R TRANSPORT CORP. VS.

EDUARDO PANTE 599 SCRA 747 (2009)

FACTS:
 R Transport operates a bus line which transports passengers from Cubao, Quezon City to Gapan, Nueva Ecija.
 27 January 1995: Pante rode a bus from Cubao (P48 fare). Along a highway in Bulacan, the bus hit a tree and
a house due to the reckless driving of Johnny Mediquia.
 Pante sustained a “laceration frontal area, with fracture of the right humerous1”.
o His operation, confinement, and medications caused him P30K. He became unemployed as Goldilocks
refused to re-employ him due to his condition.
o He had to undergo a second operation after four years. He spent another P15k.
o The only assistance petitioner gave was the amount of P7K to reimburse him for the stainless steel
plate placed in his arm. Other than that, petitioner refused to assist Pante.
 14 March 1995: Pante sued for damages.
 Petitioner in its answer denied fault claiming that it exercised the diligence of a good father of the family in
the selection and supervision of employees, and that the accident was force majeure.
 The case went on for 7 years. The delays were due to the multiple postponements and unexplained absence of
petitioner’s counsel. Its rights to cross-examine and present evidence were eventually forfeited as a
consequence.
 RTC ruled in favour of Pante. CA affirmed RTC’s decision.

ISSUE:
W/N Petitioner is liable for damages despite Pante not presenting substantial evidence to support his claim.

HELD:
YES. Petitioner is liable for damages.

 Petitioner, as a common carrier, is expected to exercise extraordinary diligence, and has the duty to transport
its passengers safely to their destination.
 ARTICLE 1756 OF THE CIVIL CODE: In case of death or injuries to passengers, common carriers are
presumed at fault or negligent unless they are able to prove their exercise of extraordinary diligence.
 ARTICLE 1759: Common carriers are also liable for the negligence of their employees.
o The liability of common carriers does not cease upon proof that they exercised extraordinary diligence
of a good father of the family in the selection and supervision of employees.
 Petitioner cannot claim that it was denied due process which prevented it from presenting evidence in his
defense. Due to the unexplained absences of his counsel, the hearings had to be constantly postponed, which
resulted in a 7-year delay of the case. It was given the opportunity to present its evidence, but was considered
to have waived its right.
 Petitioner also contends that the CA and TC erred in awarding damages in favour of Pante in the amount of
P22,000 based on a statement issued by the Baliuag Hospital and not based on the receipt. The Court held that
this was without merit since in another case, the Court awarded damages for hospitalization expenses based
on the statement of account issued by the Makati Medical Center.
 The Court also affirmed the award of moral damages, citing Spouses Ong vs. CA where moral damages were
given to passengers who suffered physical injuries. It is the usual practice to award moral damages for
physical injuries sustained. Pante here suffered physical pain, mental anguish and anxiety as a result of the
accident. P50,000 is proper.
 An award of exemplary damages is also proper, as the driver was manning the bus in a reckless, negligent,
and imprudent manner. This will provide as an example or as a correction for the public good.

PETITION IS DENIED.

1
The bone that extends from shoulder to elbow.
INSURANCE CASE DIGEST: ABOITIZ SHIPPING CORP. V. INSURANCE CO. OF NORTH AMERICA
(2008)

G.R. NO. 168402 AUGUST 6, 2008

LESSONS APPLICABLE: INSURER'S RIGHT OF SUBROGRATION (INSURANCE)

