G.R. No. 150751. September 20, 2004 CENTRAL SHIPPING COMPANY, INC., petitioner, vs.INS RANCE COMPANY O!

NORTH AMERICA, respondent. A "ommo# "$rr%er %& pre&'me( to be $t )$'*t or #e+*%+e#t. It &,$** be *%$b*e )or t,e *o&&, (e&tr'"t%o# or (eter%or$t%o# o) %t& "$r+o, '#*e&& %t "$# pro-e t,$t t,e &o*e $#( pro.%m$te "$'&e o) &'", e-e#t %& o#e o) t,e "$'&e& e#'mer$te( %# Art%"*e 17/4 o) t,e C%-%* Co(e, or t,$t %t e.er"%&e( e.tr$or(%#$r0 (%*%+e#"e to pre-e#t or m%#%m%1e t,e *o&&. In the present case, the weather condition encountered by petitioners vessel was not a "storm" or a natural disaster comprehended in the law. Given the known weather condition prevailing during the voyage, the manner of stowage employed by the carrier was insufficient to secure the cargo from the rolling action of the sea. The carrier took a calculated risk in %mproper*0 &e"'r%#+ the cargo. Having lost that risk, it cannot now disclaim any liability for the loss. efore the !ourt is a "etition for #eview$ under #ule %& of the #ules of !ourt, seeking to reverse and set aside the 'arch (), (**$ +ecision( of the !, in !,-G# !. /o. %01$&. The assailed +ecision disposed as follows2 "3H4#456#4, the decision of the #T! of 'akati !ity, ranch $%0 dated ,ugust %, $11% is hereby '6+I5I4+ in so far as the award of attorneys fees is +474T4+. The decision is ,55I#'4+ in all other respects." ) The !, denied petitioners 'otion for #econsideration in its /ovember 8, (**$ #esolution.% T,e !$"t& The factual antecedents, summari9ed by the trial court and adopted by the appellate court, are as follows2 "6n :uly (&, $11* at "uerto "rincesa, "alawan, the ;petitioner< received on board its vessel, the '=. >!entral ohol, )8? pieces ;of< "hilippine ,pitong #ound 7ogs and undertook to transport said shipment to 'anila for delivery to ,laska 7umber !o., Inc. The cargo was insured for "),***,***.** against total loss under ;respondents< 'arine !argo "olicy /o. '!" -**$8*. 6n :uly (&, $11*, upon completion of loading of the cargo, the vessel left "alawan and commenced the voyage to 'anila. ,t about *$(& hours on :uly (?, $11*, while enroute to 'anila, the vessel listed about $* degrees starboard side, due to the shifting of logs in the hold. ,t about *$(0 hours, after the listing of the vessel had increased to $& degrees, the ship captain ordered his men to abandon ship and at about *$)* hours of the same day the vessel completely sank. +ue to the sinking of the vessel, the cargo was totally lost. ;#espondent< alleged that the total loss of the shipment was caused by the fault and negligence of the ;petitioner< and its captain and as direct conse@uence thereof the consignee suffered damage in the sum of "),***,***.**. The consignee, ,laska 7umber !o. Inc., presented a claim for the value of the shipment to the ;petitioner< but the latter failed and refused to settle the claim, hence ;respondent<, being the insurer, paid said claim and now seeks to be subrogated to all the rights and actions of the consignee as against the ;petitioner<. ;"etitioner<, while admitting the sinking of the vessel, interposed the defense that the vessel was fully manned, fully e@uipped and in all respects seaworthyA that all the logs were properly loaded and securedA that the vessels master eBercised due diligence to prevent or minimi9e the loss before, during and after the occurrence of the storm. It raised as its main defense that the proBimate and only cause of the sinking of its vessel and the loss of its cargo was a natural disaster, a tropical storm which neither ;petitioner< nor the captain of its vessel could have foreseen."& R'*%#+ o) t,e RTC The #T! was unconvinced that the sinking of '=. !entral ohol had been caused by the weather or any other caso fortuito. It noted that monsoons, which were common occurrences during the months of :uly to +ecember, could have been foreseen and provided for by an ocean-going vessel. ,pplying the rule of presumptive fault or negligence against the carrier, the trial court held petitioner liable for the loss of the cargo. Thus, the #T! deducted the salvage value of the logs in the amount of "(**,*** from the principal claim of respondent and found that the latter was entitled to be subrogated to the rights of the insured. The court a @uo disposed as follows2 "3H4#456#4, premises considered, Cudgment is hereby rendered in favor of the ;respondent< and against the ;petitioner< ordering the latter to pay the following2 $D the amount of "(,0**,***.** with legal interest thereof from the filing of this complaint up to and until the same is fully paidA (D "0*,***.** as and for attorneys feesA )D "lus costs of suit."? R'*%#+ o) t,e Co'rt o) Appe$*& The !, affirmed the trial courts finding that the southwestern monsoon encountered by the vessel was not unforeseeable. Given the season of rains and monsoons, the ship captain and his crew should have anticipated the perils of the sea. The appellate court further held that the weather disturbance was not the sole and proBimate cause of the sinking of the vessel, which was also due to the concurrent shifting of the logs in the hold that could have resulted only from improper stowage. Thus, the carrier was held responsible for the conse@uent loss of or damage to the cargo, because its own negligence had contributed thereto. The !, found no merit in petitioners assertion of the vessels seaworthiness. It held that the !ertificates of Inspection and +rydocking were not conclusive proofs thereof. I# or(er to "o#&%(er $ -e&&e* to be &e$2ort,0, %t m'&t be )%t to meet t,e per%*& o) t,e &e$. 5ound untenable was petitioners insistence that the trial court should have given greater weight to the factual findings of the oard of 'arine In@uiry E 'ID in the investigation of the 'arine "rotest filed by the ship captain, 4nri@uito !ahatol. The !, further observed that what petitioner had presented to the court a @uo were mere eBcerpts of the testimony of !aptain !ahatol given during the course of the proceedings before the 'I, not the actual findings and conclusions of the agency. !iting ,rada v. !,,8 it said that findings of the 'I were limited to the administrative liability of the owner=operator, officers and crew of the vessel. Ho2e-er, t,e (eterm%#$t%o# o) 2,et,er t,e "$rr%er ob&er-e( e.tr$or(%#$r0 (%*%+e#"e %# prote"t%#+ t,e "$r+o %t 2$& tr$#&port%#+ 2$& $ )'#"t%o# o) t,e "o'rt&, #ot o) t,e 3MI. The !, concluded that the doctrine of limited liability was not applicable, in view of petitioners negligence -- particularly its improper stowage of the logs. Hence, this "etition.0 I&&'e&2 In its 'emorandum, petitioner submits the following issues for our consideration2 "EiD 3hether or not the weather disturbance which caused the sinking of the vessel '=. !entral ohol was a fortuitous event. "EiiD 3hether or not the investigation report prepared by !laimsmen ,dCustment !orporation is hearsay evidence under Fection )?, #ule $)* of the #ules of !ourt. "EiiiD 3hether or not the finding of the !ourt of ,ppeals that >the logs in the hold shifted and such shifting could only be due to improper stowage has a valid and factual basis. "EivD 3hether or not '=. !entral ohol is seaworthy.

"EvD 3hether or not the !ourt of ,ppeals erred in not giving credence to the factual finding of the oard of 'arine In@uiry E 'ID, an independent government agency tasked to conduct in@uiries on maritime accidents. "EviD 3hether or not the +octrine of 7imited 7iability is applicable to the case at bar."1 T,e %&&'e& bo%* (o2# to t2o4 516 2,et,er t,e "$rr%er %& *%$b*e )or t,e *o&& o) t,e "$r+o7 $#( 526 2,et,er t,e (o"tr%#e o) *%m%te( *%$b%*%t0 %& $pp*%"$b*e. These issues involve a determination of factual @uestions of whether the loss of the cargo was due to the occurrence of a natural disasterA and if so, whether its sole and proBimate cause was such natural disaster or whether petitioner was partly to blame for failing to eBercise due diligence in the prevention of that loss. T,e Co'rt8& R'*%#+ The "etition is devoid of merit. !%r&t I&&'e4 Liability for Lost Cargo !rom t,e #$t're o) t,e%r b'&%#e&& $#( )or re$&o#& o) p'b*%" po*%"0, "ommo# "$rr%er& $re bo'#( to ob&er-e e.tr$or(%#$r0 (%*%+e#"e o-er t,e +oo(& t,e0 tr$#&port, $""or(%#+ to $** t,e "%r"'m&t$#"e& o) e$", "$&e. $* In the event of loss, destruction or deterioration of the insured goods, common carriers are responsibleA that is, unless they can prove that such loss, destruction or deterioration was brought about -- among others -- by "flood, storm, earth@uake, lightning or other natural disaster or calamity." $$ In all other cases not specified under ,rticle $8)% of the !ivil !ode, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed eBtraordinary diligence.$( In the present case, petitioner disclaims responsibility for the loss of the cargo by claiming the occurrence of a "storm" under ,rticle $8)%E$D. It attributes the sinking of its vessel solely to the weather condition between $*2** p.m. on :uly (&, $11* and $2(& a.m. on :uly (?, $11*. ,t the outset, it must be stressed that only @uestions of law $) may be raised in a petition for review on certiorari under #ule %& of the #ules of !ourt. Guestions of fact are not proper subCects in this mode of appeal, $% for ";t<he Fupreme !ourt is not a trier of facts."$& 5actual findings of the !, may be reviewed on appeal $? only under eBceptional circumstances such as, among others, when the inference is manifestly mistaken,$8 the Cudgment is based on a misapprehension of facts,$0 or the !, manifestly overlooked certain relevant and undisputed facts that, if properly considered, would Custify a different conclusion.$1 In the present case, petitioner has not given the !ourt sufficient cogent reasons to disturb the conclusion of the !, that the weather encountered by the vessel was not a "storm" as contemplated by ,rticle $8)%E$D. 4stablished is the fact that between $*2** p.m. on :uly (&, $11* and $2(& a.m. on :uly (?, $11*, '=. !entral ohol encountered a southwestern monsoon in the course of its voyage. The /ote of 'arine "rotest,(* which the captain of the vessel issued under oath, stated that he and his crew encountered a southwestern monsoon about ((** hours on :uly (&, $11*, and another monsoon about (%** hours on :uly (?, $11*. 4ven petitioner admitted in its ,nswer that the sinking of '=. !entral ohol had been caused by the strong southwest monsoon. ($Having made such factual representation, it cannot now be allowed to retreat and claim that the southwestern monsoon was a "storm." The pieces of evidence with respect to the weather conditions encountered by the vessel showed that there was a southwestern monsoon at the time. /ormally eBpected on sea voyages, however, were such monsoons, during which strong winds were not unusual. #osa F. arba, weather specialist of the "hilippine ,tmospheric Geophysical and ,stronomical Fervices ,dministration E",G,F,D, testified that a thunderstorm might occur in the midst of a southwest monsoon. ,ccording to her, one did occur between 02** p.m. on :uly (&, $11*, and ( a.m. on :uly (?, $11*, as recorded by the ",G,F, 3eather ureau.(( /onetheless, to our mind it would not be sufficient to categori9e the weather condition at the time as a "storm" within the absolutory causes enumerated in the law. Fignificantly, no typhoon was observed within the "hilippine area of responsibility during that period.() ,ccording to ",G,F,, a storm has a wind force of %0 to && knots, (% e@uivalent to && to ?) miles per hour or $* to $$ in the eaufort Fcale. The second mate of the vessel stated that the wind was blowing around force 8 to 0 on the eaufort Fcale. (& !onse@uently, the strong winds accompanying the southwestern monsoon could not be classified as a "storm." Fuch winds are the ordinary vicissitudes of a sea voyage.(? 4ven if the weather encountered by the ship is to be deemed a natural disaster under ,rticle $8)1 of the !ivil !ode, petitioner failed to show that such natural disaster or calamity was the proBimate and only cause of the loss. Human agency must be entirely eBcluded from the cause of inCury or loss. In other words, the damaging effects blamed on the event or phenomenon must not have been caused, contributed to, or worsened by the presence of human participation. 27T,e (e)e#&e o) )ort'%to'& e-e#t or #$t'r$* (%&$&ter "$##ot be &'""e&&)'**0 m$(e 2,e# t,e %#9'r0 "o'*( ,$-e bee# $-o%(e( b0 ,'m$# pre"$'t%o#. 2: He#"e, %) $ "ommo# "$rr%er )$%*& to e.er"%&e ('e (%*%+e#"e ;; or t,$t or(%#$r0 "$re t,$t t,e "%r"'m&t$#"e& o) t,e p$rt%"'*$r "$&e (em$#( ;; to pre-e#t or m%#%m%1e t,e *o&& be)ore, ('r%#+ $#( $)ter t,e o""'rre#"e o) t,e #$t'r$* (%&$&ter, t,e "$rr%er &,$** be (eeme( to ,$-e bee# #e+*%+e#t. The loss or inCury is not, in a legal sense, due to a natural disaster under ,rticle $8)%E$D.(1 3e also find no reason to disturb the !,s finding that the loss of the vessel was caused not only by the southwestern monsoon, but also by the shifting of the logs in the hold. Fuch shifting could been due only to improper stowage. The assailed +ecision stated2 "/otably, in 'aster !ahatols account, the vessel encountered the first southwestern monsoon at about $;*<2** in the evening. The monsoon was coupled with heavy rains and rough seas yet the vessel withstood the onslaught. The second monsoon attack occurred at about $(2** midnight. +uring this occasion, the master >felt that the logs in the hold shifted, prompting him to order second mate "ercival +ayanan to look at the bodega. !omplying with the captains order, (nd mate "ercival +ayanan found that there was seawater in the bodega. (nd mate +ayanans account was2

>$%.T H Iung inyo pong natatandaanang mga pangyayari, maarimo bang isalaysay ang naganap na paglubog sa barkong '=. !entral oholJ >F H 6po, noong ika-(? ng :ulio $11* humigit kumulang alas $2(* ngumaga EdstD habang kami ay nagnanabegar patungong 'aynila sa tapat ng !adlao Island at !auayan Island sakopng 4l /ido, "alawan, inutusan akoni !aptain 4nri@uito !ahatol na tingnan ko ang bodegaA nang ako ay nasa bodega, nakita ko ang loob nang bodega na maraming tubig at naririnig ko ang malakas na agos ng tubig-dagat na pumapasok sa loob ng bodega ng barkoA agad bumalik ako kay !aptain 4nri@uito !ahatol at sinabi ko ang malakas napagpasok ng tubig-dagat sa loob nang bodega ng barko na ito ay naka-tagilid humigit kumulang sa *(* degrees, nag-order si !aptain !ahatol na standby engine at tinawag ang lahat ng mga officials at mga crew nang maipon kaming lahat ang barko ay naka-tagilid at ito ay tuloy-tuloy ang pagtatagilid na ang ilan sa mga officials ay naka-hawak nasa barandilla ng barko at di-nagtagal sumigaw nang , ,/+6;/< FHI" si !aptain !ahatol at kami ay nagkanya-kanyana ng talunan at languyan sa dagat na malakas ang alon at nangako ay lumingon sa barko ito ay di ko na nakita. ",dditionally, ;petitioners< own witnesses, boatswain 4duardo .iKas !astro and oiler 5rederick "erena, are one in saying that the vessel encountered two weather disturbances, one at around $* oclock to $$ oclock in the evening and the other at around $( oclock midnight. oth disturbances were coupled with waves and heavy rains, yet, the vessel endured the first and not the second. 3hyJ The reason is plain. The vessel felt the strain during the second onslaught because the logs in the bodega shifted and there were already seawater that seeped inside.")* The above conclusion is supported by the fact that the vessel proceeded through the first southwestern monsoon without any mishap, and that it began to list only during the second monsoon immediately after the logs had shifted and seawater had entered the hold. In the hold, the sloshing of tons of water back and forth had created pressures that eventually caused the ship to sink. Had the logs not shifted, the ship could have survived and reached at least the port of 4l /ido. In fact, there was another motor launch that had been buffeted by the same weather condition within the same area, yet it was able to arrive safely at 4l /ido.)$ In its ,nswer, petitioner categorically admitted the allegation of respondent in paragraph & of the latters !omplaint ";t<hat at about *$(& hours on (? :uly $11*, while enroute to 'anila, the '=. >!entral ohol listed about $* degrees starboardside, due to the shifting of logs in the hold." 5urther, petitioner averred that ";t<he vessel, while navigating through this second southwestern monsoon, was under eBtreme stress. ,t about *$(& hours, (? :uly $11*, a thud was heard in the cargo hold and the logs therein were felt to have shifted. The vessel thereafter immediately listed by ten E$*D degrees starboardside.")( Let, petitioner now claims that the !,s conclusion was grounded on mere speculations and conCectures. It alleges that it was impossible for the logs to have shifted, because they had fitted eBactly in the hold from the port to the starboard side. ,fter carefully studying the records, we are inclined to believe that the logs did indeed shift, and that they had been improperly loaded. ,ccording to the boatswains testimony, the logs were piled properly, and the entire shipment was lashed to the vessel by cable wire.))The ship captain testified that out of the )8? pieces of round logs, around )?* had been loaded in the lower hold of the vessel and $? on deck. The logs stored in the lower hold were not secured by cable wire, because they fitted eBactly from floor to ceiling. However, while they were placed side by side, there were unavoidable clearances between them owing to their round shape. Those loaded on deck were lashed together several times across by cable wire, which had a diameter of ?* millimeters, and were secured from starboard to port.)% It is obvious, as a matter of common sense, that the manner of stowage in the lower hold was not sufficient to secure the logs in the event the ship should roll in heavy weather. /otably, they were of different lengths ranging from ).8 to $(.8 meters. )& eing clearly prone to shifting, the round logs should not have been stowed with nothing to hold them securely in place. 4ach pile of logs should have been lashed together by cable wire, and the wire fastened to the side of the hold. !onsidering the strong force of the wind and the roll of the waves, the loose arrangement of the logs did not rule out the possibility of their shifting. y force of gravity, those on top of the pile would naturally roll towards the bottom of the ship. The adCusters #eport, which was heavily relied upon by petitioner to strengthen its claim that the logs had not shifted, stated that "the logs were still properly lashed by steel chains on deck." "arenthetically, this statement referred only to those loaded on deck and did not mention anything about the condition of those placed in the lower hold. Thus, the finding of the surveyor that the logs were still intact clearly pertained only to those lashed on deck. The evidence indicated that strong southwest monsoons were common occurrences during the month of :uly. Thus, the officers and crew of '=. !entral ohol should have reasonably anticipated heavy rains, strong winds and rough seas. They should then have taken eBtra precaution in stowing the logs in the hold, in consonance with their duty of observing eBtraordinary diligence in safeguarding the goods. ut the carrier took a calculated risk in improperly securing the cargo. Having lost that risk, it cannot now escape responsibility for the loss. Se"o#( I&&'e4 Doctrine of Limited Liability The doctrine of limited liability under ,rticle &08 of the !ode of !ommerce )? is not applicable to the present case. T,%& r'*e (oe& #ot $pp*0 to &%t'$t%o#& %# 2,%", t,e *o&& or t,e %#9'r0 %& ('e to t,e "o#"'rre#t #e+*%+e#"e o) t,e &,%po2#er $#( t,e "$pt$%#. )8 It has already been established that the sinking of '=. !entral ohol had been caused by the fault or negligence of the ship captain and the crew, as shown by the improper stowage of the cargo of logs. "!loser supervision on the part of the shipowner could have prevented this fatal miscalculation.")0 ,s such, the shipowner was e@ually negligent. It cannot escape liability by virtue of the limited liability rule. <HERE!ORE, the "etition is =ENIE=, and the assailed +ecision and #esolution A!!IRME=. !osts against petitioner. SO OR=ERE=.

