G.R. No. 84458 November 6, 1989 ABOITIZ SHIPPING CORPORATION, petitioner, vs. HON.

COURT OF APPEALS, ELEVENTH DIVISION, LUCILA C. VIANA, SPS. ANTONIO VIANA and GORGONIA VIANA, and PIONEER STEVEDORING CORPORATION, respondents. Herenio E. Martinez for petitioner. M.R. Villaluz Law Office for private respondent. REGALADO, J.: In this appeal by certiorari, petitioner Aboitiz Shipping Corporation seeks a review of the decision 1 of respondent Court of Appeals, dated July 29, 1988, the decretal portion of which reads: WHEREFORE, the judgment appealed from as modified by the order of October 27, 1982, is hereby affirmed with the modification that appellant Aboitiz Shipping is hereby ordered to pay plaintiff-appellees the amount of P30,000.00 for the death of Anacleto Viana; actual damages of P9,800.00; P150,000.00 for unearned income; P7,200.00 as support for deceased's parents; P20,000.00 as moral damages; P10,000.00 as attorney's fees; and to pay the costs. The undisputed facts of the case, as found by the court a quo and adopted by respondent court, are as follows: . The evidence disclosed that on May 11, 1975, Anacleto Viana boarded the vessel M/V Antonia, owned by defendant, at the port at San Jose, Occidental Mindoro, bound for Manila, having purchased a ticket (No. 117392) in the sum of P23.10 (Exh. 'B'). On May 12, 1975, said vessel arrived at Pier 4, North Harbor, Manila, and the passengers therein disembarked, a gangplank having been provided connecting the side of the vessel to the pier. Instead of using said gangplank Anacleto Viana disembarked on the third deck which was on the level with the pier. After said vessel had landed, the Pioneer Stevedoring Corporation took over the exclusive control of the cargoes loaded on said vessel pursuant to the Memorandum of Agreement dated July 26, 1975 (Exh. '2') between the third party defendant Pioneer Stevedoring Corporation and defendant Aboitiz Shipping Corporation. The crane owned by the third party defendant and operated by its crane operator Alejo Figueroa was placed alongside the vessel and one (1) hour after the passengers of said vessel had disembarked, it started operation by unloading the cargoes from said vessel. While the crane was being operated, Anacleto Viana who had already disembarked from said vessel obviously remembering that some of his cargoes were still loaded in the vessel, went back to the vessel, and it was while he was pointing to the crew of the said vessel to the place where his cargoes were loaded that the crane hit him, pinning him between the side of the vessel and the crane. He was thereafter brought to the hospital where he later expired three (3) days thereafter, on May 15, 1975, the cause of his death according to the Death Certificate (Exh. "C") being "hypostatic pneumonia secondary to traumatic fracture of the pubic bone lacerating the urinary bladder" (See also Exh. "B"). For his hospitalization, medical, burial and other miscellaneous expenses, Anacleto's wife, herein plaintiff, spent a total of P9,800.00 (Exhibits "E", "E-1", to "E-5"). Anacleto Viana who was only forty (40) years old when he met said fateful accident (Exh. 'E') was in good health. His average annual income as a farmer or a farm supervisor was 400 cavans of palay annually. His parents, herein plaintiffs Antonio and Gorgonia Viana, prior to his death had been recipient of

twenty (20) cavans of palay as support or P120.00 monthly. Because of Anacleto's death, plaintiffs suffered mental anguish and extreme worry or moral damages. For the filing of the instant case, they had to hire a lawyer for an agreed fee of ten thousand (P10,000.00) pesos. 2 Private respondents Vianas filed a complaint 3 for damages against petitioner corporation (Aboitiz, for brevity) for breach of contract of carriage. In its answer. 4 Aboitiz denied responsibility contending that at the time of the accident, the vessel was completely under the control of respondent Pioneer Stevedoring Corporation (Pioneer, for short) as the exclusive stevedoring contractor of Aboitiz, which handled the unloading of cargoes from the vessel of Aboitiz. It is also averred that since the crane operator was not an employee of Aboitiz, the latter cannot be held liable under the fellow-servant rule. Thereafter, Aboitiz, as third-party plaintiff, filed a third-party complaint 5 against Pioneer imputing liability thereto for Anacleto Viana's death as having been allegedly caused by the negligence of the crane operator who was an employee of Pioneer under its exclusive control and supervision. Pioneer, in its answer to the third-party complaint, 6 raised the defenses that Aboitiz had no cause of action against Pioneer considering that Aboitiz is being sued by the Vianas for breach of contract of carriage to which Pioneer is not a party; that Pioneer had observed the diligence of a good father of a family both in the selection and supervision of its employees as well as in the prevention of damage or injury to anyone including the victim Anacleto Viana; that Anacleto Viana's gross negligence was the direct and proximate cause of his death; and that the filing of the third-party complaint was premature by reason of the pendency of the criminal case for homicide through reckless imprudence filed against the crane operator, Alejo Figueroa. In a decision rendered on April 17, 1980 by the trial court, 7 Aboitiz was ordered to pay the Vianas for damages incurred, and Pioneer was ordered to reimburse Aboitiz for whatever amount the latter paid the Vianas. The dispositive portion of said decision provides: WHEREFORE, judgment is hereby rendered in favor of the plantiffs: (1) ordering defendant Aboitiz Shipping Corporation to pay to plaintiffs the sum of P12,000.00 for the death of Anacleto Viana P9,800.00 as actual damages; P533,200.00 value of the 10,664 cavans of palay computed at P50.00 per cavan; P10,000.00 as attorney's fees; F 5,000.00, value of the 100 cavans of palay as support for five (5) years for deceased (sic) parents, herein plaintiffs Antonio and Gorgonia Viana computed at P50.00 per cavan; P7,200.00 as support for deceased's parents computed at P120.00 a month for five years pursuant to Art. 2206, Par. 2, of the Civil Code; P20,000.00 as moral damages, and costs; and (2) ordering the third party defendant Pioneer Stevedoring Corporation to reimburse defendant and third party plaintiff Aboitiz Shipping Corporation the said amounts that it is ordered to pay to herein plaintiffs. Both Aboitiz and Pioneer filed separate motions for reconsideration wherein they similarly raised the trial court's failure to declare that Anacleto Viana acted with gross negligence despite the overwhelming evidence presented in support thereof. In addition, Aboitiz alleged, in opposition to Pioneer's motion, that under the memorandum of agreement the liability of Pioneer as contractor is automatic for any damages or losses whatsoever occasioned by and arising from the operation of its arrastre and stevedoring service. In an order dated October 27, 1982, 8 the trial court absolved Pioneer from liability for failure of the Vianas and Aboitiz to preponderantly establish a case of negligence against the crane operator which the court a quo ruled is never presumed, aside from the fact that the memorandum of agreement supposedly refers only to Pioneer's liability in case of loss or damage to goods handled by it but not in the case of personal injuries, and, finally that Aboitiz cannot properly invoke the fellow-servant rule simply because its liability stems from a breach of contract of carriage. The dispositive portion of said order reads:

WHEREFORE, judgment is hereby modified insofar as third party defendant Pioneer Stevedoring Corporation is concerned rendered in favor of the plaintiffs-,: (1) Ordering defendant Aboitiz Shipping Corporation to pay the plaintiffs the sum of P12,000.00 for the death of Anacleto Viana; P9,000.00 (sic) as actual damages; P533,200.00 value of the 10,664 cavans of palay computed at P50.00 per cavan; P10,000.00 as attorney's fees; P5,000.00 value of the 100 cavans of palay as support for five (5) years for deceased's parents, herein plaintiffs Antonio and Gorgonia Viana,computed at P50.00 per cavan; P7,200.00 as support for deceased's parents computed at P120.00 a month for five years pursuant to Art. 2206, Par. 2, of the Civil Code; P20,000.00 as moral damages, and costs; and (2) Absolving third-party defendant Pioneer Stevedoring Corporation for (sic) any liability for the death of Anacleto Viana the passenger of M/V Antonia owned by defendant third party plaintiff Aboitiz Shipping Corporation it appearing that the negligence of its crane operator has not been established therein. Not satisfied with the modified judgment of the trial court, Aboitiz appealed the same to respondent Court of Appeals which affirmed the findings of of the trial court except as to the amount of damages awarded to the Vianas. Hence, this petition wherein petitioner Aboitiz postulates that respondent court erred: (A) In holding that the doctrine laid down by this honorable Court in La Mallorca vs. Court of Appeals, et al. (17 SCRA 739, July 27, 1966) is applicable to the case in the face of the undisputable fact that the factual situation under the La Mallorca case is radically different from the facts obtaining in this case; (B) In holding petitioner liable for damages in the face of the finding of the court a quo and confirmed by the Honorable respondent court of Appeals that the deceased, Anacleto Viana was guilty of contributory negligence, which, We respectfully submit contributory negligence was the proximate cause of his death; specifically the honorable respondent Court of Appeals failed to apply Art. 1762 of the New Civil Code; (C) In the alternative assuming the holding of the Honorable respondent Court of Appears that petitioner may be legally condemned to pay damages to the private respondents we respectfully submit that it committed a reversible error when it dismissed petitioner's third party complaint against private respondent Pioneer Stevedoring Corporation instead of compelling the latter to reimburse the petitioner for whatever damages it may be compelled to pay to the private respondents Vianas. 9 At threshold, it is to be observed that both the trial court and respondent Court of Appeals found the victim Anacleto Viana guilty of contributory negligence, but holding that it was the negligence of Aboitiz in prematurely turning over the vessel to the arrastre operator for the unloading of cargoes which was the direct, immediate and proximate cause of the victim's death. I. Petitioner contends that since one (1) hour had already elapsed from the time Anacleto Viana disembarked from the vessel and that he was given more than ample opportunity to unload his cargoes prior to the operation of the crane, his presence on the vessel was no longer reasonable e and he consequently ceased to be a passenger. Corollarily, it insists that the doctrine in La Mallorca vs. Court of Appeals, et al. 10 is not applicable to the case at bar. The rule is that the relation of carrier and passenger continues until the passenger has been landed at the port of destination and has left the vessel owner's dock or premises. 11 Once created, the relationship will not ordinarily terminate until the passenger has, after reaching his destination, safely alighted from the carrier's conveyance or had a reasonable opportunity to leave the carrier's premises. All persons who remain on the premises a reasonable time after

leaving the conveyance are to be deemed passengers, and what is a reasonable time or a reasonable delay within this rule is to be determined from all the circumstances, and includes a reasonable time to see after his baggage and prepare for his departure. 12 The carrier-passenger relationship is not terminated merely by the fact that the person transported has been carried to his destination if, for example, such person remains in the carrier's premises to claim his baggage. 13 It was in accordance with this rationale that the doctrine in the aforesaid case of La Mallorca was enunciated, to wit: It has been recognized as a rule that the relation of carrier and passenger does not cease at the moment the passenger alights from the carrier's vehicle at a place selected by the carrier at the point of destination, but continues until the passenger has had a reasonable time or a reasonable opportunity to leave the carrier's premises. And, what is a reasonable time or a reasonable delay within this rule is to be determined from all the circumstances. Thus, a person who, after alighting from a train, walks along the station platform is considered still a passenger. So also, where a passenger has alighted at his destination and is proceeding by the usual way to leave the company's premises, but before actually doing so is halted by the report that his brother, a fellow passenger, has been shot, and he in good faith and without intent of engaging in the difficulty, returns to relieve his brother, he is deemed reasonably and necessarily delayed and thus continues to be a passenger entitled as such to the protection of the railroad company and its agents. In the present case, the father returned to the bus to get one of his baggages which was not unloaded when they alighted from the bus. Racquel, the child that she was, must have followed the father. However, although the father was still on the running board of the bus waiting for the conductor to hand him the bag or bayong, the bus started to run, so that even he (the father) had to jump down from the moving vehicle. It was at this instance that the child, who must be near the bus, was run over and killed. In the circumstances, it cannot be claimed that the carrier's agent had exercised the 'utmost diligence' of a 'very cautious person' required by Article 1755 of the Civil Code to be observed by a common carrier in the discharge of its obligation to transport safely its passengers. ... The presence of said passengers near the bus was not unreasonable and they are, therefore, to be considered still as passengers of the carrier, entitled to the protection under their contract of carriage. 14 It is apparent from the foregoing that what prompted the Court to rule as it did in said case is the fact of the passenger's reasonable presence within the carrier's premises. That reasonableness of time should be made to depend on the attending circumstances of the case, such as the kind of common carrier, the nature of its business, the customs of the place, and so forth, and therefore precludes a consideration of the time element per se without taking into account such other factors. It is thus of no moment whether in the cited case of La Mallorcathere was no appreciable interregnum for the passenger therein to leave the carrier's premises whereas in the case at bar, an interval of one (1) hour had elapsed before the victim met the accident. The primary factor to be considered is the existence of a reasonable cause as will justify the presence of the victim on or near the petitioner's vessel. We believe there exists such a justifiable cause. It is of common knowledge that, by the very nature of petitioner's business as a shipper, the passengers of vessels are allotted a longer period of time to disembark from the ship than other common carriers such as a passenger bus. With respect to the bulk of cargoes and the number of passengers it can load, such vessels are capable of accommodating a bigger volume of both as compared to the capacity of a regular commuter bus. Consequently, a ship passenger will need at least an hour as is the usual practice, to disembark from the vessel and claim his baggage whereas a bus passenger can easily get off the bus and retrieve his luggage in a very short period of time. Verily, petitioner cannot categorically claim, through the bare expedient of

comparing the period of time entailed in getting the passenger's cargoes, that the ruling in La Mallorca is inapplicable to the case at bar. On the contrary, if we are to apply the doctrine enunciated therein to the instant petition, we cannot in reason doubt that the victim Anacleto Viana was still a passenger at the time of the incident. When the accident occurred, the victim was in the act of unloading his cargoes, which he had every right to do, from petitioner's vessel. As earlier stated, a carrier is duty bound not only to bring its passengers safely to their destination but also to afford them a reasonable time to claim their baggage. It is not definitely shown that one (1) hour prior to the incident, the victim had already disembarked from the vessel. Petitioner failed to prove this. What is clear to us is that at the time the victim was taking his cargoes, the vessel had already docked an hour earlier. In consonance with common shipping procedure as to the minimum time of one (1) hour allowed for the passengers to disembark, it may be presumed that the victim had just gotten off the vessel when he went to retrieve his baggage. Yet, even if he had already disembarked an hour earlier, his presence in petitioner's premises was not without cause. The victim had to claim his baggage which was possible only one (1) hour after the vessel arrived since it was admittedly standard procedure in the case of petitioner's vessels that the unloading operations shall start only after that time. Consequently, under the foregoing circumstances, the victim Anacleto Viana is still deemed a passenger of said carrier at the time of his tragic death. II. Under the law, common carriers are, from the nature of their business and for reasons of public policy, bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them, according to all the circumstances of each case. 15 More particularly, a common carrier is bound to carry the passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with a due regard for all the circumstances. 16 Thus, where a passenger dies or is injured, the common carrier is presumed to have been at fault or to have acted negligently. 17 This gives rise to an action for breach of contract of carriage where all that is required of plaintiff is to prove the existence of the contract of carriage and its non-performance by the carrier, that is, the failure of the carrier to carry the passenger safely to his destination, 18which, in the instant case, necessarily includes its failure to safeguard its passenger with extraordinary diligence while such relation subsists. The presumption is, therefore, established by law that in case of a passenger's death or injury the operator of the vessel was at fault or negligent, having failed to exercise extraordinary diligence, and it is incumbent upon it to rebut the same. This is in consonance with the avowed policy of the State to afford full protection to the passengers of common carriers which can be carried out only by imposing a stringent statutory obligation upon the latter. Concomitantly, this Court has likewise adopted a rigid posture in the application of the law by exacting the highest degree of care and diligence from common carriers, bearing utmost in mind the welfare of the passengers who often become hapless victims of indifferent and profit-oriented carriers. We cannot in reason deny that petitioner failed to rebut the presumption against it. Under the facts obtaining in the present case, it cannot be gainsaid that petitioner had inadequately complied with the required degree of diligence to prevent the accident from happening. As found by the Court of Appeals, the evidence does not show that there was a cordon of drums around the perimeter of the crane, as claimed by petitioner. It also adverted to the fact that the alleged presence of visible warning signs in the vicinity was disputable and not indubitably established. Thus, we are not inclined to accept petitioner's explanation that the victim and other passengers were sufficiently warned that merely venturing into the area in question was fraught with serious peril. Definitely, even assuming the existence of the supposed cordon of drums loosely placed around the unloading area and the guard's admonitions against entry therein, these were at most insufficient precautions which pale into insignificance if considered vis-a-vis the gravity of the danger to which the deceased was exposed. There is no showing that petitioner was extraordinarily diligent in requiring or seeing to it that said precautionary measures were strictly and actually enforced to subserve their purpose of preventing entry into the forbidden area. By no stretch of liberal evaluation can such perfunctory acts approximate the "utmost

diligence of very cautious persons" to be exercised "as far as human care and foresight can provide" which is required by law of common carriers with respect to their passengers. While the victim was admittedly contributorily negligent, still petitioner's aforesaid failure to exercise extraordinary diligence was the proximate and direct cause of, because it could definitely have prevented, the former's death. Moreover, in paragraph 5.6 of its petition, at bar, 19 petitioner has expressly conceded the factual finding of respondent Court of Appeals that petitioner did not present sufficient evidence in support of its submission that the deceased Anacleto Viana was guilty of gross negligence. Petitioner cannot now be heard to claim otherwise. No excepting circumstance being present, we are likewise bound by respondent court's declaration that there was no negligence on the part of Pioneer Stevedoring Corporation, a confirmation of the trial court's finding to that effect, hence our conformity to Pioneer's being absolved of any liability. As correctly observed by both courts, Aboitiz joined Pioneer in proving the alleged gross negligence of the victim, hence its present contention that the death of the passenger was due to the negligence of the crane operator cannot be sustained both on grounds, of estoppel and for lack of evidence on its present theory. Even in its answer filed in the court below it readily alleged that Pioneer had taken the necessary safeguards insofar as its unloading operations were concerned, a fact which appears to have been accepted by the plaintiff therein by not impleading Pioneer as a defendant, and likewise inceptively by Aboitiz by filing its third-party complaint only after ten (10) months from the institution of the suit against it. Parenthetically, Pioneer is not within the ambit of the rule on extraordinary diligence required of, and the corresponding presumption of negligence foisted on, common carriers like Aboitiz. This, of course, does not detract from what we have said that no negligence can be imputed to Pioneer but, that on the contrary, the failure of Aboitiz to exercise extraordinary diligence for the safety of its passenger is the rationale for our finding on its liability. WHEREFORE, the petition is DENIED and the judgment appealed from is hereby AFFIRMED in toto. SO ORDERED. Melencio-Herrera (Chairperson), Paras, Padilla and Sarmiento, JJ., concur.

G.R. No. L-20761 July 27, 1966 LA MALLORCA, petitioner, vs. HONORABLE COURT OF APPEALS, MARIANO BELTRAN, ET AL., respondents. G. E. Yabut, R. Monterey and M.C. Lagman for petitioner. Ahmed Garcia for respondents. BARRERA, J.: La Mallorca seeks the review of the decision of the Court of Appeals in CA-G.R. No. 23267-R, holding it liable for quasi-delict and ordering it to pay to respondents Mariano Beltran, et al., P6,000.00 for the death of his minor daughter Raquel Beltran, plus P400.00 as actual damages. The facts of the case as found by the Court of Appeals, briefly are: On December 20, 1953, at about noontime, plaintiffs, husband and wife, together with their minor daughters, namely, Milagros, 13 years old, Raquel, about 4 years old, and Fe, over 2 years old, boarded the Pambusco Bus No. 352, bearing plate TPU No. 757 (1953 Pampanga), owned and operated by the defendant, at San Fernando, Pampanga, bound for Anao, Mexico, Pampanga. At the time, they were carrying with them four pieces of baggages containing their personal belonging. The conductor of the bus, who happened to be a half-brother of plaintiff Mariano Beltran, issued three tickets (Exhs. A, B, & C) covering the full fares of the plaintiff and their eldest child, Milagros. No fare was charged on Raquel and Fe, since both were below the height at which fare is charged in accordance with the appellant's rules and regulations. After about an hour's trip, the bus reached Anao whereat it stopped to allow the passengers bound therefor, among whom were the plaintiffs and their children to get off. With respect to the group of the plaintiffs, Mariano Beltran, then carrying some of their baggages, was the first to get down the bus, followed by his wife and his children. Mariano led his companions to a shaded spot on the left pedestrians side of the road about four or five meters away from the vehicle. Afterwards, he returned to the bus in controversy to get his other bayong, which he had left behind, but in so doing, his daughter Raquel followed him, unnoticed by her father. While said Mariano Beltran was on the running board of the bus waiting for the conductor to hand him his bayong which he left under one of its seats near the door, the bus, whose motor was not shut off while unloading, suddenly started moving forward, evidently to resume its trip, notwithstanding the fact that the conductor has not given the driver the customary signal to start, since said conductor was still attending to the baggage left behind by Mariano Beltran. Incidentally, when the bus was again placed into a complete stop, it had travelled about ten meters from the point where the plaintiffs had gotten off. Sensing that the bus was again in motion, Mariano Beltran immediately jumped from the running board without getting his bayong from the

conductor. He landed on the side of the road almost in front of the shaded place where he left his wife and children. At that precise time, he saw people beginning to gather around the body of a child lying prostrate on the ground, her skull crushed, and without life. The child was none other than his daughter Raquel, who was run over by the bus in which she rode earlier together with her parents. For the death of their said child, the plaintiffs commenced the present suit against the defendant seeking to recover from the latter an aggregate amount of P16,000 to cover moral damages and actual damages sustained as a result thereof and attorney's fees. After trial on the merits, the court below rendered the judgment in question. On the basis of these facts, the trial court found defendant liable for breach of contract of carriage and sentenced it to pay P3,000.00 for the death of the child and P400.00 as compensatory damages representing burial expenses and costs. On appeal to the Court of Appeals, La Mallorca claimed that there could not be a breach of contract in the case, for the reason that when the child met her death, she was no longer a passenger of the bus involved in the incident and, therefore, the contract of carriage had already terminated. Although the Court of Appeals sustained this theory, it nevertheless found the defendant-appellant guilty of quasidelict and held the latter liable for damages, for the negligence of its driver, in accordance with Article 2180 of the Civil Code. And, the Court of Appeals did not only find the petitioner liable, but increased the damages awarded the plaintiffsappellees to P6,000.00, instead of P3,000.00 granted by the trial court. In its brief before us, La Mallorca contends that the Court of Appeals erred (1) in holding it liable for quasi-delict, considering that respondents complaint was one for breach of contract, and (2) in raising the award of damages from P3,000.00 to P6,000.00 although respondents did not appeal from the decision of the lower court. Under the facts as found by the Court of Appeals, we have to sustain the judgement holding petitioner liable for damages for the death of the child, Raquel Beltran. It may be pointed out that although it is true that respondent Mariano Beltran, his wife, and their children (including the deceased child) had alighted from the bus at a place designated for disembarking or unloading of passengers, it was also established that the father had to return to the vehicle (which was still at a stop) to get one of his bags or bayong that was left under one of the seats of the bus. There can be no controversy that as far as the father is concerned, when he returned to the bus for hisbayong which was not unloaded, the relation of passenger and carrier between him and the petitioner remained subsisting. For, the relation of carrier and passenger does not necessarily cease where the latter, after alighting from the car, aids the carrier's servant or employee in removing his 1 baggage from the car. The issue to be determined here is whether as to the child, who was already led by the father to a place about 5 meters away from the bus, the liability of the carrier for her safety under the contract of carriage also persisted.

It has been recognized as a rule that the relation of carrier and passenger does not cease at the moment the passenger alights from the carrier's vehicle at a place selected by the carrier at the point of destination, but continues until the passenger has had a reasonable time or a reasonable opportunity to leave the carrier's premises. And, what is a reasonable time or a reasonable delay within this rule is to be determined from all the circumstances. Thus, a person who, after alighting 2 from a train, walks along the station platform is considered still a passenger. So also, where a passenger has alighted at his destination and is proceeding by the usual way to leave the company's premises, but before actually doing so is halted by the report that his brother, a fellow passenger, has been shot, and he in good faith and without intent of engaging in the difficulty, returns to relieve his brother, he is deemed reasonably and necessarily delayed and thus continues to be a passenger entitled as such to the protection of the railroad and company and its 3 agents. In the present case, the father returned to the bus to get one of his baggages which was not unloaded when they alighted from the bus. Raquel, the child that she was, must have followed the father. However, although the father was still on the running board of the bus awaiting for the conductor to hand him the bag or bayong, the bus started to run, so that even he (the father) had to jump down from the moving vehicle. It was at this instance that the child, who must be near the bus, was run over and killed. In the circumstances, it cannot be claimed that the carrier's agent had exercised the "utmost diligence" of a "very cautions person" required by Article 1755 of the Civil Code to be observed by a common carrier in the discharge of its obligation to transport safely its passengers. In the first place, the driver, although stopping the bus, nevertheless did not put off the engine. Secondly, he started to run the bus even before the bus conductor gave him the signal to go and while the latter was still unloading part of the baggages of the passengers Mariano Beltran and family. The presence of said passengers near the bus was not unreasonable and they are, therefore, to be considered still as passengers of the carrier, entitled to the protection under their contract of carriage. But even assuming arguendo that the contract of carriage has already terminated, herein petitioner can be held liable for the negligence of its driver, as ruled by the Court of Appeals, pursuant to Article 2180 of the Civil Code. Paragraph 7 of the complaint, which reads That aside from the aforesaid breach of contract, the death of Raquel Beltran, plaintiffs' daughter, was caused by the negligence and want of exercise of the utmost diligence of a very cautious person on the part of the defendants and their agent, necessary to transport plaintiffs and their daughter safely as far as human care and foresight can provide in the operation of their vehicle. is clearly an allegation for quasi-delict. The inclusion of this averment for quasidelict, while incompatible with the other claim under the contract of carriage, is permissible under Section 2 of Rule 8 of the New Rules of Court, which allows a plaintiff to allege causes of action in the alternative, be they compatible with each

other or not, to the end that the real matter in controversy may be resolved and 4 determined. The plaintiffs sufficiently pleaded the culpa or negligence upon which the claim was predicated when it was alleged in the complaint that "the death of Raquel Beltran, plaintiffs' daughter, was caused by the negligence and want of exercise of the utmost diligence of a very cautious person on the part of the defendants and their agent." This allegation was also proved when it was established during the trial that the driver, even before receiving the proper signal from the conductor, and while there were still persons on the running board of the bus and near it, started to run off the vehicle. The presentation of proof of the negligence of its employee gave rise to the presumption that the defendant employer did not exercise the diligence of a good father of the family in the selection and supervision of its employees. And this presumption, as the Court of Appeals found, petitioner had failed to overcome. Consequently, petitioner must be adjudged peculiarily liable for the death of the child Raquel Beltran. The increase of the award of damages from P3,000.00 to P6,000.00 by the Court of Appeals, however, cannot be sustained. Generally, the appellate court can only pass upon and consider questions or issues raised and argued in appellant's brief. Plaintiffs did not appeal from that portion of the judgment of the trial court awarding them on P3,000.00 damages for the death of their daughter. Neither does it appear that, as appellees in the Court of Appeals, plaintiffs have pointed out in their brief the inadequacy of the award, or that the inclusion of the figure P3,000.00 was merely a clerical error, in order that the matter may be treated as an exception to 5 the general rule. Herein petitioner's contention, therefore, that the Court of Appeals committed error in raising the amount of the award for damages is, evidently, meritorious.1wph1.t Wherefore, the decision of the Court of Appeals is hereby modified by sentencing, the petitioner to pay to the respondents Mariano Beltran, et al., the sum of P3,000.00 for the death of the child, Raquel Beltran, and the amount of P400.00 as actual damages. No costs in this instance. So ordered. Concepcion, C.J., Reyes, J.B.L., Dizon, Regala, Bengzon, J.P., Zaldivar, Sanchez and Castro, JJ., concur. Makalintal, J., concurs in the result.