FACTS:
 June 20, 1993: MSAS Cargo International Limited and/or Associated and/or Subsidiary
Companies (MSAS) procured an "all-risk" marine insurance policy from ICNA UK Limited
of London for wooden work tools and workbenches purchased by consignee Science
Teaching Improvement Project (STIP), Ecotech Center, Sudlon Lahug, Cebu City.
 July 26, 1993: the cargo was received by Aboitiz Shipping Corporation (Aboitiz) through
its duly authorized booking representative, Aboitiz Transport System
 August 1, 1993: container van was loaded on board MV Super Concarrier I
 The vessel left Manila en route to Cebu City
 August 3, 1993: shipment arrived in Cebu City
 August 5, 1993: Stripping Report, checker noted that the crates were slightly broken or
cracked at the bottom
 August 11, 1993: cargo was withdrawn by the representative of the consignee, Science
Teaching Improvement Project (STIP) and delivered to Don Bosco Technical High School,
Punta Princesa, Cebu City
 August 13, 1993: Mayo B. Perez, Head of Aboiti received a call from the receiver Mr.
Bernhard Willig that the cargo sustained water damage so he checked the other cargo but
they were dry
 In a letter dated August 15, 1993, Willig informed Aboitiz that the damage was caused by
water entering through the broken bottom parts of the crate
 Consignee filed a claim against ICNA
 CAC reported to ICNA that the shipment was placed outside the warehouse when it was
delivered on July 26, 1993 and it was only on July 31, 1993 when the shipment was
stuffed inside another container van for shipment to Cebu. Weather report shows that
the heavy rains on July 28 and 29, 1993 caused the damages.
 Aboitiz refused to settle the claim
 ICNA paid the amount of P280,176.92 to consignee and a subrogation receipt was duly
signed by Willig.
 ICNA then advised Aboitiz of the receipt signed in its favor but received no reply so it filed
for collection at the RTC.
 RTC: against ICNA - subrogation Form is self-serving and has no probative value since
Wellig was not presented to the witness stand
 CA: reversed RTC ruling - right of subrogation accrues simply upon payment by the
insurance company of the insurance claim even assuming that it is an unlicensed foreign
corporation
SSUE: W/N ICNA can claim under the right of subrogation

HELD: YES. CA affirmed.

 Only when that foreign corporation is "transacting" or "doing business" in the country will
a license be necessary before it can institute suits. It may, however, bring suits on
isolated business transactions, which is not prohibited under Philippine law
 The policy benefits any subsequent assignee, or holder, including the consignee, who may
file claims on behalf of the assured.
 Insurance Code
Sec. 57
Sec. 57. A policy may be so framed that it will inure to the benefit of whomsoever, during the
continuance of the risk, may become the owner of the interest insured.

Civil Code
Art. 2207
Art. 2207. If the plaintiff's 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.

 This right of subrogation, however, has its limitations.

 First, both the insurer and the consignee are bound by the contractual stipulations under
the bill of lading
 Second, the insurer can be subrogated only to the rights as the insured may have against
the wrongdoer. If by its own acts after receiving payment from the insurer, the insured
releases the wrongdoer who caused the loss from liability, the insurer loses its claim
against the latter.
Civil Code
Art. 366
Article 366. Within twenty four hours following the receipt of the merchandise, the claim against
the carrier for damages or average which may be found therein upon opening the packages, may
be made, provided that the indications of the damage or average which give rise to the claim
cannot be ascertained from the outside part of such packages, in which case the claim shall be
admitted only at the time of receipt.
After the periods mentioned have elapsed, or the transportation charges have been paid, no claim
shall be admitted against the carrier with regard to the condition in which the goods transported
were delivered.
 The call was made 2 from delivery, a reasonable period considering that the goods could
not have corroded instantly overnight such that it could only have sustained the damage
during transit.
Civil Code
Art. 1735
Art. 1735. In all cases other than those mentioned in Nos. 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.
 the shipment delivered to the consignee sustained water damage. We agree with the
findings of the CA that petitioner failed to overturn this presumption

PHILIPPINE AIRLINES, INC., Petitioner, G.R. No. 123238 September 22, 2008
vs.COURT OF APPEALS Respondents.
FACTS:

Sometime before 2 May 1980, private respondents spouses Buncio purchased from petitioner Philippine
Airlines, Incorporated, two plane tickets for their two minor children, (Deanna), then 9 years of age, and
(Nikolai), then 8 years old. Since Deanna and Nikolai will travel as unaccompanied minors, petitioner
required private respondents to accomplish, sign and submit to it an indemnity bond. Private respondents
complied with this requirement. For the purchase of the said two plane tickets, petitioner agreed to transport
Deanna and Nikolai on 2 May 1980 from Manila to San Francisco, California, through one of its planes.
Petitioner also agreed that upon the arrival of Deanna and Nikolai in San Francisco Airport on 3 May 1980,
it would again transport the two on that same day through a connecting flight from San Francisco to Los
Angeles, via another airline, United Airways. Deanna and Nikolai then will be met by their grandmother,
Mrs. Regalado, at the Los Angeles Airport on their scheduled arrival on 3 May 1980.