G.R. No. 14171> ?'*0 4, 2002. SAN MIG EL CORPORATION, petitioner, vs.HEIRS O! SA3INIANO ING ITO, $#( ? LI S O ANO, respondents.

Fan 'iguel !orporation entered into a Time !harter "arty ,greement with :ulius 6uano, doing business under the name and style :. 6uano 'arine Fervices. Mnder the terms of the agreement, F'! chartered the '=. +oKa #oberta owned by :ulius 6uano for a period of two years, from :une $, $101 to 'ay )$, $11$, for the purpose of transporting F'!s beverage products from its 'andaue !ity plant to various points in .isayas and 'indanao. "ertinent portions of the Time !harter "arty ,greement state2 $. 63/4# ;i.e., 6uano< warrants ownership, title and interest over the vessel +6N, #6 4#T, and represents that on the date the vessel is placed at !H,#T4#4#s Fan 'iguel !orporation< disposal the following shall be the accurate or approBimate description of the particulars and capacities of the vessel and her e@uipment2 BBB BBB BBB. (. That for and in consideration of the premises hereinafter stipulated, the 63/4# hereby lets, demises and the !H,#T4#4# hereby hires the use and service of the aforementioned vesselA BBB BBB BBB. %. 63/4# warrants that the vessel is seaworthy and in proper, useful and operational condition and in the event that !H,#T4#4# finds any defect in the vessel with regards to its working order, condition and function, !H,#T4#4# shall immediately notify 63/4# of this factA BBB BBB BBB. 1. There shall be no employer-employee relations between the 63/4# and=or its vessels crew on one hand and the !H,#T4#4# on the other. The crew of the vessel shall continue to be under the employ, control and supervision of the 63/4#. !onse@uently, damage or loss that may be attributable to the crew, including loss of the vessel used shall continue to be the responsibility of, and shall be borne, by the 63/4#A the 63/4# further covenants to hold the !H,#T4#4# free from all claims and liabilities arising out of the acts of the crew and the condition of the vesselA $*. The 63/4# shall undertake to pay all compensation of all the vessels crew, including the benefits, premia and protection in accordance with the provisions of the /ew 7abor !ode and other applicable laws and decrees and the rules and regulations promulgated by competent authorities as well as all of the FFF premium. Thus, it is understood that the crew of he vessel shall and always remain the employees of the 63/4#A $$. The 63/4# shall be responsible to and shall indemnify the !H,#T4#4# for damages and losses arising from the incompetence and=or negligence of, and=or the failure to observe the re@uired eBtra-ordinary diligence by the crew. It shall be automatically liable to the !H,#T4#4# for shortlanded shipment and wrong levels, the value of which shall be withheld from the 63/4#s collectibles with the !H,#T4#4#. However, in the case of wrong levels, !H,#T4#4# shall immediately reimburse 63/4# after the formers laboratory shall be able to determine that the bottles were never opened after it left the "lantA BBB BBB BBB.$ 6n /ovember $$, $11*, during the term of the charter, F'! issued sailing orders to the 'aster of the '/ +oKa #oberta, !aptain FabinianoInguito, instructing him as follows2 $. Fail for 6pol, !agayan *&**H /ov. $(, $11*, or as soon as loading of 5GF is completed, with load2 F44 I77 65 7,+I/G (. Lou are eBpected to arrive6pol *1**H /ov. $), $11*. ). Lou are eBpected to depart 6pol *1**H /ov. $%, $11*, or as soon as loading of empties is completed, back to 'andaue. %. Lou are eBpected to arrive'andaue $)**H /ov. $&, $11*. &. In case you need cash advance, send your re@uest thru radio addressed to us for needed authority. ?. 'aintain communications and keep us posted of your developments. 8. 6bserve weather condition, eBercise utmost precautionary measures. 6/ .6L,G4 ,/+ G66+ 7M!I.( In accordance with the sailing orders, !aptain Inguito obtained the necessary sailing clearance from the "hilippine !oast Guard. ) 7oading of the cargo on the '=. +oKa #oberta was completed at 02)* p.m. of /ovember $$, $11*. However, the vessel did not leave 'andaue !ity until ?2** a.m. of the following day, /ovember $(, $11*. 'eanwhile, at %2** a.m. of /ovember $(, $11*, typhoon #uping was spotted &8* kilometers east-southeast of orongan, Famar, moving west-northwest at (( kilometers per hour in the general direction of 4astern .isayas. The typhoon had maBimum sustained winds of (%* kilometers per hour near the center with gustiness of up to (0* kilometers per hour.% ,t 82** a.m., /ovember $(, $11*, one hour after the '=. +oKa #oberta departed from 'andaue !ity and while it was abeam !awit Island off !ebu, F'! #adio 6perator #ogelio ". 'oreno contacted !aptain Inguito through the radio and advised him to take shelter. !aptain Inguito replied that they will proceed since the typhoon was far away from them, and that the winds were in their favor.& ,t (2** p.m., while the vessel was two kilometers abeam olCoon "oint, 'oreno again communicated with !aptain Inguito and advised him to take shelter. The captain responded that they can manage. ? Hearing this, 'oreno immediately tried to get in touch with #ico 6uano to tell him that !aptain Inguito did not heed their advice. However, #ico 6uano was out of his office, so 'oreno left the message with the secretary.8 'oreno again contacted !aptain Inguito at %2** p.m. of /ovember $(, $11*. y then the vessel was already 1.& miles southeast of alicasag Island heading towards Fulauan "oint. The sky was cloudy with southwesterly winds and the sea was choppy. 0 'oreno reiterated the advice and pointed out that it will be difficult to take shelter after passing alicasag Island because they were approaching an open sea. Ftill, the captain refused to heed his advice.1 ,t 02** p.m., the vessel was )0 miles southeast of alicasag Island. 3est-southwest winds were prevailing. ,t $*2** p.m., the '=. +oKa #oberta was (& miles approaching Fulauan "oint.$* 'oments later, power went out in 'orenos office and resumed at $$2%* p.m. He immediately made a series of calls to the '=. +oKa #oberta but he failed to get in touch with anyone in the vessel.$$ ,t $2$& a.m., /ovember $), $11*, !aptain Inguito called 'oreno over the radio and re@uested him to contact #ico 6uano, son of :ulius 6uano, because they needed a helicopter to rescue them. The vessel was about (* miles west of Fulauan "oint.$( Mpon being told by F'!s radio operator, #ico 6uano turned on his radio and read the distress signal from !aptain Ingiuto. 3hen he talked to the captain, the latter re@uested for a helicopter to rescue them. $) #ico 6uano talked to the !hief 4ngineer who informed him that they can no longer stop the water from coming into the vessel because the crew members were feeling di99y from the petroleum fumes.$% ,t (2)* a.m. of /ovember $), $11*, the '=. +oKa #oberta sank. 6ut of the (& officers and crew on board the vessel, only five survived, namely, 5ernando ucod, #afael 'acairan, !henitoFugabo, #amil"abayo and Gilbert Gon9aga.$& 6n /ovember (%, $11*, shipowner :ulius 6uano, in lieu of the captain who perished in the sea tragedy, filed a 'arine "rotest.$?

The heirs of the deceased captain and crew, as well as the survivors, $8 of the ill-fated '=. +oKa #oberta filed a complaint for tort against Fan 'iguel !orporation and :ulius 6uano, docketed as !ivil !ase /o. (%8(-7 of the #egional Trial !ourt of 7apu-7apu !ity, ranch (8.$0 :ulius 6uano filed an answer with cross-claim, $1 alleging that the proBimate cause of the loss of the vessel and its officers and crew was the fault and negligence of F'!, which had complete control and disposal of the vessel as charterer and which issued the sailing order for its departure despite being forewarned of the impending typhoon. Thus, he prayed that F'! indemnify him for the cost of the vessel and the unreali9ed rentals and earnings thereof. In its answer to the complaint$1 and answer to the cross-claim,(* F'! countered that it was 6uano who had the control, supervision and responsibilities over the navigation of the vessel. This notwithstanding, and despite his knowledge of the incoming typhoon, 6uano never bothered to initiate contact with his vessel. !ontrary to his allegation, F'! argued that the proBimate cause of the sinking was 6uanos breach of his obligation to provide F'! with a seaworthy vessel duly manned by competent crew members. F'! interposed counterclaims against 6uano for the value of the cargo lost in the sea tragedy. ,fter trial, the court a quo rendered Cudgment finding that the proBimate cause of the loss of the '=. +oKa #oberta was attributable to F'!. Thus, it disposed of the case as follows2 3H4#456#4, "#4'IF4F !6/FI+4#4+, Cudgment is hereby rendered2 $. +eclaring defendant Fan 'iguel !orporation and its acts or omissions as having produced the proBimate cause which resulted in the death of the crew members of '/ +oKa #oberta at past midnight of /ovember $(, $11* during the height of super typhoon "#uping" and as such said defendant is hereby ordered and sentenced to pay to the heirs of the deceased crew members the following sum;s< plus $(O per annum from the filing of the !omplaint2 ,. 5or loss of life. . . . . . . "&*,***.** each of the deceased crew members, namely2 FabinianoInguito 5elipe "usa, ,bundioGalon, Isidro !eletaria, Henry !abigas, "edro ,bayon, Fimeon ,sentista, /orman 7oon, 7eonardo "resbitero, #enato Fuscano, ,ntonio +u, George asilgo, Isagani+ayondonA . 5or loss of earnings based on life eBpectancy less 50% representing estimated living eBpenses eBcept for the apprentices as they were presumed at the time of their deaths to be dependent on their parents2 /ame Total loss of earnings $. Fabiniano, Inguito(sic) (. "usa, 5elipe ). Galon, ,bundio %. !eletaria, Isidro &. !abigas, Henry ?. ,bayon, "edro 8. ,sentista, Fimeon 0. 7oon, /orman 1. "resbitero, 7eonardo $*. Fuscano, #enato $$. +u, ,ntonio $(. asilgo, George $). +ayondon, Isagani Total2 "$,8%*,*** (&*O B "),%0*,***D " $,(**,*** E&*O B "(,%**,***D " 0(&,*** E&*O B " $,?&*,***D " ?**,*** E&*O B "$,(**,***D " 1)*,*** E&*O B " $,0?*,***D " ??*,*** E&*O B " $,)(*,***D " &**,*** E&*O B "$,***,***D " &&*,*** E&*O B " $,$**,***D " %?*,*** E&*O B " 1(*,***D " %?*,*** E&*O B " 1(*,***D " %0*,*** E&*O B " 1?*,***D " $(*,*** E,pprenticeD " $(*,*** E+ittoD -------------------------------------------"0,?%&,*** vvvvvvvvvvvvvv !. ")**,***.** for moral damages and "(**,***.** for eBemplary damages for the heirs of each of the deceased crew members of the '=. +oKa #oberta named in the ,mended !omplaint including survivor Gilbert Gon9agaA +. To pay plaintiffs counsel attorneys fees in the sum of "&**,***.**A (. Mnder the cross-claim of defendant, 6uano, Fan 'iguel !orporation is further ordered and sentenced to pay defendant crossclaimant 4ngr. :ulius !. 6uano the total sum of ")(,01),)**.** plus $(O per annum from the filing of his crossclaim, broken down as follows2 $D "1.0 million for the value of the total loss of the vessel '=. +oKa #obertaA (D "$,0)),)**.** for unreali9ed rental earnings E"),???,?**.** less &*O for operating eBpenses and taBesD from /ovember $1, $11* to 'ay )$, $11$ as stipulated in the !harter "arty ,greementA )D "($,***,***.** for unreali9ed earnings of '=. +oKa #oberta based on the eBpected additional lifetime of the vessel estimated at seven E8D years E%(,***,***.** less &*O for operating eBpenses and taBesDA %D "(&*,***.** for and as attorneys fees and " $*,***.** as eBpenses of litigationA ). The counter-claims against plaintiffs and the cross-claim of defendant Fan 'iguel !orporation against defendant 4ngr. :ulius !. 6uano are hereby dismissed for lack of merit. 3ith costs against defendant Fan 'iguel !orporation. F6 6#+4#4+.(( oth F'! and 6uano appealed to the !ourt of ,ppeals, docketed as !,-G.#. !. /o. %0(1?. F'! argued that as mere charterer, it did not have control of the vessel and that the proBimate cause of the loss of the vessel and its cargo was the negligence of the ship captain. 5or his part, 6uano complained of the reduced damages awarded to him by the trial court. 6n +ecember $*, $110, the !ourt of ,ppeals rendered the decision subCect of the instant petitions for review, to wit2 3H4#456#4, Cudgment is hereby rendered, modifying the decision appealed from, declaring defendant-appellants Fan 'iguel !orporation and :ulian !. 6uano Cointly and severally liable to plaintiffs-appellees, eBcept to the heirs of !apt. FabinianoInguito, for the following reduced amounts2 ,. "&*,***.** death indemnity Eloss of lifeD for each of the deceased officers and crew of '=. +oKa #oberta. b. 7oss of earning for each of the deceased officers and crew, in the amount awarded by the trial court.

c. "$**,***.** moral damages and "&*,***.** eBemplary damages for each deceased officer and crew members, including Gilbert Gon9aga. d. ")**,***,** attorneys fees to plaintiffs-appellees. e. The counter-claims of defendants-appellants against plaintiffs-appellees are dismissed. f. The cross-claims of defendants-appellants F'! and :ulius 6uano against each other are likewise dismissed. g. !osts against defendants-appellants. F6 6#+4#4+.() F'! and 6uano filed separate motions for reconsideration, which were denied by the !ourt of ,ppeals for lack of merit.(% "etitioner F'!, in G.#. /o. $%$8$?, raises the following arguments2 I. F'! !6M7+ /6T 4 , T6#T54,F6# !6/FI+4#I/G TH4 M/+IF"MT4+ 5,!T TH,T2 ,. F'! H,F /6 74G,7 6# !6/T#,!TM,7 +MTL T6 I/56#' 6M,/6 , 6MT TH4 FITM,TI6/ 65 TH4 .4FF47. . 4.4/ 3ITH6MT FM!H +MTL, F'! /4.4#TH474FF 4P4#!IF4+ TH4 /4!4FF,#L +4G#44 65 "#M+4/!4 L I/56#'I/G 6M,/6 , 6MT I/GMIT6F #45MF,7 T6 T,I4 FH47T4#. !. TH4 !6M#T 65 ,""4,7F ITF475 56M/+ TH,T TH4 "#6PI',T4 !,MF4 65 TH4 76FF 65 TH4 .4FF47 3,F I/GMIT6F 5,I7M#4 T6 H44+ F'!F ,+.I!4 T6 T,I4 FH47T4#, ,/+ I/GMIT6 3,F ,/ 4'"76L44 65 6M,/6 ,/+ /6T 65 F'!. II. M/+4# TH4 !H,#T4#, 6M,/6 3,F #4F"6/FI 74 ,/+ M/+4#T66I T6 I/+4'/I5L F'! 56# ,77 +,',G4F ,#IFI/G 5#6' TH4 /4G7IG4/!4 65 HIF !#43, ",#TI!M7,#7L I/GMIT6. (& 'eanwhile, petitioner 6uano, in G.#. /o. $%(*(&, anchors his petition on the following assignment of errors2 First Error The !ourt of ,ppeals committed serious error of law and=or grave abuse of discretion in not finding that the !harter "arty between F'! and 6uano is legally and in fact a demise charter, an issue raised by petitioner from the very start in the Trial !ourt Second Error The !ourt of ,ppeals committed serious error of law and=or grave abuse of discretion in not finding that !apt. Inguito, master of the ill-fated '=. +oKa #oberta, was legally and in fact an agent=servant of F'! demise charterer as correctly characteri9ed by the Trial !ourt Third Error The !ourt of ,ppeals committed serious error of law and=or grave abuse of discretion in completely disregarding or suppressing the findings of fact of the Trial !ourt on the issues of possession and control of '=. +oKa #oberta by F'! and its actions relating thereto as demise charterer=owner pro hac vice which led to the tragedy and in not declaring that said actions of F'! constituted the proBimate cause of the sinking and loss of the vessel and the death of most of its crew members Fourth Error The !ourt of ,ppeals committed serious error of law and=or grave abuse of discretion in finding 6uano at fault in the sinking of '=. +oKa #oberta against the evidence on record which is largely undisputed Fifth Error The !ourt of ,ppeals committed serious error of law and=or grave abuse of discretion insofar as it failed to find and declare respondent F'!s tort or negligence as the proBimate cause which resulted in the sinking and total loss of '=. +oKa #oberta as well as the death of its officers and crew members and correspondingly in not awarding to petitioner 6uano the sums of money as awarded by the Trial !ourt in the dispositive part of its decision dated $* +ecember $110. Sixth Error In any event, the !ourt of ,ppeals committed serious error of law and=or grave abuse of discretion in not declaring and holding petitioner 6uano not liable for the claims of private respondents heirs of FabinianoInguito, et al. and F'! under the wellestablished principle in 'aritime 7aw that the owners liability sinks with the vessel.(? The two petitions were consolidated. In deciding the cases at bar, the !ourt of ,ppeals correctly resolved the issues with an initial discussion of the definition and kinds of charter parties. "reliminarily, a charter party is a contract by virtue of which the owner or the agent of a vessel binds himself to transport merchandise or persons for a fiBed price. It has also been defined as a contract by virtue of which the owner or the agent of the vessel leases for a certain price the whole or a portion of the vessel for the transportation of goods or persons from one port to another.(8 , charter party may either be a E$D bareboat or demise charter or E(D contract of affreightment. Mnder a demise or bareboat charter, the charterer mans the vessel with his own people and becomes, in effect, the owner of the ship for the voyage or service stipulated, subCect to liability for damages caused by negligence.(0 In a contract of affreightment, on the other hand, the owner of the vessel leases part or all of its space to haul goods for others. It is a contract for special service to be rendered by the owner of the vessel. Mnder such contract the ship owner retains the possession, command and navigation of the ship, the charterer or freighter merely having use of the space in the vessel in return for his payment of the charter hire.(1 6therwise put, a contract of affreightment is one by which the owner of a ship or other vessel lets the whole or 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. , contract of affreightment may be either time charter, wherein the leased vessel is leased to the charterer for a fiBed period of time, or voyage charter, wherein the ship is leased for a single voyage. In both cases, the charterer provides for the hire of the vessel only, either for a determinate period of time or for a single or consecutive voyage, the ship owner to supply the ships store, pay for the wages of the master of the crew, and defray the eBpenses for the maintenance of the ship. If the charter is a contract of affreightment, which leaves the general owner in possession of the ship as owner for the voyage, the rights and the responsibilities of ownership rest on the owner. The charterer is free from liability to third persons in respect of the ship.)* 3e concur with the findings of the !ourt of ,ppeals that the charter party in these cases was a contract of affreightment, contrary to petitioner 6uanos protestation that it was a demise charter, as shown by the following stipulations in the Time !harter "arty ,greement2 1. There shall be no employer-employee relations between the 63/4# and=or its vessels crew on one hand and the !H,#T4#4# on the other. The crew of the vessel shall continue to be under the employ, control and supervision of the 63/4#. !onse@uently, damage or loss that may be attributable to the crew, including loss of the vessel used shall continue to be the

