TRANSPO CASE SET 3 Whether or not there is a breach of contract of a common carrier and

whether there is negligence.

Spouses Teodoro and Nanette Perena, vs. Spouses Nicolas and Teresita Zarate
HELD: Yes.
GR no. 157917 August 29, 2012

The Supreme Court ruled in favor spouses Zarate, affirming the decision of
The facts of the case are as follows:
the Court of Appeals.

Spouses Perena were engaged in school bus service, transporting students

In this case, the Supreme Court, once and for all lay the matter to rest that
from Paranaque to Don Bosco Technical Institute in Makati. In June 1996, spouses
the school service is a common carrier and not a private carrier, and as such, they
Zarate contracted spouses Perena to transport their son, Aaron Zarate, from their
are required to observe the extraordinary diligence as provided under Article 1733
residence in Paranaque to Don Bosco. As on the usual days of school in August 22,
of the Civil Code.
1996, the van picked-up Aaron in their house, he then took the left side seat near
the rear door of the said vehicle. Considering that the students were due by
According to the Supreme Court, the true test for a common carrier is not
7:15am at Don Bosco, and because of heavy traffic at the South Superhighway, the
the quantity or extent of the business actually transacted, or the number and
driver, Clemente Alfaro, decided to take the narrow path underneath the
character of the conveyances used in the activity, but whether the undertaking is
Magallanes interchange which then is being used by Makati bound vehicles as
a part of the activity engaged in by the carrier that he has held out to the general
short cut. The said narrow path has a railroad crossing, and while traversing the
public as his business or occupation. Otherwise stated, making the activity or
said narrow path, closely tailing a huge passenger bus, the driver of the school
holding himself or itself out to the public as a ready to act for all who may desire
service decided to overtake the said bus at about 50 meters away from the
his or its services to transport goods or persons for a fee.
railroad crossing. Considering that the stereo is playing loudly and blinded by the
bus, he did not hear the blowing of horn of the oncoming train as a warning to the
vehicles. The bus successfully crossed the railroad crossing but the van did not.
Applying the considerations mentioned above, there is no question that
The train hit the rear side of the van and the impact threw 9 of the 12 students
Perenas as the operators of a school service were: a) engaged in transporting
including Aaron. His body landed in the path of the train, which dragged him,
passengers generally as a business not just as a casual occupation; b) undertaking
severed his head, instantaneously killing him. Devastated by the sudden death of
to carry passengers over established roads; c) transporting students for a fee.
their son, spouses Zarate commenced this action for damages. The Regional Trial
Despite catering limited clientele, the Perenas operated as a common carrier
Court ruled in favor of the spouses Zarate. On appeal, The Court of Appeals
because they hold themselves out as a ready transportation indiscriminately to
affirmed the decision of the lower court but lowered the moral damages to php
the students of a particular school living within or near where they operated the
2,500,000.00.
service and for a fee.

ISSUE:
 On the second issue, Article 1756 of the Civil code provides that, In case
of death of or injuries to passengers, common carriers are presumed to have been
at fault or to have acted negligently, unless they prove that they observed
extraordinary diligence as prescribed in articles 1733 and 1755. In this case, Aaron
Zarate died, and thus as provided under the above-mentioned law, they are
negligent.
Lara v. Valencia
June 30, 1958
LOURDES J. LARA, ET AL., PLAINTIFFS AND APPELLANTS
VS.
BRIGIDO R. VALENCIA, DEFENDANT AND APPELLANT.
BAUTISTA ANGELO, J.:
NATURE: Action for damages
SUMMARY: Deceased Lara went to Parang to classify Valencia's logs but during
said period he contracted malaria fever so he wanted to return to Davao
immediately. Since there were no available buses, he, together with other
passengers, asked for a ride in Valencia's pick-up up to Cotabato. However, there
were still no buses so they continued towards Davao in Valencia's pick-up. On the
way, Lara, fell and suffered fatal injuries which caused his death. CFI held Valencia
civilly liable. SC: Reverse CFI. Lara is only an accommodation passenger and
therefore, Valencia is only required to observe ordinary care, and is not in duty
bound to exercise extraordinary diligence as required of a common carrier by our
law. There is nothing there to indicate that Valencia has acted with negligence or
without taking the precaution that an ordinary prudent man would have taken
under similar circumstances. Incident can be attributed to lack of care on the part
of the deceased considering that the pick-up was open and he was then in a
crouching position.
DOCTRINE: The owner or operator of an automobile owes the duty to an invited
guest to exercise reasonable care in its operation, and not unreasonably to expose
him to danger and injury by increasing the hazard of travel. A passenger must
observe the diligence of a good father of a family to avoid injury to himself",
which means that if the injury to the passenger has been proximately caused by
his own negligence, the carrier cannot be held liable.
FACTS:
 Deceased Demetrio Lara, Sr. was an inspector of the Bureau of Forestry
stationed in Davao with an annual salary of P1,800 while defendant
Valencia is engaged in the business of exporting logs from his lumber
concession in Cotabato.
 Lara went to said concession upon instructions of his chief to classify the
logs of Valencia which were about to be exported and loaded on a ship
anchored in the port of Parang. The work of Lara lasted for 6 days during
which he contracted malaria fever and for that reason he evinced a desire
to return immediately to Davao. However, at that time, there was no
available bus that could take him back to Davao
 Jan 9, 1954 (AM): Lara, who was then in a hurry to return to Davao,
asked Valencia if he could take him in his pick-up as there was then no
other means of transportation, to which Valencia agreed, and in that
same morning the pick-up left Parang bound for Davao taking along 6
passengers who were gov't employees, including Lara.
o The pick-up has a front seat where the driver and 2 passengers
can be accommodated and the back has a steel flooring enclosed
with a steel walling of 16 to 17 inches tall on the sides and with a
19 inches tall walling at the back.
 Before leaving Parang, the sitting arrangement was as follows:
o Valencia was at the wheel and seated with him in the front seat
were Mrs. Valencia and Nicanor Quinain
o On the back of the pick-up were 2 improvised benches placed on
each side, and seated on the right bench were Ricardo Alojipan
and Antonio Lagahit, and on the left one Bernardo and Pastor
Geronimo.
o A person by the name of Leoning was seated on a box located on
the left side while in the middle Lara sat on a bag.
 Before leaving Parang, Valencia invited Lara to sit with him on the front
seat but Lara declined. It was their understanding that upon reaching
 barrio Samoay, Cotabato, the passengers (including Lara) were to alight
and take a bus bound for Davao, but when they arrived at that place, only
Bernardo alighted and the other passengers requested Valencia to allow
them to ride with him up to Davao because there was then no available
bus that they could take in going to that place. Valencia again
accommodated the passengers.
 When they continued their trip, the sitting arrangement of the passengers
remained the same, Lara being seated on a bag in the middle with his
arms on a suitcase and his head covered by a jacket.
 Upon reaching Km. 96, barrio Catidtuan, Lara accidentally fell from the
pick-up and as a result he suffered serious injuries.
 Valencia stopped the pick-up to see what happened to Lara. He sought
the help of the residents of that place and applied water to Lara but to no
avail.
 They brought Lara to the nearest place where they could find a doctor and
not having found any they took him to St. Joseph's Clinic of Kidapawan.
But when Lara arrived he was already dead.
 From there they proceeded to Davao City and immediately notified the
local authorities. An investigation was made regarding the circumstances
surrounding the death of Lara but no criminal action was taken against
defendant.
 An action for damages was brought by plaintiffs (relatives of Lara) against
Valencia in CFI of Davao for Lara's death allegedly caused by the negligent
act of Valencia.
 Valencia denied the charge of negligence and set up certain affirmative
defenses and a counterclaim.
 CFI: Valencia failed to observe ordinary care or diligence in transporting
the deceased from Parang to Davao. Pay Lara et al: (a) P10k (MD) (b) P3k
(ED) and (c) P1k (AF)
o The journey from Cotabato to Davao is not less than 8 hours, the
road is in poor condition, uneven, with protruding rocks and
potholes that make up not stable in their vehicle. Lara was sick of
a certain severity, had the body and swollen face, attacked by
malaria, headaches and rashes on the face and body.
o Valencia ought to know that it was extremely dangerous to carry 5
passengers in the back of the pick-up, particularly for the health
of Lara. He did not exercise the proper precautions to avoid
possible fatal accidents.
o Lara's refusal to occupy the front seat does not constitute a
defense because Valencia, knowing the poor health of Lara,
should not have allowed him to return to Davao in his pickup. If
he wanted to accommodate Lara, he should have provided Lara of
an automobile to return to Davao or left Lara in Samoay to catch a
passenger bus from Cotabato to Davao. (di ako sure, Spanish e)
 Both parties appealed to SC because the damages claimed in the
complaint exceed the sum of P50,000.
o Lara et al: CFI erred in disregarding their claim of P41,400 as AD
and P3000 as AF
o Valencia: Death of Demetrio Lara, Sr. was not due to his
negligence but to unavoidable accident.
ISSUE: Whether Valencia as driver & owner of the vehicle should be held liable for
the death of his passenger, Lara Sr.? (NO)
RATIO:
 The accident occurred not due to the negligence of Valencia but to
circumstances beyond his control and so he should be exempt from
liability.
 Deceased Lara, as well as his companions who rode in the pick-up of
Valencia were merely accommodation passengers who paid nothing for
the service and so they can be considered as invited guests within the
meaning of the law.
 As accommodation passengers or invited guests, Valencia as owner and
driver of the pick-up owes to them merely the duty to exercise
reasonable care so that they may be transported safely to their
destination.
OBLIGATION OF OWNER TO INVITED GUESTS/ACCOMMODATION PASSENGERS:
REASONABLE/ORDINARY CARE
 The owner or operator of an automobile owes the duty to an invited
guest to exercise reasonable care in its operation, and not unreasonably
to expose him to danger and injury by increasing the hazard of travel.
 An owner of an automobile owes a guest the duty to exercise ordinary or
reasonable care to avoid injuring him.
 5 Am. Jur., 626-627: Since one riding in an automobile is no less a guest
because he asked for the privilege of doing so, the same obligation of care
is imposed upon the driver as in the case of one expressly invited to ride".
 Valencia, therefore, is only required to observe ordinary care, and is not
in duty bound to exercise extraordinary diligence as required of a
common carrier by our law (Articles 1755 and 1756, new Civil Code).
ORDINARY CARE: PRESENT
 Facts found CFI are not sufficient to show that Valencia has failed to take
the precaution necessary to conduct his passengers safely to their place of
destination. There is nothing there to indicate that Valencia has acted
with negligence or without taking the precaution that an ordinary
prudent man would have taken under similar circumstances.
 Lara went to the lumber concession of Valencia in answer to a call of duty
which he was bound to perform because of the requirement of his office
and he contracted the malaria fever in the course of the performance of
that duty.
 Valencia was not in duty bound to take the deceased in his own pick-up to
Davao because from Parang to Cotabato there was a line of transportation
that regularly makes trips for the public, and if Valencia agreed to take the
deceased in his own car, it was only to accommodate him considering his
feverish condition and his request that he be so accommodated.
 The passengers who rode in the pick-up of Valencia took their respective
seats therein at their own choice and not upon indication of Valencia with
the particularity that Valencia invited the deceased to sit with him in the
front seat but which invitation the deceased declined.
 It was Lara's own desire to be at the back so that he could sit on a bag and
travel in a, reclining position because such was more convenient for him
due to his feverish condition.
 Unfortunate happening was only due to an unforeseen accident caused
by the fact that at the time Lara was half asleep and must have fallen from
the pick-up when it ran into some stones causing it to jerk considering
that the road was then bumpy, rough and full of stones.
 CFI: Pick-up was running at more than 40 kmh
 SC: Not supported by the evidence. This is a mere surmise made by CFI
considering the time the pick-up left barrio Samoay and the time the
accident occured in relation to the distance covered by the pick-up. And
even if this is correct, such speed is not unreasonable considering that
they were traveling on a national road and the traffic then was not heavy.
 DUTY OF PASSENGER: Incident can be attributed to lack of care on the
part of the deceased considering that the pick-up was open and he was
then in a crouching position. "A passenger must observe the diligence of
a good father of a family to avoid injury to himself" (Article 1761, new
Civil Code), which means that if the injury to the passenger has been
proximately caused by his own negligence, the carrier cannot be held
liable.
DISPOSITIVE: Decision appealed from is reversed.
G.R. No. 95582 October 7, 1991
Lessons Applicable: Actionable Document (Transportation)
Laws Applicable: Art. 1733, Art. 1755
FACTS:
 May 13, 1985: Theodore M. Lardizabal was driving a passenger bus belonging
to Dangwa Transportation Co. Inc. (Dangwa)
 The bus was at full stop bet. Bunkhouses 53 and 54 when Pedro alighted  EX: carrier to prove that it has exercised extraordinary diligence as prescribed
 Pedro Cudiamat fell from the platform of the bus when it suddenly in Art. 1733 and 1755 of the Civil Code
accelerated forward  Failure to immediately bring Pedrito to the hospital despite his serious
 Pedro was ran over by the rear right tires of the vehicle condition = patent and incontrovertible proof of their negligence
 Theodore first brought his other passengers and cargo to their  Hospital was in Bunk 56
respective destinationsbefore bringing Pedro to Lepanto Hospital where he  1st proceeded to Bunk 70 to allow a passenger (who later called the family of
expired Pedrito on his own will) to alight and deliver a refrigerator
 Private respondents filed a complaint for damages against Dangwa for the  In tort, actual damages is based on net earnings
death of Pedro Cudiamat Labels: 1991, Actionable Document, Art. 1733, Art. 1755, Case Digest, Dangwa
 Dangwa: observed and continued to observe the extraordinary diligence Transportation Co. Inc. v. CA, G.R. No. 95582, Juris
required in the operation of the co. and the supervision of the employees Doctor, transportation, transportation case digest
even as they are not absolute insurers of the public at large
 RTC: in favour of Dangwa holding Pedrito as negligent and his negligence was
the cause of his death but still ordered to pay in equity P 10,000 to the heirs
of Pedrito
 CA: reversed and ordered to pay Pedrito indemnity, moral damages, actual
and compensatory damages and cost of the suit

ISSUE: W/N Dangwa should be held liable for the negligence of its driver
Theodore

HELD: YES. CA affirmed.

