transpo cases i.pdf

8/20/2019 Transpo cases I.pdf

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G.R. No. 92288 February 9, 1993 BRITISH AIRWAYS, INC., Petitioner , vs. THE HON. COURT OF APPEALS, Twelfth Division, and FIRST INTERNATIONAL TRADING

AND GENERAL SERVICES, Respondents.Quasha, Asperilla, Ancheta, Peña & Nolasco for petitioner.

Monina P. Lee for private respondent.

NOCON, J.: This is a petition for review on certiorari to annul and set aside the decision dated November 15, 1989 of the Court of Appeals 1affirmingthe decision of the trial court 2in ordering petitioner British Airways, Inc. to pay private respondent First International Trading and GeneralServices actual damages, moral damages, corrective or exemplary damages, attorney's fees and the costs as well as the Resolutiondated February 15, 1990 3denying petitioner's Motion for Reconsideration in the appealed decision.It appears on record that on February 15, 1981, private respondent First International Trading and General Services Co., a duly licenseddomestic recruitment and placement agency, received a telex message from its principal ROLACO Engineering and Contracting Servicesin Jeddah, Saudi Arabia to recruit Filipino contract workers in behalf of said principal. 4cDuring the early part of March 1981, said principal paid to the Jeddah branch of petitioner British Airways, Inc. airfare tickets for 93contract workers with specific instruction to transport said workers to Jeddah on or before March 30, 1981.

As soon as petitioner received a prepaid ticket advice from its Jeddah branch to transport the 93 workers, private respondent wasimmediately informed by petitioner that its principal had forwarded 93 prepaid tickets. Thereafter, private respondent instructed its travelagent, ADB Travel and Tours. Inc., to book the 93 workers with petitioner but the latter failed to fly said workers, thereby compellingprivate respondent to borrow money in the amount of P304,416.00 in order to purchase airline tickets from the other airlines asevidenced by the cash vouchers (Exhibits "B", "C" and "C-1 to C-7") for the 93 workers it had recruited who must leave immediately sincethe visas of said workers are valid only for 45 days and the Bureau of Employment Services mandates that contract workers must besent to the job site within a period of 30 days.Sometime in the first week of June, 1981, private respondent was again informed by the petitioner that it had received a prepaid ticketadvice from its Jeddah branch for the transportation of 27 contract workers. Immediatety, private respondent instructed its travel agent tobook the 27 contract workers with the petitioner but the latter was only able to book and confirm 16 seats on its June 9, 1981 flight.However, on the date of the scheduled flight only 9 workers were able to board said flight while the remaining 7 workers were rebooked

to June 30, 1981 which bookings were again cancelled by the petitioner without any prior notice to either private respondent or theworkers. Thereafter, the 7 workers were rebooked to the July 4,1981 flight of petitioner with 6 more workers booked for said flight.Unfortunately, the confirmed bookings of the 13 workers were again cancelled and rebooked to July 7,1981.chanroblesvirtualawlibrarychanrobles virtual law libraryOn July 6, 1981, private respondent paid the travel tax of the said workers as required by the petitioner but when the receipt of the taxpayments was submitted, the latter informed private respondent that it can only confirm the seats of the 12 workers on its July 7, 1981flight. However, the confirmed seats of said workers were again cancelled without any prior notice either to the private respondent or said


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workers. The 12 workers were finally able to leave for Jeddah after private respondent had bought tickets from the otherairlines.chanroblesvirtualawlibrarychanrobles virtual law library

As a result of these incidents, private respondent sent a letter to petitioner demanding compensation for the damages it had incurred bythe latter's repeated failure to transport its contract workers despite confirmed bookings and payment of the corresponding traveltaxes.chanroblesvirtualawlibrarychanrobles virtual law libraryOn July 23, 1981, the counsel of private respondent sent another letter to the petitioner demanding the latter to pay the amount of

P350,000.00 representing damages and unrealized profit or income which was denied by thepetitioner.chanroblesvirtualawlibrarychanrobles virtual law libraryOn August 8, 1981, private respondent received a telex message from its principal cancelling the hiring of the remaining recruitedworkers due to the delay in transporting the workers to Jeddah. 5chanrobles virtual law libraryOn January 27, 1982, private respondent filed a complaint for damages against petitioner with the Regional Trial Court of Manila, Branch1 in Civil Case No. 82-4653.chanroblesvirtualawlibrarychanrobles virtual law libraryOn the other hand, petitioner, alleged in its Answer with counterclaims that it received a telex message from Jeddah on March 20, 1981advising that the principal of private respondent had prepaid the airfares of 100 persons to transport private respondent's contractworkers from Manila to Jeddah on or before March 30, 1981. However, due to the unavailability of space and limited time, petitioner hadto return to its sponsor in Jeddah the prepaid ticket advice consequently not even one of the alleged 93 contract workers were booked inany of its flights.chanroblesvirtualawlibrarychanrobles virtual law libraryOn June 5, 1981, petitioner received another prepaid ticket advice to transport 16 contract workers of private respondent to Jeddah butthe travel agent of the private respondent booked only 10 contract workers for petitioner's June 9, 1981 flight. However, only 9 contractworkers boarded the scheduled flight with 1 passenger not showing up as evidenced by the Philippine Airlines' passenger manifest forFlight BA-020 (Exhibit "7", "7-A", "7-B" and "7-C"). 6chanrobles virtual law libraryThereafter, private respondent's travel agent booked seats for 5 contract workers on petitioner's July 4, 1981 flight but said travel agentcancelled the booking of 2 passengers while the other 3 passengers did not show up on said flight.chanroblesvirtualawlibrarychanroblesvirtual law librarySometime in July 1981, the travel agent of the private respondent booked 7 more contract workers in addition to the previous 5 contractworkers who were not able to board the July 4, 1981 flight with the petitioner's July 7, 1981 flight which was accepted by petitionersubject to reconfirmation.chanroblesvirtualawlibrarychanrobles virtual law library

However on July 6, 1981, petitioner's computer system broke down which resulted to petitioner's failure to get a reconfirmation fromSaudi Arabia Airlines causing the automatic cancellation of the bookings of private respondent's 12 contract workers. In the morning ofJuly 7, 1981, the computer system of the petitioner was reinstalled and immediately petitioner tried to reinstate the bookings of the 12workers with either Gulf Air or Saudi Arabia Airlines but both airlines replied that no seat was available on that date and had to place the12 workers on the wait list. Said information was duly relayed to the private respondent and the 12 workers before the scheduledflight.chanroblesvirtualawlibrarychanrobles virtual law library

After due trial on or on August 27, 1985, the trial court rendered its decision, the dispositive portion of which reads as follows:


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WHEREFORE, in view of all the foregoing, this Court renders judgment:chanrobles virtual law library1. Ordering the defendant to pay the plaintiff actual damages in the sum of P308,016.00;chanrobles virtual law library2. Ordering defendant to pay moral damages to the plaintiff in the amount of P20,000.00;chanrobles virtual law library3. Ordering the defendant to pay the plaintiff P10,000.00 by way of corrective or exemplary damages;chanrobles virtual law library4. Ordering the defendant to pay the plaintiff 30% of its total claim for and as attorney's fees; andchanrobles virtual law library5. To pay the costs. 7chanrobles virtual law library

On March 13, 1986, petitioner appealed said decision to respondent appellate court after the trial court denied its Motion forReconsideration on February 28, 1986.chanroblesvirtualawlibrarychanrobles virtual law libraryOn November 15, 1989, respondent appellate court affirmed the decision of the trial court, the dispositive portion of which reads:WHEREFORE, the decision appealed from is hereby AFFIRMED with costs against the appellant. 8chanrobles virtual law libraryOn December 9, 1989, petitioner filed a Motion for Reconsideration which was also denied.chanroblesvirtualawlibrarychanrobles virtuallaw libraryHence, this petition.chanroblesvirtualawlibrarychanrobles virtual law libraryIt is the contention of petitioner that private respondent has no cause of action against it there being no perfected contract of carriageexisting between them as no ticket was ever issued to private respondent's contract workers and, therefore, the obligation of thepetitioner to transport said contract workers did not arise. Furthermore, private respondent's failure to attach any ticket in the complaintfurther proved that it was never a party to the alleged transaction.chanroblesvirtualawlibrarychanrobles virtual law libraryPetitioner's contention is untenable.chanroblesvirtualawlibrarychanrobles virtual law libraryPrivate respondent had a valid cause of action for damages against petitioner. A cause of action is an act or omission of one party inviolation of the legal right or rights of the other. 9Petitioner's repeated failures to transport private respondent's workers in its flight despiteconfirmed booking of said workers clearly constitutes breach of contract and bad faith on its part. In resolving petitioner's theory thatprivate respondent has no cause of action in the instant case, the appellate court correctly held that:In dealing with the contract of common carriage of passengers for purpose of accuracy, there are two (2) aspects of the same, namely:(a) the contract "to carry (at some future time)," which contract is consensual and is necessarily perfected by mere consent (See Article1356, Civil Code of the Philippines), and (b) the contract "of carriage" or "of common carriage" itself which should be considered as a realcontract for not until the carrier is actually used can the carrier be said to have already assumed the obligation of a carrier. (Paras, CivilCode Annotated, Vol. V, p. 429, Eleventh Ed.)chanrobles virtual law library