responsibility of, and shall be borne, by the 63/4#A the 63/4# further covenants to hold the !H,#T4#4# free from all claims and liabilities arising out of the acts of the crew and the condition of the vesselA $*. The 63/4# shall undertake to pay all compensation of all the vessels crew, including the benefits, premia and protection in accordance with the provisions of the /ew 7abor !ode and other applicable laws and decrees and the rules and regulations promulgated by competent authorities as well as all of the FFF premium. Thus, it is understood that the crew of he vessel shall and always remain the employees of the 63/4#A $$. The 63/4# shall be responsible to and shall indemnify the !H,#T4#4# for damages and losses arising from the incompetence and=or, negligence of, and=or the failure to observe the re@uired eBtraordinary diligence by the crew. It shall be automatically liable to the !H,#T4#4# for shortlanded shipment and wrong levels, the value of which shall be withheld from the 63/4#s collectibles with the !H,#T4#4#. However, in the case of wrong levels, !H,#T4#4# shall immediately reimburse 63/4# after the formers laboratory shall be able to determine that the bottles were never opened after it left the "lantA It appearing that 6uano was the employer of the captain and crew of the '=. +oKa #oberta during the term of the charter, he therefore had command and control over the vessel. His son, #ico 6uano, even testified that during the period that the vessel was under charter to F'!, the !aptain thereof had control of the navigation of all voyages. )$ Mnder the foregoing definitions, as well as the clear terms of the !harter "arty ,greement between the parties, the charterer, F'!, should be free from liability for any loss or damage sustained during the voyage, )( unless it be shown that the same was due to its fault or negligence. The evidence does not show that F'! or its employees were amiss in their duties. The facts indubitably establish that F'!s #adio 6perator, #ogelio ". 'oreno, who was tasked to monitor every shipment of its cargo, contacted !aptain Inguito as early as 82** a.m., one hour after the '=. +oKa #oberta departed from 'andaue, and advised him to take shelter from typhoon Ruping. This advice was reiterated at (2** p.m. ,t that point, 'oreno thought of calling 6uanos son, #ico, but failed to find him. ,t %2** p.m., 'oreno again advised !aptain Inguito to take shelter and stressed the danger of venturing into the open sea. The !aptain insisted that he can handle the situation. That evening, 'oreno tried in vain to contact the captain. 7ater at $2$& a.m., !aptain Inguito himself radioed a distress signal and asked that the same be relayed to #ico 6uano. In contrast to the care eBercised by 'oreno, #ico 6uano tried to communicate with the captain only after receiving the F.6.F. message. /either 6uano nor his son was available during the entire time that the vessel set out and encountered foul weather. !onsidering that the charter was a contract of affreightment, the shipowner had the clear duty to ensure the safe carriage and arrival of goods transported on board its vessels. 'ore specifically, 6uano eBpressly warranted in the Time !harter "arty that his vessel was seaworthy. 5or a vessel to be seaworthy, it must be ade@uately e@uipped for the voyage and manned with a sufficient number of competent officers and crew.)) Feaworthiness is defined as the sufficiency of the vessel in materials, construction, e@uipment, officers, men, and outfit, for the trade or service in which it is employed. )% It includes the fitness of a ship for a particular voyage with reference to its physical and mechanical condition, the eBtent of its fuel and provisions supply, the @uality of its officers and crew, and its adaptability for the time of voyage proposed.)& In the assailed decision, the !ourt of ,ppeals found that the proBimate cause of the sinking of the vessel was the negligence of !aptain FabinianoInguito, thus2 It appears that the proBimate cause of the sinking of the vessel was the gross failure of the captain of the vessel to observe due care and to heed F'!s advices to take shelter. Gilbert Gonsaga, !hief 4ngineer of +oKa #oberta, testified that the ship sank at (2)* in the early morning of /ovember $)th. 6n the other hand, from the time the vessel left the port of 'andaue at siB oclock in the morning, 4Bh "$& F'!", 4Bh "$? F'!", 4Bh "$8 F'!" and 4Bh "$0 F'!" would show that !aptain FabinianoInguito was able to contact the radio operator of F'!. He was fully apprised of typhoon "#uping" and its strength. +ue diligence dictates that at any time before the vessel was in distress, he should have taken shelter in order to safeguard the vessel and its crew. Gonsaga testified that at 82** a.m. of /ovember $(, $11*, he was able to talk to the captain and in@uired from him what the message was of the radio operator of F'!. The captain answered that they would take shelter in Tagbilaran if the wind would grow stronger. ut Gonsaga was surprised when they did not take shelter and, instead, proceeded with the voyage. Gonsaga further testified that at 82** in the evening of /ovember $(, $11*, he went up to the office of the captain when the wind was getting stronger and asked him, "3hat is this captain, the wind is already very strong and the waves are very big, what is the message of F'!J" The captain plotted the position of the typhoon and said that the typhoon is still very far per the data supplied by F'!. It is very clear that !aptain FabinianoInguito had sufficient time within which to secure his men and the vessel. ut he waited until the vessel was already in distress at $2$& in the early morning of /ovember $)m, $11* to seek help in saving his men and the vessel. In any event, !apt. Inguito had full control and responsibility, whether to follow a sailing order or to take shelter when already at sea. In fact, there was an incident when a sailing order was issued by F'! to Inguito but he decided not to proceed with the voyage because of a tropical storm.)? The foregoing factual conclusions are binding on us. Fettled is the rule that findings of fact of the !ourt of ,ppeals are conclusive and are not reviewable by this !ourt, )8 unless the case falls under any of the recogni9ed eBceptions, such as2 E$D when the conclusion is a finding grounded entirely on speculation, surmises and conCecturesA E(D when the inference made is manifestly mistaken, absurd or impossibleA E)D where there is a grave abuse of discretionA E%D when the Cudgment is based on a misapprehension of factsA E&D when the findings of fact are conflictingA E?D when the !ourt of ,ppeals, in making its findings, went beyond the issues of the case and the same is contrary to the admissions of both appellant and appelleeA E8D when the findings are contrary to those of the trial courtA E0D when the findings of fact are conclusions without citation of specific evidence on which they are basedA E1D when the facts set forth in the petition as well as in the petitioners main and reply briefs are not disputed by the respondentsA and E$*D when the findings of fact of the !ourt of ,ppeals are premised on the supposed absence of evidence and contradicted by the evidence on record.)0 /one of these eBceptions obtain in the case at bar. 3e likewise agree with the !ourt of ,ppeals that 6uano is vicariously liable for the negligent acts of his employee, !aptain Inguito. Mnder ,rticles ($8? and ($0* of the !ivil !ode, owners and managers are responsible for damages caused by the negligence of a servant or an employee, the master or employer is presumed to be negligent either in the selection or in the supervision of that employee. This presumption may be overcome only by satisfactorily showing that the employer eBercised the care and the diligence of a good father of a family in the selection and the supervision of its employee. )1 6uano miserably failed to overcome the presumption of his negligence. He failed to present proof that he eBercised the due diligence of a onus paterfa!i"ias in the selection and supervision of the captain of the '=. +oKa #oberta. Hence, he is vicariously liable for the loss of lives and property occasioned by the lack of care and negligence of his employee.

However, we cannot sustain the appellate courts finding that F'! was likewise liable for the losses. The contention that it was the issuance of the sailing order by F'! which was the proBimate cause of the sinking is untenable. The fact that there was an approaching typhoon is of no moment. It appears that on one previous occasion, F'! issued a sailing order to the captain of the '=. +oKa #oberta, but the vessel cancelled its voyage due to typhoon.%* 7ikewise, it appears from the records that F'! issued the sailing order on /ovember $$, $11*, before typhoon "#uping" was first spotted at %2** a.m. of /ovember $(, $11*.%$ !onse@uently, 6uano should answer for the loss of lives and damages suffered by the heirs of the officers and crew members who perished on board the '=. +oKa #oberta, eBcept !aptain FabinianoInguito. The award of damages granted by the !ourt of ,ppeals is affirmed only against 6uano, who should also indemnify F'! for the cost of the lost cargo, in the total amount of "$*,(80,&%(.%*.%( <HERE!ORE, in view of the foregoing, the decision of the !ourt of ,ppeals in !,-G.#. !. /o. %0(1? is MO=I!IE= as follows2 :ulius !. 6uano is ordered to pay each of the deceased officers and crew of the '=. +oKa #oberta, eBcept !aptain FabinanoInguito, death indemnity in the amount of "&*,***.** and damages for loss of earnings in the amounts awarded by the trial court. 5urther, :ulius !. 6uano is ordered to pay each deceased officer and crew members, eBcept !aptain FabinianoInguito, including Gilbert Gon9aga, "$**,***.** as moral damages, "&*,***.** as eBemplary damages and ")**,***.** as attorneys fees. 5inally, :ulius !. 6uano is ordered to pay Fan 'iguel !orporation the sums of "$*,(80,&%(.%* as actual damages. SO OR=ERE=.

G.R. No. 10>@@@ ?'#e 20, 1@@>. PHILIPPINE HOME ASS RANCE CO RT O! APPEALS $#( EASTERN SHIPPING LINES, INC., respondents.

CORPORATION,

petitioner,

vs.

T,e !$"t& 4astern Fhipping 7ines, Inc. E4F7ID loaded on board FF 4astern 4Bplorer in Iobe, :apan, the following shipment for carriage to 'anila and !ebu, freight pre-paid and in good order and condition, vi#2 EaD two E(D boBes internal combustion engine parts, consigned to 3illiam 7ines, Inc. under ill of 7ading /o. *%((0)A EbD ten El*D metric ton. E))% bagsD ammonium chloride, consigned to 6rcaQs !ompany under ill of 7ading /o. I!4-I(A EcD two hundred E(**D bags Glue )**, consigned to "an 6riental 'atch !ompany under ill of 7ading /o. I!4-0A and EdD garments, consigned to +ing .elayo under ills of 7ading /os. I',-8) and I',-8%. 3hile the vessel was off 6kinawa, :apan, a small flame was detected on the acetylene cylinder located in the accommodation area near the engine room on the main deck level. ,s the crew was trying to eBtinguish the fire, the acetylene cylinder suddenly eBploded sending a flash of flame throughout the accommodation area, thus causing death and severe inCuries to the crew and instantly setting fire to the whole superstructure of the vessel. The incident forced the master and the crew to abandon the ship. Thereafter, FF 4astern 4Bplorer was found to be a constructive total loss and its voyage was declared abandoned. Feveral hours later, a tugboat under the control of 5ukuda Falvage !o. arrived near the vessel and commenced to tow the vessel for the port of /aha, :apan. 5ire fighting operations were again conducted at the said port. ,fter the fire was eBtinguished, the cargoes which were saved were loaded to another vessel for delivery to their original ports of destination. 4F7I charged the consignees several amounts corresponding to additional freight and salvage charges, as follows2 EaD for the goods covered by ill of 7ading /o. *%((0), 4F7I charged the consignee the sum of "$,1(8.?&, representing salvage charges assessed against the goodsA EbD for the goods covered by ill of 7ading /o. I!4-$(, 4F7I charged the consignee the sum of "(,10*.?% for additional freight and "0(?.$% for salvage charges against the goodsA EcD for the goods covered by ill of 7ading /o. I!4-0, 4F7I charged the consignee the sum of "),(1(.(? for additional freight and "%,$)*.?0 for salvage charges against the goodsA and EdD for the goods under ills of 7ading /os. I',-8) and I',-8%, 4F7I charged the consignee the sum of "0,))8.*? for salvage charges against the goods. The charges were all paid by "hilippine Home ,ssurance !orporation E"H,!D under protest for and in behalf of the consignees. "H,!, as subrogee of the consignees, thereafter filed a complaint before the #egional Trial !ourt of 'anila, ranch )1, against 4F7I to recover the sum paid under protest on the ground that the same were actually damages directly brought about by the fault, negligence, illegal act and=or breach of contract of 4F7I. In its answer, 4F7I contended that it eBercised the diligence re@uired by law in the handling, custody and carriage of the shipmentA that the fire was caused by an unforeseen eventA that the additional freight charges are due and demandable pursuant to the ill of 7adingA 1 and that salvage charges are properly collectible under ,ct /o. (?$?, known as the Falvage 7aw. R'*%#+ o) t,e RTC The trial court dismissed "H,!Qs complaint and ruled in favor of 4F7I ratiocinating thus2 T,e A'e&t%o# to be re&o*-e( %& 2,et,er or #ot t,e )%re o# t,e -e&&e* 2,%", 2$& "$'&e( b0 t,e e.p*o&%o# o) $# $"et0*e#e "0*%#(er *o$(e( o# t,e &$me 2$& t,e )$'*t or #e+*%+e#"e o) t,e (e)e#($#t. 4vidence has been presented that the FF "4astern 4Bplorer" was a seaworthy vessel E+eposition of :umpei 'aeda, 6ctober (), $10*, p. )D and before the ship loaded the ,cetylene !ylinder /o. /!3 08&, the same has been tested, checked and eBamined and was certified to have complied with the re@uired safety measures and standards E+eposition of FenCei Hayashi, 6ctober (), $10*, pp. (-)D. 3hen the fire was detected by the crew, fire fighting operations was immediately conducted but due to the eBplosion of the acetylene cylinder, the crew were unable to contain the fire and had to abandon the ship to save their lives and were saved from drowning by passing vessels in the vicinity. The burning of the vessel rendering it a constructive total loss and incapable of pursuing its voyage to the "hilippines was, therefore, not the fault or negligence of defendant but a natural disaster or calamity which nobody would like to happen. The salvage operations conducted by 5ukuda Falvage !ompany E4Bhibits "%-," and "?-,"D was perfectly a legal operation and charges made on the goods recovered were legitimate charges. A"t No. 2>1>, ot,er2%&e B#o2# $& t,e S$*-$+e L$2, %& t,'& $pp*%"$b*e to t,e "$&e $t b$r. Fection $ of ,ct /o. (?$? states2 Se" 1. <,e# %# "$&e o) &,%p2re"B, t,e -e&&e* or %t& "$r+o &,$** be be0o#( t,e "o#tro* o) t,e "re2, or &,$** ,$-e bee# $b$#(o#e( b0 t,em, $#( p%"Be( 'p $#( "o#-e0e( to $ &$)e p*$"e b0 ot,er per&o#&, t,e *$tter &,$** be e#t%t*e( to $ re2$r( )or t,e &$*-$+e. T,o&e 2,o, #ot be%#+ %#"*'(e( %# t,e $bo-e p$r$+r$p,, $&&%&t %# &$-%#+ $ -e&&e* or %t& "$r+o )rom &,%p2re"B, &,$** be e#t%t*e( to *%Be re2$r(. In relation to the above provision, the Fupreme !ourt has ruled in 4rlanger R Galinger v. Fwedish 4ast ,siatic !o., 7td., )% "hil. $80, that three elements are necessary to a valid salvage claim, namely E$6$ m$r%#e per%* 5b6 &er-%"e -o*'#t$r%*0 re#(ere( 2,e# #ot reA'%re( $& $# e.%&t%#+ ('t0 or )rom $ &pe"%$* "o#tr$"t $#( 5"6 &'""e&& %# 2,o*e or %# p$rt, or t,$t t,e &er-%"e re#(ere( "o#tr%b'te( to &'", &'""e&&. The above elements are all present in the instant case. Falvage charges may thus be assessed on the cargoes saved from the vessel. ,s provided for in Fection $) of the Falvage 7aw, "The eBpenses of salvage, as well as the reward for salvage or assistance, shall be a charge on the things salvaged or their value." In 'anila #ailroad !o. v. 'acondray !o., )8 "hil. &0), it was also held that "when a ship and its cargo are saved together, the salvage allowance should be charged against the ship and cargo in the proportion of their respective values, the same as in a case of general average . . ." Thus, the "compensation to be paid by the owner of the cargo is in proportion to the value of the vessel and the value of the cargo saved." E,tlantic Gulf and "acific !o. v. Mchida Iisen Iaisha, %( "hil. )($D.E'emorandum for +efendant, #ecords, pp. ($(-($)D.

