G.R. No.

L-15122

March 10, 1920

THE UNITED STATES, plaintiff-appellee, vs. TAN PIACO, VENTURA ESTUYA, PEDRO HOMERES, MAXIMINO GALSA and EMILIO LEOPANDO, defendants. TAN PIACO, appellant. Recaredo Ma. Calvo for appellant. Attorney-General Paredes for appellee. JOHNSON, J.: Said defendants were charged with a violation of the Public Utility Law (Act No. 2307 as amended by Acts Nos. 2362 and 2694), in that they were operating a public utility without permission from the Public Utility Commissioner. Upon the complain presented each of said defendants were arrested and brought to trial. After hearing the evidence the Honorable Cayetano Lukban, judge, found that the evidence was insufficient to support the charges against Ventura Estuya, Pedro Homeres, Maximino Galsa and Emilio Leopando, and absolved them from all liability under the complaint and discharged them from all liability under the complaint and discharged them from the custody of the law. The lower court found the defendant Tan Piaco guilty of the crime charged in the complaint and sentence him to pay a fine of P100, and, in case of insolvency, to suffer subsidiary imprisonment, and to pay one-fifth part of the costs. From that sentence Tan Piaco appealed to this court. The facts proved during the trial of the cause may be stated as follows: The appellant rented two automobile trucks and was using them upon the highways of the Province of Leyte for the purpose of carrying some passengers and freight; that he carried passengers and freight under a special contract in each case; that he had not held himself out to carry all passengers and all freight for all persons who might offer passengers and freight. The Attorney-General, in a carefully prepared brief, says: "The question is whether the appellant, under the above facts, was a public utility under the foregoing definitions," and was therefore subject to the control and regulation of the Public Utility Commission. "We have not found anything

in the evidence showing that the appellant operated the trucks in question for public use. These trucks, so far as indicated by the evidence and as far as the appellant is concerned, furnished service under special agreements to carry particular persons and property. . . . For all that we can deduce from the evidence, these passengers, or the owners of the freight, may have controlled the whole vehicles 'both as to content, direction, and time of use,' which facts, under all the circumstances of the case, would, in our opinion, take away the defendant's business from the provisions of the Public Utility Act." In support of the conclusion of the Attorney-General, he cites the case of Terminal Taxicab Co. vs. Kutz (241 U. S.. 252). In that case the Terminal Taxicab Co. furnished automobiles from its central garage on special orders and did not hold itself out to accommodate any and all persons. The plaintiff reserve to itself the right to refuse service. The Supreme Court of the United States, speaking through Mr. Justice Holmes, said: "The bargains made by the plaintiff are individual, and however much they may tend towards uniformity in price, probably have not the mechanical fixity of charges that attend the use of taxicabs from the stations to the hotels. The court is of the opinion that that part of the business is not to be regarded as a public utility. It is true that all business, and for the matter of that, every life in all its details, has a public aspect, some bearing upon the welfare of the country in which it is passed." The court held that by virtue of the fact that said company did not hold itself out to serve any and all persons, it was not a public utility and was not subject to the jurisdiction of the public utility commission. Upon the facts adduced during the trial of the cause, and for the foregoing reasons, the Attorney-General recommends that the sentence of the lower court be revoked and that the appellant be absolved from all liability under the complaint. Section 14 of Act No. 2307, as amended by section 9 of Act No. 2694, provides that: "The Public Utility Commission or Commissioners shall have general supervision and regulation of, jurisdiction and control over, all public utilities. . . . The term 'public utility' is hereby defined to include every individual, copartnership, association, corporation or joint stock company, etc., etc., that now or hereafter may own, operate, managed, or control any common carrier, railroad, street railway, etc., etc., engaged in the transportation of passengers, cargo, etc., etc., for public use." Under the provisions of said section, two things are necessary: (a) The individual, copartnership, etc., etc., must be a public utility; and (b) the business in which such individual, copartnership, etc. etc., is engaged

must be for public use. So long as the individual or copartnership, etc., etc., is engaged in a purely private enterprise, without attempting to render service to all who may apply, he can in no sense be considered a public utility, for public use. "Public use" means the same as "use by the public." The essential feature of the public use is that it is not confined to privilege individuals, but is open to the indefinite public. It is this indefinite or unrestricted quality that gives it its public character. In determining whether a use is public, we must look not only the character of the business to be done, but also to the proposed mode of doing it. If the use is merely optional with the owners, or the public benefit is merely incidental, it is not a public use, authorizing the exercise of the jurisdiction of the public utility commission. There must be, in general, a right which the law compels the power to give to the general public. It is not enough that the general prosperity of the public is promoted. Public use is not synonymous with public interest. The true criterion by which to judge of the character of the use is whether the public may enjoy it by right or only by permission. For all of the foregoing reasons, we agree with the Attorney-General that the appellant was not operating a public utility, for public use, and was not, therefore, subject to the jurisdiction of the Public Utility Commission. Therefore, the sentence of the lower court is hereby revoked, and it is hereby ordered and decreed that the complaint be dismissed and that the defendant be absolved from all liability under the same, and that he be discharged from the custody of the law, without any finding as to costs. So ordered. Arellano, C.J., Torres, Araullo, Street, Malcolm and Avancea, JJ., concur.

G.R. No. L-25599

April 4, 1968

HOME INSURANCE COMPANY, plaintiff-appellee, vs. AMERICAN STEAMSHIP AGENCIES, INC. and LUZON STEVEDORING CORPORATION, defendants, AMERICAN STEAMSHIP AGENCIES, INC., defendant-appellant. William H. Quasha and Associates for plaintiff-appellee. Ross, Selph, Salcedo and Associates for defendant-appellant. BENGZON, J.P., J.: "Consorcio Pesquero del Peru of South America" shipped freight pre-paid at Chimbate, Peru, 21,740 jute bags of Peruvian fish meal through SS Crowborough, covered by clean bills of lading Numbers 1 and 2, both dated January 17, 1963. The cargo, consigned to San Miguel Brewery, Inc., now San Miguel Corporation, and insured by Home Insurance Company for $202,505, arrived in Manila on March 7, 1963 and was discharged into the lighters of Luzon Stevedoring Company. When the cargo was delivered to consignee San Miguel Brewery Inc., there were shortages amounting to P12,033.85, causing the latter to lay claims against Luzon Stevedoring Corporation, Home Insurance Company and the American Steamship Agencies, owner and operator of SS Crowborough. Because the others denied liability, Home Insurance Company paid the consignee P14,870.71 the insurance value of the loss, as full settlement of the claim. Having been refused reimbursement by both the Luzon Stevedoring Corporation and American Steamship Agencies, Home Insurance Company, as subrogee to the consignee, filed against them on March 6, 1964 before the Court of First Instance of Manila a complaint for recovery of P14,870.71 with legal interest, plus attorney's fees. In answer, Luzon Stevedoring Corporation alleged that it delivered with due diligence the goods in the same quantity and quality that it had received the same from the carrier. It also claimed that plaintiff's claim had prescribed under Article 366 of the Code of Commerce stating that the claim must be made within 24 hours from receipt of the cargo.

American Steamship Agencies denied liability by alleging that under the provisions of the Charter party referred to in the bills of lading, the charterer, not the shipowner, was responsible for any loss or damage of the cargo. Furthermore, it claimed to have exercised due diligence in stowing the goods and that as a mere forwarding agent, it was not responsible for losses or damages to the cargo. On November 17, 1965, the Court of First Instance, after trial, absolved Luzon Stevedoring Corporation, having found the latter to have merely delivered what it received from the carrier in the same condition and quality, and ordered American Steamship Agencies to pay plaintiff P14,870.71 with legal interest plus P1,000 attorney's fees. Said court cited the following grounds: (a) The non-liability claim of American Steamship Agencies under the charter party contract is not tenable because Article 587 of the Code of Commerce makes the ship agent also civilly liable for damages in favor of third persons due to the conduct of the captain of the carrier; (b) The stipulation in the charter party contract exempting the owner from liability is against public policy under Article 1744 of the Civil Code; (c) In case of loss, destruction or deterioration of goods, common carriers are presumed at fault or negligent under Article 1735 of the Civil Code unless they prove extraordinary diligence, and they cannot by contract exempt themselves from liability resulting from their negligence or that of their servants; and (d) When goods are delivered to the carrier in good order and the same are in bad order at the place of destination, the carrier is prima facie liable. Disagreeing with such judgment, American Steamship Agencies appealed directly to Us. The appeal brings forth for determination this legal issue: Is the stipulation in the charter party of the owner's nonliability valid so as to absolve the American Steamship Agencies from liability for loss? The bills of lading,1 covering the shipment of Peruvian fish meal provide at the back thereof that the bills of lading shall be governed by and subject to the terms and conditions of the charter party, if any, otherwise,

the bills of lading prevail over all the agreements.2 On the of the bills are stamped "Freight prepaid as per charter party. Subject to all terms, conditions and exceptions of charter party dated London, Dec. 13, 1962." A perusal of the charter party3 referred to shows that while the possession and control of the ship were not entirely transferred to the charterer,4 the vessel was chartered to its full and complete capacity (Exh. 3). Furthermore, the, charter had the option to go north or south or vice-versa,5 loading, stowing and discharging at its risk and expense.6 Accordingly, the charter party contract is one of affreightment over the whole vessel rather than a demise. As such, the liability of the shipowner for acts or negligence of its captain and crew, would remain in the absence of stipulation. Section 2, paragraph 2 of the charter party, provides that the owner is liable for loss or damage to the goods caused by personal want of due diligence on its part or its manager to make the vessel in all respects seaworthy and to secure that she be properly manned, equipped and supplied or by the personal act or default of the owner or its manager. Said paragraph, however, exempts the owner of the vessel from any loss or damage or delay arising from any other source, even from the neglect or fault of the captain or crew or some other person employed by the owner on board, for whose acts the owner would ordinarily be liable except for said paragraph.. Regarding the stipulation, the Court of First Instance declared the contract as contrary to Article 587 of the Code of Commerce making the ship agent civilly liable for indemnities suffered by third persons arising from acts or omissions of the captain in the care of the goods and Article 1744 of the Civil Code under which a stipulation between the common carrier and the shipper or owner limiting the liability of the former for loss or destruction of the goods to a degree less than extraordinary diligence is valid provided it be reasonable, just and not contrary to public policy. The release from liability in this case was held unreasonable and contrary to the public policy on common carriers. The provisions of our Civil Code on common carriers were taken from Anglo-American law.7 Under American jurisprudence, a common carrier undertaking to carry a special cargo or chartered to a special person only, becomes a private carrier.8 As a private carrier, a stipulation exempting the owner from liability for the negligence of its agent is not against public policy,9 and is deemed valid.

Such doctrine We find reasonable. The Civil Code provisions on common carriers should not be applied where the carrier is not acting as such but as a private carrier. The stipulation in the charter party absolving the owner from liability for loss due to the negligence of its agent would be void only if the strict public policy governing common carriers is applied. Such policy has no force where the public at large is not involved, as in the case of a ship totally chartered for the use of a single party. And furthermore, in a charter of the entire vessel, the bill of lading issued by the master to the charterer, as shipper, is in fact and legal contemplation merely a receipt and a document of title not a contract, for the contract is the charter party.10 The consignee may not claim ignorance of said charter party because the bills of lading expressly referred to the same. Accordingly, the consignees under the bills of lading must likewise abide by the terms of the charter party. And as stated, recovery cannot be had thereunder, for loss or damage to the cargo, against the shipowners, unless the same is due to personal acts or negligence of said owner or its manager, as distinguished from its other agents or employees. In this case, no such personal act or negligence has been proved. WHEREFORE, the judgment appealed from is hereby reversed and appellant is absolved from liability to plaintiff. No costs. So ordered. Reyes, J.B.L., Makalintal, Zaldivar, Sanchez, Castro, Angeles and Fernando, JJ., concur. Dizon J., took no part. Concepcion, C.J., is on leave.
Footnotes 1 Exhibits 1 & 2. 2 No. 26 of the bills of lading. 3 Exhibit 3, page 78 of the records. 4 Owner shoulders payment for overtime work of officers and crew (Clauses 17 & 29), duties and taxes on vessel (Clause 14), and rigging, opening and closing of hatches at owner's time and expense (Clause 41). 5 Clause 1, paragraph 2 of contract. 6 Clause 18 of contract. 7 Maranan v. Perez, L-22272, June 26, 1967. 8 80 C.J.S., pp. 692-693. 9 The Crowe, 294 Fed. 506; The Fri, 154. 333. 10 The Crowe, The Fri, supra.

G.R. No. L-47822 December 22, 1988 PEDRO DE GUZMAN, petitioner, vs. COURT OF APPEALS and ERNESTO CENDANA, respondents. Vicente D. Millora for petitioner. Jacinto Callanta for private respondent.

In his Answer, private respondent denied that he was a common carrier and argued that he could not be held responsible for the value of the lost goods, such loss having been due to force majeure. On 10 December 1975, the trial court rendered a Decision 1 finding private respondent to be a common carrier and holding him liable for the value of the undelivered goods (P 22,150.00) as well as for P 4,000.00 as damages and P 2,000.00 as attorney's fees. On appeal before the Court of Appeals, respondent urged that the trial court had erred in considering him a common carrier; in finding that he had habitually offered trucking services to the public; in not exempting him from liability on the ground of force majeure; and in ordering him to pay damages and attorney's fees. The Court of Appeals reversed the judgment of the trial court and held that respondent had been engaged in transporting return loads of freight "as a casual occupation a sideline to his scrap iron business" and not as a common carrier. Petitioner came to this Court by way of a Petition for Review assigning as errors the following conclusions of the Court of Appeals: 1. that private respondent was not a common carrier; 2. that the hijacking of respondent's truck was force majeure; and 3. that respondent was not liable for the value of the undelivered cargo. (Rollo, p. 111) We consider first the issue of whether or not private respondent Ernesto Cendana may, under the facts earlier set forth, be properly characterized as a common carrier. The Civil Code defines "common carriers" in the following terms: Article 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 an 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 deliberaom making such distinctions.

FELICIANO, J.: Respondent Ernesto Cendana, a junk dealer, was engaged in buying up used bottles and scrap metal in Pangasinan. Upon gathering sufficient quantities of such scrap material, respondent would bring such material to Manila for resale. He utilized two (2) six-wheeler trucks which he owned for hauling the material to Manila. On the return trip to Pangasinan, respondent would load his vehicles with cargo which various merchants wanted delivered to differing establishments in Pangasinan. For that service, respondent charged freight rates which were commonly lower than regular commercial rates. Sometime in November 1970, petitioner Pedro de Guzman a merchant and authorized dealer of General Milk Company (Philippines), Inc. in Urdaneta, Pangasinan, contracted with respondent for the hauling of 750 cartons of Liberty filled milk from a warehouse of General Milk in Makati, Rizal, to petitioner's establishment in Urdaneta on or before 4 December 1970. Accordingly, on 1 December 1970, respondent loaded in Makati the merchandise on to his trucks: 150 cartons were loaded on a truck driven by respondent himself, while 600 cartons were placed on board the other truck which was driven by Manuel Estrada, respondent's driver and employee. Only 150 boxes of Liberty filled milk were delivered to petitioner. The other 600 boxes never reached petitioner, since the truck which carried these boxes was hijacked somewhere along the MacArthur Highway in Paniqui, Tarlac, by armed men who took with them the truck, its driver, his helper and the cargo. On 6 January 1971, petitioner commenced action against private respondent in the Court of First Instance of Pangasinan, demanding payment of P 22,150.00, the claimed value of the lost merchandise, plus damages and attorney's fees. Petitioner argued that private respondent, being a common carrier, and having failed to exercise the extraordinary diligence required of him by the law, should be held liable for the value of the undelivered goods.

So understood, the concept of "common carrier" under Article 1732 may be seen to coincide neatly with the notion of "public service," under the Public Service Act (Commonwealth Act No. 1416, as amended) which at least partially supplements the law on common carriers set forth in the Civil Code. Under Section 13, paragraph (b) of the Public Service Act, "public service" includes: ... every person that now or hereafter may own, operate, manage, or control in the Philippines, for hire or compensation, with general or limited clientele, whether permanent, occasional or accidental, and done for general business purposes, any common carrier, railroad, street railway, traction railway, subway motor vehicle, either for freight or passenger, or both, with or without fixed route and whatever may be its classification, freight or carrier service of any class, express service, steamboat, or steamship line, pontines, ferries and water craft, engaged in the transportation of passengers or freight or both, shipyard, marine repair shop, wharf or dock, ice plant, ice-refrigeration plant, canal, irrigation system, gas, electric light, heat and power, water supply and power petroleum, sewerage system, wire or wireless communications systems, wire or wireless broadcasting stations and other similar public services. ... (Emphasis supplied) 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 back-hauling was done on a periodic or occasional rather than regular or scheduled manner, and even though 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.