In the instant case, the contract "to carry" is the one involved which is consensual and is perfected by the mere consent of theparties.chanroblesvirtualawlibrarychanrobles virtual law libraryThere is no dispute as to the appellee's consent to the said contract "to carry" its contract workers from Manila to Jeddah. The appellant'sconsent thereto, on the other hand, was manifested by its acceptance of the PTA or prepaid ticket advice that ROLACO Engineering hasprepaid the airfares of the appellee's contract workers advising the appellant that it must transport the contract workers on or before theend of March, 1981 and the other batch in June, 1981.chanroblesvirtualawlibrarychanrobles virtual law library


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Even if a PTA is merely an advice from the sponsors that an airline is authorized to issue a ticket and thus no ticket was yet issued, thefact remains that the passage had already been paid for by the principal of the appellee, and the appellant had accepted such payment.The existence of this payment was never objected to nor questioned by the appellant in the lower court. Thus, the cause or considerationwhich is the fare paid for the passengers exists in this case.chanroblesvirtualawlibrarychanrobles virtual law libraryThe third essential requisite of a contract is an object certain. In this contract "to carry", such an object is the transport of the passengersfrom the place of departure to the place of destination as stated in the telex.chanroblesvirtualawlibrarychanrobles virtual law library

Accordingly, there could be no more pretensions as to the existence of an oral contract of carriage imposing reciprocal obligations onboth parties.chanroblesvirtualawlibrarychanrobles virtual law libraryIn the case of appellee, it has fully complied with the obligation, namely, the payment of the fare and its willingness for its contractworkers to leave for their place of destination.chanroblesvirtualawlibrarychanrobles virtual law libraryOn the other hand, the facts clearly show that appellant was remiss in its obligation to transport the contract workers on their flightdespite confirmation and bookings made by appellee's travelling agent.xxx xxx xxxchanrobles virtual law libraryBesides, appellant knew very well that time was of the essence as the prepaid ticket advice had specified the period of compliancetherewith, and with emphasis that it could only be used if the passengers fly on BA. Under the circumstances, the appellant should haverefused acceptance of the PTA from appellee's principal or to at least inform appellee that it could not accommodate the contract workers.xxx xxx xxxchanrobles virtual law libraryWhile there is no dispute that ROLACO Engineering advanced the payment for the airfares of the appellee's contract workers who wererecruited for ROLACO Engineering and the said contract workers were the intended passengers in the aircraft of the appellant, the saidcontract "to carry" also involved the appellee for as recruiter he had to see to it that the contract workers should be transported toROLACO Engineering in Jeddah thru the appellant's transportation. For that matter, the involvement of the appellee in the said contract"to carry" was well demonstrated whenthe appellant upon receiving the PTA immediately advised the appellee thereof. 10chanrobles virtual law libraryPetitioner also contends that the appellate court erred in awarding actual damages in the amount of P308,016.00 to private respondentsince all expenses had already been subsequently reimbursed by the latter's principal.chanroblesvirtualawlibrarychanrobles virtual lawlibraryIn awarding actual damages to private respondent, the appellate court held that the amount of P308,016.00 representing actual damages

refers to private respondent's second cause of action involving the expenses incurred by the latter which were not reimbursed byROLACO Engineering. However, in the Complaint 11filed by private respondent, it was alleged that private respondent suffered actualdamages in the amount of P308,016.00 representing the money it borrowed from friends and financiers which is P304,416.00 for the 93airline tickets and P3,600.00 for the travel tax of the 12 workers. It is clear therefore that the actual damages private respondent seeks torecover are the airline tickets and travel taxes it spent for its workers which were already reimbursed by its principal and not for any otherexpenses it had incurred in the process of recruiting said contract workers. Inasmuch as all expenses including the processing feesincurred by private respondent had already been paid for by the latter's principal on a staggered basis as admitted in open court by its


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managing director, Mrs. Bienvenida Brusellas. 12We do not find anymore justification in the appellate court's decision in granting actualdamages to private respondent.chanroblesvirtualawlibrarychanrobles virtual law libraryThus, while it may be true that private respondent was compelled to borrow money for the airfare tickets of its contract workers whenpetitioner failed to transport said workers, the reimbursements made by its principal to private respondent failed to support the latter'sclaim that it suffered actual damages as a result of petitioner's failure to transport said workers. It is undisputed that private respondenthad consistently admitted that its principal had reimbursed all its expenses.chanroblesvirtualawlibrarychanrobles virtual law library

Article 2199 of the Civil Code provides that:Except as provided by law or by stipulations, one is entitled to an adequate compensation only for such pecuniary loss suffered by him ashe has duly proved. Such compensation is referred to as actual or compensatory damages.Furthermore, actual or compensatory damages cannot be presumed, but must be duly proved, and proved with reasonable degree ofcertainty. A court cannot rely on speculation, conjecture or guesswork as to the fact and amount of damages, but must depend uponcompetent proof that they have suffered and on evidence of the actual amount thereof. 13chanrobles virtual law libraryHowever, private respondent is entitled to an award of moral and exemplary damages for the injury suffered as a result of petitioner'sfailure to transport the former's workers because of the latter's patent bad faith in the performance of its obligation. As correctly pointedout by the appellate court:

As evidence had proved, there was complete failure on the part of the appellant to transport the 93 contract workers of the appellee on orbefore March 30, 1981 despite receipt of the payment for their airfares, and acceptance of the same by the appellant, with specificinstructions from the appellee's principal to transport the contract workers on or before March 30, 1981. No previous notice was everregistered by the appellant that it could not comply with the same. And then followed the detestable act of appellant in unilaterallycancelling, booking and rebooking unreasonably the flight of appellee's contract workers in June to July, 1981 without prior notice. And allof these actuations of the appellant indeed constitute malice and evident bad faith which had caused damage and besmirched thereputation and business image of the appellee. 14chanrobles virtual law library

As to the alleged damages suffered by the petitioner as stated in its counterclaims, the record shows that no claim for said damages wasever made by the petitioner immediately after their alleged occurrence therefore said counterclaims were mere afterthoughts whenprivate respondent filed the present case.chanroblesvirtualawlibrarychanrobles virtual law libraryWHEREFORE, the assailed decision is hereby AFFIRMED with the MODIFICATION that the award of actual damages be deleted fromsaid decision.chanroblesvirtualawlibrarychanrobles virtual law library

SO ORDERED.


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[G.R. No. 114061. August 3, 1994.]

KOREAN AIRLINES CO., LTD., Petitioner , v. COURT OF APPEALS and JUANITO C. LAPUZ, Respondents.

[G.R. No. 113842. August 3, 1994.]

JUANITO C. LAPUZ, Petitioner , v. COURT OF APPEALS and KOREAN AIRLINES CO., LTD., Respondents.

1. REMEDIAL LAW; EVIDENCE; CREDIBILITY; FINDINGS OF FACTS OF THE COURT OF APPEALS, GENERALLY BINDING ON APPEAL. — It is evident that the issues raised in these petitions relate mainly to the correctness of the factual findings of the Court of Appeals and the award of damages. The Court has consistently affirmed that the findings of fact of the Court of Appeals and the otherlower courts are as a rule binding upon it, subject to certain exceptions. As nothing in the record indicates any of such exceptions, thefactual conclusions of the appellate court must be affirmed.

2. CIVIL LAW; CONTRACT OF CARRIAGE; BREACH THEREOF MANIFEST WHERE CONFIRMED PASSENGER WAS NOT ALLOWED TO BOARD THE AIRLINE; CASE AT BAR. — The status of Lapuz as standby passenger was changed to that of a confirmedpassenger when his name was entered in the passenger manifest of KAL for its Flight No. KE 903. His clearance through immigrationand customs clearly shows that he had indeed been confirmed as a passenger of KAL in that flight. KAL thus committed a breach of thecontract of carriage between them when it failed to bring Lapuz to his destination. The evidence presented by Lapuz shows that he hadindeed checked in at the departure counter, passed through customs and immigration, boarded the shuttle bus and proceeded to theramp of KAL’s aircraft. In fact, his baggage had already been loaded in KAL’s aircraft, to be flown with him to Jeddah. The contract tocarriage between him and KAL had already been perfected when he was summarily and insolently prevented from boarding the aircraft.

3. ID.; MORAL DAMAGES; PASSENGER; SUBJECTED TO DISCOURTEOUS CONDUCT BY AIRLINE OFFICER ENTITLEDTHERETO. — This Court has held that a contract to transport passengers is different in kind and degree from any other contractualrelation. The business of the carrier is mainly with the traveling public. It invites people to avail themselves of the comforts and

advantages it offers. The contract of air carriage generates a relation attended with a public duty. Passengers have the right to be treatedby the carrier’s employees with kindness, respect, courtesy and due consideration. They are entitled to be protected against personalmisconduct, injurious language, indignities and abuses from such employees So it is that any discourteous conduct on the part of theseemployees toward a passenger gives the latter an action for damages against the carrier. The breach of contract was aggravated in thiscase when, instead of courteously informing Lapuz of his being a "wait-listed" passenger, a KAL officer rudely shouted "Down! Down!"while pointing at him, thus causing him embarrassment and public humiliation.