G.R. No. L-22272 June 26, 1967 ANTONIA MARANAN, plaintiff-appellant, vs. PASCUAL PEREZ, ET AL., defendants. PASCUAL PEREZ, defendant appellant. Pedro Panganiban for plaintiff-appellant. Magno T. Bueser for defendant-appellant. BENGZON, J.P., J.: Rogelio Corachea, on October 18, 1960, was a passenger in a taxicab owned and operated by Pascual Perez when he was stabbed and killed by the driver, Simeon Valenzuela. Valenzuela was prosecuted for homicide in the Court of First Instance of Batangas. Found guilty, he was sentenced to suffer imprisonment and to indemnify the heirs of the deceased in the sum of P6,000. Appeal from said conviction was taken to the Court of Appeals. 1wph1.t On December 6 1961, while appeal was pending in the Court of Appeals, Antonia Maranan, Rogelio's mother, filed an action in the Court of First Instance of Batangas to recover damages from Perez and Valenzuela for the death of her son. Defendants asserted that the deceased was killed in self-defense, since he first assaulted the driver by stabbing him from behind. Defendant Perez further claimed that the death was a caso fortuito for which the carrier was not liable. The court a quo, after trial, found for the plaintiff and awarded her P3,000 as damages against defendant Perez. The claim against defendant Valenzuela was dismissed. From this ruling, both plaintiff and defendant Perez appealed to this Court, the former asking for more damages and the latter insisting on non-liability. Subsequently, the Court of Appeals affirmed the judgment of conviction earlier mentioned, during the pendency of the herein appeal, and on May 19, 1964, final judgment was entered therein. (Rollo, p. 33). Defendant-appellant relies solely on the ruling enunciated in Gillaco v. Manila Railroad Co., 97 Phil. 884, that the carrier is under no absolute liability for assaults of its employees upon the passengers. The attendant facts and controlling law of that case and the one at bar are very different however. In the Gillaco case, the passenger was killed outside the scope and the course of duty of the guilty employee. As this Court there found: x x x when the crime took place, the guard Devesa had no duties to discharge in connection with the transportation of the deceased from Calamba to Manila. The stipulation of facts is clear that when Devesa shot and killed Gillaco, Devesa was assigned to guard the ManilaSan Fernando (La Union) trains, and he was at Paco Station awaiting transportation to Tutuban, the starting point of the train that he was engaged to guard. In fact, his tour of duty was to start at 9:00 two hours after the commission of the crime. Devesa was therefore under no obligation to safeguard the passengers of the Calamba-Manila train, where the deceased was riding; and the killing of Gillaco was not done in line of duty . The position of Devesa at the time was that of another would be passenger, a stranger also awaiting transportation, and not that of an employee assigned to discharge any of the duties that the Railroad had assumed by its contract with the deceased. As a result, Devesa's assault can not be deemed in law a breach of Gillaco's contract of transportation by a servant or employee of the carrier. . . . (Emphasis supplied) Now here, the killing was perpetrated by the driver of the very cab transporting the passenger, in whose hands the carrier had entrusted the duty of executing the contract of carriage. In other words, unlike the Gillaco case, the killing of the passenger here took place in the course of duty of the guilty employee and when the employee was acting within the scope of his duties. Moreover, the Gillaco case was decided under the provisions of the Civil Code of 1889 which, unlike the present Civil Code, did not impose upon common carriers absolute liability for the safety of passengers against wilful assaults or negligent acts committed by their employees. The death of the passenger in the Gillaco case was truly a fortuitous event which exempted the carrier from liability. It is true that Art. 1105 of the old Civil Code on fortuitous events has been substantially reproduced in Art. 1174 of the Civil Code of the Philippines but both articles clearly remove from their exempting effect the case where the law expressly provides for liability in spite of the occurrence of force majeure. And herein significantly lies the statutory difference between the old and present Civil Codes, in the backdrop of the factual situation before Us, which further accounts for a different result in theGillaco case. Unlike the old Civil Code, the new Civil Code of the Philippines expressly makes the

common carrier liable for intentional assaults committed by its employees upon its passengers, by the wording of Art. 1759 which categorically states that Common carriers are liable for the death of or injuries to passengers through the negligence or willful acts of the former's employees, although such employees may have acted beyond the scope of their authority or in violation of the orders of the common carriers. The Civil Code provisions on the subject of Common Carriers 1 are new and were taken from AngloAmerican Law.2 There, the basis of the carrier's liability for assaults on passengers committed by its drivers rests either on (1) the doctrine of respondeat superior or (2) the principle that it is the carrier's implied duty to transport the passenger safely.3 Under the first, which is the minority view, the carrier is liable only when the act of the employee is within the scope of his authority and duty. It is not sufficient that the act be within the course of employment only.4 Under the second view, upheld by the majority and also by the later cases, it is enough that the assault happens within the course of the employee's duty. It is no defense for the carrier that the act was done in excess of authority or in disobedience of the carrier's orders. 5 The carrier's liability here is absolute in the sense that it practically secures the passengers from assaults committed by its own employees. 6 As can be gleaned from Art. 1759, the Civil Code of the Philippines evidently follows the rule based on the second view. At least three very cogent reasons underlie this rule. As explained in Texas Midland R.R. v. Monroe, 110 Tex. 97, 216 S.W. 388, 389-390, and Haver v. Central Railroad Co., 43 LRA 84, 85: (1) the special undertaking of the carrier requires that it furnish its passenger that full measure of protection afforded by the exercise of the high degree of care prescribed by the law, inter alia from violence and insults at the hands of strangers and other passengers, but above all, from the acts of the carrier's own servants charged with the passenger's safety; (2) said liability of the carrier for the servant's violation of duty to passengers, is the result of the formers confiding in the servant's hands the performance of his contract to safely transport the passenger, delegating therewith the duty of protecting the passenger with the utmost care prescribed by law; and (3) as between the carrier and the passenger, the former must bear the risk of wrongful acts or negligence of the carrier's employees against passengers, since it, and not the passengers, has power to select and remove them. Accordingly, it is the carrier's strict obligation to select its drivers and similar employees with due regard not only to their technical competence and physical ability, but also, no less important, to their total personality, including their patterns of behavior, moral fibers, and social attitude. Applying this stringent norm to the facts in this case, therefore, the lower court rightly adjudged the defendant carrier liable pursuant to Art. 1759 of the Civil Code. The dismissal of the claim against the defendant driver was also correct. Plaintiff's action was predicated on breach of contract of carriage7 and the cab driver was not a party thereto. His civil liability is covered in the criminal case wherein he was convicted by final judgment. In connection with the award of damages, the court a quo granted only P3,000 to plaintiff-appellant. This is the minimum compensatory damages amount recoverable under Art. 1764 in connection with Art. 2206 of the Civil Code when a breach of contract results in the passenger's death. As has been the policy followed by this Court, this minimal award should be increased to P6,000. As to other alleged actual damages, the lower court's finding that plaintiff's evidence thereon was not convincing, 8 should not be disturbed. Still, Arts. 2206 and 1764 award moral damages in addition to compensatory damages, to the parents of the passenger killed to compensate for the mental anguish they suffered. A claim therefor, having been properly made, it becomes the court's duty to award moral damages.9 Plaintiff demands P5,000 as moral damages; however, in the circumstances, We consider P3,000 moral damages, in addition to the P6,000 damages afore-stated, as sufficient. Interest upon such damages are also due to plaintiff-appellant. 10 Wherefore, with the modification increasing the award of actual damages in plaintiff's favor to P6,000, plus P3,000.00 moral damages, with legal interest on both from the filing of the complaint on December 6, 1961 until the whole amount is paid, the judgment appealed from is affirmed in all other respects. No costs. So ordered. Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez and Castro, JJ., concur.

G.R. No. 128607 January 31, 2000 ALFREDO MALLARI, SR. and ALFREDO MALLARI, JR., petitioners, vs. COURT OF APPEALS and BULLETIN PUBLISHING CORPORATION, respondents. BELLOSILLO, J.: ALFREDO MALLARI SR. and ALFREDO MALLARI JR. in this petition for review 1 on certiorari seek to set aside the Decision of the Court of Appeals which reversed the court a quo and adjudged petitioners to be liable for damages due to negligence as a common carrier resulting in the death of a passenger. On 14 October 1987, at about 5:00 o'clock in the morning, the passenger jeepney driven by petitioner Alfredo Mallari Jr. and owned by his co-petitioner Alfredo Mallari Sr. collided with the delivery van of respondent Bulletin Publishing Corp. (BULLETIN, for brevity) along the National Highway in Barangay San Pablo, Dinalupihan, Bataan. Petitioner Mallari Jr. testified that he went to the left lane of the highway and overtook a Fiera which had stopped on the right lane. Before he passed by the Fiera, he saw the van of respondent BULLETIN coming from the opposite direction. It was driven by one Felix Angeles. The sketch of the accident showed that the collision occurred after Mallari Jr. overtook the Fiera while negotiating a curve in the highway. The points of collision were the and the left rear portion of the passenger jeepney and the left front side of the delivery van of BULLETIN. The two (2) right wheels of the delivery van were on the right shoulder of the road and pieces of debris from the accident were found scattered along the shoulder of the road up to a certain portion of the lane travelled by the passenger jeepney. The impact caused the jeepney to turn around and fall on its left side resulting in injuries to its passengers one of whom was Israel Reyes who eventually died due to the gravity of his injuries.1wphi1.nt On 16 December 1987 Claudia G. Reyes, the widow of Israel M. Reyes, filed a complaint for damages with the Regional Trial Court of Olongapo City against Alfredo Mallari Sr. and Alfredo Mallari Jr., and also against BULLETIN, its driver Felix Angeles, and the N.V. Netherlands Insurance Company. The complaint alleged that the collision which resulted in the death of Israel Reyes was caused by the fault and negligence of both drivers of the passenger jeepney and the Bulletin Isuzu delivery van. The complaint also prayed that the defendants be ordered jointly and severally to pay plaintiff P1,006,777.40 in compensatory damages, P40,000.00 for hospital and medical expenses, P18,270.00 for burial expenses plus such amounts as may be fixed by the trial court for exemplary damages and attorney's fees. The trial court found that the proximate cause of the collision was the negligence of Felix Angeles, driver of the Bulletin delivery van, considering the fact that the left front portion of the delivery truck driven by Felix Angeles hit and bumped the left rear portion of the passenger jeepney driven by Alfredo Mallari Jr. Hence, the trial court ordered BULLETIN and Felix Angeles to pay jointly and severally Claudia G. Reyes, widow of the deceased victim, the sums of P42,106.93 for medical expenses; P8,600.00 for funeral and burial expenses; P1,006,777.40 for loss of

earning capacity; P5,000.00 for moral damages and P10,000.00 for attorney's fees. The trial court also ordered N.V. Netherlands Insurance Company to indemnify Claudia G. Reyes P12,000.00 as death indemnity and P2,500.00 for funeral expenses which when paid should be deducted from the liabilities of respondent BULLETIN and its driver Felix Angeles to the plaintiff. It also dismissed the complaint against the other defendants Alfredo Mallari Sr. and Alfredo Mallari Jr. On appeal the Court of Appeals modified the decision of the trial court and found no negligence on the part of Angeles and consequently of his employer, respondent BULLETIN. Instead, the appellate court ruled that the collision was caused by the sole negligence of petitioner Alfredo Mallari Jr. who admitted that immediately before the collision and after he rounded a curve on the highway, he overtook a Fiera which had stopped on his lane and that he had seen the van driven by Angeles before overtaking the Fiera. The Court of Appeals ordered petitioners Mallari Jr. and Mallari Sr. to compensate Claudia G. Reyes P1,006,777.50 for loss of earning capacity, P50,000.00 as indemnity for death and P10,000.00 for attorney's fees. It absolved from any liability respondent BULLETIN, Felix Angeles and N.V. Netherlands Insurance Company. Hence this petition. Petitioners contend that there is no evidence to show that petitioner Mallari Jr. overtook a vehicle at a curve on the road at the time of the accident and that the testimony of Angeles on the overtaking made by Mallari Jr. was not credible and unreliable. Petitioner also submits that the trial court was in a better position than the Court of Appeals to assess the evidence and observe the witnesses as well as determine their credibility; hence, its finding that the proximate cause of the collision was the negligence of respondent Angeles, driver of the delivery van owned by respondent BULLETIN, should be given more weight and consideration. We cannot sustain petitioners. Contrary to their allegation that there was no evidence whatsoever that petitioner Mallari Jr. overtook a vehicle at a curve on the road at the time of or before the accident, the same petitioner himself testified that such fact indeed did occur Q: And what was that accident all about? A: Well, what happened, sir, is that at about that time 5:00 o'clock in that morning of October 14 while I was negotiating on the highway at San Pablo, Dinalupihan, Bataan, I was then following a blue Ford Fierra and my distance behind was about twenty (20) feet and then I passed that blue Ford Fierra. I overtook and when I was almost on the right lane of the highway towards Olongapo City there was an oncoming delivery van of the Bulletin Publishing Corporation which bumped the left rear portion of the jeepney which I was driving and as a result of which the jeepney . . . turned around and fell on its left side and as a result of which some of my passengers including me were injured, sir . . . . Q: Before you overtook the Ford Fierra jeepney did you look . . . whether there was any vehicle coming towards you? A: Yes, sir.

Q: Did you see the Bulletin van or the Press van coming towards you? A: Yes, sir. Q: At the moment the Ford Fierra . . . stop(ped) and in overtaking the Fierra, did you not have an option to stop and not to overtake the Ford Fierra? A: Well, at the time when the Ford Fierra stopped in front of me I slowed down with the intention of applying the brake, however, when I saw the oncoming vehicle which is the Press van is very far. . . which is 100 feet distance, . . . it is sufficient to overtake the Ford Fierra so I overt(ook) it . . . . Q: You said that you took into consideration the speed of the oncoming Press van but you also could not estimate the speed of the press van because it was dark at that time, which of these statements are true? A: What I wanted to say, I took into consideration the speed of the oncoming vehicle, the Press van, although at the moment I could not 2 estimate the speed of the oncoming vehicle . . . . The Court of Appeals correctly found, based on the sketch and spot report of the police authorities which were not disputed by petitioners, that the collision occurred immediately after petitioner Mallari Jr. overtook a vehicle in front of it while 3 traversing a curve on the highway. This act of overtaking was in clear violation of Sec. 41, pars. (a) and (b), of RA 4136 as amended, otherwise known as The Land Transportation and Traffic Code which provides: Sec. 41. Restrictions on overtaking and passing. (a) The driver of a vehicle shall not drive to the left side of the center line of a highway in overtaking or passing another vehicle proceeding in the same direction, unless such left side is clearly visible and is free of oncoming traffic for a sufficient distance ahead to permit such overtaking or passing to be made in safety. (b) The driver of a vehicle shall not overtake or pass another vehicle proceeding in the same direction when approaching the crest of a grade, nor upon a curve in the highway, where the driver's view along the highway is obstructed within a distance of five hundred feet ahead except on a highway having two or more lanes for movement of traffic in one direction where the driver of a vehicle may overtake or pass another vehicle: Provided That on a highway, within a business or residential district, having two or more lanes for movement of traffic in one direction, the driver of a vehicle may overtake or pass another vehicle on the right. The rule is settled that a driver abandoning his proper lane for the purpose of overtaking another vehicle in an ordinary situation has the duty to see to it that the 4 road is clear and not to proceed if he cannot do so in safety. When a motor vehicle is approaching or rounding a curve, there is special necessity for keeping to the right side of the road and the driver does not have the right to drive on the left hand side relying upon having time to turn to the right if a car approaching from the 5 opposite direction comes into view.

In the instant case, by his own admission, petitioner Mallari Jr. already saw that the BULLETIN delivery van was coming from the opposite direction and failing to consider the speed thereof since it was still dark at 5:00 o'clock in the morning mindlessly occupied the left lane and overtook two (2) vehicles in front of it at a curve in the highway. Clearly, the proximate cause of the collision resulting in the death of Israel Reyes, a passenger of the jeepney, was the sole negligence of the driver of the passenger jeepney, petitioner Alfredo Mallari Jr., who recklessly operated and drove his jeepney in a lane where overtaking was not allowed by traffic rules. Under Art. 2185 of the Civil Code, unless there is proof to the contrary, it is presumed that a person driving a motor vehicle has been negligent if at the time of the mishap he was violating a traffic regulation. As found by the appellate court, petitioners failed to present satisfactory evidence to overcome this legal presumption. The negligence and recklessness of the driver of the passenger jeepney is binding against petitioner Mallari Sr., who admittedly was the owner of the passenger jeepney engaged as a common carrier, considering the fact that in an action based on contract of carriage, the court need not make an express finding of fault or negligence on the part of the carrier in order to hold it responsible for the payment of damages sought by the passenger. Under Art. 1755 of the Civil Code, a common carrier is bound to carry the passengers safely as far as human care and foresight can provide using the utmost diligence of very cautious persons with due regard for all the circumstances. Moreover, under Art. 1756 of the Civil Code, in case of death or injuries to passengers, a common carrier is presumed to have been at fault or to have acted negligently, unless it proves that it observed extraordinary diligence. Further, pursuant to Art. 1759 of the same Code, it is liable for the death of or injuries to passengers through the negligence or willful acts of the former's employees. This liability of the common carrier does not cease upon proof that it exercised all the diligence of a good father of a family in the selection of its employees. Clearly, by the contract of carriage, the carrier jeepney owned by Mallari Sr. assumed the express obligation to transport the passengers to their destination safely and to observe extraordinary diligence with due regard for all the circumstances, and any injury or death that might be suffered by its passengers is right away attributable to the fault or negligence of the carrier. The monetary award ordered by the appellate court to be paid by petitioners to the widow of the deceased passenger Israel M. Reyes of P1,006,777.50 for loss of earning capacity, P50,000.00 as civil indemnity for death, and P10,000.00 for attorney's fees, all of which were not disputed by petitioners, is a factual matter binding and conclusive upon this Court. 1wphi1.nt WHEREFORE, the Petition is DENIED and the Decision of the Court of Appeals dated 20 September 1995 reversing the decision of the trial court being in accord with law and evidence is AFFIRMED. Consequently, petitioners are ordered jointly and severally to pay Claudia G. Reyes P1,006,777.50 for loss of earning capacity, P50,000.00 as civil indemnity for death, and P10,000.00 for attorney's fees. Costs against petitioners. SO ORDERED.

G.R. No. 85691 July 31, 1990 BACHELOR EXPRESS, INCORPORATED, and CRESENCIO RIVERA, petitioners, vs. THE HONORABLE COURT OF APPEALS (Sixth Division), RICARDO BETER, SERGIA BETER, TEOFILO RAUTRAUT and ZOETERA RAUTRAUT, respondents. Aquino W. Gambe for petitioners. Tranquilino O. Calo, Jr. for private respondents. GUTIERREZ, JR., J.: This is a petition for review of the decision of the Court of Appeals which reversed and set aside the order of the Regional Trial Court, Branch I, Butuan City dismissing the private respondents' complaint for collection of "a sum of money" and finding the petitioners solidarily liable for damages in the total amount of One Hundred Twenty Thousand Pesos (P120,000.00). The petitioners also question the appellate court's resolution denying a motion for reconsideration. On August 1, 1980, Bus No. 800 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 evidence shows that the bus came from Davao City on its way to Cagayan de Oro City passing Butuan City; that while at Tabon-Tabon, Butuan City, the bus picked up a passenger; that about fifteen (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 herein (Ricardo Beter and Sergia Beter are the parents of Ornominio while Teofilo Rautraut and Zoetera [should be Zotera] Rautraut are the parents of Narcisa) filed a complaint for "sum of money" against Bachelor Express, Inc. its alleged owner Samson Yasay and the driver Rivera. In their answer, the petitioners denied liability for the death of Ornominio Beter and Narcisa Rautraut. They 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, much less, the fault of the driver and conductor and the defendants in this case; the defendant corporation had exercised due diligence in the choice of its employees to avoid as much as possible accidents; the incident on August 1, 1980 was not a traffic accident or vehicular accident; it was an incident or event very much beyond the control of the defendants; defendants were not parties to the incident complained of as it was an act of a third party who is not in any way connected with the defendants and of which the latter have no control and supervision; ..." (Rollo, pp. 112113).itc-asl After due trial, the trial court issued an order dated August 8, 1985 dismissing the complaint. Upon appeal however, the trial court's decision was reversed and set aside. The dispositive portion of the decision of the Court of Appeals states: WHEREFORE, the Decision appealed from is REVERSED and SET ASIDE and a new one entered finding the appellees jointly and solidarily liable to pay the plaintiffs-appellants the following amounts: 1) To the heirs of Ornominio Beter, the amount of Seventy Five Thousand Pesos (P75,000.00) in loss of earnings and support, moral damages, straight death indemnity and attorney's fees; and,

2) To the heirs of Narcisa Rautraut, the amount of Forty Five Thousand Pesos (P45,000.00) for straight death indemnity, moral damages and attorney's fees. Costs against appellees. (Rollo, pp. 71-72) The petitioners now pose the following questions What was the proximate cause of the whole incident? Why were the passengers on board the bus panicked (sic) and why were they shoving one another? Why did Narcisa Rautraut and Ornominio Beter jump off from the running bus? The petitioners opine that answers to these questions are material to arrive at "a fair, just and equitable judgment." (Rollo, p. 5) They claim that the assailed decision is based on a misapprehension of facts and its conclusion is grounded on speculation, surmises or conjectures. As regards the proximate cause of the death of Ornominio Beter and Narcisa Rautraut, the petitioners maintain that it was the act of the passenger who ran amuck and stabbed another passenger of the bus. They contend that the stabbing incident triggered off the commotion and panic among the passengers who pushed one another and that presumably out of fear and moved by that human instinct of self-preservation Beter and Rautraut jumped off the bus while the bus was still running resulting in their untimely death." (Rollo, p. 6) Under these circumstances, the 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. Furthermore, the petitioners maintain that the driver of the bus, before, during and after the incident was driving cautiously giving due regard to traffic rules, laws and regulations. The petitioners also argue that they are not insurers of their passengers as ruled by the trial court. The liability, if any, of the petitioners is anchored on culpa contractual or breach of contract of carriage. The applicable provisions of law under the New Civil Code are as follows: ART. 1732. Common carriers are persons, corporations, firms or associations engaged in the business of carrying or transporting passengers or goods or both by land, water, or air, for compensation, offering their services to the public. ART. 1733. Common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them, according to all the circumstances of each case. xxx xxx xxx ART. 1755. A common carrier is bound to carry the passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with a due regard for all the circumstances. ART. 1756. 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. There is no question that Bachelor Express, Inc. is a common carrier. Hence, from the nature of its business and for reasons of public policy Bachelor Express, Inc. 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 a due regard for all the circumstances. In the case at bar, 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. Bachelor Express, Inc. denies liability for the death of Beter and Rautraut on its posture that the death of the said passengers was caused by a third person who was beyond its control and 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. Article 1174 of the present Civil Code states: Except in cases expressly specified by law, or when it is otherwise declared by stipulations, or when the nature of the obligation requires the assumption of risk, no person shall be responsible for those events which could not be foreseen, or which though foreseen, were inevitable. The above-mentioned provision was substantially copied from Article 1105 of the old Civil Code which states" No one shall be liable for events which could not be foreseen or which, even if foreseen, were inevitable, with the exception of the cases in which the law expressly provides otherwise and those in which the obligation itself imposes liability. In the case of Lasam v. Smith (45 Phil. 657 [1924]), we defined "events" which cannot be foreseen and which, having been foreseen, are inevitable in the following manner: ... The Spanish authorities regard the language employed as an effort to define the term 'caso fortuito' and hold that the two expressions are synonymous. (Manresa Comentarios al Codigo Civil Espaol, vol. 8, pp. 88 et seq.; Scaevola, Codigo Civil, vol. 19, pp. 526 et seq.) The antecedent to Article 1105 is found in Law II, Title 33, Partida 7, which defines caso fortuito as 'occasion que acaese por aventura de que non se puede ante ver. E son estos, derrivamientos de casas e fuego que enciende a so ora, e quebrantamiento de navio, fuerca de ladrones' (An event that takes place by incident and could not have been foreseen. Examples of this are destruction of houses, unexpected fire, shipwreck, violence of robbers ...) Escriche defines caso fortuito as an unexpected event or act of God which could neither be foreseen nor resisted, such as floods, torrents, shipwrecks, conflagrations, lightning, compulsion, insurrections, destruction of buildings by unforeseen accidents and other occurrences of a similar nature. In discussing and analyzing the term caso fortuito the Enciclopedia Juridica Espaola says: 'In a legal sense and, consequently, also in relation to contracts, a caso fortuito presents the following essential characteristics: (1) The cause of the unforeseen and unexpected occurrence, or of the failure of the debtor to comply with his obligation, must be independent of the human will. (2) It must be impossible to foresee the event which constitutes the caso fortuito, or if it can be

foreseen, it must be impossible to avoid. (3) The occurrence must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner. And (4) the obligor (debtor) must be free from any participation in the aggravation of the injury resulting to the creditor. (5) Enciclopedia Juridica Espaola, 309) 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. ... 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. 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. Thus, as early as 1912, we ruled: From all the foregoing, it is concluded that the defendant is not liable for the loss and damage of the goods shipped on the lorcha Pilar by the Chinaman, Ong Bien Sip, inasmuch as such loss and damage were the result of a fortuitous event or force majeure, and there was no negligence or lack of care and diligence on the part of the defendant company or its agents. (Tan Chiong Sian v. Inchausti & Co., 22 Phil. 152 [1912]; Emphasis supplied). This principle was reiterated in a more recent case, Batangas Laguna Tayabas Co. v. Intermediate Appellate Court (167 SCRA 379 [1988]), wherein we ruled: ... [F]or their defense of force majeure or act of God to prosper the accident must be due to natural causes and exclusively without human intervention. (Emphasis supplied) Therefore, the next question to be determined is whether or not the petitioner's common carrier observed extraordinary diligence to safeguard the lives of its passengers. In this regard the trial court and the appellate court arrived at conflicting factual findings. The trial court found the following facts: The parties presented conflicting evidence as to how the two deceased Narcisa Rautruat and Ornominio Beter met their deaths. However, from the evidence adduced by the plaintiffs, the Court could not see why the two deceased could have fallen off the bus when their own witnesses testified that when the commotion ensued inside the bus, the passengers pushed and shoved each other towards the door apparently in order to get off from the bus through the door. But the passengers also could not pass through the door because according to the evidence the door was locked. On the other hand, the Court is inclined to give credence to the evidence adduced by the defendants that when the commotion ensued inside the bus, the two deceased panicked and, in state of shock and fear, they jumped off from the bus by passing through the window. It is the prevailing rule and settled jurisprudence that transportation companies are not insurers of their passengers. The evidence on record does not show that defendants' personnel were negligent in their duties. The defendants' personnel have every right to accept passengers absent

any manifestation of violence or drunkenness. If and when such passengers harm other passengers without the knowledge of the transportation company's personnel, the latter should not be faulted. (Rollo, pp. 46-47) A thorough examination of the records, however, show that there are material facts ignored by the trial court which were discussed by the appellate court to arrive at a different conclusion. These circumstances show that the petitioner common carrier was negligent in the provision of safety precautions so that its passengers may be transported safely to their destinations. The appellate court states: A critical eye must be accorded the lower court's conclusions of fact in its tersely written ratio decidendi. The lower court concluded that the door of the bus was closed; secondly, the passengers, specifically the two deceased, jumped out of the window. The lower court therefore concluded that the defendant common carrier is not liable for the death of the said passengers which it implicitly attributed to the unforeseen acts of the unidentified passenger who went amuck. There is nothing in the record to support the conclusion that the solitary door of the bus was locked as to prevent the passengers from passing through. Leonila Cullano, testifying for the defense, clearly stated that the conductor opened the door when the passengers were shouting that the bus stop while they were in a state of panic. Sergia Beter categorically stated that she actually saw her son fall from the bus as the door was forced open by the force of the onrushing passengers. Pedro Collango, on the other hand, testified that he shut the door after the last passenger had boarded the bus. But he had quite conveniently neglected to say that when the passengers had panicked, he himself panicked and had gone to open the door. Portions of the testimony of Leonila Cullano, quoted below, are illuminating: xxx xxx xxx Q When you said the conductor opened the door, the door at the front or rear portion of the bus? A Front door. Q And these two persons whom you said alighted, where did they pass, the fron(t) door or rear door? A Front door. xxx xxx xxx (Tsn., p. 4, Aug. 8, 1984) xxx xxx xxx Q What happened after there was a commotion at the rear portion of the bus? A When the commotion occurred, I stood up and I noticed that there was a passenger who was sounded (sic). The conductor panicked because the passengers were shouting 'stop, stop'. The conductor opened the bus.' (Tsn. p. 3, August 8, 1984). Accordingly, there is no reason to believe that the deceased passengers jumped from the window when it was entirely possible for them to have alighted through the door. The lower court's reliance on the testimony of Pedro Collango, as the conductor and employee of the common carrier, is unjustified, in the light of the clear testimony of Leonila Cullano as the

sole uninterested eyewitness of the entire episode. Instead we find Pedro Collango's testimony to be infused by bias and fraught with inconsistencies, if not notably unreliable for lack of veracity. On direct examination, he testified: xxx xxx xxx Q So what happened to the passengers inside your bus? A Some of the passengers jumped out of the window. COURT: Q While the bus was in motion? A Yes, your Honor, but the speed was slow because we have just picked up a passenger. Atty. Gambe: Q You said that at the time of the incident the bus was running slow because you have just picked up a passenger. Can you estimate what was your speed at that time? Atty. Calo: No basis, your Honor, he is neither a driver nor a conductor. COURT: Let the witness answer. Estimate only, the conductor experienced. Witness: Not less than 30 to 40 miles. COURT: Kilometers or miles? A Miles. Atty. Gambe: Q That is only your estimate by your experience? A Yes, sir, estimate. (Tsn., pp. 4-5, Oct. 17, 1983). At such speed of not less than 30 to 40 miles ..., or about 48 to 65 kilometers per hour, the speed of the bus could scarcely be considered slow considering that according to Collango himself, the bus had just come from a full stop after picking a passenger (Tsn, p. 4, Id.) and that the bus was still on its second or third gear (Tsn., p. 12, Id.). In the light of the foregoing, the negligence of the common carrier, through its employees, consisted of the lack of extraordinary diligence required of common carriers, in exercising vigilance and utmost care of the safety of its passengers, exemplified by the driver's belated stop and the reckless opening of the doors of the bus while the same was travelling at an appreciably fast speed. At the same time, the common carrier itself acknowledged, through its administrative officer, Benjamin Granada, that the bus was commissioned to travel and take on passengers and the public at large, while equipped with only a solitary door for a bus its size and loading capacity, in contravention of rules and regulations provided for under the Land Transportation and Traffic Code (RA 4136 as amended.) (Rollo, pp. 23-26) Considering the factual findings of the Court of Appeals-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 majeureand not to the failure of the petitioners to observe extraordinary diligence in transporting safely the passengers to their destinations as warranted by law. (See Batangas Laguna Tayabas Co. v. Intermediate Appellate Court,supra). The petitioners also contend that the private respondents failed to show to the court that they are the parents of Ornominio Beter and Narcisa Rautraut respectively and therefore have no legal personality to sue the petitioners. This argument deserves scant consideration. We find this argument a belated attempt on the part of the petitioners to avoid liability for the deaths of Beter and Rautraut. The private respondents were Identified as the parents of the victims by witnesses during the trial and the trial court recognized them as such. The trial court dismissed the complaint solely on the ground that the petitioners were not negligent. Finally, the amount of damages awarded to the heirs of Beter and Rautraut by the appellate court is supported by the evidence. The appellate court stated: Ornominio Beter was 32 years of age at the time of his death, single, in good health and rendering support and service to his mother. As far as Narcisa Rautraut is concerned, the only evidence adduced is to the effect that at her death, she was 23 years of age, in good health and without visible means of support. In accordance with Art. 1764 in conjunction with Art. 2206 of the Civil Code, and established jurisprudence, several factors may be considered in determining the award of damages, namely: 1) life expectancy (considering the state of health of the deceased and the mortality tables are deemed conclusive) and loss of earning capacity; (2) pecuniary loss, loss of support and service; and (3) moral and mental suffering (Alcantara, et al. v. Surro, et al., 93 Phil. 470). In the case of People v. Daniel (No. L-66551, April 25, 1985, 136 SCRA 92, at page 104), the High Tribunal, reiterating the rule in Villa Rey Transit, Inc. v. Court of Appeals (31 SCRA 511), stated that the amount of loss of earring capacity is based mainly on two factors, namely, (1) the number of years on the basis of which the damages shall be computed; and (2) the rate at which the losses sustained by the heirs should be fixed. As the formula adopted in the case of Davila v. Philippine Air Lines, 49 SCRA 497, at the age of 30 one's normal life expectancy is 33-1/3 years based on the American Expectancy Table of Mortality (2/3 x 80-32).itcasl By taking into account the pace and nature of the life of a carpenter, it is reasonable to make allowances for these circumstances and reduce the life expectancy of the deceased Ornominio Beter to 25 years (People v. Daniel, supra). To fix the rate of losses it must be noted that Art. 2206 refers to gross earnings less necessary living expenses of the deceased, in other words, only net earnings are to be considered (People v. Daniel, supra; Villa Rey Transit, Inc. v. Court of Appeals,supra). Applying the foregoing rules with respect to Ornominio Beter, it is both just and reasonable, considering his social standing and position, to fix the deductible, living and incidental expenses at the sum of Four Hundred

Pesos (P400.00) a month, or Four Thousand Eight Hundred Pesos (P4,800.00) annually. As to his income, considering the irregular nature of the work of a daily wage carpenter which is seasonal, it is safe to assume that he shall have work for twenty (20) days a month at Twenty Five Pesos (P150,000.00) for twenty five years. Deducting therefrom his necessary expenses, his heirs would be entitled to Thirty Thousand Pesos (P30,000.00) representing loss of support and service (P150,000.00 less P120,000.00). In addition, his heirs are entitled to Thirty Thousand Pesos (P30,000.00) as straight death indemnity pursuant to Article 2206 (People v. Daniel, supra). For damages for their moral and mental anguish, his heirs are entitled to the reasonable sum of P10,000.00 as an exception to the general rule against moral damages in case of breach of contract rule Art. 2200 (Necesito v. Paras, 104 Phil. 75). As attorney's fees, Beter's heirs are entitled to P5,000.00. All in all, the plaintiff-appellants Ricardo and Sergia Beter as heirs of their son Ornominio are entitled to an indemnity of Seventy Five Thousand Pesos (P75,000.00). In the case of Narcisa Rautraut, her heirs are entitled to a straight death indemnity of Thirty Thousand Pesos (P30,000.00), to moral damages in the amount of Ten Thousand Pesos (P10,000.00) and Five Thousand Pesos (P5,000.00) as attorney's fees, or a total of Forty Five Thousand Pesos (P45,000.00) as total indemnity for her death in the absence of any evidence that she had visible means of support. (Rollo, pp. 30-31) WHEREFORE, the instant petition is DISMISSED. The questioned decision dated May 19, 1988 and the resolution dated August 1, 1988 of the Court of Appeals are AFFIRMED. SO ORDERED. Fernan, C.J., (Chairman), Feliciano, Bidin and Cortes, JJ., concur.

