flight such as S-27/28
without spending the night in Singapore
[23]

The respondent was not remiss in conveying her apprehension about the delay of the flight when she was still in Frankfurt. Upon
the assurance of petitioners personnel in Frankfurt that she will be transported to Manila on the same date, she had every right to
expect that obligation fulfilled. She testified, to wit:
Q: Now, since you were late, when the plane that arrived from Frankfurt was late, did you not make arrangements so that
your flight from Singapore to Manila would be adjusted?
A: I asked the lady at the ticket counter, the one who gave the boarding pass in Frankfurt and I asked her, Since my flight
going to Singapore would be late, what would happen to my Singapore-Manila flight? and then she said, Dont worry,
Singapore Airlines would be responsible to bring you to Manila on the same date. And then they have informed the
name of the officer, or whatever, that our flight is going to be late.
[24]

When a passenger contracts for a specific flight, he has a purpose in making that choice which must be respected. This choice,
once exercised, must not be impaired by a breach on the part of the airline without the latter incurring any liability.
[25]
For petitioners
failure to bring the respondent to her destination, as scheduled, we find the petitioner clearly liable for the breach of its contract of
carriage with the respondent.
We are convinced that the petitioner acted in bad faith. Bad faith means a breach of known duty through some motive of interest
or ill will. Self-enrichment or fraternal interest, and not personal ill will, may well have been the motive; but it is malice
nevertheless.
[26]
Bad faith was imputed by the trial court when it found that the petitioners employees at the Singapore airport did not
accord the respondent the attention and treatment allegedly warranted under the circumstances. The lady employee at the counter
was unkind and of no help to her. The respondent further alleged that without her threats of suing the company, she was not allowed
to use the companys phone to make long distance calls to her mother in Manila. The male employee at the counter where it says:
Immediate Attention to Passengers with Immediate Booking was rude to her when he curtly retorted that he was busy attending to
other passengers in line. The trial court concluded that this inattentiveness and rudeness of petitioners personnel to respondents
plight was gross enough amounting to bad faith. This is a finding that is generally binding upon the Court which we find no reason to
disturb.
Article 2232 of the Civil Code provides that in a contractual or quasi-contractual relationship, exemplary damages may be
awarded only if the defendant had acted in a wanton, fraudulent, reckless, oppressive or malevolent manner. In this case,
petitioners employees acted in a wanton, oppressive or malevolent manner. The award of exemplary damages is, therefore,
warranted in this case.
WHEREFORE, the Petition is DENIED. The Decision of the Court of Appeals is AFFIRMED.
SO ORDERED.
Puno, (Chairman), Quisumbing, Austria-Martinez, and Tinga, JJ., concur.

SECOND DIVISION
[G.R. No. 127897. November 15, 2001]
DELSAN TRANSPORT LINES, INC., petitioner, vs. THE HON. COURT OF APPEALS and AMERICAN HOME ASSURANCE
CORPORATION, respondents.
D E C I S I O N
DE LEON, JR., J .:
Before us is a petition for review on certiorari of the Decision
[1]
of the Court of Appeals in CA-G.R. CV No. 39836 promulgated on June 17,
1996, reversing the decision of the Regional Trial Court of Makati City, Branch 137, ordering petitioner to pay private respondent the sum of Five
Million Ninety-Six Thousand Six Hundred Thirty-Five Pesos and Fifty-Seven Centavos (P5,096,635.57) and costs and the Resolution
[2]
dated
January 21, 1997 which denied the subsequent motion for reconsideration.
The facts show that Caltex Philippines (Caltex for brevity) entered into a contract of affreightment with the petitioner, Delsan Transport Lines,
Inc., for a period of one year whereby the said common carrier agreed to transport Caltexs industrial fuel oil from the Batangas-Bataan Refinery to
different parts of the country. Under the contract, petitioner took on board its vessel, MT Maysun, 2,277.314 kiloliters of industrial fuel oil of
Caltex to be delivered to the Caltex Oil Terminal in Zamboanga City. The shipment was insured with the private respondent, American Home
Assurance Corporation.
On August 14, 1986, MT Maysun set sail from Batangas for Zamboanga City. Unfortunately, the vessel sank in the early morning of August
16, 1986 near Panay Gulf in the Visayas taking with it the entire cargo of fuel oil.
Subsequently, private respondent paid Caltex the sum of Five Million Ninety-Six Thousand Six Hundred Thirty-Five Pesos and Fifty-Seven
Centavos (P5,096,635.57) representing the insured value of the lost cargo. Exercising its right of subrogation under Article 2207 of the New Civil
Code, the private respondent demanded of the petitioner the same amount it paid to Caltex.
Due to its failure to collect from the petitioner despite prior demand, private respondent filed a complaint with the Regional Trial Court of
Makati City, Branch 137, for collection of a sum of money. After the trial and upon analyzing the evidence adduced, the trial court rendered a
decision on November 29, 1990 dismissing the complaint against herein petitioner without pronouncement as to cost. The trial court found that the
vessel, MT Maysun, was seaworthy to undertake the voyage as determined by the Philippine Coast Guard per Survey Certificate Report No. M5-
016-MH upon inspection during its annual dry-docking and that the incident was caused by unexpected inclement weather condition or force
majeure, thus exempting the common carrier (herein petitioner) from liability for the loss of its cargo.
[3]

The decision of the trial court, however, was reversed, on appeal, by the Court of Appeals. The appellate court gave credence to the weather
report issued by the Philippine Atmospheric, Geophysical and Astronomical Services Administration (PAGASA for brevity) which showed that
from 2:00 oclock to 8:00 oclock in the morning on August 16, 1986, the wind speed remained at 10 to 20 knots per hour while the waves
measured from .7 to two (2) meters in height only in the vicinity of the Panay Gulf where the subject vessel sank, in contrast to herein petitioners
allegation that the waves were twenty (20) feet high. In the absence of any explanation as to what may have caused the sinking of the vessel
coupled with the finding that the same was improperly manned, the appellate court ruled that the petitioner is liable on its obligation as common
carrier
[4]
to herein private respondent insurance company as subrogee of Caltex. The subsequent motion for reconsideration of herein petitioner was
denied by the appellate court.
Petitioner raised the following assignments of error in support of the instant petition,
[5]
to wit:
I
THE COURT OF APPEALS ERRED IN REVERSING THE DECISION OF THE REGIONAL TRIAL COURT.
II
THE COURT OF APPEALS ERRED AND WAS NOT JUSTIFIED IN REBUTTING THE LEGAL PRESUMPTION THAT THE VESSEL MT
MAYSUN WAS SEAWORTHY.
III
THE COURT OF APPEALS ERRED IN NOT APPLYING THE DOCTRINE OF THE SUPREME COURT IN THE CASE OF HOME
INSURANCE CORPORATION V. COURT OF APPEALS.
Petitioner Delsan Transport Lines, Inc. invokes the provision of Section 113 of the Insurance Code of the Philippines, which states that in
every marine insurance upon a ship or freight, or freightage, or upon any thing which is the subject of marine insurance there is an implied warranty
by the shipper that the ship is seaworthy. Consequently, the insurer will not be liable to the assured for any loss under the policy in case the vessel
would later on be found as not seaworthy at the inception of the insurance. It theorized that when private respondent paid Caltex the value of its lost
cargo, the act of the private respondent is equivalent to a tacit recognition that the ill-fated vessel was seaworthy; otherwise, private respondent was
not legally liable to Caltex due to the latters breach of implied warranty under the marine insurance policy that the vessel was seaworthy.
The petitioner also alleges that the Court of Appeals erred in ruling that MT Maysun was not seaworthy on the ground that the marine officer
who served as the chief mate of the vessel, Francisco Berina, was allegedly not qualified. Under Section 116 of the Insurance Code of the
Philippines, the implied warranty of seaworthiness of the vessel, which the private respondent admitted as having been fulfilled by its payment of
the insurance proceeds to Caltex of its lost cargo, extends to the vessels complement. Besides, petitioner avers that although Berina had merely a
2
nd
officers license, he was qualified to act as the vessels chief officer under Chapter IV(403), Category III(a)(3)(ii)(aa) of the Philippine Merchant
Marine Rules and Regulations. In fact, all the crew and officers of MT Maysun were exonerated in the administrative investigation conducted by
the Board of Marine Inquiry after the subject accident.
[6]

In any event, petitioner further avers that private respondent failed, for unknown reason, to present in evidence during the trial of the instant
case the subject marine cargo insurance policy it entered into with Caltex. By virtue of the doctrine laid down in the case of Home Insurance
Corporation vs. CA,
[7]
the failure of the private respondent to present the insurance policy in evidence is allegedly fatal to its claim inasmuch as
there is no way to determine the rights of the parties thereto.
Hence, the legal issues posed before the Court are:
I
Whether or not the payment made by the private respondent to Caltex for the insured value of the lost cargo amounted to an admission that the
vessel was seaworthy, thus precluding any action for recovery against the petitioner.
II
Whether or not the non-presentation of the marine insurance policy bars the complaint for recovery of sum of money for lack of cause of action.
We rule in the negative on both issues.
The payment made by the private respondent for the insured value of the lost cargo operates as waiver of its (private respondent) right to
enforce the term of the implied warranty against Caltex under the marine insurance policy. However, the same cannot be validly interpreted as an
automatic admission of the vessels seaworthiness by the private respondent as to foreclose recourse against the petitioner for any liability under its
contractual obligation as a common carrier. The fact of payment grants the private respondent subrogatory right which enables it to exercise legal
remedies that would otherwise be available to Caltex as owner of the lost cargo against the petitioner common carrier.
[8]
Article 2207 of the New
Civil Code provides that:
Art. 2207. If the plaintiffs property has been insured, and he has received indemnity from the insurance company for the injury or loss arising out
of the wrong or breach of contract complained of, the insurance company shall be subrogated to the rights of the insured against the wrongdoer or
the person who has violated the contract. If the amount paid by the insurance company does not fully cover the injury or loss, the aggrieved party
shall be entitled to recover the deficiency from the person causing the loss or injury.
The right of subrogation has its roots in equity. It is designed to promote and to accomplish justice and is the mode which equity adopts to
compel the ultimate payment of a debt by one who in justice and good conscience ought to pay.
[9]
It is not dependent upon, nor does it grow out of,
any privity of contract or upon written assignment of claim. It accrues simply upon payment by the insurance company of the insurance
claim.
[10]
Consequently, the payment made by the private respondent (insurer) to Caltex (assured) operates as an equitable assignment to the former
of all the remedies which the latter may have against the petitioner.
From the nature of their business and for reasons of public policy, common carriers are bound to observe extraordinary diligence in the
vigilance over the goods and for the safety of passengers transported by them, according to all the circumstances of each case.
[11]
In the event of
loss, destruction or deterioration of the insured goods, common carriers shall be responsible unless the same is brought about, among others, by
flood, storm, earthquake, lightning or other natural disaster or calamity.
[12]
In all other cases, if the goods are lost, destroyed or deteriorated,
common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence.
[13]

In order to escape liability for the loss of its cargo of industrial fuel oil belonging to Caltex, petitioner attributes the sinking of MT Maysun to
fortuitous event or force majeure. From the testimonies of Jaime Jarabe and Francisco Berina, captain and chief mate, respectively of the ill-fated
vessel, it appears that a sudden and unexpected change of weather condition occurred in the early morning of August 16, 1986; that at around 3:15
oclock in the morning a squall (unos) carrying strong winds with an approximate velocity of 30 knots per hour and big waves averaging eighteen
(18) to twenty (20) feet high, repeatedly buffeted MT Maysun causing it to tilt, take in water and eventually sink with its cargo.
[14]
This tale of
strong winds and big waves by the said officers of the petitioner however, was effectively rebutted and belied by the weather report
[15]
from the
Philippine Atmospheric, Geophysical and Astronomical Services Administration (PAGASA), the independent government agency charged with
monitoring weather and sea conditions, showing that from 2:00 oclock to 8:00 oclock in the morning on August 16, 1986, the wind speed
remained at ten (10) to twenty (20) knots per hour while the height of the waves ranged from .7 to two (2) meters in the vicinity of Cuyo East Pass
and Panay Gulf where the subject vessel sank. Thus, as the appellate court correctly ruled, petitioners vessel, MT Maysun, sank with its entire
cargo for the reason that it was not seaworthy. There was no squall or bad weather or extremely poor sea condition in the vicinity when the said
vessel sank.
The appellate court also correctly opined that the petitioners witnesses, Jaime Jarabe and Francisco Berina, ship captain and chief mate,
respectively, of the said vessel, could not be expected to testify against the interest of their employer, the herein petitioner common carrier.
Neither may petitioner escape liability by presenting in evidence certificates
[16]
that tend to show that at the time of dry-docking and
inspection by the Philippine Coast Guard, the vessel MT Maysun, was fit for voyage. These pieces of evidence do not necessarily take into account
the actual condition of the vessel at the time of the commencement of the voyage. As correctly observed by the Court of appeals:
At the time of dry-docking and inspection, the ship may have appeared fit. The certificates issued, however, do not negate the presumption of
unseaworthiness triggered by an unexplained sinking. Of certificates issued in this regard, authorities are likewise clear as to their probative value,
(thus):
Seaworthiness relates to a vessels actual condition. Neither the granting of classification or the issuance of certificates establishes seaworthiness.
(2-A Benedict on Admiralty, 7-3, Sec. 62)
And also:
Authorities are clear that diligence in securing certificates of seaworthiness does not satisfy the vessel owners obligation. Also securing the
approval of the shipper of the cargo, or his surveyor, of the condition of the vessel or her stowage does not establish due diligence if the vessel was
in fact unseaworthy, for the cargo owner has no obligation in relation to seaworthiness. (Ibid.)
[17]