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4. ID.; ID.; DEPEND UPON THE DISCRETION OF THE COURT; AWARD OF P100,000 AS MORAL AND EXEMPLARY DAMAGES IN ABREACH OF CONTRACT, REASONABLE AND REALISTIC; CASE AT BAR. —The well-entrenched principle is that moral damagesdepend upon the discretion of the court based on the circumstances of each case. This discretion is limited by the principle that the"amount awarded should not be palpably and scandalously excessive" as to indicate that it was the result of prejudice or corruption onthe part of the trial court. Damages are not intended to enrich the complainant at the expense of the defendant. They are awarded only toalleviate the moral suffering that the injured party had undergone by reason of the defendant’s culpable action. There is no hard-and-fast

rule in the determination of what would be a fair amount damages since each case must be governed by its own peculiar facts. A reviewof the record of this case shows that the injury suffered by Lapuz is not so serious or extensive as to warrant an award of P1.5 million.The assessment of P100,000 as moral and exemplary damages in his favor is, in our view, reasonable and realistic.

5. REMEDIAL LAW; COURTS; CLOTHED WITH AMPLE AUTHORITY TO REVIEW MATTERS EVEN IF THEY ARE NOT ASSIGNED ASERROS IN THEIR APPEAL; PROPRIETY OF AWARD OF ACTUAL DAMAGES, JUSTIFIED. — Lapuz likewise claims that therespondent court could not rule upon the propriety of the award of actual damages because it had not been assigned as an error by KAL.Not so. The rule is that only errors specifically assigned and properly argued in the brief will be considered except errors affecting

jurisdiction over the subject matter and plain as well as clerical errors. But this is not without qualification for, as the Court held in Vda. deJavellana v. Court of Appeals: . . . [T]he Court is clothed with ample authority to review matters, even if they are not assigned as errors intheir appeal, if it finds that their consideration is necessary in arriving at a just decision of the case. A similar pronouncement was made inBaquiran v. Court of Appeals in this wise: Issues, though not specifically raised in the pleading in the appellate court, may, in the interestof justice, be properly considered by said court in deciding a case, if they are questions raised in the trial court and are matters of recordhaving some bearing on the issue submitted which the parties failed to raise or the lower court ignored. The Court of Appeals wastherefore justified in decreasing the award of actual damages even if the issue was not assigned as an error by KAL Consideration of thisquestion was necessary for the just and complete resolution of the present case. Furthermore, there was enough evidence to warrant thereduction of the original award,

6. ID.; ACTIONS; JUDGMENT; LEGAL INTEREST ADJUDGED IN FAVOR OF PARTY ACCRUES FROM THE DATE OF RENDITION OFJUDGMENT. — We disagree with the respondent court, however, on the date when the legal interest should commence to run. The ruleis that the legal interest of six percent (6%) on the amounts adjudged in favor of Lapuz should resume from the time of rendition of the

trial court’s decision instead of November 28, 1980, the date of the filing of the complaint.

D E C I S I O N

CRUZ, J.:


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Sometime in 1980, Juanito C. Lapuz, an automotive electrician, was contracted for employment is Jeddah, Saudi Arabia, for a period ofone year through Pan Pacific Overseas Recruiting Services, Inc. Lapuz was supposed to leave on November 8, 1980, via Korean

Airlines. Initially, he was "waitlisted," which meant that he could only be accommodated if any of the confirmed passengers failed to showup at the airport before departure. When two of such passengers did not appear, Lapuz and another person by the name of Perico were

given the two unclaimed seats.chanroblesvirtualawlibrary

According to Lapuz, he was allowed to check in with one suitcase and one shoulder bag at the check-in counter of KAL. He passedthrough the customs and immigration sections for routine check-up and was cleared for departure as Passenger No. 157 of KAL FlightNo. KE 903. Together with the other passengers, he rode in the shuttle bus and proceeded to the ramp of the KAL aircraft for boarding.However, when he was at the third or fourth rung of the stairs, a KAL officer pointed to him and shouted "Down! Down!" He was thusbarred from taking the flight. When he later asked for another booking, his ticket was canceled by KAL. Consequently, he was unable toreport for his work in Saudi Arabia within the stipulated 2-week period and so lost his employment.

KAL, on the other hand, alleged that on November 8, 1980, Pan Pacific Recruiting Services Inc. coordinated with KAL for the departureof 30 contract workers, of whom only 21 were confirmed and 9 were wait-listed passengers. The agent of Pan Pacific, Jimmie Joseph,after being informed that there was a possibility of having one or two seats becoming available, gave priority to Perico, who was one ofthe supervisors of the hiring company in Saudi Arabia. The other seat was won through lottery by Lapuz. However, only one seat becameavailable and so, pursuant to the earlier agreement that Perico was to be given priority, he alone was allowed to board.chanrobles lawlibrary : red

After trial, the Regional Trial Court of Manila, Branch 30, 1 adjudged KAL liable for damages, disposing as follows:chanrob1es virtual 1awlibrary

WHEREFORE, in view of the foregoing consideration, judgment is hereby rendered sentencing the defendant Korean Air Lines to payplaintiff Juanito C. Lapuz the following:chanrob1es virtual 1aw library

1. The amount of TWO HUNDRED SEVENTY-TWO THOUSAND ONE HUNDRED SIXTY (P272,160.00) PESOS as actual/compensatory damages, will legal interest thereon from the date of the filing of the complaint until fully paid.

2. The sum of TWENTY-FIVE THOUSAND (P25,000.00) PESOS as and for attorney’s fees; and

3. The costs of suit.


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The case is hereby dismissed with respect to defendant Pan Pacific Overseas Recruiting Services, Inc.

The counterclaims and cross-claim of defendant Korean Air Lines Co., Ltd. are likewise dismissed.

On appeal, this decision was modified by the Court of Appeals 2 as follows:chanrob1es virtual 1aw library

WHEREFORE, in view of all the foregoing, the appealed judgment is hereby AFFIRMED with the following modifications: the amount ofactual damages and compensatory damages is reduced to P60,000.00 and defendant-appellant is hereby ordered to pay plaintiff-appellant the sum of One Hundred Thousand Pesos (P100,000.00) by way of moral and exemplary damages, at 6% interest per annumfrom the date of filing of the Complaint until fully paid.

KAL and Lapuz filed their respective motions for reconsideration, which were both denied for lack of merit. Hence, the present petitionsfor review which have been consolidated because of the identity of the parties and the similarity of the issues.cralawnad

In G.R. No. 114061, KAL assails the decision of the appellant court on the following grounds:chanrob1es virtual 1aw library

1. That the Court of Appeals erred in concluding that petitioner committed a breach of contract of carriage notwithstanding lack of proper,competent and sufficient evidence of the existence of such contract.

2. That the Court of Appeals erred in not according the proper evidentiary weight to some evidence presented and the fact that privaterespondent did not have any boarding pass to prove that he was allowed to board and to prove that this airline ticket was confirmed.

3. That the Court of Appeals erred in concluding that the standby passenger status of private respondent Lapuz was changed to aconfirmed status when his name was entered into the passenger manifest.

4. That the Court of Appeals abused its discretion in awarding moral and exemplary damages in the amount of P100,000.00 in favor of

private respondent notwithstanding its lack of basis and private respondent did not state such amount in his complaint nor had privaterespondent proven the said damages.cralawnad

5. That the Court of Appeals erred in dismissing the counterclaims.

6. That the Court of Appeals erred in dismissing the counterclaim of petitioner against Pan Pacific.


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7. That the Court of Appeals erred in ruling that the 6% per annum legal interest on the judgment shall be computed from the filing of thecomplaint.

In G.R. No. 113842, Lapuz seeks: (a) the setting aside of the decision of the Court of Appeals insofar as it modifies the award ofdamages; b) actual and compensatory damages in the sum equivalent to 5 years’ loss of earnings based on the petitioner’s month salaryof 1,600 Saudi rials at the current conversion rate plus the cost of baggage and personal belongings worth P2,000 and the service fee of

P3,000 paid to the recruiting agency, all with legal interest from the filing of the complaint until fully paid; c) moral damages of not lessthan P1 million and exemplary damages of not less than P500,000.00, both with interest at 6% per annum from the filing of the complaint;and d) attorney’s fees in the sum equivalent to 30% of the award of damages.

It is evident that the issues raised in these petitions relate mainly to the correctness of the factual findings of the Court of Appeals and theaward of damages. The Court has consistently affirmed that the findings of fact of the Court of Appeals and the other lower courts are asa rule binding upon it, subject to certain exceptions. As nothing in the record indicates any of such exceptions, the factual conclusions ofthe appellate court must be affirmed.

The status of Lapuz as standby passenger was changed to that of a confirmed passenger when his name was entered in the passengermanifest of KAL for its Flight No. KE 903. His clearance through immigration and customs clearly shows that he had indeed beenconfirmed as a passenger of KAL in that flight. KAL thus committed a breach of the contract of carriage between them when it failed tobring Lapuz to his destination.chanrobles.com:cralaw:red

This Court has held that a contract to transport passengers is different in kind and degree from any other contractual relation. 3 Thebusiness of the carrier is mainly with the traveling public. It invites people to avail themselves of the comforts and advantages it offers.The contract of air carriage generates a relation attended with a public duty. Passengers have the right to be treated by the carrier’semployees with kindness, respect, courtesy and due consideration. They are entitled to be protected against personal misconduct,injurious language, indignities and abuses from such employees. 4 So it is that any discourteous conduct on the part of these employeestoward a passenger gives the latter an action for damages against the carrier.