On 2 May 1980, Deanna and Nikolai boarded Flight 106 in Manila.

On 3 May 1980, Deanna and Nikolai arrived at the San Francisco Airport. However, the staff of United
Airways refused to take aboard Deanna and Nikolai for their connecting flight to Los Angeles because
petitioner’s personnel in San Francisco could not produce the indemnity bond accomplished and submitted
by private respondents. The said indemnity bond was lost by petitioner’s personnel during the previous
stop-over in Honolulu, Hawaii. Deanna and Nikolai were then left stranded at the San Francisco Airport.
Subsequently, Mr. Strigl, then the Lead Traffic Agent of petitioner in San Francisco took Deanna and Nikolai
to his residence where they stayed overnight.

Meanwhile, Mrs. Regalado and several relatives waited for the arrival of Deanna and Nikolai at the Los
Angeles Airport (LAX). When United Airways landed at the LAX and its passengers disembarked, Mrs.
Regalado sought Deanna and Nikolai but she failed to find them. Mrs. Regalado called private respondents
and informed them that Deanna and Nikolai did not arrive at LAX. Private respondents inquired about the
location of Deanna and Nikolai from petitioner’s personnel, but the latter replied that they were still verifying
their whereabouts.On the morning of 4 May 1980, Strigl took the kids to San Francisco Airport where the
two boarded a Western Airlines plane bound for Los Angeles. Later that day, Deanna and Nikolai arrived
at the Los Angeles Airport where they were met by Mrs. Regalado.

On July 1980, private respondents, through their lawyer, sent a letter to petitioner demanding payment of
1 million pesos as damages for the gross negligence and inefficiency of its employees in transporting
Deanna and Nikolai. Petitioner did not heed the demand.

On November 1981, private respondents filed a complaint for damages against petitioner before the RTC.
Private respondents alleged that Deanna and Nikolai were not able to take their connecting flight from San
Francisco to Los Angeles as scheduled because the required indemnity bond was lost on account of the
gross negligence and malevolent conduct of petitioner’s personnel. As a consequence thereof, Deanna
and Nikolai were stranded in San Francisco overnight, thereby exposing them to grave danger. This
dilemma caused Deanna, Nikolai, Mrs. Regalado and private respondents to suffer serious anxiety, mental
anguish, wounded feelings, and sleepless nights.

After trial, the RTC rendered a decision holding petitioner liable for damages for breach of contract of
carriage. It also held that petitioner should pay exemplary damages by way of example or correction for
the public good under Article 2229 and 2232 of the Civil Code, plus attorney’s fees and costs of suit.

Petitioner filed the instant petition. Petitioner maintains that moral damages may be awarded in a breach
of contract of air carriage only if the mishap results in death of a passenger or if the carrier acted
fraudulently or in bad faith, that is, by breach of a known duty through some motive of interest or ill will,
some dishonest purpose or conscious doing of wrong; if there was no finding of fraud or bad faith on its
part; if, although it lost the indemnity bond, there was no finding that such loss was attended by ill will, or
some motive of interest, or any dishonest purpose; and if there was no finding that the loss was deliberate,
intentional or consciously done.

ISSUE:

Whether or not petitioner is correct that it should not pay moral damages.
RULING:

No. When an airline issues a ticket to a passenger, confirmed for a particular flight on a certain date, a
contract of carriage arises. The passenger has every right to expect that he be transported on that flight
and on that date, and it becomes the airline’s obligation to carry him and his luggage safely to the agreed
destination without delay. If the passenger is not so transported or if in the process of transporting, he dies
or is injured, the carrier may be held liable for a breach of contract of carriage.

In breach of contract of air carriage, moral damages may be recovered where (1) the mishap results in the
death of a passenger; or (2) where the carrier is guilty of fraud or bad faith; or (3) where the negligence of
the carrier is so gross and reckless as to virtually amount to bad faith.

