First Philippine Industrial Corp. vs.

CA

Facts:

Petitioner is a grantee of a pipeline concession under Republic Act No. 387. Sometime
in January 1995, petitioner applied for mayors permit in Batangas. However, the
Treasurer required petitioner to pay a local tax based on gross receipts amounting to
P956,076.04. In order not to hamper its operations, petitioner paid the taxes for the
first quarter of 1993 amounting to P239,019.01 under protest. On January 20, 1994,
petitioner filed a letter-protest to the City Treasurer, claiming that it is exempt from
local tax since it is engaged in transportation business. The respondent City Treasurer
denied the protest, thus, petitioner filed a complaint before the Regional Trial Court of
Batangas for tax refund. Respondents assert that pipelines are not included in the
term common carrier which refers solely to ordinary carriers or motor vehicles. The
trial court dismissed the complaint, and such was affirmed by the Court of Appeals.

Issue:

Whether a pipeline business is included in the term common carrier so as to entitle

the petitioner to the exemption

Held:

Article 1732 of the Civil Code defines a "common carrier" as "any person, corporation,
firm or association engaged in the business of carrying or transporting passengers or
goods or both, by land, water, or air, for compensation, offering their services to the
public."

The test for determining whether a party is a common carrier of goods is:

(1) He must be engaged in the business of carrying goods for others as a public
employment, and must hold himself out as ready to engage in the transportation of
goods for person generally as a business and not as a casual occupation;

(2) He must undertake to carry goods of the kind to which his business is confined;

(3) He must undertake to carry by the method by which his business is conducted and
over his established roads; and

(4) The transportation must be for hire.

Based on the above definitions and requirements, there is no doubt that petitioner is a
common carrier. It is engaged in the business of transporting or carrying goods, i.e.
petroleum products, for hire as a public employment. It undertakes to carry for all
persons indifferently, that is, to all persons who choose to employ its services, and
transports the goods by land and for compensation. The fact that petitioner has a
limited clientele does not exclude it from the definition of a common carrier.

Caltex [Philippines], Inc. vs. Sulpicio Lines, Inc.

Facts:

On December 20, 1987, motor tanker MV Vector, carrying petroleum products of

Caltex, collided in the open sea with passenger ship MV Doa Paz, causing the death
of all but 25 of the latters passengers. Among those who died were Sebastian Canezal
and his daughter Corazon Canezal. On March 22, 1988, the board of marine inquiry
found that Vector Shipping Corporation was at fault. On February 13, 1989, Teresita
Caezal and Sotera E. Caezal, Sebastian Caezals wife and mother respectively,
filed with the Regional Trial Court of Manila a complaint for damages arising from
breach of contract of carriage against Sulpicio Lines. Sulpicio filed a third-party
complaint against Vector and Caltex. The trial court dismissed the complaint against
Caltex, but the Court of Appeals included the same in the liability. Hence, Caltex filed
this petition.

Issue:

Is the charterer of a sea vessel liable for damages resulting from a collision between
the chartered vessel and a passenger ship?

Held:

First: The charterer has no liability for damages under Philippine Maritime
laws.

Petitioner and Vector entered into a contract of affreightment, also known as a voyage
charter.

A charter party is a contract by which an entire ship, or some principal part thereof, is
let by the owner to another person for a specified time or use; a contract of
affreightment is one by which the owner of a ship or other vessel lets the whole or
part of her to a merchant or other person for the conveyance of goods, on a particular
voyage, in consideration of the payment of freight. A contract of affreightment may be
either time charter, wherein the leased vessel is leased to the charterer for a fixed
period of time, or voyage charter, wherein the ship is leased for a single voyage. In
both cases, the charter-party provides for the hire of the vessel only, either for a
determinate period of time or for a single or consecutive voyage, the ship owner to
supply the ships store, pay for the wages of the master of the crew, and defray the
expenses for the maintenance of the ship. If the charter is a contract of affreightment,
which leaves the general owner in possession of the ship as owner for the voyage, the
rights and the responsibilities of ownership rest on the owner. The charterer is free
from liability to third persons in respect of the ship.

Second: MT Vector is a common carrier

The charter party agreement did not convert the common carrier into a private carrier.
The parties entered into a voyage charter, which retains the character of the vessel as
a common carrier. It is imperative that a public carrier shall remain as such,
notwithstanding the charter of the whole or portion of a vessel by one or more
persons, provided the charter is limited to the ship only, as in the case of a time-
charter or voyage charter. It is only when the charter includes both the vessel and its
crew, as in a bareboat or demise that a common carrier becomes private, at least
insofar as the particular voyage covering the charter-party is concerned. Indubitably, a
ship-owner in a time or voyage charter retains possession and control of the ship,
although her holds may, for the moment, be the property of the charterer. A common
carrier is a person or corporation whose regular business is to carry passengers or
property for all persons who may choose to employ and to remunerate him. 16 MT
Vector fits the definition of a common carrier under Article 1732 of the Civil Code.
The public must of necessity rely on the care and skill of common carriers in the
vigilance over the goods and safety of the passengers, especially because with the
modern development of science and invention, transportation has become more
rapid, more complicated and somehow more hazardous. For these reasons, a
passenger or a shipper of goods is under no obligation to conduct an inspection of the
ship and its crew, the carrier being obliged by law to impliedly warrant its
seaworthiness.

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

The charterer of a vessel has no obligation before transporting its cargo to ensure that
the vessel it chartered complied with all legal requirements. The duty rests upon the
common carrier simply for being engaged in "public service." The relationship
between the parties in this case is governed by special laws. Because of the implied
warranty of seaworthiness, shippers of goods, when transacting with common
carriers, are not expected to inquire into the vessels seaworthiness, genuineness of
its licenses and compliance with all maritime laws. To demand more from shippers and
hold them liable in case of failure exhibits nothing but the futility of our maritime laws
insofar as the protection of the public in general is concerned. Such a practice would
be an absurdity in a business where time is always of the essence. Considering the
nature of transportation business, passengers and shippers alike customarily presume
that common carriers possess all the legal requisites in its operation.

Calvo v. UCPB General Insurance Case Digest

G.R. No. 148496 March 19, 2002

Facts: Petitioner Virgines Calvo, owner of Transorient Container Terminal Services, Inc.
(TCTSI), and a custom broker, entered into a contract with San Miguel Corporation
(SMC) for the transfer of 114 reels of semi-chemical fluting paper and 124 reels of
kraft liner board from the port area to the Tabacalera Compound, Ermita, Manila. The
cargo was insured by respondent UCPB General Insurance Co., Inc.