 A public utility once it stops, is in effect making a continuous offer to bus
riders (EVEN when moving as long as it is still slow in motion)
 Duty of the driver: do NOT make acts that would have the effect of increasing
peril to a passenger while he is attempting to board the same
 Premature acceleration of the bus in this case = breach of duty G.R. No. 137801 October 17, 2008
 Stepping and standing on the platform of the bus is already considered a
passenger and is entitled all the rights and protection pertaining to such a
ABOITIZ SHIPPING CORPORATION, petitioners,
contractual relation
 Duty extends to boarding and alighting vs.
 GR: By contract of carriage, the carrier assumes the express obligation to EQUITABLE INSURANCE CORPORATION, respondents.
transport the passenger to his destination safely and observe extraordinary
diligence with a due regard for all the circumstances, and any injury that DECISION
might be suffered by the passenger is right away attributable to the fault or
negligence of the carrier TINGA, J.:
Before this Court are three consolidated Rule 45 petitions all involving the issue of
whether the real and hypothecary doctrine may be invoked by the shipowner in
relation to the loss of cargoes occasioned by the sinking of M/V P. Aboitiz on 31
October 1980. The petitions filed by Aboitiz Shipping Corporation (Aboitiz)
commonly seek the computation of its liability in accordance with the Court ’s
pronouncement in Aboitiz Shipping Corporation v. General Accident Fire and Life
Assurance Corporation, Ltd.1 (hereafter referred to as "the 1993GAFLAC case").
The three petitions stemmed from some of the several suits filed against Aboitiz
before different regional trial courts by shippers or their successors-in-interest for
the recovery of the monetary value of the cargoes lost, or by the insurers for the
reimbursement of whatever they paid. The trial courts awarded to various
claimants the amounts of P639,862.02, P646,926.30, and P87,633.81 in G.R. Nos.
121833, 130752 and 137801, respectively.
ANTECEDENTS
G.R. No. 121833
Respondent Malayan Insurance Company, Inc. (Malayan) filed five separate
actions against several defendants for the collection of the amounts of the
cargoes allegedly paid by Malayan under various marine cargo policies 2issued to
the insurance claimants. The five civil cases, namely, Civil Cases No. 138761, No.
139083, No. 138762, No. R-81-526 and No. 138879, were consolidated and heard
before the Regional Trial Court (RTC) of Manila, Branch 54.
The defendants in Civil Case No. 138761 and in Civil Case No. 139083 were
Malayan International Shipping Corporation, a foreign corporation based in
Malaysia, its local ship agent, Litonjua Merchant Shipping Agency (Litonjua), and
Aboitiz. The defendants in Civil Case No. 138762 were Compagnie Maritime des
Chargeurs Reunis (CMCR), its local ship agent, F.E. Zuellig (M), Inc. (Zuellig), and
Aboitiz. Malayan also filed Civil Case No. R-81-526 only against CMCR and Zuellig.
Thus, defendants CMCR and Zuellig filed a third-party complaint against Aboitiz. In
the fifth complaint docketed as Civil Case No. 138879, only Aboitiz was impleaded
as defendant.
The shipments were supported by their respective bills of lading and insured
separately by Malayan against the risk of loss or damage. In the five consolidated
cases, Malayan sought the recovery of amounts totalingP639,862.02.
Aboitiz raised the defenses of lack of jurisdiction, lack of cause of action and
prescription. It also claimed that M/V P. Aboitiz was seaworthy, that it exercised
extraordinary diligence and that the loss was caused by a fortuitous event.
After trial on the merits, the RTC of Manila rendered a Decision dated 27
November 1989, adjudging Aboitiz liable on the money claims. The decretal
portion reads:
WHEREFORE, judgment is hereby rendered as follows:
1. In Civil Case No. 138072 (R-81-526-CV), the defendants are adjudged liable and
ordered to pay to the plaintiffs jointly and severally the amount of P128,896.79;
the third-party defendant Aboitiz is adjudged liable to reimburse and ordered to
pay the defendants or whosoever of them paid the plaintiff up to the said
amount;
2. In Civil Case No. 138761, Aboitiz is adjudged liable and ordered to pay plaintiff
the amount of One Hundred Sixty Three-Thousand Seven Hundred Thirteen Pesos
and Thirty-Eight Centavos (P163,713.38).
3. In Civil Case No. 138762, defendant Aboitiz is adjudged liable and ordered to
pay plaintiff the sum of Seventy Three Thousand Five Hundred Sixty-Nine Pesos
and Ninety-Four Centavos (P73,569.94); and Sixty-Four Thousand Seven Hundred
Four Pesos and Seventy-Seven Centavos (P64,704.77);
4. In Civil Case No. 139083, defendant Aboitiz is adjudged liable and ordered to
pay plaintiff the amount of One Hundred Fifty-Six Thousand Two Hundred Eighty-
Seven Pesos and Sixty-Four Centavos (P156,287.64);
In Civil Case No. 138879, defendant Aboitiz is adjudged liable and ordered to pay
plaintiff the amount of Fifty-Two Thousand Six Hundred Eighty-Nine Pesos and
Fifty Centavos (P52,689.50).
All the aforesaid award shall bear interest at the legal rate from the filing of the
respective complaints. Considering that there is no clear showing that the cases
fall under Article 2208, Nos. 4 and 5, of the Civil Code, and in consonance with the
basic rule that there be no penalty (in terms of attorney ’s fees) imposed on the
right to litigate, no damages by way of attorney’s fees are awarded; however, costs
of the party/parties to whom judgment awards are made shall be made by the
party ordered to pay the said judgment awards.
SO ORDERED.3
Aboitiz, CMCR and Zuellig appealed the RTC decision to the Court of Appeals. The
appeal was docketed as CA-G.R. SP No. 35975-CV. During the pendency of the
appeal, the Court promulgated the decision in the 1993GAFLAC case.
On 31 March 1995, the Court of Appeals (Ninth Division) affirmed the RTC
decision. It disregarded Aboitiz’s argument that the sinking of the vessel was
caused by a force majeure, in view of this Court’s finding in a related case, Aboitiz
Shipping Corporation v. Court of Appeals, et al. (the 1990 GAFLAC case).4 In said
case, this Court affirmed the Court of Appeals ’ finding that the sinking of M/V P.
Aboitiz was caused by the negligence of its officers and crew. It is one of the
numerous collection suits against Aboitiz, which eventually reached this Court in
connection with the sinking of M/V P. Aboitiz.
As to the computation of Aboitiz’s liability, the Court of Appeals again based its
ruling on the 1990 GAFLAC case that Aboitiz’s liability should be based on the
declared value of the shipment in consonance with the exceptional rule under
Section 4(5)5 of the Carriage of Goods by Sea Act.
Aboitiz moved for reconsideration6 to no avail. Hence, it filed this petition for
review on certiorari docketed as G.R. No. 121833. 7 The instant petition is based on
the following grounds:
THE COURT OF APPEALS SHOULD HAVE LIMITED THE RECOVERABLE AMOUNT
FROM ASC TO THAT AMOUNT STIPULATED IN THE BILL OF LADING.
IN THE ALTERNATIVE, THE COURT OF APPEALS SHOULD HAVE FOUND THAT THE
TOTAL LIABILITY OF ASC IS LIMITED TO THE VALUE OF THE VESSEL OR THE
INSURANCE PROCEEDS THEREOF.8
On 4 December 1995, the Court issued a Resolution 9 denying the petition. Aboitiz
moved for reconsideration, arguing that the limited liability doctrine enunciated in
the 1993 GAFLAC case should be applied in the computation of its liability. In the
Resolution10 dated 6 March 1996, the Court granted the motion and ordered the
reinstatement of the petition and the filing of a comment.
G.R. No. 130752
Respondents Asia Traders Insurance Corporation (Asia Traders) and Allied
Guarantee Insurance Corporation (Allied) filed separate actions for damages
against Aboitiz to recover by way of subrogation the value of the cargoes insured
by them and lost in the sinking of the vessel M/V P. Aboitiz. The two actions were
consolidated and heard before the RTC of Manila, Branch 20.
Aboitiz reiterated the defense of force majeure. The trial court rendered a
decision11 on 25 April 1990 ordering Aboitiz to pay damages in the amount
of P646,926.30. Aboitiz sought reconsideration, arguing that the trial court should
have considered the findings of the Board of Marine Inquiry that the sinking of
the M/V P. Aboitiz was caused by a typhoon and should have applied the real and
hypothecary doctrine in limiting the monetary award in favor of the claimants.
The trial court denied Aboitiz’s motion for reconsideration.
Aboitiz elevated the case to the Court of Appeals. While the appeal was pending,
this Court promulgated the decision in the 1993 GAFLAC case. The Court of
Appeals subsequently rendered a decision on 30 May 1994, affirming the RTC
decision.12
Aboitiz appealed the Court of Appeals decision to this Court. 13 In a Resolution
dated 20 September 1995,14 the Court denied the petition for raising factual issues
and for failure to show that the Court of Appeals committed any reversible error.
Aboitiz’s motion for reconsideration was also denied in a Resolution dated 22
November 1995.15
The 22 November 1995 Resolution became final and executory. On 26 February
1996, Asia Traders and Allied filed a motion for execution before the RTC of
Manila, Branch 20. Aboitiz opposed the motion. On 16 August 1996, the trial court
granted the motion and issued a writ of execution.
Alleging that it had no other speedy, just or adequate remedy to prevent the
execution of the judgment, Aboitiz filed with the Court of Appeals a petition for
certiorari and prohibition with an urgent prayer for preliminary injunction and/or
temporary restraining order docketed as CA-G.R. SP No. 41696. 16 The petition was
mainly anchored on this Court’s ruling in the 1993 GAFLAC case.
On 8 August 1997, the Court of Appeals (Special Seventeenth Division) rendered
the assailed decision dismissing the petition. 17 Based on the trial court’s finding
that Aboitiz was actually negligent in ensuring the seaworthiness of M/V P.
Aboitiz, the appellate court held that the real and hypothecary doctrine
enunciated in the 1993 GAFLACcase may not be applied in the case.
In view of the denial of its motion for reconsideration, 18 Aboitiz filed before this
Court the instant petition for review on certiorari docketed as G.R. No.
130752.19 The petition attributes the following errors to the Court of Appeals:
THE COURT OF APPEALS GRAVELY ERRED WHEN IT RULED THAT THE LOWER
COURT HAD MADE AN EXPRESS FINDING OF THE ACTUAL NEGLIGENCE OF
ABOITIZ IN THE SINKING OF THE M/V P. ABOITIZ THEREBY DEPRIVING ABOITIZ OF
THE BENEFIT OF THE DOCTRINE OF THE REAL AND HYPOTHECARY NATURE OF
MARITIME LAW.20
THE COURT OF APPEALS ERRED IN NOT GIVING WEIGHT TO THE GAFLAC CASE
DECIDED BY THE HONORABLE COURT WHICH SUPPORTS THE APPLICABILITY OF
THE REAL AND HYPOTHECARY NATURE OF MARITIME LAW IN THE PRESENT
CASE.21
G.R. No. 137801
On 27 February 1981, Equitable Insurance Corporation (Equitable) filed an action
for damages against Aboitiz to recover by way of subrogation the value of the
cargoes insured by Equitable that were lost in the sinking of M/V P. Aboitiz.22 The
complaint, which was docketed as Civil Case No. 138395, was later amended to
implead Seatrain Pacific Services S.A. and Citadel Lines, Inc. as party
defendants.23 The complaint against the latter defendants was subsequently
dismissed upon motion in view of the amicable settlement reached by the parties.
On 7 September 1989, the RTC of Manila, Branch 7, rendered judgment 24 ordering
Aboitiz to pay Equitable the amount of P87,633.81, plus legal interest and
attorney’s fees.25 It found that Aboitiz was guilty of contributory negligence and,
therefore, liable for the loss.
In its appeal, docketed as CA-G.R. CV No. 43458, Aboitiz invoked the doctrine of
limited liability and claimed that the typhoon was the proximate cause of the loss.
On 27 November 1998, the Court of Appeals rendered a decision, affirming the
RTC decision.26
The Court of Appeals (Fifteenth Division) ruled that the loss of the cargoes and the
sinking of the vessel were due to its unseaworthiness and the failure of the crew
to exercise extraordinary diligence. Said findings were anchored on the
1990 GAFLAC case and on this Court’s resolution dated November 13, 1989 in G.R.
No. 88159, dismissing Aboitiz’s petition and affirming the findings of the appellate
court on the vessel’s unseaworthiness and the crew ’s negligence.
Its motion for reconsideration27 having been denied,28 Aboitiz filed before this
Court a petition for review on certiorari, docketed as G.R. No. 137801, 29 raising
this sole issue, to wit:
WHETHER OR NOT THE DOCTRINE OF REAL AND HYPOTHECARY NATURE OF
MARITIME LAW (ALSO KNOWN AS THE "LIMITED LIABILITY RULE") APPLIES. 30
ISSUES
The principal issue common to all three petitions is whether Aboitiz can avail
limited liability on the basis of the real and hypothecary doctrine of maritime law.
Corollary to this issue is the determination of actual negligence on the part of
Aboitiz.
These consolidated petitions similarly posit that Aboitiz’s liability to respondents
should be limited to the value of the insurance proceeds of the lost vessel plus
pending freightage and not correspond to the full insurable value of the cargoes
paid by respondents, based on the Court ’s ruling in the 1993 GAFLAC case.
Respondents in G.R. No. 121833 counter that the limited liability rule should not
be applied because there was a finding of negligence in the care of the goods on
the part of Aboitiz based on this Court’s Resolution dated 4 December 1995 in
G.R. No. 121833, which affirmed the trial court ’s finding of negligence on the part
of the vessel’s captain. Likewise, respondent in G.R. No. 137801 relies on the
finding of the trial court, as affirmed by the appellate court, that Aboitiz was guilty
of negligence.
Respondents in G.R No. 130752 argue that this Court had already affirmed in
toto the appellate court’s finding that the vessel was not seaworthy and that
Aboitiz failed to exercise extraordinary diligence in the handling of the cargoes.
This being the law of the case, Aboitiz should not be entitled to the limited liability
rule as far as this petition is concerned, respondents contend.
RULING of the COURT
These consolidated petitions are just among the many others elevated to this
Court involving Aboitiz’s liability to shippers and insurers as a result of the sinking
of its vessel, M/V P. Aboitiz, on 31 October 1980 in the South China Sea. One of
those petitions is the 1993 GAFLAC case, docketed as G.R. No. 100446. 31
The 1993 GAFLAC case was an offshoot of an earlier final and executory judgment
in the 1990 GAFLAC case, where the General Accident Fire and Life Assurance
Corporation, Ltd. (GAFLAC), as judgment obligee therein, sought the execution of
the monetary award against Aboitiz. The trial court granted GAFLAC ’s prayer for
execution of the full judgment award. The appellate court dismissed Aboitiz ’s
petition to nullify the order of execution, prompting Aboitiz to file a petition with
this Court.
In the 1993 GAFLAC case, Aboitiz argued that the real and hypothecary doctrine
warranted the immediate stay of execution of judgment to prevent the
impairment of the other creditors’ shares. Invoking the rule on the law of the
case, private respondent therein countered that the 1990 GAFLAC case had
already settled the extent of Aboitiz’s liability.
Following the doctrine of limited liability, however, the Court declared in the
1993 GAFLAC case that claims against Aboitiz arising from the sinking of M/V P.
Aboitiz should be limited only to the extent of the value of the vessel. Thus, the
Court held that the execution of judgments in cases already resolved with finality
must be stayed pending the resolution of all the other similar claims arising from
the sinking of M/V P. Aboitiz. Considering that the claims against Aboitiz had
reached more than 100, the Court found it necessary to collate all these claims
before their payment from the insurance proceeds of the vessel and its pending
freightage. As a result, the Court exhorted the trial courts before whom similar
cases remained pending to proceed with trial and adjudicate these claims so that
the pro-rated share of each claim could be determined after all the cases shall
have been decided.32
In the 1993 GAFLAC case, the Court applied the limited liability rule in favor of
Aboitiz based on the trial court’s finding therein that Aboitiz was not negligent .
The Court explained, thus:
x x x In the few instances when the matter was considered by this Court, we have
been consistent in this jurisdiction in holding that the only time the Limited
Liability Rule does not apply is when there is an actual finding of negligence on the
part of the vessel owner or agent x x x. The pivotal question, thus, is whether
there is finding of such negligence on the part of the owner in the instant case.
A careful reading of the decision rendered by the trial court in Civil Case No.
144425 as well as the entirety of the records in the instant case will show
that there has been no actual finding of negligence on the part of petitioner. x x
x
The same is true of the decision of this Court in G.R. No. 89757 affirming the
decision of the Court of Appeals in CA-G.R. CV No. 10609 since both decisions did
not make any new and additional finding of fact. Both merely affirmed the factual
findings of the trial court, adding that the cause of the sinking of the vessel was
because of unseaworthiness due to the failure of the crew and the master to
exercise extraordinary diligence. Indeed, there appears to have been no evidence
presented sufficient to form a conclusion that petitioner shipowner itself was
negligent, and no tribunal, including this Court, will add or subtract to such
evidence to justify a conclusion to the contrary. 33 (Citations entitled) (Emphasis
supplied)
The ruling in the 1993 GAFLAC case cited the real and hypothecary doctrine in
maritime law that the shipowner or agent’s liability is merely co-extensive with his
interest in the vessel such that a total loss thereof results in its extinction. "No
vessel, no liability" expresses in a nutshell the limited liability rule. 34
In this jurisdiction, the limited liability rule is embodied in Articles 587, 590 and
837 under Book III of the Code of Commerce, thus:
Art. 587. The ship agent shall also be civilly liable for the indemnities in favor of
third persons which may arise from the conduct of the captain in the care of the
goods which he loaded on the vessel; but he may exempt himself therefrom by
abandoning the vessel with all her equipment and the freight it may have earned
during the voyage.
Art. 590. The co-owners of the vessel shall be civilly liable in the proportion of
their interests in the common fund for the results of the acts of the captain
referred to in Art. 587.
Each co-owner may exempt himself from this liability by the abandonment, before
a notary, of the part of the vessel belonging to him.
Art. 837. The civil liability incurred by shipowners in the case prescribed in this
section, shall be understood as limited to the value of the vessel with all its
appurtenances and freightage served during the voyage.
These articles precisely intend to limit the liability of the shipowner or agent to
the value of the vessel, its appurtenances and freightage earned in the voyage,
provided that the owner or agent abandons the vessel.35When the vessel is totally
lost in which case there is no vessel to abandon, abandonment is not required.
Because of such total loss the liability of the shipowner or agent for damages is
extinguished.36 However, despite the total loss of the vessel, its insurance answers
for the damages for which a shipowner or agent may be held liable. 37
Nonetheless, there are exceptional circumstances wherein the ship agent could
still be held answerable despite the abandonment of the vessel, as where the loss
or injury was due to the fault of the shipowner and the captain. The international
rule is to the effect that the right of abandonment of vessels, as a legal limitation
of a shipowner’s liability, does not apply to cases where the injury or average was
occasioned by the shipowner’s own fault .38 Likewise, the shipowner may be held
liable for injuries to passengers notwithstanding the exclusively real and
hypothecary nature of maritime law if fault can be attributed to the shipowner. 39
As can be gleaned from the foregoing disquisition in the 1993 GAFLAC case, the
Court applied the doctrine of limited liability in view of the absence of an express
finding that Aboitiz’s negligence was the direct cause of the sinking of the vessel .
The circumstances in the 1993 GAFLAC case, however, are not obtaining in the
instant petitions.
A perusal of the decisions of the courts below in all three petitions reveals that
there is a categorical finding of negligence on the part of Aboitiz. For instance, in
G.R. No. 121833, the RTC therein expressly stated that the captain of M/V P.
Aboitiz was negligent in failing to take a course of action that would prevent the
vessel from sailing into the typhoon. In G.R. No. 130752, the RTC concluded that
Aboitiz failed to show that it had exercised the required extraordinary diligence in
steering the vessel before, during and after the storm. In G.R. No. 137801, the RTC
categorically stated that the sinking of M/V P. Aboitiz was attributable to the
negligence or fault of Aboitiz. In all instances, the Court of Appeals affirmed the
factual findings of the trial courts.
The finding of actual fault on the part of Aboitiz is central to the issue of its
liability to the respondents. Aboitiz’s contention, that with the sinking of M/V P.
Aboitiz, its liability to the cargo shippers and shippers should be limited only to
the insurance proceeds of the vessel absent any finding of fault on the part of
Aboitiz, is not supported by the record. Thus, Aboitiz is not entitled to the limited
liability rule and is, therefore, liable for the value of the lost cargoes as so duly
alleged and proven during trial.
Events have supervened during the pendency of the instant petitions. On two
other occasions, the Court ruled on separate petitions involving monetary claims
against Aboitiz as a result of the 1980 sinking
of the vessel M/V P. Aboitiz. One of them is the consolidated petitions of Monarch
Ins. Co., Inc v. Court of Appeals,40 Allied Guarantee Insurance Company v. Court of
Appeals41 and Equitable Insurance Corporation v. Court of Appeals 42 (hereafter
collectively referred to as Monarch Insurance) promulgated on 08 June 2000. This
time, the petitioners consisted of claimants against Aboitiz because either the
execution of the judgment awarding full indemnification of their claims was
stayed or set aside or the lower courts awarded damages only to the extent of the
claimants’ proportionate share in the insurance proceeds of the vessel.
In Monarch Insurance, the Court deemed it fit to settle once and for all this factual
issue by declaring that the sinking of M/V P. Aboitiz was caused by the
concurrence of the unseaworthiness of the vessel and the negligence of both
Aboitiz and the vessel’s crew and master and not because of force majeure.
Notwithstanding this finding, the Court did not reverse but reiterated instead the
pronouncement in GAFLAC to the effect that the claimants be treated as
"creditors in an insolvent corporation whose assets are not enough to satisfy the
totality of claims against it."43 The Court explained that the peculiar circumstances
warranted that procedural rules of evidence be set aside to prevent frustrating
the just claims of shippers/insurers. Thus, the Court in Monarch
Insurance ordered Aboitiz to institute the necessary limitation and distribution
action before the proper RTC and to deposit with the said court the insurance
proceeds of and the freightage earned by the ill-fated ship.
However, on 02 May 2006, the Court rendered a decision in Aboitiz Shipping
Corporation v. New India Assurance Company, Ltd. 44 (New India), reiterating the
well-settled principle that the exception to the limited liability doctrine applies
when the damage is due to the fault of the shipowner or to the concurrent
negligence of the shipowner and the captain. Where the shipowner fails to
overcome the presumption of negligence, the doctrine of limited liability cannot
be applied.45 In New India, the Court clarified that the earlier pronouncement
in Monarch Insurance was not an abandonment of the doctrine of limited liability
and that the circumstances therein still made the doctrine applicable. 46
In New India, the Court declared that Aboitiz failed to discharge its burden of
showing that it exercised extraordinary diligence in the transport of the goods it
had on board in order to invoke the limited liability doctrine. Thus, the Court
rejected Aboitiz’s argument that the award of damages to respondent therein
should be limited to its pro rata share in the insurance proceeds from the sinking
of M/V P. Aboitiz.
The instant petitions provide another occasion for the Court to reiterate the well-
settled doctrine of the real and hypothecary nature of maritime law. As a general
rule, a ship owner’s liability is merely co-extensive with his interest in the vessel,
except where actual fault is attributable to the shipowner. Thus, as an exception
to the limited
liability doctrine, a shipowner or ship agent may be held liable for damages when
the sinking of the vessel is attributable to the actual fault or negligence of the
shipowner or its failure to ensure the seaworthiness of the vessel. The instant
petitions cannot be spared from the application of the exception to the doctrine
of limited liability in view of the unanimous findings of the courts below that both
Aboitiz and the crew failed to ensure the seaworthiness of the M/V P. Aboitiz.
WHEREFORE, the petitions in G.R. Nos. 121833, 130752 and 137801 are DENIED.
The decisions of the Court of Appeals in CA-G.R. SP No. 35975-CV, CA-G.R. SP No.
41696 and CA-G.R. CV No. 43458 are herebyAFFIRMED. Costs against petitioner.
SO ORDERED.
ISAAC v A.L. AMMEN TRANS. CO.
DOCTRINE:
A carrier is presumed to be at fault or to have acted negligently in case of death
of, or injury to, passengers, it being its duty to prove that it exercised
extraordinary diligence
FACTS:
1. AL Ammen Transportation was engaged in transporting passengers.
2. Cesar Isaac boarded a passenger bus of AL Ammen, paying the required fare
from Albay bound for Camarines Sur, but before reaching the destination, the
bus collided with a pick-up type vehicle coming from the opposite direction.
a. As a result of which, Isaac’s left arm was completely severed and the
severed portion fell inside the bus.
3. Isaac was rushed to a hospital in Iriga, Cam Sur where he was given blood
transfusion to save his life. After several transfers to other hospitals and
treatments for several months, Isaac incurred expenses amounting to
P623.40, excluding medical fees which were paid by AL Ammen.
4. Isaac then filed an action against AL Ammen for damages on the ground that
the collision was caused by the incompetence and recklessness of the driver
of the bus and that AL Ammen breached the contract of carriage for failure to
transport Isaac safely to his destination.
a. Isaac prayed for Moral damages, loss of earnings, attorney ’s fees,
medical expenses and the cost of the artificial arm.
5. AL Ammen on the other hand alleges that the injury suffered was due entirely
to the fault or negligence of the driver of the pick-up car and to the
contributory negligence of Isaac himself.
a. AL Ammen further claims that the accident, which resulted in the
injury of plaintiff, is one which defendant could not foresee or, though
foreseen, was inevitable.
6. Trial Court: dismissed complaint; in favor of AL Ammen; the collision occurred
due to the negligence of the driver of the pick-up car and not to that of the
driver of the bus it appearing that the latter did everything he could to avoid
the same but that notwithstanding his efforts, he was not able to avoid it.
Hence, this appeal.
ISSUES:
1. WON AL Ammen is liable observed extraordinary diligence or the
utmost diligence of every cautious person.
2. WON there was contributory negligence on the part of Isaac
RULING :
1. YES. The Bus Driver exercised extra-ordinary diligence, which redounds to
the benefit of the passenger Isaac.
a. Based on art. 1733, 1755 and 1756 of the civil code, the following
principles governing the liability of the common carrier can be gleaned:
i. The liability of a carrier is contractual and arises upon breach of its
obligation; there is breach if it fails to exert extraordinary diligence
according to all the circumstances of each case
ii. Carrier is obliged to carry its passenger with the utmost diligence of a
very cautious person, having due regard for all the circumstances
iii. A carrier is presumed to be at fault or to have acted negligently in
case of death of, or injury to, passengers, it being its duty to prove
that it exercised extraordinary diligence.
iv. Carrier is not an insurer against all risks of travel
b. The Bus Driver exercised extraordinary diligence when upon seeing the
Pickup Truck, which was heading towards them at full speed, he swerved
the bus to the very right of the road until its front and rear wheels have
gone over the pile of stones or gravel situated on the rampart of the road.
Said driver could not move the bus farther right and run over a greater
portion of the pile, the peak of which was about 3 feet high, without
endangering the safety of his passengers. And notwithstanding all these
efforts, the pick-up car hit the rear left side of the bus.
c. Isaac’s contention that that the bus driver should have stopped and
waited for the vehicle from the opposite direction to pass is not correct:
(Emergency Rule)
i. “Where a carrier’s employee is confronted with a sudden emergency,
the fact that he is obliged to act quickly and without a chance for
deliberation must be taken into account, and he is not held to the
same degree of care as any ordinary prudent person would exercise
only such care as any ordinary prudent person would exercise under
like circumstances and conditions, and the failure on his part to
exercise the best judgment the case renders possible does not
establish lack of care and skill on his part which renders the company,
liable”
d. Considering the attendant circumstances, the driver of the bus has done
what a prudent man could have done to avoid the collision and relieves
the defendant from liability
2. There was contributory negligence on the part of Isaac which mitigates his
position.
a. Upon boarding, Isaac placed himself in such a position as to expose his
arm to injury, which is the position he was in when the collision
happened. He rest his arm on the window sill but with his left elbow
outside the window. Had he not placed his left arm on the window sill
with a portion thereof protruding outside, perhaps the injury would have
been avoided as is the case with the other passenger. It is to be noted that
appellant was the only victim of the collision.
b. Notably, it is only the plaintiff who was the victim of the collision
c. It has been held that:
i. “It is negligence per se for a passenger on a railroad voluntarily or
inadvertently to protrude his arm, hand, elbow, or any other part of
his body through the window of a moving car beyond the outer edge
of the window or outer surface of the car, so as to come in contact
with objects or obstacles near the track, and that no recovery can be
had for an injury which but for such negligence would not have been
sustained