We turn then to the liability of private respondent as a common carrier. Common carriers, "by the nature of their business and for reasons of public policy" 2 are held to a very high degree of care and diligence ("extraordinary diligence") in the carriage of goods as well as of passengers. The specific import of extraordinary diligence in the care of goods transported by a common carrier is, according to Article 1733, "further expressed in Articles 1734,1735 and 1745, numbers 5, 6 and 7" of the Civil Code. Article 1734 establishes the general rule that common carriers are responsible for the loss, destruction or deterioration of the goods which they carry, "unless the same is due to any of the following causes only: (1) Flood, storm, earthquake, lightning or other natural disaster or calamity; (2) Act of the public enemy in war, whether international or civil; (3) Act or omission of the shipper or owner of the goods; (4) The character-of the goods or defects in the packing or-in the containers; and (5) Order or act of competent public authority. It is important to point out that the above list of causes of loss, destruction or deterioration which exempt the common carrier for responsibility therefor, is a closed list. Causes falling outside the foregoing list, even if they appear to constitute a species of force majeure fall within the scope of Article 1735, which provides as follows: In all cases other than those mentioned in numbers 1, 2, 3, 4 and 5 of the preceding article, if the goods are lost, destroyed or deteriorated, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence as required in Article 1733. (Emphasis supplied) Applying the above-quoted Articles 1734 and 1735, we note firstly that the specific cause alleged in the instant case the hijacking of the carrier's truck does not fall within any of the five (5) categories of exempting causes listed in Article 1734. It would follow, therefore, that the hijacking of the carrier's vehicle must be dealt with under the provisions of Article 1735, in other words, that the private respondent as common carrier is presumed to have been at fault or to have acted negligently. This presumption, however, may be overthrown by proof of extraordinary diligence on the part of private respondent. Petitioner insists that private respondent had not observed extraordinary diligence in the care of petitioner's goods. Petitioner argues that in the circumstances of this case, private respondent should have hired a security guard presumably to ride with the truck carrying the 600 cartons of Liberty filled milk. We do not believe, however, that

in the instant case, the standard of extraordinary diligence required private respondent to retain a security guard to ride with the truck and to engage brigands in a firelight at the risk of his own life and the lives of the driver and his helper. The precise issue that we address here relates to the specific requirements of the duty of extraordinary diligence in the vigilance over the goods carried in the specific context of hijacking or armed robbery. As noted earlier, the duty of extraordinary diligence in the vigilance over goods is, under Article 1733, given additional specification not only by Articles 1734 and 1735 but also by Article 1745, numbers 4, 5 and 6, Article 1745 provides in relevant part: Any of the following or similar stipulations shall be considered unreasonable, unjust and contrary to public policy: xxx xxx xxx (5) that the common carrier shall not be responsible for the acts or omissions of his or its employees; (6) that the common carrier's liability for acts committed by thieves, or of robbers who do not act with grave or irresistible threat, violence or force, is dispensed with or diminished; and (7) that the common carrier shall not responsible for the loss, destruction or deterioration of goods on account of the defective condition of the car vehicle, ship, airplane or other equipment used in the contract of carriage. (Emphasis supplied) Under Article 1745 (6) above, a common carrier is held responsible and will not be allowed to divest or to diminish such responsibility even for acts of strangers like thieves or robbers, except where such thieves or robbers in fact acted "with grave or irresistible threat, violence or force." We believe and so hold that the limits of the duty of extraordinary diligence in the vigilance over the goods carried are reached where the goods are lost as a result of a robbery which is attended by "grave or irresistible threat, violence or force." In the instant case, armed men held up the second truck owned by private respondent which carried petitioner's cargo. The record shows that an information for robbery in band was filed in the Court of First Instance of Tarlac, Branch 2, in Criminal Case No. 198 entitled "People of the Philippines v. Felipe Boncorno, Napoleon Presno, Armando Mesina, Oscar Oria and one John Doe." There, the accused were charged with willfully and unlawfully taking and carrying away with them the second truck, driven by Manuel Estrada and loaded with the 600 cartons of Liberty filled milk destined for delivery at petitioner's store in Urdaneta, Pangasinan. The decision of the

trial court shows that the accused acted with grave, if not irresistible, threat, violence or force. 3 Three (3) of the five (5) hold-uppers were armed with firearms. The robbers not only took away the truck and its cargo but also kidnapped the driver and his helper, detaining them for several days and later releasing them in another province (in Zambales). The hijacked truck was subsequently found by the police in Quezon City. The Court of First Instance convicted all the accused of robbery, though not of robbery in band. 4 In these circumstances, we hold that the occurrence of the loss must reasonably be regarded as quite beyond the control of the common carrier and properly regarded as a fortuitous event. It is necessary to recall that even common carriers are not made absolute insurers against all risks of travel and of transport of goods, and are not held liable for acts or events which cannot be foreseen or are inevitable, provided that they shall have complied with the rigorous standard of extraordinary diligence. We, therefore, agree with the result reached by the Court of Appeals that private respondent Cendana is not liable for the value of the undelivered merchandise which was lost because of an event entirely beyond private respondent's control. ACCORDINGLY, the Petition for Review on certiorari is hereby DENIED and the Decision of the Court of Appeals dated 3 August 1977 is AFFIRMED. No pronouncement as to costs. SO ORDERED. Fernan, C.J., Gutierrez, Jr., Bidin and Cortes, JJ., concur.

Footnotes 1 Rollo, p. 14. 2 Article 1733, Civil Code. 3 Rollo, p. 22. 4 The evidence of the prosecution did not show that more than three (3) of the five (5) hold-uppers were armed. Thus, the existence of a "band" within the technical meaning of Article 306 of the Revised Penal Code, was not affirmatively proved by the prosecution.
The Lawphil Project - Arellano Law Foundation

G.R. No. 101503 September 15, 1993 PLANTERS PRODUCTS, INC., petitioner, vs. COURT OF APPEALS, SORIAMONT STEAMSHIP AGENCIES AND KYOSEI KISEN KABUSHIKI KAISHA, respondents. Gonzales, Sinense, Jimenez & Associates for petitioner. Siguion Reyna, Montecillo & Ongsiako Law Office for private respondents.

steelbodied dump trucks which were parked alongside the berth, using metal scoops attached to the ship, pursuant to the terms and conditions of the charter-partly (which provided for an F.I.O.S. clause). 6 The hatches remained open throughout the duration of the discharge. 7 Each time a dump truck was filled up, its load of Urea was covered with tarpaulin before it was transported to the consignee's warehouse located some fifty (50) meters from the wharf. Midway to the warehouse, the trucks were made to pass through a weighing scale where they were individually weighed for the purpose of ascertaining the net weight of the cargo. The port area was windy, certain portions of the route to the warehouse were sandy and the weather was variable, raining occasionally while the discharge was in progress. 8 The petitioner's warehouse was made of corrugated galvanized iron (GI) sheets, with an opening at the front where the dump trucks entered and unloaded the fertilizer on the warehouse floor. Tarpaulins and GI sheets were placed in-between and alongside the trucks to contain spillages of the ferilizer. 9 It took eleven (11) days for PPI to unload the cargo, from 5 July to 18 July 1974 (except July 12th, 14th and 18th). 10 A private marine and cargo surveyor, Cargo Superintendents Company Inc. (CSCI), was hired by PPI to determine the "outturn" of the cargo shipped, by taking draft readings of the vessel prior to and after discharge. 11 The survey report submitted by CSCI to the consignee (PPI) dated 19 July 1974 revealed a shortage in the cargo of 106.726 M/T and that a portion of the Urea fertilizer approximating 18 M/T was contaminated with dirt. The same results were contained in a Certificate of Shortage/Damaged Cargo dated 18 July 1974 prepared by PPI which showed that the cargo delivered was indeed short of 94.839 M/T and about 23 M/T were rendered unfit for commerce, having been polluted with sand, rust and dirt. 12 Consequently, PPI sent a claim letter dated 18 December 1974 to Soriamont Steamship Agencies (SSA), the resident agent of the carrier, KKKK, for P245,969.31 representing the cost of the alleged shortage in the goods shipped and the diminution in value of that portion said to have been contaminated with dirt. 13 Respondent SSA explained that they were not able to respond to the consignee's claim for payment because, according to them, what they received was just a request for shortlanded certificate and not a formal claim, and that this "request" was denied by them because they "had nothing to do with the discharge of the shipment." 14 Hence, on 18 July 1975, PPI filed an action for damages with the Court of First Instance of Manila. The defendant carrier argued that the strict public policy governing common carriers does not apply to them because they have become private carriers by reason of the provisions of the charter-party. The court a quo however sustained the claim of the plaintiff against the defendant carrier for the value of the goods lost or damaged when it ruled thus: 15 . . . Prescinding from the provision of the law that a common carrier is presumed negligent in case of loss or damage of the goods it contracts to transport, all that a shipper has to do in a suit to recover for loss or damage is to show receipt by the carrier of the goods and to delivery by it of less than what it received. After that, the burden of proving that the loss or damage was due to any of the causes which exempt him from liability is shipted to the carrier, common or private he may be. Even if the provisions of the charter-party aforequoted are deemed valid, and the defendants considered private carriers, it was still incumbent upon them to prove that the shortage or contamination sustained by the cargo is attributable to the fault or negligence on the part of the shipper or consignee in the loading, stowing, trimming and discharge of the cargo. This they failed to do. By this omission, coupled with their failure to destroy the presumption of negligence against them, the defendants are liable (emphasis supplied).

BELLOSILLO, J.: Does a charter-party 1 between a shipowner and a charterer transform a common carrier into a private one as to negate the civil law presumption of negligence in case of loss or damage to its cargo? Planters Products, Inc. (PPI), purchased from Mitsubishi International Corporation (MITSUBISHI) of New York, U.S.A., 9,329.7069 metric tons (M/T) of Urea 46% fertilizer which the latter shipped in bulk on 16 June 1974 aboard the cargo vessel M/V "Sun Plum" owned by private respondent Kyosei Kisen Kabushiki Kaisha (KKKK) from Kenai, Alaska, U.S.A., to Poro Point, San Fernando, La Union, Philippines, as evidenced by Bill of Lading No. KP-1 signed by the master of the vessel and issued on the date of departure. On 17 May 1974, or prior to its voyage, a time charter-party on the vessel M/V "Sun Plum" pursuant to the Uniform General Charter 2 was entered into between Mitsubishi as shipper/charterer and KKKK as shipowner, in Tokyo, Japan. 3 Riders to the aforesaid charterparty starting from par. 16 to 40 were attached to the pre-printed agreement. Addenda Nos. 1, 2, 3 and 4 to the charter-party were also subsequently entered into on the 18th, 20th, 21st and 27th of May 1974, respectively. Before loading the fertilizer aboard the vessel, four (4) of her holds 4 were all presumably inspected by the charterer's representative and found fit to take a load of urea in bulk pursuant to par. 16 of the charter-party which reads: 16. . . . At loading port, notice of readiness to be accomplished by certificate from National Cargo Bureau inspector or substitute appointed by charterers for his account certifying the vessel's readiness to receive cargo spaces. The vessel's hold to be properly swept, cleaned and dried at the vessel's expense and the vessel to be presented clean for use in bulk to the satisfaction of the inspector before daytime commences. (emphasis supplied) After the Urea fertilizer was loaded in bulk by stevedores hired by and under the supervision of the shipper, the steel hatches were closed with heavy iron lids, covered with three (3) layers of tarpaulin, then tied with steel bonds. The hatches remained closed and tightly sealed throughout the entire voyage. 5 Upon arrival of the vessel at her port of call on 3 July 1974, the steel pontoon hatches were opened with the use of the vessel's boom. Petitioner unloaded the cargo from the holds into its

On appeal, respondent Court of Appeals reversed the lower court and absolved the carrier from liability for the value of the cargo that was lost or damaged. 16 Relying on the 1968 case of Home Insurance Co. v. American Steamship Agencies, Inc., 17 the appellate court ruled that the cargo vessel M/V "Sun Plum" owned by private respondent KKKK was a private carrier and not a common carrier by reason of the time charterer-party. Accordingly, the Civil Code provisions on common carriers which set forth a presumption of negligence do not find application in the case at bar. Thus . . . In the absence of such presumption, it was incumbent upon the plaintiffappellee to adduce sufficient evidence to prove the negligence of the defendant carrier as alleged in its complaint. It is an old and well settled rule that if the plaintiff, upon whom rests the burden of proving his cause of action, fails to show in a satisfactory manner the facts upon which he bases his claim, the defendant is under no obligation to prove his exception or defense (Moran, Commentaries on the Rules of Court, Volume 6, p. 2, citing Belen v. Belen, 13 Phil. 202). But, the record shows that the plaintiff-appellee dismally failed to prove the basis of its cause of action, i.e. the alleged negligence of defendant carrier. It appears that the plaintiff was under the impression that it did not have to establish defendant's negligence. Be that as it may, contrary to the trial court's finding, the record of the instant case discloses ample evidence showing that defendant carrier was not negligent in performing its obligation . . . 18 (emphasis supplied). Petitioner PPI appeals to us by way of a petition for review assailing the decision of the Court of Appeals. Petitioner theorizes that the Home Insurance case has no bearing on the present controversy because the issue raised therein is the validity of a stipulation in the charter-party delimiting the liability of the shipowner for loss or damage to goods cause by want of due deligence on its part or that of its manager to make the vessel seaworthy in all respects, and not whether the presumption of negligence provided under the Civil Code applies only to common carriers and not to private carriers. 19 Petitioner further argues that since the possession and control of the vessel remain with the shipowner, absent any stipulation to the contrary, such shipowner should made liable for the negligence of the captain and crew. In fine, PPI faults the appellate court in not applying the presumption of negligence against respondent carrier, and instead shifting the onus probandi on the shipper to show want of due deligence on the part of the carrier, when he was not even at hand to witness what transpired during the entire voyage. As earlier stated, the primordial issue here is whether a common carrier becomes a private carrier by reason of a charter-party; in the negative, whether the shipowner in the instant case was able to prove that he had exercised that degree of diligence required of him under the law. It is said that etymology is the basis of reliable judicial decisions in commercial cases. This being so, we find it fitting to first define important terms which are relevant to our discussion. A "charter-party" is defined as a contract by which an entire ship, or some principal part thereof, is let by the owner to another person for a specified time or use; 20 a contract of affreightment by which the owner of a ship or other vessel lets the whole or a part of her to a merchant or other person for the conveyance of goods, on a particular voyage, in consideration of the payment of freight; 21 Charter parties are of two types: (a) contract of affreightment which involves the use of shipping space on vessels leased by the owner in part or as a whole, to carry goods for others; and, (b) charter by demise or bareboat charter, by the terms of which the whole vessel is let to the charterer with a transfer to him of its entire command and possession and consequent control over its navigation, including the master and the crew, who are his servants. Contract of affreightment may either be time charter, wherein the vessel is leased to the charterer for a fixed

period of time, or voyage charter, wherein the ship is leased for a single voyage. 22 In both cases, the charter-party provides for the hire of vessel only, either for a determinate period of time or for a single or consecutive voyage, the shipowner to supply the ship's stores, pay for the wages of the master and the crew, and defray the expenses for the maintenance of the ship. Upon the other hand, the term "common or public carrier" is defined in Art. 1732 of the Civil Code. 23 The definition extends to carriers either by land, air or water which hold themselves out as ready to engage in carrying goods or transporting passengers or both for compensation as a public employment and not as a casual occupation. The distinction between a "common or public carrier" and a "private or special carrier" lies in the character of the business, such that if the undertaking is a single transaction, not a part of the general business or occupation, although involving the carriage of goods for a fee, the person or corporation offering such service is a private carrier. 24 Article 1733 of the New Civil Code mandates that common carriers, by reason of the nature of their business, should observe extraordinary diligence in the vigilance over the goods they carry. 25 In the case of private carriers, however, the exercise of ordinary diligence in the carriage of goods will suffice. Moreover, in the case of loss, destruction or deterioration of the goods, common carriers are presumed to have been at fault or to have acted negligently, and the burden of proving otherwise rests on them. 26 On the contrary, no such presumption applies to private carriers, for whosoever alleges damage to or deterioration of the goods carried has the onus of proving that the cause was the negligence of the carrier. It is not disputed that respondent carrier, in the ordinary course of business, operates as a common carrier, transporting goods indiscriminately for all persons. When petitioner chartered the vessel M/V "Sun Plum", the ship captain, its officers and compliment were under the employ of the shipowner and therefore continued to be under its direct supervision and control. Hardly then can we charge the charterer, a stranger to the crew and to the ship, with the duty of caring for his cargo when the charterer did not have any control of the means in doing so. This is evident in the present case considering that the steering of the ship, the manning of the decks, the determination of the course of the voyage and other technical incidents of maritime navigation were all consigned to the officers and crew who were screened, chosen and hired by the shipowner. 27 It is therefore imperative that a public carrier shall remain as such, notwithstanding the charter of the whole or portion of a vessel by one or more persons, provided the charter is limited to the ship only, as in the case of a time-charter or voyage-charter. It is only when the charter includes both the vessel and its crew, as in a bareboat or demise that a common carrier becomes private, at least insofar as the particular voyage covering the charter-party is concerned. Indubitably, a shipowner in a time or voyage charter retains possession and control of the ship, although her holds may, for the moment, be the property of the charterer. 28 Respondent carrier's heavy reliance on the case of Home Insurance Co. v. American Steamship Agencies, supra, is misplaced for the reason that the meat of the controversy therein was the validity of a stipulation in the charter-party exempting the shipowners from liability for loss due to the negligence of its agent, and not the effects of a special charter on common carriers. At any rate, the rule in the United States that a ship chartered by a single shipper to carry special cargo is not a common carrier, 29 does not find application in our jurisdiction, for we have observed that the growing concern for safety in the transportation of passengers and /or carriage of goods by sea requires a more exacting interpretation of admiralty laws, more particularly, the rules governing common carriers. We quote with approval the observations of Raoul Colinvaux, the learned barrister-at-law 30