3ith respect to the additional freight charged by defendant from the consignees of the goods, the same are also validly demandable. ,s provided by the !ivil !ode2 Art. 1174. 4Bcept in cases eBpressly specified by law, or when it is otherwise declared by stipulation, or when the nature of the obligation re@uire the assumption of risk, no person shall be responsible for those events which could not be foreseen, or which though foreseen, were inevitable. Art 12>>. The debtor in obligations to do shall also be released when the prestation becomes legally or physically impossible without the fault of the obligor." The burning of "4,FT4#/ 4P"76#4#" while off 6kinawa rendered it physically impossible for defendant to comply with its obligation of delivering the goods to their port of destination pursuant to the contract of carriage. Mnder ,rticle $(?? of the !ivil !ode, the physical impossibility of the prestation eBtinguished defendantQs obligation.. It is but legal and e@uitable for the defendant therefore, to demand additional freight from the consignees for forwarding the goods from /aha, :apan to 'anila and !ebu !ity on board another vessel, the "4,FT4#/ ',#F." This finds support under ,rticle 0%% of the !ode of !ommerce which provides as follows2 Art. :44. , captain who may have taken on board the goods saved from the wreck shall continue his course to the port of destinationA and on arrival should deposit the same, with Cudicial intervention at the disposal of their legitimate owners. . . . The owners of the cargo shall defray all the eBpenses of this arrival as well as the payment of the freight which, after taking into consideration the circumstances of the case, may be fiBed by agreement or by a Cudicial decision. 5urthermore, the terms and conditions of the ill of 7ading authori9e the imposition of additional freight charges in case of forced interruption or abandonment of the voyage. ,t the dorsal portion of the ills of 7ading issued to the consignees is this stipulation2 $(. ,ll storage, transshipment, forwarding or other disposition of cargo at or from a port of distress or other place where there has been a forced interruption or abandonment of the voyage shall be at the eBpense of the owner, shipper, consignee of the goods or the holder of this bill of lading who shall be Cointly and severally liable for all freight charges and eBpenses of every kind whatsoever, whether payable in advance or not that may be incurred by the cargo in addition to the ordinary freight, whether the service be performed by the named carrying vessel or by carrierQs other vessels or by strangers. ,ll such eBpenses and charges shall be due and payable day by day immediately when they are incurred. The bill of lading is a contract and the parties are bound by its terms EGovQt of the "hilippine Islands vs. Lnchausti and !o., %* "hil. ($1D. The provision @uoted is binding upon the consignee. +efendant therefore, can validly re@uire payment of additional freight from the consignee. "laintiff can not thus recover the additional freight paid by the consignee to defendant. E'emorandum for +efendant, #ecord, pp. ($&-($?D. 2 R'*%#+ o) t,e CA 6n appeal to the !ourt of ,ppeals, respondent court affirmed the trial courtQs findings and conclusions, / hence, the present petition for review before this !ourt on the following errors2 I. TH4 #4F"6/+4/T !6M#T 4##6/46MF7L ,+6"T4+ 3ITH ,""#6.,7 TH4 T#I,7 !6M#TQF 5I/+I/GF TH,T TH4 M#/I/G 65 TH4 FF "4,FT4#/ 4P"76#4#", #4/+4#I/G 4T , !6/FT#M!TI.4 T6T,7 76FF, IF , /,TM#,7 +IF,FT4# 6# !,7,'ITL 3HI!H /6 6+L 36M7+ 7II4 T6 H,""4/, +4F"IT4 4PIFTI/G :M#IF"#M+4/!4 T6 TH4 !6/T#,#L. II. TH4 #4F"6/+4/T !6M#T ,# IT#,#I7L #M74+ TH,T TH4 M#/I/G 65 TH4 FF "4,FT4#/ 4P"76#4#" 3,F /6T TH4 5,M7T ,/+ /4G7IG4/!4 65 #4F"6/+4/T 4,FT4#/ FHI""I/G 7I/4F. III. TH4 #4F"6/+4/T !6M#T !6''ITT4+ G#,.4 , MF4 65 +IF!#4TI6/ I/ #M7I/G TH,T +454/+,/T H,+ 4P4#!IF4+ TH4 4PT#,6#+I/,#L +I7IG4/!4 I/ TH4 .IGI7,/!4 6.4# TH4 G66+F ,F #4GMI#4+ L 7,3. I.. TH4 #4F"6/+4/T !6M#T ,# IT#,#I7L #M74+ TH,T TH4 ',#I/4 /6T4 65 "#6T4FT ,/+ FT,T4'4/T 65 5,!TF IFFM4+ L TH4 .4FF47QF ',FT4# ,#4 /6T H4,#F,L +4F"IT4 TH4 5,!T TH,T TH4 .4FF47QF ',FT4#, !,"T. 7I!,L7I!,L 3,F /6T "#4F4/T4+ !6M#T, 3ITH6MT 4P"7,/,TI6/ 3H,TF64.4# 56# HIF /6/-"#4F4/T,TI6/, THMF, "4TITI6/4# 3,F +4"#I.4+ 65 ITF #IGHT T6 !#6FF- 4P,'I/4 TH4 ,MTH6# TH4#465. .. TH4 #4F"6/+4/T !6M#T 4##6/46MF7L ,+6"T4+ 3ITH ,""#6.,7 TH4 T#I,7 !6M#TQF !6/!7MFI6/ TH,T TH4 4P"4/F4F 6# ,.4#,G4F I/!M##4+ I/ F,.I/G TH4 !,#G6 !6/FTITMT4 G4/4#,7 ,.4#,G4. .I. TH4 #4F"6/+4/T !6M#T 4##6/46MF7L ,+6"T4+ TH4 T#I,7 !6M#TQF #M7I/G TH,T "4TITI6/4# 3,F 7I, 74 T6 #4F"6/+4/T !,##I4# 56# ,++ITI6/,7 5#4IGHT ,/+ F,7.,G4 !H,#G4F. 4 T,e Co'rt8& R'*%#+ It is @uite evident that the foregoing assignment of errors challenges the findings of fact and the appreciation of evidence made by the trial court and later affirmed by respondent court. 3hile it is a well-settled rule that only @uestions of law may be raised in a petition for review under #ule %& of the #ules of !ourt, it is e@ually well-settled that the same admits of the following eBceptions, namely2 EaD when the conclusion is a finding grounded entirely on speculation, surmises or conCecturesA EbD when the inference made is manifestly mistaken, absurd or impossibleA EcD where there is a grave abuse of discretionA EdD when the Cudgment is based on a misapprehension of factsA EeD when the findings of fact are conflictingA EfD when the !ourt of ,ppeals, in making its findings, went beyond the issues of the case and the same is contrary to the admissions of both appellant and appelleeA EgD when the findings of the !ourt of ,ppeals are contrary to those of the trial courtA EhD when the findings of fact are conclusions without citation of specific evidence on which they are basedA EiD when the facts set forth in the petition as well as in the petitionersQ main and reply briefs are not disputed by the respondentsA and ECD when the finding of fact of the !ourt of ,ppeals is premised on the supposed absence of evidence and is contradicted by the evidence on record. 5 Thus, if there is a showing, as in the instant case, that the findings complained of are totally devoid of support in the records, or that they are so glaringly erroneous as to constitute grave abuse of discretion, the same may be properly reviewed and evaluated by this !ourt. It is worthy to note at the outset that the goods subCect of the present controversy were neither lost nor damaged in transit by the fire that ra9ed the carrier. In fact, the said goods were all delivered to the consignees, even if the transshipment took longer than necessary. <,$t %& $t %&&'e t,ere)ore %& #ot 2,et,er or #ot t,e "$rr%er %& *%$b*e )or t,e *o&&, ($m$+e, or (eter%or$t%o# o) t,e

+oo(& tr$#&porte( b0 t,em b't 2,o, $mo#+ t,e "$rr%er, "o#&%+#ee or %#&'rer o) t,e +oo(&, %& *%$b*e )or t,e $((%t%o#$* ",$r+e& or e.pe#&e& %#"'rre( b0 t,e o2#er o) t,e &,%p %# t,e &$*-$+e oper$t%o#& $#( %# t,e tr$#&&,%pme#t o) t,e +oo(& -%$ $ (%))ere#t "$rr%er. In absolving respondent carrier of any liability, respondent !ourt of ,ppeals sustained the trial courtQs finding that the fire that gutted the ship was a natural disaster or calamity. "etitioner takes eBception to this conclusion and we agree. I# o'r 9'r%&pr'(e#"e, )%re m$0 #ot be "o#&%(ere( $ #$t'r$* (%&$&ter or "$*$m%t0 &%#"e %t $*mo&t $*2$0& $r%&e& )rom &ome $"t o) m$# or b0 ,'m$# me$#&. It "$##ot be $# $"t o) Go( '#*e&& "$'&e( b0 *%+,t#%#+ or $ #$t'r$* (%&$&ter or "$&'$*t0 #ot $ttr%b't$b*e to ,'m$# $+e#"0. > In the case at bar, it is not disputed that a small flame was detected on the acetylene cylinder and that by reason thereof, the same eBploded despite efforts to eBtinguish the fire. /either is there any doubt that the acetylene cylinder, obviously fully loaded, was stored in the accommodation area near the engine room and not in a storage area considerably far, and in a safe distance, from the engine room. 'oreover, there was no showing, and none was alleged by the parties, that the fire was caused by a natural disaster or calamity not attributable to human agency. 6n the contrary, there is strong evidence indicating that the acetylene cylinder caught fire because of the fault and negligence of respondent 4F7I, its captain and its crew. !%r&t, the acetylene cylinder which was fully loaded should not have been stored in the accommodation area near the engine room where the heat generated therefrom could cause the acetylene cylinder to eBplode by reason of spontaneous combustion. #espondent 4F7I should have easily foreseen that the acetylene cylinder, containing highly inflammable material was in real danger of eBploding because it was stored in close proBimity to the engine room. Se"o#(, respondent 4F7I should have known that by storing the acetylene cylinder in the accommodation area supposed to be reserved for passengers, it unnecessarily eBposed its passengers to grave danger and inCury. !urious passengers, ignorant of the danger the tank might have on humans and property, could have handled the same or could have lighted and smoked cigarettes while repairing in the accommodation area. T,%r(, the fact that the acetylene cylinder was checked, tested and eBamined and subse@uently certified as having complied with the safety measures and standards by @ualified eBperts 7 before it was loaded in the vessel only shows to a great eBtent that negligence was present in the handling of the acetylene cylinder after it was loaded and while it was on board the ship. Indeed, had the respondent and its agents not been negligent in storing the acetylene cylinder near the engine room, then the same would not have leaked and eBploded during the voyage. .erily, there is no merit in the finding of the trial court to which respondent court erroneously agreed that the fire was not the fault or negligence of respondent but a natural disaster or calamity. The records are simply wanting in this regard. ,nent petitionerQs obCection to the admissibility of 4Bhibits "%QQ and QQ&", the Ftatement of 5acts and the 'arine /ote of "rotest issued by !aptain Tiburcio ,. 7icaylicay, we find the same impressed with merit because said documents are hearsay evidence. !apt. 7icaylicay, 'aster of F.F. 4astern 4Bplorer who issued the said documents, was not presented in court to testify to the truth of the facts he stated thereinA instead, respondent 4F7I presented :unpei 'aeda, its ranch 'anager in Tokyo and Lokohama, :apan, who evidently had no personal knowledge of the facts stated in the documents at issue. It is clear from Fection )?, #ule $)* of the #ules of !ourt that any evidence, whether oral or documentary, is hearsay if its probative value is not based on the personal knowledge of the witness but on the knowledge of some other person not on the witness stand. !onse@uently, hearsay evidence, whether obCected to or not, has no probative value unless the proponent can show that the evidence falls within the eBceptions to the hearsay evidence rule. : It is eBcluded because the party against whom it is presented is deprived of his right and opportunity to cross-eBamine the persons to whom the statements or writings are attributed. 6n the issue of whether or not respondent court committed an error in concluding that the eBpenses incurred in saving the cargo are considered general average, we rule in the affirmative. A& $ r'*e, +e#er$* or +ro&& $-er$+e& %#"*'(e $** ($m$+e& $#( e.pe#&e& 2,%", $re (e*%ber$te*0 "$'&e( %# or(er to &$-e t,e -e&&e*, %t& "$r+o, or bot, $t t,e &$me t%me, )rom $ re$* $#( B#o2# r%&B @ 3hile the instant case may technically fall within the purview of the said provision, the formalities prescribed under ,rticles 0$) 10 and 0$% 11 of the !ode of !ommerce in order to incur the eBpenses and cause the damage corresponding to gross average were not complied with. !onse@uently, respondent 4F7IQs claim for contribution from the consignees of the cargo at the time of the occurrence of the average turns to naught. "rescinding from the foregoing premises, it indubitably follows that the cargo consignees cannot be made liable to respondent carrier for additional freight and salvage charges. !onse@uently, respondent carrier must refund to herein petitioner the amount it paid under protest for additional freight and salvage charges in behalf of the consignees. <HERE!ORE, the Cudgment appealed from is hereby #4.4#F4+ and F4T ,FI+4. #espondent 4astern Fhipping 7ines, Inc. is 6#+4#4+ to return to petitioner "hilippine Home ,ssurance !orporation the amount it paid under protest in behalf of the consignees herein. SO OR=ERE=.

G.R. No. 11:0/0 ?$#'$r0 15, 2004. PROCI=ENT INS RANCE CORP., petitioner, vs. HONORA3LE CO RT O! APPEALS $#( AD CAR SHIPPING CORP., respondents. This is a petition for review under #ule %& of the #ules of !ourt assailing the +ecision of the !ourt of ,ppeals dated /ovember $&, $11%, which affirmed the appealed 6rders dated ,ugust $(, $11$ and 5ebruary %, $11( issued by the #egional Trial !ourt of 'anila, ranch &$, in !ivil !ase /o. 1$-&?$?8. T,e !$"t& The pertinent facts as culled from the stipulation of facts submitted by the parties are as follows2 6n or about :une &, $101, the vessel '. "4duardo II" took and received on board at Fangi, Toledo !ity a shipment of )(,*** plastic woven bags of various fertili9er in good order and condition for transportation to !agayan de 6ro !ity. The subCect shipment was consigned to ,tlas 5ertili9er !orporation, and covered by ill of 7ading /o. *$ and 'arine Insurance "olicy /o. !'I-($$=01! . Mpon its arrival at General Fantos !ity on :une 8, $101, the vessel '. "4duardo II" was instructed by the consigneeQs representative to proceed to +avao !ity and deliver the shipment to its +avao ranch in Tabigao. 6n :une $*, $101, the '. "4duardo II" arrived in +avao !ity where the subCect shipment was unloaded. In the process of unloading the shipment, three bags of fertili9er fell overboard and (0$ bags were considered to be unrecovered spillages. ecause of the mishandling of the cargo, it was determined that the consignee incurred actual damages in the amount of "?0,$1?.$?. ,s the claims were not paid, petitioner "rovident Insurance !orporation indemnified the consignee ,tlas 5ertili9er !orporation for its damages. Thereafter, petitioner, as subrogee of the consignee, filed on :une ), $11$ a complaint against respondent carrier seeking reimbursement for the value of the losses=damages to the cargo. #espondent carrier moved to dismiss the complaint on the ground that the claim or demand by petitioner has been waived, abandoned or otherwise eBtinguished for failure of the consignee to comply with the re@uired claim for damages set forth in the first sentence of Ftipulation /o. 8 of the bill of lading, the full teBt of which reads H 8. ,ll claims for damages to the goods must be made to the carrier at the time of delivery to the consignee or his agent if the package or containers show eBterior sign of damage, otherwise to be made in writing to the carrier within twenty-four hours from the time of delivery. /otice of loss due to delay must be given in writing to the carrier within )* days from the time the goods were ready for delivery, or in case of non-delivery or misdelivery of shipment the written notice must be given within )* days after the arrival at the port of discharge of the vessels on which the goods were received in case of the failure of the vessel on which the goods were shipped to arrived at the port of discharge, misdelivery must be presented in writing to the carrier within two months after the arrival of the vessel of the port of discharge or in case of the failure of the vessel in which the goods were shipped to arrive at the port of discharge written claims shall be made within )* days of the time the vessel should have arrived. The giving of notice and the filing of claims as above provided shall be conditions precedent to the securing of the right of actions against the carrier for losses due to delay, non-delivery, or misdelivery. In the case of damage to goods, the filing of the suit based upon claims arising from damage, delay, non-delivery or mis-delivery shall be instituted within one year from the date of the accrual of the right of action. 5ailure to institute Cudicial proceedings as herein provided shall constitute a waiver of the claim or right of action, and no agent nor employee of the carrier shall have authority to waive any of the provisions or re@uirements of this bill of lading. ,ny action by the ship owner or its agents or attorneys in considering or dealing with claims where the provisions or re@uirements of this bill of lading have not been complied with shall not be considered a waiver of such re@uirements and they shall not be considered as waived eBcept by an eBpress waiver.$ EItalics FuppliedD R'*%#+ o) t,e RTC The trial court, in an 6rder dated ,ugust $(, $11$, found the motion to dismiss well taken and accordingly, dismissed the complaint.( "etitioner filed a motion for reconsideration which the trial court, in an 6rder dated 5ebruary %, $11(, denied.) R'*%#+ o) t,e CA ,ggrieved by the lower courtQs decision, petitioner appealed to the !ourt of ,ppeals. 6n /ovember $&, $11%, the !ourt of ,ppeals rendered the assailed decision which affirmed the lower courtQs 6rders dated ,ugust $(, $11$ and 5ebruary %, $11(. % Hence, this petition raising the lone error that H TH4 H6/6#, 74 !6M#T 65 ,""4,7F H,F +4!I+4+ TH4 GM4FTI6/ I/ IFFM4 /6T I/ ,!!6#+,/!4 3ITH TH4 "M#"6F4 56# 3HI!H TH4 7,3 3,F 4FT, 7IFH4+ ,/+ !6/T#,#L T6 TH4 4PIFTI/G :M#IF"#M+4/!4.& In support of its petition, petitioner contends that it is unreasonable for the consignee ,tlas 5ertili9er !orporation to be re@uired to abide by the provisions of Ftipulation /o. 8 of the bill of lading. ,ccording to petitioner, since the place of delivery was remote and inaccessible, the consignee cannot be eBpected to have been able to immediately inform its main office and make the necessary claim for damages for the losses and unrecovered spillages in the subCect cargo. "etitioner further argues that the contents of the bill of lading are printed in small letters that no one would bother to read them, as they are difficult to read. 5inally, petitioner avers that from :une $) to $0, $108, the vesselQs !hief 6fficer supervised the unloading of the shipment and thereafter signed a discharging report attesting to the fact of loss and unrecovered spillages on the cargo. Thus, petitioner argues that respondent carrierQs knowledge of the loss and spillages was substantial compliance with the notice of claim re@uired under Ftipulation /o. 8 of the bill of lading. T,e Co'rt8& R'*%#+ The petition is bereft of merit. It is a fact admitted by both parties that the losses and damages were caused by the mishandling of the cargo by respondent carrier. There is also no dispute that the consignee failed to strictly comply with Ftipulation /o. 8 of the ill of 7ading in not making claims for damages to the goods within the twenty-four hour period from the time of delivery, and that there was no eBterior sign of damage of the goods. Co#&eA'e#t*0, t,e o#*0 %&&'e *e)t to be re&o*-e( %& 2,et,er t,e )$%*'re to m$Be t,e prompt #ot%"e o) "*$%m $& reA'%re( %& )$t$* to t,e r%+,t o) pet%t%o#er to "*$%m %#(em#%)%"$t%o# )or ($m$+e&.