DISPOSITION: Wherefore, the decision appealed from is affirmed, with cost
against appellant.
REAL VS BELO
G.R. NO. 146224 ; JANUARY 26, 2007
Appeals; Pleadings and Practice; Procedural Rules and Technicalities; The rule is
explicit in its mandate that the legible duplicate originals or true copies of the
judgment or final orders of both lower courts must be certified correct by the
Clerk of Court, unless the petitioner could show that the Clerk of Court was
officially on leave and the Administrative Officer was officially designated as
officer-in-charge.— In the present case, petitioner’s submission of copies of the
RTC Decision and Order certified as correct by the Administrative Officer IV of the
RTC is insufficient compliance with the requirements of the rule. Petitioner failed
to show that the Clerk of Court was officially on leave and the Administrative
Officer was officially designated as officer-in-charge. The rule is explicit in its
mandate that the legible duplicate originals or true copies of the judgments or
final orders of both lower courts must be certified correct by the Clerk of Court.
Same; Same; There is ample jurisprudence holding that the subsequent and
substantial compliance of a party may call for the relaxation of the rules of
procedure; When the Court of Appeals dismisses a petition outright and the
petitioner files a motion for the reconsideration of such dismissal, appending
thereto the requisite pleadings, documents or order/resolution, this would
constitute substantial compliance with the Revised Rules of Court.—
Nonetheless, a strict application of the rule in this case is not called for. This Court
has ruled against the dismissal of appeals based solely on technicalities in several
cases, especially when the appellant had substantially complied with the formal
requirements. There is ample jurisprudence holding that the subsequent and
substantial compliance of a party may call for the relaxation of the rules of
procedure. When the CA dismisses a petition outright and the petitioner files a
motion for the reconsideration of such dismissal, appending thereto the requisite
pleadings, documents or order/resolution, this would constitute substantial
compliance with the Revised Rules of Court.
Same; Same; There is no compelling need to attach the position papers of the
parties where the Decisions of the MeTC and RTC already stated their respective
arguments.—On the necessity of attaching position papers and affidavits of
witnesses, Section 2 of Rule 42 of the Revised Rules of Court requires attachments
if these would support the allegations of the petition. In the present case, there
was no compelling need to attach the position papers of the parties since the
Decisions of the MeTC and RTC already stated their respective arguments. As to
the affidavits, the Court notes that they were presented by the respondent as part
of the testimony of his witness Fire Investigator Pinca and therefore would not
support the allegations of the petitioner.
Same; Same; What should guide judicial action is that a party litigant is given
the fullest opportunity to establish the merits of his action or defense rather
than for him to lose life, honor or property on mere technicalities. —Truly, in
dismissing the petition for review, the CA had committed grave abuse of discretion
amounting to lack of jurisdiction in putting a premium on technicalities at the
expense of a just resolution of the case. The Court ’s pronouncement in Republic
of the Philippines v. Court of Appeals, 292 SCRA 243 (1998), is worth echoing:
“cases should be determined on the merits, after full opportunity to all parties for
ventilation of their causes and defenses, rather than on technicality or some
procedural imperfections. In that way, the ends of justice would be better served.”
Thus, what should guide judicial action is that a party litigant is given the fullest
opportunity to establish the merits of his action or defense rather than for him to
lose life, honor or property on mere technicalities.
Torts; Quasi-Delicts; Negligence; Fortuitous Events; Elements; A party ’s theory of
fortuitous event is unavailing where the circumstances show that the fire
originated from leaking fumes from the LPG stove and tank installed at a party ’s
fastfood stall and her employees failed to prevent the fire from spreading and
destroying the other fastfood stalls.—Jurisprudence defines the elements of a
“fortuitous event” as follows: (a) the cause of the unforeseen and unexpected
occurrence must be independent of human will; (b) 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; (c) the occurrence must be such as to render it
impossible for the debtor to fulfill his obligation in a normal manner; and (d) the
obligor must be free from any participation in the aggravation of the injury
resulting to the creditor. Article 1174 of the Civil Code provides that no person
shall be responsible for a fortuitous event which could not be foreseen, or which,
though foreseen, was inevitable. In other words, there must be an entire exclusion
of human agency from the cause of injury or loss. It is established by evidence
that the fire originated from leaking fumes from the LPG stove and tank installed
at petitioner’s fastfood stall and her employees failed to prevent the fire from
spreading and destroying the other fastfood stalls, including respondent ’s fastfood
stall. Such circumstances do not support petitioner ’s theory of fortuitous event.
Same; Same; Same; Same; Evidence; Bare allegations, unsubstantiated by
evidence, are not equivalent to proof. —Petitioner’s bare allegation is far from
sufficient proof for the Court to rule in her favor. It is basic in the rule of evidence
that bare allegations, unsubstantiated by evidence, are not equivalent to proof. In
short, mere allegations are not evidence.
Same; Same; Same; Whenever an employee’ s negligence causes damage or
injury to another, there instantly arises a presumption juris tantum that the
employer failed to exercise diligentissimi patris families in the selection (culpa in
eligiendo) or supervision (culpa in vigilando) of its employees. —Whenever an
employee’s negligence causes damage or injury to another, there instantly arises a
presumption juris tantum that the employer failed to exercise diligentissimi patris
families in the selection (culpa in eligiendo) or supervision (culpa in vigilando) of
its employees. To avoid liability for a quasi-delict committed by his employee, an
employer must overcome the presumption by presenting convincing proof that he
exercised the care and diligence of a good father of a family in the selection and
supervision of his employee.
Appeals; Pleadings and Practice; It is well-settled that a party who does not
appeal from the decision may not obtain any affirmative relief from the
appellate court other than what he has obtained from the lower court, if any,
whose decision is brought up on appeal; Exceptions.—As to the award of
temperate damages, the increase in the amount thereof by the RTC is improper.
The RTC could no longer examine the amounts awarded by the MeTC since
respondent did not appeal from the Decision of the MeTC. It is well-settled that a
party who does not appeal from the decision may not obtain any affirmative relief
from the appellate court other than what he has obtained from the lower court, if
any, whose decision is brought up on appeal. While there are exceptions to this
rule, such as if they involve (1) errors affecting the lower court ’s jurisdiction over
the subject matter, (2) plain errors not specified, and (3) clerical errors, none apply
here.
Virginia Real V. Sisenando H. Belo
FACTS:
Petitioner owned and operated the Wasabe Fastfood stall located at the
Food Center of the Philippine Women’s University along Taft Avenue, Malate,
Manila.
Sisenando H. Belo (respondent) owned and operated the BS Masters
fastfood stall, also located at the Food Center of PWU.
Around 7:00 o’clock in the morning of January 25, 1996, a fire broke out
at petitioner’s Wasabe Fastfood stall. The fire spread and gutted other fastfood
stalls in the area, including respondent ’s stall. An investigation on the cause of the
fire by Fire Investigator SFO1 Arnel C. Pinca revealed that the fire broke out due to
the leaking fumes coming from the Liquefied Petroleum Gas stove and tank
installed at petitioner’s stall. For the loss of his fastfood stall due to the fire,
respondent demanded compensation from petitioner. However, petitioner
refused to accede to respondent’s demand.
Hence, respondent filed a complaint for damages against petitioner.
Respondent alleged that petitioner failed to exercise due diligence in the upkeep
and maintenance of her cooking equipments, as well as the selection and
supervision of her employees; that petitioner’s negligence was the proximate
cause of the fire that gutted the fastfood stalls.
In her Answer, petitioner denied liability on the grounds that the fire was
a fortuitous event and that she exercised due diligence in the selection and
supervision of her employees.
ISSUE:
WON the herein petitioner could be held liable for damages as a result of
the fire that razed not only her own food kiosk but also the adjacent food stalls at
the Food Center premises of the Philippine Women ’s University, including that of
the respondent.
HELD:
Yes. It is established by evidence that the fire originated from leaking
fumes from the LPG stove and tank installed at petitioner’s fastfood stall and her
employees failed to prevent the fire from spreading and destroying the other
fastfood stalls, including respondent’s fastfood stall. Such circumstances do not
support petitioner’s theory of fortuitous event.
Whenever an employee’s negligence causes damage or injury to another,
there instantly arises a presumption juris tantum that the employer failed to
exercise diligentissimi patris families in the selection or supervision of its
employees. To avoid liability for a quasi-delict committed by his employee, an
employer must overcome the presumption by presenting convincing proof that he
exercised the care and diligence of a good father of a family in the selection and
supervision of his employee.
In this case, petitioner not only failed to show that she submitted proof
that the LPG stove and tank in her fastfood stall were maintained in good
condition and periodically checked for defects but she also failed to submit proof
that she exercised the diligence of a good father of a family in the selection and
supervision of her employees. For failing to prove care and diligence in the
maintenance of her cooking equipment and in the selection and supervision of
her employees, the necessary inference was that petitioner had been negligent.
Fortune Express vs. CA
GR 119756, 18 March 1999
Facts of the Case
Fortune Express Inc. is a bus company in northern Mindanao. On November 18,
1989, Fortune Express bus figured in an accident with a jeepney in Kauswagan,
Lanao del Norte, resulting in the death of several passengers of the jeepney,
including two Maranaos. Crisanto Generalao, a volunteer field agent of the
Constabulary Regional Security Unit (X), conducted an investigation of the
accident. He found that the owner of the jeepney was a Maranao residing in
Delabayan, Lanao del Norte and that certain Maranaos were planning to take
revenge on Fortune Express by burning some of its buses. Generalao rendered a
report on his findings to Sgt. Reynaldo Bastasa of the Philippine Constabulary
Regional Headquarters at Cagayan de Oro. Upon the instruction of Sgt. Bastasa he
went to see Diosdado Bravo, operations manager of petitioner, at its main office in
Cagayan de Oro City. Bravo assured him that the necessary precautions to insure
the safety of lives and property would be taken. At about 6:45 p.m. on 22
November 1989, 3 armed Maranaos who pretended to be passengers, seized a
bus of Fortune Express at Linamon, Lanao del Norte while on its way to Iligan City.
Among the passengers of the bus was Atty. Talib Caorong. The leader of the
Maranaos, identified as one Bashier Mananggolo, ordered the driver, Godofredo
Cabatuan, to stop the bus on the side of the highway. Mananggolo then shot
Cabatuan on the arm, which caused him to slump on the steering wheel. Then
one of the companions of Mananggolo started pouring gasoline inside the bus, as
the other held the passengers at bay with a handgun. Mananggolo then ordered
the passengers to get off the bus. The passengers, including Atty. Caorong,
stepped out of the bus and went behind the bushes in a field some distance from
the highway. However, Atty. Caorong returned to the bus to retrieve something
from the overhead rack. At that time, one of the armed men was pouring gasoline
on the head of the driver. Cabatuan, who had meantime regained consciousness,
heard Atty. Caorong pleading with the armed men to spare the driver as he was
innocent of any wrong doing and was only trying to make a living. The armed men
were, however, adamant as they repeated their warning that they were going to
burn the bus along with its driver. During this exchange between Atty. Caorong
and the assailants, Cabatuan climbed out of the left window of the bus and
crawled to the canal on the opposite side of the highway. He heard shots from
inside the bus. Larry de la Cruz, one of the passengers, saw that Atty. Caorong was
hit. Then the bus was set on fire. Some of the passengers were able to pull Atty.
Caorong out of the burning bus and rush him to the Mercy Community Hospital in
Iligan City, but he died while undergoing operation. Paulie Caorong, the widow of
Atty. Caorong, and their minor children Yasser King, Rose Heinni, and Prince
Alexander brought a suit for breach of contract of carriage in the Regional Trial
Court of Iligan City (Branch VI). In its decision, dated 28 December 1990, the trial
court dismissed the complaint, and the corresponding counterclaim; without
costs. On appeal, however, and on 29 July 1994, the Court of Appeals reversed the
decision of the trial court, and rendered another one ordering Fortune Express to
pay the Caorongs (1) P3,399,649.20 as death indemnity; (2) P50,000.00 and
P500.00 per appearance as attorney’s fees; and costs against Fortune Express.
Hence, the appeal by petition for review on certiorari.
Issue
Whether or not Fortune Express is liable for injuries suffered by passenger on
account of willful acts of other passenger.
Decision
Article 1763 of the Civil Code provides that a common carrier is responsible for
injuries suffered by a passenger on account of the wilful acts of other passengers,
if the employees of the common carrier could have prevented the act through the
exercise of the diligence of a good father of a family.
Based from this provision, the Supreme Court held that herein, it is clear that
because of the negligence of Fortune Express ’ employees, the seizure of the bus
by Mananggolo and his men was made possible. Despite warning by the
Philippine Constabulary at Cagayan de Oro that the Maranaos were planning to
take revenge on Fortune Express by burning some of its buses and the assurance
of petitioner’s operation manager, Diosdado Bravo, that the necessary precautions
would be taken, Fortune Express did nothing to protect the safety of its
passengers. Had Fortune Express and its employees been vigilant they would not
have failed to see that the malefactors had a large quantity of gasoline with them.
Under the circumstances, simple precautionary measures to protect the safety of
passengers, such as frisking passengers and inspecting their baggages, preferably
with non-intrusive gadgets such as metal detectors, before allowing them on
board could have been employed without violating the passenger ’s constitutional
rights. As the Court intimated in Gacal v. Philippine Air Lines, Inc., a common
carrier can be held liable for failing to prevent a hijacking by frisking passengers
and inspecting their baggages.
The Supreme Court affirmed the decision of the Court of Appeals with
modification.
G.R. No. 85691 July 31, 1990
BACHELOR EXPRESS, INCORPORATED, and CRESENCIO RIVERA vs. THE
HONORABLE COURT OF APPEALS (Sixth Division), RICARDO BETER, SERGIA
BETER, TEOFILO RAUTRAUT and ZOETERA RAUTRAUT
FACTS: A bus owned by Bachelor Express, Inc. and driven by Cresencio Rivera was
the situs of a stampede which resulted in the death of passengers Ornominio
Beter and Narcisa Rautraut.
The bus came from Davao City on its way to Cagayan de Oro City; that while in
Butuan City, the bus picked up a passenger; that about 15 minutes later, a
passenger at the rear portion suddenly stabbed a PC soldier which caused
commotion and panic among the passengers; that when the bus stopped,
passengers Ornominio Beter and Narcisa Rautraut were found lying down the
road, the former already dead as a result of head injuries and the latter also
suffering from severe injuries which caused her death later. The passenger
assailant alighted from the bus and ran toward the bushes but was killed by the
police. Thereafter, the heirs of Ornominio Beter and Narcisa Rautraut, private
respondents filed a complaint for "sum of money" against Bachelor Express, Inc.
its alleged owner Samson Yasay and the driver Rivera.
Petitioner alleged that the driver was able to transport his passengers
safely to their respective places of destination except Ornominio Beter and
Narcisa Rautraut who jumped off the bus without the knowledge and consent.
The trial court dismissed the complaint which was reversed and set aside
by the Court of Appeals.
Petitioners asseverate that they were not negligent in the performance of their
duties and that the incident was completely and absolutely attributable to a third
person, the passenger who ran amuck, for without his criminal act, Beter and
Rautraut could not have been subjected to fear and shock which compelled them
to jump off the running bus. They argue that they should not be made liable for
damages arising from acts of third persons over whom they have no control or
supervision. . In effect, the petitioner, in order to overcome the presumption of
fault or negligence under the law, states that the vehicular incident resulting in
the death of passengers Beter and Rautraut was caused by force majeure or caso
fortuito over which the common carrier did not have any control.
ISSUE: Whether petitioner is liable.
HELD: YES. The liability of the petitioners is anchored on culpa contractual or
breach of contract of carriage.
Ornominio Beter and Narcisa Rautraut were passengers of a bus
belonging to petitioner Bachelor Express, Inc. and, while passengers of the bus,
suffered injuries which caused their death. Consequently, pursuant to Article 1756
of the Civil Code, petitioner Bachelor Express, Inc. is presumed to have acted
negligently unless it can prove that it had observed extraordinary diligence in
accordance with Articles 1733 and 1755 of the New Civil Code.
The running amuck of the passenger was the proximate cause of the
incident as it triggered off a commotion and panic among the passengers such
that the passengers started running to the sole exit shoving each other resulting in
the falling off the bus by passengers Beter and Rautraut causing them fatal
injuries. The sudden act of the passenger who stabbed another passenger in the
bus is within the context of force majeure.
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 (debtor) must be free from any participation in the