On July 14, 1990, contained in 30 metal vans, arrived in Manila on board M/V
Hayakawa Maru. After 24 hours, they were unloaded from vessel to the custody of
the arrastre operator, Manila Port Services, Inc. From July 23 to 25, 1990, petitioner,
pursuant to her contract with SMC, withdrew the cargo from the arrastre operator and
delivered it to SMCs warehouse in Manila. On July 25, the goods were inspected by
Marine Cargo Surveyors, reported that 15 reels of the semi-chemical fluting paper
were wet/stained/torn and 3 reels of kraft liner board were also torn. The damages
cost P93,112.00.

SMC collected the said amount from respondent UCPB under its insurance contract.
Respondent on the other hand, as a subrogee of SMC, brought a suit against petitioner
in RTC, Makati City. On December 20, 1995, the RTC rendered judgment finding
petitioner liable for the damage to the shipment. The decision was affirmed by the CA.

Issue: Whether or not Calvo is a common carrier?

Held: In this case the contention of the petitioner, that he is not a common carrier but
a private carrier, has no merit.

Article 1732 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 ancillary
activity. 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 deliberately refrained from making such distinction. (De Guzman v. CA, 68 SCRA
612)

Te concept of common carrier under Article 1732 coincide with the notion of public
service, under the Public Service Act which partially supplements the law on common
carrier. Under Section 13, paragraph (b) of the Public Service Act, it includes:

x x x every person that now or hereafter may own, operate, manage, or control in
the Philippines, for hire or compensation, with general or limited clientele, whether
permanent, occasional or accidental, and done for general business purposes, any
common carrier, railroad, street railway, 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. x x x

Asia Lighterage & Shipping, Inc. vs CA & Prudential Guarantee and Assurance,Inc.
Posted on November 24, 2012

G.R. No. 147246

August 19, 2003

On appeal is the CAs May 11, 2000 Decision in CA-G.R. CV No. 49195 and February
21, 2001 Resolution affirming with modification the April 6,1994 Decision of the RTC of
Manila which found petitioner liable to pay private respondent the amount of
indemnity and attorneys fees.

FACTS:

Asia Lighterage and Shipping, Inc was contracted as carrier to deliver 3,150 metric
tons of Better Western White Wheat in bulk, (US$423,192.35) to the consignees
(General Milling Corporation) warehouse at Bo. Ugong, Pasig City. The cargo was
transferred to its custody on July 25, 1990. The shipment was insured by Prudential
Guarantee and Assurance, Inc. against loss/damage for P14,621,771.75.

On August 15, 1990, 900 metric tons of the shipment was loaded on barge PSTSI III for
delivery to consignee. However, the cargo did not reach its destination.

It appears that on August 17, 1990, the transport of said cargo was suspended due to
a warning of an incoming typhoon. 5 days later, the petitioner proceeded to pull the
barge to Engineering Island off Baseco to seek shelter from the approaching typhoon.
PSTSI III was tied down to other barges which arrived ahead of it while weathering out
the storm that night. A few days after, the barge developed a list because of a hole it
sustained after hitting an unseen protuberance underneath the water. It filed a Marine
Protest on August 28, 1990 and also secured the services of Gaspar Salvaging
Corporation to refloat the barge. The hole was then patched with clay and cement.

The barge was then towed to ISLOFF terminal before it finally headed towards the
consignees wharf on September 5, 1990. Upon reaching the Sta. Mesa spillways, the
barge again ran aground due to strong current. To avoid the complete sinking of the
barge, a portion of the goods was transferred to 3 other barges.

The next day, the towing bits of the barge broke. It sank completely, resulting in the
total loss of the remaining cargo. A 2nd Marine Protest was filed on September 7,
1990.

7 days later, a bidding was conducted to dispose of the damaged wheat retrieved &
loaded on the 3 other barges. The total proceeds from the sale of the salvaged cargo
was P201,379.75.

On the same date, consignee sent a claim letter to the petitioner, and another letter
dated September 18, 1990 to the private respondent for the value of the lost cargo.
On January 30, 1991, the private respondent indemnified the consignee in the amount
of P4,104,654.22. Thereafter, as subrogee, it sought recovery of said amount from the
petitioner, but to no avail.

ISSUES:

1. Whether petitioner is a common carrier.

2. Assuming petitioner is a common carrier, whether it exercised extraordinary care

and diligence in its care and custody of the consignees cargo.

HELD:

1. Petitioner is a common carrier.

Article 1732 of the Civil Code defines common carriers 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.

In De Guzman vs. CA (G.R. No. L-47822, 22 December 1988) it was held that the
definition of common carriers in Article 1732 of the Civil Code 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. There is also no distinction between a person or enterprise
offering transportation service on a regular/scheduled basis and one
offering such service on an occasional, episodic or unscheduled basis.
Further, Article 1732 does not distinguish between a carrier offering its
services to the general public, and one who offers services or solicits business
only from a narrow segment of the general population.Private respondent
Ernesto Cendaa was considered to be a common carrier even if his principal
occupation was not the carriage of goods for others, but that of buying used bottles
and scrap metal in Pangasinan and selling these items in Manila.
To be sure, petitioner fits the test of a common carrier as laid down in Bascos vs.
CA (G.R. No. 101089, 07 April 1993, 221 SCRA 318). The test to determine a common
carrier is whether the given undertaking is a part of the business engaged in by the
carrier which he has held out to the general public as his occupation rather than the
quantity or extent of the business transacted. In the case at bar, the petitioner
admitted that it is engaged in the business of shipping, lighterage and drayage,
offering its barges to the public, despite its limited clientele for carrying/transporting
goods by water for compensation. Petitioner is clearly a common carrier.

Therefore, petitioner is a common carrier whether its carrying of goods is

done on an irregular rather than scheduled manner, and with an only limited
clientele. A common carrier need not have fixed and publicly known routes.
Neither does it have to maintain terminals or issue tickets.

2. The findings of the lower courts should be upheld. Petitioner failed to exercise
extraordinary diligence in its care and custody of the consignees goods.

Common carriers are bound to observe extraordinary diligence in the

vigilance over the goods transported by them. They are presumed to have been
at fault or to have acted negligently if the goods are lost, destroyed or deteriorated. To
overcome the presumption of negligence in the case of loss, destruction or
deterioration of the goods, the common carrier must prove that it exercised
extraordinary diligence. There are, however, exceptions to this rule. Article 1734
of the Civil Code enumerates the instances when the presumption of
negligence does not attach:

Art. 1734. Common carriers are responsible for the loss, destruction, or deterioration
of the goods, unless the same is due to any of the following causes only:

(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/omission of the shipper/owner of the goods;

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

(5) Order/act of competent public authority.