The breach of contract was aggravated in this case when, instead of courteously informing Lapuz of his being a "wait-listed" passenger, aKAL officer rudely shouted "Down! Down!" while pointing at him, thus causing him embarrassment and public humiliation.

KAL argues that "the evidence of confirmation of a chance passenger status is not through the entry of the name of a chance passengerin the passenger manifest nor the clearance from the Commission on Immigration and Deportation, because they are merely means offacilitating the boarding of the chance passenger in case his status is confirmed." We are not persuaded.


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The evidence presented by Lapuz shows that he had indeed checked in at the departure counter, passed through customs andimmigration, boarded the shuttle bus and proceeded to the ramp of KAL’s aircraft. In fact, his baggage had already been loaded in KAL’saircraft, to be flown with him to Jeddah. The contract to carriage between him and KAL had already been perfected when he wassummarily and insolently prevented from boarding the aircraft.chanrobles.com:cralaw:red

KAL’s allegation that the respondent court abused its discretion in awarding moral and exemplary damages is also not tenable.

The Court of Appeals granted moral and exemplary damages because:chanrob1es virtual 1aw library

The findings of the court a quo that the defendant-appellant has committed breach of contract of carriage in bad faith and in wanton,disregard of plaintiff-appellant’s rights as passenger laid the basis and justification of an award for moral damages.

x x x

In the instant case, we find that defendant-appellant Korean Air Lines acted in a wanton, fraudulent, reckless, oppressive or malevolentmanner when it "bumped off" plaintiff-appellant on November 8, 1980, and in addition treated him rudely and arrogantly as a "patay

gutom na contract worker fighting Korean Air Lines," which clearly malice and bad faith, thus entitling plaintiff-appellant to moraldamages.

x x x

Considering that the plaintiff-appellant’s entitlement to moral damages has been fully established by oral and documentary evidence,exemplary damages may be awarded. In fact, exemplary damages may be awarded, even though not so expressly pleaded in thecomplaint (Kapoe v. Masa, 134 SCRA 231). By the same token, to provide an example for the public good, an award of exemplarydamages is also proper (Armovit v. Court of Appeals, supra).

On the other hand, Lapuz’s claim that the award of P100,000.00 as moral and exemplary damages is inadequate is not acceptable either.His prayer for moral damages of not less than P1 million and exemplary of not less than P500,000.00 is overblown.chanrobles virtuallawlibrary

The well-entrenched principle is that moral damages depend upon the discretion of the court based on the circumstances of each case. 5This discretion is limited by the principle that the "amount awarded should not be palpably and scandalously excessive" as to indicate


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that it was the result of prejudice or corruption on the part of the trial court. 6 Damages are not intended to enrich the complainant at theexpense of the defendant. They are awarded only to alleviate the moral suffering that the injured party had undergone by reason of thedefendant’s culpable action. 7 There is no hard-and-fast rule in the determination of what would be a fair amount damages since eachcase must be governed by its own peculiar facts.

A review of the record of this case shows that the injury suffered by Lapuz is not so serious or extensive as to warrant an award of P1.5

million. The assessment of P100,000 as moral and exemplary damages in his favor is, in our view, reasonable and realistic.

Lapuz likewise claims that the respondent court could not rule upon the propriety of the award of actual damages because it had notbeen assigned as an error by KAL. Not so. The rule is that only errors specifically assigned and properly argued in the brief will beconsidered except errors affecting jurisdiction over the subject matter and plain as well as clerical errors. 8 But this is not withoutqualification for, as the Court held in Vda. de Javellana v. Court of Appeals: 9

. . . [T]he Court is clothed with ample authority to review matters, even if they are not assigned as errors in their appeal, if it finds thattheir consideration is necessary in arriving at a just decision of the case.

A similar pronouncement was made in Baquiran v. Court of Appeals 10 in this wise:chanrobles law library : red

Issues, though not specifically raised in the pleading in the appellate court, may, in the interest of justice, be properly considered by saidcourt in deciding a case, if they are questions raised in the trial court and are matters of record having some bearing on the issuesubmitted which the parties failed to raise or the lower court ignored.

The Court of Appeals was therefore justified in decreasing the award of actual damages even if the issue was not assigned as an error byKAL Consideration of this question was necessary for the just and complete resolution of the present case. Furthermore, there wasenough evidence to warrant the reduction of the original award, as the challenged decision correctly observed:chanrob1es virtual 1awlibrary

A perusal of the plaintiff-appellant’s contract of employment shows that the effectivity of the contract is for only one year, renewable everyyear for five years. Although plaintiff-appellant intends to renew his contract, such renewal will still be subject to his foreign employer.Plaintiff-appellant had not yet started working with his foreign employer, hence, there can be no basis as to whether his contract will berenewed by his foreign employer or not. Thus, the damages representing the loss of earnings of plaintiff-appellant in the renewal of thecontract of employment is at most speculative. Damages may not be awarded on the basis of speculation or conjecture (Gachalian v.Delim, 203 SCRA 126). Hence, Defendant-Appellant ’s liability is limited to the one year contract only. Plaintiff-appellant is, therefore,


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entitled only to his lost earnings for one year, i.e., P60,000.00, which is 1/5 of P300,000.00, the total amount of actual damages,representing lost earnings for five years prayed for in the Complaint.

Plaintiff-appellant’s contention that in computing his lost earnings, the current rate of Saudi Rial to the Philippine Peso at the time ofpayment should be used, is untenable, considering that in his Complaint, plaintiff-appellant has quantified in Philippine Pesos his lostearnings for five years.chanrobles virtualawlibrary chanrobles.com:chanrobles.com.ph

We disagree with the respondent court, however, on the date when the legal interest should commence to run. The rule is that the legalinterest of six percent (6%) on the amounts adjudged in favor of Lapuz should resume from the time of rendition of the trial court’sdecision instead of November 28, 1980, the date of the filing of the complaint.

On this matter, the Court has held:chanrob1es virtual 1aw library

If suit were for payment of a definite sum of money, the contention might be tenable. However, if it is for damages, unliquidated and notknown until definitely ascertained, assessed and determined by the courts after proof, interest should be from the date of the decision. 11

x x x

The obligation to pay interest on a sum of filed in a judgment exists from the date of the sentence, when so declared; for until the netamount of the debtor’s liability has been determined, he cannot he considered delinquent in the fulfillment of his obligation to pay the debtwith interest thereon. 12

Finally, we find that the respondent court did not err in sustaining the trial court’s dismissal of KAL’s counterclaim against Pan PacificOverseas Recruiting Recruiting Services Inc., whose responsibility ended with the confirmation by KAL of Lapuz as its passenger in itsFlight No. 903.chanrobles.com.ph : virtual law library

This is still another case of the maltreatment of our overseas contract workers, this time by the airline supposed to bring the passenger ofhis foreign assignment. Our OCWs sacrifice much in seeking employment abroad, where they are deprived of the company of their lovedones, the direct protection of our laws, and the comfort of our own native culture and way of life. This Court shall exert every effort tovindicate their rights when they are abused and shall accord them the commensurate reparation of their injuries consistent with theirdignity and worth as members of the working class.


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WHEREFORE, the appealed judgment is AFFIRMED, but with the modification that the legal interest on the damages awarded to privaterespondent should commence from the date of the decision of the trial court on November 14, 1990. The parties shall bear their owncosts.

SO ORDERED.


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G.R. No. L-18965 October 30, 1964 COMPAÑIA MARITIMA, Petitioner , vs. INSURANCE COMPANY OF NORTH AMERICA, Respondent .

Rafael Dinglasan for petitioner.Ozaeta Gibbs & Ozaeta for respondent.

BAUTISTA ANGELO, J.: Sometime in October, 1952, Macleod and Company of the Phil ippines contracted by telephone the services of the Compañia Maritima, a

shipping corporation, for the shipment of 2,645 bales of hemp from the former's Sasa private pier at Davao City to Manila and for theirsubsequent transhipment to Boston, Massachusetts, U.S.A. on board the S.S. Steel Navigator. This oral contract was later on confirmedby a formal and written booking issued by Macleod's branch office in Sasa and handcarried to Compañia Maritima's branch office inDavao in compliance with which the latter sent to Macleod's private wharf LCT Nos. 1023 and 1025 on which the loading of the hempwas completed on October 29, 1952. These two lighters were manned each by a patron and an assistant patron. The patrons of bothbarges issued the corresponding carrier's receipts and that issued by the patron of Barge No. 1025 reads in part:Received in behalf of S.S. Bowline Knot in good order and condition from MACLEOD AND COMPANY OF PHILIPPINES, Sasa Davao,for transhipment at Manila onto S.S. Steel Navigator.chanroblesvirtualawlibrarychanrobles virtual law libraryFINAL DESTINATION: Boston.Thereafter, the two loaded barges left Macleod's wharf and proceeded to and moored at the government's marginal wharf in the sameplace to await the arrival of the S.S. Bowline Knot belonging to Compañia Maritima on which the hemp was to be loaded. During the night

of October 29, 1952, or at the early hours of October 30, LCT No. 1025 sank, resulting in the damage or loss of 1,162 bales of hemploaded therein. On October 30, 1952, Macleod promptly notified the carrier's main office in Manila and its branch in Davao advising it ofits liability. The damaged hemp was brought to Odell Plantation in Madaum, Davao, for cleaning, washing, reconditioning, and redrying.During the period from November 1-15, 1952, the carrier's trucks and lighters hauled from Odell to Macleod at Sasa a total of 2,197.75piculs of the reconditioned hemp out of the original cargo of 1,162 bales weighing 2,324 piculs which had a total value of 116,835.00.