aggravation of the injury resulting to the creditor.
As will be seen, these authorities agree that some extraordinary
circumstance independent of the will of the obligor or of his employees, is an
essential element of a caso fortuito.
However, in order that a common carrier may be absolved from liability in
case of force majeure, it is not enough that the accident was caused by force
majeure. The common carrier must still prove that it was not negligent in
causing the injuries resulting from such accident.
The bus driver did not immediately stop the bus at the height of the
commotion; the bus was speeding from a full stop; the victims fell from the bus
door when it was opened or gave way while the bus was still running; the
conductor panicked and blew his whistle after people had already fallen off the
bus; and the bus was not properly equipped with doors in accordance with law-it
is clear that the petitioners have failed to overcome the presumption of fault and
negligence found in the law governing common carriers.
The petitioners' argument that the petitioners "are not insurers of their
passengers" deserves no merit in view of the failure of the petitioners to prove
that the deaths of the two passengers were exclusively due to force majeure and
not to the failure of the petitioners to observe extraordinary diligence in
transporting safely the passengers to their destinations as warranted by law.
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-
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.
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%.
LOPEZ v PAN AMERICAN WORLD AIRWAYS
En Banc
G.R. No.L-22415. – March 30, 1966
FACTS
● March 29, 1960:: Reservations for first class accommodations in Flight No.
2 of PAN-AM from Tokyo to San Francisco were made by "Your Travel
Guide" agency for then Senator Fernando Lopez, his wife Maria J. Lopez,
his soninlaw Alfredo Montelibano, Jr., and his daughter, Mrs. Alfredo
Montelibano, Jr.
● March 31, 1960: PANAM's San Francisco head office confirmed the
reservations
● May 21, 1960: First class tickets for the abovementioned flight were
subsequently issued byPANAM in favor of Senator Lopez and his party
 The total fare of P9,444 for all of them was fully paid before the
tickets were issued
● May 24, 1960: As scheduled Senator Lopez arrived in Tokyo at 5:30 P.M.
 As soon as they arrived Senator Lopez requested Minister Busuego
of the Philippine Embassy to contact PANAM's Tokyo office
regarding their first class accommodations for that evening's flight
o For the given reason that the first class seats therein were all
booked up
  PANAM's Tokyo office informed Minister Busuego that PANAM
could not accommodate Senator Lopez and party in that trip as
first class passengers
o Senator Lopez thereupon gave their first class tickets to
Minister Busuego for him to show the same to PANAM's
Tokyo office
o PAN-AM firmly reiterated that there was no
accommodation for them in the first class, stating that they
ISSUES/HELD/RATIO:
could not go in that flight unless they took the tourist class
1. W/N PAN-AM acted in bad faith in failing to provide first class
therein
 Due to pressing engagements awaiting Senator Lopez and his wife,
in the United States, they were constrained to take PANAM's flight
from Tokyo to San Francisco as tourist passengers
● June 2, 1960: Senator Lopez and party filed a suit for damages against
PAN-AM in CFI of Rizal
 Alleged breach of contract
 Asked for 500k in actual and moral damages, 100k exemplary
damages, and 25k attorney’s fees
● PAN-AM’s Answer
 Asserted that its failure to provide first class accommodations to
plaintiffs was due to honest error of its employees
● Nov. 13, 1963: CFI ruled in favor of Senator Lopez
 Defendant is accordingly ordered to pay the plaintiffs the
following:
o (a) P100,000.00 as moral damages;
o (b) P20,000.00 as exemplary damages;
o (c) P25,000.00 as attorney's fees, and the costs of this action
● Dec. 14, 1963: On MR by Lopez, the CFI reconsidered the dispositive part
of its decision
 Defendant is ordered to pay the plaintiffs the following:
o (a) P150,000.00 as moral damages;
o (b) P25,000.00 as exemplary damages; with legal interest on
both from the date of the filing of the complaint until paid; an
o (c) P25,000.00 as attorney's fees; and the costs of this action
● Both parties appealed from the CFI’s reconsidered judgment
 PAN-AM: Contested the finding of the court a quo that it acted in
bad faith in the branch of said contracts
 Lopez: Raised questions on the amount of damages awarded in
their favor, seeking that the same be increased to a total of
P650,000
accommodations to respondent – YES
● Contention of Lopez re: bad faith
 PAN-AM acted in bad faith because it deliberately refused to
comply with its contract to provide first class accommodations to
plaintiffs, out of racial prejudice against Orientals
o Evidence was adduced relating to two previous instances of
alleged racial discrimination by defendant against Filipinos in
favor of "white" passengers
● Contention of PAN-AM re: bad faith
 Failure to provide petitioner and his party first class
accommodations was an honest mistake
 "Your Travel Guide" agency called PAN-AM to cancel the
reservation of the Rufino family, but their employee, Herranz,
mistakenly cancelled the reservation of Senator Lopez along with
the Rufinos’
 Herranz, upon discovering the mistake, called the head office in
order to reinstate the first class seats of Senator Lopez
o Head office replied that they are waitlisted, as they are unable
to reinstate them at the moment
o Herranz relied on the belief that the head office would be able
to reinstate Senator Lopez and party, so he told no one about
it and forgot the matter entirely
  When a representative of Senator Lopez called PAN-AM to confirm
the reservation, Alberto Jose, the reservations supervisor, withheld
the information that the reservation had been cancelled
o He expected some cancellations of bookings would be made
before the flight time of Senator Lopez
● From the foregoing evidence of defendant, it is in effect admitted that
defendant, through its agents, first cancelled plaintiff’s, reservations by
mistake, and thereafter deliberately and intentionally withheld from
plaintiffs or their travel agent the fact of said cancellation
 PAN-AM let them go on believing that their first class reservations
stood valid and confirmed
 PAN-AM willfully and knowingly placed itself into the position of
having to breach its contract with plaintiffs, should there be no
lastminute cancellation by other passengers before flight time, as it
turned out in this case
o Such actuation of defendant may indeed have been prompted
by nothing more than the promotion of its selfinterest in
holding on to Senator Lopez and party as passengers in its
flight
o Such conduct already amounts to action in bad faith, for bad
faith means a breach of a known duty through some motive of
interest or illwill
● At any rate, granting all the mistakes advanced by the defendant, there
would at least be negligence so gross and reckless as to amount to malice
or bad faith
 Herranz made the mistake of cancelling all the reservations,
including those of Senator Lopez and party, along with the Rufinos’
 After sending a wire to San Francisco head office stating his error
and asking for reinstatement, Herranz simply forgot about the
matter
 Davila confirmed plaintiff's reservations in a phone call to
defendant's ticket sellers, when at the time it appeared in
plaintiffs' reservation card that they were only waitlisted
passengers
 Defendant's ticket sellers issued plaintiffs' tickets on May 21 and
23, 1960, without first checking their reservations just before
issuing said tickets
 No one among defendant's agents notified Senator Lopez and
party that their reservations had been cancelled
o This precaution that could have averted their entering with
defendant into contracts that the latter had already placed
beyond its power to perform
2. W/N Senator Lopez and his party are entitled to damages
● NOTE: The amount of damages awarded in this appeal has been
determined by adequately considering the official, political, social, and
financial standing of the offended parties on one hand, and the business
and financial position of the offender on the other
 MORAL DAMAGES – YES
● As a proximate result of defendant's breach in bad faith of its contracts
with plaintiffs, the latter suffered social humiliation, wounded feelings,
serious anxiety and mental anguish.
 They were travelling with first class tickets issued by defendant and
yet they were given only the tourist class
o At stop overs, they were expected to be among the firstclass
passengers by those awaiting to welcome them, only to be
found among the tourist passengers
o It may not be humiliating to travel as tourist passengers; it is
humiliating to be compelled to travel as such, contrary to
what is rightfully to be expected from the contractual
undertaking.
 Senator Lopez was then Senate President Pro Tempore, and
international carriers like defendant know the prestige of such an
office  entitled to 100k in moral damages
o He was former VicePresident of the Philippines as well
 o Senator Lopez was going to the United States to attend a
private business conference of the BinalbaganIsabela Sugar
Company
o He had a second engagement awaiting him in the United
States: a banquet tendered by Filipino friends in his honor as
Senate President Pro Tempore
 Mrs. Maria J. Lopez, as wife of Senator Lopez, shared his prestige
and therefore his humiliation  entitled to P50k for moral
damages
o Two months before, she was attacked by severe flu and lost 10
pounds of weight and that she was advised by Dr. Sison to go
to the United States as soon as possible for medical checkup
and relaxation
o She suffered physical discomfort during the 13hour trip
 Noise and trepidation inside the plane
 Seating spaces in the tourist class are quite narrower
than in first class
 Very little space for reclining in view of the closer
distance between rows
 Painful thought that she was deprived by defendant of
everything that would have been given her in first class:
the best seat, service, food and treatment
 Mr. and Mrs. Alfredo Montelibano, Jr., were travelling as
immediate members of the family of Senator Lopez, as such they
likewise shared his prestige and humiliation  entitled to P25k
each for moral damages for their social humiliation
o They had already been made to pay for first class seats and
therefore expected first class accommodations
 EXEMPLARY DAMAGES – YES
● Exemplary damages as the name implies, to provide an example or
correction for public good
 Defendant having breached its contracts in bad faith, the court, as
stated earlier, may award exemplary damages in addition to moral
damages
● In view of its nature, it should be imposed in such an amount as to
sufficiently and effectively deter similar breach of contracts in the future
by defendant or other airlines
 In this light, the Court finds it just to award P75,000.00 as
exemplary or corrective damages.
 ATTORNEY’ S FEES - YES
● The record shows a written contract of services executed on June 1, 1960
whereunder plaintiffsappellants engaged the services of their counsel,
Atty. Vicente J. Francisco
 Agreed to pay the sum of P25,000.00 as attorney's fees upon the
termination of the case in the Court of First Instance
o And an additional sum of P25,000.00 in the event the case is
appealed to the Supreme Court
 As said earlier, a written contract for attorney's services shall
control the amount to be paid therefor unless found by the court
to be unconscionable or unreasonable
o A consideration of the subject matter of the present
controversy, of the professional standing of the attorney
for plaintiffsappellants, and of the extent of the service
rendered by him, shows that said amount provided for in
the written agreement is reasonable
o P50,000.00 is the proper compensation for his services
rendered to defendant in the trial court and on appeal
DISPOSITIVE PORTION
Wherefore, the judgment appealed from is hereby modified so as to award in
favor of plaintiffs and against defendant, the following: (1) P200,000.00 as moral
damages, divided among plaintiffs, thus: P100,000.00 for Senate President Pro
Tempore Fernando Lopez; P50,000.00 for his wife Maria J. Lopez; P25,000.00 for
his soninlaw Alfredo Montelibano, Jr.; and P25,000.00 for his daughter Mrs.
Alfredo Montelibano, Jr.; (2) P75,000.00 as exemplary or corrective damages; (3)
interest at the legal rate of 6% per annum on the moral and exemplary damages
aforestated, from December 14, 1963, the date of the amended decision of the
court a quo, until said damages are fully paid; (4) P50,000.00 as attorney's fees;
and (5) the costs. Counterclaim dismissed.
[G.R. NO. 152134 : June 4, 2004]
ENDREO MAGBANUA, VALLACAR TRANSIT, INC., and its Present Corporate
Official RICARDO YANSON, Petitioners, v. JOSE TABUSARES, JR., EVA T.
LAFIGUERA, NONA C. TABUSARES, JUN C. TABUSARES, FE C. TABUSARES and JAX
C. TABUSARES, Respondents.
Civil Law; Damages; Loss of Earnings; Article 2205 of the New Civil Code allows the
recovery of damages for loss or impairment of earning capacity in cases of
temporary or permanent personal injury.Such damages covers the loss sustained
by the dependents or heirs of the deceased, consisting of the support they would
have received from him had he not died because of the negligent act of
another.The loss is not equivalent to the entire earnings of the deceased, but
only that portion that he would have used to support his dependents or heirs.
Hence, we deduct from his gross earnings the necessary expenses supposed to be
used by the deceased for his own needs.
Same; Same; Same; Aside from the loss sustained by the heirs of the deceased,
another factor considered in determining the award of loss of earning capacity is
the life expectancy of the deceased which takes into account his work, lifestyle,
age and state of health prior to the accident.
Same; Same; Same; A survey of more recent jurisprudence shows that the Court
consistently pegged the amount at 50% of the gross annual income. We held
(in Smith Bell Dodwell Shipping Agency Corp. v. Borja) that when there is no
showing that the living expenses constituted a smaller percentage of the gross
income, Court fix the living expenses at half of the gross income.
Petition for review on certiorari.
The case at bar arose from the complaint for damages filed by spouses Jose
Tabusares, Sr. and Rebecca Tabusares against Petitioners, Endreo A. Magbanua,
Vallacar Transit, Inc., and /or its corporate officials for the tragic death of their son,
Jury Tabusares, in a vehicular mishap involving a Ceres Liner Bus owned and
operated by petitioners.The case was docketed as Civil Case No. 4654 before the
Regional Trial Court of Negros Occidental, Branch 48, Bacolod City.
The facts, as found by the trial court, are as follows:chanroblesvirtua1awlibrary
At about 4:30 oclock in the afternoon of October 25, 1986, a Ceres Liner Bus No.
154 with Plate No. GVG 469, driven by Endreo Magbanua and owned and
operated by Vallacar Transit, Inc., and an Amante Type Jeepney bearing Plate No.
FBN 996, driven by Felipe Palacios and owned by Salvador Algara, Sr. figured in a
vehicular accident along the national road at Hda. Mabuhay, Gil Montilla, Sipalay,
Negros Occidental.The Ceres Liner Bus bumped the rear portion of the Amante
Type Jeepney while both vehicles were running downhill on the same direction
towards the town of Sipalay from the North.Due to the impact, several passengers
of the Amante Type Jeepney were thrown out and ran over by the Ceres Liner Bus
and died as a result of the injuries they sustained. (O) ne of those killed was Jury
Tabusares, 27 years of age, single, an employee ofthe Maricalum Copper Mines as
Oiler 2B and was then receiving P1,256.00 monthly salary plus P510.00 cost of
living allowance (COLA) or a total monthly income of P1,766.00.Jury Tabusares
was the son of the plantiffs Jose Tabusares, Sr. and Rebecca
Tabusares.Immediately before the bumping accident, the Ceres Liner Buss driver,
Endreo Magbanua, was trying to overtake the Amante Type Jeepney ahead of him
and he said that he did not apply his brakes because he cannot overtake if he will
slow down.The Amante Type Jeepney was overloaded with 35 passengers and
some of them clinging on its sides and some were riding on the roof.While the
Ceres Liner (B) us was about one and a half (1) meters from the Amante Type
Jeepney, the bus driver saw that the jeepney went zigzagging on the middle of the
road and since he could not control the bus anymore it bumped the rear portion
of the jeep.
After a careful perusal of the circumstances of the case, the (c) ourt finds that the 2.The amount of P699,336.00 as indemnity for the loss of the earning capacity of
Amante Type Jeepney, as testified to by its own driver, Felipe Palacios, was not a the late Jury Tabusares;chanroblesvirtuallawlibrary
passenger jeepney but a private vehicle which is used by its owner Salvador
Algara, Sr., who is an ambulant peddler in his peddling business.But, although not 3.The amount of P27,600.00 as reimbursement for actual expenses in connection
for passengers, it was carrying 35 passengers at the time of the bumping accident with the death and burial of the said deceased;chanroblesvirtuallawlibrary
on October 25, 1986 as testified to by Traffic Investigator Pfc. Praxedes
Campillanos of the Sipalay Police Command, Sipalay, Negros Occidental.This jeep 4.The amount of P10,000.00 as moral damages;and
had a seating capacity of only 16 passengers but it was made to accommodate
passengers on its roof and some were clinging on its side.This act is not only gross 5.The sum of P10,000.00 as reasonable attorneys fees.
negligence but it was violative of the traffic rules and regulations.On the other
The cross-claim of defendant Salvador Algara, Sr. against the defendants Endreo A.
hand, the (c) ourt also finds thatthe driver of the CeresLiner Bus was driving his
Magbanua and Vallacar Transit, Inc., represented by its corporate official Ricardo
vehicle negligently and recklessly because Endreo Magbanua testified and
Yanson, is hereby allowed and defendants Endreo A. Magbanua and Vallacar
admitted that while driving the bus downhill and following the Amante type
Transit, Inc., represented by it (sic) corporate official Ricardo Yanson are hereby
Jeepney ahead of him, he did not apply his brakes because he was trying to
ordered to indemnify Salvador Algara, Sr. in such amount as he may be required to
overtake when he bumped the jeep on its rear portion.This act was negligent and
pay as damages to the herein plaintiffs.
reckless because Endreo Magbanua could have avoided the bumping of the
jeepney had he applied his brakes considering that he has the last clear chance to
The counterclaims of the defendants against the plaintiffs are hereby dismissed
prevent a collision by slowing down and reducing speed. 1 cralawred
for lack or merit.
The trial court found that the negligent acts of the drivers of both the jeepney and
SO ORDERED.2 cralawred
the Ceres Liner Bus combined in directly causing the death of Jury Tabusares.It
therefore held both drivers solidarily liable for damages.The court
Petitioners appealed to the Court of Appeals.They prayed that the decision of the
ruled:chanroblesvirtua1awlibrary
trial court be reversed insofar as their liabilities are concerned. 3 cralawred