In the case at bar, the barge completely sank after its towing bits broke, resulting in
the total loss of its cargo. Petitioner claims that this was caused by a typhoon, hence,
it should not be held liable for the loss of the cargo. However, petitioner failed to
prove that the typhoon is the proximate and only cause of the loss of the goods, and
that it has exercised due diligence before, during and after the occurrence of the
typhoon to prevent/minimize the loss. The evidence show that, even before the towing
bits of the barge broke, it had already previously sustained damage when it hit a
sunken object while docked at the Engineering Island. It even suffered a hole. Clearly,
this could not be solely attributed to the typhoon. The partly-submerged vessel was
refloated but its hole was patched with only clay and cement. The patch work was
merely a provisional remedy, not enough for the barge to sail safely. Thus, when
petitioner persisted to proceed with the voyage, it recklessly exposed the cargo to
further damage.
Moreover, petitioner still headed to the consignees wharf despite knowledge of an
incoming typhoon. During the time that the barge was heading towards the
consignees wharf on September 5, 1990, typhoon Loleng has already entered the
Philippine area of responsibility.

Accordingly, the petitioner cannot invoke the occurrence of the typhoon as force
majeure to escape liability for the loss sustained by the private respondent. Surely,
meeting a typhoon head-on falls short of due diligence required from a common
carrier. More importantly, the officers/employees themselves of petitioner admitted
that when the towing bits of the vessel broke that caused its sinking and the total loss
of the cargo upon reaching the Pasig River, it was no longer affected by the typhoon.
The typhoon then is not the proximate cause of the loss of the cargo; a
human factor, i.e., negligence had intervened.

G.R. No. 186312 June 29, 2010

SPOUSES DANTE CRUZ and LEONORA CRUZ, Petitioners,

vs.
SUN HOLIDAYS, INC., Respondent.

DECISION

CARPIO MORALES, J.:

Spouses Dante and Leonora Cruz (petitioners) lodged a Complaint on January 25,
20011 against Sun Holidays, Inc. (respondent) with the Regional Trial Court (RTC) of
Pasig City for damages arising from the death of their son Ruelito C. Cruz (Ruelito)
who perished with his wife on September 11, 2000 on board the boat M/B Coco Beach
III that capsized en route to Batangas from Puerto Galera, Oriental Mindoro where the
couple had stayed at Coco Beach Island Resort (Resort) owned and operated by
respondent.

The stay of the newly wed Ruelito and his wife at the Resort from September 9 to 11,
2000 was by virtue of a tour package-contract with respondent that included
transportation to and from the Resort and the point of departure in Batangas.

Miguel C. Matute (Matute),2 a scuba diving instructor and one of the survivors, gave
his account of the incident that led to the filing of the complaint as follows:

Matute stayed at the Resort from September 8 to 11, 2000. He was originally
scheduled to leave the Resort in the afternoon of September 10, 2000, but was
advised to stay for another night because of strong winds and heavy rains.

On September 11, 2000, as it was still windy, Matute and 25 other Resort guests
including petitioners son and his wife trekked to the other side of the Coco Beach
mountain that was sheltered from the wind where they boarded M/B Coco Beach III,
which was to ferry them to Batangas.

Shortly after the boat sailed, it started to rain. As it moved farther away from Puerto
Galera and into the open seas, the rain and wind got stronger, causing the boat to tilt
from side to side and the captain to step forward to the front, leaving the wheel to one
of the crew members.
The waves got more unwieldy. After getting hit by two big waves which came one
after the other, M/B Coco Beach III capsized putting all passengers underwater.

The passengers, who had put on their life jackets, struggled to get out of the boat.
Upon seeing the captain, Matute and the other passengers who reached the surface
asked him what they could do to save the people who were still trapped under the
boat. The captain replied "Iligtas niyo na lang ang sarili niyo" (Just save yourselves).

Help came after about 45 minutes when two boats owned by Asia Divers in Sabang,
Puerto Galera passed by the capsized M/B Coco Beach III. Boarded on those two boats
were 22 persons, consisting of 18 passengers and four crew members, who were
brought to Pisa Island. Eight passengers, including petitioners son and his wife, died
during the incident.

At the time of Ruelitos death, he was 28 years old and employed as a contractual
worker for Mitsui Engineering & Shipbuilding Arabia, Ltd. in Saudi Arabia, with a basic
monthly salary of $900.3

Petitioners, by letter of October 26, 2000, 4 demanded indemnification from

respondent for the death of their son in the amount of at least P4,000,000.

Replying, respondent, by letter dated November 7, 2000, 5 denied any responsibility

for the incident which it considered to be a fortuitous event. It nevertheless offered, as
an act of commiseration, the amount of P10,000 to petitioners upon their signing of a
waiver.

As petitioners declined respondents offer, they filed the Complaint, as earlier

reflected, alleging that respondent, as a common carrier, was guilty of negligence in
allowing M/B Coco Beach III to sail notwithstanding storm warning bulletins issued by
the Philippine Atmospheric, Geophysical and Astronomical Services Administration
(PAGASA) as early as 5:00 a.m. of September 11, 2000. 6

In its Answer,7 respondent denied being a common carrier, alleging that its boats are
not available to the general public as they only ferry Resort guests and crew
members. Nonetheless, it claimed that it exercised the utmost diligence in ensuring
the safety of its passengers; contrary to petitioners allegation, there was no storm on
September 11, 2000 as the Coast Guard in fact cleared the voyage; and M/B Coco
Beach III was not filled to capacity and had sufficient life jackets for its passengers. By
way of Counterclaim, respondent alleged that it is entitled to an award for attorneys
fees and litigation expenses amounting to not less than P300,000.

Carlos Bonquin, captain of M/B Coco Beach III, averred that the Resort customarily
requires four conditions to be met before a boat is allowed to sail, to wit: (1) the sea is
calm, (2) there is clearance from the Coast Guard, (3) there is clearance from the
captain and (4) there is clearance from the Resorts assistant manager. 8 He added that
M/B Coco Beach III met all four conditions on September 11, 2000, 9 but a subasco or
squall, characterized by strong winds and big waves, suddenly occurred, causing the
boat to capsize.10

By Decision of February 16, 2005, 11 Branch 267 of the Pasig RTC dismissed petitioners
Complaint and respondents Counterclaim.