As a matter of principle, it is difficult to find a valid distinction between cases in which a ship is used to convey the goods of one and of several persons. Where the ship herself is let to a charterer, so that he takes over the charge and control of her, the case is different; the shipowner is not then a carrier. But where her services only are let, the same grounds for imposing a strict responsibility exist, whether he is employed by one or many. The master and the crew are in each case his servants, the freighter in each case is usually without any representative on board the ship; the same opportunities for fraud or collusion occur; and the same difficulty in discovering the truth as to what has taken place arises . . . In an action for recovery of damages against a common carrier on the goods shipped, the shipper or consignee should first prove the fact of shipment and its consequent loss or damage while the same was in the possession, actual or constructive, of the carrier. Thereafter, the burden of proof shifts to respondent to prove that he has exercised extraordinary diligence required by law or that the loss, damage or deterioration of the cargo was due to fortuitous event, or some other circumstances inconsistent with its liability. 31 To our mind, respondent carrier has sufficiently overcome, by clear and convincing proof, the prima facie presumption of negligence. The master of the carrying vessel, Captain Lee Tae Bo, in his deposition taken on 19 April 1977 before the Philippine Consul and Legal Attache in the Philippine Embassy in Tokyo, Japan, testified that before the fertilizer was loaded, the four (4) hatches of the vessel were cleaned, dried and fumigated. After completing the loading of the cargo in bulk in the ship's holds, the steel pontoon hatches were closed and sealed with iron lids, then covered with three (3) layers of serviceable tarpaulins which were tied with steel bonds. The hatches remained close and tightly sealed while the ship was in transit as the weight of the steel covers made it impossible for a person to open without the use of the ship's boom. 32 It was also shown during the trial that the hull of the vessel was in good condition, foreclosing the possibility of spillage of the cargo into the sea or seepage of water inside the hull of the vessel. 33 When M/V "Sun Plum" docked at its berthing place, representatives of the consignee boarded, and in the presence of a representative of the shipowner, the foreman, the stevedores, and a cargo surveyor representing CSCI, opened the hatches and inspected the condition of the hull of the vessel. The stevedores unloaded the cargo under the watchful eyes of the shipmates who were overseeing the whole operation on rotation basis. 34 Verily, the presumption of negligence on the part of the respondent carrier has been efficaciously overcome by the showing of extraordinary zeal and assiduity exercised by the carrier in the care of the cargo. This was confirmed by respondent appellate court thus . . . Be that as it may, contrary to the trial court's finding, the record of the instant case discloses ample evidence showing that defendant carrier was not negligent in performing its obligations. Particularly, the following testimonies of plaintiff-appellee's own witnesses clearly show absence of negligence by the defendant carrier; that the hull of the vessel at the time of the discharge of the cargo was sealed and nobody could open the same except in the presence of the owner of the cargo and the representatives of the vessel (TSN, 20 July 1977, p. 14); that the cover of the hatches was made of steel and it was overlaid with tarpaulins, three layers of tarpaulins and therefore their contents were protected from the weather (TSN, 5 April 1978, p. 24); and, that to open these hatches, the seals would have to be broken, all the seals were found to be intact (TSN, 20 July 1977, pp. 15-16) (emphasis supplied).

The period during which private respondent was to observe the degree of diligence required of it as a public carrier began from the time the cargo was unconditionally placed in its charge after the vessel's holds were duly inspected and passed scrutiny by the shipper, up to and until the vessel reached its destination and its hull was reexamined by the consignee, but prior to unloading. This is clear from the limitation clause agreed upon by the parties in the Addendum to the standard "GENCON" time charter-party which provided for an F.I.O.S., meaning, that the loading, stowing, trimming and discharge of the cargo was to be done by the charterer, free from all risk and expense to the carrier. 35 Moreover, a shipowner is liable for damage to the cargo resulting from improper stowage only when the stowing is done by stevedores employed by him, and therefore under his control and supervision, not when the same is done by the consignee or stevedores under the employ of the latter. 36 Article 1734 of the New Civil Code provides that common carriers are not responsible for the loss, destruction or deterioration of the goods if caused by the charterer of the goods or defects in the packaging or in the containers. The Code of Commerce also provides that all losses and deterioration which the goods may suffer during the transportation by reason of fortuitous event, force majeure, or the inherent defect of the goods, shall be for the account and risk of the shipper, and that proof of these accidents is incumbent upon the carrier. 37 The carrier, nonetheless, shall be liable for the loss and damage resulting from the preceding causes if it is proved, as against him, that they arose through his negligence or by reason of his having failed to take the precautions which usage has established among careful persons. 38 Respondent carrier presented a witness who testified on the characteristics of the fertilizer shipped and the expected risks of bulk shipping. Mr. Estanislao Chupungco, a chemical engineer working with Atlas Fertilizer, described Urea as a chemical compound consisting mostly of ammonia and carbon monoxide compounds which are used as fertilizer. Urea also contains 46% nitrogen and is highly soluble in water. However, during storage, nitrogen and ammonia do not normally evaporate even on a long voyage, provided that the temperature inside the hull does not exceed eighty (80) degrees centigrade. Mr. Chupungco further added that in unloading fertilizer in bulk with the use of a clamped shell, losses due to spillage during such operation amounting to one percent (1%) against the bill of lading is deemed "normal" or "tolerable." The primary cause of these spillages is the clamped shell which does not seal very tightly. Also, the wind tends to blow away some of the materials during the unloading process. The dissipation of quantities of fertilizer, or its daterioration in value, is caused either by an extremely high temperature in its place of storage, or when it comes in contact with water. When Urea is drenched in water, either fresh or saline, some of its particles dissolve. But the salvaged portion which is in liquid form still remains potent and usable although no longer saleable in its original market value. The probability of the cargo being damaged or getting mixed or contaminated with foreign particles was made greater by the fact that the fertilizer was transported in "bulk," thereby exposing it to the inimical effects of the elements and the grimy condition of the various pieces of equipment used in transporting and hauling it. The evidence of respondent carrier also showed that it was highly improbable for sea water to seep into the vessel's holds during the voyage since the hull of the vessel was in good condition and her hatches were tightly closed and firmly sealed, making the M/V "Sun Plum" in all respects seaworthy to carry the cargo she was chartered for. If there was loss or contamination of the cargo, it was more likely to have occurred while the same was being transported from the ship to the dump trucks and finally to the consignee's warehouse. This may be gleaned from the testimony of the marine and cargo surveyor of CSCI who supervised the unloading. He explained that the 18 M/T of alleged "bar order cargo" as contained in their report to PPI was just an approximation or estimate made by them after the fertilizer was discharged from the vessel and segregated from the rest of the cargo.

The Court notes that it was in the month of July when the vessel arrived port and unloaded her cargo. It rained from time to time at the harbor area while the cargo was being discharged according to the supply officer of PPI, who also testified that it was windy at the waterfront and along the shoreline where the dump trucks passed enroute to the consignee's warehouse. Indeed, we agree with respondent carrier that bulk shipment of highly soluble goods like fertilizer carries with it the risk of loss or damage. More so, with a variable weather condition prevalent during its unloading, as was the case at bar. This is a risk the shipper or the owner of the goods has to face. Clearly, respondent carrier has sufficiently proved the inherent character of the goods which makes it highly vulnerable to deterioration; as well as the inadequacy of its packaging which further contributed to the loss. On the other hand, no proof was adduced by the petitioner showing that the carrier was remise in the exercise of due diligence in order to minimize the loss or damage to the goods it carried. WHEREFORE, the petition is DISMISSED. The assailed decision of the Court of Appeals, which reversed the trial court, is AFFIRMED. Consequently, Civil Case No. 98623 of the then Court of the First Instance, now Regional Trial Court, of Manila should be, as it is hereby DISMISSED. Costs against petitioner. SO ORDERED. Davide, Jr. and Quiason, JJ., concur. Cruz, J., took no part. Grio-Aquino, J., is on leave.

# Footnotes 1 A charter-party is a contract by which an entire ship or some principal part thereof, is let by the owner to another person for a specified time or use (70 Am Jur 2d, p. 580, citing Ward v. Thompson, 63 US 330, 16 L Ed 249; a contract in which the owner of a vessel lets for consideration the whole or part thereof for the conveyance of goods and/or passengers on a particular voyage to one or more places or until the expiration of a specified time and surrender unto the lessee or charterer the control, by vesting upon the latter the right to appoint the captain, officers and members of the crew, of the vessel leased or chartered during the duration of the contract (R.A. 913). 2 The Baltic and International Maritime Uniform General Charter (As Revised 1922 and 1976), Including "F.I.O.S." Alternative, etc., Code Name: "GENCON" Adopted by the Documentary Committee of the General Council of British Shipping, London, and the Documentary Committee of the Japan Shipping Exchange, Inc., Tokyo. 3 Rollo, pp. 105, 128. 4 Although par. 40 of the Rider (Description of "Sun Plum") states that the vessel has 3 holds/3 hatches, Hatch No. 4 which usually was not used for cargo, was converted for such purpose. The time sheet for 12 July 1974 shows that Hatch No. 4 was first to be discharge of cargo. This was also testified by the master of the vessel, Captain Lee Tae Bo. 5 Id., p. 129. 6 Under the terms and conditions of the charter-party, F.I.O.S. (Free In and Out Shipping/Stevedoring) means that the shipper takes care of the loading, while the unloading is the sole responsibility of the consignee (Rollo, pp. 128, 184). 7 TSN, 20 July 1977, p. 17. 8 TSN, 20 July 1977, p. 18. 9 Rollo, p. 130. 10 Id., p. 129; ADDENDUM No. 4 dated 17 May 1974 provides: "The cargo to be discharged at the average rate of 1,000 metric tons per day of 24 hours weather working days, Sundays, holidays excluded unless used, assuming four (4) sets of vessel's gear simultaneously workable a vessel's bearthing side."

11 TSN, 5 April 1978, pp. 7-8. "Drop survey" is the drop of the vessel showing certain meters or centimeters of the vessel. In the ship there is a draft from one meter upward. When the vessel arrives, (CSCI) conducted initial draft survey before discharging, together with the ship's representative by getting the draft forward and aft. They divided it by 2 to get the mean draft and the average draft. After getting the mean draft, they got the displacement scale of the vessel to show certain tons of the ship, then deducted the non-cargo weight, like the fuel oil, the freshwater. Finally, the total load of the ship is taken. After discharging, CSCI went over same procedure to get the weight of the vessel. These figures were then subtracted from the total load of the ships to get the weight of the cargo. 12 Id., p. 106. 13 Id., pp. 49, 68. 14 TSN, 28 Aug. 1979, pp. 9-10. 15 Id., p. 68 "Planters Products, Inc. v. Soriamont Steamship Agencies, et al., "Civil Case No. 98623, CFI of Manila, Br. 27, decision penned by Judge E.L. Peralta, 24 March 1980. 16 The Court of Appeals (Twelfth Division) rendered its decision on 13 August 1991 in CA-G.R. CV No. 02736 entitled "Planters Products, Inc. vs. Kyosei Kisen Kabushiki Kaisha & Soriamont Steamship Agencies." Decision penned by Justice Alfredo L. Benipayo, concurred in by Justices Manuel C. Herrera and Cancio C. Garcia, Rollo, pp. 13-24. 17 No. L-25599, 4 April 1968, 23 SCRA 24. 18 Rollo, p. 109. 19 Rollo, pp. 8 & 9. 20 Charter Partis; Charters of Demise and Contracts of Affreightment; 70 Am Jur 2d, p. 580; citing Ward v. Thompson, 63 US 330, 16 L d 249; E.R. Harvey Ivamy, Carriage of Goods by Sea, 13th Ed., Chap. 2, pp. 5, 810. The term is also defined under R.A. No. 913, known as "An Act Defining 'Lease' or 'Charter' of Vessels" as to mean a "contract in which the owner of a vessel lets for consideration the whole or principal part thereof for the conveyance of goods and/or passengers on a particular voyage to one or more places or until the expiration of a specified time and surrenders unto the lessee or charterer the control, by vesting upon the latter the right to appoint the captain, officers and members of the crew, of the vessel leased or chartered during the duration of the contract." 21 Bouvier's Law Dictionary, Third Rev., Vol. I, p. 470. 22 Id., pp. 581-582. 23 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. 24 See De Guzman v. Court of Appeals, No. L-47822, 22 December 1988, 168 SCRA 612; U.S. v. Quinajon, No. 8686, 30 July 1915. 25 Art. 1733. Common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them, according to all the circumstances of each case. Such extraordinary diligence in the vigilance over the goods is further expressed in Arts. 1734, 1735 and 1745, Nos. 5, 6 and 7, while the extraordinary diligence for the safety of the passengers is further set forth in Arts. 1755 and 1756. 26 Art. 1735. In all cases other than those mentioned in Nos. 1, 2, 3, 4 and 5 of the preceding article, if the goods are lost, destroyed or deteriorated, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence as required in article 1733. 27 E.R. Harvey Ivamy, pp. 8-10. 28 70 Am Jur 2nd, P, 608 S 238, citing Grace v. Palmer, 21 US 605, 5 L Ed 696, and Kerry v. Pacific Marine Co., 12 CAL 564, 54, p. 89. 29 30 C.J.S., pp. 269-693. 30 British Shipping Laws, Vol. 2, "Carver's Carriage by Sea," By Raoul Colinvaux, Vol. 1, 12th Ed., Published by Stevens & Sons Limited of London, Printed in Great Britain, 1971. 31 See Ynchausti Steamship Co. v. Dexter, No. 15652, 41 Phil. 289, 14 Dec. 1920; Mirasol v. Robert Dollar, Co., No. 29721, 53 Phil. 124, 27 March 1929. 32 Deposition of Capt. Lee Tae Bo, Exh. "4", pp. 22-23. 33 TSN, 20 July 1977, p. 14. 34 TSN, 5 April 1978, pp. 24-25. 35 See Note 6. 36 70 Am Jur 2d, p. 603 S 230, citing Oxford Paper Co. v. The Nidarholm, 282 US 681, 75L ed 614, 51 S Ct 266. 37 Art. 361, par. 4, Code of Commerce. 38 Art. 362, par. 1, id.