G.R. No. L-25499 February 18, 1970 VILLA REY TRANSIT, INC., petitioner, vs. THE COURT OF APPEALS, TRINIDAD A. QUINTOS, PRIMA A. QUINTOS, AND JULITA A. QUINTOS,respondents. Laurea and Pison for petitioner. Bonifacio M. Abad, Jr. for respondents. CONCEPCION, C.J.: Petitioner, Villa Rey Transit, Inc., seeks the review by certiorari of a decision of the Court of Appeals affirming that of the Court of First Instance of Pangasinan. The basic facts are set forth in said decision of the Court of Appeals, from which We quote: At about 1:30 in the morning of March 17, 1960, an Izuzu First Class passenger bus owned and operated by the defendant, bearing Plate No. TPU-14871-Bulacan and driven by Laureano Casim, left Lingayen, Pangasinan, for Manila. Among its paying passengers was the deceased, Policronio Quintos, Jr. who sat on the first seat, second row, right side of the bus. At about 4:55 o'clock a.m. when the vehicle was nearing the northern approach of the Sadsaran Bridge on the national highway in barrio Sto. Domingo, municipality of Minalin, Pampanga, it frontally hit the rear side of a bullcart filled with hay. As a result the end of a bamboo pole placed on top of the hayload and tied to the cart to hold it in place, hit the right side of the windshield of the bus. The protruding end of the bamboo pole, about 8 feet long from the rear of the bullcart, penetrated through the glass windshield and landed on the face of Policronio Quintos, Jr. who, because of the impact, fell from his seat and was sprawled on the floor. The pole landed on his left eye and the bone of the left side of his face was fractured. He suffered other multiple wounds and was rendered unconscious due, among other causes to severe cerebral concussion. A La Mallorca passenger bus going in the opposite direction towards San Fernando, Pampanga, reached the scene of the mishap and it was stopped by Patrolman Felino Bacani of the municipal police force of Minalin who, in the meantime, had gone to the scene to investigate. Patrolman Bacani placed Policronio Quintos, Jr. and three other injured men who rode on the bullcart aboard the La Mallorca bus and brought them to the provincial hospital of Pampanga at San Fernando for medical assistance. Notwithstanding such assistance, Policronio Quintos, Jr. died at 3:15 p.m. on the same day, March 17, 1960, due to traumatic shock due to cerebral injuries. The private respondents, Trinidad, Prima and Julita, all surnamed Quintos, are the sisters and only surviving heirs of Policronio Quintos Jr., who died single, leaving

no descendants nor ascendants. Said respondents herein brought this action against herein petitioner, Villa Rey Transit, Inc., as owner and operator of said passenger bus, bearing Plate No. TPU-14871-Bulacan, for breach of the contract of carriage between said petitioner and the deceased Policronio Quintos, Jr., to recover the aggregate sum of P63,750.00 as damages, including attorney's fees. Said petitioner defendant in the court of first instance contended that the mishap was due to a fortuitous event, but this pretense was rejected by the trial court and the Court of Appeals, both of which found that the accident and the death of Policronio had been due to the negligence of the bus driver, for whom petitioner was liable under its contract of carriage with the deceased. In the language of His Honor, the trial Judge: The mishap was not the result of any unforeseeable fortuitous event or emergency but was the direct result of the negligence of the driver of the defendant. The defendant must, therefore, respond for damages resulting from its breach of contract for carriage. As the complaint alleged a total damage of only P63,750.00 although as elsewhere shown in this decision the damages for wake and burial expenses, loss of income, death of the victim, and attorneys fee reach the aggregate of P79,615.95, this Court finds it just that said damages be assessed at total of only P63,750.00 as prayed for in plaintiffs' amended complaint. The despositive part of the decision of the trial Court reads: WHEREFORE, judgment is hereby rendered ordering the defendant to pay to the plaintiffs the amount of P63,750.00 as damages for breach of contract of carriage resulting from the death of Policronio Quintos, Jr. which, as above indicated, was affirmed by the Court of Appeals. Hence, the present petition for review oncertiorari, filed by Villa Rey Transit, Inc. The only issue raised in this appeal is the amount of damages recoverable by private respondents herein. The determination of such amount depends, mainly upon two (2) factors, namely: (1) the number of years on the basis of which the damages shall be computed and (2) the rate at which the losses sustained by said respondents should be fixed. The first factor was based by the trial court the view of which was concurred in by the Court of Appeals upon the life expectancy of Policronio Quintos, Jr., which was placed at 33-1/3 years he being over 29 years of age (or around 30 years for purposes of computation) at the time of his demise by applying the formula (2/3 x [80-301 = life expectancy) adopted in the American Expectancy Table of Mortality or the actuarial of Combined Experience Table of Mortality. Upon the other hand, petitioner maintains that the lower courts had erred in adopting 1 said formula and in not acting in accordance with Alcantara v. Surro in which the damages were computed on a four (4) year basis, despite the fact that the victim therein was 39 years old, at the time of his death, and had a life expectancy of 28.90 years.

The case cited is not, however, controlling in the one at bar. In the Alcantara case, none of the parties had questioned the propriety of the four-year basis adopted by the trial court in making its award of damages. Both parties appealed, but only as regards the amount thereof. The plaintiffs assailed the non-inclusion, in its computation, of the bonus that the corporation, which was the victim's employer, had awarded to deserving officers and employees, based upon the profits earned less than two (2) months before the accident that resulted in his death. The defendants, in turn, objected to the sum awarded for the fourth year, which was treble that of the previous years, based upon the increases given, in that fourth year, to other employees of the same corporation. Neither this objection nor said claim for inclusion of the bonus was sustained by this Court. Accordingly, the same had not thereby laid down any rule on the length of time to be used in the computation of damages. On the contrary, it declared: The determination of the indemnity to be awarded to the heirs of a deceased person has therefore no fixed basis. Much is left to the discretion of the court considering the moral and material damages involved, and so it has been said that "(t)here can be no exact or uniform rule for measuring the value of a human life and the measure of damages cannot be arrived at by precise mathematical calculation, but the amount recoverable depends on the particular facts and circumstances of each case. The life expectancy of the deceased or of the beneficiary, whichever is shorter, is an important factor.' (25 C.J.S. 1241.) Other factors that are usually considered are: (1) pecuniary loss to plaintiff or beneficiary (25 C.J.S. 1243-1250) ; (2) loss of support (25 C.J.S., 1250-1251); (3) loss of service (25 C.J.S. 1251-1254); (4) loss of society (25 C.J.S. 1254-1255); (5) mental suffering of beneficiaries (25 C.J.S., 1258-1259) ; and (6) medical and funeral expenses (26 2 C.J.S., 1254-1260)." Thus, life expectancy is, not only relevant, but, also, an important element in fixing the amount recoverable by private respondents herein. Although it is not the sole element determinative of said amount, no cogent reason has been given to warrant its disregard and the adoption, in the case at bar, of a purely arbitrary standard, such as a four-year rule. In short, the Court of Appeals has not erred in basing the computation of petitioner's liability upon the life expectancy of Policronio Quintos, Jr. With respect to the rate at which the damages shall be computed, petitioner impugns the decision appealed from upon the ground that the damages awarded therein will have to be paid now, whereas most of those sought to be indemnified will be suffered years later. This argument is basically true, and this is, perhaps, one of the reasons why the Alcantara case points out the absence of a "fixed basis" for the ascertainment of the damages recoverable in litigations like the one at bar. Just the same, the force of the said argument of petitioner herein is offset by the fact that, although payment of the award in the case at bar will have to take place upon the finality of the decision therein, the liability of petitioner herein had

been fixed at the rate only of P2,184.00 a year, which is the annual salary of Policronio Quintos, Jr. at the time of his death, as a young "training assistant" in the Bacnotan Cement Industries, Inc. In other words, unlike the Alcantara case, on which petitioner relies, the lower courts did not consider, in the present case, Policronio's potentiality and capacity to increase his future income. Indeed, upon the conclusion of his training period, he was supposed to have a better job and be promoted from time to time, and, hence, to earn more, if not considering the growing importance of trade, commerce and industry and the concomitant rise in the income level of officers and employees therein much more. At this juncture, it should be noted, also, that We are mainly 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 petitioner's 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 one's estate for his death by wrongful act is necessarily his net earning capacity or his capacity to acquire money, " less the necessary expense for 3 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 4 would have received. In other words, only net earnings, not gross earning, are to 5 be considered that is, the total of the earnings less expenses necessary in the 6 creation of such earnings or income and less living and other incidental 7 expenses. All things considered, We are of the opinion that it is fair and reasonable to fix the deductible living and other expenses of the deceased at the sum of P1,184.00 a year, or about P100.00 a month, and that, consequently, the loss sustained by his sisters may be roughly estimated at P1,000.00 a year or P33,333.33 for the 33-1/3 years of his life expectancy. To this sum of P33,333.33, the following should be added: (a) P12,000.00, pursuant to Arts. 104 and 107 of the Revised Penal Code, in relation to Article 2206 of our Civil Code, as construed and applied by this 8 Court; (b) P1,727.95, actually spent by private respondents for medical and burial expenses; and (c) attorney's fee, which was fixed by the trial court, at P500.00, but which, in view of the appeal taken by petitioner herein, first to the Court of Appeals and later to this Supreme Court, should be increased to P2,500.00. In other words, the amount adjudged in the decision appealed from should be reduced to the aggregate sum of P49,561.28, with interest thereon, at the legal rate, from December 29, 1961, date of the promulgation of the decision of the trial court. Thus modified, said decision and that of the Court of Appeals are hereby affirmed, in all other respects, with costs against petitioner, Villa Rey Transit, Inc. It is so ordered. Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Fernando, Teehankee, Barredo and Villamor, JJ., concur.

G.R. No. 92735 June 8, 2000 MONARCH INSURANCE CO., INC., TABACALERA INSURANCE CO., INC and Hon. Judge AMANTE PURISIMA,petitioners, vs. COURT OF APPEALS and ABOITIZ SHIPPING CORPORATION, respondents. x - - - - - - - - - - - - - - - - - - - - - - -x G.R. No. 94867 ALLIED GUARANTEE INSURANCE COMPANY, petitioner, vs. COURT OF APPEALS, Presiding Judge, RTC Manila, Br. 24 and ABOITIZ SHIPPING CORPORATION,respondents. x - - - - - - - - - - - - - - - - - - - - - - -x G.R. No. 95578 EQUITABLE INSURANCE CORPORATION, petitioner, vs. COURT OF APPEALS, Former First Division Composed of Hon. Justices RODOLFO NOCON, PEDRO RAMIREZ, and JESUS ELBINIAS and ABOITIZ SHIPPING CORPORATION, respondents. DE LEON, JR., J.: Before us are three consolidated petitions. G.R. No. 92735 is a petition for review filed under Rule 45 of the Rules of Court assailing the decision of the Court of Appeals dated March 29, 1990 in CA-G.R. SP. Case No. 17427 which set aside the writ of execution issued by the lower court for the full indemnification of the claims of the petitioners, Monarch Insurance Company (hereafter "Monarch") and Tabacalera Insurance Company, Incorporated (hereafter "Tabacalera") against private respondent, Aboitiz Shipping Corporation (hereafter "Aboitiz") on the ground that the latter is entitled to the benefit of the limited liability rule in maritime law; G.R. No. 94867 is a petition for certiorari under Rule 65 of the Rules of Court to annul and set aside the decision of the Court of Appeals dated August 15, 1990 in CA-G.R. SP No. 20844 which ordered the lower court to stay the execution of the judgment in favor of the petitioner, Allied Guarantee Insurance Company (hereafter "Allied") against Aboitiz insofar as it impairs the rights of the other claimants to their pro-rata share in the insurance proceeds from the sinking of the M/V P. Aboitiz, in accordance with the rule on limited liability; and G.R. No. 95578 is a petition for review under Rule 45 of the Rules of Court seeking a reversal of the decision of the Court of Appeals dated August 24, 1990 and its resolution dated October 4, 1990 in C.A. G.R. Civil Case No. 15071 which modified the judgment of the lower court's award of actual damages to petitioner Equitable Insurance Corporation (hereafter "Equitable") to its pro-rata share in the insurance proceeds from the sinking of the M/V P. Aboitiz. All cases arose from the loss of cargoes of various shippers when the M/V P. Aboitiz, a common carrier owned and operated by Aboitiz, sank on her voyage from Hong Kong to Manila on October 31, 1980. Seeking indemnification for the loss of their cargoes, the shippers, their successors-in-interest, and the cargo insurers such as the instant petitioners filed separate suits against Aboitiz before the Regional Trial Courts. The claims numbered one hundred and ten (110) for the total amount of P41,230,115.00 which is almost thrice the amount of the insurance proceeds of P14,500,000.00 plus earned freight of 500,000.00 according to Aboitiz. To this day, some of these claims, including those of herein petitioners, have not yet been settled. G.R. No. 92735. Monarch and Tabacalera are insurance carriers of lost cargoes. They indemnified the shippers and were consequently subrogated to their rights, interests and actions against Aboitiz, the cargo carrier. 1 Because Aboitiz refused to compensate Monarch, it filed two complaints against Aboitiz, docketed as Civil Cases Nos. 82-2767 and 82-2770. For its part, Tabacalera also filed two complaints against the same defendant, docketed as Civil Cases Nos. 82-2768 and 82-2769. As these four (4) cases had common causes of action, they were consolidated and jointly tried. 2

In Civil Case No. 82-2767 where Monarch also named Malaysian International Shipping Corporation and Litonja Merchant Shipping Agency as Aboitiz's co-defendants, Monarch sough recovery of P29,719.88 representing the value of three (3) pallets of glass tubing that sank with the M/V P. Aboitiz, plus attorney's fees of not less than P5,000.00, litigation expenses, interest at the legal rate on all these amounts, and the cost of suit. 3 Civil Case. No. 82-2770 was a complaint filed by Monarch against Aboitiz and co-defendants Compagnie Maritime des Chargeurs Reunis and F.E. Zuellig (M), Inc. for the recovery of P39,597.00 representing the value of the one case motor vehicle parts which was lost when the M/V P. Aboitiz sank on her way to Manila, plus Attorney's fees of not less than P10,000.00 and cost of suit. 4 Tabacalera sought against Franco Belgian Services, F.E. Zuellig and Aboitiz in Civil Case No. 822768 the recovery of P284,218.00 corresponding to the value of nine (9) cases of Renault spare parts, P213,207.00 for the value of twenty-five (25) cases of door closers and P42,254.00 representing the value of eighteen (18) cases of plastic spangle, plus attorney's fees of not less than P50,000.00 and cost of suit. 5 In Civil Case No. 82-2769, Tabacalera claimed from Hong Kong Island Shipping Co., Ltd., Citadel Lines and Aboitiz indemnification in the amount of P75,058.00 for the value of four (4) cartons of motor vehicle parts foundered with the M/V P. Aboitiz, plus attorney's fees of not less than P20,000.00 and cost of suit. 6 In its answer with counterclaim, Aboitiz rejected responsibility for the claims on the ground that the sinking of its cargo vessel was due to force majeure or an act of God. 7 Aboitiz was subsequently declared as in default for its failure to appear during the pre-trial. Its counsel fried a motion to set aside the order of default with notice of his withdrawal as such counsel. Before the motion could be acted upon, Judge Bienvenido Ejercjto, the presiding judge of the trial court, was promoted to the then intermediate Appellate Court. The cases were thus re-raffled to Branch VII of the RTC of Manila presided by Judge Amante P. Purisima, the co-petitioner in G.R. No. 92735. Without resolving the pending motion to set aside the order of default, the trial court set the cases for hearing. However, since Aboitiz had repeatedly failed to appear in court, the trial court denied the said motion and allowed Monarch and Tabacalera to present evidence ex-parte. 8 Monarch and Tabacalera proffered in evidence the survey of Perfect Lambert, a surveyor commissioned to investigate the possible cause of the sinking of the cargo vessel. The survey established that on her voyage to Manila from Hong Kong, the vessel did not encounter weather so inclement that Aboitiz would be exculpated from liability for losses. In his note of protest, the master of M/V P. Aboitiz described the wind force encountered by the vessel as from ten (10) to fifteen (15) knots, a weather condition classified as typical and moderate in the South China Sea at that particular time of the year. The survey added that the seaworthiness of the vessel was in question especially because the breaches of the hull and the serious flooding of two (2) cargo holds occurred simultaneously in "seasonal weather." 9 In due course, the trial court rendered judgment against Aboitiz but the complaint against all the other defendants was dismissed. Aboitiz was held liable for the following: (a) in Civil Case No. 822767, P29,719.88 with legal interest from the filing of the complaint until fully paid plus attorney's fees of P30,000.00 and cost of suit; (b) in Civil Case No. 82-2768, P539,679.00 with legal interest of 12% per annum from date of filing of the complaint until fully paid, plus attorney's fees of P30,000.00, litigation expenses and cost of suit; (c) in Civil Case No. 82-2769, P75,058.00 with legal interest of 12% per annum from date of filing of the complaint until-fully paid, plus P5,000.00 attorney's fees, litigation expenses and cost of suit, and (d) in Civil Case No. 82-2770, P39,579.66 with legal interest of 12% per annum from date of filing of the complaint until fully paid, plus attorney's fees of P5,000.00, litigation expenses and cost of suit. Aboitiz filed a motion for reconsideration of the decision and/or for new trial to lift the order of default. The court denied the motion on August 27, 1986. 10 Aboitiz appealed to the Court of Appeals but the appeal was dismissed for its failure to file appellant's brief. It subsequently filed an urgent motion for reconsideration of the dismissal with prayer for the admission of its attached appellant's brief. The appellate court denied that motion for lack of merit in a Resolution dated July 8, 1988. 11

Aboitiz thus filed a petition for review before this Court. Docketed as G.R. No. 84158, the petition was denied in the Resolution of October 10, 1988 for being filed out of time. Aboitiz's motion for the reconsideration of said Resolution was similarly denied. 12 Entry of judgment was made in the case. 13 Consequently, Monarch and Tabacalera moved for execution of judgment. The trial court granted the motion on April 4, 1989 14 and issued separate writs of execution. However, on April 12, 1989, Aboitiz, invoking the real and hypothecary nature of liability in maritime law, filed an urgent motion to quash the writs of execution. 15 According to Aboitiz, since its liability is limited to the value of the vessel which was insufficient to satisfy the aggregate claims of all 110 claimants, to indemnify Monarch and Tabacalera ahead of the other claimants would be prejudicial to the latter. Monarch and Tabacalera opposed the motion to quash. 16 On April 17, 1989, before the motion to quash could be heard, the sheriff levied upon five (5) heavy equipment owned by Aboitiz for the public auction sale. At said sale, Monarch was the highest bidder for one (1) unit FL-151 Fork Lift (big) and one (1) unit FL-25 Fork Lift (small). Tabacalera was also the highest bidder for one (1) unit TCH TL-251 Hyster Container Lifter, one (1) unit Hyster Top Lifter (out of order), and one (1) unit ER-353 Crane. The corresponding certificates of sale 17 were issued to Monarch and Tabacalera. On April 18, 1989, the day before the hearing of the motion to quash, Aboitiz filed a supplement to its motion, to add the fact that an auction sale had taken place. On April 19, 1989, Judge Purisima issued an order denying the motion to quash but freezing execution proceedings for ten (10) days to give Aboitiz time to secure a restraining order from a higher court. 18 Execution was scheduled to resume to fully satisfy the judgment when the grace period shall have lapsed without such restraining order having been obtained by Aboitiz. Aboitiz filed with the Court of Appeals a petition for certiorari and prohibition with prayer for preliminary injunction and/or temporary restraining order under CA-G.R. No. SP-17427. 19 On March 29, 1990, the appellate court rendered a Decision the dispositive portion of which reads: WHEREFORE, the writ of certiorari is hereby granted, annulling the subject writs of execution, auction sale, certificates of sale, and the assailed orders of respondent Judge dated April 4 and April 19, 1989 insofar as the money value of those properties of Aboitiz, levied on execution and sold at public auction, has exceeded the pro-rata shares of Monarch and Tabacalera in the insurance proceeds of Aboitiz in relation to the pro-rata shares of the 106 other claimants. The writ of prohibition is also granted to enjoin respondent Judge, Monarch and Tabacalera from proceeding further with execution of the judgments in question insofar as the execution would satisfy the claims of Monarch and Tabacalera in excess of their pro-rata shares and in effect reduce the balance of the proceeds for distribution to the other claimants to their prejudice. The question of whether or how much of the claims of Monarch and Tabacalera against the insurance proceeds has already been settled through the writ of execution and auction sale in question, being factual issues, shall be threshed out before respondent judge. The writ of preliminary injunction issued in favor of Aboitiz, having served its purpose, is hereby lifted. No pronouncement as to costs. SO ORDERED. 20 Hence, the instant petition for review on certiorari where petitioners Monarch, Tabacalera and Judge Purisima raise the following assignment of errors: 1. The appellate court grievously erred in re-opening the Purisima decisions, already final and executory, on the alleged ground that the issue of real and hypothecary liability had not been previously resolved by Purisima, the appellate court, and this Hon. Supreme Court; 2. The appellate court erred when it resolved that Aboitiz is entitled to the limited real and hypothecary liability of a ship owner, considering the facts on record and the law on the matter.

3. The appellate court erred when it concluded that Aboitiz does not have to present evidence to prove its entitlement to the limited real and hypothecary liability. 4. The appellate court erred in ignoring the case of "Aboitiz Shipping Corporation v. CA and Allied Guaranty Insurance Co., Inc. (G.R. No. 88159), decided by this Honorable Supreme Court as early as November 13, 1989, considering that said case, now factual and executory, is in pari materia with the instant case. 5. The appellate court erred in not concluding that irrespective of whether Aboitiz is entitled to limited hypothecary liability or not, there are enough funds to satisfy all the claimants. 6. The appellate court erred when it concluded that Aboitiz had made an "abandonment" as envisioned by Art. 587 of the Code of Commerce. 7. The appellate court erred when it concluded that other claimants would suffer if Tabacalera and Monarch would be fully paid. 8. The appellate court erred in concluding that certiorari was the proper remedy for Aboitiz. 21 G.R. NOS. 94867 & 95578 Allied as insurer-subrogee of consignee Peak Plastic and Metal Products Limited, filed a complaint against Aboitiz for the recovery of P278,536.50 representing the value of 676 bags of PVC compound and 10 bags of ABS plastic lost on board the M/V P. Aboitiz, with legal interest from the date of filing of the complaint, plus attorney's fees, exemplary damages and costs. 22 Docketed as Civil Case No. 138643, the case was heard before the Regional Trial Court of Manila, Branch XXIV, presided by Judge Sergio D. Mabunay. On the other hand, Equitable, as insurer-subrogee of consignee-assured Axel Manufacturing Corporation, filed an amended complaint against Franco Belgian Services, F.E. Zuellig, Inc. and Aboitiz for the recovery of P194,794.85 representing the value of 76 drums of synthetic organic tanning substances and 1,000 kilograms of optical bleaching agents which were also lost on board the M/V P. Aboitiz, with legal interest from the date of filing of the complaint, plus 25% attorney's fees, exemplary damages, litigation expenses and costs of suit. 23 Docketed as Civil Case No. 138396, the complaint was assigned to the Regional Trial Court of Manila, Branch VIII. In its answer with counterclaim in the two cases, Aboitiz disclaimed responsibility for the amounts being recovered, alleging that the loss was due to a fortuitous event or an act of God. It prayed for the dismissal of the cases and the payment of attorney's fees, litigation expenses plus costs of suit. It similarly relied on the defenses of force mejeure, seaworthiness of the vessel and exercise of due diligence in the carriage of goods as regards the cross-claim of its co-defendants. 24 In support of its position, Aboitiz presented the testimonies of Capt. Gerry N. Racines, master mariner of the M/V P. Aboitiz, and Justo C. Iglesias, a meteorologist of the Philippine Atmospheric Geophysical and Astronomical Services Administration (PAGASA). The gist of the testimony of Capt. Racines in the two cases follows: The M/V P. Aboitiz left Hong Kong for Manila at about 7:30 in the evening of October 29, 1980 after securing a departure clearance from the Hong Kong Port Authority. The departure was delayed for two hours because he (Capt. Racines) was observing the direction of the storm that crossed the Bicol Region. He proceeded with the voyage only after being informed that the storm had abated. At about 8:00 o'clock in the morning of October 30, 1980, after more than twelve (12) hours of navigation, the vessel suddenly encountered rough seas with waves about fifteen to twenty-five feet high. He ordered his chief engineer to check the cargo holds. The latter found that sea water had entered cargo hold Nos. 1 and 2. He immediately directed that water be pumped out by means of the vessel's bilge pump, a device capable of ejecting 180 gallons of water per minute. They were initially successful in pumping out the water. At 6:00 a.m. of October 31, 1980, however, Capt. Racines received a report from his chief engineer that the water level in the cargo holds was rapidly rising. He altered the vessel's course and veered towards the northern tip of Luzon to prevent the vessel from being continuously pummeled by the waves. Despite diligent efforts of the officers and crew, however, the vessel, which was approximately 250 miles away from the eye of the storm, began to list on starboard

side at 27 degrees. Capt. Racines and his crew were not able to make as much headway as they wanted because by 12:00 noon of the same day, the cargo holds were already flooded with sea water that rose from three to twelve feet, disabling the bilge pump from containing the water. The M/V P. Aboitiz sank at about 7:00 p.m. of October 31, 1980 at latitude 18 degrees North, longitude 170 degrees East in the South China Sea in between Hong Kong, the Philippines and Taiwan with the nearest land being the northern tip of Luzon, around 270 miles from Cape Bojeador, Bangui, Ilocos Norte. Responding to the captain's distress call, the M/V Kapuas (Capuas) manned by Capt. Virgilio Gonzales rescued the officers and crew of the ill-fated M/V P. Aboitiz and brought them to Waileen, Taiwan where Capt. Racines lodged his marine protest dated November 3, 1980. Justo Iglesias, meteorologist of PAGASA and another witness of Aboitiz, testified in both cases that during the inclusive dates of October 28-31, 1980, a stormy weather condition prevailed within the Philippine area of responsibility, particularly along the sea route from Hong Kong to Manila, because of tropical depression "Yoning." 25 PAGASA issued weather bulletins from October 28-30, 1980 while the storm was still within Philippine territory. No domestic bulletins were issued the following day when the storm which hit Eastern Samar, Southern Quezon and Southern Tagalog provinces, had made its exit to the South China Sea through Bataan. Allied and Equitable refuted the allegation that the M/V P. Aboitiz and its cargo were lost due to force majeure, relying mainly on the marine protest filed by Capt. Racines as well as on the Beaufort Scale of Wind. In his marine protest under oath, Capt. Racines affirmed that the wind force an October 29-30, 1980 was only ten (10) to fifteen (15) knots. Under the Beaufort Scale of Wind, said wind velocity falls under scale No. 4 that describes the sea condition as "moderate breeze," and "small waves becoming longer, fairly frequent white horses." 26 To fortify its position, Equitable presented Rogelio T. Barboza who testified that as claims supervisor and processor of Equitable, he recommended payment to Axel Manufacturing Corporation as evidenced by the cash voucher, return check and subrogation receipt. Barboza also presented a letter of demand to Aboitiz which, however, the latter ignored. 27 On April 24, 1984, the trial court rendered a decision that disposed of Civil Case No. 138643 as follows: WHEREFORE, judgment is hereby rendered ordering defendant Aboitiz Shipping Company to pay plaintiff Allied Guarantee Insurance Company, Inc. the sum of P278,536.50, with legal interest thereon from March 10, 1981, then date of the filing of the complaint, until fully paid, plus P30,000.00 as attorney's fees, with costs of suit. SO ORDERED. 28 A similar decision was arrived at in Civil Case No. 138396, the dispositive portion of which reads: WHEREFORE, in view of the foregoing, this Court hereby renders judgment in favor of plaintiff and against defendant Aboitiz Shipping Corporation, to pay the sum of P194,794.85 with legal rate of interest thereon from February 27, 1981 until fully paid; attorney's fees of twenty-five (25%) percent of the total claim, plus litigation expenses and costs of litigation. SO ORDERED. 29 In Civil Case No. 138643, Aboitiz appealed to the Court of Appeals under CA-G.R. CV No. 04121. On March 23, 1987, the Court of Appeals affirmed the decision of the lower court. A motion for reconsideration of the said decision was likewise denied by the Court of Appeals on May 3, 1989. Aggrieved, Aboitiz then filed a petition for review with this Court docketed as G.R. No. 88159 which was denied for lack merit. Entry of judgment was made and the lower court's decision in Civil Case No. 138643 became final and executory. Allied prayed for the issuance of a writ of execution in the lower court which was granted by the latter on April 4, 1990. To stay the execution of the judgment of the lower court, Aboitiz filed a petition for certiorari and prohibition with preliminary injunction with the Court of Appeals docketed as CA-G.R. SP No. 20844. 30 On August 15, 1990, the Court of Appeals rendered the assailed decision, the dispositive portion of which reads as follows.

WHEREFORE, the challenged order of the respondent Judge dated April 4, 1990 granting the execution is hereby set aside. The respondent Judge is further ordered to stay the execution of the judgment insofar as it impairs the rights of the 100 other claimants to the insurance proceeds including the rights of the petitioner to pay more than the value of the vessel or the insurance proceeds and to desist from executing the judgment insofar as it prejudices the pro-rata share of all claimants to the insurance proceeds. No pronouncement as to costs. SO ORDERED. 31 Hence, Allied filed the instant petition for certiorari, mandamus and injunction with preliminary injunction and/or restraining order before this Court alleging the following assignment of errors: 1. Respondent Court of Appeals gravely erred in staying the immediate execution of the judgment of the lower court as it has no authority nor jurisdiction to directly or indirectly alter, modify, amend, reverse or invalidate a final judgment as affirmed by the Honorable Supreme Court in G.R. No. 88159. 2. Respondent Court of Appeals with grave abuse of discretion amounting to lack or excess of jurisdiction, brushed aside the doctrine in G.R. No. 88159 which is now the law of the case and observance of time honored principles of stare decisis, res adjudicata and estoppel by judgment. 3. Real and hypothecary rule under Articles 587, 590 and 837 of the Code of Commerce which is the basis of the questioned decision (Annex "C" hereof) is without application in the face of the facts found by the lower court, sustained by the Court of Appeals in CA-G.R. No. 04121 and affirmed in toto by the Supreme Court in G.R. No. 88159. 4. Certiorari as a special remedy is unavailing for private respondent as there was no grave abuse of discretion nor lack or excess of jurisdiction for Judge Mabunay to issue the order of April 4, 1990 which was in accord with law and jurisprudence, nor were there intervening facts and/or supervening events that will justify respondent court to issue a writ of certiorari or a restraining order on a final and executory judgment of the Honorable Supreme Court. 32 From the decision of the trial court in Civil Case No. 138396 that favored Equitable, Aboitiz likewise appealed to the Court of Appeals through CA-G.R. CV No. 15071. On August 24, 1990, the Court of Appeals rendered the Decision quoting extensively its Decision in CA-G.R. No. SP17427 (now G.R. No. 92735) and disposing of the appeal as follows: WHEREFORE, we hereby affirm the trial court's awards of actual damages, attorney's fees and litigation expenses, with the exception of legal interest, in favor of plaintiffappellee Equitable Insurance Corporation as subrogee of the consignee for the loss of its shipment aboard the M/V "P. Aboitiz" and against defendant-appellant Aboitiz Shipping Corporation. However, the amount and payment of those awards shall be subject to a determination of the pro-rata share of said appellee in relation to the prorata shares of the 109 other claimants, which determination shall be made by the trial court. This case is therefore hereby ordered remanded to the trial court which shall reopen the case and receive evidence to determine appellee's pro-rata share as aforesaid. No pronouncement as to costs. SO ORDERED. 33 On September 12, 1990, Equitable moved to reconsider the Court of Appeals' Decision. The Court of Appeals denied the motion for reconsideration on October 4, 1990. 34 Consequently, Equitable filed with this Court a petition for review alleging the following assignment of errors: 1. Respondent Court of Appeals, with grave abuse of discretion amounting to lack or excess of jurisdiction, erroneously brushed aside the doctrine in G.R. No. 88159 which is now the law of the case as held in G.R. No. 89757 involving the same and identical set of facts and cause of action relative to the sinking of the M/V "P. Aboitiz" and observance of the time honored principles of stare decisis, and estoppel by judgment.