Petitioners Motion for Reconsideration having been denied by Order dated September
2, 2005,12 they appealed to the Court of Appeals.
By Decision of August 19, 2008, 13 the appellate court denied petitioners appeal,
holding, among other things, that the trial court correctly ruled that respondent is a
private carrier which is only required to observe ordinary diligence; that respondent in
fact observed extraordinary diligence in transporting its guests on board M/B Coco
Beach III; and that the proximate cause of the incident was a squall, a fortuitous
event.

Petitioners Motion for Reconsideration having been denied by Resolution dated

January 16, 2009,14 they filed the present Petition for Review.15

Petitioners maintain the position they took before the trial court, adding that
respondent is a common carrier since by its tour package, the transporting of its
guests is an integral part of its resort business. They inform that another division of
the appellate court in fact held respondent liable for damages to the other survivors of
the incident.

Upon the other hand, respondent contends that petitioners failed to present evidence
to prove that it is a common carrier; that the Resorts ferry services for guests cannot
be considered as ancillary to its business as no income is derived therefrom; that it
exercised extraordinary diligence as shown by the conditions it had imposed before
allowing M/B Coco Beach III to sail; that the incident was caused by a fortuitous event
without any contributory negligence on its part; and that the other case wherein the
appellate court held it liable for damages involved different plaintiffs, issues and
evidence.16

The petition is impressed with merit.

Petitioners correctly rely on De Guzman v. Court of Appeals 17 in characterizing

respondent 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 deliberately refrained from making
such distinctions.

So understood, the concept of "common carrier" under Article 1732 may be seen to
coincide neatly with the notion of "public service," under the Public Service Act
(Commonwealth Act No. 1416, as amended) which at least partially supplements the
law on common carriers set forth in the Civil Code. 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 . . .18 (emphasis and underscoring supplied.)

Indeed, respondent is a common carrier. Its ferry services are so intertwined with its
main business as to be properly considered ancillary thereto. The constancy of
respondents ferry services in its resort operations is underscored by its having its own
Coco Beach boats. And the tour packages it offers, which include the ferry services,
may be availed of by anyone who can afford to pay the same. These services are thus
available to the public.

That respondent does not charge a separate fee or fare for its ferry services is of no
moment. It would be imprudent to suppose that it provides said services at a loss. The
Court is aware of the practice of beach resort operators offering tour packages to
factor the transportation fee in arriving at the tour package price. That guests who opt
not to avail of respondents ferry services pay the same amount is likewise
inconsequential. These guests may only be deemed to have overpaid.

As De Guzman instructs, Article 1732 of the Civil Code defining "common carriers" has
deliberately refrained from making distinctions on whether the carrying of persons or
goods is the carriers principal business, whether it is offered on a regular basis, or
whether it is offered to the general public. The intent of the law is thus to not consider
such distinctions. Otherwise, there is no telling how many other distinctions may be
concocted by unscrupulous businessmen engaged in the carrying of persons or goods
in order to avoid the legal obligations and liabilities of common carriers.

Under the Civil Code, common carriers, from the nature of their business and for
reasons of public policy, are bound to observe extraordinary diligence for the safety of
the passengers transported by them, according to all the circumstances of each
case.19 They are bound to carry the passengers safely as far as human care and
foresight can provide, using the utmost diligence of very cautious persons, with due
regard for all the circumstances.20

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

presumed that the common carrier is at fault or negligent. In fact, there is even no
need for the court to make an express finding of fault or negligence on the part of the
common carrier. This statutory presumption may only be overcome by evidence that
the carrier exercised extraordinary diligence. 21

Respondent nevertheless harps on its strict compliance with the earlier mentioned
conditions of voyage before it allowed M/B Coco Beach III to sail on September 11,
2000. Respondents position does not impress.

The evidence shows that PAGASA issued 24-hour public weather forecasts and tropical
cyclone warnings for shipping on September 10 and 11, 2000 advising of tropical
depressions in Northern Luzon which would also affect the province of Mindoro. 22 By
the testimony of Dr. Frisco Nilo, supervising weather specialist of PAGASA, squalls are
to be expected under such weather condition.23

A very cautious person exercising the utmost diligence would thus not brave such
stormy weather and put other peoples lives at risk. The extraordinary diligence
required of common carriers demands that they take care of the goods or lives
entrusted to their hands as if they were their own. This respondent failed to do.

Respondents insistence that the incident was caused by a fortuitous event does not
impress either.

The elements of a "fortuitous event" are: (a) the cause of the unforeseen and
unexpected occurrence, or the failure of the debtors to comply with their obligations,
must have been independent of human will; (b) the event that constituted the caso
fortuito must have been impossible to foresee or, if foreseeable, impossible to avoid;
(c) the occurrence must have been such as to render it impossible for the debtors to
fulfill their obligation in a normal manner; and (d) the obligor must have been free
from any participation in the aggravation of the resulting injury to the creditor. 24

To fully free a common carrier from any liability, the fortuitous event must have been
the proximate and only cause of the loss. And it should have exercised due diligence
to prevent or minimize the loss before, during and after the occurrence of the
fortuitous event.25

Respondent cites the squall that occurred during the voyage as the fortuitous event
that overturned M/B Coco Beach III. As reflected above, however, the occurrence of
squalls was expected under the weather condition of September 11, 2000. Moreover,
evidence shows that M/B Coco Beach III suffered engine trouble before it capsized and
sank.26 The incident was, therefore, not completely free from human intervention.

The Court need not belabor how respondents evidence likewise fails to demonstrate
that it exercised due diligence to prevent or minimize the loss before, during and after
the occurrence of the squall.

Article 176427 vis--vis Article 2206 28 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.

Petitioners are entitled to indemnity for the death of Ruelito which is fixed at
P50,000.29

As for damages representing unearned income, the formula for its computation is:

Net Earning Capacity = life expectancy x (gross annual income - reasonable and
necessary living expenses).

Life expectancy is determined in accordance with the formula:

2 / 3 x [80 age of deceased at the time of death]30

The first factor, i.e., life expectancy, is computed by applying the formula (2/3 x [80
age at death]) adopted in the American Expectancy Table of Mortality or the Actuarial
of Combined Experience Table of Mortality.31

The second factor is computed by multiplying the life expectancy by the net earnings
of the deceased, i.e., the total earnings less expenses necessary in the creation of
such earnings or income and less living and other incidental expenses. 32 The loss is
not equivalent to the entire earnings of the deceased, but only such portion as he
would have used to support his dependents or heirs. Hence, to be deducted from his
gross earnings are the necessary expenses supposed to be used by the deceased for
his own needs.33

In computing the third factor necessary living expense, Smith Bell Dodwell Shipping
Agency Corp. v. Borja34 teaches that when, as in this case, there is no showing that
the living expenses constituted the smaller percentage of the gross income, the living
expenses are fixed at half of the gross income.

