Transportation Case Digest: Calvo V. Ucpb Gen Insurance Co. (2002)G.R. No.148496 March • Article 1732.
• Article 1732. Common carriers are persons, corporations, firms or associations
19, 2002
Lessons Applicable: Legal Effect (Transportation)
FACTS:
• At the time material to this case, Transorient Container Terminal Services, Inc.
(TCTSI) owned by Virgines Calvo 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 in Manila to SMC's warehouse at the Tabacalera
Compound, Romualdez St., Ermita, Manila.
• The cargo was insured by respondent UCPB General Insurance Co.,
Inc.
• July 14, 1990: arrived in Manila on board "M/V Hayakawa Maru" and later
on unloaded from the vessel to the custody of the arrastre operator, Manila Port
Services, Inc
• July 23 to July 25, 1990: Calvo withdrew the cargo from the arrastre operator
and delivered it to SMC's warehouse in Ermita, Manila
• July 25, 1990: goods were inspected by Marine Cargo Surveyors, who found
that 15 reels of the semi-chemical fluting paper were "wet/stained/torn" and 3 reels of
kraft liner board were likewise torn
• SMC collected payment from UCPB the total damage of P93,112 under its
insurance contract
• UCPB brought suit against Calvo as subrogee of SMC
• Calvo: Art. 1734(4) The character of the goods or defects in the
packing or in the containers
• spoilage or wettage" took place while the goods were in the
custody of either the carrying vessel "M/V Hayakawa Maru," which
transported the cargo to Manila, or the arrastre operator, to whom the
goods were unloaded and who allegedly kept them in open air for 9
days notwithstanding the fact that some of the containers were
deformed, cracked, or otherwise damaged
• Trial Court: Calvo liable
• CA: affirmed
ISSUE: W/N Calvo can be exempted from liability under Art. 1734(4)
HELD: NO. CA AFFIRMED.
• mere proof of delivery of goods in good order to a carrier, and of their arrival at
the place of destination in bad order, makes out a prima facie case against the carrier, so
that if no explanation is given as to how the injury occurred, the carrier must be held
responsible
• extraordinary responsibility lasts from the time the goods are unconditionally
placed in the possession of and received by the carrier for transportation until the same
are delivered actually or constructively by the carrier to the consignee or to the person
who has the right to receive the same
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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 . . . 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.
• 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:

" 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"
• when Calvo's employees withdrew the cargo from the arrastre operator, they did
so without exception or protest either with regard to the condition of container vans or
their contents
• Calvo must do more than merely show the possibility that some other party
could be responsible for the damage. It must prove that it used "all reasonable means to
ascertain the nature and characteristic of goods tendered for transport and that it
exercised due care in the handling 