C$*%(%t0 o) t,e St%p'*$t%o# T,e b%** o) *$(%#+ (e)%#e& t,e r%+,t& $#( *%$b%*%t%e& o) t,e p$rt%e& %# re)ere#"e to t,e "o#tr$"t o) "$rr%$+e. St%p'*$t%o#& t,ere%# $re -$*%( $#( b%#(%#+ %# t,e $b&e#"e o) $#0 &,o2%#+ t,$t t,e &$me $re "o#tr$r0 to *$2, mor$*&, "'&tom&, p'b*%" or(er $#( p'b*%" po*%"0. <,ere t,e term& o) t,e "o#tr$"t $re "*e$r $#( *e$-e #o (o'bt 'po# t,e %#te#t%o# o) t,e "o#tr$"t%#+ p$rt%e&, t,e *%ter$* me$#%#+ o) t,e &t%p'*$t%o#& &,$** "o#tro*. In light of the foregoing, there can be no @uestion about the validity and enforceability of Ftipulation /o. 8 in the bill of lading. The twenty-four hour re@uirement under the said stipulation is, by agreement of the contracting parties, a sine qua non for the accrual of the right of action to recover damages against the carrier. The wisdom of this kind of proviso has been succinctly eBplained in $onsun%i v. &ani"a 'ort Service, where it was held2 C$rr%er& $#( (epo&%t$r%e& &omet%me& reA'%re pre&e#t$t%o# o) "*$%m& 2%t,%# $ &,ort t%me $)ter (e*%-er0 $& $ "o#(%t%o# pre"e(e#t to t,e%r *%$b%*%t0 )or *o&&e&. Fuch re@uirement is not an empty formalism. It has a definite purpose, i.e., to afford the carrier or depositary a reasonable opportunity and facilities to check the validity of the claims while the facts are still fresh in the minds of the persons who took part in the transaction and the document are still available.? !onsidering that a prompt demand was necessary to foreclose the possibility of fraud or mistake in ascertaining the validity of claims, there was a need for the consignee or its agent to observe the conditions provided for in Ftipulation /o. 8. Hence, petitionerQs insistence that respondent carrier had knowledge of the damage because one of respondent carrierQs officers supervised the unloading operations and signed a discharging report, cannot be construed as sufficient compliance with the aforementioned proviso. The +ischarge #eport is not the notice referred to in Ftipulation /o. 8, hence, its accomplishment cannot be considered substantial compliance of the re@uirement embodied therein. 'oreover, a reading of the first paragraph of Ftipulation /o. 8 will readily show that upon the consignee or its agent rests the obligation to make the necessary claim within the prescribed period and not merely rely on the supposed knowledge of the damages by the carrier. "etitioner also makes much of the fact that it had nothing to do with the preparation of the bill of lading. 3orse, according to petitioner, the bill of lading, particularly Ftipulation /o. 8, was printed in very small letters that no one would be minded to closely eBamine the contents thereof and understand its legal implications. 3e are not persuaded. A b%** o) *$(%#+ %& %# t,e #$t're o) $ "o#tr$"t o) $(,e&%o#, (e)%#e( $& o#e 2,ere o#e o) t,e p$rt%e& %mpo&e& $ re$(0;m$(e )orm o) "o#tr$"t 2,%", t,e ot,er p$rt0 m$0 $""ept or re9e"t, b't 2,%", t,e *$tter "$##ot mo(%)0. 6ne party prepares the stipulation in the contract, while the other party merely affiBes his signature or his "adhesion" thereto, giving no room for negotiation and depriving the latter of the opportunity to bargain on e@ual footing. /evertheless, these types of contracts have been declared as binding as ordinary contracts, the reason being that the party who adheres to the contract is free to reCect it entirely.8 ,fter it received the bill of lading without any obCection, consignee ,tlas 5ertili9er !orporation was presumed to have knowledge of its contents and to have assented to the terms and conditions set forth therein. The pronouncement by this !ourt in &age""an &anufacturing &ar(eting $orp. v. $ourt of )ppea"s may be cited by analogy H The holding in most Curisdictions has been that a shipper who receives a bill of lading without obCection after an opportunity to inspect it, and permits the carrier to act on it by proceeding with the shipment is presumed to have accepted it as correctly stating the contract and to have assented to its terms. In other words, the acceptance of the i"" *ithout dissent raises the presu!ption that a"" the ter!s therein *ere rought to the (no*"edge of the shipper and agreed to + hi! and, in the a sence of fraud or !ista(e, he is estopped fro! thereafter den+ing that he assented to such ter!s.0 EItalics FuppliedD In this regard, we also @uote with approval the lower courtQs view on the matter when it said2 It is very clear that the ill of 7ading provides for the time or period within which a claim should be made or suit filed in !ourt. "laintiff or ,tlas 5ertili9er !orporation failed on this score. 'oreover, ,tlas 5ertili9er !orporation could not claim ignorance of the contents of the ill of 7ading Cust because the printed letters are so small that they are hard to read or that the shipper did not sign it for ,tlas 5ertili9er !orporation being a regular shipper and a big corporation. "laintiff is presumed to know the contents thereof for the reason that this is the very document E,nneB "," of the complaintD where plaintiff relied its suit.1 3e are likewise not inclined to lend credence to petitionerQs allegation that the lack of communications facilities in the place of delivery prevented the consignee from making a prompt claim for recovery of damages as prescribed by Ftipulation /o. 8. It is indeed hard to believe that ,tlas 5ertili9er !orporation, being an established corporation and a regular shipper, would be so inept as not to have the necessary facilities to at least monitor, in the form of communications e@uipment, the condition of its large shipment involving )(,*** bags of fertili9er. ,s pointed out by the appellate court, at this day and age of advanced telecommunications and modern transportation, even in the year $101, the time limitation provided for in Ftipulation /o. 8 are Cust and reasonable. <HERE!ORE, in view of all the foregoing, the petition is +4/I4+. The +ecision of the !ourt of ,ppeals in !,-G.#. !. /o. )?%10 is ,55I#'4+ in toto. SO OR=ERE=.

G.R. No. 1/>::: ?'#e 2@, 2005. PHILIPPINE CHEMOIL LIGHTERAGE CORPORATION, respondent.

CHARTER

INS RANCE

CORPORATION,

petitioner,

vs.

efore Ms is a petition for review on certiorari which assails the +ecision of the !ourt of ,ppeals$ in !,-G.#. !. /o. &?(*1, dated $0 +ecember $110. The +ecision reversed and set aside the decision of the #egional Trial !ourt E#T!D,( ranch $?, !ity of 'anila, which ordered herein respondent to pay the petitioners claim in the amount of "&,***,***.** with legal interest from the date of the filing of the complaint. THE !ACTS "etitioner "hilippine !harter Insurance !orporation is a domestic corporation engaged in the business of non-life insurance. #espondent !hemoil7ighterage !orporation is also a domestic corporation engaged in the transport of goods. 6n (% :anuary $11$, Famkyung !hemical !ompany, 7td., based in Mlsan, Fouth Iorea, shipped ?(.*? metric tons of the li@uid chemical +I6!TL7 "HTH,7,T4 E+6"D on board 'T "T,!HI ,/," which was valued at MFS1*,(*$.&8 under ill of 7ading /o. M7F='/7-$) and another %)?.8* metric tons of +6" valued at MFS?)%,8(%.01 under ill of 7ading /o. M7F='/7-( % to the "hilippines. The consignee was "lastic Group "hils., Inc. E"G"D in 'anila. "G" insured the cargo with herein petitioner "hilippine !harter Insurance !orporation against all risks. The insurance was under 'arine "olicies /o. '#/-)*8($& dated *? 5ebruary $11$ for ")$,8&8,1?1.$1 and /o. '#/-)*8((? for "%,&$%,00$.**. 'arine 4ndorsement /o. (80?8 dated $$ 'ay $11$ was attached and formed part of '#/-)*8($, amending the latters insured value to "(%,??8,%((.*), and reduced the premium accordingly. The ocean tanker 'T "T,!HI ,/," unloaded the cargo to Tanker arge 7 -$*$$ of respondent !hemoil7ighterage !orporation, which shall transport the same to +el "an ridge in "asig #iver. Tanker arge 7 -$*$$ would unload the cargo to tanker trucks, also owned by the respondent, and haul it by land to "G"s storage tanks in !alamba, 7aguna. Mpon inspection by "G", the samples taken from the shipment showed discoloration from yellowish to amber, demonstrating that it was damaged, as +6" is colorless and water clear. "G" then sent a letter to the petitioner dated $0 5ebruary $11$ 0 where it formally made an insurance claim for the loss it sustained due to the contamination. The petitioner re@uested an independent insurance adCuster, the GIT Insurance ,dCusters, Inc. EGITD, to conduct a Guantity and !ondition Furvey of the shipment. 6n (( 5ebruary $11$, GIT issued a #eport,1 part of which states2 ,s unloading progressed, it was observed on 5ebruary $%, $11$ that +6" samples taken were discolored from yellowish to amber. Inspection of cargo tanks showed manhole covers of ballast tanks ceilings loosely secured. 5urthermore, it was noted that the rubber gaskets of the manhole covers of the ballast tanks re-acted to the chemical causing shrinkage thus, loosening the covers and cargo ingress to the rusty ballast tanksT$* 6n $) 'ay $11$, the petitioner paid "G" the amount of "&,***,***.** $$ as full and final payment for the loss. "G" issued a Fubrogation #eceipt to the petitioner. 'eanwhile, on *) ,pril $11$, "G" paid the respondent the amount of ")*$,1*1.&* as full payment for the latters services, as evidenced by 6fficial #eceipt /o. $(8%.$( 6n $& :uly $11$, an action for damages was instituted by the petitioner-insurer against respondent-carrier before the #T!, ranch $?, !ity of 'anila, docketed as !ivil !ase /o. 1$-&81().$) The petitioner prayed for actual damages in the amount of "&,***,***.**, attorneys fees in the amount of no less than "$,***,***.**, and costs of suit. ,n ,nswer with !ompulsory !ounterclaim $% was filed by the respondent on *& Feptember $11$. The respondent admitted it undertook to transport the consignees shipment from 'T "T,!HI ,/," to the +el "an ridge, "asig #iver, where it was transferred to its tanker trucks for hauling to "G"s storage tanks in !alamba, 7aguna. The respondent alleged that before the +6" was loaded into its barge E7 -$*$$D, the surveyor=representative of "G", ,dCustment Ftandard !orporation, inspected it and found the same clean, dry, and fit for loading. The entire loading and unloading of the shipment were also done under the control and supervision of "G"s surveyor=representative. It was also mentioned by the respondent that the contract between it and "G" eBpressly stipulated that it shall be free from any and all claims arising from contamination, loss of cargo or part thereofA that the consignee accepted the cargo without any protest or noticeA and that the cargo shall be insured by its owner sans recourse against all risks. ,s subrogee, the petitioner was bound by this stipulation. ,s carrier, no fault and negligence can be attributed against respondent as it eBercised eBtraordinary diligence in handling the cargo.$& ,fter due hearing, the trial court rendered a +ecision on *? :anuary $118, the dispositive portion of which reads2 3H4#456#4, "#4'IF4F !6/FI+4#4+, Cudgment is hereby rendered in favor of plaintiff ordering defendant to pay plaintiffs claim of "&,***,***.** with legal interest from the date of the filing of the complaint. The counterclaims are +IF'IFF4+. $? ,ggrieved by the trial courts decision, the respondent sought relief with the !ourt of ,ppeals where it alleged in the main that "G" failed to file any notice, claim or protest within the period re@uired by ,rticle )?? of the !ode of !ommerce, which is a condition precedent to the accrual of a right of action against the carrier. $8 , telephone call which was supposedly made by a certain ,lfred !han, an employee of "G", to one of the .ice "residents of the respondent, informing the latter of the discoloration, is not the notice re@uired by ,rticle )?? of the !ode of !ommerce.$0 6n $0 +ecember $110, the !ourt of ,ppeals promulgated its +ecision reversing the trial court, the dispositive portion of which reads2 3H4#456#4, the decision appealed from is hereby RECERSE= AN= SET ASI=E and a new one is entered dismissing the complaint.$1 , petition for review on certiorari(* was filed by the petitioner with this !ourt, praying that the decision of the trial court be affirmed. ,fter the respondent filed its !omment($ and the petitioner filed its #eply(( thereto, this !ourt issued a #esolution () on $0 ,ugust $111, giving due course to the petition. ,FFIG/'4/T 65 4##6#F The petitioner assigns as errors the following2 I TH4 ,""477,T4 !6M#T G#,.47L 4##4+ I/ 5I/+I/G TH,T TH4 /6TI!4 65 !7,I' 3,F /6T 5I74+ 3ITHI/ TH4 #4GMI#4+ "4#I6+. II TH4 ,""477,T4 !6M#T G#,.47L 4##4+ I/ /6T H67+I/G TH,T +,',G4 T6 TH4 !,#G6 3,F +M4 T6 TH4 5,M7T 6# /4G7IG4/!4 65 #4F"6/+4/T !H4'6I7. III

TH4 ,""477,T4 !6M#T G#,.47L 4##4+ I/ F4TTI/G ,FI+4 TH4 T#I,7 !6M#TF +4!IFI6/ ,/+ I/ +IF'IFFI/G TH4 !6'"7,I/T.(% IFFM4F Fynthesi9ed, the issues that must be addressed by this !ourt are2 I 3H4TH4# 6# /6T TH4 /6TI!4 65 !7,I' 3,F 5I74+ 3ITHI/ TH4 #4GMI#4+ "4#I6+. If the answer is in the affirmative, II 3H4TH4# 6# /6T TH4 +,',G4 T6 TH4 !,#G6 3,F +M4 T6 TH4 5,M7T 6# /4G7IG4/!4 65 TH4 #4F"6/+4/T. TH4 !6M#TF #M7I/GF ,rticle )?? of the !ode of !ommerce has profound application in the case at bar. This provision of law imparts2 ,rt. )??. 3ithin twenty-four hours following the receipt of the merchandise a claim may be made against the carrier on account of damage or average found upon opening the packages, provided that the indications of the damage or average giving rise to the claim cannot be ascertained from the eBterior of said packages, in which case said claim shall only be admitted at the time of the receipt of the packages. ,fter the periods mentioned have elapsed, or after the transportation charges have been paid, no claim whatsoever shall be admitted against the carrier with regard to the condition in which the goods transported were delivered. ,s to the first issue, the petitioner contends that the notice of contamination was given by ,lfredo !han, an employee of "G", to 's.4ncarnacion,bastillas, .ice "resident for ,dministration and 6perations of the respondent, at the time of the delivery of the cargo, and therefore, within the re@uired period.(& This was done by telephone. The respondent, however, claims that the supposed notice given by "G" over the telephone was denied by 's.,bastillas. etween the testimonies of ,lfredo !han and 4ncarnacion,bastillas, the latters testimony is purportedly more credible because it would be @uite unbelievable and contrary to business practice for ,lfredo !han to merely make a verbal notice of claim that involves millions of pesos.(? 6n this point, the !ourt of ,ppeals declared2 . . . 3e are inclined to sustain the view that a telephone call made to defendant-company could constitute substantial compliance with the re@uirement of notice considering that the notice was given to a responsible official, the .ice-"resident, who promptly replied that she will look into the matter. However, it must be pointed out that compliance with the period for filing notice is an essential part of the re@uirement, i.e..immediately if the damage is apparent, or otherwise within twenty-four hours from receipt of the goods, the clear import being that prompt eBamination of the goods must be made to ascertain damage if this is not immediately apparent. 3e have eBamined the evidence, and 3e are unable to find any proof of compliance with the re@uired period, which is fatal to the accrual of the right of action against the carrier.(8 The petitioner is of the view that there was an incongruity in the findings of facts of the trial court and the !ourt of ,ppeals, the former allegedly holding that the period to file the notice had been complied with, while the latter held otherwise. 3e do not agree. 6n the matter concerning the giving of the notice of claim as re@uired by ,rticle )?? of the !ode of !ommerce, the finding of fact of the !ourt of ,ppeals does not actually contradict the finding of fact of the trial court. oth courts held that, indeed, a telephone call was made by ,lfredo !han to 4ncarnacion,bastillas, informing the latter of the contamination. However, nothing in the trial courts decision stated that the notice of claim was relayed or filed with the respondent-carrier immediately or within a period of twenty-four hours from the time the goods were received. The !ourt of ,ppeals made the same finding. Having eBamined the entire records of the case, we cannot find a shred of evidence that will precisely and ultimately point to the conclusion that the notice of claim was timely relayed or filed. The allegation of the petitioner that not only the .ice "resident of the respondent was informed, but also its drivers, as testified by ,lfredo !han, during the time that the delivery was actually being made, cannot be given great weight as no driver was presented to the witness stand to prove this. "art of the testimony of ,lfredo !han is revealing2 G2 T 'r. 3itness, were you in your plant site at the time these various cargoes were deliveredJ ,2 /o, sir. T G2 Fo, do you have a first hand knowledge that your plant representative informed the driver of the alleged contaminationJ ,2 3hat do you mean by thatJ G2 "ersonal knowledge ;that< you yourself heard or saw them ;notify< the driverJ ,2 /o, sir.(0 5rom the preceding testimony, it is @uite palpable that the witness ,lfredo !han had no personal knowledge that the drivers of the respondent were informed of the contamination. The re@uirement that a notice of claim should be filed within the period stated by ,rticle )?? of the !ode of !ommerce is not an empty or worthless proviso. In a case, we held2 The obCect sought to be attained by the re@uirement of the submission of claims in pursuance of this article is to compel the consignee of goods entrusted to a carrier to make prompt demand for settlement of alleged damages suffered by the goods while in transport, so that the carrier will be enabled to verify all such claims at the time of delivery or within twenty-four hours thereafter, and if necessary fiB responsibility and secure evidence as to the nature and eBtent of the alleged damages to the goods while the matter is still fresh in the minds of the parties.(1 In another case, we ruled, thus2 'ore particularly, where the contract of shipment contains a reasonable re@uirement of giving notice of loss of or inCury to the goods, the giving of such notice is a condition precedent to the action for loss or inCury or the right to enforce the carriers liability. Fuch re@uirement is not an empty formalism. The fundamental reason or purpose of such a stipulation is not to relieve the carrier from Cust liability, but reasonably to inform it that the shipment has been damaged and that it is charged with liability therefore, and to give it an opportunity to eBamine the nature and eBtent of the inCury. This protects the carrier by affording it an opportunity to make an investigation of a claim while the matter is fresh and easily investigated so as to safeguard itself from false and fraudulent claims.)* The filing of a claim with the carrier within the time limitation therefore actually constitutes a condition precedent to the accrual of a right of action against a carrier for loss of, or damage to, the goods. The shipper or consignee must allege and prove the fulfillment of the condition. If it fails to do so, no right of action against the carrier can accrue in favor of the former. The aforementioned re@uirement is a reasonable condition precedentA it does not constitute a limitation of action.)$