Applying the above guidelines, the Court determines Ruelito's life expectancy as
follows:

Life 2/3 x [80 - age of deceased at the time of death]

expectan 2/3 x [80 - 28]
cy = 2/3 x [52]
Life
expectan 35
cy =
Documentary evidence shows that Ruelito was earning a basic monthly salary of
$90035 which, when converted to Philippine peso applying the annual average
exchange rate of $1 = P44 in 2000,36 amounts to P39,600. Ruelitos net earning
capacity is thus computed as follows:

Net
= life expectancy x (gross annual income - reasonable and necessary living
Earnin
expenses).
g
= 35 x (P475,200 - P237,600)
Capaci
= 35 x (P237,600)
ty
Net
Earnin
g = P8,316,000
Capaci
ty
Respecting the award of moral damages, since respondent common carriers breach
of contract of carriage resulted in the death of petitioners son, following Article 1764
vis--vis Article 2206 of the Civil Code, petitioners are entitled to moral damages.

Since respondent failed to prove that it exercised the extraordinary diligence required
of common carriers, it is presumed to have acted recklessly, thus warranting the
award too of exemplary damages, which are granted in contractual obligations if the
defendant acted in a wanton, fraudulent, reckless, oppressive or malevolent manner. 37

Under the circumstances, it is reasonable to award petitioners the amount of

P100,000 as moral damages and P100,000 as exemplary damages.381avvphi1
Pursuant to Article 220839 of the Civil Code, attorney's fees may also be awarded
where exemplary damages are awarded. The Court finds that 10% of the total amount
adjudged against respondent is reasonable for the purpose.

Finally, Eastern Shipping Lines, Inc. v. Court of Appeals 40 teaches 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).

Since the amounts payable by respondent have been determined with certainty only
in the present petition, the interest due shall be computed upon the finality of this
decision at the rate of 12% per annum until satisfaction, in accordance with paragraph
number 3 of the immediately cited guideline in Easter Shipping Lines, Inc.

WHEREFORE, the Court of Appeals Decision of August 19, 2008 is REVERSED and SET
ASIDE. Judgment is rendered in favor of petitioners ordering respondent to pay
petitioners the following: (1) P50,000 as indemnity for the death of Ruelito Cruz; (2)
P8,316,000 as indemnity for Ruelitos loss of earning capacity; (3) P100,000 as moral
damages; (4) P100,000 as exemplary damages; (5) 10% of the total amount adjudged
against respondent as attorneys fees; and (6) the costs of suit.

The total amount adjudged against respondent shall earn interest at the rate of 12%
per annum computed from the finality of this decision until full payment.

SO ORDEDELSAN TRANSPORT LINES, INC. VS. CA ET.AL.

G.R. No.127897, November 15, 2001
Facts: Caltex Phil. entered into a contract of affreightment with the petitioner, Delsan
Transport Lines, Inc. for a period of one year whereby the petitioner agreed to
transport Caltex industrial fuel oil from Batangas refinery to different parts of the
country. On August 14, 1986, MT Maysun set sail for Zamboanga City but
unfortunately the vessel in the early morning of August 16, 1986 near Panay Gulf. The
shipment was insured with the private respondent, American Home Assurance
Corporation. Subsequently, private respondent paid Caltex the sum of
Php.5,096,635.57. Exercising its right of subrogation under Art. 2207, NCC, the private
respondent demanded from the petitioner the same amount paid to Caltex. Due to its
failure to collect from the petitioner, private respondent filed a complaint with the RTC
of Makati City but the trial court dismissed the complaint, finding the vessel to be
seaworthy and that the incident was due to a force majeure, thus exempting the
petitioner from liability. However, the decision of the trial court was reversed by the
CA, giving credence to the report of PAGASA that the weather was normal and that it
was impossible for the vessel to sink.

Issue: Whether or not the payment made by private respondent 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.

Held: The payment by the private respondent for the insured value of the lost cargo
operates as waiver of its 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 common carrier. The fact of payment grants the private
respondent subrogatory right which enables it to exercise legal remedies that
otherwise be available to Caltex as owner of the lost cargo against the petitioner
common carrier.RED.

BELGIAN OVERSEAS CHARTERING AND SHIPPING N.V. VS. PHIL. FIRST INSURANCE CO.,
INC.
G.R. No. 143133. June 5, 2002

Facts: On June 13, 1990, CMC Trading A.G. shipped on board the M/V Anangel Sky at
Hamburg, Germany 242 coils of various Prime Cold Rolled Steel Sheets for
transportation to Manila consigned to the Philippine Steel Trading Corporation. On July
28, 1990, M/V Anangel Sky arrived at the port of Manila and within the subsequent
days, discharged the subject cargo. Four coils were found to be in bad order, and the
consignee declared the same as total loss.
The respondent filed its Notice of Claim only on September 18, 1990. the complaint
was filed by respondent on July 25, 1991. Petitioners, on the other hand, claim that
pursuant to the Carriage of Goods by Sea Act (COGSA), respondent should have filed
its Notice of Loss within three days from delivery. They assert that the cargo was
discharged on July 31, 1990 but respondent filed its Notice of Claim only on
September 18, 1990.

Issue: Whether or not failure to file a Notice of Claim shall bar respondent from
recovery.

Held: First, COGSA provides that the notice of claim need not be given if the state of
the goods, at the time of their receipt, has been the subject of a joint inspection or
survey. In this case, prior to unloading the cargo, an Inspection Report as to the
condition of the goods was prepared and signed by representative of both parties.
Second, a failure to file a Notice of Claim within three days will not bar recovery if it is
nonetheless filed within one year. The one-year prescriptive period also applies to the
shipper, the consignee, the insurer of the goods or any legal holder of the bill of
lading. The cargo was discharged on July 31, 1990, while the Complaint was filed by
respondent on July 25, 1991, within the one-year prescriptive period.

SECOND DIVISION

[G.R. No. 119756. March 18, 1999]

FORTUNE EXPRESS, INC., petitioner, vs. COURT OF APPEALS, PAULIE U. CAORONG, and
minor children YASSER KING CAORONG, ROSE HEINNI and PRINCE ALEXANDER, all
surnamed CAORONG, and represented by their mother PAULIE U. CAORONG,
respondents.