WHEREFORE, in view of the foregoing considerations, judgment is hereby

During the pendency of the appeal, Jose Tabusares, Sr. and his wife, Rebecca,
rendered ordering and condemning the defendants Endreo A. Magbanua, Vallacar
passed away. On May 18, 1999, the Court of Appeals approved the substitution of
Transit, Inc., thru and represented by its corporate official Ricardo Yanson, Felipe
the late spouses by their heirs, namely:Jose Tabusares, Jr., Eva T. Lafiguera, Nona
T. Palacios and Salvador Algara, Sr. to pay jointly and severally to the plantiffs, as
C. Tabusares, Jun C. Tabusares, Fe C. Tabusares and Jax C. Tabusares. 4 cralawred
follows:chanroblesvirtua1awlibrary
On March 13, 2001, the Court of Appeals rendered its decision.It affirmed the
1.The sum of P50,000.00 as indemnity for the death of Jury
factual findings of the trial court, but modified the award of damages, reducing
Tabusares;chanroblesvirtuallawlibrary
the amount of lost earning to P374,392.00.It made the following
computation:chanroblesvirtua1awlibrary
In the case at bar, the victim Jury Tabusares was twenty- seven (27) years old at
the time of death.With 65 years as the given life expectancy in the Philippines, the
victim was expected to live for another thirty-eight (38) years.In respect of
income, the victim was receiving the amount ofP1,766.00 as total monthly income
or a gross yearly income of P21,192.00.Multiplied by 38, the number of years the
victim is expected to continue living, the amount arrived at is P748,784.00 using
the formula 2/3 x [80-27] x 21,192.00.From the said figure must be deducted the
reasonable amount of P374,392.00 or 50% thereof representing the living and
other necessary expenses of the deceased had he continued to live.Hence, the
lost earnings of the deceased should be P374,392.00.5 cralawred
Petitioners filed a partial motion for reconsideration of the decision of the Court
of Appeals, praying for a reduction of the amount of damages for loss of earning
capacity.The Court of Appeals denied the motion. 6 Hence, this petition.
Petitioners, while accepting the factual findings of the trial court and the appellate
court, now assail the latters computation of the award of damages for loss of
earning capacity. They contend that there are varying computations used in the
decisions of this Court.In People v. Lopez, 7 the Court applied the following
formula:chanroblesvirtua1awlibrary
2/3 x (80-27) xP21,192.00 50%
However, the following formula was employed in People v. Muyco, et al .
2/3 x (80 27) x P21,192.00 80%
The difference lies in the computation of the net income of the victim.In
the Lopez case, net income was derived by deducting 50% of the gross annual
income, while in the Muyco case, the amount deducted was 80% of the gross
annual income.The Court of Appeals followed the computation inPeople v.
Lopez as it was the prevailing case law at the time of the decision appealed from
was promulgated and unmistakably more favorable to the heirs of the deceased
xxx.9 Petitioners argue that the instant case was decided by the Court of Appeals
one year and six months after the promulgation of People v. Muyco, therefore,
the Court should apply the computation in the latter case. 10 cralawred
On the other hand, the respondents, in their comment, cite other cases decided
after the Muyco case where the Court applied the formula in the Lopez case.They
submit that the computation in People v. Lopez should be applied in this
case.11 cralawred
The petition is devoid of merit.
Article 2205 of the New Civil Code allows the recovery of damages for loss or
impairment of earning capacity in cases of temporary or permanent personal
injury.Such damages covers the loss sustained by the dependents or heirs of the
deceased, consisting of the support they would have received from him had he
not died because of the negligent act of another.The loss is not equivalent to the
entire earnings of the deceased, but only that portion that he would have used to
support his dependents or heirs.Hence, we deduct from his gross earnings the
necessary expenses supposed to be used by the deceased for his own needs.The
Court explained in Villa Rey Transit, Inc. v. Court of
12
Appeals that:chanroblesvirtua1awlibrary
(the award of damages for loss of earning capacity is) concerned with the
determination of the losses or damages sustained by the private respondents, as
dependents and intestate heirs of the deceased, and that said damages
consist, not of the full amount of his earnings, but of the support they received or
would have received from him had he not died in consequence of the negligence
of petitioners agent.In fixing the amount of that support, we must reckon with the
necessary expenses of his own living, which should be deducted from his
earnings.Thus, it has been consistently held that earning capacity, as an element
of damages to ones estate for his death by wrongful act is necessarily
his net earning capacity or his capacity to acquire money, less the necessary
expense for his own living.Stated otherwise, the amount recoverable is not loss of
the entire earning, but rather the loss of that portion of the earnings which the
beneficiary would have received.In other words, only net earnings, not gross
earning are to be considered that is, the total of the earnings lessexpenses
necessary in the creation of such earnings or income and less living and other
incidental expenses.
Aside from the loss sustained by the heirs of the deceased, another factor
considered in determining the award of loss of earning capacity is the life
expectancy of the deceased which takes into account his work, lifestyle, age and
state of health prior to the accident. 13 cralawred
Thus, the formula for the computation of unearned income is:awlibrary
Net life gross living
Earning=expectancyxannuallessexpenses
Capacity >income
Life expectancy is determined in accordance with the formula:a1awlibrary
2/3x[80 age of deceased]
The bone of contention in this case is the amount of living expenses that should
be deducted from the deceaseds gross annual income - whether 50% or 80%.
A survey of more recent jurisprudence shows that the Court consistently pegged
the amount at 50% of the gross annual income. 14 We held in Smith Bell Dodwell
Shipping Agency Corp. v. Borja15 that when there is no showing that the living
expenses constituted a smaller percentage of the gross income, we fix the living
expenses at half of the gross income, thus:chanroblesvirtua1awlibrary
In other words, only net earnings, not gross earnings, are to be considered; that is,
the total of the earnings less expenses necessary in the creation of such earnings
or income, less living and other incidental expenses.When there is no showing
that the living expenses constituted a smaller percentage of the gross income,
we fix the living expenses at half of the gross income.To hold that one would
have used only a small part of the income, with the larger part going to the
support of ones children, would be conjectural and unreasonable.(emphasis
supplied)cralawlibrary
There is no evidence in the case at bar whether the living expenses of the victim,
Jury Tabusares, constituted a bigger or smaller percentage of his gross income.In
such case, it is fair to assume that it is 50% of his gross annual income.Hence, we
find that the Court of Appeals did not err in its computation of the award of loss
of unearned income to petitioner.
IN VIEW WHEREOF, the petition is DENIED.The assailed decision of the Court of
Appeals is AFFIRMED.
___________________________________________________________-
SMITH BELL DODWELL SHIPPING AGENCY CORPORATION vs. CATALINO BORJA
AND INTERNATIONAL TOWAGE AND TRANSPORT CORPORATION
G.R. No. 143008, June 10, 2002, J. Panganiban
Negligence is conduct that creates undue risk of harm to another. It is the failure
to observe that degree of care, precaution and vigilance that the circumstances
justly demand, whereby that other person sufers injury. Petitioner’s vessel was
carrying chemical cargo— alkyl benzene and methyl methacrylate monomer.
While knowing that their vessel was carrying dangerous inflammable chemicals,
its officers and crew failed to take all the necessary precautions to prevent an
accident. Petitioner was, therefore, negligent.
Facts:
Smith Bell filed a written request with the Bureau of Customs for
inspection of vessel M/T King Family which was due to arrive at the port of
Manila. Said vessel contained 750 metric tons of alkyl benzene and methyl
methacrylate monomer. Respondent Catalino Borja was instructed to board said
vessel and perform his duties as inspector upon the vessel's arrival until its
departure.
At about 11 o'clock am, while M/T King Family was unloading chemicals
unto two (2) barges owned by International Towage and Transport Corporation
(ITTC), a sudden explosion occurred setting the vessels afire. Upon hearing the
explosion, Borja, ran outside to check what happened. Again, another explosion
was heard. Seeing the fire and fearing for his life, he hurriedly jumped over board
to save himself. However, the water was likewise on fire due mainly to the spilled
chemicals. Despite the tremendous heat, Borja swam his way for one (1) hour
until he was rescued by the people living in the squatters' area.
After weeks of intensive care at the hospital, his attending physician
diagnosed Borja to be permanently disabled due to the incident. [Borja] made
demands against Smith Bell and ITTC for the damages
caused by the explosion. However, both denied liabilities and attributed to each
other negligence. The RTC ruled in favor of Borja and held Smith Bell liable for
damages and loss of income. The CA affirmed the RTC decision.
Issue:
Whether or not Smith Bell is liable for Borja ’s injuries
What is the proper amount of liability
Ruling: Smith Bell is liable for Borja’s injuries.
"The attempts of [Petitioner] Smith Bell to shift the blame on x x x ITTC
were all for naught. First, the
testimony of its alleged eyewitness was stricken off the record for his failure to
appear for cross-examination (p. 361, Record). Second, the documents offered to
prove that the fire originated from barge ITTC-101 were all denied admission by
the [c]ourt for being, in effect, hearsay (pp. 335 and 362). x x x Thus, there is
nothing in the record to support [petitioner's] contention that the fire and
explosion originated from barge ITTC-1
Negligence is conduct that creates undue risk of harm to another. It is the
failure to observe that degree of care, precaution and vigilance that the
circumstances justly demand, whereby that other person
suffers injury. Petitioner's vessel was carrying chemical cargo -- alkyl benzene and
methyl methacrylate monomer. While knowing that their vessel was carrying
dangerous inflammable chemicals, its officers and crew failed to take all the
necessary precautions to prevent an accident. Petitioner was, therefore,
negligent.
The three elements of quasi delict are: (a) damages suffered by the
plaintiff, (b) fault or negligence of the defendant, and (c) the connection of cause
and effect between the fault or negligence of the defendant and the damages
inflicted on the plaintiff.[16] All these elements were established in this case.
Knowing fully well that it was carrying dangerous chemicals, petitioner was
negligent in not taking all the necessary precautions in transporting the cargo.
Hence, the owner or the person in possession and control of a vessel and the
vessel are liable for all natural and proximate damage caused to persons and
property by reason of negligent management or navigation.