Philippine Airlines, Inc. vs. Civil Aeronautics Board
(270 SCRA 538)
Facts: Grand Air applied for a Certificate of Public Convenience and Necessity with the Civil
Aeronautics Board (CAB). The Chief Hearing Officer issued a notice of hearing directing Grand
Air to serve a copy of the application and notice to all scheduled Philippine Domestic operators.
Grand Air filed its compliance and requested for a Temporary Operating Permit (TOP). PAL filed
an opposition to the application on the ground that the CAB had no jurisdiction to hear the
application until Grand Air first obtains a franchise to operate from Congress. The Chief Hearing
Officer denied the opposition and the CAB approved the issuance of the TOP for a period of 3
months. The opposition for the TOP was likewise denied. The CAB justified its assumption of
jurisdiction over Grand Air’s application on the basis of Republic Act 776 which gives it the
specific power to issue any TOP or Certificate of Public Convenience and Necessity.
Issue: Whether or not the CAB can issue a Certificate of Public Convenience and Necessity or
TOP even though the prospective operator does not have a legislative franchise?
Held: Yes, as mentioned by the CAB, it is duly authorized to do so under Republic Act 776 and a
legislative franchise is not necessary before it may do so, since Congress has delegated the
authority to authorize the operation of domestic air transport services to the CAB, an
administrative agency. The delegation of such authority is not without limits since Congress had
set specific standard and limitations on how such authority should be exercised.
Public convenience and necessity exists when the proposed facility will meet a reasonable want of
the public and supply a need which the existing facilities do not adequately afford.
Thus, the Board should be allowed to continue hearing the application, since it has jurisdiction
over it provided that the applicant meets all the requirements of the law.
Mallari v. CA and Bulletin Publishing Corp.
WHO WON: Bulletin
DOCTRINE: In an action based on contract of carriage, the court need not make an express
finding of fault or negligence on the part of the carrier in order to hold it responsible for the
payment of damages sought by the passenger. Under Art. 1755 of the Civil Code, a common
carrier is bound to carry the passengers safely as far as human care and foresight can provide
using the utmost diligence of very cautious persons with due regard for all the circumstances.
Moreover, under Art. 1756 of the Civil Code, in case of death or injuries to passengers, a common
carrier is presumed to have been at fault or to have acted negligently, unless it proves that it
observed extraordinary diligence. Further, pursuant to Art. 1759 of the same Code, it is liable for
the death of or injuries to passengers through the negligence or willful acts of the former’s
employees. This liability of the common carrier does not cease upon proof that it exercised all the
diligence of a good father of a family in the selection of its employees.
FACTS:
- On Oct 1987, the passenger jeepney driven by petitioner Alfredo Mallari Jr. and owned
by his co-petitioner Alfredo Mallari Sr. collided with the delivery van of respondent
Bulletin Publishing Corp. (Bulletin) along the National Highway in Barangay San
Pablo, Dinalupihan, Bataan.
- The collision occurred after Mallari Jr. overtook the Fiera while negotiating a curve in
the highway. The points of collision were the left rear portion of the passenger jeepney
and the left front side of the delivery van of Bulletin. The two right wheels of the
delivery van were on the right shoulder of the road and pieces of debris from the
accident were found scattered along the shoulder of the road up to a certain portion of
Page 2 of 19
the lane travelled by the passenger jeepney. The impact caused the jeepney to turn
around and fall on its left side resulting in injuries to its passengers one of whom was
Israel Reyes who eventually died due to the gravity of his injuries.
- Claudia G. Reyes, the widow of Israel M. Reyes, filed a complaint for damages with the
RTC against Alfredo Mallari Sr. and Alfredo Mallari Jr., and also against Bulletin, its
driver Felix Angeles, and the N.V. Netherlands Insurance Company. RTC found that the
proximate cause of the collision was the negligence of Felix Angeles, driver of the
Bulletin delivery van, considering the fact that the left front portion of the delivery truck
driven by Felix Angeles hit and bumped the left rear portion of the passenger jeepney
driven by Alfredo Mallari Jr.
- CA modified the decision of the RTC and found no negligence on the part of Angeles
and Bulletin (his employer). It ruled that the collision was caused by the sole negligence
of petitioner Alfredo Mallari Jr. who admitted that immediately before the collision and
after he rounded a curve on the highway, he overtook a Fiera which had stopped on his
lane and that he had seen the van driven by Angeles before overtaking the Fiera. CA
ordered the Mallaris to compensate Reyes and absolved respondent Bulletin.
ISSUE: Who among the two carriers in a collision is liable to the injuries sustained by the
plaintiff’s husband? Mallaris
RULING:
The SC found that the proximate cause of the collision resulting in the death of Israel Reyes, a
passenger of the jeepney, was the sole negligence of the driver of the passenger jeepney, petitioner
Alfredo Mallari Jr., who recklessly operated and drove his jeepney in a lane where overtaking was
not allowed by traffic rules. Under Art. 2185 of the Civil Code, unless there is proof to the
contrary, it is presumed that a person driving a motor vehicle has been negligent if at the
time of the mishap he was violating a traffic regulation. As found by the appellate court,
petitioners failed to present satisfactory evidence to overcome this legal presumption.
The negligence and recklessness of the driver of the passenger jeepney is binding against
petitioner Mallari Sr., who was the owner of the passenger jeepney engaged as a common carrier,
considering the fact that in an action based on contract of carriage, the court need not make
an express finding of fault or negligence on the part of the carrier in order to hold it
responsible for the payment of damages sought by the passenger. Under Art. 1755 of the
Civil Code, a common carrier is bound to carry the passengers safely as far as human care
and foresight can provide using the utmost diligence of very cautious persons with due
regard for all the circumstances. Moreover, under Art. 1756 of the Civil Code, in case of
death or injuries to passengers, a common carrier is presumed to have been at fault or to
have acted negligently, unless it proves that it observed extraordinary diligence. Further,
pursuant to Art. 1759 of the same Code, it is liable for the death of or injuries to passengers
through the negligence or willful acts of the former’s employees. This liability of the
common carrier does not cease upon proof that it exercised all the diligence of a good father
of a family in the selection of its employees.
Clearly, by the contract of carriage, the carrier jeepney owned by Mallari Sr. assumed the express
obligation to transport the passengers to their destination safely and to observe extraordinary
diligence with due regard for all the circumstances, and any injury or death that might be suffered
by its passengers is right away attributable to the fault or negligence of the carrier.
Calalas v. CA
Facts:
Private respondent Eliza Jujeurche G. Sunga took a passenger jeepney owned and operated by
petitioner Vicente Calalas. As the jeepney was already full, Calalas gave Sunga an stool at the
back of the door at the rear end of the vehicle. Along the way, the jeepney stopped to let a
passenger off. Sunga stepped down to give way when an Isuzu truck owned by Francisco Salva
and driven by Iglecerio Verena bumped the jeepney. As a result, Sunga was injured. Sunga filed a
complaint against Calalas for violation of contract of carriage. Calalas filed a third party
complaint against Salva. The trial court held Salva liable and absolved Calalas, taking cognisance
of another civil case for quasi-delict wherein Salva and Verena were held liable to Calalas. The
Court of Appeals reversed the decision and found Calalas liable to Sunga for violation of contract
of carriage.
Issues:
(1) Whether the decision in the case for quasi delict between Calalas on one hand and Salva and
Verena on the other hand, is res judicata to the issue in this case
(2) Whether Calalas exercised the extraordinary diligence required in the contract of carriage
(3) Whether moral damages should be awarded
Held:
(1) The argument that Sunga is bound by the ruling in Civil Case No. 3490 finding the driver and
the owner of the truck liable for quasi-delict ignores the fact that she was never a party to that
case and, therefore, the principle of res judicata does not apply. Nor are the issues in Civil Case
No. 3490 and in the present case the same. The issue in Civil Case No. 3490 was whether Salva
and his driver Verena were liable for quasi-delict for the damage caused to petitioner's jeepney.
On the other hand, the issue in this case is whether petitioner is liable on his contract of carriage.
The first, quasi-delict, also known as culpa aquiliana or culpa extra contractual, has as its source
the negligence of the tortfeasor. Thesecond, breach of contract or culpa contractual, is premised
upon the negligence in the performance of a contractual obligation. Consequently, in quasi-delict,
the negligence or fault should be clearly established because it is the basis of the action, whereas
in breach of contract, the action can be prosecuted merely by proving the existence of the contract
and the fact that the obligor, in this case the common carrier, failed to transport his passenger
safely to his destination. In case of death or injuries to passengers, Art. 1756 of the Civil Code
provides that common carriers are presumed to have been at fault or to have acted negligently
unless they prove that they observed extraordinary diligence as defined in Arts. 1733 and 1755 of
the Code. This provision necessarily shifts to the common carrier the burden of proof. It is
immaterial that the proximate cause of the collision between the jeepney and the truck was the
negligence of the truck driver. The doctrine of proximate cause is applicable only in actions for
quasi-delict, not in actions involving breach of contract. The doctrine is a device for imputing
liability to a person where there is no relation between him and another party. In such a case, the
obligation is created by law itself. But, where there is a pre-existing contractual relation between
Page 3 of 19
the parties, it is the parties themselves who create the obligation, and the function of the law is
merely to regulate the relation thus created.
(2) We do not think so. First, the jeepney was not properly parked, its rear portion being exposed
about two meters from the broad shoulders of the highway, and facing the middle of the highway
in a diagonal angle. Second, it is undisputed that petitioner's driver took in more passengers than
the allowed seating capacity of the jeepney. The fact that Sunga was seated in an "extension seat"
placed her in a peril greater than that to which the other passengers were exposed. Therefore, not
only was petitioner unable to overcome the presumption of negligence imposed on him for the
injury sustained by Sunga, but also, the evidence shows he was actually negligent in transporting
passengers. We find it hard to give serious thought to petitioner's contention that Sunga's taking
an "extension seat" amounted to an implied assumption of risk. It is akin to arguing that the
injuries to the many victims of the tragedies in our seas should not be compensated merely
because those passengers assumed a greater risk of drowning by boarding an overloaded ferry.
This is also true of petitioner's contention that the jeepney being bumped while it was improperly
parked constitutes caso fortuito. A caso fortuito is an event which could not be foreseen, or
which, though foreseen, was inevitable. This requires that the following requirements be present:
(a) the cause of the breach is independent of the debtor's will; (b) the event is unforeseeable or
unavoidable; (c) the event is such as to render it impossible for the debtor to fulfill his obligation
in a normal manner, and (d) the debtor did not take part in causing the injury to the
creditor. Petitioner should have foreseen the danger of parking his jeepney with its body
protruding two meters into the highway.
PHILIPPINE AMERICAN GENERAL INSURANCE v. MGG MARINE SERVICES
(VILLARIN, L.)
G.R. No. 135645, March 8, 2002
(Common Carriage- Carriage of Goods)
FACTS
San Miguel Corporation (SMC) insured several beer bottle cases with an aggregate value of
P5,836,222.80 with petitioner Philippine American General Insurance Company. The cargos were
loaded on board the M/V Peatheray PatrickG to be transported from Mandaue City to Bislig,
Surigao del Sur. After having been cleared by the Coast Guard Station in Cebu the previous day,
the vessel left the port of Mandaue City for Bislig, Surigao del Sur on March 2, 1987. The
weather was calm when the vessel started its voyage. The following day, March 3, 1987, M/V
Peatheray PatrickG listed and subsequently sunk off Cawit Point, Cortes, Surigao del Sur. As a
consequence thereof, the cargo belonging to San Miguel Corporation was lost.
SMC claimed the amount of the loss from Philam Gen (petitioner). Petitioner sent a surveyor to
investigate the circumstances surrounding the loss of the cargo. The surveyor found that the
vessel was structurally sound and that he did not see any damage or crack thereon. He concluded
that the proximate cause of the listing and subsequent sinking of the vessel was the shifting of
ballast water from starboard to portside. The said shifting of ballast water allegedly affected the
stability of the M/V Peatheray PatrickG. Hence, petitioner paid SMC the amount of
P5,836,222.80 and was subrogated the rights of SMC.
Petitioner filed a case for collection against respondents and obtained a favourable decision.
Meanwhile, the Board of Marine Inquiry conducted its own investigation of the sinking of the M/
V Peatheray PatrickG and found that the captain and crew should be exonerated from liability. It
found that the proximate and only cause of the sinking of the vessel was the existence of strong
winds and enormous waves in Surigao del Sur, a fortuitous event that could not have been
foreseen at the time.
Private respondents filed an appeal and the CA reversed the RTC’s decision.
ISSUE/S
Whether respondent is liable for the loss of the cargo. – NO
HELD
Common carriers, as a general rule, are presumed to have been at fault or negligent if the goods
transported by them are lost, destroyed or if the same deteriorated. The exceptions, as provided in
Article 1734 of the Civil Code, are the following:
(1) Flood, storm, earthquake, lightning or other natural disaster or calamity;
(2) Act of the public enemy in war, whether international or civil;
(3) Act or omission of the shipper or owner of the goods;
(4) The character of the goods or defects in the packing or in the containers;
(5) Order or act of competent public authority.
In this case, the Court finds no reason to reverse the CA’s ruling.
The Board of Marine Inquiry confirmed that good weather condition was present when the ship
left the port of Cebu and that the sudden experience of 6-10 feet waves coupled with strong winds
that increased from 5 knots to 15 knots within an hour was a fortuitous event. The board found
that “along the port side platings, a small hole and two separate cracks were found at about
midship.” This caused water to ingress and resulted into an imbalance of the ship. Despite the
efforts of the captain and crew to pump all the water out, the ship still continued to sink and they
were left with no choice but to abandon ship.
There was thus no error on the part of the Court of Appeals in relying on the factual findings of
the Board of Marine Inquiry, for such factual findings, being supported by substantial evidence
are persuasive, considering that said administrative body is an expert in matters concerning
marine casualties.
[G. R. No. 119086. January 25, 2002]
Page 4 of 19
EMMANUEL G. HERBOSA and ROSEMARIE L. HERBOSA, petitioners, vs. COURT OF
APPEALS (Fifteenth Division), and PROFESSIONAL VIDEO EQUIPMENT a
Division of Solid Distributors, Inc., respondents.
[G. R. No. 119087. January 25, 2002]
EMMANUEL G. HERBOSA and ROSEMARIE L. HERBOSA, petitioners, vs. COURT OF
APPEALS (Fifteenth Division) and SOLID CORPORATION, respondents.
DECISION
DE LEON, JR., J.:
This is a Petition for Review on Certiorari of the decision[1] of the Court of Appeals in CA-
G.R. CV Nos. 15346 and 15093 promulgated on October 20, 1994 which reversed the decision of
the trial court in Civil Case No. R-82-4389[2] while affirming in toto the decision of the trial court
in Civil Case No. R-83-21786,[3] respectively, and the resolution[4] promulgated on February 7,
1995 which denied the subsequent motion for reconsideration.
The facts show that on January 25, 1982 petitioner spouses sued Professional Video
Equipment (PVE for brevity), a division of private respondent Solid Distributors, Inc., for breach
of contract with damages[5] with the Regional Trial Court of Manila, Branch 39, docketed as Civil
Case No. R-82-4389. The case stemmed from the failure of PVE to record on video the petitioners
wedding celebration allegedly due to the gross negligence of its crew as well as the lack of
supervision on the part of the general manager of the PVE. Petitioners also alleged that said
failure on the part of PVE to perform its obligation caused deep disappointment, anxiety and an
irreparable break in the continuity of an established family tradition of recording by film or slide
historical and momentous family events especially wedding celebrations and for which they were
entitled to be paid actual, moral and exemplary damages including attorneys fees.
In its Answer,[6] PVE claimed that it had diligently supervised its VTR crew in the video
recording of petitioners wedding and reception and that its crew acted in good faith and with due
care and proper diligence of a good father of a family.
After trial the lower court rendered a decision[7] on January 3, 1983 in favor of the
petitioners, the dispositive portion of which reads:
FOR ALL THE FOREGOING CONSIDERATIONS, the Court hereby renders judgment,
ordering defendant to pay the plaintiffs actual, moral and exemplary damages in the amount
of P100,000.00, P10,000.00 for attorneys fees and to pay the costs of these proceedings.
For insufficiency of evidence, the counterclaim is hereby DISMISSED.
SO ORDERED.
Complications arose when the petitioners moved for execution on June 23, 1983 of the
above judgment for failure of PVE to file a motion for reconsideration despite, as petitioners
alleged, the mailing to its former counsel a copy of the decision by registered mail.[8]
PVE opposed the motion,[9] and on July 27, 1983 filed a petition for relief from
judgment[10] under Rule 38 of the Rules of Court essentially alleging that it failed to receive
notice of the said judgment sought to be executed and that said failure was due to fraud and
accident when the mail matter was posted in a post office box which was not registered in the
name of PVEs former counsel.
In an order[11] dated November 10, 1983, the trial court denied the petition for relief from
judgment and ordered the issuance of a writ of execution.
Consequently, PVE filed a notice of appeal[12] from the order of November 10, 1983. In
addition, it filed a motion for reconsideration[13] of the said order insofar as it directed the
issuance of a writ of execution.
The trial court gave due course to PVEs appeal[14] but it took no action on the motion for
reconsideration of the order, thus a writ of execution was issued and an auction sale of certain
personal properties levied upon by the deputy sheriff of the trial court was scheduled on
December 8, 1983.
On December 3, 1983 PVE filed a petition for injunction with the Court of Appeals,
docketed as AC-G.R. SP No. 02155, to restrain the scheduled auction sale. Although a temporary
restraining order was issued by the appellate court, the same was served one hour late, at 4:30
oclock in the afternoon on the day of the auction sale on December 8, 1983. As a result, the
personal properties which had been levied upon were sold to Atty. Santiago Gabionza, Jr. as the
highest bidder.[15]
In view of the auction sale held on December 8, 1983, the trial court recalled[16] on May 10,
1984 its previous order giving due course to the appeal from its order dated November 10,
1983. The action taken by the trial court prompted PVE to file a separate petition for
mandamus[17] with the Court of Appeals, docketed as AC-G.R. SP No.03470, to compel the
respondent trial court to give due course to its appeal.
Meanwhile, on December 13, 1983, private respondent Solid Corporation, filed a complaint
for damages[18] with the Regional Trial Court of Manila, Branch 54, docketed as Civil Case No.
R-83-21786, against Deputy Sheriff Angel Borja and the petitioners. Solid Corporation essentially
alleged in its complaint that it was the true owner of the electronic appliances valued at One
Hundred Thirty Nine Thousand Eight Hundred Pesos (P139,800.00) which were levied upon and
subsequently sold at public auction on December 8, 1983 for the satisfaction of the judgment in
Civil Case No. R-82-4389 in favor of the petitioners; that the levy on execution and the
subsequent auction sale were illegal; and that it suffered actual and compensatory damages in the
sum of One Hundred Thirty Nine Thousand Eight Hundred Pesos (P139,800.00), moral damages
in the sum of One Million Pesos (P1,000,000.00), exemplary damages in the sum of One Million
Pesos (P1,000,000.00) and attorneys fees of Two Hundred Thousand Pesos (P200,000.00).
On January 18, 1984, petitioners filed an Answer[19] specifically denying that Solid
Corporation was the owner of the personal properties levied upon and subsequently sold at public
auction on December 8, 1983. They claimed that the showroom and offices located at 1000 J.
Bocobo Street corner Kalaw Street, Ermita, Manila where the subject personal properties were
then on display were owned and operated by respondent Solid Distributors, Inc., a sister company
of Solid Corporation, Inc.; and that both corporations had interlocking directors, officers and
principal stockholders.
Page 5 of 19
On September 6, 1984, the Court of Appeals rendered a consolidated decision[20] in AC -
G.R. SP No. 02155 and AC - G.R. SP No. 03470, the dispositive portion of which reads:
WHEREFORE, the petition for injunction and mandamus are GRANTED and (1) the sheriffs sale
is nullified and the respondents Emmanuel and Rosemarie Herbosa are ordered to deliver the
proceeds of the sale to the Solid Corporation, Inc. and (2) the respondent court is hereby ordered
to give due course to the petitioners appeal in Civil Case No. 137541. Costs against the private
respondents.
Petitioners appealed the above judgment of the appellate court to this Court through a
petition for review on certiorari, docketed as G. R. Nos. 69008-09, but which we denied in a
resolution dated December 17, 1984 for lack of merit. Forthwith, the trial court granted on June
23, 1987 the subsequent motion of herein respondent Solid Corporation for summary judgment in
Civil Case No. R-83-21786.The dispositive portion of the decision[21] of the trial court reads:
WHEREFORE, summary judgment is hereby rendered in favor of the plaintiff, ordering the
private defendants Emmanuel G. Herbosa and Rosemarie L. Herbosa to deliver to the plaintiff the
amount of P139,800.(00) as the proceeds of the sale of plaintiffs properties and attorneys fees
of P10,000.00, plus costs.
Considering that the defendant First Integrated Bonding Co., Inc. is not a party in the aforesaid
Court of Appeals cases, the judgment therein does not bind the defendant and therefore the case
as against it is hereby dismissed.
SO ORDERED.
The appeal taken by the petitioner spouses to the Court of Appeals of the said Decision of
the trial court in Civil Case No. R-83-21786 and the earlier appeal filed by respondent Solid
Distributors, Inc. in Civil Case No. R-82-4389, respectively docketed as CA-G.R. CV Nos. 15093
and 15346, were ordered consolidated by the appellate court in its Resolution[22] dated February
23, 1988.
On October 20, 1994 the Court of Appeals rendered its consolidated Decision,[23] in CA-
G.R. CV Nos. 15093 and 15346, the dispositive portion of which reads:
WHEREFORE, the Court renders judgment:
(1) In CA-G.R. CV No. 15346, REVERSING the appealed decision, and, accordingly,
DISMISSING plaintiffs complaint and defendants counterclaim;
(2) In CA-G.R. CV No. 15093, AFFIRMING in toto the decision appealed from. The Court
sentences defendants Emmanuel G. Herbosa and Rosemarie L. Herbosa to pay plaintiff Solid
Corporation the amount of One Hundred Thirty Nine Thousand Eight Hundred (P139,800.00),
pesos, as the proceeds of the sale of plaintiffs property, and Ten Thousand (P10,000.00), pesos, as
attorneys fees, plus costs.
In both cases, we make no special pronouncement as to costs in this instance.
SO ORDERED.
 The Court of Appeals denied the motion for reconsideration filed by the petitioner spouses
on November 14, 1994 for having been allegedly filed out of time.[24]
Dissatisfied, petitioner spouses filed the instant petition[25] raising the following assignment
of errors:
I properties to satisfy the judgment in Civil Case No. R-82-4389 remains unaffected by the
THE COURT OF APPEALS ERRED IN HOLDING THAT THE PETITIONERS MOTION FOR
RECONSIDERATION DATED NOVEMBER 11, 1994 WAS FILED OUT OF TIME WHEN IT
RELIED ON THE CASE OF IMPERIAL VICTORY SHIPPING AGENCY vs. NLRC (200
SCRA 178) WHICH IS CLEARLY INAPPLICABLE IN THE CASE AT BAR.
II
THE COURT OF APPEALS ERRED WHEN, IN CA-G.R. CV NO. 15346, IT REVERSED THE
FINDING OF THE TRIAL COURT THAT PRIVATE RESPONDENT PVE IS GUILTY OF
GROSS NEGLIGENCE IN THE PERFORMANCE OF ITS OBLIGATION BY SOLELY
RELYING ON THE TRIAL COURTS STATEMENT THAT PRIVATE RESPONDENT PVE
FAILED TO PRESENT AN IOTA OF PROOF THAT IT EXERCISED EXTRAORDINARY
CARE IN THE PROPER MAINTENANCE OF ITS EQUIPMENT USED IN THE
COVERAGE.
III
THE COURT OF APPEALS ERRED WHEN, IN CA-G.R. CV NO. 15346, IT TOTALLY SET
ASIDE THE TRIAL COURTS AWARD OF ACTUAL, MORAL, AND EXEMPLARY
DAMAGES IN THE AMOUNT OFP100,000.00 AS WELL AS ATTORNEYS FEES IN THE
AMOUNT OF P10,000.00 PLUS COSTS OF SUIT, IN FAVOR OF THE SPOUSES HERBOSA
FOR HAVING ALLEGEDLY NO BASIS BOTH IN FACT AND IN LAW.
IV
THE COURT OF APPEALS ALSO ERRED WHEN, WITHOUT ANY LAWFUL BASIS, IT
ERRONEOUSLY AFFIRMED, IN CA-G.R. CV NO. 15093, THE DECISION OF THE TRIAL
COURT WHICH RENDERED SUMMARY JUDGMENT IN THE ENTIRE CASE
NOTWITHSTANDING THE APPARENT EXISTENCE OF A GENUINE ISSUE OF FACT
CONCERNING THE OWNERSHIP OF PERSONAL PROPERTY LEVIED UPON WHICH
ISSUE CLEARLY REMAINS UNAFFECTED BY THE DECISION OF THE COURT OF
APPEALS IN CA-G.R. SP NOS. 02155 AND 03470.
Petitioners contend that their motion for reconsideration was filed within the reglementary
period inasmuch as the ruling in the case of Imperial Victory Shipping Agency v. NLRC[26] cited in
the questioned resolution of the appellate court dated February 7, 1995 was superseded by the
decision of the Supreme Court in the case of Ramon Aquino v. NLRC.[27]
They also contend that the ruling of the Court of Appeals in CA-G.R. CV No. 15346 to the
effect that the degree of diligence required under the contract was that of diligence of a good
father of a family, and not extraordinary diligence as opined by the trial court, does not negate the
finding of the lower court that breach of contract due to gross negligence on the part of PVE was
Page 6 of 19
duly proven by the petitioners. Due to the presence of gross negligence on the part of PVE (a
division of respondent Solid Distributors, Inc.), petitioners are entitled to an award of actual,
moral and exemplary damages including attorneys fees and costs.
Additionally, petitioners contend that the summary judgment rendered by the trial court in
Civil Case No. R-83-21786 was improper since the question of ownership of the levied personal
decision of the Court of Appeals in AC-G.R. SP Nos. 02155 and 03470 which merely declared
that the execution of the said judgment was void for being premature.
On the other hand, both private respondents Solid Distributors, Inc. and Solid Corporation
invoke the ruling in the case of Azores v. SEC[28] which affirmed our ruling in the cases of Bank of