It was established in the instant case that since Deanna and Nikolai would travel as unaccompanied
minors, petitioner required private respondents to accomplish, sign and submit to it an indemnity bond.
Evidently, petitioner was fully aware that Deanna and Nikolai would travel as unaccompanied minors and,
therefore, should be specially taken care of considering their tender age and delicate situation.

The foregoing circumstances reflect petitioner’s utter lack of care for and inattention to the welfare of
Deanna and Nikolai as unaccompanied minor passengers. They also indicate petitioner’s failure to
exercise even slight care and diligence in handling the indemnity bond. Clearly, the negligence of petitioner
was so gross and reckless that it amounted to bad faith.

It is worth emphasizing that petitioner, as a common carrier, is bound by law to exercise extraordinary
diligence and utmost care in ensuring for the safety and welfare of its passengers with due regard for all
the circumstances. The negligent acts of petitioner signified more than inadvertence or inattention and thus
constituted a radical departure from the extraordinary standard of care required of common carriers.

As we have earlier found, petitioner breached its contract of carriage with private respondents, and it acted
recklessly and malevolently in transporting Deanna and Nikolai as unaccompanied minors and in handling
their indemnity bond. We have also ascertained that private respondents are entitled to moral damages
because they have sufficiently established petitioner’s gross negligence which amounted to bad faith. This
being the case, the award of exemplary damages is warranted. The records show that Mrs. Regalado died
in 1995 at the age of 74, while Deanna passed away in 2003 at the age of 32. This being the case, the
foregoing award of damages plus interests in their favor should be given to their respective heirs.

JAPAN AIRLINES vs. SIMANGAN

GR No. 170141 April 22, 2008
Third Division Reyes

FACTS:
Respondent needed to go to the US to donate his kidney to his ailing cousin. Having obtained an emergency US Visa,
respondent purchased a round trip ticket from petitioner JAL. He was scheduled to a flight bound for LA via Japan. On the date of
his flight, respondent passed through rigid immigration and security routines before being allowed to board a JAL plane.
While inside the plane, respondent was asked to show his travel documents. After which he was ordered by the crew to
leave the plane, imputing that respondent is carrying falsified travel documents. Respondent pleaded but was ignored and under
constraint he gets off the plane. The plane took off and respondent was left behind.
Respondent was refunded with the cost of his ticket minus 500 USD, when JAL found out eventually that his travel
documents were not falsified and in order. Respondent filed an action for damages against JAL.

RTC RULING:
 JAL is liable for beach of contract of carriage, and should pay 1M as MD, 500K as ED, 250K as AF + cost of suit. JAL
appealed contending it is not guilty of breach of contract of carriage and not liable for damages.

CA RULING:
Affirmed RTC decision with modification as to amount of damages for being scandalously excessive. 500K MD, 250K ED
and NO AT.

ISSUE:
WON JAL is guilty of breach of contract of carriage.
WON Simangan is entitled to moral and exemplary damages.

HELD:
JAL is guilty of breach of contract of carriage and is liable for damages. Petition of JAL was denied. CA decision was
affirmed with modification. 500K ED, 100K ED, 200K AF.

RATIO:
Breach of contract of carriage
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 failure to carry the passenger safely to his destination. Simangan complied with these
requisites. Damage was accrued by JAL when Simangan was bumped off despite his protestations and valid travel documents and
notwithstanding his contract of carriage with JAL.

Award of moral damages in breach of contract of carriage.

As a general rule, moral damages are not recoverable in actions for damages predicated on a breach of contract for it is
not enumerated under Art 2219 NCC. As an exception, such damages are recoverable in:
1. Mishaps resulting to a death of a passenger (Art. 1764 NCC)
2. When carrier is guilty of fraud or bad faith (Art. 2220)
JAL breached its contract of carriage with respondent in bad faith, when its crew ordered respondent to disembark while
the latter is already settled in his assigned seat under the guise of verifying the genuineness of his travel documents. Inattention to
and lack of care for the interest of its passengers who are entitled ot its utmost consideration, particularly as to their convenience,
amount to bad faith which entitles the passenger to award of moral damages.

Award of exemplary damages in breach of contract of carriage.

Exemplary damages maybe recovered in contractual obligations as a way of example or correction for the public good.JAL
is liable for exemplary damages as its acts constitute wanton, oppressive and malevolent acts against respondent. Passengers
have the right to be treated by the carrier’s 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.