Additionally, the exoneration of MT Maysuns officers and crew by the Board of Marine Inquiry merely concerns their respective
administrative liabilities. It does not in any way operate to absolve the petitioner common carrier from its civil liability arising from its failure to
observe extraordinary diligence in the vigilance over the goods it was transporting and for the negligent acts or omissions of its employees, the
determination of which properly belongs to the courts.
[18]
In the case at bar, petitioner is liable for the insured value of the lost cargo of industrial
fuel oil belonging to Caltex for its failure to rebut the presumption of fault or negligence as common carrier
[19]
occasioned by the unexplained
sinking of its vessel, MT Maysun, while in transit.
Anent the second issue, it is our view and so hold that the presentation in evidence of the marine insurance policy is not indispensable in this
case before the insurer may recover from the common carrier the insured value of the lost cargo in the exercise of its subrogatory right. The
subrogation receipt, by itself, is sufficient to establish not only the relationship of herein private respondent as insurer and Caltex, as the assured
shipper of the lost cargo of industrial fuel oil, but also the amount paid to settle the insurance claim. The right of subrogation accrues simply upon
payment by the insurance company of the insurance claim.
[20]

The presentation of the insurance policy was necessary in the case of Home Insurance Corporation v. CA
[21]
(a case cited by
petitioner) because the shipment therein (hydraulic engines) passed through several stages with different parties involved in each stage. First, from
the shipper to the port of departure; second, from the port of departure to the M/S Oriental Statesman; third, from the M/S Oriental Statesman to the
M/S Pacific Conveyor; fourth, from the M/S Pacific Conveyor to the port of arrival; fifth, from the port of arrival to the arrastre operator; sixth,
from the arrastre operator to the hauler, Mabuhay Brokerage Co., Inc. (private respondent therein); and lastly, from the hauler to the consignee. We
emphasized in that case that in the absence of proof of stipulations to the contrary, the hauler can be liable only for any damage that occurred from
the time it received the cargo until it finally delivered it to the consignee. Ordinarily, it cannot be held responsible for the handling of the cargo
before it actually received it. The insurance contract, which was not presented in evidence in that case would have indicated the scope of the
insurers liability, if any, since no evidence was adduced indicating at what stage in the handling process the damage to the cargo was sustained.
Hence, our ruling on the presentation of the insurance policy in the said case of Home Insurance Corporation is not applicable to the case at
bar. In contrast, there is no doubt that the cargo of industrial fuel oil belonging to Caltex, in the case at bar, was lost while on board petitioners
vessel, MT Maysun, which sank while in transit in the vicinity of Panay Gulf and Cuyo East Pass in the early morning of August 16, 1986.
WHEREFORE, the instant petition is DENIED. The Decision dated June 17, 1996 of the Court of Appeals in CA-G.R. CV No. 39836 is
AFFIRMED. Costs against the petitioner.
SO ORDERED.
Bellosillo, (Chairman), Mendoza, Quisumbing, and Buena, JJ., concur.
[G.R. No. 159636. November 25, 2004]
VICTORY LINER, INC., petitioner, vs. ROSALITO GAMMAD, APRIL ROSSAN P. GAMMAD, ROI ROZANO P. GAMMAD and
DIANA FRANCES P. GAMMAD, respondents.
D E C I S I O N
YNARES-SANTIAGO, J .:
Assailed in this petition for review on certiorari is the April 11, 2003 decision
[1]
of the Court of Appeals in CA-G.R. CV No. 63290
which affirmed with modification the November 6, 1998 decision
[2]
of the Regional Trial Court of Tuguegarao, Cagayan, Branch 5
finding petitioner Victory Liner, Inc. liable for breach of contract of carriage in Civil Case No. 5023.
The facts as testified by respondent Rosalito Gammad show that on March 14, 1996, his wife Marie Grace Pagulayan-
Gammad,
[3]
was on board an air-conditioned Victory Liner bus bound for Tuguegarao, Cagayan from Manila. At about 3:00 a.m., the
bus while running at a high speed fell on a ravine somewhere in Barangay Baliling, Sta. Fe, Nueva Vizcaya, which resulted in the
death of Marie Grace and physical injuries to other passengers.
[4]

On May 14, 1996, respondent heirs of the deceased filed a complaint
[5]
for damages arising from culpa contractual against
petitioner. In its answer,
[6]
the petitioner claimed that the incident was purely accidental and that it has always exercised extraordinary
diligence in its 50 years of operation.
After several re-settings,
[7]
pre-trial was set on April 10, 1997.
[8]
For failure to appear on the said date, petitioner was declared as
in default.
[9]
However, on petitioners motion
[10]
to lift the order of default, the same was granted by the trial court.
[11]

At the pre-trial on May 6, 1997, petitioner did not want to admit the proposed stipulation that the deceased was a passenger of
the Victory Liner Bus which fell on the ravine and that she was issued Passenger Ticket No. 977785. Respondents, for their part, did
not accept petitioners proposal to pay P50,000.00.
[12]

After respondent Rosalito Gammad completed his direct testimony, cross-examination was scheduled for November 17,
1997
[13]
but moved to December 8, 1997,
[14]
because the parties and the counsel failed to appear. On December 8, 1997, counsel of
petitioner was absent despite due notice and was deemed to have waived right to cross-examine respondent Rosalito.
[15]

Petitioners motion to reset the presentation of its evidence to March 25, 1998
[16]
was granted. However, on March 24, 1998, the
counsel of petitioner sent the court a telegram
[17]
requesting postponement but the telegram was received by the trial court on March
25, 1998, after it had issued an order considering the case submitted for decision for failure of petitioner and counsel to appear.
[18]

On November 6, 1998, the trial court rendered its decision in favor of respondents, the dispositive portion of which reads:
WHEREFORE, premises considered and in the interest of justice, judgment is hereby rendered in favor of the plaintiffs and against the defendant
Victory Liner, Incorporated, ordering the latter to pay the following:
1. Actual Damages -------------------- P 122,000.00
2. Death Indemnity --------------------- 50,000.00
3. Exemplary and Moral Damages----- 400,000.00
4. Compensatory Damages ---------- 1,500,000.00
5. Attorneys Fees ------------ 10% of the total amount granted
6. Cost of the Suit.
SO ORDERED.
[19]

On appeal by petitioner, the Court of Appeals affirmed the decision of the trial court with modification as follows:
[T]he Decision dated 06 November 1998 is hereby MODIFIED to reflect that the following are hereby adjudged in favor of plaintiffs-appellees:
1. Actual Damages in the amount of P88,270.00;
2. Compensatory Damages in the amount of P1,135,536,10;
3. Moral and Exemplary Damages in the amount of P400,000.00; and
4. Attorneys fees equivalent to 10% of the sum of the actual, compensatory, moral, and exemplary damages herein adjudged.
The court a quos judgment of the cost of the suit against defendant-appellant is hereby AFFIRMED.
SO ORDERED.
[20]

Represented by a new counsel, petitioner on May 21, 2003 filed a motion for reconsideration praying that the case be remanded
to the trial court for cross- examination of respondents witness and for the presentation of its evidence; or in the alternative, dismiss
the respondents complaint.
[21]
Invoking APEX Mining, Inc. v. Court of Appeals,
[22]
petitioner argues, inter alia, that the decision of the
trial court should be set aside because the negligence of its former counsel, Atty. Antonio B. Paguirigan, in failing to appear at the
scheduled hearings and move for reconsideration of the orders declaring petitioner to have wai ved the right to cross-examine
respondents witness and right to present evidence, deprived petitioner of its day in court.
On August 21, 2003, the Court of Appeals denied petitioners motion for reconsideration.
[23]

Hence, this petition for review principally based on the fact that the mistake or gross negligence of its counsel deprived petitioner
of due process of law. Petitioner also argues that the trial courts award of damages were without basis and should be deleted.
The issues for resolution are: (1) whether petitioners counsel was guilty of gross negligence; (2) whether petitioner should be
held liable for breach of contract of carriage; and (3) whether the award of damages was proper.
It is settled that the negligence of counsel binds the client. This is based on the rule that any act performed by a counsel within
the scope of his general or implied authority is regarded as an act of his client. Consequently, the mistake or negligence of counsel
may result in the rendition of an unfavorable judgment against the client. However, the application of the general rule to a given case
should be looked into and adopted according to the surrounding circumstances obtaining. Thus, exceptions to the foregoing have
been recognized by the court in cases where reckless or gross negligence of counsel deprives the client of due process of law, or
when its application will result in outright deprivation of the clients liberty or property or where the interests of justice so require, and
accord relief to the client who suffered by reason of the lawyers gross or palpable mistake or negligence.
[24]

The exceptions, however, are not present in this case. The record shows that Atty. Paguirigan filed an Answer and Pre-trial Brief
for petitioner. Although initially declared as in default, Atty. Paguirigan successfully moved for the setting aside of the order of
default. In fact, petitioner was represented by Atty. Paguirigan at the pre-trial who proposed settlement for P50,000.00. Although Atty.
Paguirigan failed to file motions for reconsideration of the orders declaring petitioner to have waived the right to cross-examine
respondents witness and to present evidence, he nevertheless, filed a timely appeal with the Court of Appeals assailing the decision
of the trial court. Hence, petitioners claim that it was denied due process lacks basis.
Petitioner too is not entirely blameless. Prior to the issuance of the order declaring it as in default for not appearing at the pre-
trial, three notices (dated October 23, 1996,
[25]
January 30, 1997,
[26]
and March 26, 1997,
[27]
) requiring attendance at the pre-trial were
sent and duly received by petitioner. However, it was only on April 27, 1997, after the issuance of the April 10, 1997 order of default
for failure to appear at the pre-trial when petitioner, through its finance and administrative manager, executed a special power of
attorney
[28]
authorizing Atty. Paguirigan or any member of his law firm to represent petitioner at the pre-trial. Petitioner is guilty, at the
least, of contributory negligence and fault cannot be imputed solely on previous counsel.
The case of APEX Mining, Inc., invoked by petitioner is not on all fours with the case at bar. In APEX, the negligent counsel not
only allowed the adverse decision against his client to become final and executory, but deliberately misrepresented in the progress
report that the case was still pending with the Court of Appeals when the same was dismissed 16 months ago.
[29]
These circumstances
are absent in this case because Atty. Paguirigan timely filed an appeal from the decision of the trial court with the Court of Appeals.
In Gold Line Transit, Inc. v. Ramos,
[30]
the Court was similarly confronted with the issue of whether or not the client should bear
the adverse consequences of its counsels negligence. In that case, Gold Line Transit, Inc. (Gold Line) and its lawyer failed to appear
at the pre-trial despite notice and was declared as in default. After the plaintiffs presentation of evidence ex parte, the trial court
rendered decision ordering Gold Line to pay damages to the heirs of its deceased passenger. The decision became final and
executory because counsel of Gold Line did not file any appeal. Finding that Goldline was not denied due process of law and is thus
bound by the negligence of its lawyer, the Court held as follows
This leads us to the question of whether the negligence of counsel was so gross and reckless that petitioner was deprived of its right to due process
of law. We do not believe so. It cannot be denied that the requirements of due process were observed in the instant case. Petitioner was never
deprived of its day in court, as in fact it was afforded every opportunity to be heard. Thus, it is of record that notices were sent to petitioner and that
its counsel was able to file a motion to dismiss the complaint, an answer to the complaint, and even a pre-trial brief. What was irretrievably lost by
petitioner was its opportunity to participate in the trial of the case and to adduce evidence in its behalf because of negligence.
In the application of the principle of due process, what is sought to be safeguarded against is not the lack of previous notice but the denial of the
opportunity to be heard. The question is not whether petitioner succeeded in defending its rights and interests, but simply, whether it had the
opportunity to present its side of the controversy. Verily, as petitioner retained the services of counsel of its choice, it should, as far as this suit is
concerned, bear the consequences of its choice of a faulty option. Its plea that it was deprived of due process echoes on hollow ground and certainly
cannot elicit approval nor sympathy.
To cater to petitioners arguments and reinstate its petition for relief from judgment would put a premium on the negligence of its former counsel
and encourage the non-termination of this case by reason thereof. This is one case where petitioner has to bear the adverse consequences of its
counsels act, for a client is bound by the action of his counsel in the conduct of a case and he cannot thereafter be heard to complain that the result
might have been different had his counsel proceeded differently. The rationale for the rule is easily discernible. If the negligence of counsel be
admitted as a reason for opening cases, there would never be an end to a suit so long as a new counsel could be hired every time it is shown that the
prior counsel had not been sufficiently diligent, experienced or learned.
[31]

Similarly, in Macalalag v. Ombudsman,
[32]
a Philippine Postal Corporation employee charged with dishonesty was not able to file
an answer and position paper. He was found guilty solely on the basis of complainants evidence and was dismissed with forfeiture of
all benefits and disqualification from government service. Challenging the decision of the Ombudsman, the employee contended that
the gross negligence of his counsel deprived him of due process of law. In debunking his contention, the Court said
Neither can he claim that he is not bound by his lawyers actions; it is only in case of gross or palpable negligence of counsel when the courts can
step in and accord relief to a client who would have suffered thereby. If every perceived mistake, failure of diligence, lack of experience or
insufficient legal knowledge of the lawyer would be admitted as a reason for the reopening of a case, there would be no end to controversy.
Fundamental to our judicial system is the principle that every litigation must come to an end. It would be a clear mockery if it were otherwise.
Access to the courts is guaranteed, but there must be a limit to it.
Viewed vis--vis the foregoing jurisprudence, to sustain petitioners argument that it was denied due process of law due to
negligence of its counsel would set a dangerous precedent. It would enable every party to render inutile any adverse order or decision
through the simple expedient of alleging gross negligence on the part of its counsel. The Court will not countenance such a farce
which contradicts long-settled doctrines of trial and procedure.
[33]