G.R. No. 111127 July 26, 1996 MR. & MRS. ENGRACIO FABRE, JR. and PORFIRIO CABIL, petitioners, vs. COURT OF APPEALS, THE WORD FOR THE WORLD CHRISTIAN FELLOWSHIP, INC., AMYLINE ANTONIO, JOHN RICHARDS, GONZALO GONZALES, VICENTE V. QUE, JR., ICLI CORDOVA, ARLENE GOJOCCO, ALBERTO ROXAS CORDERO, RICHARD BAUTISTA, JOCELYN GARCIA, YOLANDA CORDOVA, NOEL ROQUE, EDWARD TAN, ERNESTO NARCISO, ENRIQUETA LOCSIN, FRANCIS NORMAN O. LOPES, JULIUS CAESAR, GARCIA, ROSARIO MA. V. ORTIZ, MARIETTA C. CLAVO, ELVIE SENIEL, ROSARIO MARA-MARA, TERESITA REGALA, MELINDA TORRES, MARELLA MIJARES, JOSEFA CABATINGAN, MARA NADOC, DIANE MAYO, TESS PLATA, MAYETTE JOCSON, ARLENE Y. MORTIZ, LIZA MAYO, CARLOS RANARIO, ROSAMARIA T. RADOC and BERNADETTE FERRER, respondents.

back in consideration of which private respondent paid petitioners the amount of P3,000.00. The group was scheduled to leave on November 2, 1984, at 5:00 o'clock in the afternoon. However, as several members of the party were late, the bus did not leave the Tropical Hut at the corner of Ortigas Avenue and EDSA until 8:00 o'clock in the evening. Petitioner Porfirio Cabil drove the minibus. The usual route to Caba, La Union was through Carmen, Pangasinan. However, the bridge at Carmen was under repair, sot hat petitioner Cabil, who was unfamiliar with the area (it being his first trip to La Union), was forced to take a detour through the town of Baay in Lingayen, Pangasinan. At 11:30 that night, petitioner Cabil came upon a sharp curve on the highway, running on a south to east direction, which he described as "siete." The road was slippery because it was raining, causing the bus, which was running at the speed of 50 kilometers per hour, to skid to the left road shoulder. The bus hit the left traffic steel brace and sign along the road and rammed the fence of one Jesus Escano, then turned over and landed on its left side, coming to a full stop only after a series of impacts. The bus came to rest off the road. A coconut tree which it had hit fell on it and smashed its front portion. Several passengers were injured. Private respondent Amyline Antonio was thrown on the floor of the bus and pinned down by a wooden seat which came down by a wooden seat which came off after being unscrewed. It took three persons to safely remove her from this portion. She was in great pain and could not move. The driver, petitioner Cabil, claimed he did not see the curve until it was too late. He said he was not familiar with the area and he could not have seen the curve despite the care he took in driving the bus, because it was dark and there was no sign on the road. He said that he saw the curve when he was already within 15 to 30 meters of it. He allegedly slowed down to 30 kilometers per hour, but it was too late. The Lingayen police investigated the incident the next day, November 3, 1984. On the basis of their finding they filed a criminal complaint against the driver, Porfirio Cabil. The case was later filed with the Lingayen Regional Trial Court. Petitioners Fabre paid Jesus Escano P1,500.00 for the damage to the latter's fence. On the basis of Escano's affidavit of desistance the case against petitioners Fabre was dismissed.

MENDOZA, J.:p This is a petition for review on certiorari of the decision of the Court of Appeals 1 in CA-GR No. 28245, dated September 30, 1992, which affirmed with modification the decision of the Regional Trial Court of Makati, Branch 58, ordering petitioners jointly and severally to pay damages to private respondent Amyline Antonio, and its resolution which denied petitioners' motion for reconsideration for lack of merit. Petitioners Engracio Fabre, Jr. and his wife were owners of a 1982 model Mazda minibus. They used the bus principally in connection with a bus service for school children which they operated in Manila. The couple had a driver, Porfirio J. Cabil, whom they hired in 1981, after trying him out for two weeks, His job was to take school children to and from the St. Scholastica's College in Malate, Manila. On November 2, 1984 private respondent Word for the World Christian Fellowship Inc. (WWCF) arranged with petitioners for the transportation of 33 members of its Young Adults Ministry from Manila to La Union and

Amyline Antonio, who was seriously injured, brought this case in the RTC of Makati, Metro Manila. As a result of the accident, she is now suffering from paraplegia and is permanently paralyzed from the waist down. During the trial she described the operations she underwent and adduced evidence regarding the cost of her treatment and therapy. Immediately after the accident, she was taken to the Nazareth Hospital in Baay, Lingayen. As this hospital was not adequately equipped, she was transferred to the Sto. Nio Hospital, also in the town of Ba-ay, where she was given sedatives. An x-ray was taken and the damage to her spine was determined to be too severe to be treated there. She was therefore brought to Manila, first to the Philippine General Hospital and later to the Makati Medical Center where she underwent an operation to correct the dislocation of her spine. In its decision dated April 17, 1989, the trial court found that: No convincing evidence was shown that the minibus was properly checked for travel to a long distance trip and that the driver was properly screened and tested before being admitted for employment. Indeed, all the evidence presented have shown the negligent act of the defendants which ultimately resulted to the accident subject of this case. Accordingly, it gave judgment for private respondents holding: Considering that plaintiffs Word for the World Christian Fellowship, Inc. and Ms. Amyline Antonio were the only ones who adduced evidence in support of their claim for damages, the Court is therefore not in a position to award damages to the other plaintiffs. WHEREFORE, premises considered, the Court hereby renders judgment against defendants Mr. & Mrs. Engracio Fabre, Jr. and Porfirio Cabil y Jamil pursuant to articles 2176 and 2180 of the Civil Code of the Philippines and said defendants are ordered to pay jointly and severally to the plaintiffs the following amount: 1) P93,657.11 as compensatory and actual damages; 2) P500,000.00 as the reasonable amount of loss of earning capacity of plaintiff Amyline Antonio; 3) P20,000.00 as moral damages; 4) P20,000.00 as exemplary damages; and

5) 25% of the recoverable amount as attorney's fees; 6) Costs of suit. SO ORDERED. The Court of Appeals affirmed the decision of the trial court with respect to Amyline Antonio but dismissed it with respect to the other plaintiffs on the ground that they failed to prove their respective claims. The Court of Appeals modified the award of damages as follows: 1) P93,657.11 as actual damages; 2) P600,000.00 as compensatory damages; 3) P50,000.00 as moral damages; 4) P20,000.00 as exemplary damages; 5) P10,000.00 as attorney's fees; and 6) Costs of suit. The Court of Appeals sustained the trial court's finding that petitioner Cabil failed to exercise due care and precaution in the operation of his vehicle considering the time and the place of the accident. The Court of Appeals held that the Fabres were themselves presumptively negligent. Hence, this petition. Petitioners raise the following issues: I. WHETHER OR NOT PETITIONERS WERE NEGLIGENT. II. WHETHER OF NOT PETITIONERS WERE LIABLE FOR THE INJURIES SUFFERED BY PRIVATE RESPONDENTS. III WHETHER OR NOT DAMAGES CAN BE AWARDED AND IN THE POSITIVE, UP TO WHAT EXTENT.

Petitioners challenge the propriety of the award of compensatory damages in the amount of P600,000.00. It is insisted that, on the assumption that petitioners are liable an award of P600,000.00 is unconscionable and highly speculative. Amyline Antonio testified that she was a casual employee of a company called "Suaco," earning P1,650.00 a month, and a dealer of Avon products, earning an average of P1,000.00 monthly. Petitioners contend that as casual employees do not have security of tenure, the award of P600,000.00, considering Amyline Antonio's earnings, is without factual basis as there is no assurance that she would be regularly earning these amounts. With the exception of the award of damages, the petition is devoid of merit. First, it is unnecessary for our purpose to determine whether to decide this case on the theory that petitioners are liable for breach of contract of carriage or culpa contractual or on the theory of quasi delict or culpa aquiliana as both the Regional Trial Court and the Court of Appeals held, for although the relation of passenger and carrier is "contractual both in origin and nature," nevertheless "the act that breaks the contract may be also a tort." 2 In either case, the question is whether the bus driver, petitioner Porfirio Cabil, was negligent. The finding that Cabil drove his bus negligently, while his employer, the Fabres, who owned the bus, failed to exercise the diligence of a good father of the family in the selection and supervision of their employee is fully supported by the evidence on record. These factual findings of the two courts we regard as final and conclusive, supported as they are by the evidence. Indeed, it was admitted by Cabil that on the night in question, it was raining, and as a consequence, the road was slippery, and it was dark. He averred these facts to justify his failure to see that there lay a sharp curve ahead. However, it is undisputed that Cabil drove his bus at the speed of 50 kilometers per hour and only slowed down when he noticed the curve some 15 to 30 meters ahead. 3 By then it was too late for him to avoid falling off the road. Given the conditions of the road and considering that the trip was Cabil's first one outside of Manila, Cabil should have driven his vehicle at a moderate speed. There is testimony 4 that the vehicles passing on that portion of the road should only be running 20 kilometers per hour, so that at 50 kilometers per hour, Cabil was running at a very high speed. Considering the foregoing the fact that it was raining and the road was slippery, that it was dark, that he drove his bus at 50 kilometers an hour

when even on a good day the normal speed was only 20 kilometers an hour, and that he was unfamiliar with the terrain, Cabil was grossly negligent and should be held liable for the injuries suffered by private respondent Amyline Antonio. Pursuant to Arts. 2176 and 2180 of the Civil Code his negligence gave rise to the presumption that his employers, the Fabres, were themselves negligent in the selection and supervisions of their employee. Due diligence in selection of employees is not satisfied by finding that the applicant possessed a professional driver's license. The employer should also examine the applicant for his qualifications, experience and record of service. 5 Due diligence in supervision, on the other hand, requires the formulation of rules and regulations for the guidance of employees and issuance of proper instructions as well as actual implementation and monitoring of consistent compliance with the rules. 6 In the case at bar, the Fabres, in allowing Cabil to drive the bus to La Union, apparently did not consider the fact that Cabil had been driving for school children only, from their homes to the St. Scholastica's College in Metro Manila. 7 They had hired him only after a two-week apprenticeship. They had hired him only after a two-week apprenticeship. They had tested him for certain matters, such as whether he could remember the names of the children he would be taking to school, which were irrelevant to his qualification to drive on a long distance travel, especially considering that the trip to La Union was his first. The existence of hiring procedures and supervisory policies cannot be casually invoked to overturn the presumption of negligence on the part of an employer. 8 Petitioners argue that they are not liable because (1) an earlier departure (made impossible by the congregation's delayed meeting) could have a averted the mishap and (2) under the contract, the WWCF was directly responsible for the conduct of the trip. Neither of these contentions hold water. The hour of departure had not been fixed. Even if it had been, the delay did not bear directly on the cause of the accident. With respect to the second contention, it was held in an early case that: [A] person who hires a public automobile and gives the driver directions as to the place to which he wishes to be conveyed, but exercises no other control over the conduct of the driver, is not responsible for acts of negligence of the latter or prevented from recovering for injuries suffered from a collision between the automobile and a train, caused by the negligence or the automobile driver. 9

As already stated, this case actually involves a contract of carriage. Petitioners, the Fabres, did not have to be engaged in the business of public transportation for the provisions of the Civil Code on common carriers to apply to them. As this Court has held: 10 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 an 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 1732 deliberately refrained from making such distinctions. As common carriers, the Fabres were found to exercise "extraordinary diligence" for the safe transportation of the passengers to their destination. This duty of care is not excused by proof that they exercise the diligence of a good father of the family in the selection and supervision of their employee. As Art. 1759 of the Code provides: 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. This liability of the common carriers does not cease upon proof that they exercised all the diligence of a good father

of a family in the selection and supervision of their employees. The same circumstances detailed above, supporting the finding of the trial court and of the appellate court that petitioners are liable under Arts. 2176 and 2180 for quasi delict, fully justify findings them guilty of breach of contract of carriage under Arts. 1733, 1755 and 1759 of the Civil Code. Secondly, we sustain the award of damages in favor of Amyline Antonio. However, we think the Court of Appeals erred in increasing the amount of compensatory damages because private respondents did not question this award as inadequate. 11 To the contrary, the award of P500,000.00 for compensatory damages which the Regional Trial Court made is reasonable considering the contingent nature of her income as a casual employee of a company and as distributor of beauty products and the fact that the possibility that she might be able to work again has not been foreclosed. In fact she testified that one of her previous employers had expressed willingness to employ her again. With respect to the other awards, while the decisions of the trial court and the Court of Appeals do not sufficiently indicate the factual and legal basis for them, we find that they are nevertheless supported by evidence in the records of this case. Viewed as an action for quasi delict, this case falls squarely within the purview of Art. 2219(2) providing for the payment of moral damages in cases of quasi delict. On the theory that petitioners are liable for breach of contract of carriage, the award of moral damages is authorized by Art. 1764, in relation to Art. 2220, since Cabil's gross negligence amounted to bad faith. 12 Amyline Antonio's testimony, as well as the testimonies of her father and copassengers, fully establish the physical suffering and mental anguish she endured as a result of the injuries caused by petitioners' negligence. The award of exemplary damages and attorney's fees was also properly made. However, for the same reason that it was error for the appellate court to increase the award of compensatory damages, we hold that it was also error for it to increase the award of moral damages and reduce the award of attorney's fees, inasmuch as private respondents, in whose favor the awards were made, have not appealed. 13 As above stated, the decision of the Court of Appeals can be sustained either on the theory of quasi delict or on that of breach of contract. The question is whether, as the two courts below held, petitioners, who are the owners and driver of the bus, may be made to respond jointly and

severally to private respondent. We hold that they may be. In Dangwa Trans. Co. Inc. v. Court of Appeals, 14 on facts similar to those in this case, this Court held the bus company and the driver jointly and severally liable for damages for injuries suffered by a passenger. Again, in Bachelor Express, Inc. v. Court of Appeals 15 a driver found negligent in failing to stop the bus in order to let off passengers when a fellow passenger ran amuck, as a result of which the passengers jumped out of the speeding bus and suffered injuries, was held also jointly and severally liable with the bus company to the injured passengers. The same rule of liability was applied in situations where the negligence of the driver of the bus on which plaintiff was riding concurred with the negligence of a third party who was the driver of another vehicle, thus causing an accident. In Anuran v. Buo, 16 Batangas Laguna Tayabas Bus Co. v. Intermediate Appellate Court, 17 and Metro Manila Transit Corporation v. Court of Appeals, 18 the bus company, its driver, the operator of the other vehicle and the driver of the vehicle were jointly and severally held liable to the injured passenger or the latters' heirs. The basis of this allocation of liability was explained in Viluan v. Court of Appeals, 19 thus: Nor should it make any difference that the liability of petitioner [bus owner] springs from contract while that of respondents [owner and driver of other vehicle] arises from quasi-delict. As early as 1913, we already ruled in Gutierrez vs. Gutierrez, 56 Phil. 177, that in case of injury to a passenger due to the negligence of the driver of the bus on which he was riding and of the driver of another vehicle, the drivers as well as the owners of the two vehicles are jointly and severally liable for damages. Some members of the Court, though, are of the view that under the circumstances they are liable on quasi-delict. 20 It is true that in Philippine Rabbit Bus Lines, Inc. v. Court of Appeals this Court exonerated the jeepney driver from liability to the injured passengers and their families while holding the owners of the jeepney jointly and severally liable, but that is because that case was expressly tried and decided exclusively on the theory of culpa contractual. As this Court there explained:
21

severally liable with Manalo is erroneous. The driver cannot be held jointly and severally liable with carrier in case of breach of the contract of carriage. The rationale behind this is readily discernible. Firstly, the contract of carriage is between the carrier is exclusively responsible therefore to the passenger, even if such breach be due to the negligence of his driver (see Viluan v. The Court of Appeals, et al., G.R. Nos. L21477-81, April 29, 1966, 16 SCRA 742). 22 As in the case of BLTB, private respondents in this case and her coplaintiffs did not stake out their claim against the carrier and the driver exclusively on one theory, much less on that of breach of contract alone. After all, it was permitted for them to allege alternative causes of action and join as many parties as may be liable on such causes of action 23 so long as private respondent and her coplaintiffs do not recover twice for the same injury. What is clear from the cases is the intent of the plaintiff there to recover from both the carrier and the driver, thus, justifying the holding that the carrier and the driver were jointly and severally liable because their separate and distinct acts concurred to produce the same injury. WHEREFORE, the decision of the Court of Appeals is AFFIRMED with MODIFICATION as to award of damages. Petitioners are ORDERED to PAY jointly and severally the private respondent Amyline Antonio the following amounts: 1) P93,657.11 as actual damages; 2) P500,000.00 as the reasonable amount of loss of earning capacity of plaintiff Amyline Antonio; 3) P20,000.00 as moral damages; 4) P20,000.00 as exemplary damages; 5) 25% of the recoverable amount as attorney's fees; and 6) costs of suit. SO ORDERED. Regalado, Romero, Puno and Torres, Jr., JJ., concur.