After reclassification, the value of the reconditioned hemp was reduced to P84,887.28, or a loss in value of P31,947.72. Adding to thislast amount the sum of P8,863.30 representing Macleod's expenses in checking, grading, rebating, and other fees for washing, cleaningand redrying in the amount of P19.610.00, the total loss adds up to P60,421.02.chanroblesvirtualawlibrarychanrobles virtual law library

All abaca shipments of Macleod, including the 1,162 bales loaded on the carrier's LCT No. 1025, were insured with the InsuranceCompany of North America against all losses and damages. In due time, Macleod filed a claim for the loss it suffered as above stated

with said insurance company, and after the same had been processed, the sum of P64,018.55 was paid, which was noted down in adocument which aside from being a receipt of the amount paid, was a subrogation agreement between Macleod and the insurancecompany wherein the former assigned to the latter its rights over the insured and damaged cargo. Having failed to recover from thecarrier the sum of P60,421.02, which is the only amount supported by receipts, the insurance company instituted the present action onOctober 28, 1953. After trial, the court a quo rendered judgment ordering the carrier to pay the insurance company the sum ofP60,421.02, with legal interest thereon from the date of the filing of the complaint until fully paid, and the costs. This judgment was


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affirmed by the Court of Appeals on December 14, 1960. Hence, this petition for review.chanroblesvirtualawlibrarychanrobles virtual lawlibraryThe issues posed before us are: (1) Was there a contract of carriage between the carrier and the shipper even if the loss occurred whenthe hemp was loaded on a barge owned by the carrier which was loaded free of charge and was not actually loaded on the S.S. BowlineKnot which would carry the hemp to Manila and no bill of lading was issued therefore?; (2) Was the damage caused to the cargo or thesinking of the barge where it was loaded due to a fortuitous event, storm or natural disaster that would exempt the carrier from liability?;

(3) Can respondent insurance company sue the carrier under its insurance contract as assignee of Macleod in spite of the fact that theliability of the carrier as insurer is not recognized in this jurisdiction?; (4) Has the Court of Appeals erred in regarding Exhibit NNN-1 as animplied admission by the carrier of the correctness and sufficiency of the shipper's statement of accounts contrary to the burden of proofrule?; and (5) Can the insurance company maintain this suit without proof of its personality to do so?chanrobles virtual law library1. This issue should be answered in the affirmative. As found by the Court of Appeals, Macleod and Company contracted by telephonethe services of petitioner to ship the hemp in question from the former's private pier at Sasa, Davao City, to Manila, to be subsequentlytranshipped to Boston, Massachusetts, U.S.A., which oral contract was later confirmed by a formal and written booking issued by theshipper's branch office, Davao City, in virtue of which the carrier sent two of its lighters to undertake the service. It also appears that thepatrons of said lighters were employees of the carrier with due authority to undertake the transportation and to sign the documents thatmay be necessary therefor so much so that the patron of LCT No. 1025 signed the receipt covering the cargo of hemp loaded therein asfollows: .

Received in behalf of S.S. Bowline Knot in good order and condition from MACLEOD AND COMPANY OF PHILIPPINES, Sasa Davao,for transhipment at Manila onto S.S. Steel Navigator.chanroblesvirtualawlibrarychanrobles virtual law libraryFINAL DESTINATION: Boston.The fact that the carrier sent its lighters free of charge to take the hemp from Macleod's wharf at Sasa preparatory to its loading onto theship Bowline Knot does not in any way impair the contract of carriage already entered into between the carrier and the shipper, for thatpreparatory step is but part and parcel of said contract of carriage. The lighters were merely employed as the first step of the voyage, butonce that step was taken and the hemp delivered to the carrier's employees, the rights and obligations of the parties attached therebysubjecting them to the principles and usages of the maritime law. In other words, here we have a complete contract of carriage theconsummation of which has already begun: the shipper delivering the cargo to the carrier, and the latter taking possession thereof byplacing it on a lighter manned by its authorized employees, under which Macleod became entitled to the privilege secured to him by law

for its safe transportation and delivery, and the carrier to the full payment of its freight upon completion of the voyage.The receipt of goods by the carrier has been said to lie at the foundation of the contract to carry and deliver, and if actually no goods arereceived there can be no such contract. The liability and responsibility of the carrier under a contract for the carriage of goods commenceon their actual delivery to, or receipt by , the carrier or an authorized agent . ... and delivery to a lighter in charge of a vessel for shipmenton the vessel, where it is the custom to deliver in that way, is a good delivery and binds the vessel receiving the freight, the liabilitycommencing at the time of delivery to the lighter. ... and, similarly, where there is a contract to carry goods from one port to another, andthey cannot be loaded directly on the vessel and lighters are sent by the vessel to bring the goods to it, the lighters are for the time its


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substitutes, so that the bill of landing is applicable to the goods as soon as they are placed on the lighters . (80 C.J.S., p. 901, emphasissupplied)chanrobles virtual law library... The test as to whether the relation of shipper and carrier had been established is, Had the control and possession of the cotton beencompletely surrendered by the shipper to the railroad company? Whenever the control and possession of goods passes to the carrier andnothing remains to be done by the shipper, then it can be said with certainty that the relation of shipper and carrier has been established.Railroad Co. v. Murphy, 60 Ark. 333, 30 S.W. 419, 46 A. St. Rep. 202; Pine Bluff & Arkansas River Ry. v. MaKenzie, 74 Ark. 100, 86 S.W.

834; Matthews & Hood v. St. L., I.M. & S.R. Co., 123 Ark. 365, 185 S.W. 461, L.R.A. 1916E, 1194. (W.F. Bogart & Co., et al. v. Wade, etal., 200 S.W. 148).The claim that there can be no contract of affreightment because the hemp was not actually loaded on the ship that was to take it fromDavao City to Manila is of no moment, for, as already stated, the delivery of the hemp to the carrier's lighter is in line with the contract. Infact, the receipt signed by the patron of the lighter that carried the hemp stated that he was receiving the cargo "in behalf of S.S. BowlineKnot in good order and condition." On the other hand, the authorities are to the effect that a bill of lading is not indispensable for thecreation of a contract of carriage.Bill of lading not indispensable to contract of carriage. - As to the issuance of a bill of lading, although article 350 of the Code ofCommerce provides that "the shipper as well as the carrier of merchandise or goods may mutua-lly demand that a bill of lading is notindispensable. As regards the form of the contract of carriage it can be said that provided that there is a meeting of the minds and fromsuch meeting arise rights and obligations, there should be no limitations as to form." The bill of lading is not essential to the contract,

although it may become obligatory by reason of the regulations of railroad companies, or as a condition imposed in the contract by theagreement of the parties themselves. The bill of lading is juridically a documentary proof of the stipulations and conditions agreed uponby both parties. (Del Viso, pp. 314-315; Robles vs. Santos, 44 O.G. 2268). In other words, the Code does not demand, as necessaryrequisite in the contract of transportation, the delivery of the bill of lading to the shipper, but gives right to both the carrier and the shipperto mutually demand of each other the delivery of said bill. (Sp. Sup. Ct. Decision, May 6, 1895). (Martin, Philippine Commercial Laws,Vol. II, Revised Edition, pp. 12-13)chanrobles virtual law libraryThe liability of the carrier as common carrier begins with the actual delivery of the goods for transportation, and not merely with the formalexecution of a receipt or bill of lading; the issuance of a bill of lading is not necessary to complete delivery and acceptance. Even where itis provided by statute that liability commences with the issuance of the bill of lading, actual delivery and acceptance are sufficient to bindthe carrier. (13 C.J.S., p. 288)

2. Petitioner disclaims responsibility for the damage of the cargo in question shielding itself behind the claim of force majeure or stormwhich occurred on the night of October 29, 1952. But the evidence fails to bear this out.chanroblesvirtualawlibrarychanrobles virtual lawlibraryRather, it shows that the mishap that caused the damage or loss was due, not to force majeure, but to lack of adequate precautions ormeasures taken by the carrier to prevent the loss as may be inferred from the following findings of the Court of Appeals:

Aside from the fact that, as admitted by appellant's own witness, the ill-fated barge had cracks on its bottom (pp. 18-19, t.s.n., Sept. 13,1959) which admitted sea water in the same manner as rain entered "thru tank man-holes", according to the patron of LCT No. 1023


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(exh. JJJ-4) - conclusively showing that the barge was not seaworthy - it should be noted that on the night of the nautical accident therewas no storm, flood, or other natural disaster or calamity. Certainly, winds of 11 miles per hour, although stronger than the average 4.6miles per hour then prevailing in Davao on October 29, 1952 (exh. 5), cannot be classified as storm. For according to Beaufort's windscale, a storm has wind velocities of from 64 to 75 miles per hour; and by Philippine Weather Bureau standards winds should have avelocity of from 55 to 74 miles per hour in order to be classified as storm (Northern Assurance Co., Ltd. vs. Visayan StevedoreTransportation Co., CA-G.R. No. 23167-R, March 12, 1959).