DECISION

MENDOZA, J.:

This is an appeal by petition for review on certiorari of the decision, dated July 29,
1994, of the Court of Appeals, which reversed the decision of the Regional Trial Court,
Branch VI, Iligan City. The aforesaid decision of the trial court dismissed the complaint
of private respondents against petitioner for damages for breach of contract of
carriage filed on the ground that petitioner had not exercised the required degree of
diligence in the operation of one of its buses. Atty. Talib Caorong, whose heirs are
private respondents herein, was a passenger of the bus and was killed in the ambush
involving said bus.

The facts of the instant case are as follows:

Petitioner is a bus company in northern Mindanao. Private respondent Paulie Caorong

is the widow of Atty. Caorong, while private respondents Yasser King, Rose Heinni, and
Prince Alexander are their minor children.

On November 18, 1989, a bus of petitioner figured in an accident with a jeepney in

Kauswagan, Lanao del Norte, resulting in the death of several passengers of the
jeepney, including two Maranaos. Crisanto Generalao, a volunteer field agent of the
Constabulary Regional Security Unit No. X, conducted an investigation of the accident.
He found that the owner of the jeepney was a Maranao residing in Delabayan, Lanao
del Norte and that certain Maranaos were planning to take revenge on the petitioner
by burning some of its buses. Generalao rendered a report on his findings to Sgt.
Reynaldo Bastasa of the Philippine Constabulary Regional Hearquarters at Cagayan de
Oro. Upon the instruction of Sgt. Bastasa, he went to see Diosdado Bravo, operations
manager of petitioner, at its main office in Cagayan de Oro City. Bravo assured him
that the necessary precautions to insure the safety of lives and property would be
taken.i[1]

At about 6:45 P.M. on November 22, 1989, three armed Maranaos who pretended to
be passengers, seized a bus of petitioner at Linamon, Lanao del Norte while on its way
to Iligan City. Among the passengers of the bus was Atty. Caorong. The leader of the
Maranaos, identified as one Bashier Mananggolo, ordered the driver, Godofredo
Cabatuan, to stop the bus on the side of the highway. Mananggolo then shot Cabatuan
on the arm, which caused him to slump on the steering wheel. Then one of the
companions of Mananggolo started pouring gasoline inside the bus, as the other held
the passengers at bay with a handgun. Mananggolo then ordered the passengers to
get off the bus. The passengers, including Atty. Caorong, stepped out of the bus and
went behind the bushes in a field some distance from the highway. ii[2]

However, Atty. Caorong returned to the bus to retrieve something from the overhead
rack. At that time, one of the armed men was pouring gasoline on the head of the
driver. Cabatuan, who had meantime regained consciousness, heard Atty. Caorong
pleading with the armed men to spare the driver as he was innocent of any wrong
doing and was only trying to make a living. The armed men were, however, adamant
as they repeated their warning that they were going to burn the bus along with its
driver. During this exchange between Atty. Caorong and the assailants, Cabatuan
climbed out of the left window of the bus and crawled to the canal on the opposite
side of the highway. He heard shots from inside the bus. Larry de la Cruz, one of the
passengers, saw that Atty. Caorong was hit. Then the bus was set on fire. Some of the
passengers were able to pull Atty. Caorong out of the burning bus and rush him to the
Mercy Community Hospital in Iligan City, but he died while undergoing operation. iii[3]

The private respondents brought this suit for breach of contract of carriage in the
Regional Trial Court, Branch VI, Iligan City. In his decision, dated December 28, 1990,
the trial court dismissed the complaint, holding as follows:

The fact that defendant, through Operations Manager Diosdado Bravo, was informed
of the rumors that the Moslems intended to take revenge by burning five buses of
defendant is established since the latter also utilized Crisanto Generalaos as a
witness. Yet despite this information, the plaintiffs charge, defendant did not take
proper precautions. . . . Consequently, plaintiffs now fault the defendant for ignoring
the report. Their position is that the defendant should have provided its buses with
security guards. Does the law require common carriers to install security guards in its
buses for the protection and safety of its passengers? Is the failure to post guards an
omission of the duty to exercise the diligence of a good father of the family which
could have prevented the killing of Atty. Caorong? To our mind, the diligence
demanded by law does not include the posting of security guards in buses. It is an
obligation that properly belongs to the State. Besides, will the presence of one or two
security guards suffice to deter a determined assault of the lawless and thus prevent
the injury complained of? Maybe so, but again, perhaps not. In other words, the
presence of a security guard is not a guarantee that the killing of Atty. Caorong would
have been definitely avoided.

Accordingly, the failure of defendant to accord faith and credit to the report of Mr.
Generalao and the fact that it did not provide security to its buses cannot, in the light
of the circumstances, be characterized as negligence.

Finally, the evidence clearly shows that the assailants did not have the least intention
of harming any of the passengers. They ordered all the passengers to alight and set
fire on the bus only after all the passengers were out of danger. The death of Atty.
Caorong was an unexpected and unforseen occurrence over which defendant had no
control. Atty. Caorong performed an act of charity and heroism in coming to the succor
of the driver even in the face of danger. He deserves the undying gratitude of the
driver whose life he saved. No one should blame him for an act of extraordinary
charity and altruism which cost his life. But neither should any blame be laid on the
doorstep of defendant. His death was solely due to the willful acts of the lawless which
defendant could neither prevent nor stop.

WHEREFORE, in view of the foregoing, the complaint is hereby dismissed. For lack of
merit, the counter-claim is likewise dismissed. No cost.iv[4]

On appeal, however, the Court of Appeals reversed. It held:

In the case at bench, how did defendant-appellee react to the tip or information that
certain Maranao hotheads were planning to burn five of its buses out of revenge for
the deaths of two Maranaos in an earlier collision involving appellees bus? Except for
the remarks of appellees operations manager that we will have our action . . . . and Ill
be the one to settle it personally, nothing concrete whatsoever was taken by appellee
or its employees to prevent the execution of the threat. Defendant-appellee never
adopted even a single safety measure for the protection of its paying passengers.
Were there available safeguards? Of course, there were: one was frisking passengers
particularly those en route to the area where the threats were likely to be carried out
such as where the earlier accident occurred or the place of influence of the victims or
their locality. If frisking was resorted to, even temporarily, . . . . appellee might be
legally excused from liability. Frisking of passengers picked up along the route could
have been implemented by the bus conductor; for those boarding at the bus terminal,
frisking could have been conducted by him and perhaps by additional personnel of
defendant-appellee. On hindsight, the handguns and especially the gallon of gasoline
used by the felons all of which were brought inside the bus would have been
discovered, thus preventing the burning of the bus and the fatal shooting of the
victim.