The trial court was therefore right in finding that Manalo (the driver) and spouses Mangune and Carreon (the jeepney owners) were negligent. However, its ruling that spouses Mangune and Carreon are jointly and

Footnotes 1 Per Justice Jainal D. Rasul and concurred in by Justices Emeterio C. Cui and Segundino G. Chua. 2 Air France v. Carrascoso, 18 SCRA 155, 168 (1966). Accord, Singson v. Bank of the Philippines Islands, 23 SCRA 1117, 1119 (1968). 3 Testimony of Porfirio Cabil, TSN, p. 14, Oct. 26. 1987. 4 Testimony of Pat. Chito Esmenda, TSN, pp. 37-38, Sept. 12, 1985. 5 Metro Manila Transit Corp. v. Court of Appeals, 223 SCRA 521 (1993); Campo v. Camarote, 100 Phil. 459 (1956). 6 Filamer Christian Institute v. Intermediate Appellate Court, 212 SCRA 637 (1992). 7 Testimony of Porfirio Cabil, TSN, p. 7, Oct. 26, 1987. 8 Supra note 5. 9 Yamada v. Manila Railroad Co., 33 Phil. 8, 14 (1915). 10 De Guzman v. Court of Appeals, 168 SCRA 612, 618 (1988); Bascos v. Court of Appeals, 221 SCRA 318 (1993). 11 Philippine Airlines v. Court of Appeals, 226 SCRA 423 (1993). 12 Gatchalian v. Delim, 203 SCRA 126 (1991); Prudenciado v. Alliance Transport System, Inc., 148 SCRA 440 (1987). 13 La Mallorca v. Court of Appeals, 175 SCRA 739 (1989). 14 202 SCRA 574 (1991). 15 188 SCRA 216 (1990). 16 17 SCRA 224 (1966).

17 167 SCRA 379 (1988). 18 223 SCRA 521 (1993). 19 16 SCRA 742 (1966). 20 Id., at 747 21 189 SCRA 158 (1988). 22 Id., at 172-173. 23 La Mallorca v. Court of Appeals, 17 SCRA 739 (1966). Rule 8, 2 provides: "Alternative causes of action or defenses. A party may set forth two or more statements of a claim or defense alternatively or hypothetically, either in one cause of action or defense or in separate causes of action or defenses. When two or more statements are made in the alternative and one of them if made independently would be sufficient, the pleading is not made insufficient by the insufficiency of one or more of the alternative statements." Rule 3, 6 provides: "Permissive joinder of parties. All persons in whom or against whom any right to relief in respect to or arising out of the same transaction or series of transactions is alleged to exist, whether jointly, severally, or in the alternative, may, except as otherwise provided in these rules, join as plaintiffs or be joined as defendants in one complaint, where any question of law of fact common to all such plaintiffs or to all such defendants may arise in the action; but the court may make such orders as may be just to prevent any plaintiff or defendant from being embarrassed or put to expense in connection with any proceedings in which he may have no interest."
The Lawphil Project - Arellano Law Foundation

[G.R. No. 147246. August 19, 2003]

proceeded to pull the barge to Engineering Island off Baseco to seek shelter from the approaching typhoon. PSTSI III was tied down to other barges which arrived ahead of it while weathering out the storm that night. A few days after, the barge developed a list because of a hole it sustained after hitting an unseen protuberance underneath the water. The petitioner filed a Marine Protest on August 28, 1990.8[8] It likewise secured the services of Gaspar Salvaging Corporation which refloated the barge.9[9] The hole was then patched with clay and cement. The barge was then towed to ISLOFF terminal before it finally headed towards the consignee's wharf on September 5, 1990. Upon reaching the Sta. Mesa spillways, the barge again ran aground due to strong current. To avoid the complete sinking of the barge, a portion of the goods was transferred to three other barges.10[10] The next day, September 6, 1990, the towing bits of the barge broke. It sank completely, resulting in the total loss of the remaining cargo.11[11] A second Marine Protest was filed on September 7, 1990.12[12] On September 14, 1990, a bidding was conducted to dispose of the damaged wheat retrieved and loaded on the three other barges.13[13] The total proceeds from the sale of the salvaged cargo was P201,379.75.14[14] On the same date, September 14, 1990, consignee sent a claim letter to the petitioner, and another letter dated September 18, 1990 to the private respondent for the value of the lost cargo. On January 30, 1991, the private respondent indemnified the consignee in the amount of P4,104,654.22.15[15] Thereafter, as subrogee, it sought recovery of said amount from the petitioner, but to no avail. On July 3, 1991, the private respondent filed a complaint against the petitioner for recovery of the amount of indemnity, attorney's fees and cost of suit.16[16] Petitioner filed its answer with counterclaim.17[17] The Regional Trial Court ruled in favor of the private respondent. dispositive portion of its Decision states: WHEREFORE, premises considered, judgment is hereby rendered ordering defendant Asia Lighterage & Shipping, Inc. liable to pay plaintiff
8 9 10
[8]

ASIA LIGHTERAGE AND SHIPPING, INC., petitioner, vs. COURT OF APPEALS and PRUDENTIAL GUARANTEE AND ASSURANCE, INC., respondents. DECISION PUNO, J.: On appeal is the Court of Appeals May 11, 2000 Decision1[1] in CA-G.R. CV No. 49195 and February 21, 2001 Resolution2[2] affirming with modification the April 6, 1994 Decision3[3] of the Regional Trial Court of Manila which found petitioner liable to pay private respondent the amount of indemnity and attorney's fees. First, the facts. On June 13, 1990, 3,150 metric tons of Better Western White Wheat in bulk, valued at US$423,192.354[4] was shipped by Marubeni American Corporation of Portland, Oregon on board the vessel M/V NEO CYMBIDIUM V-26 for delivery to the consignee, General Milling Corporation in Manila, evidenced by Bill of Lading No. PTD/Man-4.5[5] The shipment was insured by the private respondent Prudential Guarantee and Assurance, Inc. against loss or damage for P14,621,771.75 under Marine Cargo Risk Note RN 11859/90.6[6] On July 25, 1990, the carrying vessel arrived in Manila and the cargo was transferred to the custody of the petitioner Asia Lighterage and Shipping, Inc. The petitioner was contracted by the consignee as carrier to deliver the cargo to consignee's warehouse at Bo. Ugong, Pasig City. On August 15, 1990, 900 metric tons of the shipment was loaded on barge PSTSI III, evidenced by Lighterage Receipt No. 03647[7] for delivery to consignee. The cargo did not reach its destination. It appears that on August 17, 1990, the transport of said cargo was suspended due to a warning of an incoming typhoon. On August 22, 1990, the petitioner
1 2 3 4 5 6 7
[1]

The

Exhibit 4, id., p. 144. Exhibits G-1 and 1-A, id., p. 100. Exhibits G-2 and 1-B, id., p. 101. Ibid. Exhibit 5, Records, p. 145. Supra note 10. Exhibits G-3 and 1-C, Records, p. 102. Exhibit L, id., p. 110. Id., pp. 1-4. Id., pp. 21-22.

[9]

[10]

Rollo, pp. 49-59. Id., p. 61. Id., pp. 71-73. Exhibit B, Records, p. 91. Exhibit A, id., p. 90. Exhibits I and I-1, id., pp. 107-108. Exhibit C, id., p. 92.

11 12 13 14 15 16 17

[11]

[2]

[12]

[3]

[13]

[4]

[14]

[5]

[15]

[6]

[16]

[7]

[17]

Prudential Guarantee & Assurance Co., Inc. the sum of P4,104,654.22 with interest from the date complaint was filed on July 3, 1991 until fully satisfied plus 10% of the amount awarded as and for attorney's fees. Defendant's counterclaim is hereby DISMISSED. With costs against defendant.18[18] Petitioner appealed to the Court of Appeals insisting that it is not a common carrier. The appellate court affirmed the decision of the trial court with modification. The dispositive portion of its decision reads: WHEREFORE, the decision appealed from is hereby AFFIRMED with modification in the sense that the salvage value of P201,379.75 shall be deducted from the amount of P4,104,654.22. Costs against appellant. SO ORDERED. Petitioners Motion for Reconsideration dated June 3, 2000 was likewise denied by the appellate court in a Resolution promulgated on February 21, 2001. Hence, this petition. Petitioner submits the following errors allegedly committed by the appellate court, viz:19[19] (1) THE COURT OF APPEALS DECIDED THE CASE A QUO IN A WAY NOT IN ACCORD WITH LAW AND/OR WITH THE APPLICABLE DECISIONS OF THE SUPREME COURT WHEN IT HELD THAT PETITIONER IS A COMMON CARRIER. (2) THE COURT OF APPEALS DECIDED THE CASE A QUO IN A WAY NOT IN ACCORD WITH LAW AND/OR WITH THE APPLICABLE DECISIONS OF THE SUPREME COURT WHEN IT AFFIRMED THE FINDING OF THE LOWER COURT A QUO THAT ON THE BASIS OF THE PROVISIONS OF THE CIVIL CODE APPLICABLE TO COMMON CARRIERS, THE LOSS OF THE CARGO IS, THEREFORE, BORNE BY THE CARRIER IN ALL CASES EXCEPT IN THE FIVE (5) CASES ENUMERATED. (3) THE COURT OF APPEALS DECIDED THE CASE A QUO IN A WAY NOT IN ACCORD WITH LAW AND/OR WITH THE APPLICABLE DECISIONS OF THE SUPREME COURT WHEN IT EFFECTIVELY CONCLUDED THAT PETITIONER FAILED TO EXERCISE DUE DILIGENCE AND/OR WAS NEGLIGENT IN ITS CARE AND CUSTODY OF THE CONSIGNEES CARGO. The issues to be resolved are: (1) Whether the petitioner is a common carrier; and, (2) Assuming the petitioner is a common carrier, whether it exercised extraordinary diligence in its care and custody of the consignees cargo. On the first issue, we rule that petitioner is a common carrier.

Article 1732 of the Civil Code defines common carriers as 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. Petitioner contends that it is not a common carrier but a private carrier. Allegedly, it has no fixed and publicly known route, maintains no terminals, and issues no tickets. It points out that it is not obliged to carry indiscriminately for any person. It is not bound to carry goods unless it consents. In short, it does not hold out its services to the general public.20[20] We disagree. In De Guzman vs. Court of Appeals,21[21] we held that the definition of common carriers in Article 1732 of the Civil Code makes no distinction between one whose principal business activity is the carrying of persons or goods or both, and one who does such carrying only as an ancillary activity. We also did not distinguish 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. Further, we ruled that Article 1732 does not distinguish between a carrier offering its services to the general public, and one who offers services or solicits business only from a narrow segment of the general population. In the case at bar, the principal business of the petitioner is that of lighterage and drayage22[22] and it offers its barges to the public for carrying or transporting goods by water for compensation. Petitioner is clearly a common carrier. In De Guzman, supra,23[23] we considered private respondent Ernesto Cendaa to be a common carrier even if his principal occupation was not the carriage of goods for others, but that of buying used bottles and scrap metal in Pangasinan and selling these items in Manila. We therefore hold that petitioner is a common carrier whether its carrying of goods is done on an irregular rather than scheduled manner, and with an only limited clientele. A common carrier need not have fixed and publicly known routes. Neither does it have to maintain terminals or issue tickets. To be sure, petitioner fits the test of a common carrier as laid down in Bascos vs. Court of Appeals.24[24] The test to determine a common carrier is whether the given undertaking is a part of the business engaged in by the carrier which he has held out to the general public as his occupation rather than the quantity or extent of the business transacted.25[25] In the case at bar, the petitioner admitted that it is engaged in the business of shipping and lighterage,26[26] offering its barges to the
20 21 22 23 24
[20]

Id., pp. 147-150. G.R. No. L-47822, 22 December 1988. Rollo, p. 127. See note 21. G.R. No. 101089, 07 April 1993, 221 SCRA 318. Id., pp. 323-324. Rollo, p. 14.

[21]

[22]

[23]

[24]

18 19

[18]

Id., p. 172. Rollo, p. 22.

25 26

[25]

[19]

[26]

public, despite its limited clientele for carrying or transporting goods by water for compensation.27[27] On the second issue, we uphold the findings of the lower courts that petitioner failed to exercise extraordinary diligence in its care and custody of the consignees goods. Common carriers are bound to observe extraordinary diligence in the vigilance over the goods transported by them.28[28] They are presumed to have been at fault or to have acted negligently if the goods are lost, destroyed or deteriorated. 29[29] To overcome the presumption of negligence in the case of loss, destruction or deterioration of the goods, the common carrier must prove that it exercised extraordinary diligence. There are, however, exceptions to this rule. Article 1734 of the Civil Code enumerates the instances when the presumption of negligence does not attach: Art. 1734. Common carriers are responsible for the loss, destruction, or deterioration of the goods, unless the same is due to any of the following causes only: (1) (2) (3) (4) (5) Flood, storm, earthquake, lightning, or other natural disaster or calamity; Act of the public enemy in war, whether international or civil; Act or omission of the shipper or owner of the goods; The character of the goods or defects in the packing or in the containers; Order or act of competent public authority.

that, even before the towing bits of the barge broke, it had already previously sustained damage when it hit a sunken object while docked at the Engineering Island. It even suffered a hole. Clearly, this could not be solely attributed to the typhoon. The partly-submerged vessel was refloated but its hole was patched with only clay and cement. The patch work was merely a provisional remedy, not enough for the barge to sail safely. Thus, when petitioner persisted to proceed with the voyage, it recklessly exposed the cargo to further damage. A portion of the cross-examination of Alfredo Cunanan, cargo-surveyor of Tan-Gatue Adjustment Co., Inc., states: CROSS-EXAMINATION BY ATTY. DONN LEE:31[31] xxx q - Can you tell us what else transpired after that incident? a - After the first accident, through the initiative of the barge owners, they tried to pull out the barge from the place of the accident, and bring it to the anchor terminal for safety, then after deciding if the vessel is stabilized, they tried to pull it to the consignees warehouse, now while on route another accident occurred, now this time the barge totally hitting something in the course. q - You said there was another accident, can you tell the court the nature of the second accident? a - The sinking, sir. q - Can you tell the nature . . . can you tell the court, if you know what caused the sinking? a - Mostly it was related to the first accident because there was already a whole (sic) on the bottom part of the barge. xxx x x xxx x x x xxx x

In the case at bar, the barge completely sank after its towing bits broke, resulting in the total loss of its cargo. Petitioner claims that this was caused by a typhoon, hence, it should not be held liable for the loss of the cargo. However, petitioner failed to prove that the typhoon is the proximate and only cause of the loss of the goods, and that it has exercised due diligence before, during and after the occurrence of the typhoon to prevent or minimize the loss.30[30] The evidence show
27 28
[27]

Id., pp. 148-150.

This is not all. Petitioner still headed to the consignees wharf despite knowledge of an incoming typhoon. During the time that the barge was heading towards the consignee's wharf on September 5, 1990, typhoon Loleng has already entered the Philippine area of responsibility.32[32] A part of the testimony of Robert Boyd, Cargo Operations Supervisor of the petitioner, reveals: DIRECT-EXAMINATION BY ATTY. LEE:33[33]
common carrier must exercise due diligence to prevent or minimize the loss before, during and after the occurrence of flood, storm or other natural disaster in order that the common carrier may be exempted from liability for the loss, destruction, or deterioration of the goods. The same duty is incumbent upon the common carrier in case of an act of the public enemy referred to in article 1734, no. 2.
31 32
[31]

[28]

Article 1733, Civil Code. Common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them, according to all the circumstances of each case.

Such extraordinary diligence in vigilance over the goods is further expressed in articles 1734, 1735, and 1745, Nos. 5, 6, and 7, while the extraordinary diligence for the safety of the passengers is further set forth in articles 1755 and 1756.
29
[29]

Article 1735, Civil Code. In all cases other than those mentioned in Nos. 1, 2, 3, 4, and 5 of the preceding article, if the goods are lost, destroyed or deteriorated, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence as required in article 1733.
[30]

TSN, 04 March 1993, pp. 12-13.