The Court of Appeals further added: "the report of R. J. del Pan & Co., Inc., marine surveyors, attributes the sinking of LCT No. 1025 tothe 'non-water-tight conditions of various buoyancy compartments' (exh. JJJ); and this report finds confirmation on the above-mentionedadmission of two witnesses for appellant concerning the cracks of the lighter's bottom and the entrance of the rain water 'thru manholes'."We are not prepared to dispute this finding of the Court of Appeals.chanroblesvirtualawlibrarychanrobles virtual law library3. There can also be no doubt that the insurance company can recover from the carrier as assignee of the owner of the cargo for theinsurance amount it paid to the latter under the insurance contract. And this is so because since the cargo that was damaged wasinsured with respondent company and the latter paid the amount represented by the loss, it is but fair that it be given the right to recoverfrom the party responsible for the loss. The instant case, therefore, is not one between the insured and the insurer, but one between theshipper and the carrier, because the insurance company merely stepped into the shoes of the shipper. And since the shipper has a directcause of action against the carrier on account of the damage of the cargo, no valid reason is seen why such action cannot be asserted oravailed of by the insurance company as a subrogee of the shipper. Nor can the carrier set up as a defense any defect in the insurance

policy not only because it is not a privy to it but also because it cannot avoid its liability to the shipper under the contract of carriage whichbinds it to pay any loss that may be caused to the cargo involved therein. Thus, we find fitting the following comments of the Court of

Appeals:It was not imperative and necessary for the trial court to pass upon the question of whether or not the disputed abaca cargo was coveredby Marine Open Cargo Policy No. MK-134 isued by appellee. Appellant was neither a party nor privy to this insurance contract, andtherefore cannot avail itself of any defect in the policy which may constitute a valid reason for appellee, as the insurer, to reject the claimof Macleod, as the insured. Anyway, whatever defect the policy contained, if any, is deemed to have been waived by the subsequentpayment of Macleod's claim by appellee. Besides, appellant is herein sued in its capacity as a common carrier, and appellee is suing asthe assignee of the shipper pursuant to exhibit MM. Since, as above demonstrated, appellant is liable to Macleod and Company of thePhilippines for the los or damage to the 1,162 bales of hemp after these were received in good order and condition by the patron of

appellant's LCT No. 1025, it necessarily follows that appellant is likewise liable to appellee who, as assignee of Macleod, merely steppedinto the shoes of and substi-tuted the latter in demanding from appellant the payment for the loss and damage aforecited.4. It should be recalled in connection with this issue that during the trial of this case the carrier asked the lower court to order theproduction of the books of accounts of the Odell Plantation containing the charges it made for the loss of the damaged hemp forverification of its accountants, but later it desisted therefrom on the claim that it finds their production no longer necessary. Thisdesistance notwithstanding, the shipper however pre-sented other documents to prove the damage it suffered in connection with thecargo and on the strength thereof the court a quo ordered the carrier to pay the sum of P60,421.02. And after the Court of Appeals


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affirmed this award upon the theory that the desistance of the carrier from producing the books of accounts of Odell Plantation implies anadmission of the correctness of the statements of accounts contained therein, petitioner now contends that the Court of Appeals erred inbasing the affirmance of the award on such erroneous interpretation.chanroblesvirtualawlibrarychanrobles virtual law libraryThere is reason to believe that the act of petitioner in waiving its right to have the books of accounts of Odell Plantation presented in courtis tantamount to an admission that the statements contained therein are correct and their verification not necessary because its maindefense here, as well as below, was that it is not liable for the loss because there was no contract of carriage between it and the shipper

and the loss caused, if any, was due to a fortuitous event. Hence, under the carrier's theory, the correctness of the account representingthe loss was not so material as would necessitate the presentation of the books in question. At any rate, even if the books of accountswere not produced, the correctness of the accounts cannot now be disputed for the same is supported by the original documents onwhich the entries in said books were based which were presented by the shipper as part of its evidence. And according to the Court of

Appeals, these documents alone sufficiently establish the award of P60,412.02 made in favor ofrespondent.chanroblesvirtualawlibrarychanrobles virtual law library5. Finally, with regard to the question concerning the personality of the insurance company to maintain this action, we find the same of noimportance, for the attorney himself of the carrier admitted in open court that it is a foreign corporation doing business in the Philippineswith a personality to file the present action.chanroblesvirtualawlibrarychanrobles virtual law libraryWHEREFORE, the decision appealed from is affirmed, with costs against petitioner.


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G.R. No. L-48757 May 30, 1988 MAURO GANZON, Petitioner , vs. COURT OF APPEALS and GELACIO E. TUMAMBING, Respondents.

Antonio B. Abinoja for petitioner.chanrobles virtual law libraryQuijano, Arroyo & Padilla Law Office for respondents.

SARMIENTO, J.:

The private respondent instituted in the Court of First Instance of Manila1

an action against the petitioner for damages based on culpacontractual. The antecedent facts, as found by the respondent Court, 2 are undisputed: chanrobles virtual law libraryOn November 28, 1956, Gelacio Tumambing contracted the services of Mauro B. Ganzon to haul 305 tons of scrap iron from Mariveles,Bataan, to the port of Manila on board the l ighter LCT "Batman" (Exhibit 1, Stipulation of Facts, Amended Record on Appeal, p. 38).Pursuant to that agreement, Mauro B. Ganzon sent his lighter "Batman" to Mariveles where it docked in three feet of water (t.s.n.,September 28, 1972, p. 31). On December 1, 1956, Gelacio Tumambing delivered the scrap iron to defendant Filomeno Niza, captain ofthe lighter, for loading which was actually begun on the same date by the crew of the lighter under the captain's supervision. When abouthalf of the scrap iron was already loaded (t.s.n., December 14, 1972, p. 20), Mayor Jose Advincula of Mariveles, Bataan, arrived anddemanded P5,000.00 from Gelacio Tumambing. The latter resisted the shakedown and after a heated argument between them, MayorJose Advincula drew his gun and fired at Gelacio Tumambing (t.s.n., March 19, 1971, p. 9; September 28, 1972, pp. 6-7). The gunshotwas not fatal but Tumambing had to be taken to a hospital in Balanga, Bataan, for treatment (t.s.n., March 19, 1971, p. 13; September

28, 1972, p. 15).chanroblesvirtualawlibrary chanrobles virtual law library After sometime, the loading of the scrap iron was resumed. But on December 4, 1956, Acting Mayor Basilio Rub, accompanied by threepolicemen, ordered captain Filomeno Niza and his crew to dump the scrap iron (t.s.n., June 16, 1972, pp. 8-9) where the lighter wasdocked (t.s.n., September 28, 1972, p. 31). The rest was brought to the compound of NASSCO (Record on Appeal, pp. 20-22). Later on

Acting Mayor Rub issued a receipt stating that the Municipality of Mariveles had taken custody of the scrap iron (Stipulation of Facts,Record on Appeal, p. 40; t.s.n., September 28, 1972, p. 10.) chanrobles virtual law libraryOn the basis of the above findings, the respondent Court rendered a decision, the dispositive portion of which states:WHEREFORE, the decision appealed from is hereby reversed and set aside and a new one entered ordering defendant-appellee MauroGanzon to pay plaintiff-appellant Gelacio E. Tumambimg the sum of P5,895.00 as actual damages, the sum of P5,000.00 as exemplarydamages, and the amount of P2,000.00 as attorney's fees. Costs against defendant-appellee Ganzon. 3

In this petition for review on certiorari, the alleged errors in the decision of the Court of Appeals are: chanrobles virtual law libraryIchanrobles virtual law libraryTHE COURT OF APPEALS FINDING THE HEREIN PETITIONER GUILTY OF BREACH OF THE CONTRACT OF TRANSPORTATION

AND IN IMPOSING A LIABILITY AGAINST HIM COMMENCING FROM THE TIME THE SCRAP WAS PLACED IN HIS CUSTODY ANDCONTROL HAVE NO BASIS IN FACT AND IN LAW.chanroblesvirtualawlibrary chanrobles virtual law libraryIIchanrobles virtual law library


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THE APPELLATE COURT ERRED IN CONDEMNING THE PETITIONER FOR THE ACTS OF HIS EMPLOYEES IN DUMPING THESCRAP INTO THE SEA DESPITE THAT IT WAS ORDERED BY THE LOCAL GOVERNMENT OFFICIAL WITHOUT HISPARTICIPATION.chanroblesvirtualawlibrary chanrobles virtual law libraryIIIchanrobles virtual law libraryTHE APPELLATE COURT FAILED TO CONSIDER THAT THE LOSS OF THE SCRAP WAS DUE TO A FORTUITOUS EVENT AND THEPETITIONER IS THEREFORE NOT LIABLE FOR LOSSES AS A CONSEQUENCE THEREOF. 4 chanrobles virtual law library