Anent the second issue, petitioner was correctly found liable for breach of contract of carriage. A common carrier is bound to
carry its passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with
due regard to all the circumstances. In a contract of carriage, it is presumed that the common carrier was at fault or was negligent
when a passenger dies or is injured. Unless the presumption is rebutted, the court need not even make an express finding of
fault or negligence on the part of the common carrier. This statutory presumption may only be overcome by evidence that the
carrier exercised extraordinary diligence.
[34]

In the instant case, there is no evidence to rebut the statutory presumption that the proximate cause of Marie Graces death was
the negligence of petitioner. Hence, the courts below correctly ruled that petitioner was guilty of breach of contract of carriage.
Nevertheless, the award of damages should be modified.
Article 1764
[35]
in relation to Article 2206
[36]
of the Civil Code, holds the common carrier in breach of its contract of carriage that
results in the death of a passenger liable to pay the following: (1) indemnity for death, (2) indemnity for loss of earning capacity, and
(3) moral damages.
In the present case, respondent heirs of the deceased are entitled to indemnity for the death of Marie Grace which under current
jurisprudence is fixed at P50,000.00.
[37]

The award of compensatory damages for the loss of the deceaseds earning capacity should be deleted for lack of basis. As a
rule, documentary evidence should be presented to substantiate the claim for damages for loss of earning capacity. By way of
exception, damages for loss of earning capacity may be awarded despite the absence of documentary evidence when (1) the
deceased is self-employed earning less than the minimum wage under current labor laws, and judicial notice may be taken of the fact
that in the deceaseds line of work no documentary evidence is available; or (2) the deceased is employed as a daily wage worker
earning less than the minimum wage under current labor laws.
[38]

In People v. Oco,
[39]
the evidence presented by the prosecution to recover damages for loss of earning capacity was the bare
testimony of the deceaseds wife that her husband was earning P8,000.00 monthly as a legal researcher of a private
corporation. Finding that the deceased was neither self-employed nor employed as a daily-wage worker earning less than the
minimum wage under the labor laws existing at the time of his death, the Court held that testimonial evidence alone is insufficient to
justify an award for loss of earning capacity.
Likewise, in People v. Caraig,
[40]
damages for loss of earning capacity was not awarded because the circumstances of the 3
deceased did not fall within the recognized exceptions, and except for the testimony of their wives, no documentary proof about their
income was presented by the prosecution. Thus
The testimonial evidence shows that Placido Agustin, Roberto Raagas, and Melencio Castro Jr. were not self-employed or employed as daily-wage
workers earning less than the minimum wage under the labor laws existing at the time of their death. Placido Agustin was a Social Security
System employee who received a monthly salary of P5,000. Roberto Raagas was the President of Sinclair Security and Allied Services, a
family owned corporation, with a monthly compensation of P30,000. Melencio Castro Jr. was a taxi driver of New Rocalex with an average
daily earning of P500 or a monthly earning of P7,500. Clearly, these cases do not fall under the exceptions where indemnity for loss of earning
capacity can be given despite lack of documentary evidence. Therefore, for lack of documentary proof, no indemnity for loss of earning capacity
can be given in these cases. (Emphasis supplied)
Here, the trial court and the Court of Appeals computed the award of compensatory damages for loss of earning capacity only on
the basis of the testimony of respondent Rosalito that the deceased was 39 years of age and a Section Chief of the Bureau of Internal
Revenue, Tuguergarao District Office with a salary of P83,088.00 per annum when she died.
[41]
No other evidence was
presented. The award is clearly erroneous because the deceaseds earnings does not fall within the exceptions.
However, the fact of loss having been established, temperate damages in the amount of P500,000.00 should be awarded to
respondents. Under Article 2224 of the Civil Code, temperate or moderate damages, which are more than nominal but less than
compensatory damages, may be recovered when the court finds that some pecuniary loss has been suffered but its amount can not,
from the nature of the case, be proved with certainty.
In Pleno v. Court of Appeals,
[42]
the Court sustained the trial courts award of P200,000.00 as temperate damages in lieu of actual
damages for loss of earning capacity because the income of the victim was not sufficiently proven, thus
The trial court based the amounts of damages awarded to the petitioner on the following circumstances:

As to the loss or impairment of earning capacity, there is no doubt that Pleno is an ent[re]preneur and the founder of his own corporation, the
Mayon Ceramics Corporation. It appears also that he is an industrious and resourceful person with several projects in line, and were it not for the
incident, might have pushed them through. On the day of the incident, Pleno was driving homeward with geologist Longley after an ocular
inspection of the site of the Mayon Ceramics Corporation. His actual income however has not been sufficiently established so that this Court cannot
award actual damages, but, an award of temperate or moderate damages may still be made on loss or impairment of earning capacity. That Pleno
sustained a permanent deformity due to a shortened left leg and that he also suffers from double vision in his left eye is also established. Because of
this, he suffers from some inferiority complex and is no longer active in business as well as in social life. In similar cases as in Borromeo v. Manila
Electric Railroad Co., 44 Phil 165; Coriage, et al. v. LTB Co., et al., L-11037, Dec. 29, 1960, and in Araneta, et al. v. Arreglado, et al., L-11394,
Sept. 9, 1958, the proper award of damages were given.

We rule that the lower courts awards of damages are more consonant with the factual circumstances of the instant case. The trial courts findings of
facts are clear and well-developed. Each item of damages is adequately supported by evidence on record.
Article 2224 of the Civil Code was likewise applied in the recent cases of People v. Singh
[43]
and People v. Almedilla,
[44]
to justify
the award of temperate damages in lieu of damages for loss of earning capacity which was not substantiated by the required
documentary proof.
Anent the award of moral damages, the same cannot be lumped with exemplary damages because they are based on different
jural foundations.
[45]
These damages are different in nature and require separate determination.
[46]
In culpa contractual or breach of
contract, moral damages may be recovered when the defendant acted in bad faith or was guilty of gross negligence (amounting to bad
faith) or in wanton disregard of contractual obligations and, as in this case, when the act of breach of contract itself constitutes the tort
that results in physical injuries. By special rule in Article 1764 in relation to Article 2206 of the Civil Code, moral damages may also be
awarded in case the death of a passenger results from a breach of carriage.
[47]
On the other hand, exemplary damages, which are
awarded by way of example or correction for the public good may be recovered in contractual obligations if the defendant acted in
wanton, fraudulent, reckless, oppressive, or malevolent manner.
[48]

Respondents in the instant case should be awarded moral damages to compensate for the grief caused by the death of the
deceased resulting from the petitioners breach of contract of carriage. Furthermore, the petitioner failed to prove that it exercised the
extraordinary diligence required for common carriers, it is presumed to have acted recklessly.
[49]
Thus, the award of exemplary
damages is proper. Under the circumstances, we find it reasonable to award respondents the amount of P100,000.00 as moral
damages and P100,000.00 as exemplary damages. These amounts are not excessive.
[50]

The actual damages awarded by the trial court reduced by the Court of Appeals should be further reduced. In People v.
Duban,
[51]
it was held that only substantiated and proven expenses or those that appear to have been genuinely incurred in connection
with the death, wake or burial of the victim will be recognized. A list of expenses (Exhibit J),
[52]
and the contract/receipt for the
construction of the tomb (Exhibit F)
[53]
in this case, cannot be considered competent proof and cannot replace the official receipts
necessary to justify the award. Hence, actual damages should be further reduced to P78,160.00,
[54]
which was the amount supported
by official receipts.
Pursuant to Article 2208
[55]
of the Civil Code, attorneys fees may also be recovered in the case at bar where exemplary damages
are awarded. The Court finds the award of attorneys fees equivalent to 10% of the total amount adjudged against petitioner
reasonable.
Finally, in Eastern Shipping Lines, Inc. v. Court of Appeals,
[56]
it was held that when an obligation, regardless of its source, i.e.,
law, contracts, quasi-contracts, delicts or quasi-delicts is breached, the contravenor can be held liable for payment of interest in the
concept of actual and compensatory damages, subject to the following rules, to wit
1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance of money, the interest due
should be that which may have been stipulated in writing. Furthermore, theinterest due shall itself earn legal interest from the time it is judicially
demanded. In the absence of stipulation, the rate of interest shall be 12% per annum to be computed from default, i.e., from judicial or extrajudicial
demand under and subject to the provisions of Article 1169 of the Civil Code.
2. When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of damages awarded may be
imposed at the discretion of the court at the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated claims or damages
except when or until the demand can be established with reasonable certainty. Accordingly, where the demand is established with reasonable
certainty, the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code) but when such certainty
cannot be so reasonably established at the time the demand is made, the interest shall begin to run only from the date the judgment of the court is
made (at which time the quantification of damages may be deemed to have been reasonably ascertained). The actual base for the computation of
legal interestshall, in any case, be on the amount finally adjudged.
3. When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, whether the case
falls under paragraph 1 or paragraph 2, above, shall be 12% per annum from such finality until its satisfaction, this interim period being
deemed to be by then an equivalent to a forbearance of credit. (Emphasis supplied).
In the instant case, petitioner should be held liable for payment of interest as damages for breach of contract of
carriage. Considering that the amounts payable by petitioner has been determined with certainty only in the instant petition, the
interest due shall be computed upon the finality of this decision at the rate of 12% per annum until satisfaction, per paragraph 3 of the
aforecited rule.
[57]

WHEREFORE, in view of all the foregoing, the petition is PARTIALLY GRANTED. The April 11, 2003 decision of the Court of
Appeals in CA-G.R. CV No. 63290, which modified the decision of the Regional Trial Court of Tuguegarao, Cagayan in Civil Case No.
5023, is AFFIRMED with MODIFICATION. As modified, petitioner Victory Liner, Inc., is ordered to pay respondents the following: (1)
P50,000.00 as indemnity for the death of Marie Grace Pagulayan-Gammad; (2) P100,000.00 as moral damages; (3) P100,000.00 as
exemplary damages; (4) P78,160.00 as actual damages; (5) P500,000.00 as temperate damages; (6) 10% of the total amount as
attorneys fees; and the costs of suit.
Furthermore, the total amount adjudged against petitioner shall earn interest at the rate of 12% per annum computed from the
finality of this decision until fully paid.
SO ORDERED.
Quisumbing, Carpio, and Azcuna, JJ., concur.
Davide, Jr., C.J., (Chairman), on official leave.
[G.R. No. 159636. November 25, 2004]

VICTORY LINER, INC., petitioner, vs. ROSALITO GAMMAD, APRIL ROSSAN P. GAMMAD, ROI ROZANO P. GAMMAD and DIANA FRANCES P.
GAMMAD, respondents.
D E C I S I O N
YNARES-SANTIAGO, J.:

Assailed in this petition for review on certiorari is the April 11, 2003 decision[1] of the Court of Appeals in CA-G.R. CV No. 63290 which affirmed
with modification the November 6, 1998 decision[2] of the Regional Trial Court of Tuguegarao, Cagayan, Branch 5 finding petitioner Victory Liner,
Inc. liable for breach of contract of carriage in Civil Case No. 5023.

The facts as testified by respondent Rosalito Gammad show that on March 14, 1996, his wife Marie Grace Pagulayan-Gammad,[3] was on board
an air-conditioned Victory Liner bus bound for Tuguegarao, Cagayan from Manila. At about 3:00 a.m., the bus while running at a high speed fell
on a ravine somewhere in Barangay Baliling, Sta. Fe, Nueva Vizcaya, which resulted in the death of Marie Grace and physical injuries to other
passengers.[4]

On May 14, 1996, respondent heirs of the deceased filed a complaint[5] for damages arising from culpa contractual against petitioner. In its
answer,[6] the petitioner claimed that the incident was purely accidental and that it has always exercised extraordinary diligence in its 50 years of
operation.

After several re-settings,[7] pre-trial was set on April 10, 1997.[8] For failure to appear on the said date, petitioner was declared as in default.[9]
However, on petitioners motion*10+ to lift the order of default, the same was granted by the trial court.[11]

At the pre-trial on May 6, 1997, petitioner did not want to admit the proposed stipulation that the deceased was a passenger of the Victory Liner
Bus which fell on the ravine and that she was issued Passenger Ticket No. 977785. Respondents, for their part, did not accept petitioners
proposal to pay P50,000.00.[12]

After respondent Rosalito Gammad completed his direct testimony, cross-examination was scheduled for November 17, 1997[13] but moved to
December 8, 1997,[14] because the parties and the counsel failed to appear. On December 8, 1997, counsel of petitioner was absent despite due
notice and was deemed to have waived right to cross-examine respondent Rosalito.[15]

Petitioners motion to reset the presentation of its evidence to March 25, 1998[16] was granted. However, on March 24, 1998, the counsel of
petitioner sent the court a telegram[17] requesting postponement but the telegram was received by the trial court on March 25, 1998, after it had
issued an order considering the case submitted for decision for failure of petitioner and counsel to appear.[18]

On November 6, 1998, the trial court rendered its decision in favor of respondents, the dispositive portion of which reads:

WHEREFORE, premises considered and in the interest of justice, judgment is hereby rendered in favor of the plaintiffs and against the defendant
Victory Liner, Incorporated, ordering the latter to pay the following:

1. Actual Damages -------------------- P 122,000.00
2. Death Indemnity --------------------- 50,000.00
3. Exemplary and Moral Damages----- 400,000.00
4. Compensatory Damages ---------- 1,500,000.00
5. Attorneys Fees ------------ 10% of the total amount granted
6. Cost of the Suit.

SO ORDERED.[19]

On appeal by petitioner, the Court of Appeals affirmed the decision of the trial court with modification as follows:

[T]he Decision dated 06 November 1998 is hereby MODIFIED to reflect that the following are hereby adjudged in favor of plaintiffs-appellees:

1. Actual Damages in the amount of P88,270.00;

2. Compensatory Damages in the amount of P1,135,536,10;

3. Moral and Exemplary Damages in the amount of P400,000.00; and

4. Attorneys fees equivalent to 10% of the sum of the actual, compensatory, moral, and exemplary damages herein adjudged.