[32]

30

Certification dated 02 August 1991 issued by the Philippine Atmospheric Geophysical & Astronomical Services Administration (PAGASA), Exhibit 7, Records, p. 147.
[33]

Article 1739, Civil Code. In order that the common carrier may be exempted from responsibility, the natural disaster must have been the proximate and only cause of the loss. However, the

33

TSN, 09 March 1993, pp. 70-71.

xxx x

xxx

with the typhoon if you are already inside the vicinity or inside Pasig entrance, it is a safe place to tow upstream. Accordingly, the petitioner cannot invoke the occurrence of the typhoon as force majeure to escape liability for the loss sustained by the private respondent. Surely, meeting a typhoon head-on falls short of due diligence required from a common carrier. More importantly, the officers/employees themselves of petitioner admitted that when the towing bits of the vessel broke that caused its sinking and the total loss of the cargo upon reaching the Pasig River, it was no longer affected by the typhoon. The typhoon then is not the proximate cause of the loss of the cargo; a human factor, i.e., negligence had intervened. IN VIEW THEREOF, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. CV No. 49195 dated May 11, 2000 and its Resolution dated February 21, 2001 are hereby AFFIRMED. Costs against petitioner.

q - Now, Mr. Witness, did it not occur to you it might be safer to just allow the Barge to lie where she was instead of towing it? a - Since that time that the Barge was refloated, GMC (General Milling Corporation, the consignee) as I have said was in a hurry for their goods to be delivered at their Wharf since they needed badly the wheat that was loaded in PSTSI-3. It was needed badly by the consignee. q - And this is the reason why you towed the Barge as you did? a - Yes, sir. xxx x CROSS-EXAMINATION BY ATTY. IGNACIO:34[34] xxx x qaqaxxx And then from ISLOFF Terminal you proceeded to the premises of the GMC? Am I correct? The next day, in the morning, we hired for additional two (2) tugboats as I have stated. Despite of the threats of an incoming typhoon as you testified a while ago? It is already in an inner portion of Pasig River. The typhoon would be coming and it would be dangerous if we are in the vicinity of Manila Bay. But the fact is, the typhoon was incoming? Yes or no? Yes. And yet as a standard operating procedure of your Company, you have to secure a sort of Certification to determine the weather condition, am I correct? Yes, sir. So, more or less, you had the knowledge of the incoming typhoon, right? Yes, sir. And yet you proceeded to the premises of the GMC? ISLOFF Terminal is far from Manila Bay and anytime even x x xxx x x

SO ORDERED. Panganiban, and Sandoval-Gutierrez, JJ., concur. Corona, and Carpio-Morales, JJ., on official leave.

qaq-

aqaqa34
[34]

Id., pp. 76-77.

plane ticket was for the flight scheduled on June 14, 1991. She thus called up Menor to complain. [G.R. No. 138334. August 25, 2003] Subsequently, Menor prevailed upon petitioner to take another tour the British Pageant which included England, Scotland and Wales in its itinerary. For this tour package, petitioner was asked anew to pay US$785.00 or P20,881.00 (at the then prevailing exchange rate of P26.60). She gave respondent US$300 or P7,980.00 as partial payment and commenced the trip in July 1991. Upon petitioners return from Europe, she demanded from respondent the reimbursement of P61,421.70, representing the difference between the sum she paid for Jewels of Europe and the amount she owed respondent for the British Pageant tour. Despite several demands, respondent company refused to reimburse the amount, contending that the same was nonrefundable. Petitioner was thus constrained to file a complaint against respondent for breach of contract of carriage and damages, which was docketed as Civil Case No. 92-133 and raffled to Branch 59 of the Regional Trial Court of Makati City.
35[1]

ESTELA L. CRISOSTOMO, petitioner, vs. THE COURT OF APPEALS and CARAVAN TRAVEL & TOURS INTERNATIONAL, INC., respondents. DECISION
YNARES-SANTIAGO, J.:

In May 1991, petitioner Estela L. Crisostomo contracted the services of respondent Caravan Travel and Tours International, Inc. to arrange and facilitate her booking, ticketing and accommodation in a tour dubbed Jewels of Europe. The package tour included the countries of England, Holland, Germany, Austria, Liechstenstein, Switzerland and France at a total cost of P74,322.70. Petitioner was given a 5% discount on the amount, which included airfare, and the booking fee was also waived because petitioners niece, Meriam Menor, was respondent companys ticketing manager. Pursuant to said contract, Menor went to her aunts residence on June 12, 1991 a Wednesday to deliver petitioners travel documents and plane tickets. Petitioner, in turn, gave Menor the full payment for the package tour. Menor then told her to be at the Ninoy Aquino International Airport (NAIA) on Saturday, two hours before her flight on board British Airways. Without checking her travel documents, petitioner went to NAIA on Saturday, June 15, 1991, to take the flight for the first leg of her journey from Manila to Hongkong. To petitioners dismay, she discovered that the flight she was supposed to take had already departed the previous day. She learned that her

In her complaint, petitioner alleged that her failure to join Jewels of Europe was due to respondents fault since it did not clearly indicate the departure date on the plane ticket. Respondent was also negligent in informing her of the wrong flight schedule through its employee Menor. She insisted that the British Pageant was merely a substitute for the Jewels of Europe tour, such that the cost of the former should be properly set-off against the sum paid for the latter.
36[2]

For its part, respondent company, through its Operations Manager, Concepcion Chipeco, denied responsibility for petitioners failure to join the first tour. Chipeco insisted that petitioner was informed of the correct departure date, which was clearly and legibly printed on the plane ticket. The travel documents were given to petitioner two days ahead of the
35 [1]

TSN, March 4, 1993, pp. 4-6. RTC Records, p. 1.

36

[2]

scheduled trip. Petitioner had only herself to blame for missing the flight, as she did not bother to read or confirm her flight schedule as printed on the ticket. Respondent explained that it can no longer reimburse the amount paid for Jewels of Europe, considering that the same had already been remitted to its principal in Singapore, Lotus Travel Ltd., which had already billed the same even if petitioner did not join the tour. Lotus European tour organizer, Insight International Tours Ltd., determines the cost of a package tour based on a minimum number of projected participants. For this reason, it is accepted industry practice to disallow refund for individuals who failed to take a booked tour.
37[3]

2.

Ordering the defendant to pay the plaintiff the amount of Five Thousand (P5,000.00) Pesos as and for reasonable attorneys fees; Dismissing the defendants counterclaim, for lack of merit; and With costs against the defendant.

3. 4.

SO ORDERED.39[5]

Lastly, respondent maintained that the British Pageant was not a substitute for the package tour that petitioner missed. This tour was independently procured by petitioner after realizing that she made a mistake in missing her flight for Jewels of Europe. Petitioner was allowed to make a partial payment of only US$300.00 for the second tour because her niece was then an employee of the travel agency. Consequently, respondent prayed that petitioner be ordered to pay the balance of P12,901.00 for the British Pageant package tour. After due proceedings, the trial court rendered a decision, the dispositive part of which reads:
WHEREFORE, premises hereby rendered as follows: 1. considered, judgment is
38[4]

The trial court held that respondent was negligent in erroneously advising petitioner of her departure date through its employee, Menor, who was not presented as witness to rebut petitioners testimony. However, petitioner should have verified the exact date and time of departure by looking at her ticket and should have simply not relied on Menors verbal representation. The trial court thus declared that petitioner was guilty of contributory negligence and accordingly, deducted 10% from the amount being claimed as refund. Respondent appealed to the Court of Appeals, which likewise found both parties to be at fault. However, the appellate court held that petitioner is more negligent than respondent because as a lawyer and well-traveled person, she should have known better than to simply rely on what was told to her. This being so, she is not entitled to any form of damages. Petitioner also forfeited her right to the Jewels of Europe tour and must therefore pay respondent the balance of the price for the British Pageant tour. The dispositive portion of the judgment appealed from reads as follows:
WHEREFORE, premises considered, the decision of the Regional Trial Court dated October 26, 1995 is hereby REVERSED and SET ASIDE. A new judgment is hereby ENTERED requiring the plaintiff-appellee to pay to the defendant-appellant the amount of P12,901.00, representing the balance of the price of the British Pageant Package Tour, the same to earn legal interest at the rate of SIX PERCENT (6%) per annum, to be computed from the time the counterclaim was filed until the finality of this decision. After
39 [5]

Ordering the defendant to return and/or refund to the plaintiff the amount of Fifty Three Thousand Nine Hundred Eighty Nine Pesos and Forty Three Centavos (P53,989.43) with legal interest thereon at the rate of twelve percent (12%) per annum starting January 16, 1992, the date when the complaint was filed;

37

[3]

TSN, August 30, 1994, pp. 6-9. Rollo, pp. 38-43. Id. at 43; penned by Judge Lucia Violago Isnani.

38

[4]

this decision becomes final and executory, the rate of TWELVE PERCENT (12%) interest per annum shall be additionally imposed on the total obligation until payment thereof is satisfied. The award of attorneys fees is DELETED. Costs against the plaintiff-appellee. SO ORDERED.40[6]

Upon denial of her motion for reconsideration, petitioner filed the instant petition under Rule 45 on the following grounds:
41[7]

Petitioner contends that respondent did not observe the standard of care required of a common carrier when it informed her wrongly of the flight schedule. She could not be deemed more negligent than respondent since the latter is required by law to exercise extraordinary diligence in the fulfillment of its obligation. If she were negligent at all, the same is merely contributory and not the proximate cause of the damage she suffered. Her loss could only be attributed to respondent as it was the direct consequence of its employees gross negligence. Petitioners contention has no merit. By definition, a contract of carriage or transportation is one whereby a certain person or association of persons obligate themselves to transport persons, things, or news from one place to another for a fixed price. Such person or association of persons are regarded as carriers and are classified as private or special carriers and common or public carriers. A common carrier is defined under Article 1732 of the Civil Code as 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.
43[9] 44[10]

I It is respectfully submitted that the Honorable Court of Appeals committed a reversible error in reversing and setting aside the decision of the trial court by ruling that the petitioner is not entitled to a refund of the cost of unavailed Jewels of Europe tour she being equally, if not more, negligent than the private respondent, for in the contract of carriage the common carrier is obliged to observe utmost care and extra-ordinary diligence which is higher in degree than the ordinary diligence required of the passenger. Thus, even if the petitioner and private respondent were both negligent, the petitioner cannot be considered to be equally, or worse, more guilty than the private respondent. At best, petitioners negligence is only contributory while the private respondent [is guilty] of gross negligence making the principle of pari delicto inapplicable in the case; II The Honorable Court of Appeals also erred in not ruling that the Jewels of Europe tour was not indivisible and the amount paid therefor refundable; III The Honorable Court erred in not granting to the petitioner the consequential damages due her as a result of breach of contract of carriage.42[8]
Id. at 36. Id. at 37. Id. at 15.
44

It is obvious from the above definition that respondent is not an entity engaged in the business of transporting either passengers or goods and is therefore, neither a private nor a common carrier. Respondent did not undertake to transport petitioner from one place to another since its covenant with its customers is simply to make travel arrangements in their behalf. Respondents services as a travel agency include procuring tickets and facilitating travel permits or visas as well as booking customers for tours. While petitioner concededly bought her plane ticket through the efforts of respondent company, this does not mean that the
43

40

[6]

41

[7]

Commentaries and Jurisprudence on the Commercial Laws of the Philippines, Vol. 4 (1993 Edition), Aguedo F. Agbayani, p. 1, citing 1 Blanco 640.
[9] [10]

42

[8]

Id. at 4.

latter ipso facto is a common carrier. At most, respondent acted merely as an agent of the airline, with whom petitioner ultimately contracted for her carriage to Europe. Respondents obligation to petitioner in this regard was simply to see to it that petitioner was properly booked with the airline for the appointed date and time. Her transport to the place of destination, meanwhile, pertained directly to the airline. The object of petitioners contractual relation with respondent is the latters service of arranging and facilitating petitioners booking, ticketing and accommodation in the package tour. In contrast, the object of a contract of carriage is the transportation of passengers or goods. It is in this sense that the contract between the parties in this case was an ordinary one for services and not one of carriage. Petitioners submission is premised on a wrong assumption. The nature of the contractual relation between petitioner and respondent is determinative of the degree of care required in the performance of the latters obligation under the contract. For reasons of public policy, a common carrier in a contract of carriage is bound by law to carry passengers as far as human care and foresight can provide using the utmost diligence of very cautious persons and with due regard for all the circumstances. As earlier stated, however, respondent is not a common carrier but a travel agency. It is thus not bound under the law to observe extraordinary diligence in the performance of its obligation, as petitioner claims.
45[11]

This connotes reasonable care consistent with that which an ordinarily prudent person would have observed when confronted with a similar situation. The test to determine whether negligence attended the performance of an obligation is: did the defendant in doing the alleged negligent act use that reasonable care and caution which an ordinarily prudent person would have used in the same situation? If not, then he is guilty of negligence.
47[13]

In the case at bar, the lower court found Menor negligent when she allegedly informed petitioner of the wrong day of departure. Petitioners testimony was accepted as indubitable evidence of Menors alleged negligent act since respondent did not call Menor to the witness stand to refute the allegation. The lower court applied the presumption under Rule 131, Section 3 (e) of the Rules of Court that evidence willfully suppressed would be adverse if produced and thus considered petitioners uncontradicted testimony to be sufficient proof of her claim.
48[14]

On the other hand, respondent has consistently denied that Menor was negligent and maintains that petitioners assertion is belied by the evidence on record. The date and time of departure was legibly written on the plane ticket and the travel papers were delivered two days in advance precisely so that petitioner could prepare for the trip. It performed all its obligations to enable petitioner to join the tour and exercised
the performance, that which is expected of a good father of a family shall be required.
47

Since the contract between the parties is an ordinary one for services, the standard of care required of respondent is that of a good father of a family under Article 1173 of the Civil Code.
45 [11]

46[12]

Jarco Marketing Corporation v. Court of Appeals, 378 Phil. 991, 1003 (1999), citing Picart v. Smith, 37 Phil. 809 (1918).
[13] [14]

48

This rule states:

Civil Code of the Philippines, Article 1755.

46

Article 1173. The fault or negligence of the obligor consists in the omission of that diligence which is required by the nature of the obligation and corresponds with the circumstances of the persons, of the time and of the place. When negligence shows bad faith, the provisions of Articles 1171 and 2201, paragraph 2, shall apply.
[12]

SEC. 3. Disputable presumptions. The following presumptions are satisfactory if uncontradicted, but may be contradicted and overcome by other evidence: xxx (e) xxx xxx xxx

That evidence willfully suppressed would be adverse if produced; xxx xxx

If the law or contract does not state the diligence which is to be observed in

due diligence in its dealings with the latter. We agree with respondent. Respondents failure to present Menor as witness to rebut petitioners testimony could not give rise to an inference unfavorable to the former. Menor was already working in France at the time of the filing of the complaint, thereby making it physically impossible for respondent to present her as a witness. Then too, even if it were possible for respondent to secure Menors testimony, the presumption under Rule 131, Section 3(e) would still not apply. The opportunity and possibility for obtaining Menors testimony belonged to both parties, considering that Menor was not just respondents employee, but also petitioners niece. It was thus error for the lower court to invoke the presumption that respondent willfully suppressed evidence under Rule 131, Section 3(e). Said presumption would logically be inoperative if the evidence is not intentionally omitted but is simply unavailable, or when the same could have been obtained by both parties.
49[15] 50[16]

Contrary to petitioners claim, the evidence on record shows that respondent exercised due diligence in performing its obligations under the contract and followed standard procedure in rendering its services to petitioner. As correctly observed by the lower court, the plane ticket issued to petitioner clearly reflected the departure date and time, contrary to petitioners contention. The travel documents, consisting of the tour itinerary, vouchers and instructions, were likewise delivered to petitioner two days prior to the trip. Respondent also properly booked petitioner for the tour, prepared the necessary documents and procured the plane tickets. It arranged petitioners hotel accommodation as well as food, land transfers and sightseeing excursions, in accordance with its avowed undertaking.
53[19]

In sum, we do not agree with the finding of the lower court that Menors negligence concurred with the negligence of petitioner and resultantly caused damage to the latter. Menors negligence was not sufficiently proved, considering that the only evidence presented on this score was petitioners uncorroborated narration of the events. It is well-settled that the party alleging a fact has the burden of proving it and a mere allegation cannot take the place of evidence. If the plaintiff, upon whom rests the burden of proving his cause of action, fails to show in a satisfactory manner facts upon which he bases his claim, the defendant is under no obligation to prove his exception or defense.
51[17] 52[18] 49 [15]

Therefore, it is clear that respondent performed its prestation under the contract as well as everything else that was essential to book petitioner for the tour. Had petitioner exercised due diligence in the conduct of her affairs, there would have been no reason for her to miss the flight. Needless to say, after the travel papers were delivered to petitioner, it became incumbent upon her to take ordinary care of her concerns. This undoubtedly would require that she at least read the documents in order to assure herself of the important details regarding the trip. The negligence of the obligor in the performance of the obligation renders him liable for damages for the resulting loss suffered by the obligee. Fault or negligence of the obligor consists in his failure to exercise due care and prudence in the performance of the obligation as the nature of the obligation so demands. There is no fixed standard of diligence applicable to each and every contractual obligation and each case must be
54[20]

Supra, note 3 at 10.