The petitioner, in his first assignment of error, insists that the scrap iron had not been unconditionally placed under his custody andcontrol to make him liable. However, he completely agrees with the respondent Court's finding that on December 1, 1956, the privaterespondent delivered the scraps to Captain Filomeno Niza for loading in the lighter "Batman," That the petitioner, thru his employees,actually received the scraps is freely admitted. Significantly, there is not the slightest allegation or showing of any condition, qualification,or restriction accompanying the delivery by the private respondent-shipper of the scraps, or the receipt of the same by the petitioner. Onthe contrary, soon after the scraps were delivered to, and received by the petitioner-common carrier, loading wascommenced.chanroblesvirtualawlibrary chanrobles virtual law libraryBy the said act of delivery, the scraps were unconditionally placed in the possession and control of the common carrier, and upon theirreceipt by the carrier for transportation, the contract of carriage was deemed perfected. Consequently, the petitioner-carrier'sextraordinary responsibility for the loss, destruction or deterioration of the goods commenced. Pursuant to Art. 1736, such extraordinaryresponsibility would cease only upon the delivery, actual or constructive, by the carrier to the consignee, or to the person who has a right

to receive them. 5 The fact that part of the shipment had not been loaded on board the lighter did not impair the said contract oftransportation as the goods remained in the custody and control of the carrier, albeit still unloaded.chanroblesvirtualawlibrary chanroblesvirtual law libraryThe petitioner has failed to show that the loss of the scraps was due to any of the following causes enumerated in Article 1734 of the CivilCode, namely: chanrobles virtual law library(1) Flood, storm, earthquake, lightning, or other natural disaster or calamity; chanrobles virtual law library(2) Act of the public enemy in war, whether international or civil; chanrobles virtual law library(3) Act or omission of the shipper or owner of the goods; chanrobles virtual law library(4) The character of the goods or defects in the packing or in the containers; chanrobles virtual law library(5) Order or act of competent public authority.chanroblesvirtualawlibrary chanrobles virtual law library

Hence, the petitioner is presumed to have been at fault or to have acted negligently.6

By reason of this presumption, the court is noteven required to make an express finding of fault or negligence before it could hold the petitioner answerable for the breach of thecontract of carriage. Still, the petitioner could have been exempted from any liability had he been able to prove that he observedextraordinary diligence in the vigilance over the goods in his custody, according to all the circumstances of the case, or that the loss wasdue to an unforeseen event or to force majeure. As it was, there was hardly any attempt on the part of the petitioner to prove that heexercised such extraordinary diligence.chanroblesvirtualawlibrary chanrobles virtual law library


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It is in the second and third assignments of error where the petitioner maintains that he is exempt from any liability because the loss ofthe scraps was due mainly to the intervention of the municipal officials of Mariveles which constitutes a caso fortuito as defined in Article1174 of the Civil Code. 7 chanrobles virtual law libraryWe cannot sustain the theory of caso fortuito. In the courts below, the petitioner's defense was that the loss of the scraps was due to an"order or act of competent public authority," and this contention was correctly passed upon by the Court of Appeals which ruled that:... In the second place, before the appellee Ganzon could be absolved from responsibility on the ground that he was ordered by

competent public authority to unload the scrap iron, it must be shown that Acting Mayor Basilio Rub had the power to issue the disputedorder, or that it was lawful, or that it was issued under legal process of authority. The appellee failed to establish this. Indeed, no authorityor power of the acting mayor to issue such an order was given in evidence. Neither has it been shown that the cargo of scrap ironbelonged to the Municipality of Mariveles. What we have in the record is the stipulation of the parties that the cargo of scrap iron wasaccilmillated by the appellant through separate purchases here and there from private individuals (Record on Appeal, pp. 38-39). The factremains that the order given by the acting mayor to dump the scrap iron into the sea was part of the pressure applied by Mayor Jose

Advincula to shakedown the appellant for P5,000.00. The order of the acting mayor did not constitute valid authority for appellee MauroGanzon and his representatives to carry out.Now the petitioner is changing his theory to caso fortuito. Such a change of theory on appeal we cannot, however, allow. In any case, theintervention of the municipal officials was not In any case, of a character that would render impossible the fulfillment by the carrier of itsobligation. The petitioner was not duty bound to obey the illegal order to dump into the sea the scrap iron. Moreover, there is absence of

sufficient proof that the issuance of the same order was attended with such force or intimidation as to completely overpower the will of thepetitioner's employees. The mere difficulty in the fullfilment of the obligation is not considered force majeure. We agree with the privaterespondent that the scraps could have been properly unloaded at the shore or at the NASSCO compound, so that after the dispute withthe local officials concerned was settled, the scraps could then be delivered in accordance with the contract ofcarriage.chanroblesvirtualawlibrary chanrobles virtual law libraryThere is no incompatibility between the Civil Code provisions on common carriers and Articles 361 8 and 362 9 of the Code of Commercewhich were the basis for this Court's ruling in Government of the Philippine Islands vs. Ynchausti & Co.10 and which the petitionerinvokes in tills petition. For Art. 1735 of the Civil Code, conversely stated, means that the shipper will suffer the losses and deteriorationarising from the causes enumerated in Art. 1734; and in these instances, the burden of proving that damages were caused by the fault ornegligence of the carrier rests upon him. However, the carrier must first establish that the loss or deterioration was occasioned by one of

the excepted causes or was due to an unforeseen event or to force majeure. Be that as it may, insofar as Art. 362 appears to require ofthe carrier only ordinary diligence, the same is .deemed to have been modified by Art. 1733 of the Civil Code.chanroblesvirtualawlibrarychanrobles virtual law libraryFinding the award of actual and exemplary damages to be proper, the same will not be disturbed by us. Besides, these were notsufficiently controverted by the petitioner.chanroblesvirtualawlibrary chanrobles virtual law libraryWHEREFORE, the petition is DENIED; the assailed decision of the Court of Appeals is hereby AFFIRMED. Costs against thepetitioner.chanroblesvirtualawlibrary chanrobles virtual law library


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This decision is IMMEDIATELY EXECUTORY.Yap, C.J., Paras and Padilla, JJ., concur.chanrobles virtual law library

Separate OpinionsMELENCIO-HERRERA, J., dissenting: chanrobles virtual law library

I am constrained to dissent.chanroblesvirtualawlibrary chanrobles virtual law libraryIt is my view that petitioner can not be held liable in damages for the loss and destruction of the scrap iron. The loss of said cargo wasdue to an excepted cause an 'order or act of competent public authority" (Article 1734[5], Civil Code).chanroblesvirtualawlibrarychanrobles virtual law libraryThe loading of the scrap iron on the lighter had to be suspended because of Municipal Mayor Jose Advincula's intervention, who was a"competent public authority." Petitioner had no control over the situation as, in fact, Tumambing himself, the owner of the cargo, wasimpotent to stop the "act' of said official and even suffered a gunshot wound on the occasion.chanroblesvirtualawlibrary chanrobles virtuallaw libraryWhen loading was resumed, this time it was Acting Mayor Basilio Rub, accompanied by three policemen, who ordered the dumping ofthe scrap iron into the sea right where the lighter was docked in three feet of water. Again, could the captain of the lighter and his crewhave defied said order? chanrobles virtual law library

Through the "order" or "act" of "competent public authority," therefore, the performance of a contractual obligation was renderedimpossible. The scrap iron that was dumped into the sea was "destroyed" while the rest of the cargo was "seized." The seizure isevidenced by the receipt issues by Acting Mayor Rub stating that the Municipality of Mariveles had taken custody of the scrap iron.

Apparently, therefore, the seizure and destruction of the goods was done under legal process or authority so that petitioner should befreed from responsibility.

Art. 1743. If through order of public authority the goods are seized or destroyed, the common carrier is not responsible, provided saidpublic authority had power to issue the order.chanroblesvirtualawlibrary chanrobles virtual law library

Separate Opinions MELENCIO-HERRERA, J., dissenting:

I am constrained to dissent.chanrobles virtual law libraryIt is my view that petitioner can not be held liable in damages for the loss and destruction of the scrap iron. The loss of said cargo wasdue to an excepted cause an 'order or act of competent public authority" (Article 1734[5], Civil Code).chanrobles virtual law libraryThe loading of the scrap iron on the lighter had to be suspended because of Municipal Mayor Jose Advincula's intervention, who was a"competent public authority." Petitioner had no control over the situation as, in fact, Tumambing himself, the owner of the cargo, wasimpotent to stop the "act' of said official and even suffered a gunshot wound on the occasion.chanrobles virtual law library


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When loading was resumed, this time it was Acting Mayor Basilio Rub, accompanied by three policemen, who ordered the dumping ofthe scrap iron into the sea right where the lighter was docked in three feet of water. Again, could the captain of the lighter and his crewhave defied said order?Through the "order" or "act" of "competent public authority," therefore, the performance of a contractual obligation was renderedimpossible. The scrap iron that was dumped into the sea was "destroyed" while the rest of the cargo was "seized." The seizure isevidenced by the receipt issues by Acting Mayor Rub stating that the Municipality of Mariveles had taken custody of the scrap iron.

Apparently, therefore, the seizure and destruction of the goods was done under legal process or authority so that petitioner should befreed from responsibility. Art. 1743. If through order of public authority the goods are seized or destroyed, the common carrier is not responsible, provided saidpublic authority had power to issue the order.


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G.R. No. 95582 October 7, 1991DANGWA TRANSPORTATION CO., INC. and THEODORE LARDIZABAL y MALECDAN, petitioners,

vs.COURT OF APPEALS, INOCENCIA CUDIAMAT, EMILIA CUDIAMAT BANDOY, FERNANDO CUDLAMAT, MARRIETA CUDIAMAT,NORMA CUDIAMAT, DANTE CUDIAMAT, SAMUEL CUDIAMAT and LIGAYA CUDIAMAT, all Heirs of the late Pedrito Cudiamat

represented by Inocencia Cudiamat, respondents.