The court a quos judgment of the cost of the suit against defendant-appellant is hereby AFFIRMED.

SO ORDERED.[20]

Represented by a new counsel, petitioner on May 21, 2003 filed a motion for reconsideration praying that the case be remanded to the trial court
for cross- examination of respondents witness and for the presentation of its evidence; or in the alternative, dismiss the respondents
complaint.[21] Invoking APEX Mining, Inc. v. Court of Appeals,[22] petitioner argues, inter alia, that the decision of the trial court should be set
aside because the negligence of its former counsel, Atty. Antonio B. Paguirigan, in failing to appear at the scheduled hearings and move for
reconsideration of the orders declaring petitioner to have waived the right to cross-examine respondents witness and right to present evidence,
deprived petitioner of its day in court.

On August 21, 2003, the Court of Appeals denied petitioners motion for reconsideration.*23]

Hence, this petition for review principally based on the fact that the mistake or gross negligence of its counsel deprived petitioner of due process
of law. Petitioner also argues that the trial courts award of damages were without basis and should be deleted.

The issues for resolution are: (1) whether petitioners counsel was guilty of gross negligence; (2) whether petitioner should be held liable for
breach of contract of carriage; and (3) whether the award of damages was proper.

It is settled that the negligence of counsel binds the client. This is based on the rule that any act performed by a counsel within the scope of his
general or implied authority is regarded as an act of his client. Consequently, the mistake or negligence of counsel may result in the rendition of
an unfavorable judgment against the client. However, the application of the general rule to a given case should be looked into and adopted
according to the surrounding circumstances obtaining. Thus, exceptions to the foregoing have been recognized by the court in cases where
reckless or gross negligence of counsel deprives the client of due process of law, or when its application will result in outright deprivation of the
clients liberty or property or where the interests of justice so require, and accord relief to the client who suffered by reason of the lawyers gross
or palpable mistake or negligence.[24]

The exceptions, however, are not present in this case. The record shows that Atty. Paguirigan filed an Answer and Pre-trial Brief for petitioner.
Although initially declared as in default, Atty. Paguirigan successfully moved for the setting aside of the order of default. In fact, petitioner was
represented by Atty. Paguirigan at the pre-trial who proposed settlement for P50,000.00. Although Atty. Paguirigan failed to file motions for
reconsideration of the orders declaring petitioner to have waived the right to cross-examine respondents witness and to present evidence, he
nevertheless, filed a timely appeal with the Court of Appeals assailing the decision of the trial court. Hence, petitioners claim that it was denied
due process lacks basis.

Petitioner too is not entirely blameless. Prior to the issuance of the order declaring it as in default for not appearing at the pre-trial, three notices
(dated October 23, 1996,[25] January 30, 1997,[26] and March 26, 1997,[27]) requiring attendance at the pre-trial were sent and duly received by
petitioner. However, it was only on April 27, 1997, after the issuance of the April 10, 1997 order of default for failure to appear at the pre-trial
when petitioner, through its finance and administrative manager, executed a special power of attorney[28] authorizing Atty. Paguirigan or any
member of his law firm to represent petitioner at the pre-trial. Petitioner is guilty, at the least, of contributory negligence and fault cannot be
imputed solely on previous counsel.

The case of APEX Mining, Inc., invoked by petitioner is not on all fours with the case at bar. In APEX, the negligent counsel not only allowed the
adverse decision against his client to become final and executory, but deliberately misrepresented in the progress report that the case was still
pending with the Court of Appeals when the same was dismissed 16 months ago.[29] These circumstances are absent in this case because Atty.
Paguirigan timely filed an appeal from the decision of the trial court with the Court of Appeals.

In Gold Line Transit, Inc. v. Ramos,[30] the Court was similarly confronted with the issue of whether or not the client should bear the adverse
consequences of its counsels negligence. In that case, Gold Line Transit, Inc. (Gold Line) and its lawyer failed to appear at the pre-trial despite
notice and was declared as in default. After the plaintiffs presentation of evidence ex parte, the trial court rendered decision ordering Gold Line
to pay damages to the heirs of its deceased passenger. The decision became final and executory because counsel of Gold Line did not file any
appeal. Finding that Goldline was not denied due process of law and is thus bound by the negligence of its lawyer, the Court held as follows

This leads us to the question of whether the negligence of counsel was so gross and reckless that petitioner was deprived of its right to due
process of law. We do not believe so. It cannot be denied that the requirements of due process were observed in the instant case. Petitioner was
never deprived of its day in court, as in fact it was afforded every opportunity to be heard. Thus, it is of record that notices were sent to petitioner
and that its counsel was able to file a motion to dismiss the complaint, an answer to the complaint, and even a pre-trial brief. What was
irretrievably lost by petitioner was its opportunity to participate in the trial of the case and to adduce evidence in its behalf because of negligence.

In the application of the principle of due process, what is sought to be safeguarded against is not the lack of previous notice but the denial of the
opportunity to be heard. The question is not whether petitioner succeeded in defending its rights and interests, but simply, whether it had the
opportunity to present its side of the controversy. Verily, as petitioner retained the services of counsel of its choice, it should, as far as this suit is
concerned, bear the consequences of its choice of a faulty option. Its plea that it was deprived of due process echoes on hollow ground and
certainly cannot elicit approval nor sympathy.

To cater to petitioners arguments and reinstate its petition for relief from judgment would put a premium on the negligence of its former counsel
and encourage the non-termination of this case by reason thereof. This is one case where petitioner has to bear the adverse consequences of its
counsels act, for a client is bound by the action of his counsel in the conduct of a case and he cannot thereafter be heard to complain that the
result might have been different had his counsel proceeded differently. The rationale for the rule is easily discernible. If the negligence of counsel
be admitted as a reason for opening cases, there would never be an end to a suit so long as a new counsel could be hired every time it is shown
that the prior counsel had not been sufficiently diligent, experienced or learned.[31]

Similarly, in Macalalag v. Ombudsman,[32] a Philippine Postal Corporation employee charged with dishonesty was not able to file an answer and
position paper. He was found guilty solely on the basis of complainants evidence and was dismissed with forfeiture of all benefits and
disqualification from government service. Challenging the decision of the Ombudsman, the employee contended that the gross negligence of his
counsel deprived him of due process of law. In debunking his contention, the Court said

Neither can he claim that he is not bound by his lawyers actions; it is only in case of gross or palpable negligence of counsel when the courts can
step in and accord relief to a client who would have suffered thereby. If every perceived mistake, failure of diligence, lack of experience or
insufficient legal knowledge of the lawyer would be admitted as a reason for the reopening of a case, there would be no end to controversy.
Fundamental to our judicial system is the principle that every litigation must come to an end. It would be a clear mockery if it were otherwise.
Access to the courts is guaranteed, but there must be a limit to it.

Viewed vis--vis the foregoing jurisprudence, to sustain petitioners argument that it was denied due process of law due to negligence of its
counsel would set a dangerous precedent. It would enable every party to render inutile any adverse order or decision through the simple
expedient of alleging gross negligence on the part of its counsel. The Court will not countenance such a farce which contradicts long-settled
doctrines of trial and procedure.[33]

Anent the second issue, petitioner was correctly found liable for breach of contract of carriage. A common carrier is bound to carry its passengers
safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with due regard to all the
circumstances. In a contract of carriage, it is presumed that the common carrier was at fault or was negligent when a passenger dies or is injured.
Unless the presumption is rebutted, the court need not even make an express finding of fault or negligence on the part of the common carrier.
This statutory presumption may only be overcome by evidence that the carrier exercised extraordinary diligence.[34]

In the instant case, there is no evidence to rebut the statutory presumption that the proximate cause of Marie Graces death was the negligence
of petitioner. Hence, the courts below correctly ruled that petitioner was guilty of breach of contract of carriage.

Nevertheless, the award of damages should be modified.

Article 1764[35] in relation to Article 2206[36] of the Civil Code, holds the common carrier in breach of its contract of carriage that results in the
death of a passenger liable to pay the following: (1) indemnity for death, (2) indemnity for loss of earning capacity, and (3) moral damages.

In the present case, respondent heirs of the deceased are entitled to indemnity for the death of Marie Grace which under current jurisprudence is
fixed at P50,000.00.[37]

The award of compensatory damages for the loss of the deceaseds earning capacity should be deleted for lack of basis. As a rule, documentary
evidence should be presented to substantiate the claim for damages for loss of earning capacity. By way of exception, damages for loss of earning
capacity may be awarded despite the absence of documentary evidence when (1) the deceased is self-employed earning less than the minimum
wage under current labor laws, and judicial notice may be taken of the fact that in the deceaseds line of work no documentary evidence is
available; or (2) the deceased is employed as a daily wage worker earning less than the minimum wage under current labor laws.[38]

In People v. Oco,[39] the evidence presented by the prosecution to recover damages for loss of earning capacity was the bare testimony of the
deceaseds wife that her husband was earning P8,000.00 monthly as a legal researcher of a private corporation. Finding that the deceased was
neither self-employed nor employed as a daily-wage worker earning less than the minimum wage under the labor laws existing at the time of his
death, the Court held that testimonial evidence alone is insufficient to justify an award for loss of earning capacity.

Likewise, in People v. Caraig,[40] damages for loss of earning capacity was not awarded because the circumstances of the 3 deceased did not fall
within the recognized exceptions, and except for the testimony of their wives, no documentary proof about their income was presented by the
prosecution. Thus

The testimonial evidence shows that Placido Agustin, Roberto Raagas, and Melencio Castro Jr. were not self-employed or employed as daily-wage
workers earning less than the minimum wage under the labor laws existing at the time of their death. Placido Agustin was a Social Security
System employee who received a monthly salary of P5,000. Roberto Raagas was the President of Sinclair Security and Allied Services, a family
owned corporation, with a monthly compensation of P30,000. Melencio Castro Jr. was a taxi driver of New Rocalex with an average daily earning
of P500 or a monthly earning of P7,500. Clearly, these cases do not fall under the exceptions where indemnity for loss of earning capacity can be
given despite lack of documentary evidence. Therefore, for lack of documentary proof, no indemnity for loss of earning capacity can be given in
these cases. (Emphasis supplied)

Here, the trial court and the Court of Appeals computed the award of compensatory damages for loss of earning capacity only on the basis of the
testimony of respondent Rosalito that the deceased was 39 years of age and a Section Chief of the Bureau of Internal Revenue, Tuguergarao
District Office with a salary of P83,088.00 per annum when she died.[41] No other evidence was presented. The award is clearly erroneous
because the deceaseds earnings does not fall within the exceptions.

However, the fact of loss having been established, temperate damages in the amount of P500,000.00 should be awarded to respondents. Under
Article 2224 of the Civil Code, temperate or moderate damages, which are more than nominal but less than compensatory damages, may be
recovered when the court finds that some pecuniary loss has been suffered but its amount can not, from the nature of the case, be proved with
certainty.

In Pleno v. Court of Appeals,*42+ the Court sustained the trial courts award of P200,000.00 as temperate damages in lieu of actual damages for
loss of earning capacity because the income of the victim was not sufficiently proven, thus

The trial court based the amounts of damages awarded to the petitioner on the following circumstances:



As to the loss or impairment of earning capacity, there is no doubt that Pleno is an ent*re+preneur and the founder of his own corporation, the
Mayon Ceramics Corporation. It appears also that he is an industrious and resourceful person with several projects in line, and were it not for the
incident, might have pushed them through. On the day of the incident, Pleno was driving homeward with geologist Longley after an ocular
inspection of the site of the Mayon Ceramics Corporation. His actual income however has not been sufficiently established so that this Court
cannot award actual damages, but, an award of temperate or moderate damages may still be made on loss or impairment of earning capacity.
That Pleno sustained a permanent deformity due to a shortened left leg and that he also suffers from double vision in his left eye is also
established. Because of this, he suffers from some inferiority complex and is no longer active in business as well as in social life. In similar cases as
in Borromeo v. Manila Electric Railroad Co., 44 Phil 165; Coriage, et al. v. LTB Co., et al., L-11037, Dec. 29, 1960, and in Araneta, et al. v. Arreglado,
et al., L-11394, Sept. 9, 1958, the proper award of damages were given.



We rule that the lower courts awards of damages are more consonant with the factual circumstances of the instant case. The trial courts findings
of facts are clear and well-developed. Each item of damages is adequately supported by evidence on record.

Article 2224 of the Civil Code was likewise applied in the recent cases of People v. Singh[43] and People v. Almedilla,[44] to justify the award of
temperate damages in lieu of damages for loss of earning capacity which was not substantiated by the required documentary proof.

Anent the award of moral damages, the same cannot be lumped with exemplary damages because they are based on different jural
foundations.[45] These damages are different in nature and require separate determination.[46] In culpa contractual or breach of contract, moral
damages may be recovered when the defendant acted in bad faith or was guilty of gross negligence (amounting to bad faith) or in wanton
disregard of contractual obligations and, as in this case, when the act of breach of contract itself constitutes the tort that results in physical
injuries. By special rule in Article 1764 in relation to Article 2206 of the Civil Code, moral damages may also be awarded in case the death of a
passenger results from a breach of carriage.[47] On the other hand, exemplary damages, which are awarded by way of example or correction for
the public good may be recovered in contractual obligations if the defendant acted in wanton, fraudulent, reckless, oppressive, or malevolent
manner.[48]

Respondents in the instant case should be awarded moral damages to compensate for the grief caused by the death of the deceased resulting
from the petitioners breach of contract of carriage. Furthermore, the petitioner failed to prove that it exercised the extraordinary diligence
required for common carriers, it is presumed to have acted recklessly.[49] Thus, the award of exemplary damages is proper. Under the
circumstances, we find it reasonable to award respondents the amount of P100,000.00 as moral damages and P100,000.00 as exemplary
damages. These amounts are not excessive.[50]

The actual damages awarded by the trial court reduced by the Court of Appeals should be further reduced. In People v. Duban,[51] it was held
that only substantiated and proven expenses or those that appear to have been genuinely incurred in connection with the death, wake or burial
of the victim will be recognized. A list of expenses (Exhibit J),*52+ and the contract/receipt for the construction of the tomb (Exhibit F)*53+ in
this case, cannot be considered competent proof and cannot replace the official receipts necessary to justify the award. Hence, actual damages
should be further reduced to P78,160.00,[54] which was the amount supported by official receipts.