53

Martin v. Court of Appeals, G.R. No. 82248, 205 SCRA 591 (1992).
[19]

50

The Revised Rules of Court in the Philippines, Vol. VII, Part II (1999 Edition) V. Francisco, p. 92.
[16] [17]

Supra, note 2 at 60 & 94.

51

Pimentel v. Court of Appeals, 307 SCRA 38.

54

52

Castilex Industrial Corporation v. Vasquez, Jr., 378 Phil. 1009, 1018 (1999), citing Belen v. Belen, 13 Phil. 202, 206 (1909), cited in
[18]

Bayne Adjusters and Surveyors, Inc. v. Court of Appeals, G.R. No. 116332, 323 SCRA 231 (2000), citing Articles 1170, 1172-73, Civil Code; Southeastern College, Inc. v. Court of Appeals, 354 Phil 434 (1998).
[20]

determined upon its particular facts. The degree of diligence required depends on the circumstances of the specific obligation and whether one has been negligent is a question of fact that is to be determined after taking into account the particulars of each case.
55[21]

Davide, Jr., C.J., (Chairman), Vitug, Carpio, and Azcuna, JJ., concur.

The lower court declared that respondents employee was negligent. This factual finding, however, is not supported by the evidence on record. While factual findings below are generally conclusive upon this court, the rule is subject to certain exceptions, as when the trial court overlooked, misunderstood, or misapplied some facts or circumstances of weight and substance which will affect the result of the case.
56[22]

In the case at bar, the evidence on record shows that respondent company performed its duty diligently and did not commit any contractual breach. Hence, petitioner cannot recover and must bear her own damage. WHEREFORE, the instant petition is DENIED for lack of merit. The decision of the Court of Appeals in CA-G.R. CV No. 51932 is AFFIRMED. Accordingly, petitioner is ordered to pay respondent the amount of P12,901.00 representing the balance of the price of the British Pageant Package Tour, with legal interest thereon at the rate of 6% per annum, to be computed from the time the counterclaim was filed until the finality of this Decision. After this Decision becomes final and executory, the rate of 12% per annum shall be imposed until the obligation is fully settled, this interim period being deemed to be by then an equivalent to a forbearance of credit.
57[23]

SO ORDERED.
55

Commentaries and Jurisprudence on the Civil Code of the Philippines, Vol. IV (1999 Edition), Arturo M. Tolentino, p. 124.
[21]

56

Supra, note 13, citing Borillo v. CA, G.R. No. 55691, 209 SCRA 130 (1992); Mckee v. Intermediate Appellate Court, G.R. No. 68102, 211 SCRA 517 (1992); and Salvador v. Court of Appeals, 313 Phil. 36 (1995).
[22]

57

Eastern Shipping Lines, Inc. v. Court of Appeals, G.R. No. 97412, 12 July 1994, 234 SCRA 78, 97.
[23]

G.R. Nos. 66102-04 August 30, 1990 PHILIPPINE RABBIT BUS LINES, INC., petitioner, vs. THE HONORABLE INTERMEDIATE APPELLATE COURT AND CASIANO PASCUA, ET AL., respondents. Santiago & Santiago for petitioner. Federico R. Vinluan for private respondents.

Upon reaching barrio Sinayoan, San Manuel, Tarlac, the right rear wheel of the jeepney was detached, so it was running in an unbalanced position. Manalo stepped on the brake, as a result of which, the jeepney which was then running on the eastern lane (its right of way) made a U-turn, invading and eventually stopping on the western lane of the road in such a manner that the jeepney's front faced the south (from where it came) and its rear faced the north (towards where it was going). The jeepney practically occupied and blocked the greater portion of the western lane, which is the right of way of vehicles coming from the north, among which was Bus No. 753 of petitioner Philippine Rabbit Bus Lines, Inc. (Rabbit) driven by Tomas delos Reyes. Almost at the time when the jeepney made a sudden U-turn and encroached on the western lane of the highway as claimed by Rabbit and delos Reyes, or after stopping for a couple of minutes as claimed by Mangune, Carreon and Manalo, the bus bumped from behind the right rear portion of the jeepney. As a result of the collision, three passengers of the jeepney (Catalina Pascua, Erlinda Meriales and Adelaida Estomo) died while the other jeepney passengers sustained physical injuries. What could have been a festive Christmas turned out to be tragic. The causes of the death of the three jeepney passengers were as follows (p. 101, Record on Appeal): The deceased Catalina Pascua suffered the following injuries, to wit: fracture of the left parietal and temporal regions of the skull; fracture of the left mandible; fracture of the right humenous; compound fracture of the left radious and ullma middle third and lower third; fracture of the upper third of the right tibia and fillnea; avulsion of the head, left internal; and multiple abrasions. The cause of her death was shock, secondary to fracture and multiple hemorrhage. The fractures were produced as a result of the hitting of the victim by a strong force. The abrasions could be produced when a person falls from a moving vehicles (sic) and rubs parts of her body against a cement road pavement. . . . Erlinda Mariles (sic) sustained external lesions such as contusion on the left parietal region of the skull; hematoma on the right upper lid; and abrasions (sic) on the left knee. Her internal lesions were: hematoma on the left thorax; multiple lacerations of the left lower lobe of the lungs; contusions on the left lower lobe of the lungs; and simple fractures of the 2nd, 3rd, 4th, 5th, 6th, 7th, and 8th ribs, left. The forcible impact of the jeep caused the above injuries which resulted in her death. . . . The cause of death of Erlinda or Florida Estomo (also called as per autopsy of Dr. Panlasiqui was due to shock due to internal hemorrhage, ruptured spleen and trauma. . . . Caridad Pascua suffered physical injuries as follows (p. 101, Record on Appeal): . . . lacerated wound on the forehead and occipital region, hematoma on the forehead, multiple abrasions on the forearm, right upper arm, back and right leg. . . .

MEDIALDEA, J.: This is a petition for review on certiorari of the decision of the Intermediate Appellate Court (now Court of Appeals) dated July 29, 1983 in AC-G.R. Nos. CV-65885, CV65886 and CV-65887 which reversed the decision of the Court of First Instance (now Regional Trial Court) of Pangasinan dated December 27, 1978; and its resolution dated November 28, 1983 denying the motion for reconsideration. It is an established principle that the factual findings of the Court of Appeals are final and may not be reviewed by this Court on appeal. However, this principle is subject to certain exceptions. One of these is when the findings of the appellate court are contrary to those of the trial court (see Sabinosa v. The Honorable Court of Appeals, et al., G.R. No. L-47981, July 24, 1989) in which case, a re-examination of the facts and evidence may be undertaken. This is Our task now. The antecedent facts are as follows: About 11:00 o'clock in the morning on December 24, 1966, Catalina Pascua, Caridad Pascua, Adelaida Estomo, Erlinda Meriales, Mercedes Lorenzo, Alejandro Morales and Zenaida Parejas boarded the jeepney owned by spouses Isidro Mangune and Guillerma Carreon and driven by Tranquilino Manalo at Dau, Mabalacat, Pampanga bound for Carmen, Rosales, Pangasinan to spend Christmas at their respective homes. Although they usually ride in buses, they had to ride in a jeepney that day because the buses were full. Their contract with Manalo was for them to pay P24.00 for the trip. The private respondents' testimonial evidence on this contractual relationship was not controverted by Mangune, Carreon and Manalo, nor by Filriters Guaranty Assurance Corporation, Inc., the insurer of the jeepney, with contrary evidence. Purportedly riding on the front seat with Manalo was Mercedes Lorenzo. On the left rear passenger seat were Caridad Pascua, Alejandro Morales and Zenaida Parejas. On the right rear passenger seat were Catalina Pascua, Adelaida Estomo, and Erlinda Meriales. After a brief stopover at Moncada, Tarlac for refreshment, the jeepney proceeded towards Carmen, Rosales, Pangasinan.

The police investigators of Tacpal and policemen of San Manuel, Tarlac, Tarlac, upon arrival at the scene of the mishap, prepared a sketch (common exhibit "K" for private respondents "19" for Rabbit) showing the relative positions of the two vehicles as well as the alleged point of impact (p. 100, Record on Appeal): . . . The point of collision was a cement pave-portion of the Highway, about six (6) meters wide, with narrow shoulders with grasses beyond which are canals on both sides. The road was straight and points 200 meters north and south of the point of collision are visible and unobstructed. Purportedly, the point of impact or collision (Exh. "K-4", Pascua on the sketch Exh. "K"Pascua) was on the western lane of the highway about 3 feet (or one yard) from the center line as shown by the bedris (sic), dirt and soil (obviously from the undercarriage of both vehicles) as well as paint, marron (sic) from the Rabbit bus and greenish from the jeepney. The point of impact encircled and marked with the letter "X" in Exh. "K"-4 Pascua, had a diameter of two meters, the center of which was about two meters from the western edge of cement pavement of the roadway. Pictures taken by witness Bisquera in the course of the investigation showed the relative positions of the point of impact and center line (Exh. "P"-Pascua) the back of the Rabbit bus (Exh. "P"-1-Pascua"), the lifeless body of Catalina Pascua (Exh. "P-2 Pascua"), and the damaged front part of the Rabbit bus (Exh. "P-3 Pascua"). No skid marks of the Rabbit bus was found in the vicinity of the collision, before or after the point of impact. On the other hand, there was a skid mark about 45 meters long purportedly of the jeepney from the eastern shoulder of the road south of, and extending up to the point of impact. At the time and in the vicinity of the accident, there were no vehicles following the jeepney, neither were there oncoming vehicles except the bus. The weather condition of that day was fair. After conducting the investigation, the police filed with the Municipal Court of San Manuel, Tarlac, a criminal complaint against the two drivers for Multiple Homicide. At the preliminary investigation, a probable cause was found with respect to the case of Manalo, thus, his case was elevated to the Court of First Instance. However, finding no sufficiency of evidence as regards the case of delos Reyes, the Court dismissed it. Manalo was convicted and sentenced to suffer imprisonment. Not having appealed, he served his sentence. Complaints for recovery of damages were then filed before the Court of First Instance of Pangasinan. In Civil Case No. 1136, spouses Casiano Pascua and Juana Valdez sued as heirs of Catalina Pascua while Caridad Pascua sued in her behalf. In Civil Case No. 1139, spouses Manuel Millares and Fidencia Arcica sued as heirs of Erlinda Meriales. In Civil Case No. 1140, spouses Mariano Estomo and Dionisia Sarmiento also sued as heirs of Adelaida Estomo. In all three cases, spouses Mangune and Carreon, Manalo, Rabbit and delos Reyes were all impleaded as defendants. Plaintiffs anchored their suits against spouses

Mangune and Carreon and Manalo on their contractual liability. As against Rabbit and delos Reyes, plaintiffs based their suits on their culpability for a quasi-delict. Filriters Guaranty Assurance Corporation, Inc. was also impleaded as additional defendant in Civil Case No. 1136 only. For the death of Catalina Pascua, plaintiffs in Civil Case No. 1136 sought to collect the aggregate amount of P70,060.00 in damages, itemized as follows: P500.00 for burial expenses; P12,000.00 for loss of wages for 24 years; P10,000.00 for exemplary damages; P10,000.00 for moral damages; and P3,000.00 for attorney's fees. In the same case, plaintiff Caridad Pascua claimed P550.00 for medical expenses; P240.00 for loss of wages for two months; P2,000.00 for disfigurement of her face; P3,000.00 for physical pain and suffering; P2,500.00 as exemplary damages and P2,000.00 for attorney's fees and expenses of litigation. In Civil Case No. 1139, plaintiffs demanded P500.00 for burial expenses; P6,000.00 for the death of Erlinda, P63,000.00 for loss of income; P10,000.00 for moral damages and P3,000.00 for attorney's fees or total of P80,000.00. In Civil Case No. 1140, plaintiffs claimed P500.00 for burial expenses; P6,000.00 for the death of Adelaide, P56,160.00 for loss of her income or earning capacity; P10,000.00 for moral damages; and P3,000.00 for attorney's fees. Rabbit filed a cross-claim in the amount of P15,000.00 for attorney's fees and expenses of litigation. On the other hand, spouses Mangune and Carreon filed a cross-claim in the amount of P6,168.00 for the repair of the jeepney and P3,000.00 for its non-use during the period of repairs. On December 27, 1978, the trial court rendered its decision finding Manalo negligent, the dispositive portion of which reads (pp. 113-114, Record on Appeal): PREMISES CONSIDERED, this Court is of the opinion and so holds: 1) That defendants Isidro Mangune, Guillerma Carreon and Tranquilino Manalo thru their negligence, breached contract of carriage with their passengers the plaintiffs' and/or their heirs, and this Court renders judgment ordering said defendants, jointly and severally, to pay the plaintiffs a) In Civil Case No. 1136, for the death of Catalina Pascua, to pay her heirs the amounts of P12,000.00 for indemnity for loss of her life; P41,760.00 for loss of earnings; P324.40 for actual expenses and P2,000.00 for moral damages; b) In the same Civil Case No.1136 for the injuries of Caridad Pascua, to pay her the amounts of P240.00 for loss of wages, P328.20 for actual expenses and P500.00 for moral damages;

c) In Civil Case No.1139 for the death of Erlinda Meriales, to pay her heirs (the plaintiffs) the amount of P12,000.00 for indemnity for loss of her life; P622.00 for actual expenses, P60,480.00 for loss of wages or income and P2,000.00 for moral damages; d) In Civil Case No. 1140, for the death of Erlinda (also called Florida or Adelaida Estomo), to pay her heirs (the plaintiff the amount of P12,000.00 for indemnity for the loss of her life; P580.00 for actual expenses; P53,160.00 for loss of wages or income and P2,000.00 for moral damages. 2) The defendant Filriters Guaranty Insurance Co., having contracted to ensure and answer for the obligations of defendants Mangune and Carreon for damages due their passengers, this Court renders judgment against the said defendants Filriters Guaranty Insurance Co., jointly and severally with said defendants (Mangune and Carreon) to pay the plaintiffs the amount herein above adjudicated in their favor in Civil Case No. 1136 only. All the amounts awarded said plaintiff, as set forth in paragraph one (1) hereinabove; 3) On the cross claim of Phil. Rabbit Bus Lines, Inc. ordering the defendant, Isidro Mangune, Guillerma Carreon and Tranquilino Manalo, to pay jointly and severally, cross-claimant Phil. Rabbit Bus Lines, Inc., the amounts of P216.27 as actual damages to its Bus No. 753 and P2,173.60 for loss of its earning. All of the above amount, shall bear legal interest from the filing of the complaints. Costs are adjudged against defendants Mangune, Carreon and Manalo and Filriters Guaranty. SO ORDERED On appeal, the Intermediate Appellate Court reversed the above-quoted decision by finding delos Reyes negligent, the dispositive portion of which reads (pp. 55-57, Rollo): WHEREFORE, PREMISES CONSIDERED, the lower court's decision is hereby REVERSED as to item No. 3 of the decision which reads: 3) On the cross claim of Philippine Rabbit Bus Lines, Inc. ordering the defendants Isidro Mangune, Guillerma Carreon and Tranquilino Manalo, to pay jointly and severally, the amounts of P216.27 as actual damages to its Bus No. 753 and P2,173.60 for loss of its earnings.

and another judgment is hereby rendered in favor of plaintiffsappellants Casiana Pascua, Juan Valdez and Caridad Pascua, ordering the Philippine Rabbit Bus Lines, Inc. and its driver Tomas delos Reyes to pay the former jointly and severally damages in amounts awarded as follows: For the death of Catalina Pascua, the parents and/or heirs are awarded Civil Case No. 1136 a) Indemnity for the loss of life P12,000.00 b) Loss of Salaries or earning capacity 14,000.00 c) Actual damages (burial expenses) 800.00 d) For moral damages 10,000.00 e) Exemplary damages 3,000.00 f) For attorney's fees 3,000.00 Total P38,200.00 (sic) For the physical injuries suffered by Caridad Pascua: Civil Case No. 1136 a) Actual damages (hospitalization expenses) P550.00 b) Moral damages (disfigurement of the face and physical suffering 8,000.00 c) Exemplary damages 2,000.00 Total P10,550.00 For the death of Erlinda Arcega Meriales. the parents and/or heirs:

Civil Case No. 1139 a) Indemnity for loss of life P12,000.00 b) Loss of Salary or Earning Capacity 20,000.00 c) Actual damages (burial expenses) 500.00 d) Moral damages 15,000.00 e) Exemplary damages 15,000.00 f) Attorney's fees 3,000.00 Total P65,500.00 For the death of Florida Sarmiento Estomo: Civil Case No. 1140 a) Indemnity for loss of life P12,000.00 b) Loss of Salary or Earning capacity 20,000.00 c) Actual damages (burial expenses) 500.00 d) Moral damages 3,000.00 e) Exemplary damages 3,000.00 f) Attorney's fees 3,000.00 Total P41,500.00 With costs against the Philippine Rabbit Bus Lines, Inc. SO ORDERED. The motion for reconsideration was denied. Hence, the present petition.