Appellees argument that there is no law requiring it to provide guards on its buses and
that the safety of citizens is the duty of the government, is not well taken. To be sure,
appellee is not expected to assign security guards on all of its buses; if at all, it has
the duty to post guards only on its buses plying predominantly Maranao areas. As
discussed in the next preceding paragraph, the least appellee could have done in
response to the report was to adopt a system of verification such as frisking of
passengers boarding its buses. Nothing, and to repeat, nothing at all, was done by
defendant-appellee to protect its innocent passengers from the danger arising from
the Maranao threats. It must be observed that frisking is not a novelty as a safety
measure in our society. Sensitive places in fact, nearly all important places have
applied this method of security enhancement. Gadgets and devices are available in
the market for this purpose. It would not have weighed much against the budget of
the bus company if such items were made available to its personnel to cope up with
situations such as the Maranao threats.

In view of the constitutional right to personal privacy, our pronouncement in this

decision should not be construed as an advocacy of mandatory frisking in all public
conveyances. What we are saying is that given the circumstances obtaining in the
case at bench that: (a) two Maranaos died because of a vehicular collision involving
one of appellees vehicles; (b) appellee received a written report from a member of the
Regional Security Unit, Constabulary Security Group, that the tribal/ethnic group of the
two deceased were planning to burn five buses of appellee out of revenge; and (c)
appellee did nothing absolutely nothing for the safety of its passengers travelling in
the area of influence of the victims, appellee has failed to exercise the degree of
diligence required of common carriers. Hence, appellee must be adjudged liable.

WHEREFORE, the decision appealed from is hereby REVERSED and another rendered
ordering defendant-appellee to pay plaintiffs-appellants the following:

1) P3,399,649.20 as death indemnity;

2) P50,000.00 and P500.00 per appearance as attorneys fees; and

Costs against defendant-appellee.v[5]

Hence, this appeal. Petitioner contends:

(A) THAT PUBLIC RESPONDENT ERRED IN REVERSING THE DECISION OF THE

REGIONAL TRIAL COURT DATED DECEMBER 28, 1990 DISMISSING THE
COMPLAINT AS WELL AS THE COUNTERCLAIM, AND FINDING FOR PRIVATE
RESPONDENTS BY ORDERING PETITIONER TO PAY THE GARGANTUAN SUM OF
P3,449,649.20 PLUS P500.00 PER APPEARANCE AS ATTORNEYS FEES, AS WELL
AS DENYING PETITIONERS MOTION FOR RECONSIDERATION AND THE
SUPPLEMENT TO SAID MOTION, WHILE HOLDING, AMONG OTHERS, THAT
PETITIONER BREACHED THE CONTRACT OF CARIAGE BY ITS FAILURE TO
EXERCISE THE REQUIRED DEGREE OF DILIGENCE;

(B) THAT THE ACTS OF THE MARANAO OUTLAWS WERE SO GRAVE, IRRESISTIBLE,
VIOLENT, AND FORCEFUL, AS TO BE REGARDED AS CASO FORTUITO; AND

(C) THAT PUBLIC RESPONDENT COURT OF APPEALS SERIOUSLY ERRED IN HOLDING

THAT PETITIONER COULD HAVE PROVIDED ADEQUATE SECURITY IN
PREDOMINANTLY MUSLIM AREAS AS PART OF ITS DUTY TO OBSERVE EXTRA-
ORDINARY DILIGENCE AS A COMMON CARRIER.

The instant petition has no merit.

First. Petitioners Breach of the Contract of Carriage

Art. 1763 of the Civil Code provides that a common carrier is responsible for injuries
suffered by a passenger on account of the wilful acts of other passengers, if the
employees of the common carrier could have prevented the act the exercise of the
diligence of a good father of a family. In the present case, it is clear that because of
the negligence of petitioners employees, the seizure of the bus by Mananggolo and
his men was made possible.

Despite warning by the Philippine Constabulary at Cagayan de Oro that the Maranaos
were planning to take revenge on the petitioner by burning some of its buses and the
assurance of petitioners operation manager, Diosdado Bravo, that the necessary
precautions would be taken, petitioner did nothing to protect the safety of its
passengers.

Had petitioner and its employees been vigilant they would not have failed to see that
the malefactors had a large quantity of gasoline with them. Under the circumstances,
simple precautionary measures to protect the safety of passengers, such as frisking
passengers and inspecting their baggages, preferably with non-intrusive gadgets such
as metal detectors, before allowing them on board could have been employed without
violating the passengers constitutional rights. As this Court intimated in Gacal v.
Philippine Air Lines, Inc.,vi[6] a common carrier can be held liable for failing to prevent
a hijacking by frisking passengers and inspecting their baggages.

From the foregoing, it is evident that petitioners employees failed to prevent the
attack on one of petitioners buses because they did not exercise the diligence of a
good father of a family. Hence, petitioner should be held liable for the death of Atty.
Caorong.
Second. Seizure of Petitioners Bus not a Case of Force Majeure

The petitioner contends that the seizure of its bus by the armed assailants was a
fortuitous event for which it could not be held liable.

Art. 1174 of the Civil Code defines a fortuitous even as an occurrence which could not
be foreseen or which though foreseen, is inevitable. In Yobido v. Court of Appeals,vii[7]
we held that to be considered as force majeure, it is necessary that: (1) the cause of
the breach of the obligation must be independent of the human will; (2) the event
must be either unforeseeable or unavoidable; (3) the occurrence must be such as to
render it impossible for the debtor to fulfill the obligation in a normal manner; and (4)
the obligor must be free of participation in, or aggravation of, the injury to the
creditor. The absence of any of the requisites mentioned above would prevent the
obligor from being excused from liability.

Thus, in Vasquez v. Court of Appeals,viii[8] it was held that the common carrier was
liable for its failure to take the necessary precautions against an approaching typhoon,
of which it was warned, resulting in the loss of the lives of several passengers. The
event was foreseeable, and, thus, the second requisite mentioned above was not
fulfilled. This ruling applies by analogy to the present case. Despite the report of PC
agent Generalao that the Maranaos were going to attack its buses, petitioner took no
steps to safeguard the lives and properties of its passengers. The seizure of the bus of
the petitioner was foreseeable and, therefore, was not a fortuitous event which would
exempt petitioner from liability.

Petitioner invokes the ruling in Pilapil v. Court of Appealsix[9] and De Guzman v. Court
of Appealsx[10] in support of its contention that the seizure of its bus by the assailants
constitutes force majeure. In Pilapil v. Court of Appeals,xi[11] it was held that a
common carrier is not liable for failing to install window grills on its buses to protect
passengers from injuries caused by rocks hurled at the bus by lawless elements. On
the other hand, in De Guzman v. Court of Appeals, xii[12] it was ruled that a common
carrier is not responsible for goods lost as a result of a robbery which is attended by
grave or irresistible threat, violence, or force.