Francisco S. Reyes Law Office for petitioners. Antonio C. de Guzman for private respondents.

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

On the other hand, petitioners alleged that they had observed and continued to observe the extraordinary diligence required in theoperation of the transportation company and the supervision of the employees, even as they add that they are not absolute insurers ofthe safety of the public at large. Further, it was alleged that it was the victim's own carelessness and negligence which gave rise to thesubject incident, hence they prayed for the dismissal of the complaint plus an award of damages in their favor by way of a counterclaim.On July 29, 1988, the trial court rendered a decision, effectively in favor of petitioners, with this decretal portion:IN VIEW OF ALL THE FOREGOING, judgment is hereby pronounced that Pedrito Cudiamat was negligent, which negligence was theproximate cause of his death. Nonetheless, defendants in equity, are hereby ordered to pay the heirs of Pedrito Cudiamat the sum ofP10,000.00 which approximates the amount defendants initially offered said heirs for the amicable settlement of the case. No costs.SO ORDERED. 2 Not satisfied therewith, private respondents appealed to the Court of Appeals which, in a decision 3 in CA-G.R. CV No. 19504

promulgated on August 14, 1990, set aside the decision of the lower court, and ordered petitioners to pay private respondents:1. The sum of Thirty Thousand (P30,000.00) Pesos by way of indemnity for death of the victim Pedrito Cudiamat;2. The sum of Twenty Thousand (P20,000.00) by way of moral damages;3. The sum of Two Hundred Eighty Eight Thousand (P288,000.00) Pesos as actual and compensatory damages;4. The costs of this suit. 4


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Petitioners' motion for reconsideration was denied by the Court of Appeals in its resolution dated October 4, 1990, 5 hence this petitionwith the central issue herein being whether respondent court erred in reversing the decision of the trial court and in finding petitionersnegligent and liable for the damages claimed.It is an established principle that the factual findings of the Court of Appeals as a rule are final and may not be reviewed by this Court onappeal. However, this is subject to settled exceptions, one of which is when the findings of the appellate court are contrary to those of thetrial court, in which case a reexamination of the facts and evidence may be undertaken. 6

In the case at bar, the trial court and the Court of Appeal have discordant positions as to who between the petitioners an the victim isguilty of negligence. Perforce, we have had to conduct an evaluation of the evidence in this case for the prope calibration of theirconflicting factual findings and legal conclusions.The lower court, in declaring that the victim was negligent, made the following findings:This Court is satisfied that Pedrito Cudiamat was negligent in trying to board a moving vehicle, especially with one of his hands holdingan umbrella. And, without having given the driver or the conductor any indication that he wishes to board the bus. But defendants canalso be found wanting of the necessary diligence. In this connection, it is safe to assume that when the deceased Cudiamat attempted toboard defendants' bus, the vehicle's door was open instead of being closed. This should be so, for it is hard to believe that one wouldeven attempt to board a vehicle (i)n motion if the door of said vehicle is closed. Here lies the defendant's lack of diligence. Under suchcircumstances, equity demands that there must be something given to the heirs of the victim to assuage their feelings. This, alsoconsidering that initially, defendant common carrier had made overtures to amicably settle the case. It did offer a certain monetary

consideration to the victim's heirs. 7 However, respondent court, in arriving at a different opinion, declares that:From the testimony of appellees'own witness in the person of Vitaliano Safarita, it is evident that the subject bus was at full stop when thevictim Pedrito Cudiamat boarded the same as it was precisely on this instance where a certain Miss Abenoja alighted from the bus.Moreover, contrary to the assertion of the appellees, the victim did indicate his intention to board the bus as can be seen from thetestimony of the said witness when he declared that Pedrito Cudiamat was no longer walking and made a sign to board the bus when thelatter was still at a distance from him. It was at the instance when Pedrito Cudiamat was closing his umbrella at the platform of the buswhen the latter made a sudden jerk movement (as) the driver commenced to accelerate the bus.Evidently, the incident took place due to the gross negligence of the appellee-driver in prematurely stepping on the accelerator and in notwaiting for the passenger to first secure his seat especially so when we take into account that the platform of the bus was at the time

slippery and wet because of a drizzle. The defendants-appellees utterly failed to observe their duty and obligation as common carrier tothe end that they should observe extra-ordinary diligence in the vigilance over the goods and for the safety of the passengers transportedby them according to the circumstances of each case (Article 1733, New Civil Code). 8

After a careful review of the evidence on record, we find no reason to disturb the above holding of the Court of Appeals. Its aforesaidfindings are supported by the testimony of petitioners' own witnesses. One of them, Virginia Abalos, testified on cross-examination asfollows:Q It is not a fact Madam witness, that at bunkhouse 54, that is before the place of the incident, there is a crossing?


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A The way going to the mines but it is not being pass(ed) by the bus.Q And the incident happened before bunkhouse 56, is that not correct?

A It happened between 54 and 53 bunkhouses. 9 The bus conductor, Martin Anglog, also declared:Q When you arrived at Lepanto on March 25, 1985, will you please inform this Honorable Court if there was anv unusual incident thatoccurred?

A When we delivered a baggage at Marivic because a person alighted there between Bunkhouse 53 and 54. Q What happened when you delivered this passenger at this particular place in Lepanto? A When we reached the place, a passenger alighted and I signalled my driver. When we stopped we went out because I saw an umbrellaabout a split second and I signalled again the driver, so the driver stopped and we went down and we saw Pedrito Cudiamat asking forhelp because he was lying down.Q How far away was this certain person, Pedrito Cudiamat, when you saw him lying down — from the bus how far was he?

A It is about two to three meters.Q On what direction of the bus was he found about three meters from the bus, was it at the front or at the back?

A At the back , sir. 10 (Emphasis supplied.)The foregoing testimonies show that the place of the accident and the place where one of the passengers alighted were both betweenBunkhouses 53 and 54, hence the finding of the Court of Appeals that the bus was at full stop when the victim boarded the same is

correct. They further confirm the conclusion that the victim fell from the platform of the bus when it suddenly accelerated forward and wasrun over by the rear right tires of the vehicle, as shown by the physical evidence on where he was thereafter found in relation to the buswhen it stopped. Under such circumstances, it cannot be said that the deceased was guilty of negligence.The contention of petitioners that the driver and the conductor had no knowledge that the victim would ride on the bus, since the latterhad supposedly not manifested his intention to board the same, does not merit consideration. When the bus is not in motion there is nonecessity for a person who wants to ride the same to signal his intention to board. A public utility bus, once it stops, is in effect making acontinuous offer to bus riders. Hence, it becomes the duty of the driver and the conductor, every time the bus stops, to do no act thatwould have the effect of increasing the peril to a passenger while he was attempting to board the same. The premature acceleration ofthe bus in this case was a breach of such duty. 11 It is the duty of common carriers of passengers, including common carriers by railroad train, streetcar, or motorbus, to stop their

conveyances a reasonable length of time in order to afford passengers an opportunity to board and enter, and they are liable for injuriessuffered by boarding passengers resulting from the sudden starting up or jerking of their conveyances while they are doing so. 12 Further, even assuming that the bus was moving, the act of the victim in boarding the same cannot be considered negligent under thecircumstances. As clearly explained in the testimony of the aforestated witness for petitioners, Virginia Abalos, th bus had "just started"and "was still in slow motion" at the point where the victim had boarded and was on its platform. 13 It is not negligence per se, or as a matter of law, for one attempt to board a train or streetcar which is moving slowly. 14 An ordinarilyprudent person would have made the attempt board the moving conveyance under the same or similar circumstances. The fact that


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passengers board and alight from slowly moving vehicle is a matter of common experience both the driver and conductor in this casecould not have been unaware of such an ordinary practice.The victim herein, by stepping and standing on the platform of the bus, is already considered a passenger and is entitled all the rightsand protection pertaining to such a contractual relation. Hence, it has been held that the duty which the carrier passengers owes to itspatrons extends to persons boarding cars as well as to those alighting therefrom. 15 Common carriers, from the nature of their business and reasons of public policy, are bound to observe extraordina diligence for the safety

of the passengers transported by the according to all the circumstances of each case. 16 A common carrier is bound to carry thepassengers safely as far as human care and foresight can provide, using the utmost diligence very cautious persons, with a due regardfor all the circumstances. 17 It has also been repeatedly held that in an action based on a contract of carriage, the court need not make an express finding of fault ornegligence on the part of the carrier in order to hold it responsible to pay the damages sought by the passenger. By contract of carriage,the carrier assumes the express obligation to transport the passenger to his destination safely and observe extraordinary diligence with adue regard for all the circumstances, and any injury that might be suffered by the passenger is right away attributable to the fault ornegligence of the carrier. This is an exception to the general rule that negligence must be proved, and it is therefore incumbent upon thecarrier to prove that it has exercised extraordinary diligence as prescribed in Articles 1733 and 1755 of the Civil Code. 18 Moreover, the circumstances under which the driver and the conductor failed to bring the gravely injured victim immediately to thehospital for medical treatment is a patent and incontrovertible proof of their negligence. It defies understanding and can even be

stigmatized as callou

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