2. Real and hypothecary rule under Articles 587, 590 and 837 of the Code of Commerce which is the basis of the assailed decision and resolution is without application in the face of the facts found by the trial court which conforms to the conclusion and finding of facts arrived at in a similar and identical case involving the same incident and parties similarly situated in G.R. No. 88159 already declared as the "law of the case" in a subsequent decision of this Honorable Court in G.R. No. 89757 promulgated on August 6, 1990. 3. Respondent Court of Appeals gravely erred in concluding that limited liability rule applies in case of loss of cargoes when the law itself does not distinguish; fault of the shipowner or privity thereto constitutes one of the exceptions to the application of limited liability under Article 587, 590 and 837 of the Code of Commerce, Civil Code provisions on common carriers for breach of contract of carriage prevails. 35 These three petitions in G.R. Nos. 92735, 94867 and 95578 were consolidated in the Resolution of August 5, 1991 on the ground that the petitioners "have identical causes of action against the same respondent and similar reliefs are prayed for." 36 The threshold issue in these consolidated petitions is the applicability of the limited liability rule in maritime law in favor of Aboitiz in order to stay the execution of the judgments for full indemnification of the losses suffered by the petitioners as a result of the sinking of the M/V P. Aboitiz. Before we can address this issue, however, there are procedural matters that need to be threshed out. First. At the outset, the Court takes note of the fact that in G.R. No. 92735, Judge Amante Purisima, whose decision in the Regional Trial Court is sought to be upheld, is named as a copetitioner. In Calderon v. Solicitor General, 37 where the petitioner in the special civil action of certiorari and mandamus was also the judge whose order was being assailed, the Court held that said judge had no standing to file the petition because he was merely a nominal or formal party-respondent under Section 5 of Rule 65 of the Rules of Court. He should not appear as a party seeking the reversal of a decision that is unfavorable to the action taken by him. The Court there said: Judge Calderon should be-reminded of the well-known doctrine that a judge should detach himself from cases where his decision is appealed to a higher court for review. The raison d'etre for such doctrine is the fact that a judge is not an active combatant in such proceeding and must leave the opposing parties to contend their individual positions and for the appellate court to decide the issues without his active participation. By filing this case, petitioner in a way ceased to be judicial and has become adversarial instead. 38 While the petition in G.R. No. 92735 does not expressly show whether or not Judge Purisima himself is personally interested in the disposition of this petition or he was just inadvertently named as petitioner by the real parties in interest, the fact that Judge Purisima is named as petitioner has not escaped this Court's notice. Judges and litigants should be reminded of the basic rule that courts or individual judges are not supposed to be interested "combatants" in any litigation they resolve. Second. The petitioners contend that the inapplicability of the limited liability rule to Aboitiz has already been decided on by no less than this Court in G.R. No. 88159 as early as November 13, 1989 which was subsequently declared as "law of the case" in G.R. No. 89757 on August 6, 1990. Herein petitioners cite the aforementioned cases in support of their theory that the limited liability rule based on the real and hypothecary nature of maritime law has no application in the cases at bar. The existence of what petitioners insist is already the "law of the case" on the matter of limited liability is at best illusory. Petitioners are either deliberately misleading this Court or profoundly confused. As elucidated in the case of Aboitiz Shipping Corporation vs. General Accident Fire and Life Assurance Corporation, 39 An examination of the November 13, 1989 Resolution in G.R. No. 88159 (pp. 280282, Rollo) shows that the same settles two principal matters, first of which is that the

doctrine of primary administrative jurisdiction is not applicable therein; and second is that a limitation of liability in said case would render inefficacious the extraordinary diligence required by law of common carriers. It should be pointed out, however, that the limited liability discussed in said case is not the same one now in issue at bar, but an altogether different aspect. The limited liability settled in G.R. No. 88159 is that which attaches to cargo by virtue of stipulations in the Bill of Lading, popularly known as package limitation clauses, which in that case was contained in Section 8 of the Bill of Lading and which limited the carrier's liability to US$500.00 for the cargo whose value was therein sought to be recovered. Said resolution did not tackle the matter of the Limited Liability Rule arising out of the real and hypothecary nature of maritime law, which was not raised therein, and which is the principal bone of contention in this case. While the matters threshed out in G.R. No. 88159, particularly those dealing with the issues on primary administrative jurisdiction and the package liability limitation provided in the Bill of Lading are now settled and should no longer be touched, the instant case raises a completely different issue. 40 Third. Petitioners asseverate that the judgments of the lower courts, already final and executory, cannot be directly or indirectly altered, modified, amended, reversed or invalidated. The rule that once a decision becomes final and executory, it is the ministerial duty of the court to order its execution, is not an absolute one: We have allowed the suspension of execution in cases of special and exceptional nature when it becomes imperative in the higher interest of justice. 41 The unjust and inequitable effects upon various other claimants against Aboitiz should we allow the execution of judgments for the full indemnification of petitioners' claims impel us to uphold the stay of execution as ordered by the respondent Court of Appeals. We reiterate our pronouncement in Aboitiz Shipping Corporation vs. General Accident Fire and Life Assurance Corporation on this very same issue. This brings us to the primary question herein which is whether or not respondent court erred in granting execution of the full judgment award in Civil Case No. 14425 (G.R. No. 89757), thus effectively denying the application of the limited liability enunciated under the appropriate articles of the Code of Commerce. . . . . Collaterally, determination of the question of whether execution of judgments which have become final and executory may be stayed is also an issue. We shall tackle the latter issue first. This Court has always been consistent in its stand that the very purpose for its existence is to see the accomplishment of the ends of justice. Consistent with this view, a number of decisions have originated herefrom, the tenor of which is that no procedural consideration is sancrosanct if such shall result in the subverting of justice. The right to execution after finality of a decision is certainly no exception to this. Thus, in Cabrias v. Adil (135 SCRA 355 [1885]), this Court ruled that: xxx xxx xxx . . . every court having jurisdiction to render a particular judgment has inherent power to enforce it, and to exercise equitable control over such enforcement. The court has authority to inquire whether its judgment has been executed, and will remove obstructions to the enforcement thereof. Such authority extends not only to such orders and such writs as may be necessary to prevent an improper enforcement of the judgment. If a judgment is sought to be perverted and made a medium of consummating a wrong the court on proper application can prevent it. 42 Fourth. Petitioners in G.R. No. 92735 ever that it was error for the respondent Court of Appeals to allow Aboitiz the benefit of the limited liability rule despite its failure to present evidence to prove its entitlement thereto in the court below. Petitioners Monarch and Tabacalera remind this Court that from the inception of G.R. No. 92735 in the lower court and all the way to the Supreme Court, Aboitiz had not presented an iota of evidence to exculpate itself from the charge of negligence for the simple reason that it was declared as in default. 43

It is true that for having been declared in default, Aboitiz was precluded from presenting evidence to prove its defenses in the court a quo. We cannot, however, agree with petitioners that this circumstance prevents the respondent Court of Appeals from taking cognizance of Aboitiz' defenses on appeal. It should be noted that Aboitiz was declared as in default not for its failure to file an answer but for its absence during pre-trial and the trial proper. In Aboitiz' answer with counterclaim, it claimed that the sinking of the M/V P. Aboitiz was due to an act of God or unforeseen event and that the said ship had been seaworthy and fit for the voyage. Aboitiz also alleged that it exercised the due diligence required by law, and that considering the real and hypothecary nature of maritime trade, the sinking justified the extinguishment of its liability for the lost shipment. 44 A judgment of default does not imply a waiver of rights except that of being heard and presenting evidence in defendant's favor. It does not imply admission by the defendant of the facts and causes of action of the plaintiff, because the codal section 45 requires the latter to adduce evidence in support of his allegations as an indispensable condition before final judgment could be given in his favor. Nor could it be interpreted as an admission by the defendant that the plaintiff's causes of action find support in the law or that the latter is entitled to the relief prayed for. 46 This is especially true with respect to a defendant who had filed his answer but had been subsequently declared in default for failing to appear at the trial since he has had an opportunity to traverse, viahis answer, the material averments contained in the complaint. Such defendant has a better standing than a defendant who has neither answered nor appeared at trial. 47 The former should be allowed to reiterate all affirmative defenses pleaded in his answer before the Court of Appeals. Likewise, the Court of Appeals may review the correctness of the evaluation of the plaintiffs evidence by the lower court. It should also be pointed out that Aboitiz is not raising the issue of its entitlement to the limited liability rule for the first time on appeal thus, the respondent Court of Appeals may properly rule on the same. However, whether or not the respondent Court of Appeals erred in finding, upon review, that Aboitiz is entitled to the benefit of the limited liability rule is an altogether different matter which shall be discussed below.1awphi1 Rule on Limited Liability. The petitioners assert in common that the vessel M/V P. Aboitiz did not sink by reason offorce majeure but because of its unseaworthiness and the concurrent fault and/or negligence of Aboitiz, the captain and its crew, thereby barring Aboitiz from availing of the benefit of the limited liability rule. The principle of limited liability is enunciated in the following provisions of the Code of Commerce: Art. 587. The shipagent 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 goods which he loaded on the vessel; but he may exempt himself therefrom by abandoning the vessel with all the equipments and the freight it may have earned during the voyage. Art. 590. The co-owners of a 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 his 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 the freightage served during the voyage. Art. 837 appeals the principle of limited liability in cases of collision hence, Arts. 587 and 590 embody the universal principle of limited liability in all cases. In Yangco v. Laserna, 48 this Court elucidated on the import of Art. 587 as follows: The provision accords a shipowner or agent the right of abandonment; and by necessary implication, his liability is confined to that which he is entitled as of right to abandon-"the vessel with all her equipments and the freight it may have earned during the voyage." It is true that the article appears to deal only with the limited liability of the

shipowners or agents for damages arising from the misconduct of the captain in the care of the goods which the vessel carries, but this is a mere deficiency of language and in no way indicates the true extent of such liability. The consensus of authorities is to the effect that notwithstanding the language of the aforequoted provision, the benefit of limited liability therein provided for, applies in all cases wherein the shipowner or agent may properly be held liable for the negligent or illicit acts of the captain. 49 "No vessel, no liability," expresses in a nutshell the limited liability rule. The shipowner's or agent's liability is merely co-extensive with his interest in the vessel such that a total loss thereof results in its extinction. The total destruction of the vessel extinguishes maritime liens because there is no longer any res to which it can attach. 50This doctrine is based on the real and hypothecary nature of maritime law which has its origin in the prevailing conditions of the maritime trade and sea voyages during the medieval ages, attended by innumerable hazards and perils. To offset against these adverse conditions and to encourage shipbuilding and maritime commerce, it was deemed necessary to confine the liability of the owner or agent arising from the operation of a ship to the vessel, equipment, and freight, or insurance, if any. 51 Contrary to the petitioners' theory that the limited liability rule has been rendered obsolete by the advances in modern technology which considerably lessen the risks involved in maritime trade, this Court continues to apply the said rule in appropriate cases. This is not to say, however, that the limited liability rule is without exceptions, namely: (1) where the injury or death to a passenger is due either to the fault of the shipowner, or to the concurring negligence of the shipowner and the captain; 52 (2) where the vessel is insured; and (3) in workmen's compensation claims. 53 We have categorically stated that Article 587 speaks only of situations where the fault or negligence is committed solely by the captain. In cases where the ship owner is likewise to be blamed, Article 587 does not apply. Such a situation will be covered by the provisions of the Civil Code on common carriers. 54 A finding that a fortuitous event was the sole cause of the loss of the M/V P. Aboitiz would absolve Aboitiz from any and all liability pursuant to Article 1734(1) of the Civil Code which provides in part that common carriers are responsible for the loss, destruction, or deterioration of the goods they carry, unless the same is due to flood, storm, earthquake, lightning, or other natural disaster or calamity. On the other hand, a finding that the M/V P. Aboitiz sank by reason of fault and/or negligence of Aboitiz, the ship captain and crew of the M/V P. Aboitiz would render inapplicable the rule on limited liability. These issues are therefore ultimately questions of fact which have been subject of conflicting determinations by the trial courts, the Court of Appeals and even this Court. In Civil Cases Nos. 82-2767-82-2770 (now G.R. No. 92735), after receiving Monarch's and Tabacalera's evidence, the trial court found that the complete loss of the shipment on board the M/V P. Aboitiz when it sank was neither due to a fortuitous event nor a storm or natural cause. For Aboitiz' failure to present controverting evidence, the trial court also upheld petitioners' allegation that the M/V P. Aboitiz was unseaworthy. 55 However, on appeal, respondent Court of Appeals exculpated Aboitiz from fault or negligence and ruled that: . . ., even if she (M/V P. Aboitiz) was found to be unseaworthy, this fault (distinguished from civil liability) cannot be laid on the shipowner's door. Such fault was directly attributable to the captain. This is so, because under Art. 612 of the Code of Commerce, among the inherent duties of a captain, are to examine the vessel before sailing and to comply with the laws on navigation. 56 and that: . . . although the shipowner may be held civilly liable for the captain's fault . . . having abandoned the vessel in question, even if the vessel was unseaworthy due to the captain's fault, Aboitiz is still entitled to the benefit under the rule of limited liability accorded to shipowners by the Code of Commerce. 57 Civil Case No. 138396 (now G.R. No. 95578) was similarly resolved by the trial court, which found that the sinking of the M/V P. Aboitiz was not due to an act of God or force majeure. It

added that the evidence presented by the petitioner Equitable demonstrated the negligence of Aboitiz Shipping Corporation in the management and operation of its, vessel M/V P. Aboitiz. 58 However, Aboitiz' appeal was favorably acted upon by the respondent Court of Appeals which reiterated its ruling in G.R. No. 92735 that the unseaworthiness of the M/V P. Aboitiz was not a fault directly attributable to Aboitiz but to the captain, and that Aboitiz is entitled to the benefit of the limited liability rule for having abandoned its ship. 59 Finally, in Civil Case No. 138643 (now G.R. No. 94867), the trial court held that the M/V P. Aboitiz was not lost due to a fortuitous event or force majeure, and that Aboitiz had failed to satisfactorily establish that it had observed extraordinary diligence in the vigilance over the goods transported by it. 60 In CA-G.R. CV No. 04121, the Court of Appeals initially ruled against Aboitiz and found that the sinking of the vessel was due to its unseaworthiness and the failure of its crew and master to exercise extraordinary diligence. 61Subsequently, however, Aboitiz' petition before the Court of Appeals, docketed as CA-G.R. SP No. 20844 (now G.R. No. 94867) to annul and set aside the order of execution issued by the lower court was resolved in favor of Aboitiz. The Court of Appeals brushed aside the issue of Aboitiz' negligence and/or fault and proceeded to allow the application of the limited liability rule "to accomplish the aims of justice." 62 It elaborated thus: "To execute the judgment in this case would prejudice the substantial right of other claimants who have filed suits to claim their cargoes that was lost in the vessel that sank and also against the petitioner to be ordered to pay more than what the law requires." 63 It should be pointed out that the issue of whether or not the M/V P. Aboitiz sank by reason of force majeure is not a novel one for that question has already been the subject of conflicting pronouncements by the Supreme Court. InAboitiz Shipping Corporation v. Court of Appeals, 64 this Court approved the findings of the trial court and the appellate court that the sinking of the M/V P. Aboitiz was not due to the waves caused by tropical storm "Yoning" but due to the fault and negligence of Aboitiz, its master and crew. 65 On the other hand, in the later case ofCountry Bankers Insurance Corporation v. Court of Appeals, 66 this Court issued a Resolution on August 28, 1991 denying the petition for review on the ground that the Court of Appeals committed no reversible error, thereby affirming and adopting as its own, the findings of the Court of Appeals that force majeure had caused the M/V P. Aboitiz to founder. In view of these conflicting pronouncements, we find that now is the opportune time to settle once and for all the issue or whether or not force mejeure had indeed caused the M/V P. Aboitiz to sink. After reviewing the records of the instant cases, we categorically state that by the facts on record, the M/V P. Aboitiz did not go under water because of the storm "Yoning." It is true that as testified by Justo Iglesias, meteorologist of Pag-Asa, during the inclusive dates of October 28-31, 1980, a stormy weather condition prevailed within the Philippine area of responsibility, particularly along the sea route from Hong Kong to Manila, because of tropical depression "Yoning". 67 But even Aboitiz' own evidence in the form of the marine protest filed by Captain Racines affirmed that the wind force when the M/V P. Aboitiz foundered on October 31, 1980 was only ten (10) to fifteen (15) knots which, under the Beaufort Scale or Wind, falls within scale No. 4 that describes the wind velocity as "moderate breeze," and characterizes the waves as "small . . . becoming longer, fairly frequent white horses." 68 Captain Racines also testified in open court that the ill-fated M/V P. Aboitiz was two hundred (200) miles away from storm "Yoning" when it sank. 69 The issue of negligence on the part of Aboitiz, and the captain and crew of the M/V P. Aboitiz has also been subject of conflicting rulings by this Court. In G.R. No. 100373, Country Bankers Insurance Corporation v. Court of Appeals , this Court found no error in the findings of the Court of Appeals that the M/V P. Aboitiz sank by reason of force majeure, and that there was no negligence on the part of its officers and crew. In direct contradiction is this Court's categorical declaration in Aboitiz Shipping Corporation v. Court of Appeals ," 70 to wit: The trial court and the appellate court found that the sinking of the M/V P. Aboitiz was not due to the waves caused by tropical storm "Yoning" but due to the fault and

negligence of petitioner, its master and crew. The court reproduces with approval said findings . . . . 71 However, in the subsequent case of Aboitiz Shipping Corporation v. General Accident Fire and Life Assurance Corporation, Ltd., 72 this Court exculpated Aboitiz from fault and/or negligence while holding that the unseaworthiness of the M/V P. Aboitiz was only attributable to the negligence of its captain and crew. Thus, On this point, it should be stressed that unseaworthiness is not a fault that can be laid squarely on petitioner's lap, absent a factual basis for such conclusion. The unseaworthiness found in some cases where the same has been ruled to exist is directly attributable to the vessel's crew and captain, more so on the part of the latter since Article 612 of the Code of Commerce provides that among the inherent duties of a captain is to examine a vessel before sailing and to comply with the laws of navigation. Such a construction would also put matters to rest relative to the decision of the Board of Marine Inquiry. While the conclusion therein exonerating the captain and crew of the vessel was not sustained for lack of basis, the finding therein contained to the effect that the vessel was seaworthy deserves merit. Despite appearances, it is not totally incompatible with the findings of the trial court and the Court of Appeals, whose finding of "unseaworthiness" clearly did not pertain to the structural condition of the vessel which is the basis of the BMI's findings, but to the condition it was in at the time of the sinking, which condition was a result of the acts of the captain and the crew. 73 It therefore becomes incumbent upon this Court to answer with finality the nagging question of whether or not it was the concurrent fault and/or negligence of Aboitiz and the captain and crew of the ill-fated vessel that had caused it to go under water. Guided by our previous pronouncements and illuminated by the evidence now on record, we reiterate our findings in Aboitiz Shipping Corporation v. General Accident Fire and Life Assurance Corporation, Ltd. 74, that the unseaworthiness of the M/V P. Aboitiz had caused it to founder. We, however, take exception to the pronouncement therein that said unseaworthiness could not be attributed to the ship owner but only to the negligent acts of the captain and crew of the M/V P. Aboitiz. On the matter of Aboitiz' negligence, we adhere to our ruling in Aboitiz Shipping Corporation v. Court of Appeals, 75 that found Aboitiz, and the captain and crew of the M/V P. Aboitiz to have been concurrently negligent. During the trial of Civil Case Nos. 82-2767-82-2770 (now G.R. No. 92735), petitioners Monarch and Tabacalera presented a survey from Perfect Lambert, a surveyor based in Hong Kong that conducted an investigation on the possible cause of the sinking of the vessel. The said survey established that the cause of the sinking of the vessel was the leakage of water into the M/V P. Aboitiz which probably started in the forward part of the No. 1 hull, although no explanation was proffered as to why the No. 2 hull was likewise flooded. Perfect Lambert surmised that the flooding was due to a leakage in the shell plating or a defect in the water tight bulk head between the Nos. 1 and 2 holds which allowed the water entering hull No. 1 to pass through hull No. 2. The surveyor concluded that whatever the cause of the leakage of water into these hulls, the seaworthiness of the vessel was definitely in question because the breaches of the hulls and serious flooding of the two cargo holds occurred simultaneously in seasonal weather. 76 We agree with the uniform finding of the lower courts that Aboitiz had failed to prove that it observed the extraordinary diligence required of it as a common carrier. We therefore reiterate our pronouncement in Aboitiz Corporation v. Court of Appeals 77 on the issue of Aboitiz' liability in the sinking of its vessel, to wit: In accordance with Article 1732 of the Civil Code, the defendant common carrier from the nature of its business and for reasons of public policy, is bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by it according to all circumstances of the case. While the goods are in the possession of the carrier, it is but fair that it exercise extraordinary diligence in protecting them from loss or damage, and if loss occurs, the law presumes that it was due to the carrier's fault or negligence; that is necessary to protect the

interest of the shipper which is at the mercy of the carrier . . . In the case at bar, the defendant failed to prove hat the loss of the subject cargo was not due to its fault or negligence. 78 The failure of Aboitiz to present sufficient evidence to exculpate itself from fault and/or negligence in the sinking of its vessel in the face of the foregoing expert testimony constrains us to hold that Aboitiz was concurrently at fault and/or negligent with the ship captain and crew of the M/V P. Aboitiz. This is in accordance with the rule that in cases involving the limited liability of shipowners, the initial burden of proof of negligence or unseaworthiness rests on the claimants. However, once the vessel owner or any party asserts the right to limit its liability, the burden of proof as to lack of privity or knowledge on its part with respect to the matter of negligence or unseaworthiness is shifted to it. 79 This burden, Aboitiz had unfortunately failed to discharge. That Aboitiz failed to discharge the burden of proving that the unseaworthiness of its vessel was not due to its fault and/or negligence should not however mean that the limited liability rule will not be applied to the present cases. The peculiar circumstances here demand that there should be no strict adherence to procedural rules on evidence lest the just claims of shippers/insurers be frustrated. The rule on limited liability should be applied in accordance with the latest ruling inAboitiz Shipping Corporation v. General Accident Fire and Life Assurance Corporation, Ltd., 80 promulgated on January 21, 1993, that claimants be treated as "creditors in an insolvent corporation whose assets are not enough to satisfy the totality of claims against it." 81 To do so, the Court set out in that case the procedural guidelines: In the instant case, there is, therefore, a need to collate all claims preparatory to their satisfaction from the insurance proceeds on the vessel M/V P. Aboitiz and its pending freightage at the time of its loss. No claimant can be given precedence over the others by the simple expedience of having completed its action earlier than the rest. Thus, execution of judgment in earlier completed cases, even these already final and executory must be stayed pending completion of all cases occasioned by the subject sinking. Then and only then can all such claims be simultaneously settled, either completely or pro-rata should the insurance proceeds and freightage be not enough to satisfy all claims. xxx xxx xxx In fairness to the claimants and as a matter of equity , the total proceeds of the insurance and pending freightage should now be deposited in trust. Moreover, petitioner should institute the necessary limitation and distribution action before the proper admiralty court within 15 days from finality of this decision, and thereafter deposit with it the proceeds from the insurance company and pending freightage in order to safeguard the same pending final resolution of all incidents, for final pro-rating and settlement thereof. 82(Emphasis supplied.) There is no record that Aboitiz. has instituted such action or that it has deposited in trust the insurance proceeds and freightage earned. The pendency of the instant cases before the Court is not a reason for Aboitiz to disregard the aforementioned order of the Court. In fact, had Aboitiz complied therewith, even these cases could have been terminated earlier. We are inclined to believe that instead of filing the suit as directed by this Court, Aboitiz tolerated the situation of several claimants waiting to gel hold of its insurance proceeds, which, if correctly handled must have multiplied in amount by now. By its failure to abide by the order of this Court, it had caused more damage to the claimants over and above that which they have endured as a direct consequence of the sinking of the M/V P. Aboitiz. It was obvious that from among the many cases filed against it over the years, Aboitiz was waiting for a judgment that might prove favorable to it, in blatant violation of the basic provisions of the Civil Code on abuse of rights. Well aware of the 110 claimants against it, Aboitiz preferred to litigate the claims singly rather than exert effort towards the consolidation of all claims. Consequently, courts have arrived at conflicting decisions while claimants waited over the years for a resolution of any of the cases that would lead to the eventual resolution of the rest. Aboitiz failed to give the claimants their due and to observe honesty and good faith in the exercise of its rights. 83

Aboitiz' blatant disregard of the order of this Court in Aboitiz Shipping Corporation v. General Accident Fire and Life Assurance Corporation, Ltd. 84 cannot be anything but, willful on its part. An act is considered willful if it is done with knowledge of its injurious effect; it is not required that the act be done purposely to produce the injury. 85 Aboitiz is well aware that by not instituting the said suit, it caused the delay in the resolution of all claims against it. Having willfully caused loss or injury to the petitioners in a manner that is contrary to morals, good customs or public policy, Aboitiz is liable for damages to the latter. 86 Thus, for its contumacious act of defying the order of this Court to file the appropriate action to consolidate all claims for settlement, Aboitiz must be held liable for moral damages which may be awarded in appropriate cases under the Chapter on human relations of the Civil Code (Articles 19 to 36). 87 On account of Aboitiz' refusal to satisfy petitioners' claims in accordance with the directive of the Court in Aboitiz Shipping Corporation v. General Accident Fire and Life Assurance Corporation, Ltd., it acted in gross and evident bad faith. Accordingly, pursuant to Article 2208 of the Civil Code, 88 petitioners should be granted attorney's fees. WHEREFORE, the petitions in G.R. Nos. 92735, 94867, and 95578 are DENIED. The decisions of the Court of Appeals in CA-G.R. No. SP-17427 dated March 29, 1990, CA-G.R. SP No. 20844 dated August 15, 1990, and CA-G.R. CV No. 15071 dated August 24, 1990 are AFFIRMED with the MODIFICATION that respondent Aboitiz Shipping Corporation is ordered to pay each of the respective petitioners the amounts of P100,000.00 as moral damages and P50,000.00 as attorney's fees, and treble the cost of suit. Respondent Aboitiz Shipping Corporation is further directed to comply with the Order promulgated by this Court on January 21, 1993 in Aboitiz Shipping Corporation v. General Accident Fire and Life Assurance Corporation, Ltd., G.R. No. 100446, January 21, 1993, to (a) institute the necessary limitation and distribution action before the proper Regional Trial Court, acting as admiralty court, within fifteen (15) days from the finality of this decision, and (b) thereafter to deposit with the said court the insurance proceeds from the loss of the vessel, M/V P. Aboitiz, and the freightage earned in order to safeguard the same pending final resolution of all incidents relative to the final pro-rating thereof and to the settlement of all claims. 1wphi1.nt SO ORDERED. Bellosillo, Mendoza, Quisumbing and Buena, JJ., concur.

G.R. No. L-69901 July 31, 1987 ANTONIO RAMON ONGSIAKO, petitioner, vs. INTERMEDIATE APPELLATE COURT and THE PEOPLE OF THE PHILIPPINES, respondents. CRUZ, J.: Prosecuted for reckless imprudence resulting in multiple physical injuries and * damage to property, the petitioner was convicted by the trial court of only simple negligence resulting in serious physical injuries and damage to property. He was sentenced to two months of arresto mayor and to pay a total indemnity of 1 P143,131.04 for medical expenses, unearned salaries and as moral damages. On ** appeal, the conviction was affirmed but the respondent court reduced the moral 2 damages by P84,000.00, thus lowering the total indemnity to P61,131,04. Still not satisfied, the petitioner has come to this Court for a complete reversal of the judgment below. This case arose from a collision between the car being driven by the petitioner and the jeep of Robert Ha on December 30, 1981, at about 4 o'clock in the afternoon. at MacArthur Highway, in Moncada, Tarlac. The petitioner had a companion, Leon Miguel Heras, who was seated beside him. Robert Ha was at the wheel of his vehicle, which had seven other passengers. It appears that the petitioner was south-bound, toward Manila, and the jeep was coming from the opposite direction; that a Philippine Rabbit bus ahead of the jeep swerved into the petitioner's lane to overtake and bypass a tricycle; and that as a result of this sudden move, the petitioner, to avoid a head-on collision, immediately veered his car to the shoulder of the highway. The car went out of control when it hit the soft shoulder, moved back diagonally across the cemented highway, then collided with Ha's jeep, damaging it and causing multiple injuries to its passengers. The Philippine Rabbit 3 bus sped away. After considering the arguments of the parties in the petition itself, the comment thereon of the public respondent and the reply thereto, we gave due course to this petition and required the parties to file simultaneous memoranda. The petitioner complied in due time but the Solicitor General, to avoid repetitiousness, as he put 4 it, merely adopted his sketchy comment as the memorandum for the respondent. While this Court is ordinarily not a trier of facts, it has the authority to review and reverse the factual findings of the lower courts if it finds that they do not conform to the evidence of record. We so find in this case, for reasons to be discussed presently. The trial court held, and the respondent court affirmed, that "the jeep was still about 150 meters away from the Philippine Rabbit bus when the accused drove his car toward the road sh ulder to avoid the collision with the oncoming bus. In other words, there was sufficient time for Antonio Ramon Ongsiako to avail of a feasible 5 time to avert hitting the jeep." The judge should have been more careful in reaching this conclusion for it is not founded on the facts as established. The evidence of record is that the distance was not 150 meters but 150 feet, which makes quite a difference, indeed. The correct distance, incidentally, was

established by no less than the trial court itself which, in its examination of Robert Ha, the principal prosecution witness, elicited from him the said information in the following exchange: COURT: Q: How far was the Philippine Rabbit bus ahead of you before the car swerved to your lane? WITNESS 6 A: Approximately about 150 feet ahead of me, Your Honor. The Court considers this discrepancy important because the finding of negligence by the trial court is based on whether or not the accused had enough opportunity to avoid the collision. And that opportunity depended on the distance between the two vehicles. If the trial judge had carefully considered the evidence and discovered that the distance was 150 feet and not meters, it is doubtful that he would have concluded as he did that the accused was negligent. The distance of 150 feet is less than one-third of 150 meters, which means that the sufficient time imagined by the trial judge would have been correspondingly and significantly reduced by two-thirds of the actual period. The time as shortened could not have, if we apply the trial judge's own calculations, prevented the petitioner from avoiding the collision. Another indication of carelessness, this time on the part of the respondent court, is its observation, in rejecting the petitioner's version of the collision, that "the police sketch of the collision scene fails to reveal any skidmarks of the appellant's 7 car" on the highway. What is rather odd about this finding is that the trial court, and the respondent court later, never considered the fact that the sketch was made five days after the collision, as clearly emphasized by the petitioner in his brief. Apparently, it did not occur to the courts below and this is also somewhat puzzling that all skidmarks would have disappeared by that time on the busy highway. There was also apparent disregard of the record when the respondent court observed that the petitioner had not presented his companion to testify on his behalf, concluding that "such failure to present Heras raises the presumption that his testimony, had it been presented, would have been adverse to the appellant's 8 cause (Orfanel v. People, 30 SCRA 825)." This is another careless conclusion. The premise is incorrect, and so the conclusion must also be rejected. In fact, the petitioner did present Heras, and Heras did testify in support of the petitioner, substantially corroborating the petitioner's account of the collision. A reading of the transcript of the stenographic notes in the hearing of the case on July 27, 1983, will 9 readily disclose this. The Court is also perplexed by the following portion of the appealed decision: If it was true that appellant lost control of his vehicle as early as when his car hit the shoulder of the road, it was extremely stupid of him to move his car back to the highway while his car was still out of control. This is especially true in the face of his own admission that he saw the Rabbit bus for the first time when it was stin about 200 meters away overtaking a vehicle (jeep of Robert Ha) which was immediately behind a tricycle (p.