America, NT and SA v. Gerochi, Jr., et al.,[29] and Imperial Victory Shipping Agency v.
NLRC[30] such that if the last day to appeal fell on a Saturday, the act was still due on that
day. While private respondents concede that rules of procedure are intended to promote
substantial justice, they emphasized that the perfection of appeal in the manner and within the
period permitted by law is not only mandatory but jurisdictional.
Private respondents also invoke the well-settled rule that only questions of law may be
entertained on appeal. By questioning in the instant petition public respondent appellate courts
appreciation of the evidence on the issue of diligence, petitioners, in effect, raised questions of
fact which cannot be done by the Supreme Court, on appeal, as it is not a trier of facts. After
having determined by the Court of Appeals that no cause of action exists against private
respondent PVE, there appears to be no basis for an award of damages contrary to the contention
of the petitioners in the third assignment of error.
Lastly, private respondents maintain that summary judgment was properly rendered in Civil
Case No. R-83-21786 in view of the Decision of the Court of Appeals in AC-G.R. SP Nos. 02155
and 03470 promulgated on September 6, 1984 which was affirmed by the Supreme Court in a
resolution dated December 17, 1984. The said decision, which is the law of the case, mandates
that the petitioners were to deliver the proceeds of the sheriffs auction sale to herein private
respondent Solid Corporation.
Hence, the issues are:
1. Whether or not the motion for reconsideration filed by the petitioners on November
14, 1994 was filed beyond the reglementary period.
2. Whether or not the petitioners are entitled to award of damages arising from breach
of contract of service in Civil Case No. R-82-4389.
3. Whether or not the trial court correctly rendered summary judgment in Civil Case
No. R-83-21786 in favor of respondent Solid Corporation.
In denying petitioners motion for reconsideration filed on November 14, 1994, the Court of
Appeals ruled that the petitioners had only until November 12, 1994, which was a Saturday,
within which to file a motion for reconsideration of its Decision dated October 20, 1994 in CA-
G.R. CV Nos. 15346 and 15093 inasmuch as they had been furnished notice of its said decision
on October 28, 1994. The appellate court cited the case of Imperial Victory Shipping where it was
held that if the last day to appeal fell on a Saturday, the act was still due on that day and not on the
next succeeding business day.
It should be noted, however, that even in the cases[31] invoked by the private respondents, we
have already made pronouncements therein that, as early as January 23, 1993, this Court had
issued an order directing court offices closed on Saturdays so that when the last day for filing of a
pleading should fall on a Saturday, the same should be done on the following Monday, provided
the latter is not a holiday. Significantly, the motion for reconsideration which was filed by the
petitioners on November 14, 1994 came after the issuance of our said order. Consequently,
respondent appellate court should not have denied outright petitioners motion for reconsideration
since the last day for the filing thereof fell on November 12, 1994, which was a Saturday, when
the Receiving and Docket Section and the Cashier Section of the Court of Appeals were closed.
Likewise, respondent PVE or respondent Solid Distributors, Inc. may not validly thwart the
petitioners instant petition for review of the decision of the Court of Appeals in CA-G.R. CV No.
15346 by arguing that the principal issue as to the existence of negligence involves a question of
fact which cannot be raised on appeal. The general rule that only questions of law may be raised
on appeal in a petition for review under Rule 45 of the Rules of Court admits of certain
exceptions, namely: a) when the conclusion is a finding grounded entirely on speculations,
surmises, or conjectures; b) when the inference made is manifestly mistaken, absurd, or
impossible; c) where there is a grave abuse of discretion; d) when the judgment is based on a
misapprehension of facts; e) when the findings of fact are conflicting; f) when the Court of
Appeals, in making its findings, went beyond the issues of the case and the same are contrary to
the admissions of both appellant and appellee; g) when the findings of the Court of Appeals are
contrary to those of the trial court; h) when the findings of fact are conclusions without citation of
specific evidence on which they are based; I) when the finding of fact of the Court of Appeals is
premised on the supposed absence of evidence but is contradicted by the evidence on record; and
j) when the Court of Appeals manifestly overlooked certain relevant facts not disputed by the
parties and which, if properly considered, would justify a different conclusion.[32] Notably, the
Court of Appeals and the trial court arrived at conflicting findings of fact in Civil Case No.
R-82-4389 which is an action for breach of contract and damages and the appeal therefrom, thus
necessitating further review of the evidence by this Court.
It appears from the evidence adduced that the petitioner spouses contracted the services of
PVE (a division of respondent Solid Distributors, Inc.) for the betamax coverage of their then
forthcoming wedding celebration scheduled in the morning of October 11, 1980. Pursuant to the
contract[33] PVE undertook to record on betamax format the wedding celebration of the petitioners
starting with the pre-departure activities of the bride at her residence, followed by the wedding
ceremony and the reception which had an approximate playback time of sixty (60) to ninety (90)
minutes. Petitioners paid PVE the amount of One Thousand Four Hundred Twenty-Three Pesos
(P1,423.00) as downpayment while the balance of One Thousand Five Hundred Thirty- Two
Pesos (P1,532.00) was to be paid upon receipt of the finished video tape.
Accordingly, on October 11, 1980 at around 6:30 oclock in the morning[34] the PVE crew
composed of the cameraman, Vedastro Sulit, VTR (video tape recorder) operator, Michael
Rodriguez, and the driver and lightman, Felix Baguio, arrived at the residence of the bride at 1694
M. H. Del Pilar Street, Ermita, Manila. They recorded the pre-departure activities of the bride
Page 7 of 19
before leaving for the Malate Church along Mabini Street, Malate, Manila where the wedding
ceremonies were held at 9:00 oclock in the morning. Thereafter, the crew proceeded to the Manila
Hotel in Intramuros, Manila, where the wedding reception followed at 10:30 oclock in the
morning.
On October 13, 1980, however, Ben Zarate, studio manager of PVE, informed the
petitioners that the videotape coverage of their wedding celebration was damaged due to
mechanical defect in their equipment. On October 19, 1980 PVE general manager, Eric Sycip,
confirmed the damage and proposed to do a video tape production of their wedding celebration
through photographs or a video coverage of any event of similar significance.[35] In addition, Eric
Sycip sent a check[36] representing the amount of the downpayment which the petitioners did not
accept. Deeply aggrieved, the petitioners rejected both of the proposed alternatives since,
according to them, a video tape production through photographs was not going to compensate for
the betamax or film coverage of their actual wedding celebration and that there could be no event
of similar significance insofar as petitioners are concerned.
PVE, a division of respondent Solid Distributors, Inc., disclaimed any liability for the
damaged videotape by invoking force majeure or fortuitous event and asserted that a defective
transistor caused the breakdown in its video tape recorder. However, said respondent failed to
substantiate its bare allegation by presenting in evidence the alleged defective transistor before
the trial court. Instead, it presented another component[37] of the same kind. Having invoked
fortuitous event, it was incumbent upon said respondent to adduce sufficient and convincing proof
to establish its defense.
At any rate, in order that fortuitous event may exempt PVE or respondent Solid Distributors,
Inc. from liability, it is necessary that it be free from negligence.[38] The record shows, however,
that the alleged malfunctioning of the video tape recorder occurred at the beginning of the video
coverage at the residence of the bride. The PVE crew miserably failed to detect the defect in the
video tape recorder and that they discovered the same rather too late after the wedding reception
at the Manila Hotel.
There appeared to be no valid reason why the alleged defect in the video tape recorder had
gone undetected. There was more than sufficient time for the PVE crew to check the video tape
recorder for the reason that they arrived at the brides residence at 6:30 oclock in the morning
while they departed for the wedding ceremonies at the Malate Church at 9:00 oclock in the
morning. Besides, PVE was admittedly furnished earlier by the petitioners with a copy of the
script[39] of the scenes to be recorded so that it could prepare and organize its contracted task.
PVE studio manager Ben Zarate even testified that ordinarily, the standard playback test to
monitor the functioning of the video tape recorder was required at every opportunity. In the
instant case, a playback test on three (3) occasions, preferably at the beginning, middle and
towards the end portions of the video coverage would have been sufficient.[40]
Based on the investigation allegedly conducted by its officers, PVE or respondent Solid
Distributors, Inc. claimed that its crew, whom it never presented to testify during the trial of the
case, allegedly conducted a playback test at the residence of the bride and that the next playback
test was conducted after the wedding reception at the Manila Hotel where the defect in the video
tape recorder was allegedly discovered for the first time.[41] A review of the records however,
raised doubts as to whether the crew actually conducted a playback test at the residence of the
bride. A very minimal portion, lasting only for two and one half (2 ) minutes, of the pre-departure
activities at the residence of the bride had been recorded while the rest of the video tape was
damaged. This strongly suggests that any alleged defect in the video tape recorder could have
easily been detected by the PVE crew at the residence of the bride had a sufficient playback test
been conducted therein prior to their departure for the wedding ceremonies at the Malate
Church. The pertinent portion of the stenographic notes of the trial is reproduced, thus:
Interpreter:
We are about to witness the video coverage of the Herbosa Wedding on the television
set. (V)iew on (sic) the M. H. del Pilar and what is in focus is a residence No.
1694. What is shown is the facade of the De Leon residence, the residence of the
bride, Rosemarie de Leon; next in focus is apparently a bedroom of the
bride. What is shown on screen now is that she was being made up by her artist
and hairdresser in preparation for the forthcoming wedding. She is wearing an
electric blue dressing gown.
Court:
It would seem that at this juncture, the picture is clear as shown on the television.
Interpreter:
Then, the other members of the entourage is also in focus. They are shown to be made-
up by the artist. At this juncture, it is still visible that the screen is clear, then
suddenly, there is complete darkness, and snatches on the screen which has a span
of about
Atty. Agcaoili:
May we stipulate that the good tape your Honor, lasted for only two and a half
minutes?
Atty. Mendoza:
Agreed, your Honor.
Atty. Agcaoili:
And that from this point, the cassette is blurred and you cannot see any visible figure
on the cassette tape. May we note the ringing sound apparently a telephone
ringing which will indicate that the audio pick-up is being taken or at least, the
audio was working. After four minutes of complete blurred, there appears to be
snatches of the brides face and again, it has faded into complete non-appearance
of the subject being taken.
Court:
In other words, no pictures registered after the few snatches of the bride.[42]
Page 8 of 19
The misfortune that befell the then newly-wed couple, petitioners herein, could have been
avoided by a timely exercise of minimum prudence by the crew of PVE who are all employees of
respondent Solid Distributors, Inc. to check any possible mechanical defect in the video tape
recorder. The defect could have been detected earlier and remedial measures could have been
made to ensure full video tape coverage of the petitioners wedding celebration. But PVE or
respondent Solid Distributors, Inc. did not. We take judicial notice of the short distance between
the office of PVE or respondent Solid Distributors, Inc. at 1000 J. Bocobo corner Kalaw Streets,
Ermita, Manila, on one hand, and the locations of the required video tape coverage at the
residence of the bride at M. H. Del Pilar Street, Ermita, Manila, the Malate Church and the
Manila Hotel. The failure to record on videotape the wedding celebration of the petitioners
constitutes malicious breach of contract as well as gross negligence on the part of respondent
Solid Distributors, Inc.
PVE or respondent Solid Distributors, Inc. cannot seek refuge under Article 2180 of the
New Civil Code by claiming that it exercised due care in the selection and supervision of its
employees and that its employees are experienced in their respective trade. That defense, as
provided in the last paragraph of Article 2180 of the New Civil Code, may be availed of only
where the liability arises from culpa aquilana and not from culpa contractual such as in the case
at bar.[43]
However, the award of damages to the petitioners cannot be lumped together as was done by
the trial court. It is basic that the claim for actual, moral and exemplary damages as well as
attorneys fees must each be independently identified and justified.[44] In this connection, Article
1170 of the New Civil Code provides that those who in the performance of their obligations are
guilty of fraud, negligence or delay, and those who in any manner contravene the tenor thereof,
are liable for damages. For failure of PVE, a division of respondent Solid Distributors, Inc., to
comply with its obligation under the video tape coverage contract, petitioners are entitled to
actual damages at least in the amount of One Thousand Four Hundred Twenty-Three Pesos
(P1,423.00) representing their downpayment in that contract.
Ordinarily, moral damages cannot be recovered in an action for breach of contract because
such an action is not among those expressly mentioned in Article 2219[45] of the New Civil
Code. However, moral damages are recoverable for breach of contract where the breach was
wanton, reckless, malicious or in bad faith, oppressive or abusive.[46] The wanton and reckless
failure and neglect to timely check and remedy the video tape recorder by the PVE crew who are
all employees of respondent Solid Distributors, Inc. indicates a malicious breach of contract and
gross negligence on the part of said respondent in the discharge of its contractual obligations.
Consequently, the petitioners who suffered mental anguish and tortured feelings thereby, are
entitled to an award of One Hundred Thousand Pesos (P100,000.00) as moral damages.
In the case of Go v. Court of Appeals[47] we emphasized that (i)n our society, the importance
of a wedding ceremony cannot be underestimated as it is the matrix of the family and, therefore,
an occasion worth reliving in the succeeding years. Further, we reiterate the following
pronouncements therein where we also awarded moral damages on account of a malicious breach
of contract similar to the case at bar, to wit:
Considering the sentimental value of the tapes and the fact that the event therein recordeda
wedding which in our culture is a significant milestone to be cherished and rememberedcould no
longer be reenacted and was lost forever, the trial court was correct in awarding the appellees
moral damages albeit in the amount of P75,000.00 xxx in compensation for the mental anguish,
tortured feelings, sleepless nights and humiliation that the appellees suffered and which under the
circumstances could be awarded as allowed under Articles 2271 and 2218 of the Civil Code.
The award of exemplary damages which is hereby fixed in the amount of Forty Thousand
Pesos (P40,000.00) is justified, under the premises, to serve as a warning to all entities engaged in
the same business to observe good faith and due diligence in the fulfillment of their contractual
obligations. Additionally, the award of attorneys fees in the amount of Ten Thousand Pesos
(P10,000.00) is also proper in accordance with Article 2208[48] of the Civil Code.
Anent the third issue, we hold that the Court of Appeals, in CA-G.R. CV No. 15346, did not
err in sustaining the summary judgment rendered by the trial court in Civil Case No. R-83-21786.
The test for propriety of a motion for summary judgment is whether the pleadings, affidavits and
exhibits in support of the motion are sufficient to overcome the opposing papers and to justify the
finding that, as a matter of law, there is no defense to the action or claim which is clearly
meritorious.[49]
The decision of the Court of Appeals in AC G.R. SP Nos. 02155 and 03470, for injunction
and mandamus, specifically commands herein petitioners to deliver the proceeds of the (auction)
sale to Solid Corporation due to the nullity of the sheriffs sale on December 8, 1983 for being
premature. The said decision of the Court of Appeals became final and executory after this Court,
in G.R. Nos. 69008 and 69009, denied on December 17, 1984 the appeal therefrom instituted by
herein petitioners.
WHEREFORE, judgment is hereby rendered as follows:
(1) In G.R. No. 119086, the appealed decision of the Court of Appeals in CA-G.R. CV No.
15346 is REVERSED. Private respondent Solid Distributors, Inc. is ordered to pay the petitioners
One Thousand Four Hundred Twenty-Three Pesos (P1,423.00) as actual damages, One Hundred
Thousand Pesos (P100,000.00) as moral damages, Forty Thousand Pesos (P40,000.00) as
exemplary damages, and Ten Thousand Pesos (P10,000.00) by way of attorneys fees; and
(2) In G.R. No. 119087, the appealed decision of the Court of Appeals in CA-G.R. CV No.
15093 is AFFIRMED.
No pronouncement as to costs. SO ORDERED. Bellosillo, (Chairman), Mendoza,
Quisumbing, and Buena, JJ., concur.
Arada v. CA
FACTS:
- Petitioner Alejandro Arada is the proprietor and operator of the firm South Negros
Enterprises which has been organized and established for more than 10 years. It is
engaged in the business of small scale shipping as a common carrier, servicing the
Page 9 of 19
hauling of cargoes of different corporations and companies with the 5 vessels it was
operating.
- On March 24, 1982, petitioner entered into a contract with private respondent to safely
transport as a common carrier, cargoes of the latter from San Carlos City, Negros
Occidental to Mandaue City using one of petitioner's vessels, M/L Maya. The cargoes of
private respondent San Miguel Corporation consisted of 9,824 cases of beer empties
valued at P176,824.80.
Petitioner thru its crew master, Mr. Vivencio Babao, applied for a clearance with the
-
Philippine Coast Guard for M/L Maya to leave the port of San Carlos City, but due to a
typhoon, it was denied clearance.
- The next day, M/L Maya was given clearance as there was no storm and the sea was
calm. Hence, said vessel left for Mandaue City. While it was navigating towards Cebu,
a typhoon developed and said vessel was buffeted on all its sides by big waves. Its
rudder was destroyed and it drifted for sixteen (16) hours although its engine was
running.
- At about 4:00 a.m., the vessel sank with whatever was left of its cargoes. The crew was
rescued by a passing pump boat and was brought to Calanggaman Island. Later in the
afternoon, they were brought to Palompon, Leyte, where Vivencio Babao filed a marine
protest.
- On the basis of such marine protest, the Board of Marine Inquiry recommended that the
owner/operator, officers and crew of M/L Maya be exonerated or absolved from any
administrative liability on account of this incident.
- The Board's report containing its findings and recommendation was then forwarded to
the headquarters of the Philippine Coast Guard for appropriate action. On the basis of
such report, the Commandant of the Philippine Coast Guard rendered a decision
exonerating the owner/operator officers and crew of the ill-fated M/L Maya from any
administrative liability on account of said incident.
- SMC filed a complaint in the RTC its first cause of action being for the recovery of the
value of the cargoes anchored on breach of contract of carriage. RTC dismissed the
plaintiff’s claim on the basis of its first cause of action.
- SMC appealed to the CA. CA reversed the decision and Arada was ordered to pay unto
the appellant SMC. It ruled that "in view of his failure to observe extraordinary diligence
over the cargo in question and his negligence previous to the sinking of the carrying
vessel, as above shown, the appellee is liable to the appellant for the value of the lost
cargo
ISSUE: Whether or not petitioner is liable for the value of the lost cargoes? YES
RULING:
There is no doubt that petitioner was exercising its function as a common carrier when it entered
into a contract with private respondent to carry and transport the latter's cargoes.
A common carrier, both from the nature of its business and for insistent reasons of public policy is
burdened by law with the duty of exercising extraordinary diligence not only in ensuring the
safety of passengers, but in caring for the goods transported by it. The loss or destruction or
deterioration of goods turned over to the common carrier for the conveyance to a designated
destination raises instantly a presumption of fault or negligence on the part of the carrier, save
only where such loss, destruction or damage arises from extreme circumstances such as a natural
disaster or calamity.
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 the 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 destruction or deterioration of the goods (Article 1739, New Civil Code).
In the instant case, the appellate court was correct in finding that petitioner failed to observe the
extraordinary diligence over the cargo in question and he or the master in his employ was
negligent previous to the sinking of the carrying vessel. Respondent court's conclusion as to the
negligence of petitioner is supported by evidence. It will be noted that Vivencio Babao knew of
the impending typhoon when the Philippine Coast Guard denied M/L Maya the issuance of a
clearance to sail. Less than 24 hours elapsed since the time of the denial of said clearance and the
time a clearance to sail was finally issued.
A common carrier is obliged to observe extraordinary diligence and the failure of Babao to
ascertain the direction of the storm and the weather condition of the path they would be
traversing, constitute lack of foresight and minimum vigilance over its cargoes taking into
account the surrounding circumstances of the case.
Furthermore, the records show that the crew of M/L Maya did not have the required qualifications
provided for in P.D. No. 97 or the Philippine Merchant Marine Officers Law, all of whom were
unlicensed. While it is true that they were given special permit to man the vessel, such permit was
issued at the risk and responsibility of the owner.
Finally, petitioner claims that the factual findings of the Special Board of Marine Inquiry
exonerating the owner/operator, crew officers of the ill-fated vessel M/L Maya from any
administrative liability is binding on the court.
In rejecting petitioner's claim, respondent court was correct in ruling that "such exoneration was
but with respect to the administrative liability of the owner/operator, officers and crew of the ill-
fated" vessel. It could not have meant exoneration of appellee from liability as a common carrier
for his failure to observe extraordinary diligence in the vigilance over the goods it was
transporting and for the negligent acts or omissions of his employees. Such is the function of the
Court, not the Special Board of Marine Inquiry."
Page 10 of 19
SERVANDO v PHIL STEAM [G.R. Nos. L-36481-2. October 23, 1982.] AMPARO C.
SERVANDO, CLARA UY BICO, plaintiffs- appellees, vs. PHILIPPINE STEAM NAVIGATION
CO., defendant-appellant.
FACTS:
Appellees Clara Uy Bico and Amparo Servando loaded their respective cargoes on board
appellant's vessel for carriage from Manila to Negros Occidental. Upon arrival of the vessel at the
place of destination, the cargoes were discharged, complete and in good order, into the warehouse
of the Bureau of Customs. After appellee Uy Bico had taken delivery of apportion of her cargoes,
the warehouse was rated by fire of unknown origin, destroying the rest of the two appellees'
cargoes. Appellees filed their claims from appellant for the recovery of the value of the goods
destroyed by fire.
DECISION OF LOWER COURTS:
(1) Trial Court: ruled in favor of appellees and ordered payment of their claims, stating that since
the burning of the warehouse occurred before actual or constructive delivery of the goods to the
appellees, the loss is chargeable against the appellant.
ISSUE:
Whether Philippine Steam Navigation Co. is liable?
RULING:
No.
Appellant, as obligor, is exempt from liability for non- performance because the burning of the
warehouse containing appellees' goods, which is the immediate and proximate cause of the loss,
is a fortuitous event or force majeure which could not have been foreseen by appellant.
Where fortuitous event or force majeure is the immediate and proximate cause of the loss, the
obligor is exempt from liability for non- performance. (See Art. 1174 of the New Civil Code.)
The Partidas(Law II, Title 33, Partida 7), the antecedent of Article 1174 of the Civil Code, defines
"caso fortuito" as "an event that takes place by accident and could not been have foreseen.
Examples of this are destruction of houses, unexpected fire, shipwreck, violence of robbers."
In the dissertation of the phrase "caso fortuito" the Encyclopedia Juridicada Española says: "In a
legal sense and consequently, also in relation to contracts, caso fortuito presents the following
essential characteristics:
(1) the cause of the unforseen and unexpected occurrence, or of the failure of the debtor to
comply with his obligation, must be independent of the human will;
(2) it must be impossible to foresee the event which constitutes the caso fortuito, or if it can be
foreseen, it must be impossible to avoid;
(3) the occurrence must be such as to render it imposible for the debtor to fulfill his obligation in
a normal manner; and
(4) the obligor must be free from any participation in the aggravation of the injury resulting to
creditor."
There is nothing in the record to show that appellant carrier incurred in delay in the performance On November 6, 1963, appellees Clara Uy Bico and Amparo Servando loaded on board the
of its obligation. It appears that appellant had not only notified appellees of the arrival of their appellant's vessel, FS-176, for carriage from Manila to Pulupandan, Negros Occidental, the
shipment, out had demanded that the same be withdrawn. In fact, pursuant to such demand, following cargoes, to wit:
appellee Uy Bico had taken delivery of 907 cavans of rice before the burning of the warehouse.
Clara Uy Bico —
Nor can the appellant or its employees be charged with negligence. The storage of the goods in
the Customs warehouse pending withdrawal thereof by the appellees was undoubtedly made with
1,528 cavans of rice valued
their knowledge and consent. Since the warehouse belonged to and was maintained by the
government, it would be unfair to impute negligence to the appellant, the latter having no control
whatsoever over the same. at P40,907.50;
The lower court in its decision relied on the ruling laid down in Yu Biao Sontua vs. Ossorio, 43
Phil. 511, where this Court held the defendant liable for damages arising from a fire caused by the Amparo Servando —
negligence of the defendant's employees while loading cases of gasoline and petroleum products.
But unlike in the said case, there is not a shred of proof in the present case that the cause of the 44 cartons of colored paper,
fire that broke out in the Custom's warehouse was in any way attributable to the negligence of the
appellant or its employees. Under the circumstances, the appellant is plainly not responsible.
toys and general merchandise valued at P1,070.50;
AMPARO C. SERVANDO, CLARA UY BICO, plaintiffs-appellees, 