Pursuant to Article 2208*55+ of the Civil Code, attorneys fees may also be recovered in the case at bar where exemplary damages are awarded.
The Court finds the award of attorneys fees equivalent to 10% of the total amount adjudged against petitioner reasonable.

Finally, in Eastern Shipping Lines, Inc. v. Court of Appeals,[56] it was held that when an obligation, regardless of its source, i.e., law, contracts,
quasi-contracts, delicts or quasi-delicts is breached, the contravenor can be held liable for payment of interest in the concept of actual and
compensatory damages, subject to the following rules, to wit

1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance of money, the interest due
should be that which may have been stipulated in writing. Furthermore, the interest due shall itself earn legal interest from the time it is judicially
demanded. In the absence of stipulation, the rate of interest shall be 12% per annum to be computed from default, i.e., from judicial or
extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code.

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

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

In the instant case, petitioner should be held liable for payment of interest as damages for breach of contract of carriage. Considering that the
amounts payable by petitioner has been determined with certainty only in the instant petition, the interest due shall be computed upon the
finality of this decision at the rate of 12% per annum until satisfaction, per paragraph 3 of the aforecited rule.[57]

WHEREFORE, in view of all the foregoing, the petition is PARTIALLY GRANTED. The April 11, 2003 decision of the Court of Appeals in CA-G.R. CV
No. 63290, which modified the decision of the Regional Trial Court of Tuguegarao, Cagayan in Civil Case No. 5023, is AFFIRMED with
MODIFICATION. As modified, petitioner Victory Liner, Inc., is ordered to pay respondents the following: (1) P50,000.00 as indemnity for the death
of Marie Grace Pagulayan-Gammad; (2) P100,000.00 as moral damages; (3) P100,000.00 as exemplary damages; (4) P78,160.00 as actual
damages; (5) P500,000.00 as temperate damages; (6) 10% of the total amount as attorneys fees; and the costs of suit.

Furthermore, the total amount adjudged against petitioner shall earn interest at the rate of 12% per annum computed from the finality of this
decision until fully paid.

SO ORDERED.

Quisumbing, Carpio, and Azcuna, JJ., concur.
Davide, Jr., C.J., (Chairman), on official leave.
Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 95582 October 7, 1991

DANGWA TRANSPORTATION CO., INC. and THEODORE LARDIZABAL y MALECDAN, petitioners,
vs.
COURT OF APPEALS, INOCENCIA CUDIAMAT, EMILIA CUDIAMAT BANDOY, FERNANDO CUDLAMAT, MARRIETA CUDIAMAT, NORMA CUDIAMAT,
DANTE CUDIAMAT, SAMUEL CUDIAMAT and LIGAYA CUDIAMAT, all Heirs of the late Pedrito Cudiamat represented by Inocencia Cudiamat,
respondents.

Francisco S. Reyes Law Office for petitioners.

Antonio C. de Guzman for private respondents.



REGALADO, J.:p

On May 13, 1985, private respondents filed a complaint 1 for damages against petitioners for the death of Pedrito Cudiamat as a result of a
vehicular accident which occurred on March 25, 1985 at Marivic, Sapid, Mankayan, Benguet. Among others, it was alleged that on said date, while
petitioner Theodore M. Lardizabal was driving a passenger bus belonging to petitioner corporation in a reckless and imprudent manner and
without due regard to traffic rules and regulations and safety to persons and property, it ran over its passenger, Pedrito Cudiamat. However,
instead of bringing Pedrito immediately to the nearest hospital, the said driver, in utter bad faith and without regard to the welfare of the victim,
first brought his other passengers and cargo to their respective destinations before banging said victim to the Lepanto Hospital where he expired.

On the other hand, petitioners alleged that they had observed and continued to observe the extraordinary diligence required in the operation of
the transportation company and the supervision of the employees, even as they add that they are not absolute insurers of the safety of the public
at large. Further, it was alleged that it was the victim's own carelessness and negligence which gave rise to the subject incident, hence they prayed
for the dismissal of the complaint plus an award of damages in their favor by way of a counterclaim.

On July 29, 1988, the trial court rendered a decision, effectively in favor of petitioners, with this decretal portion:

IN VIEW OF ALL THE FOREGOING, judgment is hereby pronounced that Pedrito Cudiamat was negligent, which negligence was the proximate
cause of his death. Nonetheless, defendants in equity, are hereby ordered to pay the heirs of Pedrito Cudiamat the sum of P10,000.00 which
approximates the amount defendants initially offered said heirs for the amicable settlement of the case. No costs.

SO ORDERED. 2

Not satisfied therewith, private respondents appealed to the Court of Appeals which, in a decision 3 in CA-G.R. CV No. 19504 promulgated on
August 14, 1990, set aside the decision of the lower court, and ordered petitioners to pay private respondents:

1. The sum of Thirty Thousand (P30,000.00) Pesos by way of indemnity for death of the victim Pedrito Cudiamat;

2. The sum of Twenty Thousand (P20,000.00) by way of moral damages;

3. The sum of Two Hundred Eighty Eight Thousand (P288,000.00) Pesos as actual and compensatory damages;

4. The costs of this suit. 4

Petitioners' motion for reconsideration was denied by the Court of Appeals in its resolution dated October 4, 1990, 5 hence this petition with the
central issue herein being whether respondent court erred in reversing the decision of the trial court and in finding petitioners negligent and liable
for the damages claimed.

It is an established principle that the factual findings of the Court of Appeals as a rule are final and may not be reviewed by this Court on appeal.
However, this is subject to settled exceptions, one of which is when the findings of the appellate court are contrary to those of the trial court, in
which case a reexamination of the facts and evidence may be undertaken. 6

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

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

This Court is satisfied that Pedrito Cudiamat was negligent in trying to board a moving vehicle, especially with one of his hands holding an
umbrella. And, without having given the driver or the conductor any indication that he wishes to board the bus. But defendants can also be found
wanting of the necessary diligence. In this connection, it is safe to assume that when the deceased Cudiamat attempted to board defendants' bus,
the vehicle's door was open instead of being closed. This should be so, for it is hard to believe that one would even attempt to board a vehicle (i)n
motion if the door of said vehicle is closed. Here lies the defendant's lack of diligence. Under such circumstances, equity demands that there must
be something given to the heirs of the victim to assuage their feelings. This, also considering that initially, defendant common carrier had made
overtures to amicably settle the case. It did offer a certain monetary consideration to the victim's heirs. 7

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

From the testimony of appellees'own witness in the person of Vitaliano Safarita, it is evident that the subject bus was at full stop when the victim
Pedrito Cudiamat boarded the same as it was precisely on this instance where a certain Miss Abenoja alighted from the bus. Moreover, contrary
to the assertion of the appellees, the victim did indicate his intention to board the bus as can be seen from the testimony of the said witness when
he declared that Pedrito Cudiamat was no longer walking and made a sign to board the bus when the latter was still at a distance from him. It was
at the instance when Pedrito Cudiamat was closing his umbrella at the platform of the bus when the latter made a sudden jerk movement (as) the
driver commenced to accelerate the bus.

Evidently, the incident took place due to the gross negligence of the appellee-driver in prematurely stepping on the accelerator and in not waiting
for the passenger to first secure his seat especially so when we take into account that the platform of the bus was at the time slippery and wet
because of a drizzle. The defendants-appellees utterly failed to observe their duty and obligation as common carrier to the end that they should
observe extra-ordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them according to the
circumstances of each case (Article 1733, New Civil Code). 8

After a careful review of the evidence on record, we find no reason to disturb the above holding of the Court of Appeals. Its aforesaid findings are
supported by the testimony of petitioners' own witnesses. One of them, Virginia Abalos, testified on cross-examination as follows:

Q It is not a fact Madam witness, that at bunkhouse 54, that is before the place of the incident, there is a crossing?

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

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

A It happened between 54 and 53 bunkhouses. 9

The bus conductor, Martin Anglog, also declared:

Q When you arrived at Lepanto on March 25, 1985, will you please inform this Honorable Court if there was anv unusual incident that occurred?

A When we delivered a baggage at Marivic because a person alighted there between Bunkhouse 53 and 54.

Q What happened when you delivered this passenger at this particular place in Lepanto?

A When we reached the place, a passenger alighted and I signalled my driver. When we stopped we went out because I saw an umbrella about a
split second and I signalled again the driver, so the driver stopped and we went down and we saw Pedrito Cudiamat asking for help because he
was lying down.

Q How far away was this certain person, Pedrito Cudiamat, when you saw him lying down from the bus how far was he?

A It is about two to three meters.

Q On what direction of the bus was he found about three meters from the bus, was it at the front or at the back?

A At the back, sir. 10 (Emphasis supplied.)

The foregoing testimonies show that the place of the accident and the place where one of the passengers alighted were both between
Bunkhouses 53 and 54, hence the finding of the Court of Appeals that the bus was at full stop when the victim boarded the same is correct. They
further confirm the conclusion that the victim fell from the platform of the bus when it suddenly accelerated forward and was run over by the rear
right tires of the vehicle, as shown by the physical evidence on where he was thereafter found in relation to the bus when it stopped. Under such
circumstances, it cannot be said that the deceased was guilty of negligence.

The contention of petitioners that the driver and the conductor had no knowledge that the victim would ride on the bus, since the latter had
supposedly not manifested his intention to board the same, does not merit consideration. When the bus is not in motion there is no necessity for
a person who wants to ride the same to signal his intention to board. A public utility bus, once it stops, is in effect making a continuous offer to
bus riders. Hence, it becomes the duty of the driver and the conductor, every time the bus stops, to do no act that would have the effect of
increasing the peril to a passenger while he was attempting to board the same. The premature acceleration of the bus in this case was a breach of
such duty. 11

It is the duty of common carriers of passengers, including common carriers by railroad train, streetcar, or motorbus, to stop their conveyances a
reasonable length of time in order to afford passengers an opportunity to board and enter, and they are liable for injuries suffered by boarding
passengers resulting from the sudden starting up or jerking of their conveyances while they are doing so. 12

Further, even assuming that the bus was moving, the act of the victim in boarding the same cannot be considered negligent under the
circumstances. As clearly explained in the testimony of the aforestated witness for petitioners, Virginia Abalos, th bus had "just started" and "was
still in slow motion" at the point where the victim had boarded and was on its platform. 13

It is not negligence per se, or as a matter of law, for one attempt to board a train or streetcar which is moving slowly. 14 An ordinarily prudent
person would have made the attempt board the moving conveyance under the same or similar circumstances. The fact that passengers board and
alight from slowly moving vehicle is a matter of common experience both the driver and conductor in this case could not have been unaware of
such an ordinary practice.

The victim herein, by stepping and standing on the platform of the bus, is already considered a passenger and is entitled all the rights and
protection pertaining to such a contractual relation. Hence, it has been held that the duty which the carrier passengers owes to its patrons
extends to persons boarding cars as well as to those alighting therefrom. 15

Common carriers, from the nature of their business and reasons of public policy, are bound to observe extraordina diligence for the safety of the
passengers transported by the according to all the circumstances of each case. 16 A common carrier is bound to carry the passengers safely as far
as human care and foresight can provide, using the utmost diligence very cautious persons, with a due regard for all the circumstances. 17

It has also been repeatedly held that in an action based on a contract of carriage, the court need not make an express finding of fault or
negligence on the part of the carrier in order to hold it responsible to pay the damages sought by the passenger. By contract of carriage, the
carrier assumes the express obligation to transport the passenger to his destination safely and observe extraordinary diligence with a due regard
for all the circumstances, and any injury that might be suffered by the passenger is right away attributable to the fault or negligence of the carrier.
This is an exception to the general rule that negligence must be proved, and it is therefore incumbent upon the carrier to prove that it has
exercised extraordinary diligence as prescribed in Articles 1733 and 1755 of the Civil Code. 18

Moreover, the circumstances under which the driver and the conductor failed to bring the gravely injured victim immediately to the hospital for
medical treatment is a patent and incontrovertible proof of their negligence. It defies understanding and can even be stigmatized as callous
indifference. The evidence shows that after the accident the bus could have forthwith turned at Bunk 56 and thence to the hospital, but its driver
instead opted to first proceed to Bunk 70 to allow a passenger to alight and to deliver a refrigerator, despite the serious condition of the victim.
The vacuous reason given by petitioners that it was the wife of the deceased who caused the delay was tersely and correctly confuted by
respondent court:

... The pretension of the appellees that the delay was due to the fact that they had to wait for about twenty minutes for Inocencia Cudiamat to get
dressed deserves scant consideration. It is rather scandalous and deplorable for a wife whose husband is at the verge of dying to have the luxury
of dressing herself up for about twenty minutes before attending to help her distressed and helpless husband. 19

Further, it cannot be said that the main intention of petitioner Lardizabal in going to Bunk 70 was to inform the victim's family of the mishap, since
it was not said bus driver nor the conductor but the companion of the victim who informed his family thereof. 20 In fact, it was only after the
refrigerator was unloaded that one of the passengers thought of sending somebody to the house of the victim, as shown by the testimony of
Virginia Abalos again, to wit:

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

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

COURT:

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

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

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

A No sir. 21

With respect to the award of damages, an oversight was, however, committed by respondent Court of Appeals in computing the actual damages
based on the gross income of the victim. The rule is that the amount recoverable by the heirs of a victim of a tort is not the loss of the entire
earnings, but rather the loss of that portion of the earnings which the beneficiary would have received. In other words, only net earnings, not
gross earnings, are to be considered, that is, the total of the earnings less expenses necessary in the creation of such earnings or income and
minus living and other incidental expenses. 22

We are of the opinion that the deductible living and other expense of the deceased may fairly and reasonably be fixed at P500.00 a month or
P6,000.00 a year. In adjudicating the actual or compensatory damages, respondent court found that the deceased was 48 years old, in good
health with a remaining productive life expectancy of 12 years, and then earning P24,000.00 a year. Using the gross annual income as the basis,
and multiplying the same by 12 years, it accordingly awarded P288,000. Applying the aforestated rule on computation based on the net earnings,
said award must be, as it hereby is, rectified and reduced to P216,000.00. However, in accordance with prevailing jurisprudence, the death
indemnity is hereby increased to P50,000.00. 23

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

SO ORDERED.