2, Ibid.). Assuming that appellant indeed lost control of his car as he hit the shoulder, he should have applied full not a little pressure upon his brakes. He should have stopped his vehicle instead of driving it back to the 10 highway and risking collision with oncoming vehicles. As the car was "still out of control," why is it assumed that the petitioner would nonetheless be able, although this would be "extremely stupid," to move it back to the highway? It is really mystifying that the respondent court would still expect the petitioner to control the car which, as it says so itself, was then "out of control." "Assuming the appellant indeed lost control of his car as he hit the shoulder," the decision adds, "he should have stopped his vehicle instead of driving it back to the highway and risking collision with oncoming vehicles." This is hardly logical. The court cannot assume that the petitioner lost control of his vehicle and on that assumption fault him for not correctly controlling it. That would be impossible, to say the least. When one loses control of his car, he cannot direct it the way he wants, or move it in the direction he chooses, or accelerate or stop it, for the simple reason that it is precisely out of control. A car out of control is simply out of control, period. As for the "little pressure" the petitioner says he applied on the brakes, the purpose, according to him, was to prevent his car from turning turtle as a result of a sudden stop that would have been caused by his jamming on the brakes. The real culprit in this unfortunate incident, as the Court sees it, could be the driver of the Philippine Rabbit bus whose recklessness was the cause of the collision between the petitioner's car and Robert Ha's jeep. We notice that the trial court made the meaningful observation that "the Philippine Rabbit bus may be faulted," 11 but added rather helplessly, that "it is not here charged." We hope it did not mean by this that someone else had to be made liable, to vindicate the victims' rights. It seems to us that a simple investigation would have uncovered the Identity and whereabouts of the Rabbit bus driver, with a view to his prosecution for his involvement in the collision. Why this was not done reflects on the sense of duty of the law-enforcement officers who investigated this matter and on the resourcefulness of the petitioner and his counsel whose cause could have improved with the indictment of the said driver. At any rate, it is the finding of the Court, in view of the misappreciation of the evidence of record by the respondent court and the trial court, that the guilt of the petitioner has not been proved beyond reasonable doubt. Consequently, he should not have been held guilty of even simple negligence and instead is entitled to be completely absolved of criminal responsibility. The civil liability is, however, a different question. While the quantum of proof necessary for conviction has not been established, there is, in our view, a preponderance of evidence to hold the petitioner liable in damages for the injuries sustained by the victims of this accident. Although it is really doubtful that he was criminally negligent, we find there is enough evidence to sustain the conclusion that a little more caution and discretion on his part in reacting to the threat of a head-on collision with the oncoming bus, could have avoided the unfortunate accident. For this shortcoming, we hold him liable for the

hospitalization expenses and unearned salaries of the victims as itemized by the trial court and affirmed by the respondent court. We absolve him, however, from the payment of moral damages and so reduce his total civil liability to P46,131.04. We apply here the doctrine announced in the recent case of People v. 12 Ligon, where the accused was acquitted of the crime of homicide for lack of clear and convincing proof that he had criminally caused a cigarette vendor to fall to his death from the jeep where he was hanging onto. Nevertheless, from the totality of the facts presented, we declared there was a preponderance of evidence to hold the accused liable in damages for the tragic mishap that befell the victim. We make a similar finding in this case and hold the petitioner civilly answerable for his quasidelict. WHEREFORE, the petitioner is ACQUITTED and his conviction is REVERSED, but he is held liable in the total sum of P46,131.04 for damages as above specified. No costs. SO ORDERED. Teehankee, C.J., Narvasa, Paras and Gancayco, JJ., concur.

G.R. No. 88052 December 14, 1989 JOSE P. MECENAS, ROMEO P. MECENAS, LILIA P. MECENAS, ORLANDO P. MECENAS, VIOLETA M. ACERVO, LUZVIMINDA P. MECENAS; and OFELIA M. JAVIER, petitioners, vs. HON. COURT OF APPEALS, CAPT. ROGER SANTISTEBAN and NEGROS NAVIGATION CO., INC., respondents. Benito P. Favie and Jose Dario Magno for petitioners. Hernandez, Velicaria, Vibar & Santiago for private respondents. FELICIANO, J.: At 6:20 o'clock in the morning of 22 April 1980, the M/T "Tacloban City," a barge-type oil tanker of Philippine registry, with a gross tonnage of 1,241,68 tons, owned by the Philippine National Oil Company (PNOC) and operated by the PNOC Shipping and Transport Corporation (PNOC Shipping), having unloaded its cargo of petroleum products, left Amlan, Negros Occidental, and headed towards Bataan. At about 1:00 o'clock in the afternoon of that same day, the M/V "Don Juan," an interisland vessel, also of Philippine registry, of 2,391.31 tons gross weight, owned and operated by the Negros Navigation Co., Inc. (Negros Navigation) left Manila bound for Bacolod with seven hundred fifty (750) passengers listed in its manifest, and a complete set of officers and crew members. On the evening of that same day, 22 April 1980, at about 10:30 o'clock, the "Tacloban City" and the "Don Juan" collided at the Talbas Strait near Maestra de Ocampo Island in the vicinity of the island of Mindoro. When the collision occurred, the sea was calm, the weather fair and visibility good. As a result of this collision, the M/V "Don Juan" sank and hundreds of its passengers perished. Among the ill-fated passengers were the parents of petitioners, the spouses Perfecto Mecenas and Sofia Mecenas, whose bodies were never found despite intensive search by petitioners. On 29 December 1980, petitioners filed a complaint in the then Court- of First Instance of Quezon City, docketed as Civil Case No. Q-31525, against private respondents Negros Navigation and Capt. Roger Santisteban, the captain of the "Don Juan" without, however, impleading either PNOC or PNOC Shipping. In their complaint, petitioners alleged that they were the seven (7) surviving legitimate children of Perfecto Mecenas and Sofia Mecenas and that the latter spouses perished in the collision which had resulted from the negligence of Negros Navigation and Capt. Santisteban. Petitioners prayed for actual damages of not less than P100,000.00 as well as moral and exemplary damages in such amount as the Court may deem reasonable to award to them. Another complaint, docketed as Civil Case No. Q-33932, was filed in the same court by Lilia Ciocon claiming damages against Negros Navigation, PNOC and PNOC Shipping for the death of her husband Manuel Ciocon, another of the luckless passengers of the "Don Juan." Manuel Ciocon's body, too, was never found. The two (2) cases were consolidated and heard jointly by the Regional Trial Court of Quezon City, Branch 82. On 17 July 1986, after trial, the trial court rendered a decision, the dispositive of which read as follows: WHEREFORE, the Court hereby renders judgment ordering: a) The defendant Negros Navigation Co., Inc. and Capt. Roger Santisteban jointly and severally liable to pay plaintiffs in Civil Case No Q31525, the sum of P400,000.00 for the death of plaintiffs' parents, Perfecto A. Mecenas and Sofia P. Mecenas; to pay said plaintiff's the sum of P15.000,00 as and for attorney's fees; plus costs of the suit.

b) Each of the defendants Negros Navigation Co Inc. and Philippine National Oil Company/PNOC Shipping and Transportation Company, to pay the plaintiff in Civil Case No. Q-33932, the sum of P100,000.00 for the death of Manuel Ciocon, to pay said plaintiff jointly and severally, the 1 sum of P1 5,000.00 as and for attorney's fees, plus costs of the suit. Negros Navigation, Capt. Santisteban, PNOC and PNOC Shipping appealed the trial court's decision to the Court of Appeals. Later, PNOC and PNOC Shipping withdrew their appeal citing a compromise agreement reached by them with Negros Navigation; the Court of Appeals granted the motion by a resolution dated 5 September 1988, subject to the reservation made by Lilia Ciocon that she could not be bound by the compromise agreement and would enforce the award granted her by the trial court. In time, the Court of Appeals rendered a decision dated 26 January 1989 which decreed the following: WHEREFORE, in view of the foregoing, the decision of the court a quo is hereby affirmed as modified with respect to Civil Case No. 31525, wherein defendant appellant Negros Navigation Co. Inc. and Capt. Roger Santisteban are held jointly and severally liable to pay the plaintiffs the amount of P100,000. 00 as actual and compensatory damages and 2 P15,000.00 as attorney's fees and the cost of the suit. The issue to be resolved in this Petition for Review is whether or not the Court of Appeals had erred in reducing the amount of the damages awarded by the trial court to the petitioners from P400,000.00 to P100,000.00. We note that the trial court had granted petitioners the sum of P400,000,00 " for the death of [their parents]" plus P15,000.00 as attorney's fees, while the Court of Appeals awarded them P100,000.00 "as actual and compensatory damages" and P15,000.00 as attorney's fees. To determine whether such reduction of the damages awarded was proper, we must first determine whether petitioners were entitled to an award of damages other than actual or compensatory damages, that is, whether they were entitled to award of moral and exemplary damages. We begin by noting that both the trial court and the Court of Appeals considered the action (Civil Case No. Q-31525) brought by the sons and daughters of the deceased Mecenas spouses against Negros Navigation as based on quasi-delict. We believed that action is more appropriately regarded as grounded on contract, the contract of carriage between the Mecenas spouses as regular passengers who paid for their boat tickets and Negros Navigation; the surviving children while not themselves passengers are in effect suing the 3 carrier in representation of their deceased parents. Thus, the suit (Civil Case No. Q33932) filed by the widow Lilia Ciocon was correctly treated by the trial and appellate courts as based on contract (vis-a-vis Negros Navigation) and as well on quasi-delict (vis-a-vis PNOC and PNOC Shipping). In an action based upon a breach of the contract of carriage, the carrier under our civil law is liable for the death of passengers arising from the negligence or willful act of the carrier's employees although such employees may have acted beyond the scope of their authority or even in violation of the instructions of the 4 5 carrier, which liability may include liability for moral damages. It follows that petitioners would be entitled to moral damages so long as the collision with the "Tacloban City" and the sinking of the "Don Juan" were caused or attended by negligence on the part of private respondents. In respect of the petitioners' claim for exemplary damages, it is only necessary to refer to Article 2232 of the Civil Code: Article 2332. In contracts and quasi-contracts, the court may exemplary damages if the defendant acted in a wanton, fraudulent, reckless, 6 oppressive or malevolent manner.

Thus, whether petitioners are entitled to exemplary damages as claimed must depend upon whether or not private respondents acted recklessly, that is, with gross negligence. We turn, therefore, to a consideration of whether or not Negros Navigation and Capt. Santisteban were grossly negligent during the events which culminated in the collision with "Tacloban City" and the sinking of the "Don Juan" and the resulting heavy loss of lives. The then Commandant of the Philippine Coast Guard, Commodore B.C. Ochoco, in a decision dated 2 March 1981, held that the "Tacloban City" was "primarily and solely [sic] at 7 fault and responsible for the collision." Initially, the Minister of National Defense upheld the 8 decision of Commodore Ochoco. On Motion for Reconsideration, however, the Minister of National Defense reversed himself and held that both vessels had been at fault: It is therefore evident from a close and thorough review of the evidence that fault is imputable to both vessels for the collision. Accordingly, the decision dated March 12, 1982, subject of the Motion for Reconsideration filed by counsel of M/T Tacloban City, is hereby reversed. However, the administrative penalties imposed oil both vessels and their respective 9 crew concerned are hereby affirmed. The trial court, after a review of the evidence submitted during the trial, arrived at the same conclusion that the Minister of National Defense had reached that both the "Tacloban City" and the "Don Juan" were at fault in the collision. The trial court summarized the testimony and evidence of PNOC and PNOC Shipping as well as of Negros Navigation in the following terms: Defendant PNOC's version of the incident: M/V Don Juan was first sighted at about 5 or 6 miles from Tacloban City (TSN, January 21, 1985, p. 13); it was on the starboard (right) side of Tacloban City. This was a visual contact; not picked up by radar (p. 15, Ibid). Tacloban City was travelling 310 degrees with a speed of 6 knots, estimated speed of Don Juan of 16 knots (TSN, May 9, pp. 5-6). As Don Juan approached, Tacloban City gave a leeway of 1 0 degrees to the left. 'The purpose was to enable Tacloban to see the direction of Don Juan (p. 19, Ibid). Don Juan switched to green light, signifying that it will pass Tacloban City's right side; it will be a starboard to starboard passing (p. 21, Ibid) Tacloban City's purpose in giving a leeway of 10 degrees at this point, is to give Don Juan more space for her passage (p. 22, Ibid). This was increased by Tacloban City to an additional 15 degrees towards the left (p. 22, Ibid). The way was clear and Don Juan has not changed its course (TSN, May 9,1985, p. 39). When Tacloban City altered its course the second time, from 300 degrees to 285 degrees, Don Juan was about 4.5 miles away (TSN, May 9,1985, p. 7). Despite executing a hardport maneuver, the collision nonetheless occurred. Don Juan rammed the Tacloban City near the starboard bow (p. 7, Ibid)." NENACO's [Negros Navigation] version. Don Juan first sighted Tacloban City 4 miles away, as shown by radar (p. 13, May 24, 1983). Tacloban City showed its red and green lights twice; it proceeded to, and will cross, the path of Don Juan. Tacloban was on the left side of Don Juan (TSN, April 20,1983, p. 4). Upon seeing Tacloban's red and green lights, Don Juan executed hard starboard (TSN, p. 4, Ibid.) This maneuver is in conformity with the rule that 'when both vessels are head on or nearly head on, each vessel must

turn to the right in order to avoid each other. (p. 5, Ibid). Nonetheless, Tacloban appeared to be heading towards Don Juan (p. 6, Ibid), When Don Juan executed hard starboard, Tacloban was about 1,500 feet away (TSN, May 24,1983, p. 6). Don Juan, after execution of hard starboard, will move forward 200 meters before the vessel will respond to such maneuver (p. 7, Ibid). The speed of Don Juan at that time was 17 knits; Tacloban City 6.3 knots. t "Between 9 to 15 seconds from execution 10 of hard starboard, collision occurred (p. 8, Ibid). (pp. 3-4 Decision). The trial court concluded: M/ V Don Juan and Tacloban City became aware of each other's presence in the area by visual contact at a distance of something like 6 miles from each other. They were fully aware that if they continued on their course, they will meet head on. Don Juan - steered to the right; Tacloban City continued its course to the left. There can be no excuse for them not to realize that, with such maneuvers, they will collide. They executed maneuvers inadequate, and too late, to avoid collision. The Court is of the considered view that the defendants are equally 11 negligent and are liable for damages. (p. 4, decision). 12 The Court of Appeals, for its part, reached the same conclusion. There is, therefore, no question that the "Don Juan" was at least as negligent as the M/T "Tacloban City" in the events leading up to the collision and the sinking of the "Don Juan." The remaining question is whether the negligence on the part of the "Don Juan" reached that level of recklessness or gross negligence that our Civil Code requires for the imposition of exemplary damages. Our own review of the record in the case at bar requires us to answer this in the affirmative. In the first place, the report of the Philippine Coast Guard Commandant (Exhibit "l 0"), while holding the "Tacloban City" as "primarily and solely [sic] at fault and responsible for the collision," did itself set out that there had been fault or negligence on the part of Capt. Santisteban and his officers and crew before the collision and immediately after contact of the two (2) vessels. The decision of Commodore Ochoco said: xxxxxxxxx M/S Don Juan's Master, Capt. Rogelio Santisteban, was playing mahjong before and up to the time of collision. Moreover, after the collision, he failed to institute appropriate measures to delay the sinking MS Don Juan and to supervise properly the execution of his order of abandonship. As regards the officer on watch, Senior 3rd Mate Rogelio Devera, he admitted that he failed or did not call or inform Capt. Santisteban of the imminent danger of collision and of the actual collision itself Also, he failed to assist his master to prevent the fast sinking of the ship. The record also indicates that Auxiliary Chief Mate Antonio Labordo displayed laxity in maintaining order among the passengers after the collision. 13 x x x x x x x x x. We believe that the behaviour of the captain of the "Don Juan" in tills instance-playing mahjong "before and up to the time of collision constitutes behaviour that is simply unacceptable on the part of the master of a vessel to whose hands the lives and welfare of at least seven hundred fifty (750) passengers had been entrusted. Whether or not Capt. Santisteban was "off-duty" or "on-duty" at or around the time of actual collision is quite immaterial; there is, both realistically speaking and in contemplation of law, no such thing as "off-duty" hours for the master of a vessel at sea that is a common carrier upon whom the law imposes the duty of extraordinary diligence-

[t]he duty to carry the passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious 14 persons, with a due regard for all the circumstances. The record does not show that was the first or only time that Capt. Santisteban had entertained himself during a voyage by playing mahjong with his officers and passengers; Negros Navigation in permitting, or in failing to discover and correct such behaviour, must be deemed grossly negligent. Capt. Santisteban was also faulted in the Philippine Coast Guard decision for failing after the collision, "to institute appropriate measures to delay the sinking of M/V Don Juan." This appears to us to be a euphemism for failure to maintain the sea-worthiness or the watertight integrity of the "Don Juan." The record shows that the "Don Juan" sank within ten (10) 15 to fifteen (15) minutes after initial contact with the "Tacloban City. While the failure of Capt. Santisteban to supervise his officers and crew in the process of abandoning the ship and his failure to avail of measures to prevent the too rapid sinking of his vessel after collision, did not cause the collision by themselves, such failures doubtless contributed materially to the consequent loss of life and, moreover, were indicative of the kind and level of diligence exercised by Capt. Santisteban in respect of his vessel and his officers and men prior to actual contact between the two (2) vessels. The officer-on-watch in the "Don Juan" admitted that he had failed to inform Capt. Santisteban not only of the "imminent danger of collision" but even of "the actual collision itself " There is also evidence that the "Don Juan" was carrying more passengers than she had 16 been certified as allowed to carry. The Certificate of Inspection dated 27 August 1979, issued by the Philippine Coast Guard Commander at Iloilo City, the Don Juan's home port, states: Passengers allowed : 810 Total Persons Allowed : 864 The report of the Philippine Coast Guard (Exhibit "10") stated that the "Don Juan" had been "officially cleared with 878 passengers on board when she sailed from the port of Manila on April 22, 1980 at about 1:00 p.m." This head-count of the passengers "did not include the 126 crew members, children below three (3) years old and two (2) half-paying passengers" 17 which had been counted as one adult passenger. Thus, the total number of persons on board the "Don Juan" on that ill-starred night of 22 April 1 980 was 1,004, or 140 persons more than the maximum lumber that could be safely carried by the "Don Juan," per its own 18 Certificate of Inspection. We note in addition, that only 750 passengers had been listed in its manifest for its final voyage; in other words, at least 128 passengers on board had not even been entered into the "Don Juan's" manifest. The "Don Juan's" Certificate of Inspection showed that she carried life boat and life raft accommodations for only 864 persons, the maximum number of persons she was permitted to carry; in other words, she did not carry enough boats and life rafts for all the persons actually on board that tragic night of 22 April 1980. We hold that under these circumstances, a presumption of gross negligence on the part of the vessel (her officers and crew) and of its ship-owner arises; this presumption was never rebutted by Negros Navigation. The grossness of the negligence of the "Don Juan" is underscored when one considers the foregoing circumstances in the context of the following facts: Firstly, the "Don Juan" was more than twice as fast as the "Tacloban City." The "Don Juan's" top speed was 17 knots; 19 while that of the "Tacloban City" was 6.3. knots. Secondly, the "Don Juan" carried the full complement of officers and crew members specified for a passenger vessel of her class. Thirdly, the "Don Juan" was equipped with radar which was functioning that night. Fourthly, the "Don Juan's" officer on-watch had sighted the "Tacloban City" on his radar screen while

the latter was still four (4) nautical miles away. Visual confirmation of radar contact was 20 established by the "Don Juan" while the "Tacloban City" was still 2.7 miles away. In the total set of circumstances which existed in the instant case, the "Don Juan," had it taken seriously its duty of extraordinary diligence, could have easily avoided the collision with the "Tacloban City," Indeed, the "Don Juan" might well have avoided the collision even if it had exercised ordinary diligence merely. It is true that the "Tacloban City" failed to follow Rule 18 of the International Rules of the Road which requires two (2) power- driven vessels meeting end on or nearly end on each to alter her course to starboard (right) so that each vessel may pass on the port side (left) of 21 the other. The "Tacloban City," when the two (2) vessels were only three-tenths (0.3) of a mile apart, turned (for the second time) 150 to port side while the "Don Juan" veered hard to starboard. This circumstance, while it may have made the collision immediately inevitable, cannot, however, be viewed in isolation from the rest of the factual circumstances obtaining before and up to the collision. In any case, Rule 18 like all other International Rules of the Road, are not to be obeyed and construed without regard to all the circumstances 22 surrounding a particular encounter between two (2) vessels. In ordinary circumstances, a vessel discharges her duty to another by a faithful and literal observance of the Rules of 23 Navigation, and she cannot be held at fault for so doing even though a different course would have prevented the collision. This rule, however, is not to be applied where it is apparent, as in the instant case, that her captain was guilty of negligence or of a want of seamanship in not perceiving the necessity for, or in so acting as to create such necessity 24 for, a departure from the rule and acting accordingly. In other words, "route observance" of the International Rules of the Road will not relieve a vessel from responsibility if the collision could have been avoided by proper care and skill on her part or even by a 25 departure from the rules. In the petition at bar, the "Don Juan" having sighted the "Tacloban City" when it was still a long way off was negligent in failing to take early preventive action and in allowing the two (2) vessels to come to such close quarters as to render the collision inevitable when there was no necessity for passing so near to the "Tacloban City" as to create that hazard or 26 inevitability, for the "Don Juan" could choose its own distance. , It is noteworthy that the "Tacloban City," upon turning hard to port shortly before the moment of collision, signalled 26 its intention to do so by giving two (2) short blasts with horn. A The "Don Juan " gave no 26 answering horn blast to signal its own intention and proceeded to turn hatd to starboard. B We conclude that Capt. Santisteban and Negros Navigation are properly held liable for gross negligence in connection with the collision of the "Don Juan" and "Tacloban City" and the sinking of the "Don Juan" leading to the death of hundreds of passengers. We find no necessity for passing upon the degree of negligence or culpability properly attributable to PNOC and PNOC Shipping or the master of the "Tacloban City," since they were never impleaded here. It will be recalled that the trial court had rendered a lump sum of P400,000.00 to petitioners for the death of their parents in the "Don Juan" tragedy. Clearly, the trial court should have included a breakdown of the lump sum award into its component parts: compensatory damages, moral damages and exemplary damages. On appeal, the Court of Appeals could have and should have itself broken down the lump sum award of the trial court into its constituent parts; perhaps, it did, in its own mind. In any case, the Court of Appeals apparently relying uponManchester Development Corporation V. Court of 27 Appeals reduced the P400,000.00 lump sum award into a P100,000.00 for actual and compensatory damages only. We believe that the Court of Appeals erred in doing so, It is true that the petitioners' complaint before the trial court had in the body indicated that the petitioner-plaintiffs

believed that moral damages in the amount of at least P1,400,000.00 were properly due to them (not P12,000,000.00 as the Court of Appeals erroneously stated) as well as exemplary damages in the sum of P100,000.00 and that in the prayer of their complaint, they did not specify the amount of moral and exemplary damages sought from the trial court. We do not believe, however, that the Manchester doctrine, which has been modified and clarified in subsequent decision by the Court in Sun Insurance Office, Ltd. (SIOL), et al. v. Asuncion, et 28 al. can be applied in the instant case so as to work a striking out of that portion of the trial court's award which could be deemed nationally to constitute an award of moral and exemplary damages. Manchester was promulgated by the Court on 7 May 1987. Circular No. 7 of this Court, which embodied the doctrine in Manchester, is dated 24 March 1988. Upon the other hand, the complaint in the case at bar was filed on 29 December 1980, that is, long before either Manchester or Circular No. 7 of 24 March 1988 emerged. The decision of the trial court was itself promulgated on 17 July 1986, again, before Manchester and Circular No. 7 were promulgated. We do not believe that Manchester should have been applied retroactively to this case where a decision on the merits had already been rendered by the trial court, even though such decision was then under appeal and had not yet reached finality. There is no indication at all that petitioners here sought simply to evade payment of the court's filing fees or to mislead the court in the assessment of the filing fees. In any event, we apply Manchester as clarified and amplified by Sun Insurance Office Ltd. (SIOL), by holding that the petitioners shall pay the additional filing fee that is properly payable given the award specified below, and that such additional filing fee shall constitute a lien upon the judgment. We consider, finally, the amount of damages-compensatory, moral and exemplary-properly imposable upon private respondents in this case. The original award of the trial court of P400,000.00 could well have been disaggregated by the trial court and the Court of Appeals in the following manner: 1. actual or compensatory damages proved in the course of trial consisting of actual expenses incurred by petitioners in their search for their parents' bodies- -P126,000.00 2. actual or compensatory damages in case of wrongful death 29 (P30,000.00 x 2) -P60,000.00 (3) moral damages -P107,000.00 (4) exemplary damages -P107,000.00 Total -P400,000.00 Considering that petitioners, legitimate children of the deceased spouses Mecenas, are seven (7) in number and that they lost both father and mothe in one fell blow of fate, and considering the pain and anxiety they doubtless experienced while searching for their parents among the survivors and the corpses recovered from the sea or washed ashore, we believe that an additional amount of P200,000.00 for moral damages, making a total of P307,000.00 for moral damages, making a total of P307,000.00 as moral damages, would be quite reasonable. Exemplary damages are designed by our civil law to permit the courts to reshape behaviour that is socially deleterious in its consequence by creating negative incentives or deterrents against such behaviour. In requiring compliance with the standard which is in fact that of the highest possible degree of diligence, from common carriers and in creating a presumption of negligence against them, the law seels to compel them to control their employees, to tame

their reckless instincts and to force them to take adequate care of human beings and their property. The Court will take judicial notive of the dreadful regularity with which grievous maritime disasters occur in our waters with massive loss of life. The bulk of our population is too poor to afford domestic air transportation. So it is that notwithstanding the frequent sinking of passenger vessels in our waters, crowds of people continue to travel by sea. This Court is prepared to use the instruments given to it by the law for securing the ends of law and public policy. One of those instruments is the institution of exemplary damages; one of those ends, of special importance in an archipelagic state like the Philippines, is the safe and reliable carriage of people and goods by sea. Considering the foregoing, we believe that an additional award in the amount of P200,000.00 as exmplary damages, is quite modest. The Court is aware that petitioners here merely asked for the restoration of the P 400.000.00 award of the trial court. We underscore once more, however, the firmly settled doctrine that this Court may consider and resolved all issues which must be decided in order to render substantial justice to the parties, including issues not explicity raised by the 30 party affected. In the case at bar, as in Kapalaran Bus Line v. Coronado, et al., both the demands of sustantial justice and the imperious requirements of public policy compel us to the conclusion that the trial court's implicit award of moral and exemplary damages was erronoeusly deledted and must be restored and augmented and brought more nearely to the level required by public policy and substantial justice. WHEREFORE, the Petition for Review on certiorari is hereby GRANTED and the Decision of the Court of Appeals insofar as it redurce the amount of damages awarded to petitioners to P100,000.00 is hereby REVERSED and SET ASIDE. The award granted by the trial court is hereby RESTORED and AUGMENTED as follows: (a) P 126,000.00 for actual damages; (b) P 60,000.00 as compensatory damages for wrongful death; (c) P 307,000.00 as moral damages; (d) P 307,000.00 as exemplary damages making a total of P 800,000.00; and (e) P 15,000.00 as attorney's fees. Petitioners shall pay the additional filing fees properly due and payable in view of the award here made, which fees shall be computed by the Clerks of Court of the trial court, and shall constitute a lien upon the judgment here awarded. Cost against private respondents. SO ORDERED. Fernan,C.J., Gutierrez, Jr., Bibin and Cortes, JJ., concur.