As to the amount of liability
In determining the reasonableness of the damages awarded under Article
1764 in conjunction with Article 2206 of the Civil Code, the factors to be
considered are: (1) life expectancy (considering the health of the victim and the
mortality table which is deemed conclusive) and loss of earning capacity; (b)
pecuniary loss, loss of support and service; and (c) moral and mental sufferings.
[19] The loss of earning capacity is based mainly on the number of years
remaining in the person's expected life span. In turn, this number is the basis of
the damages.
The formula for the computation of loss of earning capacity is as follows:
Net earning capacity = Life expectancy x [Gross Annual Income - Living Expenses
(50% of gross annual
income)], where life expectancy = 2/3 (80 - the age of the deceased)
Petitioner is correct in arguing that it is net income (or gross income less
living expenses) which is to be used in the computation of the award for loss of
income. When there is no showing that the living expenses constituted a smaller
percentage of the gross income, we fix the living expenses at half of the gross
income.
Counsel for Respondent Borja is also correct in saying that life expectancy
should not be based on theretirement age of government employees, which is
pegged at 65. The Court uses the American Experience/Expectancy Table of
Mortality or the Actuarial or Combined Experience Table of Mortality, which
consistently pegs the life span of the average Filipino at 80 years, from which it
extrapolates the estimated income to be earned by the deceased had he or she
not been killed.
Based on the foregoing discussion, the award for loss of earning capacity
should be computed as follows:
Loss of earning capacity = [2 (80-50)] x [(P2,752x12)-16,512] / 3
= P330,240…
____________________________________________________-
Cariaga vs Laguna Tayabas Bus Company
Dec. 29, 1960
Facts:
- At about 1:00 pm, June 18, 1952, Bus No. 133 of the Laguna Tayabas
Bus Company (LTB) bound for Lilio Laguna (departing from Azcarriaga
St., Manila) collided with the engine of a train then passing by the
national railroad tracks of the poblacion of Bay, Laguna.
- One of the injured: Edgardo Cariaga
o 4th year medical student (UST).
o Sustained grave injuries; He was unconscious for 35 days, and
his right forehead was fractured in such a way that it
necessitated the removal of practically all of the right frontal
lobe of his brain. Under the testimony of Dr. Fernandez
(psychiatrist), Cariaga’s mental capacity has been reduced to
that he can no longer finish his studies. Right frontal bone of
his head was replaced by a tantalum plate that when pressed
in or dented in (the brain), could cause Cariaga ’s death. The
gist of it is that he became an invalid after the accident.
o LTB paid for the expenses in the hospitalization of Cariaga.
- Cariaga (plus parents) filed a case against LTB and the Manila Railroad
Company (MRR Co.) for the recovery of P312,000.00 worth of actual,
compensatory, moral and exemplary damages.
o Lower Court: Negligence of the bus driver that caused the
accident; sentenced LTB to pay Cariaga P10,490.00.
 - Both the Cariaga and the LTB appealed.
o Cariaga: for awarding only P10K+ in compensatory damages
and not awarding them actual and moral damages
o LTB: the fault should not have been bore by them alone; MRR
Co. should be included (collision: both because of MRR Co.
and bus driver).
Issues/Held:
- Regarding LTB’s appeal:
o Untenable; all the witnesses on both side (LTB and MRR Co.)
swore that they heard the train whistle sometime before the
collision, but that it was the Bus that refused to slow down.
o LTB was unable to discredit MRR Co.’s witness that effect!
- Regarding the Cariagas’ appeal:
o Compensatory damages of P10K+ is too low considering the
effects (and the evidence thereof) of said accident.
o LTB: Under A. 2201 of the CC, the damages for which the
obligor, guilty of a breach of contract but who acted in good
faith, is liable shall be for those that are the natural and
probable consequences of the breach and which the parties
had forseen or could have reasonably forseen at the time the
obligation was constituted, provided such damages, according
to A. 2199 of the same code, have been duly proved.
 Only the hospital expenses of P17,719.75 has been
duly proved
o SC: The income of Cariaga had he finished his medical studies
should be considered too; could have been reasonably
forseen by the parties at the time Cariaga boarded the bus.
o Upon consideration of all facts, compensatory damages
should be increased to P25K.
o Moral damage and atty’s fees cannot be awarded:
 Current case not one of those contemplated in Art.
2219 that enumerated the instances such damage can
be awarded; cannot come under par. 2 thereon
because the present action is not one quasi-delict
(due to the pre-existing contractual relation between
Cariaga and LTB).
 Neither can LTB be held accountable for moral
damages under A. 2220 of the CC because LTB did not
act fraudulently or in bad faith and that LTB exercised
due diligence in the selection and supervision of its
buses in connection with the discharge of their
duties.
 Cachero vs Manila Yellow Taxi Cab:
 Not a liability arising from crime, because the
one who committed the offense is the driver.
 Liability = as a result of a breach of contract.
 Quasi-delict = for those obligations which do not
arise from law, contracts, quasi-contracts or criminal
offenses.
________________________________________________________
- COLLIN A. MORRIS and THOMAS P. WHITTIER, petitioner,
vs.
COURT OF APPEALS (Tenth Division) and SCANDINAVIAN AIRLINES
SYSTEM, respondents.
- On February 14, 1978, petitioners filed with the Regional Trial Court,
Makati branch 143 an action for damages for breach of contract of air
carriage against respondent airline because they were bumped off
from SAS Flight SK 893, Manila-Tokyo, on February 14, 1978, despite a
confirmed booking in the first class section of the flight.
- Petitioners Collin A. Morris and Thomas P. Whittier were American
citizens; the vice-president for technical service and the director for
quality assurance, respectively, of Sterling Asia, a foreign corporation
with regional headquarters at No. 8741 Paseo de Roxas, Makati City.
- Respondent Scandinavian Airline System (SAS for brevity) is and at
times material hereto has been engaged in the commercial air
transport of passengers globally
- Petitioner Morris and co-petitioner Whittier had a series of business
meetings with Japanese businessmen in Japan from February 14 to
February 22, 1978. They requested their travel agent, Staats Travel
Service. Inc. to book them as first class passengers in SAS.
- At the airport, they were informed that there were no more seats on
the plane for which reason they could not be accommodated on the
flight. Staats Travel Service called and confirmed their booking.
Thereafter, petitioner Morris and Whittier returned to respondent's
check-in counter anticipating that they would be allowed to check-in.
However, the check-in counter was closed. When they informed Ms.
Ponce, in charge at the check-in counter that arrangements had been
made with respondents office, she ignored them. Even respondent's
supervisor, Raul Basa, ignored them and refused to answer their
question why they could not be accomodated in the flight despite
their confirmed booking.
- Ms. Erlinda Ponce, SAS employee on duty at the check-in counter on
February 14, 1978 testified that they were not accommodated on the
flight because they checked-in after the flight manifest had been
closed forty (40) minutes prior to the plane's departure. Their names
were crossed out and the symbols "NOSH", meaning NO SHOW,
written after their names. The "NO SHOW" notation could mean
either that the booked passengers of his travel documents were not
at the counter at the time of the closing of the flight manifest.
- ISSUE: Whether or not petitioners complaint for damages against
respondent for breach of contract of air carriage be granted.
- RULING: The petition has no merit.
- "To begin with, it must be emphasized that a contract to transport
passengers is quite different kind and degree from any other
contractual relations, and this is because relation, which an air carrier
sustains with the public. Its business is mainly with the travelling
public. It invites people business is mainly with the traveling public. It
invites people to avail [themselves] of the comforts and advantages it
offers. The contract of air carriage, therefore, generates a relation
attended wit h a pubic duty. Neglect or malfeasance of the carrier's
employees naturally could give ground for an action for damages."
- "In awarding moral damages for breach of contract of carriage, the
breach must be wanton and deliberately injurious or the one
responsible acted fraudulently or with malice or bad faith." 17 "Where
in breaching the contract of carriage the defendant airline is not
shown to have acted fraudulently or in bad faith, liability for damages
is limited to the natural and probable consequences of the breach of
obligation which the parties had foreseen or could have reasonably
foreseen. In that case, such liability does not include moral and
exemplary damages."18"Moral damages are generally not recoverable
in culpa contractual except when bad faith had been proven.
However, the same damages may be recovered when reach of
contract of carriage results in the death of a passenger."
- In the instant case, assuming arguendo that breach of contract of
carriage may be attributed to respondent, petitioners' travails were
directly traceable to their failure to check-in on time, which lewd to
respondent's refusal to accommodate them on the flight.
- "The rule is that moral damages are recoverable in a damage suit
predicated upon a breach of contract of carriage only where (a) the
mishap result in the death of a passenger and (b) it is proved that the
carrier was guilty of fraud and bad faith even if death does not result.
 - For having arrived at the airport after the closure of the flight
manifest, respondent's employee could not be faulted for not
entertaining petitioners' tickets and travel documents for processing,
as the checking in of passengers for SAS Flight SK 893 was finished,
there was no fraud or bad faith as would justify the court's award or
normal damages.
- As we find petitioners not entitled to moral damages, "an award of
exemplary damages is likewise baseless." 23"Where the award of moral
and exemplary damages is eliminated, so must the award for
attorney's fees be deleted."
_________________________________________________________
G.R. No. L-8721 May 23, 1957
TRANQUILINO CACHERO, plaintiff-appellant,
vs.
MANILA YELLOW TAXICAB CO., INC., defendant-appellant.
Bernardino Guerrero and J. G. Madarang for plaintiff-appellant.
Castaño and Ampil for the defendant-appellant.
FELIX, J.:
There is no dispute as to the following facts: on December 13, 1952, Atty.
Tranquilino F. Cachero boarded a Yellow Taxicab, with plate No. 2159-52 driven by
Gregorio Mira Abinion and owned by the Manila Yellow Taxicab Co., Inc. On
passing Oroquieta between Doroteo Jose and Lope de Vega streets, Gregorio Mira
Abinion bumped said taxicab against a Meralco post, No. 1-4/387, with the result
that the cab was badly smashed and the plaintiff fell out of the vehicle to the
ground, suffering thereby physical injuries, slight in nature.
The chauffeur was subsequently prosecuted by the City Fiscal and on February 26,
1963, upon his plea of guilty the Municipal Court of Manila sentenced him to
suffer 1 month and 1 day of arresto mayor, and to pay the costs. On December 17,
1952, Tranquilino F. Cachero addressed a letter to the Manila Yellow Taxicab Co.,
Inc., which was followed by another of January 6, 1953, which reads as follows:
MANILA, January 6, 1953
The MANILA YELLOW TAXICAB CO., INC.
1338 Arlegui, Manila
Dear Sirs:
As you have been already advised by the letter dated December 17, 1952, on
December 13, 1952, while I was a passenger of your taxicab bearing plate No.
2159 and driven by your chauffeur Gregorio Mira and through his negligence and
the bad condition of the said car, he bumped the same against the pavement on
the street (Oroquieta — between Doroteo Jose and Lope de Vega streets, Manila)
and hit the Meralco post on said street, resulting in the smashing of the said
taxicab, and as a result thereof I was gravely injured and suffered and is still
suffering physical, mental and moral damages and not being able to resume my
daily calling.
For the said damages, I hereby make a demand for the payment of the sum of
P79,245.65, covering expenses for transportation to the hospital for medical
treatment, medicines, doctors bills, actual monetary loss, moral, compensatory
and exemplary damages, etc., within 5 days from date of receipt hereof.
I trust to hear from you on the matter within the period of 5 days above specified.
Truly yours,
(Sgd.) TRANQUILINO F. CACHERO
2256 Int. B, Misericordia St.,
Sta. Cruz, Manila
(Exhibit K)
The Taxicab Co. to avoid expenses and time of litigation offered to settle the case
amicably with plaintiff but the latter only agreed to reduce his demand to the sum
of P72,050.20 as his only basis for settlement which, of course, was not accepted
by said company. So plaintiff instituted this action on February 2, 1953, in the
Court of First Instance of Manila, praying in the complaint that the defendant be
condemned to pay him:
(a) The sum of P72,050.20, the total sum of the itemized losses and/or damages
under paragraph 7 of the complaint, with legal interest thereon from the date of
the filing of the complaint;
(b) The sum of P5,000 as attorney's fee; and the costs of the suit; and
Plaintiff further respectfully prays for such other and further reliefs as the facts
and the law pertaining to the case may warrant.
The defendant answered the complaint setting forth affirmative defenses and a
counterclaim for P930 as damages and praying for the dismissal of plaintiff's
action. After hearing the Court rendered decision only July 20, 1954, the
dispositive part of which is as follows:
IN VIEW OF THE FOREGOING, the Court hereby renders judgment in favor of the
plaintiff and against the defendant, sentencing the latter to pay the former the
following: (1) For medicine, doctor's fees for services rendered and
transportation, P700; (2) professional fee as attorney for the defendant in Criminal
Case No. 364, "People vs. Manolo Maddela et al." of the Court of First Instance of
Nueva Vizcaya, P3,000; (3) professional fees as attorney for the defendant in Civil
Case No. 23891 of the Municipal Court of Manila, "Virginia Tangulan vs. Leonel da
Silva," and for the taking of the deposition of Gabina Angrepan in a case against
the Philippine National Bank, P200; and(4) moral damages in the amount of
P2,000.
Defendant's counterclaim is hereby dismissed.
Defendant shall also pay the costs."
From this decision both parties appealed to Us, plaintiff limiting his appeal to the
part of the decision which refers to the moral damages awarded to him which he
considered inadequate, and to the failure of said judgment to grant the attorney's
fees asked for in the prayer of his complaint. Defendant in turn alleges that the
trial Court erred in awarding to the plaintiff the following:
(1) P700 — for medicine, doctor's fees and transportation expenses;
(2) P3,000 — as supposedly unearned full professional fees as attorney for the
defendant in Criminal Case No. 364, "People vs. Manolo Maddela et al.";
(3) P200 — as supposedly unearned professional fees as attorney for the
defendant in Civil Case No. 23891 of the Manila Municipal Court, "Virginia
Tangulan vs. Leonel de Silva", and for failure to take the deposition of a certain
Gabina Angrepan in an unnamed case; and
(4) P2,000 — as moral damages, amounting to the grand total of P5,900, these
amounts being very much greater than what plaintiff deserves.
In connection with his appeal, plaintiff calls attention to the testimonies of Dr.
Modesto S. Purisima and of Dr. Francisco Aguilar, a member of the staff of the
National Orthopedic Hospital, which he considers necessary as a basis for
ascertaining not only the physical sufferings undergone by him, but also for
determining the adequate compensation for moral damages that he should be
awarded by reason of said accident.
The exact nature of plaintiff's injuries, their degree of seriousness and the period
of his involuntary disability can be determined by the medical certificate (Exhibit
D) issued by the National Orthopedic Hospital on December 16, 1952, and the
testimonies of Dr. Francisco Aguilar, physician in said hospital, and of Dr. Modesto
Purisima, a private practitioner. The medical certificate (Exhibit D) lists: (a)
a subluxation of the right shoulder joint; (b) acontusion on the right chest; and (c)
a "suspicious fracture" of the upper end of the right humerus. Dr. Aguilar who
issued the medical certificate admitted, however, with regard to the "suspicious
fracture", that in his opinion with (the aid of) the x-ray there was no fracture.
According to this doctor plaintiff went to the National 0rthopedic Hospital at least
six times during the period from December 16, 1952, to April 7, 1953; that he
strapped plaintiffs body (see Exhibit E), which strap was not removed until after a
period of six weeks had elapsed Dr. Modesto Purisima, a private practitioner,
testified that he advised and treated plaintiff from, December 14, 1952, to the end
of March (1953). Plaintiff was never hospitalized for treatment of the injuries he
received in said accident.
Counsel for the defendant delves quite extensively on these injuries. He says in his
brief the following:
Just what is a subluxation? Luxation is another term for dislocation (Dorland,
W.A.N., The American Illustrated Medical Dictionary (13th ed.), p. 652), and
hence, a sublaxation is an incomplete or partialdislocation (Ibid., p. 1115). While a
dislocation is the displacement of a bone or bones from its or their normal setting
(and, therefore, applicable and occurs only to joints and not to rigid or non-
movable parts of the skeletal system) (Ibid., p. 358; Christopher, F., A Textbook of
Surgery (5th ed.), p. 342), it should be distinguished from a fracture which is a
break or rupture in a bone or cartilage, usually due to external violence
(Christopher, F., A Textbook of Surgery (5th Ed.) p. 194; Dorland, W.A.N., The
American Illustrated Medical Dictionary (13th ed.), P.459).
Because, unlike fracture which may be partial (a crack in the bone) or total (a
complete break in the bone), there can be no half-way situations with regard to
dislocations of the shoulder joint (the head or ball of the humerus — the humerus
is the bone from the elbow to the shoulder) must be either inside the socket of
the scapula or shoulder blade (in which case there is no dislocation) or out of the
latter (in which event there is a dislocation), to denote a condition where due to
external violence, the muscles and ligaments connecting the humerus to the
scapula have subjected to strain intense enough to produce temporary distention
or lessening of their tautness and consequently resulting in the loosening or
wrenching of the ball of the humerus from its snug fit in the socket of the scapula,
by using the terms subluxation or partial dislocation(as used in the medical
certificate), is to fall into a misnomer — a term often used by "chiropractors" and
by those who would want to sound impressive, but generally unfavored by the
medical profession. To describe the above condition more aptly, the medical
profession usually employs the expression luxatio imperfecta, or, in simple
language, a sprain (Dorland, W.A.N., The American Illustrated Medical Dictionary
(13th ed.), p. 652). The condition we have described is a paraphrase of the
definition of a sprain. Plaintiff suffered this very injury (a sprained or wrenched
shoulder joint) and a cursory scrutiny of his x-ray plates (Exhibits A and B) by a
qualified orthopedic surgeon or by a layman with a picture or x-ray plate of a
normal shoulder joint (found in any standard textbook on human anatomy; the
one we used was Schemer, J.P., Morris' Human Anatomy (10 ed., p. 194) for
comparison will bear out our claim.
Treatment for a sprain is by the use of adhesive or elastic bandage, elevation of
the joint, heat, effleurage and later massage (Christopher, F., A Textbook of
Surgery (5th ed., p. 116). The treatment given to the plaintiff was just exactly that
Dr. Aguilar bandaged (strapped) plaintiff's right shoulder and chest (t.s.n., p. 31) in
an elevated position (with the forearm horizontal to the chest (see photograph,
Exhibit E), and certain vitamins were prescribed for him (t.s.n., p. 131). He also
underwent massage for some time by Drs. Aguilar and Purisima. The medicines
and appurtenances to treatment purchased by plaintiff from the Orthopedic
Hospital, Botica Boie and Metro Drug Store were, by his own admission, adhesive
plaster, bandage, gauze, oil and "tintura arnica" (t.s.n., p. 3 — continuation of
transcript ), and Dr. Purisima also prescribed "Numotizin", a beat generating
ointment (t.s.n., p. 23), all of which are indicated for a sprain, and by their nature,
can cure nothing more serious than a sprain anyway.
Fractures and true dislocations cannot be cured by the kind of treatment and
medicines which plaintiff received. A true dislocation, for instance, is treated by
means of reduction through traction of the arm until the humeral head returns to
the proper position in the scapular socket (pulling the arm at a 60 degree angle
and guiding the ball of the humerus into proper position, in its socket) while the
patient is under deep anaesthesia, and then, completely immobilizing the part
until the injured capsule has healed (Christopher, F., A Textbook of Surgery, pp.
343 and 344). No evidence was submitted that plaintiff ever received the latter
kind of treatment. Dr. Purisima even declared that after the plaintiff's first visit to
the Orthopedic Hospital the latter informed him that there was no fracture or
dislocation (t.s.n., p. 26). Dr. Purisima's statement is the truth of the matter as we
have already explained — joints of the shoulder being only subject to total
dislocation (due to their anatomical design), not to partial ones, and any injury
approximating dislocation but not completely, it being classified as mere sprains,
slight or bad.
The second and last injury plaintiff sustained was a contusion. What is a
contusion? It is just a high flown expression for a bruise or the act of bruising
(Dorland, W.A.N., The American Illustrated Medical Dictionary (13th ed. p. 290).
No further discussion need be made on this particular injury since the nature of a
bruise is of common knowledge (it's a bit uncomfortable but not disabling unless
it occurs on movable parts like the fingers or elbow which is not the case, herein
having occurred in the right chest) and the kind of medical treatment or help it is
also well known. (pp. 10-14, defendant-appellant's brief).
The trial Judge undoubtedly did not give much value to the testimonies of the
doctors when in the statement of facts made in his decision he referred to the
physical injuries received by the plaintiff as slight in nature and the latter is
estopped from discussing the same in order to make them appear as serious,
because in the statement of facts made in his brief as appellant, he says the
following:
The facts of the case as found by the lower court in its decision, with the
permission of this Honorable Court, we respectfully quote them hereunder as
our STATEMENT OF FACTS for the purpose of this appeal.
Before entering into a discussion of the merits of plaintiff's appeal, We will say a
few words as to the nature of the action on which his demand for damages is
predicated.
The nature of an action as in contract or in tort is determined from the essential
elements of the complaint, taken as a whole, in the case of doubt a construction
to sustain the action being given to it.
While the prayer for relief or measure of damages sought does not necessarily
determine the character of the action, it may be material in the determination of
the question and therefore entitled to consideration and in case of doubt will
open determine character of the action and indeed there are actions whose
character is necessarily determined thereby. (1 C.J.S. 1100)
A mere perusal of plaintiff complaint will show that his action against the
defendant is predicated on an alleged breach of contract of carriage, i.e., the
failure of the defendant to bring him "safely and without mishaps" to his
destination, and it is to be noted that the chauffeur of defendant's taxicab that
plaintiff used when he received the injuries involved herein, Gregorio Mira, has
not even been made a party defendant to this case.
Considering, therefore, the nature of plaintiff's action in this case, is he entitled to
compensation for moral damages? Article 2219 of the Civil Code says the
following:
ART. 2219. Moral damages may be recovered in the following and analogous
cases:
(1) A criminal offense resulting in physical injuries;
(2) Quasi-delicts causing physical injuries;
(3) Seduction, abduction, rape, or other lascivious acts;
(4) Adultery or concubinage;
(5) Illegal or arbitrary detention or arrest;
(6) Illegal search;
(7) Libel, slander or any other form of defamation;
(8) Malicious prosecution;
(9) Acts mentioned in Article 309;
(10) Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34 and 35.
xxx xxx xxx
Of the cases enumerated in the just quoted Article 2219 only the first two may
have any bearing on the case at bar. We find, however, with regard to the first that
the defendant herein has not committed in connection with this case any
"criminal offense resulting in physical injuries". The one that committed the
offense against the plaintiff is Gregorio Mira, and that is why he has been already
prosecuted and punished therefor.
Although
(a) owners and managers of an establishment or enterprise are responsible for
damages caused by their employees in the service of the branches in which the
latter are employed or on the occasion of their functions; (b) employers are
likewise liable for damages caused by their employees and household helpers
acting within the scope of their assigned task (Article 2180 of the Civil Code); and
(c) employers and corporations engaged in any kind of industry are subsidiarily
civilly liable for felonies committed by their employees in the discharge of their
duties (Art. 103, Revised Penal Code), plaintiff herein does not maintain this
action under the provisions of any of the articles of the codes just mentioned and
against all the persons who might be liable for the damages caused, but as a result
of an admitted breach of contract of carriage and against the defendant employer
alone. We, therefore, hold that the case at bar does not come within the
exception of paragraph 1, Article 2219 of the Civil Code.
The present complaint is not based either on a "quasi delict causing physical
injuries" (Art. 2219 par. 2, of the Civil Code). From the report of the Code
Commission on the new Civil Code We copy the following:
A question of nomenclature confronted the Commission. After a careful
deliberation, it was agreed to use the term "quasi-delict" for those
obligations which do not arise from law, contracts quasi-contracts or criminal
offenses. They are known in Spanish legal treatises as "culpa aquiliana", "culpa-
extra-contractual" or "cuasi-delitos". The phrase "culpa-extra-contractual" or its
translation "extra-contractual fault" was eliminated because it did not exclude
quasi-contractual or penal obligations. "Aquilian fault" might have been selected,
but it was thought inadvisable to refer to so ancient a law as the "Lex Aquilia". So
"quasi-delicts" was chosen, which more nearly corresponds to the Roman Law
classification of obligations, and is in harmony with the nature of this kind of
liability.
The Commission also thought of the possibility of adopting the word "tort" from
Anglo-American Law. But "tort" under that system is much broader than the
Spanish-Philippine concept of obligations arising from non-contractual
negligence." "Tort" in Anglo-American jurisprudence includes not only negligence,
but also intentional criminal acts, such as assault and battery, false imprisonment
and deceit. In the general plan of the Philippine legal system, intentional and
malicious are governed by the Penal Code, although certain exceptions are made
in the Project. (Report of the Code Commission, pp. 161-162).
In the case of Cangco vs. Manila Railroad, 38 Phil. 768, We established the
distinction between obligation derived from negligence and obligation as a result
of a breach of a contract. Thus, We said:
It is important to note that the foundation of the legal liability of the defendant is
the contract of carriage, and that the obligation to respond for the damage which
plaintiff has suffered arises, if at all, from the breach of that contract by reason of
the failure of defendant to exercise due care in its performance. That is to say, its
liability is direct and immediate, differing essentially in the legal view point from
that presumptive responsibility for the negligence of its servants, imposed by
Article 1903 of the Civil Code (Art. 2180 of the new), which can be rebutted by
proof of the exercise of due care in their selection or supervision. Article 1903 is
not applicable to obligation arising EX CONTRACTU, but only to extra-contractual
obligations or — to use the technical form of expression, that article, relates only
to CULPA AQUILIANA and not to CULPA CONTRACTUAL.
The decisions in the cases of Castro vs. Acro Taxicab (82 Phil., 359, 46 Off. Gaz.,
Na. 5, p. 2023); Lilius et al. vs. Manila Railroad, (59 Phil. 758) and others, wherein
moral damages, are awarded to the plaintiffs, are not applicable to the case at bar
because said decisions were rendered before the effectivity of the new Civil Code
(August 30, 1950) and for the further reason that the complaints filed therein
were based on different causes of action.
In view of the foregoing the sum of P2,000 awarded as moral damages by the trial
Court has to be eliminated, for under the law it is not a compensation awardable
in a case like the one at bar.
As to plaintiff's demand for P5,000 as attorney's fees, the Civil Code provides the
following:
ART, 2208. In the absence of stipulation, attorney's fees and expenses of litigation,
other than judicial costs, cannot be recovered, except:
(1) When exemplary damages are awarded;
(2) When the defendant's act or omission has compelled the plaintiff to litigate
with third persons or to incur expenses to protect his interest;
(3) In criminal cases of malicious prosecution against the plaintiff;
(4) In case of a clearly unfounded civil action or proceeding against the plaintiff;
(5) Where the defendant acted in gross and evident had faith in refusing to satisfy
the plaintiff's plainly valid, just and demandable claim;
(6) In actions for legal support;
(7) In actions for the recovery of wages of household helpers, laborers and skilled
workers;
(8) in actions for indemnity under workmen's compensation and employers
liability laws;
(9) In a separate civil action to recover civil liability arising from a crime;
(10) When at least double judicial costs are awarded;
(11) In any other case where the court deems it just and equitable that attorney's
fees and expenses of litigation should be recovered.
In all cases, the attorney's fees and expenses of litigation must be reasonable.
The present case does not come under any of exceptions enumerated in the
preceding article, specially of paragraph 2 thereof, because defendant's failure to
meet its responsibility was not the plaintiff to litigate or to incur expenses to
protect his interests. The present action was instituted because plaintiff an
exorbitant amount for damages (P60,000) and naturally the defendant did not and
could not yield to such demand. This is neither a case that comes under paragraph
11 of Article 2208 because the Lower Court did not deem it just and equitable to
award any amount for attorney's fees. As We agree with the trial Judge on this
point, We cannot declare that he erred for not awarding to plaintiff any such fees
in this case.
Coming now to the appeal of the defendant, the Court, after due consideration of
the evidence appearing on record:
(1) Approves the award of P700 for medicine, doctors' fees and transportation
expenses;
(2) Reduces the award of P3,000 as attorney's fees to the sum of P2,000, as
Manolo Maddela, defendant in Criminal Case No. 364 of the Court of First
Instance of Nueva Vizcaya testified that he has already paid to plaintiff part of the
latter's fees of P3,000, the amount of which was not disclosed, though it was
incumbent upon the plaintiff to establish how much he had been paid of said fees;
(3) Approves the award of P200 as unearned professional fees as attorney for the
defendant in Civil Case No. 238191 of the Municipal Court of Manila whom
plaintiff was unable to represent, and for the latter's failure to take the deposition
of one Agripina Angrepan due to the automobile accident referred to in this case.
Before closing this decision We deem it convenient to quote the following passage
of defendant's brief as appellant:
Realizing its obligation under its contract of carriage with the plaintiff, and
because the facts of the case, as have been shown, mark it as more proper for the
Municipal Court only, the defendant, to avoid the expense and time of litigation,
offered to settle the case amicably with plaintiff, but the latter refused and
insisted on his demand for P72,050.20 (Exhibit K) as the only basis for settlement,
thus adding a clearly petty case to the already overflowing desk of the Honorable
Members of this Court.
We admire and respect at all times a man for standing up and fighting for his
rights, and when said right consists in injuries sustained due to a breach of a
contract of carriage with us, sympathy and understanding are added thereto. But
when a person starts demanding P72,050.20 for a solitary bruise and sprain,
injuries for which the trial court, even at its generous although erroneous best,
could only grant P5,900, then respect and sympathy give way to something else. It
is time to fight, for, in our humble opinion, there is nothing more loathsome nor
truly worthy of condemnation than one who uses his injuries for other purposes
than just rectification. If plaintiff's claim is granted, it would be a blessing, not a
misfortune, to be injured. (p. 34-35)
This case was instituted by a lawyer who, as an officer of the courts, should be the
first in helping Us in the administration of justice, and after going over the record
of this case, we do not hesitate to say that the demand of P72,050.20 for a
subluxation of the right humerus bone and an insignificant contusion in the chest,
has not even the semblance of reasonableness. As a matter of fact, Dr. Aguilar
himself said that the x-ray plates (Exhibits A, Band C) " did not show anything
significant except that it shows a slight subluxation of the right shoulder, and that
there is a suspicious fracture", which ultimately he admitted not to exist.
The plaintiff himself must have felt embarrassed by his own attitude when after
receiving defendant's brief as appellant, he makes in his brief as appellee the
categorical statement that he DOES NOT NOW INSIST NOR PRETEND IN THE LEAST
to Collect from the defendant all the damages he had claimed in his complaint,
but instead he is submitting his case to the sound discretion of the Honorable
Court for the award of a reasonable and equitable damages allowable by law, to
compensate the plaintiff of the suffering and losses he had undergone and
incurred of the accident oftentimes mentioned in this brief in which plaintiff was
injured" (p. 17-18).This acknowledgment comes too late, for plaintiff has already
deprived the Court of Appeals of the occasion to exercise its appellate jurisdiction
over this case which he recklessly dumped to this Court. We certainly cannot look
with at favor at his attitude of plaintiff.
WHEREFORE, the decision appealed from is hereby modified by reducing the
amount awarded as professional fees from P3,000 to P2,000 and by eliminating
the moral damages of P2,000 awarded by the Lower Court to the plaintiff. Said
decision is in all other respects affirmed, without pronouncement as to costs.
-------------------------------------------------------------------------------------------------
FORES v. MIRANDA
No. L-68729/ MAR 4 1959/ REYES, JBL, J/ TRANSPO – Common Carriers: Nature
and Basis of Liability (NCC 1733) /RLAurellano
SUMMARY. Respondent Miranda was a passenger in a jeep operated by
Petitioner Fores. The jeep got involved in an accident, and Miranda was
injured. The CFi awarded moral damages, which Fores contested in the SC.
SC held that moral damages cannot be awarded, because there was no
showing of fraud or bad faith.
DOCTRINE. The liability of common carriers is contractual; therefore, there is
a presumption of liability on the part of the carrier, upon mere proof of
injury to the passenger. They also cannot escape liability by proving that
they exercised due diligence in the selection and supervision of their
employees. In addition, moral damages cannot be awarded in the absence
of fraud or bad faith on the part of the common carrier, unless a passenger
dies (NCC 1763)