Melencio-Herrera (Chairperson), Paras, Padilla and Sarmiento, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-20761 July 27, 1966

LA MALLORCA, petitioner,
vs.
HONORABLE COURT OF APPEALS, MARIANO BELTRAN, ET AL., respondents.

G. E. Yabut, R. Monterey and M.C. Lagman for petitioner.
Ahmed Garcia for respondents.

BARRERA, J.:

La Mallorca seeks the review of the decision of the Court of Appeals in CA-G.R. No. 23267-R, holding it liable for quasi-delict and ordering it to pay
to respondents Mariano Beltran, et al., P6,000.00 for the death of his minor daughter Raquel Beltran, plus P400.00 as actual damages.

The facts of the case as found by the Court of Appeals, briefly are:

On December 20, 1953, at about noontime, plaintiffs, husband and wife, together with their minor daughters, namely, Milagros, 13 years old,
Raquel, about 4 years old, and Fe, over 2 years old, boarded the Pambusco Bus No. 352, bearing plate TPU No. 757 (1953 Pampanga), owned
and operated by the defendant, at San Fernando, Pampanga, bound for Anao, Mexico, Pampanga. At the time, they were carrying with them four
pieces of baggages containing their personal belonging. The conductor of the bus, who happened to be a half-brother of plaintiff Mariano Beltran,
issued three tickets (Exhs. A, B, & C) covering the full fares of the plaintiff and their eldest child, Milagros. No fare was charged on Raquel and Fe,
since both were below the height at which fare is charged in accordance with the appellant's rules and regulations.

After about an hour's trip, the bus reached Anao whereat it stopped to allow the passengers bound therefor, among whom were the plaintiffs and
their children to get off. With respect to the group of the plaintiffs, Mariano Beltran, then carrying some of their baggages, was the first to get
down the bus, followed by his wife and his children. Mariano led his companions to a shaded spot on the left pedestrians side of the road about
four or five meters away from the vehicle. Afterwards, he returned to the bus in controversy to get his other bayong, which he had left behind,
but in so doing, his daughter Raquel followed him, unnoticed by her father. While said Mariano Beltran was on the running board of the bus
waiting for the conductor to hand him his bayong which he left under one of its seats near the door, the bus, whose motor was not shut off while
unloading, suddenly started moving forward, evidently to resume its trip, notwithstanding the fact that the conductor has not given the driver the
customary signal to start, since said conductor was still attending to the baggage left behind by Mariano Beltran. Incidentally, when the bus was
again placed into a complete stop, it had travelled about ten meters from the point where the plaintiffs had gotten off.

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

For the death of their said child, the plaintiffs commenced the present suit against the defendant seeking to recover from the latter an aggregate
amount of P16,000 to cover moral damages and actual damages sustained as a result thereof and attorney's fees. After trial on the merits, the
court below rendered the judgment in question.

On the basis of these facts, the trial court found defendant liable for breach of contract of carriage and sentenced it to pay P3,000.00 for the
death of the child and P400.00 as compensatory damages representing burial expenses and costs.

On appeal to the Court of Appeals, La Mallorca claimed that there could not be a breach of contract in the case, for the reason that when the child
met her death, she was no longer a passenger of the bus involved in the incident and, therefore, the contract of carriage had already terminated.
Although the Court of Appeals sustained this theory, it nevertheless found the defendant-appellant guilty of quasi-delict and held the latter liable
for damages, for the negligence of its driver, in accordance with Article 2180 of the Civil Code. And, the Court of Appeals did not only find the
petitioner liable, but increased the damages awarded the plaintiffs-appellees to P6,000.00, instead of P3,000.00 granted by the trial court.

In its brief before us, La Mallorca contends that the Court of Appeals erred (1) in holding it liable for quasi-delict, considering that respondents
complaint was one for breach of contract, and (2) in raising the award of damages from P3,000.00 to P6,000.00 although respondents did not
appeal from the decision of the lower court.

Under the facts as found by the Court of Appeals, we have to sustain the judgement holding petitioner liable for damages for the death of the
child, Raquel Beltran. It may be pointed out that although it is true that respondent Mariano Beltran, his wife, and their children (including the
deceased child) had alighted from the bus at a place designated for disembarking or unloading of passengers, it was also established that the
father had to return to the vehicle (which was still at a stop) to get one of his bags or bayong that was left under one of the seats of the bus. There
can be no controversy that as far as the father is concerned, when he returned to the bus for his bayong which was not unloaded, the relation of
passenger and carrier between him and the petitioner remained subsisting. For, the relation of carrier and passenger does not necessarily cease
where the latter, after alighting from the car, aids the carrier's servant or employee in removing his baggage from the car.1 The issue to be
determined here is whether as to the child, who was already led by the father to a place about 5 meters away from the bus, the liability of the
carrier for her safety under the contract of carriage also persisted.

It has been recognized as a rule that the relation of carrier and passenger does not cease at the moment the passenger alights from the carrier's
vehicle at a place selected by the carrier at the point of destination, but continues until the passenger has had a reasonable time or a reasonable
opportunity to leave the carrier's premises. And, what is a reasonable time or a reasonable delay within this rule is to be determined from all the
circumstances. Thus, a person who, after alighting from a train, walks along the station platform is considered still a passenger.2 So also, where a
passenger has alighted at his destination and is proceeding by the usual way to leave the company's premises, but before actually doing so is
halted by the report that his brother, a fellow passenger, has been shot, and he in good faith and without intent of engaging in the difficulty,
returns to relieve his brother, he is deemed reasonably and necessarily delayed and thus continues to be a passenger entitled as such to the
protection of the railroad and company and its agents.3

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

But even assuming arguendo that the contract of carriage has already terminated, herein petitioner can be held liable for the negligence of its
driver, as ruled by the Court of Appeals, pursuant to Article 2180 of the Civil Code. Paragraph 7 of the complaint, which reads

That aside from the aforesaid breach of contract, the death of Raquel Beltran, plaintiffs' daughter, was caused by the negligence and want of
exercise of the utmost diligence of a very cautious person on the part of the defendants and their agent, necessary to transport plaintiffs and their
daughter safely as far as human care and foresight can provide in the operation of their vehicle.

is clearly an allegation for quasi-delict. The inclusion of this averment for quasi-delict, while incompatible with the other claim under the contract
of carriage, is permissible under Section 2 of Rule 8 of the New Rules of Court, which allows a plaintiff to allege causes of action in the alternative,
be they compatible with each other or not, to the end that the real matter in controversy may be resolved and determined.4

The plaintiffs sufficiently pleaded the culpa or negligence upon which the claim was predicated when it was alleged in the complaint that "the
death of Raquel Beltran, plaintiffs' daughter, was caused by the negligence and want of exercise of the utmost diligence of a very cautious person
on the part of the defendants and their agent." This allegation was also proved when it was established during the trial that the driver, even
before receiving the proper signal from the conductor, and while there were still persons on the running board of the bus and near it, started to
run off the vehicle. The presentation of proof of the negligence of its employee gave rise to the presumption that the defendant employer did not
exercise the diligence of a good father of the family in the selection and supervision of its employees. And this presumption, as the Court of
Appeals found, petitioner had failed to overcome. Consequently, petitioner must be adjudged peculiarily liable for the death of the child Raquel
Beltran.

The increase of the award of damages from P3,000.00 to P6,000.00 by the Court of Appeals, however, cannot be sustained. Generally, the
appellate court can only pass upon and consider questions or issues raised and argued in appellant's brief. Plaintiffs did not appeal from that
portion of the judgment of the trial court awarding them on P3,000.00 damages for the death of their daughter. Neither does it appear that, as
appellees in the Court of Appeals, plaintiffs have pointed out in their brief the inadequacy of the award, or that the inclusion of the figure
P3,000.00 was merely a clerical error, in order that the matter may be treated as an exception to the general rule.5 Herein petitioner's
contention, therefore, that the Court of Appeals committed error in raising the amount of the award for damages is, evidently,
meritorious.1wph1.t

Wherefore, the decision of the Court of Appeals is hereby modified by sentencing, the petitioner to pay to the respondents Mariano Beltran, et
al., the sum of P3,000.00 for the death of the child, Raquel Beltran, and the amount of P400.00 as actual damages. No costs in this instance. So
ordered.

Concepcion, C.J., Reyes, J.B.L., Dizon, Regala, Bengzon, J.P., Zaldivar, Sanchez and Castro, JJ., concur.
Makalintal, J., concurs in the result.
G.R. No. L-47822 December 22, 1988

PEDRO DE GUZMAN, petitioner,
vs.
COURT OF APPEALS and ERNESTO CENDANA, respondents.

Vicente D. Millora for petitioner.

Jacinto Callanta for private respondent.



FELICIANO, J.:

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

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

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

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

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

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

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

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

1. that private respondent was not a common carrier;

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

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

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

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

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

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

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

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

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

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

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

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

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

(1) Flood, storm, earthquake, lightning or other natural disaster or calamity;
(2) Act of the public enemy in war, whether international or civil;
(3) Act or omission of the shipper or owner of the goods;
(4) The character-of the goods or defects in the packing or-in the containers; and
(5) Order or act of competent public authority.

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

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

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

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

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

As noted earlier, the duty of extraordinary diligence in the vigilance over goods is, under Article 1733, given additional specification not only by
Articles 1734 and 1735 but also by Article 1745, numbers 4, 5 and 6, Article 1745 provides in relevant part:

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

xxx xxx xxx

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

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

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

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

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

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

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

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

SO ORDERED.

Fernan, C.J., Gutierrez, Jr., Bidin and Cortes, JJ., concur.
[G.R. No. 138334. August 25, 2003]

ESTELA L. CRISOSTOMO, petitioner, vs. THE COURT OF APPEALS and CARAVAN TRAVEL & TOURS INTERNATIONAL, INC., respondents.
D E C I S I O N
YNARES-SANTIAGO, J.:

In May 1991, petitioner Estela L. Crisostomo contracted the services of respondent 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 included the countries of England,
Holland, Germany, Austria, Liechstenstein, Switzerland and France at a total cost of P74,322.70. Petitioner was given a 5% discount on the
amount, which included airfare, and the booking fee was also waived because petitioners niece, Meriam Menor, was respondent companys
ticketing manager.

Pursuant to said contract, Menor went to her aunts residence on June 12, 1991 a Wednesday to deliver petitioners travel documents and
plane tickets. Petitioner, 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, petitioner went to NAIA on Saturday, June 15, 1991, to take the flight for the first leg of her journey from
Manila to Hongkong. To petitioners dismay, 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 petitioner to take another tour the British Pageant which included England, Scotland and Wales in its
itinerary. For this tour package, petitioner was asked anew to pay US$785.00 or P20,881.00 (at the then prevailing exchange rate of P26.60). She
gave respondent US$300 or P7,980.00 as partial payment and commenced the trip in July 1991.

Upon petitioners 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.[1] Petitioner was thus constrained to file
a complaint against respondent for breach of contract of carriage and damages, which was docketed as Civil Case No. 92-133 and raffled to
Branch 59 of the Regional Trial Court of Makati City.

In her complaint,*2+ petitioner alleged that her failure to join Jewels of Europe was due to respondents fault since it did not clearly indicate the
departure date on the plane ticket. Respondent was also negligent in informing her of the wrong flight schedule through its employee Menor.
She insisted that the British Pageant was merely a substitute for the Jewels of Europe tour, such that the cost of the former should be
properly set-off against the sum paid for the latter.

For its part, respondent company, through its Operations Manager, Concepcion Chipeco, denied responsibility for petitioners failure to join the
first tour. Chipeco insisted that petitioner was informed of the correct departure date, which was clearly and legibly printed on the plane ticket.
The travel documents were given to petitioner two days ahead of the scheduled trip. Petitioner had only herself to blame for missing the flight, as
she did not bother to read or confirm her flight schedule as printed on the ticket.

Respondent explained that it can no longer reimburse the amount paid for Jewels of Europe, considering that the same had already been
remitted to its principal in Singapore, Lotus Travel Ltd., which had already billed the same even if petitioner did not join the tour. Lotus European
tour organizer, Insight International Tours Ltd., determines the cost of a package tour based on a minimum number of projected participants. For
this reason, it is accepted industry practice to disallow refund for individuals who failed to take a booked tour.[3]

Lastly, respondent maintained that the British Pageant was not a substitute for the package tour that petitioner missed. This tour was
independently procured by petitioner after realizing that she made a mistake in missing her flight for Jewels of Europe. Petitioner was allowed
to make a partial payment of only US$300.00 for the second tour because her niece was then an employee of the travel agency. Consequently,
respondent prayed that petitioner be ordered to pay the balance of P12,901.00 for the British Pageant package tour.