It is clear that the cases of Pilapil and De Guzman do not apply to the present case.
Art. 1755 of the Civil Code provides that a common carrier is bound to carry the
passengers as far as human care and foresight can provide, using the utmost
diligence of very cautious person, with due regard for all the circumstances. Thus, we
held in Pilapil and De Guzman that the respondents therein were not negligent in
failing to take special precautions against threats to the safety of passengers which
could not be foreseen, such as tortious or criminal acts of third persons. In the present
case, this factor of unforeseeablility (the second requisite for an event to be
considered force majeure) is lacking. As already stated, despite the report of PC agent
Generalao that the Maranaos were planning to burn some of petitioners buses and the
assurance of petitioners operations manager (Diosdado Bravo) that the necessary
precautions would be taken, nothing was really done by petitioner to protect the
safety of passengers.
Third. Deceased not Guilty of Contributory Negligence

The petitioner contends that Atty. Caorong was guilty of contributory negligence in
returning to the bus to retrieve something. But Atty. Caorong did not act recklessly. It
should be pointed out that the intended targets of the violence were petitioner and its
employees, not its passengers. The assailants motive was to retaliate for the loss of
life of two Maranaos as a result of the collision between petitioners bus and the
jeepney in which the two Maranaos were riding. Mananggolo, the leader of the group
which had hijacked the bus, ordered the passengers to get off the bus as they
intended to burn it and its driver. The armed men actually allowed Atty. Caorong to
retrieve something from the bus. What apparently angered them was his attempt to
help the driver of the bus by pleading for his life. He was playing the role of the good
Samaritan. Certainly, this act cannot be considered an act of negligence, let alone
recklessness.
Fourth. Petitioner Liable to Private Respondents for Damages

We now consider the question of damages that the heirs of Atty. Caorong, private
respondents herein, are entitled to recover from the petitioner.

Indemnity for Death. Art. 1764 of the Civil Code, in relation to Art. 2206 thereof,
provides for the payment of indemnity for the death of passengers caused by the
breached of contract of carriage by a common carrier. Initially fixed in Art. 2206 at
P3,000.00, the amount of the said indemnity for death has through the years been
gradually increased in view of the declining value of the peso. It is presently fixed at
P50,000.00.xiii[13] Private respondents are entitled to this amount.

Actual damages. Art. 2199 provides that Except as provided by law or by stipulation,
one is entitled to an adequate compensation only for such pecuniary loss suffered by
him as he has duly proved. The trial court found that the private respondents spent
P30,000.00 for the wake and burial of Atty. Caorong. xiv[14] Since petitioner does not
question this finding of the trial court, it is liable to private respondents in the said
amount as actual damages.

Moral Damages. Under Art. 2206, the spouse, legitimate and illegitimate descendants
and ascendants of the deceased may demand moral damages for mental anguish by
reason of the death of the deceased. The trial court found that private respondent
Paulie Caorong suffered pain from the death of her husband and worry on how to
provide support for their minor children, private respondents Yasser King, Rose Heinni,
and Prince Alexander.xv[15] The petitioner likewise does not question this finding of
the trial court. Thus, in accordance with recent decisions of this Court, xvi[16] we hold
that the petitioner is liable to the private respondents in the amount of P100,000.00
as moral damages for the death of Atty. Caorong.

Exemplary Damages. Art. 2232 provides that in contracts and quasi-contracts, the
court may award exemplary damages if the defendant acted in a wanton, fraudulent,
reckless, oppressive, or malevolent manner. In the present case, the petitioner acted
in a wanton and reckless manner. Despite warning that the Maranaos were planning to
take revenge against the petitioner by burning some of its buses, and contrary to the
assurance made by its operations manager that the necessary precautions would be
taken, the petitioner and its employees did nothing to protect the safety of
passengers. Under the circumstances, we deem it reasonable to award private
respondents exemplary damages in the amount of P100,000.00.xvii[17]

Attorneys Fees. Pursuant to Art. 2208, attorneys fees may be recovered when, as in
the instant case, exemplary damages are awarded. In the recent case of Sulpicio
Lines, Inc. v. Court of Appeals,xviii[18] we held an award of P50,000.00 as attorneys
fees to be reasonable. Hence, the private respondents are entitled to attorneys fees in
that amount.

Compensation for Loss of Earning Capacity. Art. 1764 of the Civil Code, in relation to
Art. 2206 thereof, provides that in addition to the indemnity for death arising from the
breach of contract of carriage by a common carrier, the defendant shall be liable for
the loss of the earning capacity of the deceased, and the indemnity shall be paid to
the heirs of the latter. The formula established in decided cases for computing net
earning capacity is as follows:xix[19]

Gross Necessary

Net earning = Life x Annual - Living

Capacity Expectancy Income Expenses

Life expectancy is equivalent to two thirds (2/3) multiplied by the difference of eighty
(80) and the age of the deceased. xx[20] Since Atty. Caorong was 37 years old at the
time of his death,xxi[21] he had a life expectancy of 28 2/3 more years. xxii[22] His
projected gross annual income, computed based on his monthly salary of
P11,385.00xxiii[23] as a lawyer in the Department of Agrarian Reform at the time of his
death, was P148,005.00.xxiv[24] allowing for necessary living expenses of fifty percent
(50%)xxv[25]of his projected gross annual income, his total earning capacity amounts
to P2,121,404.90.xxvi[26] Hence, the petitioner is liable to the private respondents in
the said amount as compensation for loss of earning capacity.

WHEREFORE, the decision, dated July 29, 1994, of the Court of Appeals is hereby
AFFIRMED with the MODIFICATION that petitioner Fortune Express, Inc. is ordered to
pay the following amounts to private respondents Paulie, Yasser King, Rose Heinni,
and Prince Alexander Caorong:

1.death indemnity in the amount of fifty thousand pesos (P50,000.00);

2. actual damages in the amount of thirty thousand pesos (P30,000.00);

3. moral damages in the amount of one hundred thousand pesos(P100,000.00);

4. exemplary damages in the amount of one hundred thousand pesos

(P100,000.00);

5. attorneys fees in the amount of fifty thousand pesos (P50,000.00);

6. compensation for loss of earning capacity in the amount of two million one
hundred twenty-one thousand four hundred four pesos and ninety centavos
(P2,121,404.90); and
 7) costs of suits.

SO ORDERED.
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