The second paragraph of ,rticle )?? of the !ode of !ommerce is also edifying. It is not only when the period to make a claim has elapsed that no claim whatsoever shall be admitted, as no claim may similarly be admitted after the transportation charges have been paid. In this case, there is no @uestion that the transportation charges have been paid, as admitted by the petitioner, and the corresponding official receipt)( duly issued. ut the petitioner is of the view that the payment for services does not invalidate its claim. It contends that under the second paragraph of ,rticle )?? of the !ode of !ommerce, it is clear that if notice or protest has been made prior to payment of services, claim against the bad order condition of the cargo is allowed. 3e do not believe so. ,s discussed at length above, there is no evidence to confirm that the notice of claim was filed within the period provided for under ,rticle )?? of the !ode of !ommerce. "etitioners contention proceeds from a false presupposition that the notice of claim was timely filed. !onsidering that we have resolved the first issue in the negative, it is therefore unnecessary to make a resolution on the second issue. <HERE!ORE, in view of all the foregoing, the +ecision of the !ourt of ,ppeals dated $0 +ecember $110, which reversed and set aside the decision of the trial court, is hereby ,55I#'4+ in toto. /o pronouncement as to costs. F6 6#+4#4+.

G.R. No. 1>02:> ?'*0 /0, 2004 SPO SES !RANCISCO M. HERNAN=ED $#( ANICETA A3EL;HERNAN=ED $#( ? AN GONDALES, petitioners, vs. SPO SES LORENDO =OLOR $#( MARGARITA =OLOR, !RE= PANOPIO, ?OSEPH SAN=OCAL, RENE CASTILLO, SPO SES !RANCISCO CALMOCINA $#( CIRGINIA CALMOCINA, SPO SES CICTOR PANOPIO $#( MARTINA PANOPIO, $#( HON. CO RT O! APPEALS, respondents. +4!IFI6/ YNARES;SANTIAGO, J.4 This is a petition for review under #ule %& of the #ules of !ourt seeking the reversal of the decision $ of the !ourt of ,ppeals, dated ,pril (1, (**), in !,-G.#. !. /o. ?*)&8, which affirmed with modification the amount of damages awarded in the /ovember (%, $118 decision( of the #egional Trial !ourt of atangas !ity, ranch I.. The undisputed facts are as follows2 ,t about )2** p.m. of +ecember $1, $10?, 7oren9o 'enard " oyet" +olor, :r. was driving an owner-type Ceepney with plate no. +4 0*% owned by her mother, 'argarita, towards ,nilao, atangas. ,s he was traversing the road at arangay ,nilao 4ast, 'abini, atangas, his vehicle collided with a passenger Ceepney bearing plate no. +4G ?%0, driven by petitioner :uan Gon9ales and owned by his co-petitioner 5rancisco Hernande9, which was travelling towards atangas !ity. oyet+olor and his passenger, 6scar .almocina, died as a result of the collision. 5red "anopio, #ene !astillo and :oseph Fandoval, who were also on board the owner-type Ceep, which was totally wrecked, suffered physical inCuries. The collision also

damaged the passenger Ceepney of 5rancisco Hernande9 and caused physical inCuries to its passengers, namely, .irgie !adavida, 5iscal ,rtemio #eyes and 5rancisca !orona.) !onse@uently, respondents commenced an action% for damages against petitioners before the #egional Trial !ourt of atangas !ity, alleging that driver :uan Gon9ales was guilty of negligence and lack of care and that the Hernande9 spouses were guilty of negligence in the selection and supervision of their employees.& "etitioners countered that the proBimate cause of the death and inCuries sustained by the passengers of both vehicles was the recklessness of oyet+olor, the driver of the owner-type Ceepney, who was driving in a 9ig9agging manner under the influence of alcohol. "etitioners also alleged that Gon9ales was not the driver-employee of the Hernande9 spouses as the former only leased the passenger Ceepney on a daily basis. The Hernande9 spouses further claimed that even if an employer-employee relationship is found to eBist between them, they cannot be held liable because as employers they eBercised due care in the selection and supervision of their employee. +uring the trial of the case, it was established that the drivers of the two vehicles were duly licensed to drive and that the road where the collision occurred was asphalted and in fairly good condition.? The owner-type Ceep was travelling uphill while the passenger Ceepney was going downhill. It was further established that the owner-type Ceep was moderately moving and had Cust passed a road bend when its passengers, private respondents :oseph Fandoval and #ene !astillo, saw the passenger Ceepney at a distance of three meters away. The passenger Ceepney was traveling fast when it bumped the owner type Ceep. 8 'oreover, the evidence presented by respondents before the trial court showed that petitioner :uan Gon9ales obtained his professional driverQs license only on Feptember (%, $10?, or three months before the accident. "rior to this, he was holder of a student driverQs permit issued on ,pril $*, $10?.0 6n /ovember (%, $118, the trial court rendered a decision in favor of respondents, the dispositive portion of which states2 "remises duly considered and the plaintiffs having satisfactorily convincingly and credibly presented evidence clearly satisfying the re@uirements of preponderance of evidence to sustain the complaint, this !ourt hereby declares Cudgment in favor of the plaintiffs and against the defendants. +efendants-spouses 5rancisco Hernande9 and ,niceta ,bel Hernande9 and :uan Gon9ales are therefore directed to pay Cointly and severally, the following2 $D To spouses 7oren9o +olor and 'argarita +olor2 aD "&*,***.** H for the death of their son, 7oren9o 'enard " oyet" +olor, :r.A bD "$%(,***.** H as actual and necessary funeral eBpensesA cD "&*,***.** H reasonable value of the totally wrecked owner-type Ceep with plate no. +4 0*% "hil Q0&A dD "(*,***.** H as moral damagesA eD "(*,***.** as reasonable litigation eBpenses and attorneyQs fees. (D To spouses 5rancisco .almocina and .irginia .almocina2 aD "&*,***.** H for the death of their son, 6scar almocina EsicDA bD "(*,***.** H as moral damagesA cD "$0,%**.** H for funeral eBpensesA dD "$*,***.** H for litigation eBpenses and attorneyQs fees. )D To spouses .ictor "anopio and 'artina "anopio2 aD "$*,%&*.** H for the cost of the artificial leg and crutches being used by their son 5red "anopioA bD "(&,***.** H for hospitali9ation and medical eBpenses they incurred for the treatment of their son, 5red "anopio. %D To 5red "anopio2 aD "(&,***.** H for the loss of his right legA bD "$*,***.** H as moral damages. &D To :oseph Fandoval2 aD "%,***.** for medical treatment. The defendants are further directed to pay the costs of this proceedings. F6 6#+4#4+.1 "etitioners appealed$* the decision to the !ourt of ,ppeals, which affirmed the same with modifications as to the amount of damages, actual eBpenses and attorneyQs fees awarded to the private respondents. The decretal portion of the decision of the !ourt of ,ppeals reads2 <HERE!ORE, the foregoing premises considered, the appealed decision is A!!IRME=. However, the award for damages, actual eBpenses and attorneyQs fees shall be '6+I5I4+ as follows2 $D To spouses 7oren9o +olor and 'argarita +olor2 aD "&*,***.** H civil indemnity for their son 7oren9o 'enard +olor, :r.A bD "&0,8*).** H as actual and necessary funeral eBpensesA cD "(&,***,** H as temperate damagesA dD "$**,***.** H as moral damagesA eD "(*,***.** H as reasonable litigation eBpenses and attorneyQs fees. (D To Fpouses 5rancisco .almocina and .irginia .almocina2 aD "&*,***.** H civil indemnity for the death of their son, 6scar .almocinaA bD "$**,***.** H as moral damagesA cD "$*,***.** H as temperate damagesA dD "$*,***.** H as reasonable litigation eBpenses and attorneyQs fees. )D To Fpouses .ictor "anopio and 'artina "anopio2 aD "$*,)&(.&1 H as actual hospitali9ation and medical eBpensesA bD "&,***.** H as temperate damages. %D To 5red "anopio2 aD "&*,***.** H as moral damages. &D To :oseph Fandoval2 aD "),***.** as temperate damages. F6 6#+4#4+.$$ Hence the present petition raising the following issues2 $. 3hether the !ourt of ,ppeals was correct when it pronounced the Hernande9 spouses as solidarily liable with :uan Gon9ales, although it is of record that they were not in the passenger Ceepney driven by latter when the accident occurredA

(. 3hether the !ourt of ,ppeals was correct in awarding temperate damages to private respondents namely the Fpouses +olor, Fpouses .almocina and Fpouses "anopio and to :oseph Fandoval, although the grant of temperate damages is not provided for in decision of the court a @uoA ). 3hether the !ourt of ,ppeals was correct in increasing the award of moral damages to respondents, Fpouses +olor, Fpouses .almocina and 5red "anopioA %. 3hether the !ourt of ,ppeals was correct in affirming the grant of attorneyQs fees to Fpouses +olor and to Fpouses .almocina although the lower court did not specify the fact and the law on which it is based. "etitioners contend that the absence of the Hernande9 spouses inside the passenger Ceepney at the time of the collision militates against holding them solidarily liable with their co-petitioner, :uan Gon9ales, invoking ,rticle ($0% of the !ivil !ode, which provides2 ,#TI!74 ($0%. In motor vehicle mishaps, the owner is solidarily liable with his driver, if the former, who was in the vehicle, could have, by the use of the due diligence, prevented the misfortune. It is disputably presumed that a driver was negligent, if he had been found guilty of reckless driving or violating traffic regulations at least twice within the neBt preceding two months. If the owner was not in the motor vehicle, the provisions of article ($0* are applicable. The Hernande9 spouses argues that since they were not inside the Ceepney at the time of the collision, the provisions of ,rticle ($0* of the !ivil !ode, which does not provide for solidary liability between employers and employees, should be applied. 3e are not persuaded. ,rticle ($0* provides2 ,#TI!74 ($0*. The obligation imposed by article ($8? is demandable not only for oneQs own acts or omissions, but also for those of persons for whom one is responsible. The father and, in case of his death or incapacity, the mother, are responsible for the damages caused by the minor children who live in their company. Guardians are liable for damages caused by the minors or incapacitated persons who are under their authority and live in their company. The owners and managers of an establishment or enterprise are likewise responsible for damages caused by their employees in the service of the branches in which the latter are employed or on the occasion of their functions. Emp*o0er& &,$** be *%$b*e )or t,e ($m$+e& "$'&e( b0 t,e%r emp*o0ee& $#( ,o'&e,o*( ,e*per& $"t%#+ 2%t,%# t,e &"ope o) t,e%r $&&%+#e( t$&B&, e-e# t,o'+, t,e )ormer $re #ot e#+$+e( %# $#0 b'&%#e&& or %#('&tr0. The Ftate is responsible in like manner when it acts through a special agentA but not when the damage has been caused by the official to whom the task done properly pertains, in which case what is provided in article ($8? shall be applicable. 7astly, teachers or heads of establishments of arts and trades shall be liable for damages caused by their pupils and students or apprentices, so long as they remain in their custody. The responsibility treated of in this article shall cease when the persons herein mentioned prove that they observed all the diligence of a good father of a family to prevent damage. EMnderscoring suppliedD 6n the other hand, ,rticle ($8? provides H 3hoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Fuch fault or negligence, if there is no pre-eBisting contractual relation between the parties, is called a @uasi-delict and is governed by the provisions of this !hapter. 3hile the above provisions of law do not eBpressly provide for solidary liability, the same can be inferred from the wordings of the first paragraph of ,rticle ($0* which states that the o "igation i!posed + artic"e ,-./ is de!anda "e not on"+ for one0s o*n acts or o!issions, ut a"so for those of persons for *ho! one is responsi "e. 'oreover, ,rticle ($0* should be read with ,rticle ($1% of the same !ode, which categorically states that the responsi i"it+ of t*o or !ore persons *ho are "ia "e for quasi1de"ict is so"idar+. In other words, the liability of Coint tortfeasors is solidary. $( .erily, under ,rticle ($0* of the !ivil !ode, an employer may be held solidarily liable for the negligent act of his employee.$) The solidary liability of employers with their employees for @uasi-delicts having been established, the neBt @uestion is whether :ulian Gon9ales is an employee of the Hernande9 spouses. ,n affirmative answer will put to rest any issue on the solidary liability of the Hernande9 spouses for the acts of :ulian Gon9ales. The Hernande9 spouses maintained that :ulian Gon9ales is not their employee since their relationship relative to the use of the Ceepney is that of a lessor and a lessee. They argue that :ulian Gon9ales pays them a daily rental of "$&*.** for the use of the Ceepney. $% In essence, petitioners are practicing the "boundary system" of Ceepney operation albeit disguised as a lease agreement between them for the use of the Ceepney. 3e hold that an employer-employee relationship eBists between the Hernande9 spouses and :ulian Gon9ales. Indeed to eBempt from liability the owner of a public vehicle who operates it under the "boundary system" on the ground that he is a mere lessor would be not only to abet flagrant violations of the "ublic Fervice 7aw, but also to place the riding public at the mercy of reckless and irresponsible drivers U reckless because the measure of their earnings depends largely upon the number of trips they make and, hence, the speed at which they driveA and irresponsible because most if not all of them are in no position to pay the damages they might cause.$& ,nent the award of temperate damages to the private respondents, we hold that the appellate court committed no reversible error in awarding the same to the respondents. Temperate or moderate damages are damages which are more than nominal but less than compensatory which may be recovered when the court finds that some pecuniary loss has been suffered but its amount cannot, from the nature of the case, be proved with certainty.$? Temperate damages are awarded for those cases where, from the nature of the case, definite proof of pecuniary loss cannot be offered, although the court is convinced that there has been such loss. , Cudge should be empowered to calculate moderate damages in such cases, rather than the plaintiff should suffer, without redress, from the defendantQs wrongful act. $8 The assessment of temperate damages is left to the sound discretion of the court provided that such an award is reasonable under the circumstances.$0 3e have gone through the records of this case and we find that, indeed, respondents suffered losses which cannot be @uantified in monetary terms. These losses came in the form of the damage sustained by the owner type Ceep of the +olor spousesA the internment and burial of 6scar .almocinaA the hospitali9ation of :oseph Fandoval on account of the inCuries he sustained from the collision and the artificial leg and crutches that respondent 5red "anopio had to use because of the amputation of his right leg. 5urther, we find that the amount of temperate damages awarded to the respondents were reasonable under the circumstances. ,s to the amount of moral damages which was awarded to respondents, a review of the records of this case shows that there eBists no cogent reason to overturn the action of the appellate court on this aspect. Mnder ,rticle ((*?, the "spouse, legitimate and illegitimate descendants and ascendants of the deceased may demand moral damages for mental anguish for the death of the deceased." The reason for the grant of moral damages has been eBplained, thus2

. . . the award of moral damages is aimed at a restoration, within the limits possible, of the spiritual status @uo anteA and therefore, it must be proportionate to the suffering inflicted. The intensity of the pain eBperienced by the relatives of the victim is proportionate to the intensity of affection for him and bears no relation whatsoever with the wealth or means of the offender.$1 'oral damages are emphatically not intended to enrich a plaintiff at the eBpense of the defendant. They are awarded to allow the former to obtain means, diversion or amusements that will serve to alleviate the moral suffering he has undergone due to the defendantQs culpable action and must, perforce, be proportional to the suffering inflicted.(* Truly, the pain of the sudden loss of oneQs offspring, especially of a son who was in the prime of his youth, and who holds so much promise waiting to be fulfilled is indeed a wellspring of intense pain which no parent should be made to suffer. 3hile it is true that there can be no eBact or uniform rule for measuring the value of a human life and the measure of damages cannot be arrived at by a precise mathematical calculation,($ we hold that the !ourt of ,ppealsQ award of moral damages of "$**,***.** each to the Fpouses +olor and Fpouses .almocina for the death of their respective sons, oyet+olor and 6scar .almocina, is in full accord with prevailing Curisprudence.(( 3ith respect to the award of attorneyQs fees to respondents, no sufficient basis was established for the grant thereof. It is well settled that attorneyQs fees should not be awarded in the absence of stipulation eBcept under the instances enumerated in ,rticle ((*0 of the !ivil !ode. ,s we have held in #i9al Furety and Insurance !ompany v. !ourt of ,ppeals2() ,rticle ((*0 of the !ivil !ode allows attorneyQs fees to be awarded by a court when its claimant is compelled to litigate with third persons or to incur eBpenses to protect his interest by reason of an unCustified act or omission of the party from whom it is sought. 3hile Cudicial discretion is here eBtant, an award thereof demands, nevertheless, a factual, legal or e@uitable Custification. The matter cannot and should not be left to speculation and conCecture E'irasol vs. +e la !ru9, 0% F!#, ))8A Ftronghold Insurance !ompany, Inc. vs. !ourt of ,ppeals, $8) F!#, ?$1D. In the case at bench, the records do not show enough basis for sustaining the award for attorneyQs fees and to adCudge its payment by petitioner. B BB. 7ikewise, this !ourt held in Ftronghold Insurance !ompany, Inc. vs. !ourt of ,ppeals that2 "In ,brogar v. Intermediate ,ppellate !ourt G.#. /o. ?818*, :anuary $&, $100, $&8 F!#, &8<, the !ourt had occasion to state that Q;t<he reason for the award of attorneyQs fees must be stated in the teBt of the courtQs decision, otherwise, if it is stated only in the dispositive portion of the decision, the same must be disallowed on appeal.Q B B B."(% <HERE!ORE, the petition is +4/I4+. The assailed decision of the !ourt of ,ppeals is ,55I#'4+ with the '6+I5I!,TI6/ that the grant of attorneyQs fees is +474T4+ for lack of basis. !osts against petitioners. SO OR=ERE=.