FACTS.
 Respondent Miranda was one of passengers on a jeepney driven by Eugenio
Luga, owned by petitioner Fores. While the vehicle was descending the Sta.
Mesa bridge at an excessive rate of speed, the driver lost control, causing it to
swerve and to hit the bridge wall.
o Five of the passengers were injured, including the respondent who suffered a
fracture of the upper right humerus.
 The driver was charged with serious physical injuries through reckless
imprudence, and upon interposing a plea of guilty was sentenced accordingly.
 Miranda was awarded Php 5k actual damages and attorney ’s fees, and Php 10k
moral damages.
 Fores assails the award for damages
o She further contends that she sold the jeep to
ISSUES & RATIO.
1.MAIN ISSUE: WON the award of moral damages is correct – NO, because
moral damages are not recoverable in actions predicated on the breach of
contract of carriage, in the absence of fraud or bad faith on the part of the
common carrier
By contrasting the provisions of NCC 2219 1 and 222o2 it immediately becomes
apparent that:
 In case of breach of contract (including one of transportation) proof of bad
faith or fraud (dolus), i.e., wanton or deliberately injurious conduct, is
essential to justify an award of moral damages; and
 That a breach of contract cannot be considered included in the descriptive
term ‘analogous cases’ used in NCC 2219; not only because NCC 2220
specifically provides for the damages that are caused by contractual breach,
but because the definition of quasi-delict in NCC 2176 3 of the Code expressly
excludes the cases where there is a ‘preexisting contractual relation between
the parties.’
The exception to the basic rule of damages now under consideration is a
mishap resulting in the death of a passenger, in which case NCC 1764 4 makes
the common carrier expressly subject to the rule of NCC 2206 5, that entitles the
spouse, descendants and ascendants of the deceased passenger to demand
moral damages for mental anguish by reason of the death of the deceased. But
the exceptional rule of NCC 1764 makes it all the more evident that where the
injured passenger does not die, moral damages are not recoverable unless it is
proved that the carrier was guilty of malice or bad faith.
 The mere carelessness of the driver does not per se constitute or justify an
inference of malice or bad faith on the part of the carrier
 No other evidence of malice on part of common carrier
The action for breach of contract imposes on the defendant carrier a
presumption of liability upon mere proof of injury to the passenger; that latter
is relieved from the duty to establish the fault of the carrier, or of his
employees, and the burden is placed on the carrier to prove that it was due to
an unforeseen event or to force majeure. Moreover, the carrier, unlike in suits