G.R. No. L-58897 December 3, 1987 LUZON STEVEDORING CORPORATION, petitioner, vs. COURT OF APPEALS, HIJOS DE F. ESCANO, INC., and DOMESTIC INSURANCE COMPANY OF THE PHILIPPINES, respondents. GANCAYCO, J.: On May 30, 1968 at past 6:00 in the morning a maritime collision occurred within the vicinity of the entrance to the North Harbor, Manila between the tanker LSCO "Cavite" owned by Luzon Stevedoring Corporation and MV "Fernando Escano" a passenger ship owned by Hijos de F. Escano, Inc. as a result of which said passenger ship sunk. An action in admiralty was filed by Hijos de F. Escano, Inc. and Domestic Insurance Company of the Philippines against the Luzon Stevedoring Company (LSC) in the Court of First Instance of Cebu. In the course of the trial, the trial court appointed two commissioners representing the plaintiffs and defendant to determine the value of the LSCO "CAVITE." Said commissioners found the value thereof to be P180,000.00. After trial on the merits, a decision was rendered on January 24, 1974 finding that LSCO "Cavite" was solely to blame for the collision, thus its dispositive portion reads as follows: WHEREFORE, based on all the foregoing considerations, the Court renders judgment in favor of the plaintiffs and against the defendant ordering the latter to pay to the plaintiff Domestic Insurance Company of the Philippines the sum of P514,000.00, and to the plaintiff Hijos de F. Escano, Inc. the sum of P68,819.00, with interest on both sums at the legal rate, from the date the complaint was filed and the further sum of P252,346.70, with interest at the legal rate from August 7, 1972 and the sum of P163,721.91, without interest in trust for, and with direction that it pay the same to, the claimants concerned. With costs against the defendant. 1 In the penultimate paragraph of the decision the trial court held: With respect to the defense that defendant's liability is limited to the value of the LSCO "Cavite" and freight earned, invoking Art. 837 of the Code of Commerce, the Court believes and so holds that the defense has not been established. Moreover, the evidence is such that in principle Art. 837 does not apply here. The counterclaim of the defendant is likewise ordered dismissed for lack of merit. 2 Not satisfied therewith the defendant interposed an appeal therefrom to the Court of Appeals wherein in due course a decision was rendered on June 30, 1981 affirming the decision of the court a quo in toto with costs against appellant. The motion for reconsideration filed by the defendant of the decision was denied in a resolution of the Court of Appeals of November 7, 1981. Hence said defendant filed a petition for certiorari in this Court based on the following grounds: I THE LOWER COURT ERRED IN FINDING THAT THE LSCO "CAVITE" WAS THE VESSEL AT FAULT IN THE COLLISION. II THE LOWER COURT ERRED IN NOT FINDING THAT THE COLLISION BETWEEN THE M/V "FERNANDO ESCANO" AND THE LSCO "CAVITE" WAS DUE SOLELY AND EXCLUSIVELY TO THE FAULT, NEGLIGENCE AND LACK OF SKILL OF THE MASTER OF THE FORMER VESSEL. III THE LOWER COURT ERRED IN NOT RULING THAT THE CIVIL LIABILITY OF THE PETITIONER, IF ANY THERE BE, SHOULD BE LIMITED TO THE VALUE OF THE LSCO "CAVITE" WITH ALL ITS APPURTENANCES AND FREIGHTAGE WHEN THE COLLISION TOOK PLACE. 3 In a resolution of February 26, 1982 this Court denied the petition for lack of merit. A motion for reconsideration of said resolution was filed by petitioner limiting the issue to the legal question of whether under Art. 837 of the Code of Commerce abandonment of vessel at fault is necessary in order that the liability of owner of said vessel shall be limited only to the extent of the value thereof, its appurtenances and freightage earned in the voyage. After respondents submitted their

comment to the motion as required, on September 29, 1982 this Court denied the motion for reconsideration for lack of merit. With leave of court petitioner filed a second motion for reconsideration of said resolution raising the following issues: 1. Whether abandonment is required under Article 837 of the Code of Commerce. The decisions of this Honorable Court cited by the parties in support of their respective positions only imply the answer to the question, and the implied answers are contradictory. 2. If abandonment is required under Article 837 of the Code of Commerce, when should it be made? The Code of Commerce is silent on the matter. The decision of this Honorable Court in Yangco v. Laserna, 13 Phil. 330, left the question open and no other decision, as far as petitioner can ascertain, has resolved the question. 3. Is the decision of this Honorable Court in Manila Steamship Co., Inc. v. Abdulhama,n 100 Phil. 32, wherein it was held that "(t)he international rule to the effect that the right of abandonment of vessels, as a legal station of a shipowner's own fault," invoked by private respondents and apparently a major consideration in the denial of the motion for reconsideration, applicable to petitioner under the circumstances of the case at bar? 4 The respondents were required to comment thereto and after said comment was submitted petitioners submitted a reply thereto to which the respondents filed a rejoinder. On November 28, 1983, the Court gave due course to the petition for review and considered the respondents' comment thereto as the Answer. The parties were required to file their briefs. Both parties having filed their briefs the case is now submitted for decision. Articles 587, 590, and 837 of the Code of Commerce provide as follows: ART. 587. The ship agent shall also be civilly liable for the indemnities in favor of third persons which arise from the conduct of the captain in the vigilance over the goods which the vessel carried; but he may exempt himself therefrom by abandoning the vessel with all her equipment and the freight he may have earned during the voyage. xxx xxx xxx ART. 590. The co-owners of the vessel shall be civilly liable in the proportion of their contribution to the common fund for the results of the acts of the captain, referred to in Article 587. Each co-owner may exempt himself from this liability by the abandonment, before a notary, of that part of the vessel belonging to him. xxx xxx xxx ART. 837. The civil liability incurred by the shipowners in the cases prescribed in this section, shall be understood as limited to the value of the vessel with all her appurtenances and freight earned during the voyage. 5 In the case of Philippine Shipping Company vs. Garcia, 6 which is an action for damages instituted by the Philippine Shipping Company for the loss of Steamship "Ntra. Sra. de Lourdes" as a result of the collision with the Steamship "Navarra" of Garcia, it was found that the "Navarra" was responsible for the collision. The claim of the Philippine Shipping is that the defendant should pay P18,000.00, the value of the "Navarro" at the time of its loss, in accordance with the provision of Article 837 of the Code of Commerce, and that it was immaterial that the "Navarro" had been entirely lost provided the value could be ascertained since the extent of liability of the owner of the colliding vessel resulting from the collision is to be determined by its value. This Court speaking through the then Chief Justice Arellano held: Article 837 of the Code of Commerce provides: "The civil liability contracted by the shipowners in the cases prescribed in this section shall be understood as limited to the value of the vessel with all her equipment and all the freight money earned during the voyage " "This section is a necessary consequence of the right to abandon the vessel given to the shipowner in article 587 of the code, and it is one of the many superfluities contained in the code." (Lorenzo Benito, "Lecciones," 352.)

ART. 587. The agent shall also be civilly liable for the indemnities in favor of third persons which arise from the conduct of the captain in the care of the goods which the vessel carried but he may exempt himself therefrom by abandoning the vessel with all her equipments and the freight he may have earned during the trip. ART. 590. The part owners of a vessel shall be civilly liable, in the proportion of their contribution to the common fund, for the results of the acts of the captain referred to in Article 587. Each part owner may exempt himself from this liability by the abandonment, before a notary, of the part of the vessel belonging to him. The "Exposicion de motivos" of the Code of Commerce contains the following: "The present code (1829) does not determine the juridical status of the agent where such agent is not himself the owner of the vessel. This omission is supplied by the proposed code, which provides in accordance with the principles of maritime law that by agent it is to be understood the person intrusted with the provisioning of the vessel, or the one who represents her in the port in which she happens to be. This person is the only one who represents the vessel that is to say, the only one who represents the interests of the owner of the vessel. This provision has therefore cleared the doubt which existed as to the extent of the liability, both of the agent and of the owner of the vessel. Such liability is limited by the proposed code to the value of the vessel and other things appertaining thereto." There is no doubt that if the Navarro had not been entirely lost, the agent, having been held liable for the negligence of the captain of the vessel could have abandoned her with all her equipment and the freight money earned during the voyage, thus bringing himself within the provisions of article 837 in so far as the subsidiary civil liability is concerned This abandonment which would have amounted to an offer of the value of the vessel, of her equipment, and freight money earned could not have been refused, and the agent could not have been personally compelled, under such circumstances, to pay the 18,000 pesos, the estimated value of the vessel at the time of the collision. This is the difference which exists between the lawful acts and lawful obligations of the captain and the liability which he incurs on account of any unlawful act committed by him. In the first case, the lawful acts and obligations of the captain beneficial to the vessel may be enforced as against the agent for the reason that such obligations arise from the contract of agency (provided, however, that the captain does not exceed his authority), while as to any liability incurred by the captain through his unlawful acts, the ship agent is simply subsidiarily civilly liable. This liability of the agent is limited to the vessel and it does not extend further. For this reason the Code of Commerce makes the agent liable to the extent of the value of the vessel, as the codes of the principal maritime nations provide, with the vessel, and not individually. Such is also the spirit of our code. The spirit of our code is accurately set forth in a treatise on maritime law, from which we deem proper to quote the following as the basis of this decision: That which distinguishes the maritime from the civil law and even from the mercantile law in general is the real and hypothecary nature of the former, and the many securities of a real nature that maritime customs from time immemorial the laws, the codes, and the later jurisprudence, have provided for the protection of the various and conflicting interests which are ventured and risked in maritime expeditions, such as the interests of the vessel and of the agent, those of the owners of the cargo and consignees, those who salvage the ship, those who make loans upon the cargo, those of the sailors and members of the crew as to their wages, and those of a constructor as to repairs made to the vessel. As evidence of this "real" nature of the maritime law we have (1) the limitation of the liability of the agents to the actual value of the vessel and the freight money, and (2) the right to retain the cargo and the embargo and detention of the vessel even in cases where the ordinary civil law would not allow more than a personal action against the debtor or person liable. It will be observed that these rights are correlative, and naturally so, because if the agent can exempt himself from liability

by abandoning the vessel and freight money, thus avoiding the possibility of risking his whole fortune in the business, it is also just that his maritime creditor may for any reason attach the vessel itself to secure his claim without waiting for a settlement of his rights by a final judgment, even to the prejudice of a third person. This repeals the civil law to such an extent that, in certain cases, where the mortgaged property is lost no personal action lies against the owner or agent of the vessel. For instance, where the' vessel is lost the sailors and members of the crew can not recover their wages; in case of collision, the liability of the agent is limited as aforesaid, and in case of shipwreck, those who loan their money on the vessel and cargo lose all their rights and can not claim reimbursement under the law. There are two reasons why it is impossible to do away with these privileges, to wit: (1) The risk to which the thing is exposed, and (2) the "real" nature of the maritime law, exclusively "real," according to which the liability of the parties is limited to a thing which is at the mercy of the waves. If the agent is only liable with the vessel and freight money and both may be lost through the accidents of navigation it is only just that the maritime creditor have some means of obviating this precarious nature of his rights by detaining the ship, his only security, before it is lost. The liens tacit or legal, which may exist upon the vessel and which a purchaser of the same would be obliged to respect and recognize are in addition to those existing in favor of the State by virtue of the privileges which are granted to it by all the laws pilot, tonnage, and port dues and other similar charges, the wages of the crew earned during the last voyage as provided in article 646 of the Code of Commerce, salvage dues under article 842, the indemnification due to the captain of the vessel in case his contract is terminated on account of the voluntary sale of the ship and the insolvency of the owner as provided in article 608, and all other liabilities arising from collisions under Articles 837 and 838.' (Madariaga pp. 60, 62, 63, 85. We accordingly hold that the defendant is liable for the indemnification to which the plaintiff is entitled by reason of the collision but he is not required to pay such indemnification for the reason that the obligation thus incurred has been extinguished on account of the loss of the thing bound for the payment thereof and in this respect the judgment of the court below is affirmed except in so far as it requires the plaintiff to pay the costs of this action, which is not exactly proper. No special order is made as to costs of this appeal. After the expiration of twenty days let judgment be entered in accordance herewith and ten days thereafter the record be remanded to the Court of First Instance for execution. So ordered. 7 From the foregoing the rule is that in the case of collision, abandonment of the vessel is necessary in order to limit the liability of the shipowner or the agent to the value of the vessel, its appurtenances and freightage earned in the voyage in accordance with Article 837 of the Code of Commerce. The only instance where such abandonment is dispensed with is when the vessel was entirely lost. In such case, the obligation is thereby extinguished. In the case of Government of the Philippines vs. Maritime this Court citing Philippine Shipping stated the exception thereto in that while "the total destruction of the vessel extinguishes a maritime lien, as there is no longer any risk to which it can attach, but the total destruction of the vessel does not affect the liability of the owner for repairs of the vessel completed before its loss, 8 interpreting the provision of Article 591 of the Code of Commerce in relation with the other Articles of the same Code. In Ohta Development Company vs. Steamship "Pompey" 9 it appears that at the pier sunk and the merchandise was lost due to the fault of the steamship "Pompey" that was then docked at said pier. This Court ruled that the liability of the owner of "Pompey" may not be limited to its value under Article 587 of the Code of Commerce as there was no abandonment of the ship. We also held that Article 837 cannot apply as it refers to collisions which is not the case here. 10 In the case of Guison vs. Philippine Shipping Company 11 involving the collision at the mouth of the Pasig river between the motor launches Martha and Manila H in which the latter was found to be at fault, this Court, applying Article 837 of the Code of Commerce limited the liability of the agent to its value.

In the case of Yangco vs. Laserna 12 which involved the steamers SS "Negros" belonging to Yangco which after two hours of sailing from Romblon to Manila encountered rough seas as a result of which it capsized such that many of its passengers died in the mishap, several actions for damages were filed against Yangco, by a verified pleading, he sought to abandon the vessel to the plaintiffs in the three cases together with all the equipment without prejudice to the right to appeal. This Court in resolving the issue held as follows: Brushing aside the incidental issues, the fundamental question here raised is: May the shipowner or agent, notwithstanding the total loss of the vessel as a result of the negligence of its captain, be properly held liable in damages for the consequent death of its passengers? We are of the opinion and so hold that this question is controlled by the provision of article 587 of the Code of Commerce. Said article reads: The agent shall also be civilly liable for the indemnities in favor of third persons which arise from the conduct of the captain in the. care of the goods which the vessel carried; but he may exempt himself therefrom by abandoning the vessel with all her equipments and the freight he may have earned during the voyage. The provision accords a shipowner or agent the right of abandonment; and by necessary implication, his liability is confined to that which he is entitled as of right to -abandon "the vessel with all her equipments and the freight it may have earned during the voyage." It is true that the article apears to deal only with the limited liability of shipowners or agents for damages arising from the misconduct of the captain in the care of the goods which the vessel carries, but this is a mere deficiency of language and in no way indicates the true extent of such liability. The consensus of authorities is to the effect that notwithstanding the language of the afore-quoted provision, the benefit of limited liability therein provided for, applies in all cases wherein the shipowner or agent may properly be held liable for the negligent or illicit acts of the captain. Dr. Jose Ma. Gonzalez de Echavarri y Vivanco commenting on said article, said: La letra del Codigo, en el articulo 587, presenta una gravisima cuestion. El derecho de abandono, si se atiende a lo escrito, solo se refiere a las indemnizaciones a que diere lugar la conducta del Capitan en la custodia de los efectos que cargo en el buque. Es ese el espiritu del legislador? No; habra derecho de abandono en las responsabilidades nacidas de obligaciones contraidas por el Capitan y de otros actos de este? Lo reputamos evidente y, para fortalecer nuestra opinion, basta copiar el siguiente parrafo de la Exposicion de motivos: El proyecto, al aplicar estos principios, se inspira tambien en los intereses del comercio maritimo que quedaran mas asegurados ofreciendo a todo el que contrata con el naviero o Capitan del buque, la garantia real del mismo, cualesquiera que sean las facultades o atribuciones de que se hallen investidos; (Echavarri, Codigo de Comercio, Tomo 4, 2. ed., pags. 483- 484.) A cursory examination will disclose that the principle of limited liability of a shipowner or agent is provided for in but three articles of the Code of Commerce Article 587 aforequoted and articles 590 and 837. Article 590 merely reiterates the principle embodied in article 587, where the vessel is owned by several person Article 837 applies the same principle in cases of collision and it has been observed that said article is but 'a necessary consequence of the right to abandon the vessel given to the shipowner in Article 587 to the Code, and it is one of the many superfluities contained in the Code. (Lorenzo Benito, Lecciones 352, quoted in Philippine Shipping Co. vs. Garcia, 6 Phil. 281, 282.) In effect therefore, only Articles 587 and 590 are the provisions contained in our Code of Commerce on the matter, and the framers of said code had intended those provisions to embody the universal principle of limited liability in all cases. ... . 13 In the said case We invoked our ruling in Philippine Shipping and concluded as follows: In the light of all the foregoing, we therefore hold that if the shipowner or agent may in any way be held civilly liable at all for injury to or death of passengers arising

from the negligence of the captain in cases of collisions or shipwrecks, his liability is merely coextensive with his interest in the vessel such that a total loss thereof results in its extinction. In arriving at this conclusion, we have not been unmindful of the fact that the ill-fated steamship Negros, as a vessel engaged in interisland trade, is a common carrier (De Villata v. Stanely 32 Phil. 541), and that the relationship between the petitioner and the passengers who died in the mishap rests on a contract of carriage. But assuming that petitioner is liable for a breach of contract of carriage, the exclusively "real and hypothecary nature" of maritime law operates to limit such liability to the value of the vessel, or to the insurance thereon, if any. In the instant case it does not appear that the vessel was insured. Whether the abandonment of the vessel sought by the petitioner in the instant case was in accordance with law or not, is immaterial The vessel having totally perished any act of abandonment would be an Idle ceremony. 14 In the case of Abueg vs. San Diego,15 which involves a claim of compensation under the Workmen's Compensation Act for the deceased members of the crew of the MS "San Diego II" and MS "Bartolome" which were caught by a typhoon in the vicinity of Mindoro Island and as a consequence of which they were sunk and totally lost, this Court held as follows: Counsel for the appellant cite article 7837 of the Code of Commerce which provides that if the vessel together with all her tackle and freight money earned during the voyage are abandoned, the agent's liability to third persons for tortious acts of the captain in the care of the goods which the ship carried is extinguished (Yangco vs. Laserna, 73 Phil. 330) Article 937 of the same Code which provides that in cases of collision, the shipowners' liability is limited to the value of the vessel with all her equipment and freight earned during the voyage (Philippine Shipping Company vs. Garcia, 6 Phil. 281); and Article 643 of the same Code which provides that if the vessel and freight are totally lost, the agent's liability for wages of the crew is extinguished. From these premises counsel draw the conclusion that appellant's liability, as owner of the two motor ships lost or sunk as a result of the typhoon that lashed the island of Mindoro on October 1, 1941, was extinguished. The real and hypothecary nature of the liability of the shipowner or agent embodied in the provisions of the Maritime Law, Book III, Code of Commerce, had its origin in the prevailing conditions of the maritime trade and sea voyages during the medieval ages, attended by innumerable hazards and perils. To offset against these adverse conditions and to encourage shipbuilding and maritime commerce, it was deemed necessary to confine the liability of the owner or agent arising from the operation of a ship to the vessel equipment, and freight, or insurance, if any, so that if the shipowner or agent abandoned the ship, equipment, and freight, his liability was extinguished But the provisions of the Code of Commerce invoked by appellant have no room in the application of the Workmen's Compensation Act which seeks to improve, and aims at the amelioration of, the condition of laborers and employees. It is not the liability for the damage or loss of the cargo or injury to, or death of, a passenger by or through the misconduct of the captain or master of the ship; nor the liability for the loss of the ship as a result of collision; nor the responsibility for wages of the crew, but a liability created by a statute to compensate employees and laborers in cases of injury received by or inflicted upon them, while engaged in the performance of their work or employment, or the heirs and dependents of such laborers and employees in the event of death caused by their employment.Such compensation has nothing to do with the provisions of the Code of Commerce regarding maritime commerce. It is an item in the cost of production which must be included in the budget of any well managed industry. Appellant's assertion that in the case of Enciso vs. Dy-Liaco (57 Phil. 446), and Murillo vs. Mendoza (66 Phil. 689), the question of the extinction of the shipowner's liability due to abandonment of the ship by him was not fully discussed, as in the case of Yangco vs. Laserna, supra, is not entirely correct. In the last mentioned case, the limitation of the shipowner's liability to the value of the ship, equipment,

freight, and insurance, if any, was the lis mota In the case of Enciso vs. Dy-Liaco, supra, the application of the Workmen's Compensation Act to a master or patron who perished as a result of the sinking of the motorboat of which he was the master, was the controversy submitted to the court for decision. This Court held in that case that .It has been repeatedly stated that the Workmen's Compensation Act was enacted to abrogate the common law and our Civil Code upon culpable acts and omissions, and that the employer need not be guilty of neglect or fault in order that responsibility may attach to him' (pp. 449-450); and that the shipowner was liable to pay compensation provided for in the Workmen's Compensation Act, notwithstanding the fact that the motorboat was totally lost. In the case of Murillo vs. Mendoza, supra, this Court held that 'The rights and responsibilities defined in said Act must be governed by its own peculiar provisions in complete disregard of other similar provisions of the Civil as well as the mercantile law. If an accident is compensable under the Workmen's Compensation Act, it must be compensated even when the workman's right is not recognized by or is in conflict with other provisions of the Civil Code or of the Code of Commerce. The reason behind this principle is that the Workmen's Compensation Act was enacted by the Legislature in abrogation of the other existing laws.' This quoted part of the decision is in answer to the contention that it was not the intention of the Legislature to repeal Articles 643 and 837 of the Code of Commerce with the enactment of the Workmen's Compensation Act. 16 In said case the Court reiterated that the liability of the shipowner or agent under the provision of Articles 587 and 837 of the Code of Commerce is limited to the value of the vessel with all her equivalent and freight earned during the voyage if the shipowner or agent abandoned the ship with all the equipment and freight. However, it does not apply to the liability under the Workmen's Compensation Act where even as in said case the vessel was lost the liability thereunder is still enforceable against the employer or shipowner. The case of Manila Steamship Company, Inc. vs. Insa Abdulhaman and Lim Hong To 17 is a case of collision of the ML "Consuelo V" and MS "Bowline Knot" as a result of which the ML "Consuelo V" capsized and was lost where nine (9) passengers died or were missing and all its cargoes were lost. In the action for damages arising from the collision, applying Article 837 of the Code of Commerce, this Court held that in such case where the collision was imputable to both of them, each vessel shall suffer her own damages and both shall be solidarily liable for the damages occasioned to their cargoes.18 Thus, We held: In fact, it is a general principle, well established maritime law and custom, that shipowners and ship agents are civilly liable for the acts of the captain (Code of Commerce, Article 586) and for the indemnities due the third persons (Article 587); so that injured parties may immediately look for reimbursement to the owner of the ship, it being universally recognized that the ship master or captain is primarily the representative of the owner (Standard Oil Co. vs. Lopez Castelo, 42 Phil. 256, 260).This direct liability, moderated and limited by the owner's right of abandonment of the vessel and earned freight (Article 587) has been declared to exist not only in case of breached contracts, but also in cases of tortious negligence (Yu Biao Sontua vs. Osorio, 43 Phil. 511; 515): xxx xxx xxx It is easy to see that to admit the defense of due diligence of a bonus paterfamilias (in the selection and vigilance of the officers and crew) as exempting the shipowner from any liability for their faults, would render nugatory the solidary liability established by Article 827 of the Code of Commerce for the greater protection of injured parties. Shipowners would be able to escape liability in practically every case, considering that the qualifications and licensing of ship masters and officers are determined by the State, and that vigilance is practically impossible to exercise over officers and crew of vessels at sea. To compel the parties prejudiced to look to the crew for indemnity and redress would be an illusory remedy for almost always its members. are, from captains down, mere wage earners.

We, therefore, find no reversible error in the refusal of the Court of Appeals to consider the defense of the Manila Steamship Co., that it is exempt from liability for the collision with the M L "Consuelo V " due to the absence of negligence on its part in the selection and supervision of the officers and crew of the M/S "Bowline Knot. 19 However, insofar as respondent Lim Hong To, owner of M L "Consuelo V" who admittedly employed an unlicensed master and engineer and who in his application for permission to operate expressly assumed full risk and responsibility thereby (Exh. 2) this Court held that the liability of Lim Hong To cannot be limited to the value of his motor launch by abandonment of the vessel as invoked in Article 587 of the Code of Commerce, We said: 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 the average is due to shipowner's own fault. Farina (Derecho Commercial Maritima Vol. 1, pp. 122-123), on the authority of judicial precedents from various nations, sets the rule to be as follows: xxx xxx xxx 20 From the foregoing, it is clear that in case of collision of vessels, in order to avail of the benefits of Article 837 of the Code of Commerce the shipowner or agent must abandon the vessel. In such case the civil liability shall be limited to the value of the vessel with all the appurtenances and freight earned during the voyage. However, where the injury or average is due to the ship-owner's fault as in said case, the shipowner may not avail of his right to limited liability by abandoning the vessel. We reiterate what We said in previous decisions that the real and hypothecary nature of the liability of the shipowner or agent is embodied in the provisions of the Maritime Law, Book III, Code of Commerce. 21 Articles 587, 590 and 837 of the same code are precisely intended 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 owner or agent abandons the vessel. Although it is not specifically provided for in Article 837 of the same code that in case of collision there should be such abandonment to enjoy such limited liability, said article on collision of vessels is a mere amplification of the provisions of Articles 587 and 590 of same code where abandonment of the vessel is a pre-condition. Even without said article, the parties may avail of the provisions of Articles 587 and 590 of same code in case of collision. This is the reason why Article 837 of the same code is considered a superfluity. 22 Hence the rule is that in case of collision there should be abandonment of the vessel by the shipowner or agent in order to enjoy the limited liability provided for under said Article 837. The exception to this rule is when the vessel is totally lost in which case there is no vessel to abandon so abandonment is not required. Because of such total loss the liability of the shipowner or agent for damages is extinguished. Nevertheless, the shipowner or agent is personally liable for claims under the Workmen's Compensation Act and for repairs of the vessel before its loss. 23 In case of illegal or tortious acts of the captain the liability of the shipowner and agent is subsidiary. In such instance the shipowner or agent may avail of the provisions of Article 837 of the Code by abandoning the vessel.24 However, if the injury or damage is caused by the shipowner's fault as where he engages the services of an inexperienced and unlicensed captain or engineer, he cannot avail of the provisions of Article 837 of the Code by abandoning the vessel. 25 He is personally liable for the damages arising thereby. In the case now before the Court there is no question that the action arose from a collision and the fault is laid at the doorstep of LSCO "Cavite" of petitioner. Undeniably petitioner has not abandoned the vessel. Hence petitioner can not invoke the benefit of the provisions of Article 837 of the Code of Commerce to limit its liability to the value of the vessel, all the appurtenances and freightage earned during the voyage. In the light of the foregoing conclusion, the issue as to when abandonment should be made need not be resolved. WHEREFORE, the petition is DENIED with costs against petitioner. SO ORDERED. Teehankee, C.J., Narvasa, Cruz and Paras, JJ., concur.

G.R. No. 100446 January 21, 1993 ABOITIZ SHIPPING CORPORATION, petitioner, vs. GENERAL ACCIDENT FIRE AND LIFE ASSURANCE CORPORATION, LTD., respondent. Sycip, Salazar, Hernandez & Gamaitan Law Office for petitioner. Napoleon Rama collaborating counsel for petitioner. Dollete, Blanco, Ejercito & Associates for private respondent. MELO, J.: This refers to a petition for review which seeks to annul and set aside the decision of the Court of Appeals dated June 21, 1991, in CA G.R. SP No. 24918. The appellate court dismissed the petition for certiorari filed by herein petitioner, Aboitiz Shipping Corporation, questioning the Order of April 30, 1991 issued by the Regional Trial Court of the National Capital Judicial Region (Manila, Branch IV) in its Civil Case No. 144425 granting private respondent's prayer for execution for the full amount of the judgment award. The trial court in so doing swept aside petitioner's opposition which was grounded on the real and hypothecary nature of petitioner's liability as ship owner. The application of this established principle of maritime law would necessarily result in a probable reduction of the amount to be recovered by private respondent, since it would have to share with a number of other parties similarly situated in the insurance proceeds on the vessel that sank. The basic facts are not disputed. Petitioner is a corporation organized and operating under Philippine laws and engaged in the business of maritime trade as a carrier. As such, it owned and operated the ill-fated "M/V P. ABOITIZ," a common carrier which sank on a voyage from Hongkong to the Philippines on October 31, 1980. Private respondent General Accident Fire and Life Assurance Corporation, Ltd. (GAFLAC), on the other hand, is a foreign insurance company pursuing its remedies as a subrogee of several cargo consignees whose respective cargo sank with the said vessel and for which it has priorly paid. The incident of said vessel's sinking gave rise to the filing of suits for recovery of lost cargo either by the shippers, their successor-in-interest, or the cargo insurers like GAFLAC as subrogees. The sinking was initially investigated by the Board of Marine Inquiry (BMI Case No. 466, December 26, 1984), which found that such sinking was due toforce majeure and that subject vessel, at the time of the sinking was seaworthy. This administrative finding notwithstanding, the trial court in said Civil Case No. 144425 found against the carrier on the basis that the loss subject matter therein did not occur as a result of force majeure. Thus, in said case, plaintiff GAFLAC was allowed to prove, and. was later awarded, its claim. This decision in favor of GAFLAC was elevated all the way up to this Court in G.R. No. 89757 (Aboitiz v. Court of Appeals, 188 SCRA 387 [1990]), with Aboitiz, like its ill-fated vessel, encountering rough sailing. The attempted execution of the judgment award in said case in the amount of P1,072,611.20 plus legal interest has given rise to the instant petition. On the other hand, other cases have resulted in findings upholding the conclusion of the BMI that the vessel was seaworthy at the time of the sinking, and that such sinking was due to force majeure. One such ruling was likewise elevated to this Court in G.R. No. 100373, Country Bankers Insurance Corporation v. Court of Appeals, et al., August 28, 1991 and was sustained. Part of the task resting upon this Court, therefore, is to reconcile the resulting apparent contrary findings in cases originating out of a single set of facts. It is in this factual milieu that the instant petition seeks a pronouncement as to the applicability of the doctrine of limited liability on the totality of the claims vis a vis the losses brought about by the sinking of the vessel M/V P. ABOITIZ, as based on the real and hypothecary nature of maritime law. This is an issue which begs to be resolved considering that a number of suits alleged in the petition number about 110 (p. 10 and pp. 175 to 183, Rollo) still pend and whose resolution shall well-nigh result in more confusion than presently attends the instant case. In support of the instant petition, the following arguments are submitted by the petitioner: 1. The Limited Liability Rule warrants immediate stay of execution of judgment to prevent impairment of other creditors' shares; 2. The finding of unseaworthiness of a vessel is not necessarily attributable to the shipowner; and 3 The principle of "Law of the Case" is not applicable to the present petition. (pp. 226, Rollo.)