G.R. No. 12:705 ?'#e 2@, 2001 CONRA=O AG ILAR, SR., petitioner, vs. COMMERCIAL SACINGS 3ANE $#( !ER=INAN= 3OR?A, respondents. F IS M3ING, J.: This petition$ seeks to annul and set aside the decision dated 6ctober $?, $11?, of the !ourt of ,ppeals in !,-G.#. !. /o. %081), reversing the decision of the #egional Trial !ourt of 'akati, ranch &1, and dismissing the complaint insofar as respondent !ommercial Favings ank is concerned. The facts in this case are uncomplicated. "etitioner !onrado ,guilar, Fr. is the father of !onrado ,guilar, :r., the victim in a vehicular accident involving a 7ancer car registered in the name of respondent bank, but driven by co-respondent 5erdinand G. orCa. 6n Feptember 0, $10%, at around $$2$& ".'., ,guilar, :r. and his companions, among them /estor Femella, had Cust finished their snack at the Mncle 3atts akery along Vapote-,labang #oad. ,s they crossed the road, a 7ancer with plate no. //" )%1 and driven by 5erdinand orCa, overtook a passenger Ceepney. In so doing, the 7ancer hit ,guilar and Femella. ,guilar was thrown upwards and smashed against the windshield of the 7ancer, which did not stop. ,guilar and Femella were then brought to the "erpetual Help Hospital at "amplona, 7as "iKas, where ,guilar was pronounced dead on arrival. 6n :uly (1, $10&, petitioner filed a complaint for damages against respondents in the #egional Trial !ourt of 'akati, ranch &1. orCa did not file his answer within the reglementary period, hence, he was declared in default by the trial court. ,t the trial, respondent bank admitted that the 7ancer was registered in its name at the time of the incident. "etitioners counsel also showed that orCa was negligent in driving the car. 6n :une $%, $11$, the trial court held defendants Eherein respondentsD liable for ,guilars death, in its decision that reads2 "remises considered, Cudgment is hereby rendered ordering the defendants, Cointly and severally, to pay to the plaintiff the following2 $. The amount of "$0,1**.** representing actual eBpenses incurred by the plaintiffA (. The amount of "&*,***.** representing moral damagesA ). The amount of "$**,***.** representing loss of earning capacity of the deceased victim, !onrado ,guilar, :r. %. The sum of "(*,***.** representing attorneys feesA and &. 3ith costs against the defendants. +efendant banks counterclaim is ordered +IF'IFF4+ for lack of merit. 6n the cross-claim of the defendant bank, the cross-defendant 5erdinand orCa is hereby ordered to pay the cross-claimant !omsavings ank whatever amount the latter may have paid or is re@uired to pay to the plaintiff by virtue of this decision. F6 6#+4#4+.( The trial court declared that orCas negligence, carelessness and imprudence caused the victims death. It also found that orCa was an assistant vice president of respondent bank at the time of the incident. It held that under ,rt. ($0* ) of the !ivil !ode, the negligence of the employee is presumed to be that of the employer, whose liability is primary and directA and that respondent bank failed to eBercise due diligence in the selection of its employees. #espondent bank appealed to the !ourt of ,ppeals. The !ourt of ,ppeals found the appeal meritorious. It said that before it can apply ,rt. ($0* on which private respondent anchored its claim of the banks negligence, petitioner must first establish that orCa acted on the occasion or by reason of the functions entrusted to him by his employer. The appellate court found no evidence that orCa had acted as respondent banks assistant vicepresident at the time of the mishap. The !ourt of ,ppeals reversed the trial courts decision, thus2 3H4#456#4, the appealed decision is reversed only insofar as defendant-appellant bank is concerned. The complaint against it is +IF'IFF4+. /o award of damages on said appellants counterclaim. /o costs.-2*phi-.n3t F6 6#+4#4+.% "etitioners motion for reconsideration was denied. Hence, this petition where petitioner avers that2 TH4 !6M#T 65 ,""4,7F 4##4+ I/ 5I/+I/G TH,T #4F"6/+4/T !6'F,.I/GF IF /6T 7I, 74 56# +,',G4F +4F"IT4 TH4 4FT, 7IFH4+ 5,!T TH,T #4F"6/+4/T !6'F,.I/GF IF TH4 #4GIFT4#4+ 63/4# 65 TH4 !,# TH,T HIT ,/+ II774+ "4TITI6/4#F F6/ 3HI!H 5I/+I/G, !6M"74+ 3ITH TH4 +IF'IFF,7 65 TH4 !6'"7,I/T ,G,I/FT #4F"6/+4/T !6'F,.I/GF, IF !6/T#,#L T6 7,3 ,/+ 4PIFTI/G :M#IF"#M+4/!4. & The sole issue is whether or not respondent bank, as the 7ancers registered owner, is liable for damages. "etitioner states that the !ourt of ,ppeals erred when it disregarded the fact that respondent bank was the registered owner of the car and concluded that the bank was not liable since there was "no iota of evidence that orCa was performing his assigned task at the time of the incident."? He insists that the eBistence or absence of employer-employee relationship between the bank and orCa is immaterial in this case for the registered owner of a motor vehicle is legally liable for the damages incurred by third persons for inCuries sustained in the operation of said vehicle. #espondent bank counters that the appellate courts decision is well supported by law and Curisprudence. ,ccording to respondent bank, under ,rticle ($0* of the !ivil !ode, when the negligent employee commits the act outside the actual performance of his assigned tasks or duties, the employer has no vicarious liability. 5urther, the bank insists that it is not liable since at the time of the accident, orCa was driving the 7ancer in his private capacity and was not performing functions in furtherance of the interest of !omsavings ank. ,dditionally, according to the bank, orCa already bought the car on installment basis. Hence, at the time of the incident, the bank concluded it was no longer the owner of the car.8 3e are, however, unimpressed by respondent banks dis@uisition. It goes against established Curisprudence. In 4) Finance $orporation vs. $ourt of )ppea"s , ,-5 S$R) .-5, we had already held that the registered owner of any vehicle, even if not for public service, is primarily responsible to third persons for deaths, inCuries and damages it caused. This is true even if the vehicle is leased to third persons. In that case, petitioners Isu9u ten-wheeler truck driven by an employee of a certain 7ino !astro met an accident. /either the driver nor 7ino !astro was connected to petitioner, for at the time of the incident, the truck was on lease to #ock !omponent "hilippines, Inc. The !ourt held petitioner liable as the trucks registered owner, despite the absence of employer-employee relationship between petitioner and the driver. Though petitioner in said case had a right of reimbursement against #ock !omponent for the total amount of its liability, the !ourt per 'elo, 5. made clear petitioner remained legally responsible to the victim of vehicular mishap on the basis of Curisprudential dogmas. ,s early as Ere#o vs. 5epte, -0, 'hi". -06, the !ourt through 7abrador, 5. had synthesi9ed the rationale for holding the registered owner of a vehicle directly liable. There we said2

#egistration is re@uired not to make said registration the operative act by which ownership in vehicles is transferred, as in land registration cases, because the administrative proceeding of registration does not bear any essential relation to the contract of sale between the parties E!hinchilla vs. #afael and .erdaguer, )1 "hil. 000D, but to permit the use and operation of the vehicle upon any public highway Esection & ;a<, ,ct /o. )11(, as amended.D The main aim of motor vehicle registration is to identify the owner so that if any accident happens, or that any damage or inCury is caused by the vehicle on the public highways, responsibility therefor can be fiBed on a definite individual, the registered owner. Instances are numerous where vehicles running on public highways caused accidents or inCuries to pedestrians or other vehicles without positive identification of the owner or drivers, or with very scant means of identification. It is to forestall these circumstances, so inconvenient or preCudicial to the public, that the motor vehicle registration is primarily ordained, in the interest of the determination of persons responsible for damages or inCuries caused on public highways. ">6ne of the principal purposes of motor vehicles legislation is identification of the vehicle and of the operator, in case of accidentA and another is that the knowledge that means of detection are always available may act as a deterrent from laB observance of the law and of the rules of conservative and safe operation. 3hatever purpose there may be in these statutes, it is subordinate at the last to the primary purpose of rendering it certain that the violator of the law or of the rules of safety shall not escape because of lack of means to discover him. The purpose of the statute is thwarted, and the displayed number becomes a >snare and delusion, if courts would entertain such defenses as that put forward by appellee in this case. /o responsible person or corporation could be held liable for the most outrageous acts of negligence, if they should be allowed to place a >middleman between them and the public, and escape liability by the manner in which they recompense their servants." EIing vs. renham ,utomobile !o., $%& F.3. (80, (81.D 3ith the above policy in mind, the @uestion that defendant-appellant poses is2 should not the registered owner be allowed at the trial to prove who the actual and real owner is, and in accordance with such proof escape or evade responsibility and lay the same on the person actually owning the vehicleJ 3e hold with the trial court that the law does not allow him to do soA the law, with its aim and policy in mind, does not relieve him directly of the responsibility that the law fiBes and places upon him as an incident or conse@uence of registration. 3ere a registered owner allowed to evade responsibility by proving who the supposed transferee or owner is, it would be easy for him, by collusion with others or otherwise, to escape said responsibility and transfer the same to an indefinite person, or to one who possesses no property with which to respond financially for the damage or inCury done. , victim of recklessness on the public highways is usually without means to discover or identify the person actually causing the inCury or damage. He has no means other than by a recourse to the registration in the 'otor .ehicles 6ffice to determine who is the owner. The protection that the law aims to eBtend to him would become illusory were the registered owner given the opportunity to escape liability by disproving his ownership. If the policy of the law is to be enforced and carried out, the registered owner should not be allowed to prove the contrary to the preCudice of the person inCured, that is, to prove that a third person or another has become the owner, so that he may thereby be relieved of the responsibility to the inCured person. The above policy and application of the law may appear @uite harsh and would seem to conflict with truth and Custice. 3e do not think it is so. , registered owner who has already sold or transferred a vehicle has the recourse to a third-party complaint, in the same action brought against him to recover for the damage or inCury done, against the vendee or transferee of the vehicle. The inconvenience of the suit is no Custification for relieving him of liabilityA said inconvenience is the price he pays for failure to comply with the registration that the law demands and re@uires. In synthesis, we hold that the registered owner, the defendant-appellant herein, is primarily responsible for the damage caused to the vehicle of the plaintiff-appellee, but he Edefendant-appellantD has a right to be indemnified by the real or actual owner of the amount that he may be re@uired to pay as damage for the inCury caused to the plaintiff-appellant.0 The rationale well postulated in Ere#o applies in the present case. Thus far no change in Curisprudence has been brought to our attention. In our view, respondent bank, as the registered owner of the vehicle, is primarily liable for ,guilar, :r.s death. The !ourt of ,ppeals erred when it concluded that the bank was not liable simply because EaD petitioner did not prove that orCa was acting as the banks vice president at the time of the accidentA and EbD orCa had, according to respondent bank, already bought the car at the time of the mishap. 5or as long as the respondent bank remained the registered owner of the car involved in the vehicular accident, it could not escape primary liability for the death of petitioners son. <HERE!ORE, the petition is GRANTE=. The assailed decision of the !ourt of ,ppeals dated 6ctober $?, $11? in !,-G.#. !. /o. %081) is RECERSE=. The Cudgment of the #egional Trial !ourt of 'akati, ranch &1 in !ivil !ase /o. $$()$ is PHEL=. !osts against respondent bank. SO OR=ERE=.

G.R. No. 144274 September 20, 2004 NOSTRA=AM S CILLAN ECA, petitioner, vs. PRISCILLA R. =OMINGO $#( LEAN=RO L IS R. =OMINGO, respondents. +4!IFI6/ CORONA, J.: This is a petition to review the decision $ of the !ourt of ,ppeals in !,-G.#. !. /o. &((*) affirming in turn the decision of the trial court finding petitioner liable to respondent for damages. The dispositive portion read2 3H4#456#4, the appealed decision is hereby ,55I#'4+ eBcept the award of attorneys fees including appearance fees which is +474T4+. F6 6#+4#4+.( The facts of the case, as summari9ed by the !ourt of ,ppeals, are as follows2 ;#espondent< "riscilla #. +omingo is the registered owner of a silver 'itsubishi 7ancer !ar model $10* bearing plate /o. /+3 80$ 1$ with ;co-respondent< 7eandro 7uis #. +omingo as authori9ed driver. ;"etitioner< /ostradamus .illanueva was then the registered "owner" of a green 'itsubishi 7ancer bearing "late /o. "HI (*$ 1$. 6n (( 6ctober $11$ at about 12%& in the evening, following a green traffic light, ;respondent< "riscilla +omingos silver 7ancer car with "late /o. /+3 80$ 1$ then driven by ;co-respondent< 7eandro 7uis #. +omingo was cruising along the middle lane of Fouth Fuperhighway at moderate speed from north to south. Fuddenly, a green 'itsubishi 7ancer with plate /o. "HI (*$ 1$ driven by #enato +ela !ru9 6cfemia darted from .ito !ru9 Ftreet towards the Fouth Fuperhighway directly into the path of /+3 80$ 1$ thereby hitting and bumping its left front portion. ,s a result of the impact, /+3 80$ 1$ hit two E(D parked vehicles at the roadside, the second hitting another parked car in front of it. "er Traffic ,ccident #eport prepared by Traffic Investigator "fc."atrocinio /. ,cido, #enato dela !ru9 6cfemia was driving with eBpired license and positive for alcoholic breath. Hence, 'anila ,ssistant !ity "rosecutor 6scar ,. "ascua recommended the filing of information for reckless imprudence resulting to EsicD damage to property and physical inCuries. The original complaint was amended twice2 first, impleading ,uto "alace !ar 4Bchange as commercial agent and=or buyer-seller and second, impleading ,lbert :aucian as principal defendant doing business under the name and style of ,uto "alace !ar 4Bchange. 4Bcept for 6cfemia, all the defendants filed separate answers to the complaint. ;"etitioner< /ostradamus .illanueva claimed that he was no longer the owner of the car at the time of the mishap because it was swapped with a "aCero owned by ,lbert :aucian=,uto "alace !ar 4Bchange. 5or her part, 7inda Gon9ales declared that her presence at the scene of the accident was upon the re@uest of the actual owner of the 'itsubishi 7ancer E"HI (*$ 1$D ;,lbert :aucian< for whom she had been working as agent=seller. 6n the other hand, ,uto "alace !ar 4Bchange represented by ,lbert :aucian claimed that he was not the registered owner of the car. 'oreover, it could not be held subsidiary liable as employer of 6cfemia because the latter was off-duty as utility employee at the time of the incident. /either was 6cfemia performing a duty related to his employment. ) ,fter trial, the trial court found petitioner liable and ordered him to pay respondent actual, moral and eBemplary damages plus appearance and attorneys fees2 3H4#456#4, Cudgment is hereby rendered for the plaintiffs, ordering /ostradamus .illanueva to pay the amount of "11,&0* as actual damages, "(&,***.** as moral damages, "(&,***.** as eBemplary damages and attorneys fees in the amount of "$*,***.** plus appearance fees of "&**.** per hearing with legal interest counted from the date of Cudgment. In conformity with the law on e@uity and in accordance with the ruling in 5irst 'alayan 7ending and 5inance !orporation vs. !ourt of ,ppeals E supraD, ,lbert :aucian is hereby ordered to indemnify /ostradamus .illanueva for whatever amount the latter is hereby ordered to pay under the Cudgment. F6 6#+4#4+.% The !, upheld the trial courts decision but deleted the award for appearance and attorneys fees because the Custification for the grant was not stated in the body of the decision. Thus, this petition for review which raises a singular issue2 ',L TH4 #4GIFT4#4+ 63/4# 65 , '6T6# .4HI!74 4 H47+ 7I, 74 56# +,',G4F ,#IFI/G 5#6' , .4HI!M7,# ,!!I+4/T I/.67.I/G HIF '6T6# .4HI!74 3HI74 4I/G 6"4#,T4+ L TH4 4'"76L44 65 ITF ML4# 3ITH6MT TH4 7,TT4#F !6/F4/T ,/+ I/6374+G4J& Les. 3e have consistently ruled that the registered owner of an+ vehicle is directly and primarily responsible to the public and third persons while it is being operated.?The rationale behind such doctrine was eBplained way back in $1&8 in Ere#o vs. 5epte82 The principle upon which this doctrine is based is that in dealing with vehicles registered under the "ublic Fervice 7aw, the public has the right to assume or presume that the registered owner is the actual owner thereof, for it would be difficult for the public to enforce the actions that they may have for inCuries caused to them by the vehicles being negligently operated if the public should be re@uired to prove who the actual owner is. How would the public or third persons know against whom to enforce their rights in case of subse@uent transfers of the vehiclesJ 3e do not imply by his doctrine, however, that the registered owner may not recover whatever amount he had paid by virtue of his liability to third persons from the person to whom he had actually sold, assigned or conveyed the vehicle. 7nder the sa!e princip"e the registered o*ner of an+ vehic"e, even if not used for a pu "ic service, shou"d pri!ari"+ e responsi "e to the pu "ic or to third persons for in%uries caused the "atter *hi"e the vehic"e is eing driven on the high*a+s or streets. The !e! ers of the $ourt are in agree!ent that the defendant1appe""ant shou"d e he"d "ia "e to p"aintiff1appe""ee for the in%uries occasioned to the "atter ecause of the neg"igence of the driver, even if the defendant1appe""ant *as no "onger the o*ner of the vehic"e at the ti!e of the da!age ecause he had previous"+ so"d it to another . 3hat is the legal basis for his EdefendantappellantsD liabilityJ There is a presumption that the owner of the guilty vehicle is the defendant-appellant as he is the registered owner in the 'otor .ehicles 6ffice. Fhould he not be allowed to prove the truth, that he had sold it to another and thus shift the responsibility for the inCury to the real and actual ownerJ The defendant holds the affirmative of this propositionA the trial court held the negative. The #evised 'otor .ehicle 7aw E,ct /o. )11(, as amendedD provides that no vehicle may be used or operated upon any public highway unless the same is property registered. It has been stated that the system of licensing and the re@uirement that each machine must carry a registration number, conspicuously displayed, is one of the precautions taken to reduce the danger of inCury to pedestrians and other travelers from the careless management of automobiles. ,nd to furnish a means of ascertaining the