vs.
 as evidenced by the corresponding bills of lading issued by the appellant. 1
PHILIPPINE STEAM NAVIGATION CO., defendant-appellant.
Upon arrival of the vessel at Pulupandan, in the morning of November 18, 1963, the cargoes were
Zoilo de la Cruz, Jr. & Associate for plaintiff-appellee Amparo Servando. discharged, complete and in good order, unto the warehouse of the Bureau of Customs. At about
2:00 in the afternoon of the same day, said warehouse was razed by a fire of unknown origin,
Benedicto, Sumbingco & Associate for appellee Clara Uy Bico. destroying appellees' cargoes. Before the fire, however, appellee Uy Bico was able to take
delivery of 907 cavans of rice 2 Appellees' claims for the value of said goods were rejected by the
appellant.
Ross, Salcedo, del Rosario, Bito & Misa for defendant-appellant.
On the bases of the foregoing facts, the lower court rendered a decision, the decretal portion of
which reads as follows:
ESCOLIN, J.:
WHEREFORE, judgment is rendered as follows:
This appeal, originally brought to the Court of Appeals, seeks to set aside the decision of the
Court of First Instance of Negros Occidental in Civil Cases Nos. 7354 and 7428, declaring
appellant Philippine Steam Navigation liable for damages for the loss of the appellees' cargoes as 1. In case No. 7354, the defendant is hereby ordered to pay the plaintiff Amparo C. Servando the
a result of a fire which gutted the Bureau of Customs' warehouse in Pulupandan, Negros aggregate sum of P1,070.50 with legal interest thereon from the date of the filing of the complaint
Occidental. until fully paid, and to pay the costs.