On the other hand, private respondent opposes the foregoing contentions, arguing that: 1. There is no limited liability to speak of or applicable real and hypothecary rule under Article 587, 590, and 837 of the Code of Commerce in the face of the facts found by the lower court (Civil Case No. 144425), upheld by the Appellate Court (CA G.R. No. 10609), and affirmed in toto by the Supreme Court in G.R. No. 89757 which cited G.R. No. 88159 as the Law of the Case; and 2. Under the doctrine of the Law of the Case, cases involving the same incident, parties similarly situated and the same issues litigated should be decided in conformity therewith following the maximstare decisis et non quieta movere. (pp. 225 to 279, Rollo.) Before proceeding to the main bone of contention, it is important to determine first whether or not the Resolution of this Court in G.R. No. 88159, Aboitiz Shipping, Corporation vs. The Honorable Court of Appeals and Allied Guaranty Insurance Company, Inc., dated November 13, 1989 effectively bars and precludes the instant petition as argued by respondent GAFLAC. An examination of the November 13, 1989 Resolution in G.R. No. 88159 (pp. 280 to 282, Rollo) shows that the same settles two principal matters, first of which is that the doctrine of primary administrative jurisdiction is not applicable therein; and second is that a limitation of liability in said case would render inefficacious the extraordinary diligence required by law of common carriers. It should be pointed out, however, that the limited liability discussed in said case is not the same one now in issue at bar, but an altogether different aspect. The limited liability settled in G.R. No. 88159 is that which attaches to cargo by virtue of stipulations in the Bill of Lading, popularly known as package limitation clauses, which in that case was contained in Section 8 of the Bill of Lading and which limited the carrier's liability to US$500.00 for the cargo whose value was therein sought to be recovered. Said resolution did not tackle the matter of the Limited Liability Rule arising out of the real and hypothecary nature of maritime law, which was not raised therein, and which is the principal bone of contention in this case. While the matters threshed out in G.R. No. 88159, particularly those dealing with the issues on primary administrative jurisdiction and the package liability limitation provided in the Bill of Lading are now settled and should no longer be touched, the instant case raises a completely different issue. It appears, therefore, that the resolution in G.R. 88159 adverted to has no bearing other than factual to the instant case. This brings us to the primary question herein which is whether or not respondent court erred in granting execution of the full judgment award in Civil Case No. 14425 (G.R. No. 89757), thus effectively denying the application of the limited liability enunciated under the appropriate articles of the Code of Commerce. The articles may be ancient, but they are timeless and have remained to be good law. Collaterally, determination of the question of whether execution of judgments which have become final and executory may be stayed is also an issue. We shall tackle the latter issue first. This Court has always been consistent in its stand that the very purpose for its existence is to see to the accomplishment of the ends of justice. Consistent with this view, a number of decisions have originated herefrom, the tenor of which is that no procedural consideration is sacrosanct if such shall result in the subverting of substantial justice. The right to an execution after finality of a decision is certainly no exception to this. Thus, in Cabrias v. Adil (135 SCRA 355 [1985]), this Court ruled that: . . . It is a truism that every court has the power "to control, in the furtherance of justice, the conduct of its ministerial officers, and of all other persons in any manner connected with a case before it, in every manner appertaining thereto. It has also been said that: . . . every court having jurisdiction to render a particular judgment has inherent power to enforce it, and to exercise equitable control over such enforcement. The court has authority to inquire whether its judgment has been executed, and will remove obstructions to the enforcement thereof. Such authority extends not only to such orders and such writs as may be necessary to carry out the judgment into effect and render it binding and operative, but also to such orders and such writs as may be necessary to prevent an improper enforcement of the judgment. If a judgment is sought to be

perverted and made a medium of consummating a wrong the court on proper application can prevent it. (at p. 359) and again in the case of Lipana v. Development Bank of Rizal (154 SCRA 257 [1987]), this Court found that: The rule that once a decision becomes final and executory, it is the ministerial duty of the court to order its execution, admits of certain exceptions as in cases of special and exceptional nature where it becomes the imperative in the higher interest of justice to direct the suspension of its execution (Vecine v. Geronimo, 59 OG 579); whenever it is necessary to accomplish the aims of justice (Pascual v Tan, 85 Phil. 164); or when certain facts and circumstances transpired after the judgment became final which would render the execution of the judgment unjust (Cabrias v. Adil, 135 SCRA 354). (at p. 201) We now come to the determination of the principal issue as to whether the Limited Liability Rule arising out of the real and hypothecary nature of maritime law should apply in this and related cases. We rule in the affirmative. In deciding the instant case below, the Court of Appeals took refuge in this Court's decision in G.R. No. 89757 upholding private respondent's claims in that particular case, which the Court of Appeals took to mean that this Court has "considered, passed upon and resolved Aboitiz's contention that all claims for the losses should first be determined before GAFLAC's judgment may be satisfied," and that such ruling "in effect necessarily negated the application of the limited liability principle" (p. 175, Rollo). Such conclusion is not accurate. The decision in G.R. No. 89757 considered only the circumstances peculiar to that particular case, and was not meant to traverse the larger picture herein brought to fore, the circumstances of which heretofore were not relevant. We must stress that the matter of the Limited Liability Rule as discussed was never in issue in all prior cases, including those before the RTCs and the Court of Appeals. As discussed earlier, the "limited liability" in issue before the trial courts referred to the package limitation clauses in the bills of lading and not the limited liability doctrine arising from the real and hypothecary nature of maritime trade. The latter rule was never made a matter of defense in any of the cases a quo, as properly it could not have been made so since it was not relevant in said cases. The only time it could come into play is when any of the cases involving the mishap were to be executed, as in this case. Then, and only then, could the matter have been raised, as it has now been brought before the Court. The real and hypothecary nature of maritime law simply means that the liability of the carrier in connection with losses related to maritime contracts is confined to the vessel, which is hypothecated for such obligations or which stands as the guaranty for their settlement. It has its origin by reason of the conditions and risks attending maritime trade in its earliest years when such trade was replete with innumerable and unknown hazards since vessels had to go through largely uncharted waters to ply their trade. It was designed to offset such adverse conditions and to encourage people and entities to venture into maritime commerce despite the risks and the prohibitive cost of shipbuilding. Thus, the liability of the vessel owner and agent arising from the operation of such vessel were confined to the vessel itself, its equipment, freight, and insurance, if any, which limitation served to induce capitalists into effectively wagering their resources against the consideration of the large profits attainable in the trade. It might be noteworthy to add in passing that despite the modernization of the shipping industry and the development of high-technology safety devices designed to reduce the risks therein, the limitation has not only persisted, but is even practically absolute in well-developed maritime countries such as the United States and England where it covers almost all maritime casualties. Philippine maritime law is of Anglo-American extraction, and is governed by adherence to both international maritime conventions and generally accepted practices relative to maritime trade and travel. This is highlighted by the following excerpts on the limited liability of vessel owners and/or agents; Sec. 183. The liability of the owner of any vessel, whether American or foreign, for any embezzlement, loss, or destruction by any person of any person or any property, goods, or merchandise shipped or put on board such vessel, or for any loss, damage, or forfeiture, done, occasioned, or incurred, without the privity or knowledge of such owner or owners shall not exceed the amount or value of the interest of such owner in such vessel, and her freight then pending. (Section 183 of the US Federal Limitation of Liability Act).

and 1. The owner of a sea-going ship may limit his liability in accordance with Article 3 of this Convention in respect of claims arising, from any of the following occurrences, unless the occurrence giving rise to the claim resulted from the actual fault or privity of the owner; (a) loss of life of, or personal injury to, any person being carried in the ship, and loss of, or damage to, any property on board the ship. (b) loss of life of, or personal injury to, any other person, whether on land or on water, loss of or damage to any other property or infringement of any rights caused by the act, neglect or default the owner is responsible for, or any person not on board the ship for whose act, neglect or default the owner is responsible: Provided, however, that in regard to the act, neglect or default of this last class of person, the owner shall only be entitled to limit his liability when the act, neglect or default is one which occurs in the navigation or the management of the ship or in the loading, carriage or discharge of its cargo or in the embarkation, carriage or disembarkation of its passengers. (c) any obligation or liability imposed by any law relating to the removal of wreck and arising from or in connection with the raising, removal or destruction of any ship which is sunk, stranded or abandoned (including anything which may be on board such ship) and any obligation or liability arising out of damage caused to harbor works, basins and navigable waterways. (Section 1, Article I of the Brussels International Convention of 1957) In this jurisdiction, on the other hand, its application has been well-nigh constricted by the very statute from which it originates. The Limited Liability Rule in the Philippines is taken up in Book III of the Code of Commerce, particularly in Articles 587, 590, and 837, hereunder quoted in toto: 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 a 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 (on collisions), shall be understood as limited to the value of the vessel with all its appurtenances and freightage served during the voyage . (Emphasis supplied) Taken together with related articles, the foregoing cover only liability for injuries to third parties (Art. 587), acts of the captain (Art. 590) and collisions (Art. 837). In view of the foregoing, this Court shall not take the application of such limited liability rule, which is a matter of near absolute application in other jurisdictions, so lightly as to merely "imply" its inapplicability, because as could be seen, the reasons for its being are still apparently much in existence and highly regarded. We now come to its applicability in the instant case. 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 (Yango v. Laserna, 73 Phil. 330 [1941]; Manila Steamship Co., Inc. v. Abdulhanan, 101 Phil. 32 [1957]; Heirs of Amparo delos Santos v. Court of Appeals, 186 SCRA 649 [1967]). The pivotal question, thus, is whether there is a 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 (pp. 27-33, Rollo) 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. In its Decision, the trial court merely held that:

. . . Considering the foregoing reasons, the Court holds that the vessel M/V "Aboitiz" and its cargo were not lost due to fortuitous event or force majeure." (p. 32, Rollo) The same is true of the decision of this Court in G.R. No. 89757 (pp. 71-86, Rollo) affirming the decision of the Court of Appeals in CA-G.R. CV No. 10609 (pp. 34-50, Rollo) 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. The qualified nature of the meaning of "unseaworthiness," under the peculiar circumstances of this case is underscored by the fact that in the Country Banker's case, supra, arising from the same sinking, the Court sustained the decision of the Court of Appeals that the sinking of the M/V P. Aboitiz was due to force majeure. On this point, it should be stressed that unseaworthiness is not a fault that can be laid squarely on petitioner's lap, absent a factual basis for such a conclusion. The unseaworthiness found in some cases where the same has been ruled to exist is directly attributable to the vessel's crew and captain, more so on the part of the latter since Article 612 of the Code of Commerce provides that among the inherent duties of a captain is to examine a vessel before sailing and to comply with the laws of navigation. Such a construction would also put matters to rest relative to the decision of the Board of Marine Inquiry. While the conclusion therein exonerating the captain and crew of the vessel was not sustained for lack of basis, the finding therein contained to the effect that the vessel was seaworthy deserves merit. Despite appearances, it is not totally incompatible with the findings of the trial court and the Court of Appeals, whose finding of "unseaworthiness" clearly did not pertain to the structural condition of the vessel which is the basis of the BMI's findings, but to the condition it was in at the time of the sinking, which condition was a result of the acts of the captain and the crew. The rights of a vessel owner or agent under the Limited Liability Rule are akin to those of the rights of shareholders to limited liability under our corporation law. Both are privileges granted by statute, and while not absolute, must be swept aside only in the established existence of the most compelling of reasons. In the absence of such reasons, this Court chooses to exercise prudence and shall not sweep such rights aside on mere whim or surmise, for even in the existence of cause to do so, such incursion is definitely punitive in nature and must never be taken lightly. More to the point, the rights of parties to claim against an agent or owner of a vessel may be compared to those of creditors against an insolvent corporation whose assets are not enough to satisfy the totality of claims as against it. While each individual creditor may, and in fact shall, be allowed to prove the actual amounts of their respective claims, this does not mean that they shall all be allowed to recover fully thus favoring those who filed and proved their claims sooner to the prejudice of those who come later. In such an instance, such creditors too would not also be able to gain access to the assets of the individual shareholders, but must limit their recovery to what is left in the name of the corporation. Thus, in the case of Lipana v. Development Bank of Rizal earlier cited, We held that: In the instant case, the stay of execution of judgment is warranted by the fact that the respondent bank was placed under receivership. To execute the judgment would unduly deplete the assets of respondent bank to the obvious prejudice of other depositors and creditors, since, as aptly stated in Central Bank v. Morfe (63 SCRA 114), after the Monetary Board has declared that a bank is insolvent and has ordered it to cease operations, the Board becomes the trustee of its assets for the equal benefit of all creditors, and after its insolvency, one cannot obtain an advantage or preference over another by an attachment, execution or otherwise. (at p. 261). In both insolvency of a corporation and the sinking of a vessel, the claimants or creditors are limited in their recovery to the remaining value of accessible assets. In the case of an insolvent corporation, these are the residual assets of the corporation left over from its operations. In the case of a lost vessel, these are the insurance proceeds and pending freightage for the particular voyage. In the instant case, there is, therefore, a need to collate all claims preparatory to their satisfaction from the insurance proceeds on the vessel M/V P. Aboitiz and its pending freightage at the time of its loss. No claimant can be given precedence over the others by the simple expedience of having filed or

completed its action earlier than the rest. Thus, execution of judgment in earlier completed cases, even those already final and executory, must be stayed pending completion of all cases occasioned by the subject sinking. Then and only then can all such claims be simultaneously settled, either completely or pro-rata should the insurance proceeds and freightage be not enough to satisfy all claims. Finally, the Court notes that petitioner has provided this Court with a list of all pending cases (pp. 175 to 183,Rollo), together with the corresponding claims and the pro-rated share of each. We likewise note that some of these cases are still with the Court of Appeals, and some still with the trial courts and which probably are still undergoing trial. It would not, therefore, be entirely correct to preclude the trial courts from making their own findings of fact in those cases and deciding the same by allotting shares for these claims, some of which, after all, might not prevail, depending on the evidence presented in each. We, therefore, rule that the pro-rated share of each claim can only be found after all the cases shall have been decided. In fairness to the claimants, and as a matter of equity, the total proceeds of the insurance and pending freightage should now be deposited in trust. Moreover, petitioner should institute the necessary limitation and distribution action before the proper admiralty court within 15 days from the finality of this decision, and thereafter deposit with it the proceeds from the insurance company and pending freightage in order to safeguard the same pending final resolution of all incidents, for final pro-rating and settlement thereof. ACCORDINGLY, the petition is hereby GRANTED, and the Orders of the Regional Trial Court of Manila, Branch IV dated April 30, 1991 and the Court of Appeals dated June 21, 1991 are hereby set aside. The trial court is hereby directed to desist from proceeding with the execution of the judgment rendered in Civil Case No. 144425 pending determination of the totality of claims recoverable from the petitioner as the owner of the M/V P. Aboitiz. Petitioner is directed to institute the necessary action and to deposit the proceeds of the insurance of subject vessel as above-described within fifteen (15) days from finality of this decision. The temporary restraining order issued in this case dated August 7, 1991 is hereby made permanent. SO ORDERED. Gutierrez, Jr., Bidin, Davide, Jr. and Romero, JJ., concur.

G.R. No. L-30115 September 28, 1973 FE PEREZ, plaintiff-appellant, vs. JOSEFINA GUTIERREZ, defendant third-party plaintiff-appellee, PANFILO ALAJAR, third-party defendant-appellee. Julian C. Gonzales, Jr. for plaintiff-appellant. Gerardo E. Angeles for defendant-third-party plaintiff-appellee. Apostadera, Palabrica and Muyco for third-party defendant-appellee. CASTRO, J.: This appeal from the decision dated June 9, 1967 of the Court of First Instance of Davao in its civil case 3163 poses objections to the manner the trial court adjudicated the claim for damages filed by the plaintiff-appellant Fe Perez against the defendant-third-party plaintiff-appellee Josefina Gutierrez. The complaint (later amended) filed on October 29, 1959 by Fe Perez with the Court of First Instance of Davao against Josefina Gutierrez, for breach of contract of carriage, alleges that on September 6, 1959 while she, together with nine coteachers, was a passenger of an AC jeepney registered under the name of the defendant Gutierrez, the said vehicle, due to the reckless negligence of its driver Leopoldo Cordero, met with an accident, resulting in injuries to herself which required her hospitalization. In her answer, Josefina Gutierrez averred that if the claim of Fe Perez is at all justified, responsibility therefor should devolve on one Panfilo Alajar, the actual owner, by purchase, of the said passenger jeepney when the accident occurred and against whom she has filed a third-party complaint. The deed of sale attached to the third-party complaint recites, inter alia, That it is mutually agreed by the herein vendor and vendee that the TITLE to the aforementioned vehicle shall remain with the VENDOR, pending approval of the herein SALE by the Public Service Commission, said motor vehicle being registered as a public utility auto-calesa under "AC" denomination; ... That the vendee herein, by these presents, do [sic] hereby binds himself and do [sic] hereby assume, [sic] responsibility for all actions, claims, demands, and rights of action, and whatever kind and nature, that may hereafter develop as a consequence of or in the course of operation of the aforementioned vehicle; ... In his answer to the third-party complaint, Panfilo Alajar disclaimed responsibility for the accident, alleging that (a) the mentioned deed of sale is null and void because it has not been registered with the Public Service Commission despite repeated demands on the 3rd-party complainant to do so; (b) the said passenger jeepney remained in the control of the 3rd-party complainant who, together with her lawyer-husband, had been collecting rentals from him for the use of the said vehicle; and (c) by express agreement, title to the said vehicle remained with the 3rd-party complainant pending approval of the sale by the Public Service Commission. The defendant Leopoldo Cordero was declared in default and did not appeal.

On June 9, 1967, after trial on the merits, the court a quo rendered its decision, in the main finding Leopoldo Cordero guilty of reckless imprudence, and finding that Panfilo Alajar owned and operated the auto calesa in question and, in fact, after the accident, even assumed responsibility for the payment of the hospital bills due to the Brokenshire Memorial Hospital for treatment of the injuries suffered by Fe Perez. Based on these findings as well as the proof of the damages suffered by Fe Perez, the court adjudged as follows: WHEREFORE, premises considered, judgment is hereby rendered ordering third-party defendant Panfilo Alajar to pay plaintiff the amount of P1,552.20 hospital expenses; P2,000.00, actual damages; P5,000.00 moral damages; P500.00 incidental expenses; and P2,000.00 attorney's fees. Ordering likewise Panfilo Alajar to pay defendant third-party plaintiff Josefina Gutierrez P500.00 moral damages; and P1,000.00 attorney's fees, and to pay the costs of the proceedings on both cases. The present appeal questions the correctness of the dispositive portion of the decision a quo which adjudged Panfilo Alajar, instead of Josefina Gutierrez, as the party liable to her for the payment of the damages adjudicated in her favor. Specifically, Fe Perez argues that the registered owner of a motor vehicle should be the one held liable for damages resulting from breach of contract of carriage by a common carrier. We find the appeal meritorious and in accord with settled law on the matter. 1 In Peralta vs. Mangusang this Court, in approbation of a similar argument, said: The law (Sec. 20 [g], Public Service Act) really requires the approval of the Public Service Commission in order that a franchise, or any privileges pertaining thereto, may be sold or leased without infringing the certificate issued to the grantee. The reason is obvious. Since a franchise is personal in nature any transfer or lease thereof should be submitted for approval of the Public Service Commission, so that the latter may take proper safeguards to protect the interest of the public. It follows that if the property covered by the franchise is transferred or leased to another without obtaining the requisite approval, the transfer is not binding on the Public Service Commission and, in contemplation of law, the grantee continues to be responsible under the franchise in relation to the Commission and to the public for the consequences incident to the operation of the vehicle, one of them being the collision under consideration. (Montoya v. Ignacio, 50 O.G. No. 1. 108; Vda. de Medina, et al. v. Cresencia, et al., 52 O.G. No. 10, 4604; Erezo v. Jepte, et al., G.R. No. L-9605, Sept. 30, 1957; Tamayo v. Aquino, 56 O.G. No. 36,5617). 2 In the earlier case of Erezo vs. Jepte, which is cited in the foregoing opinion, this Court held that the doctrine making the registered owner of a common carrier answerable to the public for negligence injuries to its passengers or third persons,

even though the vehicle had already been transferred to another, is based upon the principle ... that in dealing with vehicles registered under the Public Service Law, the public has the right to assume or presume that the registered owner is the actual owner thereof, for it would be difficult for the public to enforce the actions that they may have for injuries caused to them by the vehicles being negligently operated if the public should be required to prove who the actual owner is. How would the public or third persons know against whom to enforce their rights in case of subsequent transfers of the vehicles? We do not imply by this doctrine, however, that the registered owner may not recover whatever amount he had paid by virtue of his liability to third persons from the person to whom he had actually sold, assigned or conveyed the vehicle. 3 In Tamayo vs. Aquino, also cited in Mangusang, supra, this Court, reiterating what was stated en passant inJepte, supra, described the nature of the liability of the actual transferee of a vehicle the negligent operation of which gives rise to injuries to its passengers: The question that is posed, therefore, is how should the holder of the certificate of public convenience Tamayo participate with his transferee operator Rayos, in the damages recoverable by the heirs of the deceased passenger, if their liability is not that of joint tortfeasors in accordance with Article 2194 of the Civil Code. The following considerations must be borne in mind in determining this question. As Tamayo is the registered owner of the truck, his responsibility to the public or to any passenger riding in the vehicle or truck must be direct, for the reasons given in our decision in the case of Erezo vs. Jepte, supra, as quoted above. But as the transferee, who operated the vehicle when the passenger died, is the one directly responsible for the accident and death, he should in turn be made responsible to the registered owner for what the latter may have been adjudged to pay. In operating the truck without transfer thereof having been approved by the Public Service Commission, the transferee acted merely as agent of the registered owner and should be responsible to him (the registered owner), for any damages that he may cause the latter by his negligence." Upon the foregoing, it is quite clear that the court below erred in holding Panfilo Alajar, rather than Josefina Gutierrez, as the one directly liable to Fe Perez for the latter's injuries and the corresponding damages incurred. This Court notes moreover, that the court below inexplicably failed to hold the driver (Leopoldo Cordero), whom it found guilty of reckless imprudence, jointly and solidarily liable with Josefina Gutierrez to Fe Perez in accordance with the provisions of article 4 2184 in relation to article 2180 of the new Civil Code.

ACCORDINGLY, the judgment below is hereby modified in the sense that Josefina Gutierrez and Leopoldo Cordero are hereby adjudged directly and jointly and solidarily liable to Fe Perez for the sums adjudicated in the judgment below in her (Fe Perez') favor, while Panfilo Alajar is, in turn, hereby held answerable to Josefina Gutierrez for such amount as the latter may pay to Fe Perez in satisfaction of the judgment appealed from. Costs against both the defendant-third party plaintiff-appellee Josefina Gutierrez and the third party defendant-appellee Panfilo Alajar. Makalintal, Actg.. C.J., Zaldivar, Fernando, Teehankee, Barredo, Makasiar, Antonio and Esguerra, JJ., concur.

G.R. No. 131621 September 28, 1999 LOADSTAR SHIPPING CO., INC., petitioner, vs. COURT OF APPEALS and THE MANILA INSURANCE CO., INC., respondents. DAVIDE, JR., C.J.: Petitioner Loadstar Shipping Co., Inc. (hereafter LOADSTAR), in this petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, seeks to reverse and set 1 aside the following: (a) the 30 January 1997 decision of the Court of Appeals in CA-G.R. 2 CV No. 36401, which affirmed the decision of 4 October 1991 of the Regional Trial Court of Manila, Branch 16, in Civil Case No. 85-29110, ordering LOADSTAR to pay private respondent Manila Insurance Co. (hereafter MIC) the amount of P6,067,178, with legal interest from the filing of the compliant until fully paid, P8,000 as attorney's fees, and the 3 costs of the suit; and (b) its resolution of 19 November 1997, denying LOADSTAR's motion for reconsideration of said decision. The facts are undisputed.1wphi1.nt On 19 November 1984, LOADSTAR received on board its M/V "Cherokee" (hereafter, the vessel) the following goods for shipment: a) 705 bales of lawanit hardwood; b) 27 boxes and crates of tilewood assemblies and the others ;and c) 49 bundles of mouldings R & W (3) Apitong Bolidenized. The goods, amounting to P6,067,178, were insured for the same amount with MIC against various risks including "TOTAL LOSS BY TOTAL OF THE LOSS THE VESSEL." The vessel, in turn, was insured by Prudential Guarantee & Assurance, Inc. (hereafter PGAI) for P4 million. On 20 November 1984, on its way to Manila from the port of Nasipit, Agusan del Norte, the vessel, along with its cargo, sank off Limasawa Island. As a result of the total loss of its shipment, the consignee made a claim with LOADSTAR which, however, ignored the same. As the insurer, MIC paid P6,075,000 to the insured in full settlement of its claim, and the latter executed a subrogation receipt therefor. On 4 February 1985, MIC filed a complaint against LOADSTAR and PGAI, alleging that the sinking of the vessel was due to the fault and negligence of LOADSTAR and its employees. It also prayed that PGAI be ordered to pay the insurance proceeds from the loss the vessel directly to MIC, said amount to be deducted from MIC's claim from LOADSTAR. In its answer, LOADSTAR denied any liability for the loss of the shipper's goods and claimed that sinking of its vessel was due to force majeure. PGAI, on the other hand, averred that MIC had no cause of action against it, LOADSTAR being the party insured. In any event, PGAI was later dropped as a party defendant after it paid the insurance proceeds to LOADSTAR. As stated at the outset, the court a quo rendered judgment in favor of MIC, prompting LOADSTAR to elevate the matter to the court of Appeals, which, however, agreed with the trial court and affirmed its decision in toto. In dismissing LOADSTAR's appeal, the appellate court made the following observations: 1) LOADSTAR cannot be considered a private carrier on the sole ground that there was a single shipper on that fateful voyage. The court noted that the charter of the vessel was limited to the ship, but LOADSTAR 4 retained control over its crew. 2) As a common carrier, it is the Code of Commerce, not the Civil Code, which should be applied in determining the rights and liabilities of the parties.

3) The vessel was not seaworthy because it was undermanned on the day of the voyage. If it had been seaworthy, it could have withstood the "natural and inevitable action of the sea" on 20 November 1984, when the condition of the sea was moderate. The vessel sank, not because offorce majeure, but because it was not seaworthy. LOADSTAR'S allegation that the sinking was probably due to the "convergence of the winds," as stated by a PAGASA expert, was not duly proven at the trial. The "limited liability" rule, therefore, is not applicable considering that, in this case, there was an actual finding of negligence on the part of the 5 carrier. 4) Between MIC and LOADSTAR, the provisions of the Bill of Lading do not apply because said provisions bind only the shipper/consignee and the carrier. When MIC paid the shipper for the goods insured, it was subrogated to the latter's rights as against the carrier, 6 LOADSTAR. 5) There was a clear breach of the contract of carriage when the shipper's goods never reached their destination. LOADSTAR's defense of "diligence of a good father of a family" in the training and selection of its crew is unavailing because this is not a proper or complete defense in culpa contractual. 6) "Art. 361 (of the Code of Commerce) has been judicially construed to mean that when goods are delivered on board a ship in good order and condition, and the shipowner delivers them to the shipper in bad order and condition, it then devolves upon the shipowner to both allege and prove that the goods were damaged by reason of some fact which legally exempts him from liability." Transportation of the merchandise at the risk and venture of the shipper means that the latter bears the risk of loss or deterioration of his goods arising from fortuitous events, force majeure, or the inherent nature and defects of the goods, but not those caused by the presumed negligence or fault of the 7 carrier, unless otherwise proved. The errors assigned by LOADSTAR boil down to a determination of the following issues: (1) Is the M/V "Cherokee" a private or a common carrier? (2) Did LOADSTAR observe due and/or ordinary diligence in these premises. Regarding the first issue, LOADSTAR submits that the vessel was a private carrier because it was not issued certificate of public convenience, it did not have a regular trip or schedule nor a fixed route, and there was only "one shipper, one consignee for a special cargo." In refutation, MIC argues that the issue as to the classification of the M/V "Cherokee" was not timely raised below; hence, it is barred by estoppel. While it is true that the vessel had on board only the cargo of wood products for delivery to one consignee, it was also carrying

passengers as part of its regular business. Moreover, the bills of lading in this case made no mention of any charter party but only a statement that the vessel was a "general cargo carrier." Neither was there any "special arrangement" between LOADSTAR and the shipper regarding the shipment of the cargo. The singular fact that the vessel was carrying a particular type of cargo for one shipper is not sufficient to convert the vessel into a private carrier. As regards the second error, LOADSTAR argues that as a private carrier, it cannot be presumed to have been negligent, and the burden of proving otherwise devolved upon 8 MIC. LOADSTAR also maintains that the vessel was seaworthy. Before the fateful voyage on 19 November 1984, the vessel was allegedly dry docked at Keppel Philippines Shipyard and was duly inspected by the maritime safety engineers of the Philippine Coast Guard, who certified that the ship was fit to undertake a voyage. Its crew at the time was experienced, licensed and unquestionably competent. With all these precautions, there could be no other conclusion except that LOADSTAR exercised the diligence of a good father of a family in ensuring the vessel's seaworthiness. LOADSTAR further claims that it was not responsible for the loss of the cargo, such loss being due to force majeure. It points out that when the vessel left Nasipit, Agusan del Norte, on 19 November 1984, the weather was fine until the next day when the vessel sank due to strong waves. MCI's witness, Gracelia Tapel, fully established the existence of two typhoons, "WELFRING" and "YOLING," inside the Philippine area of responsibility. In fact, on 20 November 1984, signal no. 1 was declared over Eastern Visayas, which includes Limasawa Island. Tapel also testified that the convergence of winds brought about by these two typhoons strengthened wind velocity in the area, naturally producing strong waves and winds, in turn, causing the vessel to list and eventually sink. LOADSTAR goes on to argue that, being a private carrier, any agreement limiting its liability, such as what transpired in this case, is valid. Since the cargo was being shipped at "owner's risk," LOADSTAR was not liable for any loss or damage to the same. Therefore, the Court of Appeals erred in holding that the provisions of the bills of lading apply only to the shipper and the carrier, and not to the insurer of the goods, which conclusion runs counter to the Supreme Court's ruling in the case of St. Paul Fire & Marine Co. v. 9 Macondray & Co., Inc., and National Union Fire Insurance Company of Pittsburgh v. Stolt10 Nielsen Phils., Inc. Finally, LOADSTAR avers that MIC's claim had already prescribed, the case having been instituted beyond the period stated in the bills of lading for instituting the same suits based upon claims arising from shortage, damage, or non-delivery of shipment shall be instituted within sixty days from the accrual of the right of action. The vessel sank on 20 November 1984; yet, the case for recovery was filed only on 4 February 1985. MIC, on the other hand, claims that LOADSTAR was liable, notwithstanding that the loss of the cargo was due toforce majeure, because the same concurred with LOADSTAR's fault or negligence. Secondly, LOADSTAR did not raise the issue of prescription in the court below; hence, the same must be deemed waived. Thirdly, the " limited liability " theory is not applicable in the case at bar because LOADSTAR was at fault or negligent, and because it failed to maintain a seaworthy vessel. Authorizing the voyage notwithstanding its knowledge of a typhoon is tantamount to negligence. We find no merit in this petition. Anent the first assigned error, we hold that LOADSTAR is a common carrier. It is not necessary that the carrier be issued a certificate of public convenience, and this public

character is not altered by the fact that the carriage of the goods in question was periodic, occasional, episodic or unscheduled. In support of its position, LOADSTAR relied on the 1968 case of Home Insurance Co. v. 11 American Steamship Agencies, Inc., where this Court held that a common carrier transporting special cargo or chartering the vessel to a special person becomes a private carrier that is not subject to the provisions of the Civil Code. Any stipulation in the charter party absolving the owner from liability for loss due to the negligence of its agent is void only if the strict policy governing common carriers is upheld. Such policy has no force where the public at is not involved, as in the case of a ship totally chartered for the use of a single party. LOADSTAR also cited Valenzuela Hardwoodand Industrial Supply, Inc. v. Court of 12 13 Appeals and National Steel Corp. v. Court of Appeals, both of which upheld the Home Insurance doctrine. These cases invoked by LOADSTAR are not applicable in the case at bar for the simple reason that the factual settings are different. The records do not disclose that the M/V "Cherokee," on the date in question, undertook to carry a special cargo or was chartered to a special person only. There was no charter party. The bills of lading failed to show any special arrangement, but only a general provision to the effect that the M/V"Cherokee" was 14 a "general cargo carrier." Further, the bare fact that the vessel was carrying a particular type of cargo for one shipper, which appears to be purely coincidental, is not reason enough to convert the vessel from a common to a private carrier, especially where, as in this case, it was shown that the vessel was also carrying passengers. Under the facts and circumstances obtaining in this case, LOADSTAR fits the definition of a common carrier under Article 1732 of the Civil Code. In the case of De Guzman v. Court of 15 Appeals, the Court juxtaposed the statutory definition of "common carriers" with the peculiar circumstances of that case, viz.: The Civil Code defines "common carriers" in the following terms: Art. 1732. Common carriers are persons, corporations, firms or associations engaged in the business of carrying or transporting passengers or goods or both, by land, water, or air for compensation, offering their services to the public. The above article makes no distinction between one whose principal business activity is the carrying of persons or goods or both, and one who does such carrying only as ancillary activity (in local idiom, as "a sideline". Article 1732 also carefully avoids making any distinction between a person or enterprise offering transportation service on a regular or scheduled basis and one offering such service on an occasional, episodic or unscheduled basis. Neither does Article 1732 distinguish between a carrier offering its services to the "general public," i.e., the general community or population, and one who offers services or solicits business only from a narrow segment of the general population. We think that Article 1733 deliberately refrained from making such distinctions. xxx xxx xxx It appears to the Court that private respondent is properly characterized as a common carrier even though he merely "back-hauled" goods for other merchants from Manila to Pangasinan, although such backhauling was done on a periodic or occasional rather than regular or scheduled manner, and eventhough private respondent's principal occupation was not the carriage of goods for others. There is no dispute that private