LOADMASTERS VS GLODEL AND R&B DIGEST

G.R. NO.179446: JANUARY 10, 2011

LOADMASTERS CUSTOMS SERVICES, INC. Petitioner vs. GLODEL BROKERAGE CORPORATION

and R&B INSURANCE CORPORATION Respondents

MENDOZA, J.:

FACTS:
Columbia Wire and Cable Corporation (Columbia) insured a cargo of copper cathodes through R&B
Insurance Corporation (R&B). Columbia also engaged the services of Glodel Brokerage Corporation
(Glodel) for the transport of the cargo to Columbia facilities. Glodel then engaged the services of
Loadmasters Customs Services (Loadmasters) for the delivery of said cargo to Columbia. Out of 12 trucks,
owned by Loadmasters, used to deliver the cargo of Columbia, only 11 made it to their respective
destinations. /span>Columbia claimed the amount of loss from R&B, which sued both Glodel and
Loadmasters. The RTC ruled in favor of R&B, but did not hold Loadmasters liable. Both R&B and
Glodelappealed the judgement. The Court of Appeals modified the decision of the RTC and ruled that
Loadmasters, being the agent of Glodel, is liable to Glodel for all the damages it might be required to pay.

ISSUES: Whether or not Loadmasters is an agent of Glodel, and whether or not it may be held liable under
the transaction between Glodel and Columbia.

HELD: Petition is partly meritorious

Civil Law: Glodel and Loadmasters are both common carriers, as they hold out their carriage services to
the public. As such, under the Civil Code, they are mandated to show extraordinary diligence in the
conduct of transport. In the case at bar, both Glodel and Loadmasters were negligent as the cargo failed to
reach its destination. Loadmasters failed to ensure that its employees would not tamper with the cargo.
Glodel failed to ensure that Loadmasters is sufficiently capable of completing the delivery. Glodel and
Loadmasters are therefore joint tortfeasors and are solidarily liable to R&B Insurance.

Loadmasters cannot be considered an agent of Glodel. Loadmasters in no way represented itself as such,
and in the transfer of cargo, did not represent itself as doing such in behalf of Glodel. In fact, Loadmasters
is not privy to the agreement between Glodel and Columbia. It cannot be considered an agent of Glodel,
and cannot be held liable to Glodel.

Remedial Law: Though Glodel has, admittedly, a cause of action against Loadmasters, it has effectively
waived it by failing to raise the cross-claim. The rules of procedure states that compulsory counterclaims
and cross-claims not pleaded are deemed waived. They cannot be raised for the first time on appeal.

FGU INSURANCE CORPORATION V. CA (2005)

137775 MARCH 31, 2005
LESSONS APPLICABLE: LOSS CAUSED BY NEGLIGENCE OF THE INSURED
(INSURANCE)

FACTS:

 Anco Enterprises Company (ANCO), a partnership between Ang Gui and Co To, was
engaged in the shipping business operating two common carriers
 M/T ANCO tugboat
 D/B Lucio barge - no engine of its own, it could not maneuver by itself and had to be
towed by a tugboat for it to move from one place to another.
 September 23 1979: San Miguel Corporation (SMC) shipped from Mandaue City, Cebu, on
board the D/B Lucio, for towage by M/T ANCO:
 25,000 cases Pale Pilsen and 350 cases Cerveza Negra - consignee SMC’s Beer Marketing
Division (BMD)-Estancia Beer Sales Office, Estancia, Iloilo
 15,000 cases Pale Pilsen and 200 cases Cerveza Negra - consignee SMC’s BMD-San Jose
Beer Sales Office, San Jose, Antique
 September 30, 1979: D/B Lucio was towed by the M/T ANCO arrived and M/T ANCO left
the barge immediately
 The clouds were dark and the waves were big so SMC’s District Sales Supervisor,
Fernando Macabuag, requested ANCO’s representative to transfer the barge to a safer
place but it refused so around the midnight, the barge sunk along with 29,210 cases of
Pale Pilsen and 500 cases of Cerveza Negra totalling to P1,346,197
 When SMC claimed against ANCO it stated that they agreed that it would not be liable for
any losses or damages resulting to the cargoes by reason of fortuitous event and it was
agreed to be insured with FGU for 20,000 cases or P858,500
 ANCO filed against FGU
 FGU alleged that ANCO and SMC failed to exercise ordinary diligence or the diligence of a
good father of the family in the care and supervision of the cargoes
 RTC: ANCO liable to SMC and FGU liable for 53% of the lost cargoes
 CA affirmed
ISSUE: W/N FGU should be exempted from liability to ANCO for the lost cargoes because of a
fortuitous event and negligence of ANCO

HELD: YES. Affirmed with modification. Third-party complainant is dismissed.