The Court of Appeals certified the case to Us because only pure questions of law are raised 2. In case No. 7428, the defendant is hereby ordered to pay to plaintiff Clara Uy Bico the
therein. aggregate sum of P16,625.00 with legal interest thereon from the date of the filing of the
complaint until fully paid, and to pay the costs.
The facts culled from the pleadings and the stipulations submitted by the parties are as follows:
Article 1736 of the Civil Code imposes upon common carriers the duty to observe extraordinary
diligence from the moment the goods are unconditionally placed in their possession "until the
same are delivered, actually or constructively, by the carrier to the consignee or to the person who
has a right to receive them, without prejudice to the provisions of Article 1738. "
Page 11 of 19
The court a quo held that the delivery of the shipment in question to the warehouse of the Bureau
of Customs is not the delivery contemplated by Article 1736; and since the burning of the
warehouse occurred before actual or constructive delivery of the goods to the appellees, the loss is
chargeable against the appellant.
It should be pointed out, however, that in the bills of lading issued for the cargoes in question, the
parties agreed to limit the responsibility of the carrier for the loss or damage that may be caused
to the shipment by inserting therein the following stipulation:
Clause 14. Carrier shall not be responsible for loss or damage to shipments billed 'owner's risk'
unless such loss or damage is due to negligence of carrier. Nor shall carrier be responsible for loss
or damage caused by force majeure, dangers or accidents of the sea or other waters; war; public
enemies; . . . fire . ...
We sustain the validity of the above stipulation; there is nothing therein that is contrary to law,
morals or public policy.
Appellees would contend that the above stipulation does not bind them because it was printed in
fine letters on the back-of the bills of lading; and that they did not sign the same. This argument
overlooks the pronouncement of this Court in Ong Yiu vs. Court of Appeals, promulgated June
29, 1979, 3 where the same issue was resolved in this wise:
While it may be true that petitioner had not signed the plane ticket (Exh. '12'), he is nevertheless
bound by the provisions thereof. 'Such provisions have been held to be a part of the contract of
carriage, and valid and binding upon the passenger regardless of the latter's lack of knowledge or
assent to the regulation'. It is what is known as a contract of 'adhesion', in regards which it has
been said that contracts of adhesion wherein one party imposes a ready made form of contract on
the other, as the plane ticket in the case at bar, are contracts not entirely prohibited. The one who
adheres to the contract is in reality free to reject it entirely; if he adheres, he gives his
consent." (Tolentino, Civil Code, Vol. IV, 1962 Ed., p. 462, citing Mr. Justice J.B.L. Reyes,
Lawyer's Journal, Jan. 31, 1951, p. 49).
Besides, the agreement contained in the above quoted Clause 14 is a mere iteration of the basic
principle of law written in Article 1 1 7 4 of the Civil Code:
Article 1174. Except in cases expressly specified by the law, or when it is otherwise declared by
stipulation, or when the nature of the obligation requires the assumption of risk, no person shall
be responsible for those events which could not be foreseen, or which, though foreseen, were
inevitable.
Thus, where fortuitous event or force majeure is the immediate and proximate cause of the loss,
the obligor is exempt from liability for non-performance. The Partidas, 4 the antecedent of Article
1174 of the Civil Code, defines 'caso fortuito' as 'an event that takes place by accident and could
Page 12 of 19
not have been foreseen. Examples of this are destruction of houses, unexpected fire, shipwreck,
violence of robbers.'
In its dissertation of the phrase 'caso fortuito' the Enciclopedia Juridicada Espanola 5 says: "In a
legal sense and, consequently, also in relation to contracts, a 'caso fortuito' presents the following
essential characteristics: (1) the cause of the unforeseen and unexpected occurrence, or of the
failure of the debtor to comply with his obligation, must be independent of the human will; (2) it
must be impossible to foresee the event which constitutes the 'caso fortuito', or if it can be
foreseen, it must be impossible to avoid; (3) the occurrence must be such as to render it
impossible for the debtor to fulfill his obligation in a normal manner; and (4) the obligor must be
free from any participation in the aggravation of the injury resulting to the creditor." In the case at
bar, the burning of the customs warehouse was an extraordinary event which happened
independently of the will of the appellant. The latter could not have foreseen the event.
There is nothing in the record to show that appellant carrier ,incurred in delay in the performance
of its obligation. It appears that appellant had not only notified appellees of the arrival of their
shipment, but had demanded that the same be withdrawn. In fact, pursuant to such demand,
appellee Uy Bico had taken delivery of 907 cavans of rice before the burning of the warehouse.
Nor can the appellant or its employees be charged with negligence. The storage of the goods in
the Customs warehouse pending withdrawal thereof by the appellees was undoubtedly made with
their knowledge and consent. Since the warehouse belonged to and was maintained by the
government, it would be unfair to impute negligence to the appellant, the latter having no control
whatsoever over the same.
The lower court in its decision relied on the ruling laid down in Yu Biao Sontua vs. Ossorio 6,
where this Court held the defendant liable for damages arising from a fire caused by the
negligence of the defendant's employees while loading cases of gasoline and petroleon products.
But unlike in the said case, there is not a shred of proof in the present case that the cause of the
fire that broke out in the Custom's warehouse was in any way attributable to the negligence of the
appellant or its employees. Under the circumstances, the appellant is plainly not responsible.
WHEREFORE, the judgment appealed from is hereby set aside. No costs.
Same; Same; Same; Agreement on limitation of liability of carrier, binding upon the parties;
Reason; Contracts of adhesion not entirely prohibited.—Appellees would contend that the
above stipulation does not bind them because it was printed in fine letters on the back of the bills
of lading; and that they did not sign the same. This argument overlooks the pronouncement of this
Court in Ong Yiu vs. Court of Appeals, promulgated June 29, 1979, where the same issue was
resolved in this wise: "While it may be true that petitioner had not signed the plane ticket (Exh.
'12'), he is nevertheless bound by the provisions thereof. 'Such provisions have been held to be a
part of the contract of carriage, and valid and binding upon the passenger regardless of the latter's
lack of knowledge or assent to the regulation.' It is what is known as a contract of 'adhesion', in
regards which it has been said that contracts of adhesion wherein one party imposes a ready made 