3
NCC 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is
obliged to pay for the damage done. Such fault or negligence, if there is no preexisting contractual relation
between the parties, is called a quasi-delict and is governed by the provisions of this Chapter."
4
NCC 1764. Damages in cases comprised in this Section shall be awarded in accordance with Title XVIII of
this Book, concerning Damages. Article 2206 shall also apply to the death of a passenger caused by the
breach of contract by a common carrier.
5
NCC 2206. The amount of damages for death caused by a crime or quasi-delict shall be at least three
1
thousand pesos, even though there may have been mitigating circumstances. xxx
2
 for quasi-delict, may not escape liability by proving that it has exercised due
diligence in the selection and supervision of its employees
SUB-ISSUE: WON carrier’ s violation of its engagement to safely transport
passengers involves a reach of the passenger’s confidence, and therefore
should be regarded as breach in bad faith – NO. The theory is untenable
because under it, the carrier is always deemed in bad faith, and it would never
be accountable for simple negligence
The distinction between fraud, bad faith or malice in the sense of deliberate or
wanton wrong doing and negligence (as mere carelessness) is too fundamental
in our law to be ignored. It is true that negligence may be occasionally so gross
as to amount to malice, but that fact must be shown in evidence, and a carrier's
bad faith is not to be lightly inferred from a mere finding that the contract was
breached through negligence of the carrier's employees.
2.OTHER ISSUE: WON approval of the Public Service Commission is necessary for
the sale of a public service vehicle even without conveying the authority to
operate the same – YES, because of PSL, Sec. 20. If the transfer is not
registered, it is not effective and binding in so far as the responsibility of the
grantee to the public is concerned
DECISION.
CA decision modified. Moral damages deleted. But affirmed in all other aspects.
___________________________________________________________-
Damages Recoverable from Common Carriers – Nominal, Temperate and
Liquidated
G.R. No. 118664 – Japan Airlines (JAL) vs. CA (August 7, 1998)
Romero, J.
Private respondents were on a JAL flight from San Franciso, California bound for
Manila with overnight stopover at Narita, Japan. Last leg of their flight was
cancelled because NAIA’s closed indefinitely after the Mt. Pinatubo eruption.
Action for damages were filed by the respondents after JAL refused to pay their
hotel and accommodation expenses for their unexpected additional stay in Japan.
The Court held that when JAL was prevented from resuming its flight to Manila
due to the NAIA closure because of the Mt. Pinatubo eruption, a force majeure,
the losses or damages in the form of hotel and accommodation expenses the
respondents incurred, cannot be charged to JAL. However, nominal damages were
awarded. JAL reneged on its obligation to look after the comfort and convenience
of its passengers when it declassified private respondents from transit passengers
to new passengers as a result of which private respondents were obliged to make
the necessary arrangements themselves for the next flight to Manila.
DOCTRINE
Nominal damages are adjudicated in order that a right of a plaintiff, which has
been violated or invaded by the defendant, may be vindicated or recognized and
not for the purpose of indemnifying any loss suffered by him.
FACTS
1. Jose Miranda boarded JAL flight no. JL 001 in San Francisco bound for Manila.
On the same day, Enrique Agana, Maria Angela Nina Agana, and Adelia
Francisco left LA for Manila via JAL flight no. JL 061.
a. An incentive for traveling with JAL was that both flights were to make
an overnight stopover at Narita, Japan, at JAL’s expense, before
proceeding to Manila the next day.
2. When they arrived in Narita, they were billeted at Hotel Nikko Narita for the
night. The next day, they went to the airport to take their flight to Manila; but
their flight was cancelled because the ashfall from the Mt. Pinatubo eruption
blanketed NAIA rendering it inaccessible to airline traffic.
3. JAL rebooked all the Manila-bound passengers on a flight due to depart the
next day and paid for the hotel expenses for their unexpected overnight stay.
The next day, their flight was cancelled again due to NAIA ’s indefinite closure.
a. JAL informed them that it would no longer defray their hotel and
accommodation expense during their stay in Narita.
b. NAIA was only reopened to airline traffic after 7 days so they had to
pay for their accommodation and meal expenses for those days.
c. They arrived in Manila on board JL flight no. 741.
4. They commenced an action for damages against JAL before RTC-QC. Alleging
the ff.:
a. JAL failed to live up to its duty to provide care and comfort to its
stranded passengers when it refused to pay for their hotel and
accommodation expenses during their unexpected 7-day stay in
Narita.
b. Jal was obligated to shoulder their expenses as long as they were
stranded in Narita.
5. JAL denied this allegation and averred that airline passengers have no vested
right to these amenities in case a flight is cancelled due to force majeure.
6. RTC ruled in favor of the plaintiff-respondents and ordered JAL to pay
damages.
a. Actual, moral, and exemplary damages:
i. P1,246,936.00 to Enrique Agana, Adalia Francisco, and Maria
Nina Agana
ii. P320,616.31 to Jose Miranda
b. Attorney’s fees in the amount of P200,000.00
7. JAL appealed the decision before the CA. CA affirmed the RTC, but reduced
the award of moral damages to P200,000.00 for each of the plaintiffs, the
exemplary damages to P300,000.00, and the atty ’s fees to P100,000.00.
8. JAL filed an MR; MR denied. Hence this instant petition.
ISSUE with HOLDING
1. W/N JAL has the obligation to shoulder the hotel and meal expenses of its
stranded passengers until they have reached their final destination, even if
the delay was caused by force majeure – NO, but JAL is not completely
absolved of liability.
a. The Mt. Pinatubo eruption prevented JAL from proceeding to Manila
on schedule, and the event can be considered force majeure; their
delayed arrival was not imputable to JAL.
b. Respondents: While JAL cannot be held responsible for their delay, it
was nevertheless liable for their living expenses during their
unexpected stay in Narita since airlines have the obligation to ensure
the comfort and convenience of its passengers.
c. Court
i. When a party is unable to fulfill his obligation because of
force majeure, the general rule is that he cannot be held
liable for damages for non-performance.
ii. When JAL was prevented from resuming its flight to Manila
due to the effects of the eruption, whatever losses or
damages in the form of hotel and meal expenses the stranded
passengers incurred cannot be charged to JAL.
iii. The predicament of the private respondents was not due to
the fault or negligence of JAL. But, JAL still had the duty to
arrange the respondents’ flight back to Manila.
1. However, it failed to look after the comfort and
convenience of its passengers when it made the
passengers arrange their flight back to Manila on
their own and after waiting in the airport for a whole
day.
2. Thus, JAL is not completely absolved of liability.
2. W/N the award of nominal damages was proper – YES
a. While JAL was no longer required to defray private respondents living
expenses during their stay in Narita on account of the fortuitous
event, JAL had the duty to make the necessary arrangements to
transport private respondents on the first available connecting flight
to Manila.
b. JAL reneged on its obligation to look after the comfort and
convenience of its passengers when it declassified private
respondents from transit passengers to new passengers as a result of
which private respondents were obliged to make the necessary
arrangements themselves for the next flight to Manila.
i. They were placed on the waiting list from June 20 to June 24
and were compelled to stay in the airport the whole day of
June 22, 1991 to assure themselves of a seat on an available
flight
ii. It was only at 8:00 p.m. of the aforesaid date that they were
advised that they could be accommodated in said flight which
flew at about 9:00 a.m. the next day.
c. We are not oblivious to the fact that the cancellation of JAL flights to
Manila from June 15 to June 21, 1991 caused considerable disruption
 in passenger booking and reservation. But this does not excuse JAL
from its obligation to make the necessary arrangements to transport
private respondents on its first available flight to Manila. It had a
contract to transport private respondents from the United States to
Manila as their final destination.
d. The award of nominal damages is in order. Nominal damages are
adjudicated in order that a right of a plaintiff, which has been violated
or invaded by the defendant, may be vindicated or recognized and not
for the purpose of indemnifying any loss suffered by him. The court
may award nominal damages in every obligation arising from any
source enumerated in Art. 11576, or in every case where any property
right has been invaded
Citytrust Banking Corp. v. IAC
GR No. 84281 (27 May 1994)
SUBJECT MATTER: Damages; Nominal Damages
CASE SUMMARY:
Herrero filed a complaint for damages against Citytrust alleging that she deposited
P31,500 with Citytrust. She issued postdated checks which were dishonored due
to insufficient funds. Apparently, Herrero deposited into the wrong account
because she wrote the wrong account number on the deposit slip. The CA, ruling
that Citytrust is not free of blame, awarded nominal and temperate damages to
Herrero. WON the award of nominal and temperate damages is correct, the SC
ruled that the two awards are incompatible and cannot be granted concurrently.
Thus, it deleted the award of temperate damages.
DOCTRINES:
Nominal damages and temperate or moderate are incompatible and cannot be
granted concurrently.
Nominal damages are given in order that a right of the plaintiff, which has been
violated or invaded by the defendant, may be vindicated or recognized, and not
for the purpose of indemnifying the plaintiff for any loss suffered by him.
6
Temperate or moderate damages, which are more than nominal but less than
compensatory damages, on the other hand, 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 reasonable certainty.
PARTIES:
Petitioner Citytrust Banking Corporation
Intermediate Appellate Court
Respondent
Emme Herrero, business woman
FACTS:
Emme Herrero filed a complaint for damages against petitioner Citytrust Banking
Corporation. She averred that she, a businesswoman, made regular deposits with
petitioner Citytrust starting September 1979.
She deposited P31,500.00, in cash, in order to amply cover six (6) postdated
checks she issued.
However, when the checks were presented for encashment upon maturity, all the
checks were dishonored due to insufficient funds.
Petitioner, in its answer, asserted that it was due to private respondent’s fault that
her checks were dishonored.
It averred that instead of stating her correct account number, i.e., 29000823, in
her deposit slip, she inaccurately wrote 2900823, missing one zero.
RTC - dismissed the complaint for lack of merit
CA - reversed the trial court’s decision; it held that even if Herrero omitted a ‘zero ’
in her account number, it is a fact that her name, Emme E. Herrero, was clearly
written on said deposit slip. Furthermore, the name is controlling in determining
in whose account the deposit is made or should be posted because it is not likely
to commit an error in one’s name than merely relying on 8-digit account number.
Hence, the bank is not free of blame. The teller should not have accepted
plaintiff’s deposit without correcting the account number on the deposit slip
which, obviously, was erroneous because, it contained only seven (7) digits
instead of eight (8). Second, the complete name of plaintiff depositor appears in
bold letters.
 - CA also cited Mundin v. Far East Bank &Trust Co. (1985):
To post a deposit in somebody else’s name despite the name of the
depositor clearly written on the deposit slip is indeed sheer negligence
which could have easily been avoided if defendant bank exercised due
diligence and circumspection in the acceptance and posting of plaintiff ’s
deposit.
- CA ordered defendant to pay plaintiff Herrero the ff:
nominal damages of P2,000.00
temperate and moderate damages of P5.000.00, and
attorney’s fees of P4,000.00
ISSUE/S:
WON the Citybank is liable to Herrero. (YES)
WON the award of temperate or moderate damages, along with
nominal damages correct. (NO)
Petitioner’s argument:
Citybank admits that it is its obligation to honor checks issued by private
respondent which are sufficiently funded, but, it contends that private
respondent has also the duty to use her account in accordance with the
rules of petitioner bank to which she has contractually acceded. Among
such rules, contained in its brochures governing current account deposits,
is the following printed provision:
“In making a deposit xxx kindly insure accuracy in filing said
deposit slip forms as we hold ourselves free of any liability for
loss due to an incorrect account number indicated in the deposit
slip although the name of the depositor is correctly written.”
HOLDING/RATIO
The SC agreed with CA ruling and reminded depository banks on their
fiduciary responsibility.
In Simex International (Manila), Inc. vs. Court of Appeals
“The point is that as a business affected with public interest and
because of the nature of its functions, the bank is under
obligation to treat the accounts of its depositors with meticulous
care, always having in mind the fiduciary nature of their
relationship.”
“The point is that as a business affected with public interest and
because of the nature of its functions, the bank is under
obligation to treat the accounts of its depositors with meticulous
care, always having in mind the fiduciary nature of their
relationship.”
Nonetheless, the SC ruled that it is wrong to award, along with nominal
damages, temperate or moderate damages. Thus, the SC deleted the
award of temperate or moderate damages.
The two awards are incompatible and cannot be granted concurrently.
Nominal damages are given in order that a right of the plaintiff, which
has been violated or invaded by the defendant, may be vindicated or
recognized, and not for the purpose of indemnifying the plaintiff for any
loss suffered by him (Art. 2221, New Civil Code).
Temperate or moderate damages, which are more than nominal but less
than compensatory damages, on the other hand, 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 reasonable
certainty (Art. 2224, New Civil Code).
In this case, the SC find need for vindicating the wrong done on private
respondent, and thus it accordingly agree with the Court of Appeals in
granting to her nominal damages but not in similarly awarding temperate
or moderate damages.
___________________________________________________________________
MUNSAYAC v DE LARA
G.R. No. L-21151|June 26, 1968
 Benedicta De Lara, a passenger on a jeepney owned and operated by
Lourdes Munsayac, filed an action for recovery of damages against the latter
in the CFI of Rizal
- She suffered injuries while riding as a passenger on said jeep
  CFI found the driver recklessly negligent because he drove at an excessive
speed, unmindful of the fact that the road was under repair, heedless of the
passengers' pleas that he go more slowly
 Ordered Munsayac to pay: P1000 as exemplary damages, and P500 as
attorney's fees
 CA affirmed the CFI ruling, quoting the lower court's justification of the
award
 Defendant admitted that the accident happened and that the
plaintiff's extensive injuries came as a result thereof
 Despite which the defendant failed, or even refused, to placate
the sufferings of plaintiff
 Thus, necessitating the filing of this action, which entitled
plaintiff to exemplary damages — to set an example to others
— and attorney's fees.
 Raising the case to the SC, by a petition for review on certiorari, Munsayac
argued that the act referred to in Art. 2232 must be one which is
coetaneous with, and characterizes the breach of contract on which the suit
is based
 NOT one which is SUBSEQUENT to the breach (i.e. her failure to
placate the sufferings of the plaintiff)
 No causal relation thereto
ISSUE: W/N De Lara is entitled to exemplary damages – NO
 Munsayac relied on Rotea v Halili, wherein the Court said:
 According to the rule adopted by many courts, a principal or master
can be held liable for exemplary or punitive damages based upon the
wrongful act of his agent or servant only where he participated in the
doing of such wrongful act or has previously authorized or
subsequently ratified it with full knowledge of the facts
 Reasons given for this rule are that
 Since damages are penal in character then the motive
authorizing their infliction will not be imputed by presumption
to the principal when the act is committed by an agent or
servant
 Since they are awarded not by way of compensation, but as a
warning to others, they can only be awarded against one who
has participated in the offense
o The principal therefore cannot be held liable for them
merely by reason of wanton, oppressive or malicious intent
on the part of the agent
 SC finds Munsayac's argument well-taken
 It is difficult to conceive how the defendant in a breach of contract
case could be held to have acted in a wanton, fraudulent, reckless,
oppressive or violent manner within the meaning of Article 2232 for
something he did or did not do after the breach, which had no causal
connection therewith
 The law does not contemplate a vicarious liability on his part:
 the breach is his as party to the contract only if he is to be held
liable at all for exemplary damages by reason of the wrongful
act of his agent, it must be shown that he had previously
authorized or knowingly ratified it thereafter
 The Court found that there was no evidence of previous authority or
subsequent ratification by Munsayac insofar as the recklessness of the
driver was concerned
 Mere statement that Munsayac failed or refused to placate the
suffering of De Lara was TOO TENUOUS a basis to warrant the
conclusion that Munsayac approved of the wrongful act of his servant
with full knowledge of the facts
 It is not enough to say that an example should be made, or corrective
measures employed, for the public good, especially in accident cases
where public carriers are involved
o For the causative negligence in such cases is personal to the
employees actually in charge of the vehicles = It is they who
should be made to pay this kind of damages by way of
example
 Unless by the demonstrated tolerance or approval of
the owners they themselves can be held at fault and
their fault is of the character described in Article 2232
of the Civil Code
 Otherwise there would be practically no difference
between their liability for exemplary damages and their
liability for compensatory damages
 Trial Court rendered an order in favor of the Spouses declaring that Mager
of Holiday Ticket is an agent of CAI and was in bad faith when she was less candid
and diligent in presenting to plaintiffs spouses their booking option. On appeal CA
reversed RTC’s decision, holding that CIA cannot be liable to be held liable for
Mager’s act in the absence of any proof that a principal-agent relationship existed
between them. Hence this petition for review.
Spouses Viloria vs. Continental Airlines
Issue: Whether or not Mager is an agent of CAI and CAI should be held liable for
GR No. 188288
her negligent act.
Facts: On or about July 21, 1997 and while in the United States, Fernando
Held: Holiday Travel is one of the agent of CAI. All the elements of agency exist.
purchased for himself and his wife, Lourdes, two (2) round trip airline tickets from
The first and second elements are present as CAI does not deny that it concluded
San Diego, California to Newark, New Jersey on board Continental Airlines.
an agreement with Holiday Travel, whereby Holiday Travel would enter into
Fernando purchased the tickets from a travel agency called “Holiday Travel ” and
contracts of carriage with third persons on CAI ’s behalf. The third element is also
was attended by Maragret Mager (Mager). According to Spouses Viloria, Fernando
present as it is undisputed that Holiday Travel merely acted in a representative
agreed to buy the said tickets after Mager informed them that there were no
capacity and it is CAI and not Holiday Travel who is bound by the contracts of
available seats at Amtrak.
carriage entered into by Holiday Travel on its behalf. The fourth element is also
Subsequently, Fernando requested to reschedule their flight to an earlier
present considering that CAI has not made any allegation that Holiday Travel
date but Mager informed him that flights to Newark was fully booked and offered
exceeded the authority that was granted to it. In fact, CAI consistently maintains
flight via Frontier Air but it was a higher fare so Fernando opted to request a
the validity of the contracts of carriage that Holiday Travel executed with Spouses
refund. Mager denied his request as the subject tickets are non-refundable and
Viloria and that Mager was not guilty of any fraudulent misrepresentation.
the only option that Continental Airlines can offer is the re-issuance of new tickets
Considering that Holiday Travel is CAI’s agent, does it necessarily follow
within one (1) year from the date the subject tickets were issued and
that CAI is liable for the fault or negligence of Holiday Travel ’s employees? If the
consequently reserved two seats with Frontier Air.
passenger’s cause of action against the airline company is premised on culpa
As he was having second thoughts on traveling via Frontier Air, Fernando
aquiliana or quasi-delict for a tort committed by the employee of the airline
went to the Greyhound Station where he saw an Amtrak station nearby and made
company’s agent, there must be an independent showing that the airline
inquiries. Amtrak told Fernando that there are seats available and he can travel on
company was at fault or negligent or has contributed to the negligence or
Amtrak anytime and any day he pleased so he purchased two tickets for
tortuous conduct committed by the employee of its agent. The mere fact that
Washington.
the employee of the airline company’ s agent has committed a tort is not
Upon returning to Philippines, Fernando sent a letter to CAI demanding a
sufficient to hold the airline company liable. There is no vinculum juris between
refund but was denied and was advised for re-issuance of ticket within two years
the airline company and its agent’s employees and the contractual relationship
from the date they were issued. Fernando availed of re-issuance of Lourdes ’ ticket
between the airline company and its agent does not operate to create a juridical
but was informed that it was non-transferable.
tie between the airline company and its agent’s employees. Article 2180 of the
Spouses Viloria filed a complaint against CAI praying for their refund,
Civil Code does not make the principal vicariously liable for the tort committed
moral and exemplary damages. They claim that the misrepresentation of Mager,
by its agent’ s employees and the principal-agency relationship per se does not
agent of CAI, lead him to avail the ticket and that CAI is liable for her
make the principal a party to such tort; hence, the need to prove the principal ’s
misrepresentation.
own fault or negligence.
 Spouses Viloria’s cause of action on the basis of Mager ’s alleged
fraudulent misrepresentation is clearly one of tort or quasi-delict, there being no
pre-existing contractual relationship between them. Therefore, it was incumbent
upon Spouses Viloria to prove that CAI was equally at fault. The records are
devoid of any evidence by which CAI’s alleged liability can be substantiated. A
person’ s vicarious liability is anchored on his possession of control, whether
absolute or limited, on the tortfeasor. Without such control, there is nothing
which could justify extending the liability to a person other than the one who
committed the tort. It is incumbent upon Spouses Viloria to prove that CAI
exercised control or supervision over Mager by preponderant evidence. The
existence of control or supervision cannot be presumed and CAI is under no
obligation to prove its denial or nugatory assertion. Therefore, without a modicum
of evidence that CAI exercised control over Holiday Travel ’s employees or that CAI
was equally at fault, no liability can be imposed on CAI for Mager ’s supposed
misrepresentation.
Wherefore, the instant petition is denied.