 Art. 1733. Common carriers, from the nature of their business and for reasons of public policy are
bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the
passengers transported by them, according to all the circumstances of each case.
Such extraordinary diligence in vigilance over the goods is further expressed in Articles 1734, 1735, and
1745 Nos. 5, 6, and 7 . . .

 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;

. . .

 Art. 1739. In order that the common carrier may be exempted from responsibility, the
natural disaster must have been the proximate and only cause of the loss. However, the
common carrier must exercise due diligence to prevent or minimize loss before, during
and after the occurrence of flood, storm, or other natural disaster in order that the
common carrier may be exempted from liability for the loss, destruction, or deterioration
of the goods . . .
 Caso fortuito or force majeure
 extraordinary events not foreseeable or avoidable, events that could not be foreseen, or which though foreseen,
were inevitable
 not enough that the event should not have been foreseen or anticipated, as is commonly believed but it must be
one impossible to foresee or to avoid - not in this case
 other vessels in the port of San Jose, Antique, managed to transfer to another place
 To be exempted from responsibility, the natural disaster should have been the proximate and only cause of the
loss. There must have been no contributory negligence on the part of the common
carrier.
 there was blatant negligence on the part of M/T ANCO’s crewmembers, first in leaving the engine-less barge D/B
Lucio at the mercy of the storm without the assistance of the tugboat, and again in failing to heed the request of
SMC’s representatives to have the barge transferred to a safer place
 When evidence show that the insured’s negligence or recklessness is so gross as to be sufficient to constitute a
willful act, the insurer must be exonerated.
 ANCO’s employees is of such gross character that it amounts to a wrongful act which must exonerate FGU from
liability under the insurance contract
 both the D/B Lucio and the M/T ANCO were blatantly negligent

GR NO. 172682, JULY 27, 2016

SULPICIO LINES INC. (PETITIONER) V NAPOLEON SISANTE (RESPONDENTS)
FIRST DIVISION
PONENTE: BERSAMIN, J.

NATURE OF ACTION: ACTION FOR DAMAGES FOR BREACH OF CONTRACT OF CARRIAGE.

FACTS:
The M/V Princess of the Orient, a passenger vessel owned and operated by the petitioner, sank near Fortune
Island in Batangas. Of the 388 recorded passengers, 150 were lost. Napoleon Sesante, then a member of the Philippine
National Police (PNP) and a lawyer, was one of the passengers who survived the sinking. He sued the petitioner for
breach of contract and damages. In its defense, the petitioner insisted on the seaworthiness of the M/V Princess of the
Orient due to its having been cleared to sail from the Port of Manila by the proper authorities; that the sinking had been
due to force majeure; that it had not been negligent; and that its officers and crew had also not been negligent because
they had made preparations to abandon the vessel because they had launched life rafts and had provided the passengers
assistance in that regard. The RTC rendered judgement in favor of plaintiff Napoleon Sesante and ordered defendant
to pay temperate and moral damages. The RTC observed that the petitioner, being negligent, was liable to Sesante
pursuant to Articles 1739 and 1759 of the Civil Code. The CA reduced the award of the temperate damages to the
approximate cost of Sesante's lost personal belongings and held that petitioner remained civilly liable.
The petitioner has attributed the sinking of the vessel to the storm notwithstanding its position on the
seaworthiness of M/V Princess of the Orient. Yet, the findings of the BMI directly contradicted the petitioner's
attribution, as the BMI found that petitioner’s fault was the immediate and proximate cause of the sinking due to the
Captain's erroneous maneuvers of the M/V Princess of the Orient minutes before she sunk.

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

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