form of contract on the other, as the plane ticket in the case at bar, are contracts not entirely On July 13, La Suerte paid P47,680 representing the total demurrage charges on all the
prohibited. The one who adheres to the contract is in reality free to reject it entirely; if he adheres, containers, but it was not able to obtain its goods. It was able to obtain only a partial release of the
he gives his consent." (Tolentino, Civil Code, Vol. IV, 1962 Ed., p. 462, citing Mr. Justice J.B.L. cargo because of the breakdown of the arrastre's equipment at the container yard. On July 16, La
Reyes, Lawyer's Journal, Jan. 31, 1951, p. 49). Suerte sent a letter to Smith, Bell & Co. requesting reconsideration of the demurrage charges, but
was refused. Subsequently, La Suerte refused to pay any more demurrage charges on the ground
that the delay in the release of the cargo was not due to its fault but to the breakdown of the
TELENGTEN BROTHERS AND SONS vs CA equipment at the container yard.



La Suerte filed this suit in the RTC for specific performance to compel respondents to release 7
Private respondent K-Line is a foreign shipping company doing biz in PH, its shipping agent is container vans consigned to it free of charge.

respondent Smith, Bell & Co., Inc. It is a member of the Far East Conference, the body which 

fixes rates by agreement of its member-shipowners. The conference is registered with the U.S. In their answer, private respondents claimed that they were not free to waive these charges
Federal Maritime Commission.
 because under the United States Shipping Act of 1916 it was unlawful for any common carrier

 engaged in transportation involving the foreign commerce to charge or collect a greater or lesser
Van Reekum Paper, Inc. entered into a contract of affreightment with the K-Line for the shipment compensation that the rates and charges specified in its tariffs on file with the Federal Maritime
of 468 rolls of container board liners from Georgia to Manila, consigned to herein petitioner La Commission.

Suerte Cigar. The contract of affreightment was embodied in Bill of Lading issued by the carrier 

to the shipper. The expenses of loading and unloading were for the account of the consignee (La RTC dismissed petitioner's complaint. It cited the bill of lading which provided:

Suerte). The shipment was packed in 12 container vans. At Tokyo, the cargo was transhipped on 

two vessels of the K-Line. Ten (10) container vans were loaded on the 1st vessel, while two (2) 23. The ocean carrier shall have a lien on the goods, which shall survive delivery, for all freight,
were loaded on another vessel.
 dead freight, demurrage, damages, loss, charges, expenses and any other sums whatsoever

 payable or chargeable to or for the account of the Merchant under this bill of lading . . . . RTC
On June 11, the first vessel arrived at the port of Manila. La Suerte was notified in writing of the likewise invoked clause 29 of the bill of lading which provided:

ship's arrival, together with information that container demurrage would be charged unless the 

consignee took delivery of the cargo within ten (10) days.
 29. . . .The terms of the ocean carrier's applicable tariff, including tariffs covering intermodal

 transportation on file with the Federal Maritime Commission and the Interstate Commission or
On June 21, the other vessel arrived and was discharged of its contents the next day. On the same any other regulatory body which governs a portion of the carriage of goods, are incorporated
day the shipping agent Smith, Bell & Co. released the Delivery Permit for twelve (12) containers herein.

to the broker upon payment of freight charges on the bill of lading. On June 22, La Suerte’s 

broker presented the shipping documents to the Bureau of Customs. But the latter refused to act 18. The RTC held that the bill of lading was the contract between the parties and, therefore,
on them because the manifest of the 1st vessel covered only 10 containers, whereas the bill of petitioner was liable for demurrage charges. It rejected petitioner's claim of force majeure in such
lading covered 12 containers.
 a way that the delay in the delivery of the containers was caused by the breaking down of the

 equipment of the arrastre operator. The Court reasoned that still plaintiff has to pay the
The broker therefore sent back the manifest to Smith, Bell & Co with the request that the manifest corresponding demurrage charges. The possibility that the equipment would break down was not
be amended. Smith, Bell & Co. refused on the ground that an amendment would violate the Tariff only foreseeable, but actually, foreseen, and was not caso fortuito. CA affirmed.
and Customs Code relating to unmanifested cargo.


 

Later however, it agreed to add a footnote reading "Two container vans carried by other vessel to ISSUE: Whether or not La Suerte is liable for demurrage for delay in removing its cargo
complete the shipment of twelve containers under the bill of lading."
 from the containers - YES but only for the period July 3 - 13, 1979 with respect to ten

 containers and from July 10 - July 13, 1979, in respect of two other containers
The manifest was approved for release only on July 3. On July 11, when the broker tried to secure
the release of the cargo, it was informed by Smith, Belle, & Co. that the free time for removing 

the containers from the container yard had expired on June 26 for the first vessel, and on July 9, HELD:
in the case of the 2nd vessel, and that demurrage charges had begun to run a day after the free
time, respectively.

Page 13 of 19

 Same; Same; Same; Contracts; Contract of Adhesion; Contracts of adhesion wherein one party
Payment of demurrage
 imposes a ready made form of contract on the other are not entirely prohibited. The one who
La Suerte's contention is that the bill of lading does not provide for the payment of container adheres to the contract is free to reject it entirely; if he adheres, he gives his consent.—
demurrage, as Clause 23 of the bill of lading only says "demurrage," i.e., damages for the Petitioner’s argument that it is not bound by the bill of lading issued by K-Line because it is a
detention of vessels. Here there is no detention of vessels. It invokes a case where SC defined contract of adhesion, whose terms as set forth at the back are in small prints and are hardly
"demurrage" as follows:
 readable, is without merit. As we held in Servando v. Philippine Steam Navigation: While it may

 be true that petitioner had not signed the plane ticket (Exh. 12), he is nevertheless bound by the
Demurrage, in its strict sense, is the compensation provided for in the contract of affreightment provisions thereof. “Such provisions have been held to be a part of the contract of carriage, and
for the detention of the vessel beyond the time agreed on for loading and unloading. Essentially, valid and binding upon the passenger regardless of the latter’s lack of knowledge or assent to the
demurrage is the claim for damages for failure to accept delivery… Whatever may be the merit of regulation.” It is what is known as a contract of “adhesion,” in regards to which it has been said
petitioner's contention, the fact is that clause 29(a) also of the bill of lading, in relation to Rule 21 that contracts of adhesion wherein one party imposes a ready made form of contract on the other,
of the Far East Conference Tariff , specifically provides for the payment by the consignee of as the plane ticket in the case at bar, are contracts not entirely prohibited. The one who adheres to
demurrage for the detention of containers and other equipment after the so-called "free time."
 the contract is in reality free to reject it entirely; if he adheres, he gives his consent. (Tolentino,

 Civil Code, Vol. IV, 1962 Ed., p. 462, citing Mr. Justice JBL Reyes, Lawyer’s Journal, Jan. 31,
A bill of lading is both a receipt and a contract. As a contract, its terms and conditions are 1951, p. 49).
conclusive on the parties, including the consignee. The enforcement of the rules of the Far East
Conference and the Federal Maritime Commission is in accordance with R.A. 1407 which HOME INSURANCE COMPANY vs. AMERICAN STEAMSHIP AGENCIES, INC. and
declares that the Philippines, in common with other maritime nations, recognizes the international LUZON STEVEDORING CORPORATION G.R. No. L-25599 April 4, 1968
character of shipping in foreign trade and existing international practices in maritime
transportation and that it is

part of the national policy to cooperate with other friendly nations in the maintenance and FACTS: “Consorcio Pesquero del Peru of South America” shipped freight pre-paid at Peru, jute
improvement of such practices. Period of Demurrage With respect to the period of La Suerte’s bags of Peruvian fish meal through SS Crowborough, covered by clean bills of lading. The cargo,
liability, La Suerte cannot be held liable for demurrage starting June 27 on the 10 containers consigned to San Miguel Brewery, Inc., now San Miguel Corporation, and insured by Home
because the delay in obtaining release of the goods was not due to its fault.
 Insurance Company arrived in Manila and was discharged into the lighters of Luzon Stevedoring