The issue is who is liable for the death and physical injuries suffered by the passengers of the jeepney? The trial court, in declaring that Manalo was negligent, considered the following (p. 106, Record on Appeal): (1) That the unrebutted testimony of his passenger plaintiff Caridad Pascua that a long ways (sic) before reaching the point of collision, the Mangune jeepney was "running fast" that his passengers cautioned driver Manalo to slow down but did not heed the warning: that the right rear wheel was detached causing the jeepney to run to the eastern shoulder of the road then back to the concrete pavement; that driver Manalo applied the brakes after which the jeepney made a U-turn (half-turn) in such a manner that it inverted its direction making it face South instead of north; that the jeepney stopped on the western lane of the road on the right of way of the oncoming Phil. Rabbit Bus where it was bumped by the latter; (2) The likewise unrebutted testimony of Police Investigator Tacpal of the San Manuel (Tarlac) Police who, upon responding to the reported collission, found the real evidence thereat indicate in his sketch (Exh. K, Pascua ), the tracks of the jeepney of defendant Mangune and Carreon running on the Eastern shoulder (outside the concrete paved road) until it returned to the concrete road at a sharp angle, crossing the Eastern lane and the (imaginary) center line and encroaching fully into the western lane where the collision took place as evidenced by the point of impact; (3) The observation of witness Police Corporal Cacalda also of the San Manuel Police that the path of the jeepney they found on the road and indicated in the sketch (Exh. K-Pascua) was shown by skid marks which he described as "scratches on the road caused by the iron of the jeep, after its wheel was removed;" (4) His conviction for the crime of Multiple Homicide and Multiple Serious Physical Injuries with Damage to Property thru Reckless Imprudence by the Court of First Instance of Tarlac (Exh. 24Rabbit) upon the criminal Information by the Provincial Fiscal of Tarlac (Exh. 23-Rabbit), as a result of the collision, and his commitment to prison and service of his sentence (Exh. 25-Rabbit) upon the finality of the decision and his failure to appeal therefrom; and (5) The application of the doctrine of res-ipsa loquitar (sic) attesting to the circumstance that the collision occured (sic) on the right of way of the Phil. Rabbit Bus. The respondent court had a contrary opinion. Applying primarily (1) the doctrine of last clear chance, (2) the presumption that drivers who bump the rear of another

vehicle guilty and the cause of the accident unless contradicted by other evidence, and (3) the substantial factor test. concluded that delos Reyes was negligent. The misappreciation of the facts and evidence and the misapplication of the laws by the respondent court warrant a reversal of its questioned decision and resolution. We reiterate that "[t]he principle about "the last clear" chance, would call for application in a suit between the owners and drivers of the two colliding vehicles. It does not arise where a passenger demands responsibility from the carrier to enforce its contractual obligations. For it would be inequitable to exempt the negligent driver of the jeepney and its owners on the ground that the other driver was likewise guilty of negligence." This was Our ruling in Anuran, et al. v. Buo et al., G.R. Nos. L-21353 and L-21354, May 20, 1966, 17 SCRA 224. 1 Thus, the respondent court erred in applying said doctrine. On the presumption that drivers who bump the rear of another vehicle guilty and the cause of the accident, unless contradicted by other evidence, the respondent court said (p. 49, Rollo): . . . the jeepney had already executed a complete turnabout and at the time of impact was already facing the western side of the road. Thus the jeepney assumed a new frontal position vis a vis, the bus, and the bus assumed a new role of defensive driving. The spirit behind the presumption of guilt on one who bumps the rear end of another vehicle is for the driver following a vehicle to be at all times prepared of a pending accident should the driver in front suddenly come to a full stop, or change its course either through change of mind of the front driver, mechanical trouble, or to avoid an accident. The rear vehicle is given the responsibility of avoiding a collision with the front vehicle for it is the rear vehicle who has full control of the situation as it is in a position to observe the vehicle in front of it. The above discussion would have been correct were it not for the undisputed fact that the U-turn made by the jeepney was abrupt (Exhibit "K," Pascua). The jeepney, which was then traveling on the eastern shoulder, making a straight, skid mark of approximately 35 meters, crossed the eastern lane at a sharp angle, making a skid mark of approximately 15 meters from the eastern shoulder to the point of impact (Exhibit "K" Pascua). Hence, delos Reyes could not have anticipated the sudden Uturn executed by Manalo. The respondent court did not realize that the presumption was rebutted by this piece of evidence. With regard to the substantial factor test, it was the opinion of the respondent court that (p. 52, Rollo): . . . It is the rule under the substantial factor test that if the actor's conduct is a substantial factor in bringing about harm to another, the fact that the actor neither foresaw nor should have foreseen the extent of the harm or the manner in which it occurred does not prevent him from being liable (Restatement, Torts, 2d). Here, We

find defendant bus running at a fast speed when the accident occurred and did not even make the slightest effort to avoid the accident, . . . . The bus driver's conduct is thus a substantial factor in bringing about harm to the passengers of the jeepney, not only because he was driving fast and did not even attempt to avoid the mishap but also because it was the bus which was the physical force which brought about the injury and death to the passengers of the jeepney. The speed of the bus was calculated by respondent court as follows (pp. 54-55, Rollo): According to the record of the case, the bus departed from Laoag, Ilocos Norte, at 4:00 o'clock A.M. and the accident took place at approximately around 12:30 P.M., after travelling roughly for 8 hours and 30 minutes. Deduct from this the actual stopover time of two Hours (computed from the testimony of the driver that he made three 40-minute stop-overs), We will have an actual travelling time of 6 hours and 30 minutes. Under the circumstances, We calculate that the Laoag-Tarlac route (365 kms.) driving at an average of 56 km. per hour would take 6 hours and 30 minutes. Therefore, the average speed of the bus, give and take 10 minutes, from the point of impact on the highway with excellent visibility factor would be 80 to 90 kms. per hour, as this is the place where buses would make up for lost time in traversing busy city streets. Still, We are not convinced. It cannot be said that the bus was travelling at a fast speed when the accident occurred because the speed of 80 to 90 kilometers per hour, assuming such calculation to be correct, is yet within the speed limit allowed in highways. We cannot even fault delos Reyes for not having avoided the collision. As aforestated, the jeepney left a skid mark of about 45 meters, measured from the time its right rear wheel was detached up to the point of collision. Delos Reyes must have noticed the perilous condition of the jeepney from the time its right rear wheel was detached or some 90 meters away, considering that the road was straight and points 200 meters north and south of the point of collision, visible and unobstructed. Delos Reyes admitted that he was running more or less 50 kilometers per hour at the time of the accident. Using this speed, delos Reyes covered the distance of 45 meters in 3.24 seconds. If We adopt the speed of 80 kilometers per hour, delos Reyes would have covered that distance in only 2.025 seconds. Verily, he had little time to react to the situation. To require delos Reyes to avoid the collision is to ask too much from him. Aside from the time element involved, there were no options available to him. As the trial court remarked (pp. 107-108, Record on Appeal): . . . They (plaintiffs) tried to impress this Court that defendant de los Reyes, could have taken either of two options: (1) to swerve to its right (western shoulder) or (2) to swerve to its left (eastern lane), and thus steer clear of the Mangune jeepney. This Court does not so believe, considering the existing exigencies of space and time.

As to the first option, Phil. Rabbit's evidence is convincing and unrebutted that the Western shoulder of the road was narrow and had tall grasses which would indicate that it was not passable. Even plaintiffs own evidence, the pictures (Exhs. P and P-2, Pascua) are mute confirmation of such fact. Indeed, it can be noticed in the picture (Exh. P-2, Pascua) after the Rabbit bus came to a full stop, it was tilted to right front side, its front wheels resting most probably on a canal on a much lower elevation that of the shoulder or paved road. It too shows that all of the wheels of the Rabbit bus were clear of the roadway except the outer left rear wheel. These observation appearing in said picture (Exh P-2, Pascua) clearly shows coupled with the finding the Rabbit bus came to a full stop only five meters from the point of impact (see sketch, Exh. K-Pascua) clearly show that driver de los Reyes veered his Rabbit bus to the right attempt to avoid hitting the Mangune's jeepney. That it was not successful in fully clearing the Mangune jeepney as its (Rabbit's) left front hit said jeepney (see picture Exh. 10-A-Rabbit) must have been due to limitations of space and time. Plaintiffs alternatively claim that defendant delos Reyes of the Rabbit bus could also have swerved to its left (eastern lane) to avoid bumping the Mangune jeepney which was then on the western lane. Such a claim is premised on the hypothesis (sic) that the eastern lane was then empty. This claim would appear to be good copy of it were based alone on the sketch made after the collision. Nonetheless, it loses force it one were to consider the time element involved, for moments before that, the Mangune jeepney was crossing that very eastern lane at a sharp angle. Under such a situation then, for driver delos Reyes to swerve to the eastern lane, he would run the greater risk of running smack in the Mangune jeepney either head on or broadside. After a minute scrutiny of the factual matters and duly proven evidence, We find that the proximate cause of the accident was the negligence of Manalo and spouses Mangune and Carreon. They all failed to exercise the precautions that are needed precisely pro hac vice. In culpa contractual, the moment a passenger dies or is injured, the carrier is presumed to have been at fault or to have acted negligently, and this disputable presumption may only be overcome by evidence that he had observed extra-ordinary diligence as prescribed in Articles 1733, 1755 and 1756 of the New Civil Code 2 or that the death or injury of the passenger was due to a fortuitous event 3 (Lasam v. Smith, Jr., 45 Phil. 657). The negligence of Manalo was proven during the trial by the unrebutted testimonies of Caridad Pascua, Police Investigator Tacpal, Police Corporal Cacalda, his (Manalo's) conviction for the crime of Multiple Homicide and Multiple Serious Injuries with Damage to Property thru Reckless Imprudence, and the application of the

doctrine of res ipsa loquitur supra. The negligence of spouses Mangune and Carreon was likewise proven during the trial (p. 110, Record on Appeal): To escape liability, defendants Mangune and Carreon offered to show thru their witness Natalio Navarro, an alleged mechanic, that he periodically checks and maintains the jeepney of said defendants, the last on Dec. 23, the day before the collision, which included the tightening of the bolts. This notwithstanding the right rear wheel of the vehicle was detached while in transit. As to the cause thereof no evidence was offered. Said defendant did not even attempt to explain, much less establish, it to be one caused by a caso fortuito. . . . In any event, "[i]n an action for damages against the carrier for his failure to safely carry his passenger to his destination, an accident caused either by defects in the automobile or through the negligence of its driver, is not a caso fortuito which would avoid the carriers liability for damages (Son v. Cebu Autobus Company, 94 Phil. 892 citing Lasam, et al. v. Smith, Jr., 45 Phil. 657; Necesito, etc. v. Paras, et al., 104 Phil. 75). The trial court was therefore right in finding that Manalo and spouses Mangune and Carreon were negligent. However, its ruling that spouses Mangune and Carreon are jointly and severally liable with Manalo is erroneous The driver cannot be held jointly and severally liable with the carrier in case of breach of the contract of carriage. The rationale behind this is readily discernible. Firstly, the contract of carriage is between the carrier and the passenger, and in the event of contractual liability, the carrier is exclusively responsible therefore to the passenger, even if such breach be due to the negligence of his driver (see Viluan v. The Court of Appeals, et al., G.R. Nos. L21477-81, April 29, 1966, 16 SCRA 742). In other words, the carrier can neither shift his liability on the contract to his driver nor share it with him, for his driver's negligence is his. 4 Secondly, if We make the driver jointly and severally liable with the carrier, that would make the carrier's liability personal instead of merely vicarious and consequently, entitled to recover only the share which corresponds to the driver, 5 contradictory to the explicit provision of Article 2181 of the New Civil Code. 6 We affirm the amount of damages adjudged by the trial court, except with respect to the indemnity for loss of life. Under Article 1764 in relation to Article 2206 of the New Civil Code, the amount of damages for the death of a passenger is at least three thousand pesos (P3,000.00). The prevailing jurisprudence has increased the amount of P3,000.00 to P30,000.00 (see Heirs of Amparo delos Santos, et al. v. Honorable Court of Appeals, et al., G.R. No. 51165, June 21, 1990 citing De Lima v. Laguna Tayabas Co., G.R. Nos. L-35697-99, April 15, 1988, 160 SCRA 70). ACCORDINGLY, the petition is hereby GRANTED. The decision of the Intermediate Appellate Court dated July 29, 1983 and its resolution dated November 28, 1983 are SET ASIDE. The decision of the Court of First Instance dated December 27, 1978 is REINSTATED MODIFICATION that only Isidro Mangune, Guillerma Carreon and Filriters Guaranty Assurance Corporation, Inc. are liable to the victims or their heirs and that the amount of indemnity for loss of life is increased to thirty thousand pesos (P30,000.00).

SO ORDERED. Narvasa (Chairman), Cruz, Gancayco and Grio-Aquino JJ., concur.

This liability of the common carriers does not cease upon proof that they exercised all the diligence of a good father of a family in the selection and supervision of their employees. 5 Article 1217 of the New Civil Code provides: ART. 1217. Payment made by one of the solidary debtors extinguishes the obligation. If two or more solidary debtors offer to pay, the creditor may choose which offer to accept. 1 In this case, an improperly parked passenger jeepney was bumped from behind by a speeding truck with such violence that three of its passengers died whereas two other passengers suffered injuries. The representatives of the dead and of the injured passengers filed suits to recover damages against the driver and the owners of the truck and also against the driver and the owners of the jeepney. The trial court rendered judgment absolving the driver and the owners of the jeepney but required the driver and the owners of the truck to compensate the victims. The Plaintiffs appealed insisting that the driver and the owners of the jeepney should also be made liable. The appellate court, relying on the doctrine of last clear chance, affirmed the trial court's decision. The plaintiffs then filed a petition for review on certiorari before this Court. We modified the questioned decision by making all the defendants solidarity liable. 2 Articles 1733, 1755 and 1756 of the New Civil Code, respectively provides: ART. 1733. Common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them, according to all the circumstances of each case. Such extraordinary diligence in the vigilance over the goods is further expressed in articles 1734, 1735, and 1746. Nos. 5, 6, and 7, while the extraordinary diligence for the safety of the passengers is further set forth in articles 1755 and 1756. 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. 3 Article 1174 of the New Civil Code provides: ART. 1174. Except in cases expressly specified by the law, or when it is otherwise declared by stipulation, or when the nature of the obligation requires the assumption of risk, no person shall be responsible for those events which could not be foreseen, or which, though foreseen, were inevitable. 4 Article 1759 of the New Civil Code provides: ART. 1759. Common carriers are liable for the death of or injuries to passengers through the negligence or wilful 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. He who made the payment may claim from his codebtors only the share which corresponds to each, with the interest for the payment already made. If the payment is made before the debt is due, no interest for the intervening period may de demanded. When one of the solidary debtors cannot, because of his insolvency, reimburse his share to the debtor paying the obligation, such share shall be borne by all his codebtors, in proportion to the debt of each. 6 Article 2181 of the New Civil Code provides: ART. 2181. Whoever pays for the damage caused by his dependents or employees may recover from the latter what he has paid or delivered in satisfaction of the claim.

Footnotes

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