After due proceedings, the trial court rendered a decision,[4] the dispositive part of which reads:

WHEREFORE, premises considered, judgment is hereby rendered as follows:

1. Ordering the defendant to return and/or refund to the plaintiff the amount of Fifty Three Thousand Nine Hundred Eighty Nine Pesos and
Forty Three Centavos (P53,989.43) with legal interest thereon at the rate of twelve percent (12%) per annum starting January 16, 1992, the date
when the complaint was filed;

2. Ordering the defendant to pay the plaintiff the amount of Five Thousand (P5,000.00) Pesos as and for reasonable attorneys fees;

3. Dismissing the defendants counterclaim, for lack of merit; and

4. With costs against the defendant.

SO ORDERED.[5]

The trial court held that respondent was negligent in erroneously advising petitioner of her departure date through its employee, Menor, who
was not presented as witness to rebut petitioners testimony. However, petitioner should have verified the exact date and time of departure by
looking at her ticket and should have simply not relied on Menors verbal representation. The trial court thus declared that petitioner was guilty of
contributory negligence and accordingly, deducted 10% from the amount being claimed as refund.

Respondent appealed to the Court of Appeals, which likewise found both parties to be at fault. However, the appellate court held that petitioner
is more negligent than respondent because as a lawyer and well-traveled person, she should have known better than to simply rely on what was
told to her. This being so, she is not entitled to any form of damages. Petitioner also forfeited her right to the Jewels of Europe tour and must
therefore pay respondent the balance of the price for the British Pageant tour. The dispositive portion of the judgment appealed from reads as
follows:

WHEREFORE, premises considered, the decision of the Regional Trial Court dated October 26, 1995 is hereby REVERSED and SET ASIDE. A new
judgment is hereby ENTERED requiring the plaintiff-appellee to pay to the defendant-appellant the amount of P12,901.00, representing the
balance of the price of the British Pageant Package Tour, the same to earn legal interest at the rate of SIX PERCENT (6%) per annum, to be
computed from the time the counterclaim was filed until the finality of this decision. After this decision becomes final and executory, the rate of
TWELVE PERCENT (12%) interest per annum shall be additionally imposed on the total obligation until payment thereof is satisfied. The award of
attorneys fees is DELETED. Costs against the plaintiff-appellee.

SO ORDERED.[6]

Upon denial of her motion for reconsideration,[7] petitioner filed the instant petition under Rule 45 on the following grounds:

I

It is respectfully submitted that the Honorable Court of Appeals committed a reversible error in reversing and setting aside the decision of the trial
court by ruling that the petitioner is not entitled to a refund of the cost of unavailed Jewels of Europe tour she being equally, if not more,
negligent than the private respondent, for in the contract of carriage the common carrier is obliged to observe utmost care and extra-ordinary
diligence which is higher in degree than the ordinary diligence required of the passenger. Thus, even if the petitioner and private respondent were
both negligent, the petitioner cannot be considered to be equally, or worse, more guilty than the private respondent. At best, petitioners
negligence is only contributory while the private respondent [is guilty] of gross negligence making the principle of pari delicto inapplicable in the
case;

II

The Honorable Court of Appeals also erred in not ruling that the Jewels of Europe tour was not indivisible and the amount paid therefor
refundable;

III

The Honorable Court erred in not granting to the petitioner the consequential damages due her as a result of breach of contract of carriage.[8]

Petitioner contends that respondent did not observe the standard of care required of a common carrier when it informed her wrongly of the flight
schedule. She could not be deemed more negligent than respondent since the latter is required by law to exercise extraordinary diligence in the
fulfillment of its obligation. If she were negligent at all, the same is merely contributory and not the proximate cause of the damage she suffered.
Her loss could only be attributed to respondent as it was the direct consequence of its employees gross negligence.

Petitioners contention has no merit.

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.[9] Such person or association of persons are regarded as carriers and are
classified as private or special carriers and common or public carriers.[10] A common carrier is defined under Article 1732 of the Civil Code as
persons, corporations, firms or associations engaged in the business of carrying or transporting passengers or goods or both, by land, water or air,
for compensation, offering their services to the public.

It is obvious from the above definition that respondent is not an entity engaged in the business of transporting either passengers or goods and is
therefore, neither a private nor a common carrier. Respondent did not undertake to transport petitioner from one place to another since its
covenant with its customers is simply to make travel arrangements in their behalf. Respondents services as a travel agency include procuring
tickets and facilitating travel permits or visas as well as booking customers for tours.

While petitioner 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, respondent acted merely as an agent of the airline, with whom petitioner ultimately contracted for her carriage to
Europe. Respondents obligation to petitioner in this regard was simply to see to it that petitioner was properly booked with the airline for the
appointed date and time. Her transport to the place of destination, meanwhile, pertained directly to the airline.

The object of petitioners contractual relation with respondent is the latters service of arranging and facilitating petitioners booking, ticketing
and accommodation in the package tour. In contrast, the object of a contract of carriage is the transportation of passengers or goods. It is in this
sense that the contract between the parties in this case was an ordinary one for services and not one of carriage. Petitioners submission is
premised on a wrong assumption.

The nature of the contractual relation between petitioner and respondent is determinative of the degree of care required in the performance of
the latters obligation under the contract. For reasons of public policy, a common carrier in a contract of carriage is bound by law to carry
passengers as far as human care and foresight can provide using the utmost diligence of very cautious persons and with due regard for all the
circumstances.[11] As earlier stated, however, respondent is not a common carrier but a travel agency. It is thus not bound under the law to
observe extraordinary diligence in the performance of its obligation, as petitioner claims.

Since the contract between the parties is an ordinary one for services, the standard of care required of respondent is that of a good father of a
family under Article 1173 of the Civil Code.[12] This connotes reasonable care consistent with that which an ordinarily prudent person would have
observed when confronted with a similar situation. The test to determine whether negligence attended the performance of an obligation is: did
the defendant in doing the alleged negligent act use that reasonable care and caution which an ordinarily prudent person would have used in the
same situation? If not, then he is guilty of negligence.[13]

In the case at bar, the lower court found Menor negligent when she allegedly informed petitioner of the wrong day of departure. Petitioners
testimony was accepted as indubitable evidence of Menors alleged negligent act since respondent did not call Menor to the wi tness stand to
refute the allegation. The lower court applied the presumption under Rule 131, Section 3 (e)[14] of the Rules of Court that evidence willfully
suppressed would be adverse if produced and thus considered petitioners uncontradicted testimony to be sufficient proof of her claim.

On the other hand, respondent has consistently denied that Menor was negligent and maintains that petitioners assertion is belied by the
evidence on record. The date and time of departure was legibly written on the plane ticket and the travel papers were delivered two days in
advance precisely so that petitioner could prepare for the trip. It performed all its obligations to enable petitioner to join the tour and exercised
due diligence in its dealings with the latter.

We agree with respondent.

Respondents failure to present Menor as witness to rebut petitioners testimony could not give rise to an inference unfavorable to the former.
Menor was already working in France at the time of the filing of the complaint,[15] thereby making it physically impossible for respondent to
present her as a witness. Then too, even if it were possible for respondent to secure Menors testimony, the presumption under Rule 131, Section
3(e) would still not apply. The opportunity and possibility for obtaining Menors testimony belonged to both parties, considering that Menor was
not just respondents employee, but also petitioners niece. It was thus error for the lower court to invoke the presumption that respondent
willfully suppressed evidence under Rule 131, Section 3(e). Said presumption would logically be inoperative if the evidence is not intentionally
omitted but is simply unavailable, or when the same could have been obtained by both parties.[16]

In sum, we do not agree with the finding of the lower court that Menors negligence concurred with the negligence of petitioner and resultantly
caused damage to the latter. Menors negligence was not sufficiently proved, considering that the only evidence presented on this score was
petitioners uncorroborated narration of the events. It is well-settled that the party alleging a fact has the burden of proving it and a mere
allegation cannot take the place of evidence.[17] If the plaintiff, upon whom rests the burden of proving his cause of action, fails to show in a
satisfactory manner facts upon which he bases his claim, the defendant is under no obligation to prove his exception or defense.[18]

Contrary to petitioners claim, the evidence on record shows that respondent exercised due diligence in performing its obligations under the
contract and followed standard procedure in rendering its services to petitioner. As correctly observed by the lower court, the plane ticket[19]
issued to petitioner clearly reflected the departure date and time, contrary to petitioners contention. The travel documents, consisting of the
tour itinerary, vouchers and instructions, were likewise delivered to petitioner two days prior to the trip. Respondent also properly booked
petitioner for the tour, prepared the necessary documents and procured the plane tickets. It arranged petitioners hotel accommodation as well
as food, land transfers and sightseeing excursions, in accordance with its avowed undertaking.

Therefore, it is clear that respondent performed its prestation under the contract as well as everything else that was essential to book petitioner
for the tour. Had petitioner exercised due diligence in the conduct of her affairs, there would have been no reason for her to miss the flight.
Needless to say, after the travel papers were delivered to petitioner, it became incumbent upon her to take ordinary care of her concerns. This
undoubtedly would require that she at least read the documents in order to assure herself of the important details regarding the trip.

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.[20] There is no fixed standard of diligence applicable to each and every contractual obligation and each case must be
determined upon its particular facts. The degree of diligence required depends on the circumstances of the specific obligation and whether one
has been negligent is a question of fact that is to be determined after taking into account the particulars of each case.[21]

The lower court declared that respondents employee was negligent. This factual finding, however, is not supported by the evidence on record.
While factual findings below are generally conclusive upon this court, the rule is subject to certain exceptions, as when the trial court overlooked,
misunderstood, or misapplied some facts or circumstances of weight and substance which will affect the result of the case.[22]

In the case at bar, the evidence on record shows that respondent company performed its duty diligently and did not commit any contractual
breach. Hence, petitioner cannot recover and must bear her own damage.

WHEREFORE, the instant petition is DENIED for lack of merit. The decision of the Court of Appeals in CA-G.R. CV No. 51932 is AFFIRMED.
Accordingly, petitioner is ordered to pay respondent the amount of P12,901.00 representing the balance of the price of the British Pageant
Package Tour, with legal interest thereon at the rate of 6% per annum, to be computed from the time the counterclaim was filed until the finality
of this Decision. After this Decision becomes final and executory, the rate of 12% per annum shall be imposed until the obligation is fully settled,
this interim period being deemed to be by then an equivalent to a forbearance of credit.[23]

SO ORDERED.

Davide, Jr., C.J., (Chairman), Vitug, Carpio, and Azcuna, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 84458 November 6, 1989

ABOITIZ SHIPPING CORPORATION, petitioner,
vs.
HON. COURT OF APPEALS, ELEVENTH DIVISION, LUCILA C. VIANA, SPS. ANTONIO VIANA and GORGONIA VIANA, and PIONEER STEVEDORING
CORPORATION, respondents.

Herenio E. Martinez for petitioner.

M.R. Villaluz Law Office for private respondent.



REGALADO, J.:

In this appeal by certiorari, petitioner Aboitiz Shipping Corporation seeks a review of the decision 1 of respondent Court of Appeals, dated July 29,
1988, the decretal portion of which reads:

WHEREFORE, the judgment appealed from as modified by the order of October 27, 1982, is hereby affirmed with the modification that appellant
Aboitiz Shipping is hereby ordered to pay plaintiff-appellees the amount of P30,000.00 for the death of Anacleto Viana; actual damages of
P9,800.00; P150,000.00 for unearned income; P7,200.00 as support for deceased's parents; P20,000.00 as moral damages; P10,000.00 as
attorney's fees; and to pay the costs.

The undisputed facts of the case, as found by the court a quo and adopted by respondent court, are as follows: .

The evidence disclosed that on May 11, 1975, Anacleto Viana boarded the vessel M/V Antonia, owned by defendant, at the port at San Jose,
Occidental Mindoro, bound for Manila, having purchased a ticket (No. 117392) in the sum of P23.10 (Exh. 'B'). On May 12, 1975, said vessel
arrived at Pier 4, North Harbor, Manila, and the passengers therein disembarked, a gangplank having been provided connecting the side of the
vessel to the pier. Instead of using said gangplank Anacleto Viana disembarked on the third deck which was on the level with the pier. After said
vessel had landed, the Pioneer Stevedoring Corporation took over the exclusive control of the cargoes loaded on said vessel pursuant to the
Memorandum of Agreement dated July 26, 1975 (Exh. '2') between the third party defendant Pioneer Stevedoring Corporation and defendant
Aboitiz Shipping Corporation.

The crane owned by the third party defendant and operated by its crane operator Alejo Figueroa was placed alongside the vessel and one (1) hour
after the passengers of said vessel had disembarked, it started operation by unloading the cargoes from said vessel. While the crane was being
operated, Anacleto Viana who had already disembarked from said vessel obviously remembering that some of his cargoes were still loaded in the
vessel, went back to the vessel, and it was while he was pointing to the crew of the said vessel to the place where his cargoes were loaded that
the crane hit him, pinning him between the side of the vessel and the crane. He was thereafter brought to the hospital where he later expired
three (3) days thereafter, on May 15, 1975, the cause of his death according to the Death Certificate (Exh. "C") being "hypostatic pneumonia
secondary to traumatic fracture of the pubic bone lacerating the urinary bladder" (See also Exh. "B"). For his hospitalization, medical, burial and
other miscellaneous expenses, Anacleto's wife, herein plaintiff, spent a total of P9,800.00 (Exhibits "E", "E-1", to "E-5"). Anacleto Viana who was
only forty (40) years old when he met said fateful accident (Exh. 'E') was in good health. His average annual income as a farmer or a farm
supervisor was 400 cavans of palay annually. His parents, herein plaintiffs Antonio and Gorgonia Viana, prior to his death had been recipient of
twenty (20) cavans of palay as support or P120.00 monthly. Because of Anacleto's death, plaintiffs suffered mental anguish and extreme worry or
moral damages. For the filing of the instant case, they had to hire a lawyer for an agreed fee of ten thousand (P10,000.00) pesos. 2

Private respondents Vianas filed a complaint 3 for damages against petitioner corporation (Aboitiz, for brevity) for breach of contract of carriage.