 Company. When the cargo was delivered to consignee San Miguel Brewery Inc., there were
The evidence shows that the Bureau of Customs refused to give an entry permit to petitioner shortages causing the latter to lay claims against Luzon Stevedoring Corporation, Home
because the manifest issued by K-Line stated only 10 containers whereas the bill of lading also Insurance Company and the American Steamship Agencies (shipowner), owner and operator of
issued by the K-Line showed there were 12 containers. For this reason, petitioner's broker had to SS Crowborough.
see Smith, Bell & Co. on June 22, but the latter did not immediately do something to correct the
manifest. Smith, Bell & Co. was asked to "amend" the manifest, but it refused to do so on the
ground that this would violate the law. It was only on June 29 that it thought of adding instead a
footnote, by which time the "free time" had already expired. Now June 29 was a Friday. Again it Because the others denied liability, Home Insurance Company paid SMBI the insurance value of
is probable the correct manifest was presented to the Bureau of Customs only on Monday, July 2, the loss, as full settlement of the claim. Having been refused reimbursement by both the Luzon
and therefore it was only on July 3 that it was approved.
 Stevedoring Corporation and American Steamship Agencies, Home Insurance Company, as

 subrogee to the consignee, filed against them before the CFI of Manila a complaint for recovery
It was therefore only from July 3 that La Suerte could have claimed its cargo and charged for any of the payment paid with legal interest, plus attorney’s fees.
delay With respect to the other two containers, demurrage was properly considered to have
accrued on July 10 since the "free time" expired on July 9. The period of delay, however, for all
the 12 containers must be deemed to have stopped on July 13, because on this date petitioner paid In answer, Luzon Stevedoring Corporation alleged that it delivered with due diligence the goods
P47,680.00. If it was not able to get its cargo from the container vans, it was because of the in the same quantity and quality that it had received the same from the carrier.
breakdown of the shifter or cranes of the arrastre service operation. It would be unjust to charge
demurrage after July 13, since the delay in emptying the containers was not due to the fault of La
suerte In sum, we hold that petitioner can be held liable for demurrage only for the period July
3-13, 1979 and that in accordance with the stipulation in its bill of lading. The CFI, after trial, absolved Luzon Stevedoring Corporation, having found the latter to have
merely delivered what it received from the carrier in the same condition and quality, and ordered