respondent charged his customers a fee for hauling their goods; that fee frequently fell below commercial freight rates is not relevant here. The Court of Appeals referred to the fact that private respondent held no certificate of public convenience, and concluded he was not a common carrier. This is palpable error. A certificate of public convenience is not a requisite for the incurring of liability under the Civil Code provisions governing common carriers. That liability arises the moment a person or firm acts as a common carrier, without regard to whether or not such carrier has also complied with the requirements of the applicable regulatory statute and implementing regulations and has been granted a certificate of public convenience or other franchise. To exempt private respondent from the liabilities of a common carrier because he has not secured the necessary certificate of public convenience, would be offensive to sound public policy; that would be to reward private respondent precisely for failing to comply with applicable statutory requirements The business of a common carrier impinges directly and intimately upon the safety and well being and property of those members of the general community who happen to deal with such carrier. The law imposes duties and liabilities upon common carriers for the safety and protection of those who utilize their services and the law cannot allow a common carrier to render such duties and liabilities merely facultative by simply failing to obtain the necessary permits and authorizations. Moving on to the second assigned error, we find that the M/V "Cherokee" was not seaworthy when it embarked on its voyage on 19 November 1984. The vessel was not even sufficiently manned at the time. "For a vessel to be seaworthy, it must be adequately equipped for the voyage and manned with a sufficient number of competent officers and crew. The failure of a common carrier to maintain in seaworthy condition its vessel involved in a contract of carriage is a clear breach of its duty prescribed in Article 1755 of the Civil 16 Code." Neither do we agree with LOADSTAR's argument that the "limited liability" theory should be applied in this case. The doctrine of limited liability does not apply where there was 17 negligence on the part of the vessel owner or agent. LOADSTAR was at fault or negligent in not maintaining a seaworthy vessel and in having allowed its vessel to sail despite knowledge of an approaching typhoon. In any event, it did not sink because of any storm that may be deemed as force majeure, inasmuch as the wind condition in the performance of its duties, LOADSTAR cannot hide behind the "limited liability" doctrine to escape responsibility for the loss of the vessel and its cargo. LOADSTAR also claims that the Court of Appeals erred in holding it liable for the loss of the goods, in utter disregard of this Court's pronouncements in St. Paul Fire & Marine Ins. Co. v. 18 19 Macondray & Co., Inc., andNational Union Fire Insurance v. Stolt-Nielsen Phils., Inc. It was ruled in these two cases that after paying the claim of the insured for damages under the insurance policy, the insurer is subrogated merely to the rights of the assured, that is, it can recover only the amount that may, in turn, be recovered by the latter. Since the right of the assured in case of loss or damage to the goods is limited or restricted by the provisions in the bills of lading, a suit by the insurer as subrogee is necessarily subject to the same limitations and restrictions. We do not agree. In the first place, the cases relied on by LOADSTAR involved a limitation on the carrier's liability to an amount fixed in the bill of lading which the parties may enter into, provided that the same was freely and fairly agreed upon (Articles 1749-1750). On the other hand, the stipulation in the case at bar effectively reduces the common carrier's liability for the loss or destruction of the goods to a degree

less than extraordinary (Articles 1744 and 1745), that is, the carrier is not liable for any loss or damage to shipments made at "owner's risk." Such stipulation is obviously null and void 20 for being contrary to public policy." It has been said: Three kinds of stipulations have often been made in a bill of lading. The first one exempting the carrier from any and all liability for loss or damage occasioned by its own negligence. The second is one providing for an unqualified limitation of such liability to an agreed valuation. And the third is one limiting the liability of the carrier to an agreed valuation unless the shipper declares a higher value and pays a higher rate of. freight. According to an almost uniform weight of authority, the first and second kinds of stipulations are invalid as being contrary to public policy, 21 but the third is valid and enforceable. Since the stipulation in question is null and void, it follows that when MIC paid the shipper, it was subrogated to all the rights which the latter has against the common carrier, LOADSTAR. Neither is there merit to the contention that the claim in this case was barred by prescription. MIC's cause of action had not yet prescribed at the time it was concerned. Inasmuch as neither the Civil Code nor the Code of Commerce states a specific prescriptive period on the matter, the Carriage of Goods by Sea Act (COGSA) which provides for a one-year period of limitation on claims for loss of, or damage to, cargoes sustained during transit may be applied suppletorily to the case at bar. This one-year prescriptive period also 22 applies to the insurer of the goods. In this case, the period for filing the action for recovery has not yet elapsed. Moreover, a stipulation reducing the one-year period is null and 23 void; it must, accordingly, be struck down. WHEREFORE, the instant petition is DENIED and the challenged decision of 30 January 1997 of the Court of Appeals in CA-G.R. CV No. 36401 is AFFIRMED. Costs against petitioner.1wphi1.nt SO ORDERED.

Mallari, Sr. v. Court of Appeals (324 SCRA 147) Post under case digests, Civil Law at Thursday, February 23, 2012 Posted by Schizophrenic Mind Facts: Mallari Jr. was the driving a passenger jeepney owned by his father, copetitioner herein. The jeep collided with the delivery van of Bulletin Publishing Corp. while travelling on the National Highway in Bataan. Mallari Jr. proceeded to overtake a fiera which had stopped in front of him. He negotiated the curve and moved in the opposite lane in order to overtake the fiera. As he passed the vehicle he saw the delivery van of Bulletin and the vehicles collided. The points of collision were the and the left rear portion of the passenger jeepney and the left front side of the delivery van. The 2 right wheels of the delivery van were on the right shoulder of the road and pieces of debris from the accident were found scattered along the shoulder of the road up to a certain portion of the lane travelled by the passenger jeepney. The impact caused the jeepney to turn around and fall on its left side resulting in injuries to its passengers one of whom was Israel Reyes who eventually died due to the gravity of his injuries. The widow of Reyes filed a complaint to recover damages from Mallari, Jr. and Sr. and Bulletin as well. The trial court found that the proximate cause of the collision was the negligence of the driver of the Bulletin delivery van, considering the fact that the left front portion of the delivery truck hit and bumped the left rear portion of the passenger jeepney. On appeal, the court reversed the decision of the lower court and held that it was Mallari Jr. who was negligent. Hence this petition. Issue: Whether or not petitioners herein should be held liable for the death of Reyes. Held: The Court affirmed the decision of the Court of Appeals and held that Mallari Jr. and Sr. who are responsible for the death of Reyes. The collision was caused by the sole negligence of petitioner Alfredo Mallari Jr. who admitted that immediately before the collision and after he rounded a curve on the highway, he overtook a Fiera which had stopped on his lane and that he had seen the van driven by Angeles before overtaking the Fiera. This act of overtaking was in clear violation of Sec. 41, pars. (a) and (b), of RA 4136 as amended, otherwise known as The Land Transportation and Traffic Code. The rule is settled that a driver abandoning his proper lane for the purpose of overtaking another vehicle in an ordinary situation has the duty to see to it that the road is clear and not to proceed if he cannot do so in safety. Article 2185 of the NCC, there is a presumption of negligence on the part of a person driving a motor vehicle if at the time of the mishap he was violating a traffic regulation. Petitioners herein failed to present satisfactory evidence to overcome this legal presumption. Therefore they shall be liable for the loss of Reyes life.

Luzon Stevedoring Corporation vs. CA Case Digest Luzon Stevedoring Corporation vs. Court of Appeals (156 SCRA 169) Facts: A maritime collision occurred between the tanker CAVITE owned by LSCO and MV Fernando Escano (a passenger ship) owned by Escano, as a result the passenger ship sunk. An action in admiralty was filed by Escano against Luzon. The trial court held that LSCO Cavite was solely to blame for the collision and held that Luzons claim that its liability should be limited under Article 837 of the Code of Commerce has not been established. The Court of Appeals affirmed the trial court. The SC also affirmed the CA. Upon two motions for reconsideration, the Supreme Court gave course to the petition. Issue: Whether or not in order to claim limited liability under Article 837 of the Code of Commerce, it is necessary that the owner abandon the vessel Held: Yes, abandonment is necessary to claim the limited liability wherein it shall be limited to the value of the vessel with all the appurtenances and freightage earned in the voyage. However, if the injury was due to the ship owners fault, the ship owner may not avail of his right to avail of limited liability by abandoning the vessel. The real nature of the liability of the ship owner or agent is embodied in the Code of Commerce. Articles 587, 590 and 837 are intended to limit the liability of the ship owner, provided that the owner or agent abandons the vessel. Although Article 837 does not specifically provide that in case of collision there should be abandonment, to enjoy such limited liability, said article is a mere amplification of the provisions of Articles 587 and 590 which makes it a mere superfluity. The exception to this rule in Article 837 is when the vessel is totally lost in which case there is no vessel to abandon, thus abandonment is not required. Because of such loss, the liability of the owner or agent is extinguished. However, they are still personally liable for claims under the Workmens Compensation Act and for repairs on the vessel prior to its loss. In case of illegal or tortious acts of the captain, the liability of the owner and agent is subsidiary. In such cases, the owner or agent may avail of Article 837 by abandoning the vessel. But if the injury is caused by the owners fault as where he engages the services of an inexperienced captain or engineer, he cannot avail of the provisions of Article 837 by abandoning the vessel. He is personally liable for such damages. In this case, the Court held that the petitioner is a t fault and since he did not abandon the vessel, he cannot invoke the benefit of Article 837 to limit his liability to the value of the vessel, all appurtenances and freightage earned during the voyage.

Aboitiz Shipping Corp. vs. CA Case Digest Aboitiz Shipping Corp. vs. Court of Appeals (179 SCRA 95) Facts: On May 11, 1975, Anacleto Viana boarded M/|V Antonio from Occidental Mindoro bound for Manila. Upon arrival on May 12, 1975, the passengers therein disembarked through a gangplank connecting the vessel to the pier. Viana, instead of disembarking through the gangplank, disembarked through the third deck, which was at the same level with the pier. An hour after the passengers disembarked, Pioneer stevedoring started to operate in unloading the cargo from the ship. Viana then went back, remembering some of his cargoes left at the vessel. At that time, while he was pointing at the crew of the vessel to where his cargoes were loaded, the crane hit him, pinning him between the crane and the side of the vessel. He was brought to the hospital where he died 3 days after (May 15). The parents of Anacleto filed a complaint against Aboitiz for breach of contract of carriage. The trial court ruled in favor of the plaintiffs. Then both Aboitiz and Pioneer filed a motion for reconsideration, upon which the trial court issued an order absolving Pioneer from liability but not Aboitiz. On appeal, CA affirmed the trial court ruling. Hence, this petition. Issue: Whether or not Viana is still considered a passenger at the time of the incident? Held: Yes. The La Mallorca case is applicable in the case at bar. The rule is that the relation of carrier and passenger continues until the passenger has been landed at the port of destination and has left the vessel owners dock or premises. Once created, the relationship will not ordinarily terminate until the passenger has, after reaching his destination, safely alighted from the carriers conveyance or had a reasonable opportunity to leave the carriers premises. All persons who remain on the premises a reasonable time after leaving the conveyance are to be deemed passengers, and what is a reasonable time or a reasonable delay within this rule is to be determined from all the circumstances, and includes a reasonable time to see after his baggage and prepare for his departure. The carrier-passenger relationship is not terminated merely by the fact that the person transported has been carried to his destination if, for example, such person remains in the carriers premises to claim his baggage. The reasonableness of the time should be made to depend on the attending circumstances of the case, such as the kind of common carrier, the nature of its business, the customs of the place, and so forth, and therefore precludes a consideration of the time element per se without taking into account such other factors. Where a passenger dies or is injured, the common carrier is presumed to have been at fault or to have acted negligently. This gives rise to an action for breach of contract where all that is required of plaintiff is to prove the existence of the contract of carriage and its nonperformance by the carrier, that is, the failure of the carrier to carry the passenger safely to his destination, which, in the instant case, necessarily includes its failure to safeguard its passenger with extraordinary diligence while such relation subsists.

La Mallorca vs. Court of Appeals (G.R. No. L-20761, 27 July 1966, 17 SCRA 739) Facts: Plaintiffs, husband and wife, together with their three minor daughters (Milagros, 13 years old, Raquel, about 4 years old and Fe, 2 years old) boarded the Pambusco at San Fernando Pampanga, bound for Anao, Mexico, Pampanga. Such bus is owned and operated by the defendant. They were carrying with them four pieces of baggage containing their personal belonging. The conductor of the b us issued three tickets covering the full fares of the plaintiff and their eldest child Milagros. No fare was charged on Raquel and Fe, since both were below the height which fare is charged in accordance with plaintiffs rules and regulations. After about an hours trip, the bus reached Anao where it stopped to allow the passengers bound therefore, among whom were the plaintiffs and their children to get off. Mariano Beltran, carrying some of their baggage was the first to get down the bus, followed by his wife and children. Mariano led his companion to a shaded spot on the left pedestrian side of the road about four or five meters away from the vehicle. Afterwards, he returned to the bus in controversy to get his paying, which he had left behind, but in so doing, his daughter followed him unnoticed by his father. While said Mariano Beltran was on he running board of the bus waiting for the conductor to hand him his bayong which he left under one its seats near the door, the bus, whose motor was not shut off while unloading suddenly started moving forward, evidently to resume its trip, notwithstanding the fact that the conductor was still attending to the baggage left behind by Mariano Beltran. Incidentally, when the bus was again placed in a complete stop, it had traveled about 10 meters from point where plaintiffs had gotten off. Sensing the bus was again in motion; Mariano immediately jumped form the running board without getting his bayong from conductor. He landed on the side of the road almost board in front of the shaded place where he left his wife and his children. At that time, he saw people beginning to gather around the body of a child lying prostrate on the ground, her skull crushed, and without life. The child was none other than his daughter Raquel, who was run over by the bus in which she rode earlier together her parent. For the death of the said child, plaintiffs comment the suit against the defendant to recover from the latter damages. Issue: Whether or not the child was no longer the passenger of the bus involved in the incident, and therefore, the contract of carriage was already terminated? Held: There can be no controversy that as far as the father is concerned, when he returned to the bus for his bayong which was not unloaded, the relation of passenger and carrier between him and the petitioner remained subsisting. The relation of carrier and passenger does not necessarily cease where the latter, after alighting from the car aids the carriers servant or employee in removing his baggage from the car. It is a rule that the relation of carrier and passenger does not cease the moment the passenger alights from the carriers vehic le at a place selected by the carrier at the point of destination but continues until the passenger has had a reasonable time or a reasonable opportunity to leave the carriers premises. The father returned to the bus to get one of his baggages which was not unloaded when they alighted from the bus. Raquel must have followed her father. However, although the father was still on the running board of the bus awaiting for the conductor to hand him the bag or bayong, the bus started to run, so that even he had jumped down from the moving vehicle. It was that this instance that the child, who must be near the bus, was run over and killed. In the circumstances, it cannot be claimed that the carriers agent had exercised the utmost diligence of a very cautious person required by Article 1755 of the Civil Code to be observed by a common carrier in the discharge of its obligation to transport safely its passengers. The driver, although stopping the bus, nevertheless did not put off the engine. He started to run the bus even before the conductor gave him the signal to go and while the latter was still unloading part of the baggage of the passengers Beltran and family. The presence of the said passengers near the bus was not unreasonable and they are, therefore, to be considered still as passengers of the carrier, entitled to the protection under their contract of carriage.

GR No L-22272 Maranan vs Perez Case Facts of the Case: The carrier was charged for damages due to the case where his former employee executed homicide. According the Civil code of the Philippines, made a point that the common carrier is "liable for the damages done by his employees to their passengers" by the wording of Art. 1759 which states that: "Common carriers are liable for the death or of injuries to passengers through negligence or willful acts of the former's employers, although such employees may have acted beyond the scope of their authority or in violation of the Common carriers." Antonia Maranan, the mother of the victim filed an action in the court of First Instance of Batangas to recover damages from Perez who is the carrier and Valenzuela, who is the suspect found guilty of homicide for the death of Rogelio Corachea, her son. In defense of Perez claimed that deceased was killed in self-defense because he was the first who assaulted the driver. In addition to that, the defendant claimed that the death was caso foruito which means Perez, the carrier is not liable for the damages done. In the end, the lower court adjudged the defendant carrier liable pursuant to Article 1759 of the Civil Code Issues:

CASE DIGEST (Transportation Law): Loadstar Shipping vs. CA Loadstar Shipping vs. Court of Appeals (GR 131621, 28 September 1999) FACTS :

Loadstar Shipping Co. Inc. received on board its M/V Cherokee goods, amounting to P6,067,178, which were insured for the same amount with the respondent Manila Insurance Co. (MIC) against various risks including total loss by total loss of the vessel. The vessel, in turn, was insured by Prudential Guarantee & Assurance, Inc. (PGAI) for P4 million. On its way to Manila from the port of Nasipit, Agusan del Norte, the vessel, along with its cargo, sank off Limasawa Island. As a result of the total loss of its shipment, the consignee made a claim with Loadstar which, however, ignored the same. As the insurer, MIC paid P6,075,000 to the insured in full settlement of its claim, and the latter executed a subrogation receipt therefor. MIC filed a complaint against Loadstar and PGAI, alleging that the sinking of the vessel was due to the fault and negligence of Loadstar and its employees. PGAI was later dropped as a party defendant after it paid the insurance proceeds to Loadstar. Loadstar submits that the vessel was a private carrier because it was not issued a certificate of public convenience, it did not have a regular trip or schedule nor a fixed route, and there was only "one shipper, one consignee for a special cargo. The trial court rendered judgment in favor of MIC. Loadstar elevated the matter to the Court of Appeals, which affirmed the RTCs decision in toto. ISSUE: Whether or not Loadstar is a common carrier.

Whether the carrier did not partake on the crime scene, is responsible for the protection of the passengers? Whether the carrier is not involve in that event, is responsible for the action of his employees? Whether it is not the fault of the carrier committing the crime, is liable due to the fact that he hired the employee who failed transporting the passenger to safety? Whether it's the employee's fault, the carrier will bear the risk of wrongful acts or negligence of the carrier's employees against passengers?

HELD: Yes. x x x [W]e hold that LOADSTAR is a common carrier. It is not necessary that the carrier be issued a certificate of public convenience, and this public character is not altered by the fact that the carriage of the goods in question was periodic, occasional, episodic or unscheduled. In support of its position, LOADSTAR relied on the 1968 case of Home Insurance Co. v. American Steamship Agencies, Inc., where this Court held that a common carrier transporting special cargo or chartering the vessel to a special person becomes a private carrier that is not subject to the provisions of the Civil Code. Any stipulation in the charter party absolving the owner from liability for loss due to the negligence of its agent is void only if the strict policy governing common carriers is upheld. Such policy has no force where the public at large is not involved, as in the case of a ship totally chartered for the use of a single party. LOADSTAR also cited Valenzuela Hardwood and Industrial Supply, Inc. v. Court of Appeals and National Steel Corp. v. Court of Appeals, both of which upheld the Home Insurance doctrine. These cases invoked by LOADSTAR are not applicable in the case at bar for simple reason that the factual settings are different. The records do not disclose that the M/V "Cherokee," on the date in question, undertook to carry a special cargo or was chartered to a special person only. There was no charter party. The bills of lading failed to show any special arrangement, but only a general provision to the effect that the M/V "Cherokee" was a "general cargo carrier."14 ["A general ship carrying goods for hire, whether employed in internal, in coasting, or in foreign commerce is a common carrier." (Baer, Senior & Co.s Successors v. La Compania Maritima, 6 Phil. 215, 217-218, quoting Liverpool Steamship Co. v. Phoenix Ins. Co., 129 U.S. 397, 437), cited in 3 TEODORICO C. MARTIN, PHILIPPINE COMMERCIAL LAWS 118 (Rev. Ed. 1989).] Further, the bare fact that the vessel was carrying a particular type of cargo for one shipper, which appears to be purely coincidental, is not reason enough to convert the vessel from a common to a private carrier, especially where, as in this case, it was shown that the vessel was also carrying passengers.

Decisions: The court's decision is yes, the carrier is liable for the damages due to Art. 1759 of the Civil Code proves his guilt. The three very least reasons to which the remaining issues are also 'yesy', explained in Texas Midland R.R. v. Monroe, 110 Tex. 97, 216 S.W. 388, 389-390, and Haver v. Central Railroad Co., 43 LRA 84, 85: (1) the special undertaking of the carrier requires that it furnish its passenger that full measure of protection afforded by the exercise of the high degree of care prescribed by the law, inter alia from violence and insults at the hands of strangers and other passengers, but above all, from the acts of the carrier's own servants charged with the passenger's safety; (2) said liability of the carrier for the servant's violation of duty to passengers, is the result of the formers confiding in the servant's hands the performance of his contract to safely transport the passenger, delegating therewith the duty of protecting the passenger with the utmost care prescribed by law; and (3) as between the carrier and the passenger, the former must bear the risk of wrongful acts or negligence of the carrier's employees against passengers, since it, and not the passengers, has power to select and remove them.

CASE DIGEST (Transportation Law): Monarch Insurance Co., Inc. vs. CA MONARCH INSURANCE CO., INC vs. COURT OF APPEALS and ABOITIZ SHIPPING CORPORATION G.R. No. 92735. June 8, 2000 FACTS: Monarch and Tabacalera are insurance carriers of lost cargoes. They indemnified the shippers and were consequently subrogated to their rights, interests and actions against Aboitiz, the cargo carrier. Because Aboitiz refused to compensate Monarch, it filed two complaints against Aboitiz which were consolidated and jointly tried. Aboitiz rejected responsibility for the claims on the ground that the sinking of its cargo vessel was due to force majeure or an act of God. Aboitiz was subsequently declared as in default and allowed Monarch and Tabacalera to present evidence ex-parte. ISSUE: Whether or not the doctrine of limited liability applies in the instant case. HELD: Yes. The failure of Aboitiz to present sufficient evidence to exculpate itself from fault and/or negligence in the sinking of its vessel in the face of the foregoing expert testimony constrains us to hold that Aboitiz was concurrently at fault and/or negligent with the ship captain and crew of the M/V P. Aboitiz. [This is in accordance with the rule that in cases involving the limited liability of shipowners, the initial burden of proof of negligence or unseaworthiness rests on the claimants. However, once the vessel owner or any party asserts the right to limit its liability, the burden of proof as to lack of privity or knowledge on its part with respect to the matter of negligence or unseaworthiness is shifted to it. This burden, Aboitiz had unfortunately failed to discharge.] That Aboitiz failed to discharge the burden of proving that the unseaworthiness of its vessel was not due to its fault and/or negligence should not however mean that the limited liability rule will not be applied to the present cases. The peculiar circumstances here demand that there should be no strict adherence to procedural rules on evidence lest the just claims of shippers/insurers be frustrated. The rule on limited liability should be applied in accordance with the latest ruling in Aboitiz Shipping Corporation v. General Accident Fire and Life Assurance Corporation, Ltd.,] promulgated on January 21, 1993, that claimants be treated as "creditors in an insolvent corporation whose assets are not enough to satisfy the totality of claims against it."

Mecenas v. CA Facts: On April 22, 1980, two vessels, Tacloban City and Don Juan collided at the Talbas Strait within the vicinity of Mindoro. M/V Don Juan sank and hundreds of passengers died. Among them were petitioners parents, whose bodies were never recovered. Petitioners filed a complaint seeking damages against Negros Navigation. The trial court awarded P400,000, but the Court of Appeals reduced the award to P100,000. Issue: Whether the reduction of the award was properly ruled upon by the Court of Appeals Held: In an action based upon a breach of the contract of carriage, the carrier under our civil law is liable for the death of passengers arising from the negligence or wilful act of the carrier's employees although such employees may have acted beyond the scope of their authority or even in violation of the instructions of the carrier, which liability may include liability for moral damages. It follows that petitioners would be entitled to moral damages so long as the collision with the "Tacloban City" and the sinking of the "Don Juan" were caused or attended by negligence on the part of private respondents. Whether petitioners are entitled to exemplary damages as claimed must depend upon whether or not private respondents acted recklessly, that is, with gross negligence. We believe that the behaviour of the captain of the "Don Juan" in this instance playing mahjong "before and up to the time of collision" constitutes behaviour that is simply unacceptable on the part of the master of a vessel to whose hands the lives and welfare of at least seven hundred fifty (750) passengers had been entrusted. There is also evidence that the "Don Juan" was carrying more passengers than she had been certified as allowed to carry. We conclude that Capt. Santisteban and Negros Navigation are properly held liable for gross negligence. We find no necessity for passing upon the degree of negligence or culpability properly attributable to PNOC and PNOC Shipping or the master of the "Tacloban City," since they were never impleaded here. Exemplary damages are designed by our civil law to permit the courts to reshape behaviour that is socially deleterious in its consequence by creating negative incentives or deterrents against such behaviour. In requiring compliance with the standard of extraordinary diligence, a standard which is in fact that of the highest possible degree of diligence, from common carriers and in creating a presumption of negligence against them, the law seeks to compel them to control their employees, to tame their reckless instincts and to force them to take adequate care of human beings and their property. Both the demands of substantial justice and the imperious requirements of public policy compel us to the conclusion that the trial court's implicit award of moral and exemplary damages was erroneously deleted and must be restored and augmented and brought more nearly to the level required by public policy and substantial justice.

Villa Rey Transit v. CA Facts: On March 17, 1960, Policronio Quintos, Jr. was riding the petitioners bus, when the said bus frontally hit the rear side of a bullcart filled with hay. The protruding end of the bamboo pole at the rear of the cart penetrated the windshield of the bus and landed at Policronios face. H e died of traumatic shock due to cerebral injuries. Private respondents are sisters and surviving heirs of the deceased. They brought this action against Villa Rey Transit for breach of contract of carriage. The trial court found that the death was caused by the negligence of the bus driver, for whom petitioner was liable under the contract of carriage with the deceased. Issues: (1) The number of years to be used as basis of computation (2) The rate at which the losses sustained by respondents should be fixed Held: (1) The determination of the indemnity to be awarded to the heirs of a deceased person has no fixed basis. Much is left to the discretion of the court considering the moral and material damages involved , and so it has been said that "(t)here can be no exact or uniform rule for measuring the value of a human life and the measure of damages cannot be arrived at by precise mathematical calculation, but the amount recoverable depends on the particular facts and circumstances of each case . The life expectancy of the deceased or of the beneficiary, whichever is shorter, is an important factor.' Other factors that are usually considered are: (1) pecuniary loss to plaintiff or beneficiary; (2) loss of support; (3) loss of service; (4) loss of society; (5) mental suffering of beneficiaries; and (6) medical and funeral expenses." Thus, life expectancy is, not only relevant, but, also, an importantelement in fixing the amount recoverable by private respondents herein. Although it is not the sole element determinative of said amount, no cogent reason has been given to warrant its disregard and the adoption, in the case at bar, of a purely arbitrary standard, such as a four-year rule. In short, the Court of Appeals has not erred in basing the computation of petitioner's liability upon the life expectancy of Policronio Quintos, Jr. (2) With respect to the rate at which the damages shall be computed, petitioner impugns the decision appealed from upon the ground that the damages awarded therein will have to be paid now, whereas most of those sought to be indemnified will be sufferedyears later. This argument is basically true, and this is, perhaps, one of the reasons why the Alcantara case points out the absence of a "fixed basis" for the ascertainment of the damages recoverable in litigations like the one at bar. Just the same, the force of the said argument of petitioner herein is offset by the fact that, although payment of the award in the case at bar will have to take place upon the finality of the decision therein, the liability of petitioner herein had been fixed at the rate only of P2,184.00 a year, which is the annual salary of Policronio Quintos, Jr. at the time of his death, as a young "training assistant" in the Bacnotan Cement Industries, Inc. In other words, unlike the Alcantara case, on which petitioner relies, the lower courts did not consider, in the present case, Policronio's potentiality and capacity to increase his future income. Indeed, upon the conclusion of his training period, he was supposed to have a better job and be promoted from time to time, and, hence, to earn more, if not considering the growing importance of trade, commerce and industry and the concomitant rise in the income level of officers and employees therein much more. 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 petitioner's 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. Only net earnings, not gross earning, are to be considered that is, the total of the earnings less expenses necessary in the creation of such earnings or income and less living and other incidental expenses. All things considered, We are of the opinion that it is fair and reasonable to fix the deductible living and other expenses of the deceased at the sum of P1,184.00 a year, or about P100.00 a month, and that, consequently, the loss sustained by his sisters may be roughly estimated at P1,000.00 a year or P33,333.33 for the 33-1/3 years of his life expectancy. To this sum of P33,333.33, the following should be added: (a) P12,000.00, pursuant to Arts. 104 and 107 of the Revised Penal Code, in relation to Article 2206 of our Civil Code, as construed and applied by this Court; (b) P1,727.95, actually spent by

private respondents for medical and burial expenses; and (c) attorney's fee, which was fixed by the trial court, at P500.00, but which, in view of the appeal taken by petitioner herein, first to the Court of Appeals and later to this Supreme Court, should be increased to P2,500.00. In other words, the amount adjudged in the decision appealed from should be reduced to the aggregate sum of P49,561.28, with interest thereon, at the legal rate, from December 29, 1961, date of the promulgation of the decision of the trial court.

Aboitiz shipping vs. General Accident Fire and Life Case Digest Aboitiz shipping vs. General Accident Fire and Life (GR No. 100446 January 21, 1993) Facts: Petitioner is a corporation engaged in the business of maritime trade as a carrier. As such, it owned and operated the M/V P/ ABOITIZ, a common carrier that sank on voyage from Hong Kong to Manila. Private respondent GAFLAC is a foreign insurance company pursuing its remedy as a subrogee of several cargo consignees whose respective cargo sank with the said vessel and for which it has priory paid. The sinking of vessel gave rise to filling of suit to recover the lost cargo either by shippers, their successors-in-interest, or the cargo insurers like GAFLAC as subrogees. The sinking was initially investigated by the Board of Marine Inquiry, which found that such sinking was due to fortuitous event. Issue: Whether or not the doctrine of limited liability is applicable to the case? Held: The real an hypothecary nature of maritime law simple means that the liability of the carrier in connection with losses related to maritime contracts is confined to the vessel, which is hypothecated for such obligations or which stands as the guaranty for their settlement. It has its origin by reason of the conditions and risks attending maritime trade in its earliest years when such trade was replete with innumerable and unknown hazards since vessels had to go through largely uncharted waters to ply their trade. Thus, the liability of the vessel owner and agent arising form the operation of such vessel were confined to the vessel itself, its equipment, freight and insurance, if any, which limitation served to induce capitalist into effectively wagering their resources against consideration of the large attainable in the trade.