In its answer. 4 Aboitiz denied responsibility contending that at the time of the accident, the vessel was completely under the control of
respondent Pioneer Stevedoring Corporation (Pioneer, for short) as the exclusive stevedoring contractor of Aboitiz, which handled the unloading
of cargoes from the vessel of Aboitiz. It is also averred that since the crane operator was not an employee of Aboitiz, the l atter cannot be held
liable under the fellow-servant rule.

Thereafter, Aboitiz, as third-party plaintiff, filed a third-party complaint 5 against Pioneer imputing liability thereto for Anacleto Viana's death as
having been allegedly caused by the negligence of the crane operator who was an employee of Pioneer under its exclusive control and
supervision.

Pioneer, in its answer to the third-party complaint, 6 raised the defenses that Aboitiz had no cause of action against Pioneer considering that
Aboitiz is being sued by the Vianas for breach of contract of carriage to which Pioneer is not a party; that Pioneer had observed the diligence of a
good father of a family both in the selection and supervision of its employees as well as in the prevention of damage or injury to anyone including
the victim Anacleto Viana; that Anacleto Viana's gross negligence was the direct and proximate cause of his death; and that the filing of the third-
party complaint was premature by reason of the pendency of the criminal case for homicide through reckless imprudence filed against the crane
operator, Alejo Figueroa.

In a decision rendered on April 17, 1980 by the trial court, 7 Aboitiz was ordered to pay the Vianas for damages incurred, and Pioneer was ordered
to reimburse Aboitiz for whatever amount the latter paid the Vianas. The dispositive portion of said decision provides:

WHEREFORE, judgment is hereby rendered in favor of the plantiffs:

(1) ordering defendant Aboitiz Shipping Corporation to pay to plaintiffs the sum of P12,000.00 for the death of Anacleto Viana P9,800.00 as
actual damages; P533,200.00 value of the 10,664 cavans of palay computed at P50.00 per cavan; P10,000.00 as attorney's fees; F 5,000.00, value
of the 100 cavans of palay as support for five (5) years for deceased (sic) parents, herein plaintiffs Antonio and Gorgonia Viana computed at
P50.00 per cavan; P7,200.00 as support for deceased's parents computed at P120.00 a month for five years pursuant to Art. 2206, Par. 2, of the
Civil Code; P20,000.00 as moral damages, and costs; and

(2) ordering the third party defendant Pioneer Stevedoring Corporation to reimburse defendant and third party plaintiff Aboitiz Shipping
Corporation the said amounts that it is ordered to pay to herein plaintiffs.

Both Aboitiz and Pioneer filed separate motions for reconsideration wherein they similarly raised the trial court's failure to declare that Anacleto
Viana acted with gross negligence despite the overwhelming evidence presented in support thereof. In addition, Aboitiz alleged, in opposition to
Pioneer's motion, that under the memorandum of agreement the liability of Pioneer as contractor is automatic for any damages or losses
whatsoever occasioned by and arising from the operation of its arrastre and stevedoring service.

In an order dated October 27, 1982, 8 the trial court absolved Pioneer from liability for failure of the Vianas and Aboitiz to preponderantly
establish a case of negligence against the crane operator which the court a quo ruled is never presumed, aside from the fact that the
memorandum of agreement supposedly refers only to Pioneer's liability in case of loss or damage to goods handled by it but not i n the case of
personal injuries, and, finally that Aboitiz cannot properly invoke the fellow-servant rule simply because its liability stems from a breach of
contract of carriage. The dispositive portion of said order reads:

WHEREFORE, judgment is hereby modified insofar as third party defendant Pioneer Stevedoring Corporation is concerned rendered in favor of the
plaintiffs-,:

(1) Ordering defendant Aboitiz Shipping Corporation to pay the plaintiffs the sum of P12,000.00 for the death of Anacleto Viana; P9,000.00
(sic) as actual damages; P533,200.00 value of the 10,664 cavans of palay computed at P50.00 per cavan; P10,000.00 as attorney's fees; P5,000.00
value of the 100 cavans of palay as support for five (5) years for deceased's parents, herein plaintiffs Antonio and Gorgonia Viana,computed at
P50.00 per cavan; P7,200.00 as support for deceased's parents computed at P120.00 a month for five years pursuant to Art. 2206, Par. 2, of the
Civil Code; P20,000.00 as moral damages, and costs; and

(2) Absolving third-party defendant Pioneer Stevedoring Corporation for (sic) any liability for the death of Anacleto Viana the passenger of
M/V Antonia owned by defendant third party plaintiff Aboitiz Shipping Corporation it appearing that the negligence of its crane operator has not
been established therein.

Not satisfied with the modified judgment of the trial court, Aboitiz appealed the same to respondent Court of Appeals which affirmed the findings
of of the trial court except as to the amount of damages awarded to the Vianas.

Hence, this petition wherein petitioner Aboitiz postulates that respondent court erred:

(A) In holding that the doctrine laid down by this honorable Court in La Mallorca vs. Court of Appeals, et al. (17 SCRA 739, July 27, 1966) is
applicable to the case in the face of the undisputable fact that the factual situation under the La Mallorca case is radically different from the facts
obtaining in this case;

(B) In holding petitioner liable for damages in the face of the finding of the court a quo and confirmed by the Honorable respondent court
of Appeals that the deceased, Anacleto Viana was guilty of contributory negligence, which, We respectfully submit contributory negligence was
the proximate cause of his death; specifically the honorable respondent Court of Appeals failed to apply Art. 1762 of the New Civil Code;

(C) In the alternative assuming the holding of the Honorable respondent Court of Appears that petitioner may be legally condemned to pay
damages to the private respondents we respectfully submit that it committed a reversible error when it dismissed petitioner's third party
complaint against private respondent Pioneer Stevedoring Corporation instead of compelling the latter to reimburse the petitioner for whatever
damages it may be compelled to pay to the private respondents Vianas. 9

At threshold, it is to be observed that both the trial court and respondent Court of Appeals found the victim Anacleto Viana guilty of contributory
negligence, but holding that it was the negligence of Aboitiz in prematurely turning over the vessel to the arrastre operator for the unloading of
cargoes which was the direct, immediate and proximate cause of the victim's death.

I. Petitioner contends that since one (1) hour had already elapsed from the time Anacleto Viana disembarked from the vessel and that he
was given more than ample opportunity to unload his cargoes prior to the operation of the crane, his presence on the vessel was no longer
reasonable e and he consequently ceased to be a passenger. Corollarily, it insists that the doctrine in La Mallorca vs. Court of Appeals, et al. 10 is
not applicable to the case at bar.

The rule is that the relation of carrier and passenger continues until the passenger has been landed at the port of destination and has left the
vessel owner's dock or premises. 11 Once created, the relationship will not ordinarily terminate until the passenger has, after reaching his
destination, safely alighted from the carrier's conveyance or had a reasonable opportunity to leave the carrier's premises. All persons who remain
on the premises a reasonable time after leaving the conveyance are to be deemed passengers, and what is a reasonable time or a reasonable
delay within this rule is to be determined from all the circumstances, and includes a reasonable time to see after his baggage and prepare for his
departure. 12 The carrier-passenger relationship is not terminated merely by the fact that the person transported has been carried to his
destination if, for example, such person remains in the carrier's premises to claim his baggage. 13

It was in accordance with this rationale that the doctrine in the aforesaid case of La Mallorca was enunciated, to wit:

It has been recognized as a rule that the relation of carrier and passenger does not cease at the moment the passenger alights from the carrier's
vehicle at a place selected by the carrier at the point of destination, but continues until the passenger has had a reasonable time or a reasonable
opportunity to leave the carrier's premises. And, what is a reasonable time or a reasonable delay within this rule is to be determined from all the
circumstances. Thus, a person who, after alighting from a train, walks along the station platform is considered still a passenger. So also, where a
passenger has alighted at his destination and is proceeding by the usual way to leave the company's premises, but before actually doing so is
halted by the report that his brother, a fellow passenger, has been shot, and he in good faith and without intent of engaging in the difficulty,
returns to relieve his brother, he is deemed reasonably and necessarily delayed and thus continues to be a passenger entitled as such to the
protection of the railroad company and its agents.

In the present case, the father returned to the bus to get one of his baggages which was not unloaded when they alighted from the bus. Racquel,
the child that she was, must have followed the father. However, although the father was still on the running board of the bus waiting for the
conductor to hand him the bag or bayong, the bus started to run, so that even he (the father) had to jump down from the moving vehicle. It was
at this instance that the child, who must be near the bus, was run over and killed. In the circumstances, it cannot be claimed that the carrier's
agent had exercised the 'utmost diligence' of a 'very cautious person' required by Article 1755 of the Civil Code to be observed by a common
carrier in the discharge of its obligation to transport safely its passengers. ... The presence of said passengers near the bus was not unreasonable
and they are, therefore, to be considered still as passengers of the carrier, entitled to the protection under their contract of carriage. 14

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

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

It is not definitely shown that one (1) hour prior to the incident, the victim had already disembarked from the vessel. Petitioner failed to prove
this. What is clear to us is that at the time the victim was taking his cargoes, the vessel had already docked an hour earlier. In consonance with
common shipping procedure as to the minimum time of one (1) hour allowed for the passengers to disembark, it may be presumed that the victim
had just gotten off the vessel when he went to retrieve his baggage. Yet, even if he had already disembarked an hour earlier, his presence in
petitioner's premises was not without cause. The victim had to claim his baggage which was possible only one (1) hour after the vessel arrived
since it was admittedly standard procedure in the case of petitioner's vessels that the unloading operations shall start only after that time.
Consequently, under the foregoing circumstances, the victim Anacleto Viana is still deemed a passenger of said carrier at the time of his tragic
death.

II. Under the law, common carriers are, from the nature of their business and for reasons of public policy, 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.
15 More particularly, a common carrier is bound to carry the passengers safely as far as human care and foresight can provide, using the utmost
diligence of very cautious persons, with a due regard for all the circumstances. 16 Thus, where a passenger dies or is injured, the common carrier
is presumed to have been at fault or to have acted negligently. 17 This gives rise to an action for breach of contract of carriage where all that is
required of plaintiff is to prove the existence of the contract of carriage and its non-performance by the carrier, that is, the failure of the carrier to
carry the passenger safely to his destination, 18 which, in the instant case, necessarily includes its failure to safeguard its passenger with
extraordinary diligence while such relation subsists.

The presumption is, therefore, established by law that in case of a passenger's death or injury the operator of the vessel was at fault or negligent,
having failed to exercise extraordinary diligence, and it is incumbent upon it to rebut the same. This is in consonance with the avowed policy of
the State to afford full protection to the passengers of common carriers which can be carried out only by imposing a stringent statutory obligation
upon the latter. Concomitantly, this Court has likewise adopted a rigid posture in the application of the law by exacting the highest degree of care
and diligence from common carriers, bearing utmost in mind the welfare of the passengers who often become hapless victims of indifferent and
profit-oriented carriers. We cannot in reason deny that petitioner failed to rebut the presumption against it. Under the facts obtaining in the
present case, it cannot be gainsaid that petitioner had inadequately complied with the required degree of diligence to prevent the accident from
happening.

As found by the Court of Appeals, the evidence does not show that there was a cordon of drums around the perimeter of the crane, as claimed by
petitioner. It also adverted to the fact that the alleged presence of visible warning signs in the vicinity was disputable and not indubitably
established. Thus, we are not inclined to accept petitioner's explanation that the victim and other passengers were sufficiently warned that
merely venturing into the area in question was fraught with serious peril. Definitely, even assuming the existence of the supposed cordon of
drums loosely placed around the unloading area and the guard's admonitions against entry therein, these were at most insufficient precautions
which pale into insignificance if considered vis-a-vis the gravity of the danger to which the deceased was exposed. There is no showing that
petitioner was extraordinarily diligent in requiring or seeing to it that said precautionary measures were strictly and actually enforced to subserve
their purpose of preventing entry into the forbidden area. By no stretch of liberal evaluation can such perfunctory acts approximate the "utmost
diligence of very cautious persons" to be exercised "as far as human care and foresight can provide" which is required by law of common carriers
with respect to their passengers.

While the victim was admittedly contributorily negligent, still petitioner's aforesaid failure to exercise extraordinary diligence was the proximate
and direct cause of, because it could definitely have prevented, the former's death. Moreover, in paragraph 5.6 of its petition, at bar, 19 petitioner
has expressly conceded the factual finding of respondent Court of Appeals that petitioner did not present sufficient evidence in support of its
submission that the deceased Anacleto Viana was guilty of gross negligence. Petitioner cannot now be heard to claim otherwise.

No excepting circumstance being present, we are likewise bound by respondent court's declaration that there was no negligence on the part of
Pioneer Stevedoring Corporation, a confirmation of the trial court's finding to that effect, hence our conformity to Pioneer's being absolved of any
liability.

As correctly observed by both courts, Aboitiz joined Pioneer in proving the alleged gross negligence of the victim, hence its present contention
that the death of the passenger was due to the negligence of the crane operator cannot be sustained both on grounds, of estoppel and for lack of
evidence on its present theory. Even in its answer filed in the court below it readily alleged that Pioneer had taken the necessary safeguards
insofar as its unloading operations were concerned, a fact which appears to have been accepted by the plaintiff therein by not impleading Pioneer
as a defendant, and likewise inceptively by Aboitiz by filing its third-party complaint only after ten (10) months from the institution of the suit
against it. Parenthetically, Pioneer is not within the ambit of the rule on extraordinary diligence required of, and the corresponding presumption
of negligence foisted on, common carriers like Aboitiz. This, of course, does not detract from what we have said that no negl igence can be
imputed to Pioneer but, that on the contrary, the failure of Aboitiz to exercise extraordinary diligence for the safety of its passenger is the
rationale for our finding on its liability.

WHEREFORE, the petition is DENIED and the judgment appealed from is hereby AFFIRMED in toto.

SO ORDERED.

Melencio-Herrera (Chairperson), Paras, Padilla and Sarmiento, JJ., concur.
_____________________________________________________________________________________________________