Page 14 of 19
American Steamship Agencies to pay Home Insurance Company the amount demanded with legal
interest plus attorney’s fees.
Disagreeing with such judgment, American Steamship Agencies appealed directly to Us.
ISSUE: Is the stipulation in the charter party of the owner’s non-liability valid so as to absolve
the American Steamship Agencies from liability for loss?
HELD: The judgment appealed from is hereby reversed and appellant is absolved from liability
to plaintiff.
YES The bills of lading, covering the shipment of Peruvian fish meal provide at the back thereof
that the bills of lading shall be governed by and subject to the terms and conditions of the charter
party, if any, otherwise, the bills of lading prevail over all the agreements. On the bills are
stamped “Freight prepaid as per charter party. Subject to all terms, conditions and exceptions of
charter party dated London, Dec. 13, 1962.”
Section 2, paragraph 2 of the charter party, provides that the owner is liable for loss or damage
to the goods caused by personal want of due diligence on its part or its manager to make the
vessel in all respects seaworthy and to secure that she be properly manned, equipped and supplied
or by the personal act or default of the owner or its manager. Said paragraph,
however, exempts the owner of the vessel from any loss or damage or delay arising from any
other source, even from the neglect or fault of the captain or crew or some other
person employed by the owner on board, for whose acts the owner would ordinarily be liable
except for said paragraph..
The provisions of our Civil Code on common carriers were taken from Anglo-American law.
Under American jurisprudence, a common carrier undertaking to carry a special cargo
or chartered to a special person only, becomes a private carrier. As a private carrier, a
stipulation exempting the owner from liability for the negligence of its agent is not against public
policy, and is deemed valid.
Such doctrine We find reasonable. The Civil Code provisions on common carriers should not be
applied where the carrier is not acting as such but as a private carrier. The stipulation in the
charter party absolving the owner from liability for loss due to the negligence of its agent would
Page 15 of 19
be void only if the strict public policy governing common carriers is applied. Such policy has no
force where the public at large is not involved, as in the case of a ship totally chartered for the use
of a single party.
And furthermore, in a charter of the entire vessel, the bill of lading issued by the master to the
charterer, as shipper, is in fact and legal contemplation merely a receipt and a document of title
not a contract, for the contract is the charter party. The consignee may not claim ignorance of said
charter party because the bills of lading expressly referred to the same. Accordingly, the
consignees under the bills of lading must likewise abide by the terms of the charter party. And as
stated, recovery cannot be had thereunder, for loss or damage to the cargo, against the
shipowners, unless the same is due to personal acts or negligence of said owner or its manager, as
distinguished from its other agents or employees. In this case, no such personal act or negligence
has been proved.
BA Finance vs CA (GR 98275, 13 November 1992)
Facts: On 6 March 1983, an accident occurred involving BA Finance Corp.’s Isuzu ten-wheeler
truck then driven by an employee of Lino Castro, Rogelio Villar y Amera, resulting in triple
homicide with multiple physical injuries with damage to property. Neither Lino Castro nor the
driver was connected with BA Finance Corp., as the truck was leased by BA Finance to Rock
Component Philippines Onc.
A criminal suit was filed against Villar. The trial court of Bulacan (Branch 6., RTC Malolos
Bulacan) found Villar guilty beyond reasonable doubt of reckless imprudence resulting in triple
homicide with multiple physical injuries with damage to property on 16 February 1984.
A suit for damages was filed by Carlos Ocampo, et.al., the injured in the accident against driver
Villar and BA Finance, inasmuch as the truck was registered in the name of the latter.
On 13 October 1988, the trial court rendered a decision (1) ordering Rock Component Philippines
Inc., BA Finance and Rogelio Villar y Amare jointly and severally to pay (a) Carlos Ocampo
P121,650.00, (b) Moises Ocampo P298,500.00, (c) Nicolas Cruz P154,740.00, and (d) Inocencio
Turla, Sr..48,000.00; (2) dismissing the case against Lino Castro; (3)
dismissing the third-party complaint against Stronghold; (4) dismissing all the counterclaims of
Villar and BA Finance and Stronghold; and (5) ordering Rock to reimburse BA Finance the total
amount of P622,890.00 which the latter is adjudged to pay to Ocampo, et. al.
The Court of Appeals affirmed the appealed disposition in toto through Justice Rasul, with
Justices De Pano, Jr. and Imperial concurring, on practically the same grounds arrived at by the
court a quo. Efforts exerted towards re-evaluation of the adverse judgment were futile.
Hence, the petition for review on certiorari.
The Supreme Court dismissed the petition, and affirmed the decision under review, without
special pronouncement as to costs.
1. Registered owner of CPC liable to public for injuries or damages suffered by passengers
or third persons;
Basis of doctrine
The registered owner of a certificate of public convenience is liable to the public for the injuries
or damages suffered by passengers or third persons caused by the operation of said vehicle, even
though the same had been transferred to a third person. The principle upon which this doctrine is
based is that in dealing with vehicles registered under the Public Service Law, the public has the
right to assume or presume that the registered owner is the actual owner thereof, for it would be
difficult for the public to enforce the actions that they may have for injuries caused to them by the
vehicles being negligently operated if the public should be required to prove who the actual
owner is.
2. Doctrine does not imply that registered owner cannot recover
By the doctrine, however, it is not implied that the registered owner may not recover whatever
amount he had paid by virtue of his liability to third persons from the person to whom he had
actually sold, assigned or conveyed the vehicle.
3. Registered owner of vehicle primarily responsible to public and third persons
Under the same principle the registered owner of any vehicle, even if not used for a public
service, should primarily be responsible to the public or to third persons for injuries caused the
latter while the vehicle is being driven on the highways or streets. There is a presumption that the
owner of the guilty vehicle as he is the registered owner in the Motor Vehicles Office.
4. Revised Motor Vehicles Law; No vehicle used in public highway unless properly registered
The Revised Motor vehicles Law (Act 3992, as amended) provides that no vehicle may be used or
operated upon any public highway unless the same is properly registered. It has been stated that
the system of licensing and the requirement that each machine must carry a registration number,
conspicuously displayed, is one of the precautions taken to reduce the danger of injury to
pedestrians and other travelers from the careless management of automobiles, and to furnish a
means of ascertaining the identity of persons violating the laws and ordinances, regulating the
speed and operation of machines upon the highways. Not only are vehicles to be registered and
that no motor vehicles are to be used or operated without being properly registered for the current
year, but that dealers in motor vehicles shall furnish the Motor Vehicles Office a report showing
the name and address of each purchaser of motor vehicle during the previous month and the
manufacturer’s serial number and motor number. (Section 5[c], Act 3992, as amended).
5. Registration required, not as an operative act in which ownership is transferred in vehicles but
permit use of vehicle in highways
Page 16 of 19
Registration is required not to make said registration the operative act by which ownership in
vehicles is transferred, as in land registration cases, because the administrative proceeding of
registration does not bear any essential relation to the contract of sale between the parties
(Chinchilla vs. Rafael and Verdaguer, 39 Phil. 888), but to permit the use and operation of the
vehicle upon any public highway (section 5 [a], Act 3992, as amended).
6. Main of motor vehicle registration
The main aim of motor vehicle registration is to identify the owner so that if any accident
happens, or that any damage or injury is caused by the vehicle on the public highways,
responsibility therefor can be fixed on a definite individual, the registered owner. Instances are
numerous where vehicles running on public highways caused accidents or injuries to pedestrians
or other vehicles without positive identification of the owner or drivers, or with very scant means
of identification. It is to forestall these circumstances, so inconvenient or prejudicial to the public,
that the motor vehicle registration is primarily ordained, in the interest of the determination of
persons responsible for damages or injuries caused on public highways.
7. Court cannot entertain registrant’s defense to avoid liability, as it will thwart the purpose of the
statute; Registered not allowed to prove vehicle’s ownership
One of the principal purposes of motor vehicles legislation is identification of the vehicle and of
the operator, in case of accident; and another is that the knowledge that means of detection are
always available may act as a deterrent from lax observance of the law and of the rules of
conservative and safe operation.
Whatever purpose there may be in these statutes, it is subordinate at the last to the primary
purpose of rendering it certain that the violator of the law or of the rules of safety shall not escape
because of lack of means to discover him. The purpose of the statute is thwarted, and the
displayed number becomes a ‘snare and delusion,’ if an individual or corporation should be
allowed to pace a “middleman” between them and the public, and escape liability by the manner
in which they recompense their servants. A victim of recklessness on the public highways is
usually without means to discover or identify the person actually causing the injury or damage.
He has no means other than by a recourse to the registration in the Motor Vehicles Office to
determine who is the owner. The protection that the law aims to extend to him would become
illusory were the registered owner given the opportunity to escape liability by disproving his
ownership. If the policy of the law is to be enforced and carried out, the registered owner should
not be allowed to prove the contrary to the prejudice of the person injured, that is, to prove that a
third person or another has become the owner, so that he may thereby be relieved of the
responsibility to the injured person.
8. Policy and application of law not harsh
The above policy and application of the law may appear quite harsh and would seem to conflict
with truth and justice; but actually is not. A registered owner who has already sold or transferred a
vehicle has the recourse to a third-party complaint, in the same action brought against him to
recover for the damage or injury done, against the vendee or transferee of the vehicle. The
inconvenience of the suit is no justification for relieving him of liability; said inconvenience is the
price he pays for failure to comply with the registration that the law demands and requires.
9. Cases of Duavit vs. CA and Duquillo vs. Bayot not applicable
The rulings in Duavit vs. Court of Appeals and in Duquillo vs. Bayot is legally unpalatable for the
purpose of the present discourse. The vehicles adverted to in the two cases shared a common
thread, in that the jeep and the truck were driven in reckless fashion without the consent or
knowledge of the respective owners. In the case of Duavit vs. CA, the Court was cognizant of the
inculpatory testimony spewed by Sabiniano when he admitted that he took the jeep from the
garage of Duavit without the consent or authority of the latter. In the Duquillo case, the defendant
therein cannot be held liable for anything because of circumstances which indicated that the truck
was driven without the consent or knowledge of the owner thereof.
Bascos v. CA
FACTS:
- Rodolfo Cipriano representing CIPTRADE entered into a hauling contract with Jibfair
Shipping Agency Corporation whereby CIPTRADE bound itself to haul the latter's 2,000
m/tons of soya bean meal from Magallanes Drive, Del Pan, Manila to the warehouse of
Purefoods Corporation in Calamba, Laguna.
- To carry out its obligation, CIPTRADE, through Rodolfo Cipriano, subcontracted with
Estrellita Bascos (petitioner) to transport and to deliver 400 sacks of soya bean meal
worth P156,404 from the Manila Port Area to Calamba, Laguna at the rate of P50/metric
ton.
- Petitioner Bascos failed to deliver the said cargo. As a consequence of that failure,
Cipriano paid Jibfair Shipping Agency the amount of the lost goods in accordance with
the contract which stated that: “CIPTRADE shall be held liable and answerable for any
loss in bags due to theft, hijacking and non-delivery or damages to the cargo during
transport at market value”
- Cipriano demanded reimbursement from Bascos but the latter refused to pay. Eventually,
Cipriano filed a complaint for a sum of money and damages with writ of preliminary
attachment for breach of a contract of carriage.
- RTC rendered a decision in favor of CIPTRADE. CA affirmed.
ISSUE/S:
- Was petitioner a common carrier? YES
- Was the hijacking referred to a force majeure? NO
RULING:
1) Article 1732 of the Civil Code defines a common carrier as "(a) person, corporation or 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 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 this case, petitioner herself has made the
admission that she was in the trucking business, offering her trucks to those with cargo to move.
Judicial admissions are conclusive and no evidence is required to prove the same.
Page 17 of 19
2) Common carriers are obliged to observe extraordinary diligence in the vigilance over the goods
transported by them. Accordingly, they are presumed to have been at fault or to have acted
negligently if the goods are lost, destroyed or deteriorated. There are very few instances when the
presumption of negligence does not attach and these instances are enumerated in Article 1734. In
those cases where the presumption is applied, the common carrier must prove that it exercised
extraordinary diligence in order to overcome the presumption.
To exculpate the carrier from liability arising from hijacking, he must prove that the robbers or
the hijackers acted with grave or irresistible threat, violence, or force by virtue of Art. 1745 (6).
Both the trial court and the Court of Appeals have concluded that the affidavits presented by
petitioner were not enough to overcome the presumption. Petitioner's affidavit about the hijacking
was based on what had been told her by Juanito Morden. It was not a first-hand account. The
affidavit of Jesus Bascos did not dwell on how the hijacking took place. Moreover, while the
affidavit of Juanito Morden, the truck helper in the hijacked truck, was presented as evidence in
court, he himself was a witness as could be gleaned from the contents of the petition. Affidavits
are not considered the best evidence if the affiants are available as witnesses. The subsequent
filing of the information for carnapping and robbery against the accused named in said affidavits
did not necessarily mean that the contents of the affidavits were true because they were yet to be
determined in the trial of the criminal cases.
The presumption of negligence was raised against petitioner. It was petitioner's burden to
overcome it. Thus, contrary to her assertion, private respondent need not introduce any evidence
to prove her negligence. Her own failure to adduce sufficient proof of extraordinary diligence
made the presumption conclusive against her.
PAL v. Court of Appeals 226 SCRA 423
Facts:
Zapatos purchased a ticket from Philippine Air Lines (PAL) wherein it was agreed that the latter
would transport him to Ozamiz City. The plane’s route was from Cebu-Ozamiz-Cotabato.
However, due to unfavoarable weather conditions and the fact that PAL did not have an all-
weather airport, PAL had bypassed Ozamiz City. PAL then informed Zapatos of his options, to
return to Cebu on the same day, or take the next flight to Cebu the following day, or to take the
next available flight to Ozamiz City. Zapatos chose to return to Ozamiz City on the same day.
However, there were only six (6) seats available and, the seats were given to the passengers
according to their check-in sequence at Cebu. Consequently, Zapatos was stranded in Cotabato
City, where a battle between the government and the Muslims was ongoing.
During his stay in Cotabato City, PAL also failed to provide accomodations for Zapatos. It also
refused to have the latter hitch a ride with its employees on a ford truck bound for the City. It also
failed to return Zapatos’ luggage.
This prompted Zapatos to file a complaint for damages against Philippine Air Lines for breach of
contract.
PAL claimed that it should not be charged with the task of looking after the passengers' comfort
and convenience because the diversion of the flight was due to a fortuitous event, and that if made
liable, an added burden is given to PAL which is over and beyond its duties under the contract of
carriage.
Issue:
w/n the occurrence of a fortuitous event extinguished PAL’s duty to observe extraordinary
diligence towards its passengers?
Ruling:
No. The SC ruled in favor of Zapatos.
The contract of air carriage is a peculiar one. Being imbued with public interest, the law requires
common carriers to carry the passengers safely as far as human care and foresight can provide,
using the utmost diligence of very cautious persons, with due regard for all the
circumstances. 20 In Air France v. Carrascoso, 21 we held that —
A contract to transport passengers is quite different in kind and degree from any
other contractual relation. And this, because of the relation which an air carrier
sustains with the public. Its business is mainly with the travelling public. It
invites people to avail of the comforts and advantages it offers. The contract of
air carriage, therefore, generates a relation attended with a public duty . . . .
( emphasis supplied).
The position taken by PAL in this case clearly illustrates its failure to grasp the exacting standard
required by law. Undisputably, PAL's diversion of its flight due to inclement weather was a
fortuitous event. Nonetheless, such occurrence did not terminate PAL's contract with its
passengers. Being in the business of air carriage and the sole one to operate in the country,
PAL is deemed equipped to deal with situations as in the case at bar. What we said in one case
once again must be stressed, i.e., the relation of carrier and passenger continues until the latter
has been landed at the port of destination and has left the carrier's premises. 22 Hence, PAL
necessarily would still have to exercise extraordinary diligence in safeguarding the comfort,
convenience and safety of its stranded passengers until they have reached their final
destination. On this score, PAL grossly failed considering the then ongoing battle between
government forces and Muslim rebels in Cotabato City and the fact that the private respondent
was a stranger to the place.
VICTORY LINER, INC. vs. GAMMAD
G.R. No. 159636 | November 25, 2004
FACTS:
Marie Grace Gammad was a passenger of petitioner’s bus when it fell on a ravine, which resulted
to her death. Hence, heirs of the deceased Marie Grace filed a case for damages against Victory
Liner, Inc. for breach of contract of carriage. Rosalito Gammad, husband of deceased, completed
his testimony and was scheduled for cross-examination. However, counsel of peritioner failed to
appear even after a reschedule, and thus the court deemed the petitioner to have waived cross-
Page 18 of 19
examination. The petitioner’s counsel also failed to appear at the presentation of evidence. The
court already deemed the case submitted for resolution when it received belatedly the telegram of
petitioner’s counsel requesting for postponement.
ISSUE:
(1) Is the petitioner bound by the negligence of the counsel?
(2) Is the petitioner liable for breach of contract of carriage?
(3) Is the award of damages proper?
RULING:
(1) Yes. As a general rule, client is bound by negligence of counsel. Any act performed by a
counsel within the scope of his general or implied authority is regarded as an act of his client.
Consequently, the mistake or negligence of counsel may result in the rendition of an unfavorable
judgment against the client. However, exceptions have been recognized by the court in cases
where reckless or gross negligence of counsel deprives the client of due process of law, or
when its application will result in outright deprivation of the clients liberty or property or
where the interests of justice so require, and accord relief to the client who suffered by
reason of the lawyers gross or palpable mistake or negligence.
The exceptions, however, are not present in this case. Petitioners claim that it was denied due
process lacks basis. Petitioner too is not entirely blameless.
(2) Petitioner was correctly found liable for breach of contract of carriage. A common carrier is
bound to carry its passengers safely as far as human care and foresight can provide, using the
utmost diligence of very cautious persons, with due regard to all the circumstances. In a contract
of carriage, it is presumed that the common carrier was at fault or was negligent when a passenger
dies or is injured. Unless the presumption is rebutted, the court need not even make an
express finding of fault or negligence on the part of the common carrier. This statutory
presumption may only be overcome by evidence that the carrier exercised extraordinary
diligence.
In the instant case, there is no evidence to rebut the statutory presumption that the proximate
cause of Marie Grace’s death was the negligence of petitioner. Hence, the courts below correctly
ruled that petitioner was guilty of breach of contract of carriage.
(3) Nevertheless, the award of damages should be modified. Article 1764 in relation to Article
2206, holds the common carrier in breach of its contract of carriage that results in the death of a
passenger liable to pay the following: (1) indemnity for death, (2) indemnity for loss of
earning capacity, and (3) moral damages.
In the present case, respondent heirs of the deceased are entitled to indemnity for the death of
Marie Grace which under current jurisprudence is fixed at P50,000.00.
The award of compensatory damages for the loss of the deceased’s earning capacity should be
deleted for lack of basis. As a rule, documentary evidence should be presented to substantiate
the claim for damages for loss of earning capacity. By way of exception, damages for loss of
earning capacity may be awarded despite the absence of documentary evidence when (1) the
deceased is self-employed earning less than the minimum wage under current labor laws,
and judicial notice may be taken of the fact that in the deceased’s line of work no
documentary evidence is available; or (2) the deceased is employed as a daily wage worker
earning less than the minimum wage under current labor laws.
Here, the award of compensatory damages for loss of earning capacity was based only on the
testimony of respondent Rosalito. No other evidence was presented. The award is clearly
erroneous because the deceased’s earnings does not fall within the exceptions. However, the fact
of loss having been established, temperate damages in the amount of P500,000.00 should be
awarded to respondents. Under Article 2224, temperate or moderate damages, which are more
than nominal but less than compensatory damages, may be recovered when the court finds
that some pecuniary loss has been suffered but its amount cannot, from the nature of the
case, be proved with certainty.
Anent the award of moral damages, the same cannot be lumped with exemplary damages because
they are based on different jural foundations. These damages are different in nature and require
separate determination. In culpa contractual or breach of contract, moral damages may be
recovered when the defendant acted in bad faith or was guilty of gross negligence (amounting to
bad faith) or in wanton disregard of contractual obligations and, as in this case, when the act of
breach of contract itself constitutes the tort that results in physical injuries. By special rule in
Article 1764 in relation to Article 2206, moral damages may also be awarded in case the death of
a passenger results from a breach of carriage. On the other hand, exemplary damages, which are
awarded by way of example or correction for the public good may be recovered in contractual
obligations if the defendant acted in wanton, fraudulent, reckless, oppressive, or malevolent
manner.
Respondents in the instant case should be awarded moral damages to compensate for the grief
caused by the death of the deceased resulting from the petitioner’s breach of contract of carriage.
Furthermore, the petitioner failed to prove that it exercised the extraordinary diligence required
for common carriers, it is presumed to have acted recklessly. Thus, the award of exemplary
damages is proper. Under the circumstances, we find it reasonable to award respondents the
amount of P100,000.00 as moral damages and P100,000.00 as exemplary damages.
For actual damages, only substantiated and proven expenses or those that appear to have
been genuinely incurred in connection with the death, wake or burial of the victim will be
recognized. Hence, actual damages should be further reduced to P78,160.00, which was the
amount supported by official receipts.
Pursuant to Article 2208, attorney’s fees may also be recovered in the case at bar where
exemplary damages are awarded. The Court finds the award of attorneys fees equivalent to
10% of the total amount adjudged against petitioner reasonable.
Page 19 of 19
Finally, 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:
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, 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.
In the instant case, petitioner should also be held liable for payment of interest as damages for
breach of contract of carriage. Considering that the amounts payable by petitioner has been
determined with certainty only in the instant petition, the interest due shall be computed upon the
finality of this decision at the rate of 12% per annum until satisfaction.
NOTE: Legal interest rate is now fixed at 6%.