identity of persons violating the laws and ordinances, regulating the speed and operation of machines upon the highways E( #.!.7. $$8?D. /ot only are vehicles to be registered and that no motor vehicles are to be used or operated without being properly registered for the current year, but that dealers in motor vehicles shall furnish thee 'otor .ehicles 6ffice a report showing the name and address of each purchaser of motor vehicle during the previous month and the manufacturers serial number and motor number. EFection &EcD, ,ct /o. )11(, as amended.D #egistration is re@uired not to make said registration the operative act by which ownership in vehicles is transferred, as in land registration cases, because the administrative proceeding of registration does not bear any essential relation to the contract of sale between the parties E!hinchilla vs. #afael and .erdaguer, )1 "hil. 000D, but to permit the use and operation of the vehicle upon any public highway Esection & ;a<, ,ct /o. )11(, as amendedD. The main aim of motor vehicle registration is to identify the owner so that if any accident happens, or that any damage or inCury is caused by the vehicle on the public highways, responsibility therefore can be fiBed on a definite individual, the registered owner. Instances are numerous where vehicles running on public highways caused accidents or inCuries to pedestrians or other vehicles without positive identification of the owner or drivers, or with very scant means of identification. It is to forestall these circumstances, so inconvenient or preCudicial to the public, that the motor vehicle registration is primarily ordained, in the interest of the determination of persons responsible for damages or inCuries caused on public highways2 6ne of the principal purposes of motor vehicles legislation is identification of the vehicle and of the operator, in case of accidentA and another is that the knowledge that means of detection are always available may act as a deterrent from laB observance of the law and of the rules of conservative and safe operation. 3hatever purpose there may be in these statutes, it is subordinate at the last to the primary purpose of rendering it certain that the violator of the law or of the rules of safety shall not escape because of lack of means to discover him. The purpose of the statute is thwarted, and the displayed number becomes a "share and delusion," if courts would entertain such defenses as that put forward by appellee in this case. /o responsible person or corporation could be held liable for the most outrageous acts of negligence, if they should be allowed to pace a "middleman" between them and the public, and escape liability by the manner in which they recompense servants. EIing vs. renham ,utomobile !o., Inc. $%& F.3. (80, (81.D 3ith the above policy in mind, the @uestion that defendant-appellant poses is2 should not the registered owner be allowed at the trial to prove who the actual and real owner is, and in accordance with such proof escape or evade responsibility by and lay the same on the person actually owning the vehicleJ 3e hold with the trial court that the law does not allow him to do soA the law, with its aim and policy in mind, does not relieve him directly of the responsibility that the law fiBes and places upon him as an incident or conse@uence of registration. 3ere a registered owner allowed to evade responsibility by proving who the supposed transferee or owner is, it would be easy for him, by collusion with others or otherwise, to escape said responsibility and transfer the same to an indefinite person, or to one who possesses no property with which to respond financially for the damage or inCury done. , victim of recklessness on the public highways is usually without means to discover or identify the person actually causing the inCury or damage. He has no means other than by a recourse to the registration in the 'otor .ehicles 6ffice to determine who is the owner. The protection that the law aims to eBtend to him would become illusory were the registered owner given the opportunity to escape liability by disproving his ownership. If the policy of the law is to be enforced and carried out, the registered owner should not be allowed to prove the contrary to the preCudice of the person inCured, that is, to prove that a third person or another has become the owner, so that he may thereby be relieved of the responsibility to the inCured person. The above policy and application of the law may appear @uite harsh and would seem to conflict with truth and Custice. 3e do not think it is so. , registered owner who has already sold or transferred a vehicle has the recourse to a third-party complaint, in the same action brought against him to recover for the damage or inCury done, against the vendee or transferee of the vehicle. The inconvenience of the suit is no Custification for relieving him of liabilityA said inconvenience is the price he pays for failure to comply with the registration that the law demands and re@uires. In synthesis, we hold that the registered owner, the defendant-appellant herein, is primarily responsible for the damage caused to the vehicle of the plaintiff-appellee, but he Edefendant-appellantD has a right to be indemnified by the real or actual owner of the amount that he may be re@uired to pay as damage for the inCury caused to the plaintiff-appellant.0 "etitioner insists that he is not liable for damages since the driver of the vehicle at the time of the accident was not an authori9ed driver of the new EactualD owner of the vehicle. He claims that the ruling in First &a"a+an 8easing and Finance $orporation vs. $) 1 implies that to hold the registered owner liable for damages, the driver of the vehicle must have been authori9ed, allowed and permitted by its actual owner to operate and drive it. Thus, if the vehicle is driven without the knowledge and consent of the actual owner, then the registered owner cannot be held liable for damages. He further argues that this was the underlying theory behind 9uavit vs. $)$* wherein the court absolved the registered owner from liability after finding that the vehicle was virtually stolen from the owners garage by a person who was neither authori9ed nor employed by the owner. "etitioner concludes that the ruling in 9uavit and not the one in First &a"a+an should be applicable to him. "etitioners argument lacks merit. 3hether the driver is authori9ed or not by the actual owner is irrelevant to determining the liability of the registered owner who the law holds primarily and directly responsible for any accident, inCury or death caused by the operation of the vehicle in the streets and highways. To re@uire the driver of the vehicle to be authori9ed by the actua" owner before the registered owner can be held accountable is to defeat the very purpose why motor vehicle legislations are enacted in the first place. 5urthermore, there is nothing in First &a"a+an which even remotely suggests that the driver must be authori9ed before the registered owner can be held accountable. In First &a"a+an, the registered owner, 5irst 'alayan !orporation, was held liable for damages arising from the accident even if the vehicle involved was already owned by another party2 This !ourt has consistently ruled that regardless of who the actua" owner is of a motor vehicle might be, the registered owner is the operator of the same with respect to the public and third persons, and as such, directly and primarily responsible for the conse@uences of its operation. In contemplation of law, the owner=operator of record is the employer of the driver, the actual operator and employer being considered merely as his agent E &:$1)gro1;ndustria" $orporation vs. <da. de $a"do , $)( F!#, $*, citing <argas vs. 8angca+, ? F!#, $8%A Ta!a+o vs. )quino, $*& "hil. 1%1D. >3e believe that it is immaterial whether or not the driver was actually employed by the operator of record. It is even not necessary to prove who the actual owner of the vehicle and the employer of the driver is. Granting that, in this case, the father of the driver is the actual owner and that he is the actual employer, following the well-settled principle that the operator of record continues to be the operator of the vehicle in contemplation of law, as regards the public and third person, and as such is responsible for the conse@uences incident to its operation, we must hold and consider such owner-operator of record as the employer, in contemplation of law, of the driver. ,nd, to give effect to this policy of law as enunciated in the above cited decisions of this !ourt, we must now eBtend the same and consider the actual operator and employer as the agent of the operator of record.$$

!ontrary to petitioners position, the First &a"a+an ruling is applicable to him since the case involves the same set of facts W the registered owner had previously sold the vehicle to someone else and was being driven by an employee of the new EactualD owner. 9uavit is inapplicable since the vehicle there was not transferred to anotherA the registered and the actual owner was one and the same person. esides, in 9uavit, the defense of the registered owner, Gilberto +uavit, was that the vehicle was practically stolen from his garage by 6scar Fabiano, as affirmed by the latter2 +efendant Fabiano, in his testimony, categorically admitted that he took the Ceep from the garage of defendant +uavit without the consent and authority of the latter. He testified further that +uavit even filed charges against him for the theft of the Ceep but which +uavit did not push through as his EFabianosD parents apologi9ed to +uavit on his behalf.$( ,s correctly pointed out by the !,, the 9uavit ruling is not applicable to petitioners case since the circumstance of unauthori9ed use was not present. He in fact voluntarily delivered his car to ,lbert :aucian as part of the downpayment for a vehicle he purchased from :aucian. Thus, he could not claim that the vehicle was stolen from him since he voluntarily ceded possession thereof to :aucian. It was the latter, as the new EactualD owner, who could have raised the defense of theft to prove that he was not liable for the acts of his employee 6cfemia. Thus, there is no reason to apply the 9uavitruling to this case. The ruling in First &a"a+an has been reiterated in 4) Finance $orporation vs. $)$)and more recently in )gui"ar, Sr. vs. $o!!ercia" Savings 4an(.$%In4) Finance, we held the registered owner liable even if, at the time of the accident, the vehicle was leased by another party and was driven by the lessees employee. In )gui"ar, the registered owner-bank answered for damages for the accident even if the vehicle was being driven by the .ice-"resident of the ank in his private capacity and not as an officer of the ank, as claimed by the ank. 3e find no reason to deviate from these decisions. The main purpose of vehicle registration is the easy identification of the owner who can be held responsible for any accident, damage or inCury caused by the vehicle. 4asy identification prevents inconvenience and preCudice to a third party inCured by one who is unknown or unidentified. To allow a registered owner to escape liability by claiming that the driver was not authori9ed by the new EactualD owner results in the public detriment the law seeks to avoid. 5inally, the issue of whether or not the driver of the vehicle during the accident was authori9ed is not at all relevant to determining the liability of the registered owner. This must be so if we are to comply with the rationale and principle behind the registration re@uirement under the motor vehicle law. <HERE!ORE, the petition is hereby =ENIE=. The :anuary (?, (*** decision of the !ourt of ,ppeals is A!!IRME=. SO OR=ERE=.

G.R. No. 1>17/0 ?$#'$r0 2:, 2005 ?APAN AIRLINES, petitioner, vs. MICHAEL AS NCION $#( ?EANETTE AS NCION, respondents. +4!IFI6/ YNARES;SANTIAGO, J.: This petition for review seeks to reverse and set aside the 6ctober 1, (**( decision $ of the !ourt of ,ppeals and its :anuary $(, (**% resolution,( which affirmed in toto the :une $*, $118 decision of the #egional Trial !ourt of 'akati !ity, ranch ?$ in !ivil !ase /o. 1(-)?)&.) 6n 'arch (8, $11(, respondents 'ichael and :eanette ,suncion left 'anila on board :apan ,irlines E:,7D 5light 8%( bound for 7os ,ngeles. Their itinerary included a stop-over in /arita and an overnight stay at Hotel /ikko /arita. Mpon arrival at /arita, 'rs. /oriko 4tou-Higuchi of :,7 endorsed their applications for shore pass and directed them to the :apanese immigration official. % , shore pass is re@uired of a foreigner aboard a vessel or aircraft who desires to stay in the neighborhood of the port of call for not more than 8( hours.

+uring their interview, the :apanese immigration official noted that 'ichael appeared shorter than his height as indicated in his passport. ecause of this inconsistency, respondents were denied shore pass entries and were brought instead to the /arita ,irport #est House where they were billeted overnight. The immigration official also handed 'rs. Higuchi a /otice & where it was stated that respondents were to be "watched so as not to escape". 'r. ,tsushi Takemoto of the International Fervice !enter EIF!D, the agency tasked by :apans Immigration +epartment to handle passengers who were denied shore pass entries, brought respondents to the /arita ,irport #est House where they stayed overnight until their departure the following day for 7os ,ngeles. #espondents were charged MFS%**.** each for their accommodation, security service and meals. 6n +ecember $(, $11(, respondents filed a complaint for damages? claiming that :,7 did not fully apprise them of their travel re@uirements and that they were rudely and forcibly detained at /arita ,irport. :,7 denied the allegations of respondents. It maintained that the refusal of the :apanese immigration authorities to issue shore passes to respondents is an act of state which :,7 cannot interfere with or prevail upon. !onse@uently, it cannot impose upon the immigration authorities that respondents be billeted at Hotel /ikko instead of the airport resthouse.8 6n :une $*, $118, the trial court rendered its decision, the dispositive portion of which reads2 3H4#456#4 "#4'IF4F !6/FI+4#4+, Cudgment is hereby rendered in favor of plaintiffs ordering defendant :,7 to pay plaintiffs as follows2 $. the sum of MFS0**.** representing the eBpenses incurred at the /arita ,irport with interest at $(O per annum from 'arch (8, $11( until the sum is fully paidA (. the sum of "(**,***.** for each plaintiff as moral damagesA ). the amount of "$**,***.** for each plaintiff as eBemplary damagesA %. the amount of "$**,***.** as attorneys feesA and &. costs of suit. F6 6#+4#4+.0 The trial court dismissed :,7s counterclaim for litigation eBpenses, eBemplary damages and attorneys fees. 6n 6ctober 1, (**(, the !ourt of ,ppeals affirmed in toto the decision of the trial court. Its motion for reconsideration having been denied,1 :,7 now files the instant petition. The basic issue for resolution is whether :,7 is guilty of breach of contract. Mnder ,rticle $8&& of the !ivil !ode, a common carrier such as :,7 is bound to carry its passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with due regard for all the circumstances. 3hen an airline issues a ticket to a passenger, confirmed for a particular flight on a certain date, a contract of carriage arises. The passenger has every right to eBpect that he be transported on that flight and on that date and it becomes the carriers obligation to carry him and his luggage safely to the agreed destination.$* If the passenger is not so transported or if in the process of transporting he dies or is inCured, the carrier may be held liable for a breach of contract of carriage.$$ 3e find that :,7 did not breach its contract of carriage with respondents. It may be true that :,7 has the duty to inspect whether its passengers have the necessary travel documents, however, such duty does not eBtend to checking the veracit+ of ever+ entr+ in these documents. :,7 could not vouch for the authenticity of a passport and the correctness of the entries therein. The power to admit or not an alien into the country is a sovereign act which cannot be interfered with even by :,7. This is not within the ambit of the contract of carriage entered into by :,7 and herein respondents. ,s such, :,7 should not be faulted for the denial of respondents shore pass applications. "rior to their departure, respondents were aware that upon arrival in /arita, they must secure shore pass entries for their overnight stay. #espondents mother, 'rs. Imelda ,suncion, insisted though that 's. 7inda .illavicencio of :,7 assured her that her children would be granted the passes.$( This assertion was satisfactorily refuted by 's. .illavicencios testimony during the cross eBamination, to wit2 )TT:. =>?@)=)A G I will show to you 4Bh. 1 which is the TI' and on page $0% hereof, particularly number $*, and I @uote, "Those holding tickets with confirmed seats and other documents for their onward Courney and continuing their Courney to a third country provided that they obtain an indorsement with an application of shore pass or transit pass from the airline ground personnel before clearing the immigration formalityJ" B;T?ESSA , Les, Fir. G +id you tell this provision to 'rs. ,suncionJ , Les, Fir. I did. G ,re you sureJ , Les, Fir. G +id you give a copyJ , /o, Fir, I did not give a copy but verbally I eBplained to her the procedure they have to undergo when they get to narita airport. T. G ,nd you read the contents of this ;TI'<J , /o, Fir, I did not read it to her but I eBplained to her the procedure that each passenger has to go through before when they get to narita airport before they line up in the immigration counter. G In other words, you told 'rs. ,suncion the responsibility of securing shore passes bears solely on the passengers onlyJ , Les, Fir. G That the airline has no responsibility whatsoever with regards EsicD to the application for shore passesJ , Les, Fir.$) /eBt, respondents claimed that petitioner breached its contract of carriage when it failed to eBplain to the immigration authorities that they had overnight vouchers at the Hotel /ikko /arita. They imputed that :,7 did not eBhaust all means to prevent the denial of their shore pass entry applications. To reiterate, :,7 or any of its representatives have no authority to interfere with or influence the immigration authorities. The most that could be eBpected of :,7 is to endorse respondents applications, which 'rs. Higuchi did immediately upon their arrival in /arita. ,s 'rs. Higuchi stated during her deposition2 )TT:. C7;&4> G2 'adam 3itness, what assistance did you give, if any, to the plaintiffs during this interviewJ

,2 /o, I was not present during their interview. I cannot assist. G2 3hy notJ ,2 It is forbidden for a civilian personnel to interfere with the Immigration agents duties.$% T. G2 +uring the time that you were in that room and you were given this notice for you to sign, did you tell the immigration agent that 'ichael and :eanette ,suncion should be allowed to stay at the Hotel /ikko /arita because, as passengers of :,7, and according to the plaintiff, they had vouchers to stay in that hotel that nightJ ,2 /o, I couldnt do so. G2 3hy notJ ,2 This notice is evidence which shows the decision of immigration authorities. It shows there that the immigration inspector also designated #oom )*% of the /arita ,irport #esthouse as the place where the passengers were going to wait for their outbound flight.-a*phi-.nDt I cannot interfere with that decision.$& 'rs. Higuchi did all she could to assist the respondents. Mpon being notified of the denial of respondents applications, 'rs. Higuchi immediately made reservations for respondents at the /arita ,irport #est House which is really more a hotel than a detention house as claimed by respondents.$? 'ore importantly, nowhere in respondent 'ichaels testimony did he state categorically that 'rs. Higuchi or any other employee of :,7 treated them rudely or eBhibited improper behavior throughout their stay. 3e therefore find :,7 not remiss in its obligations as a common carrier.-a*phi-.nDt 'oral damages may be recovered in cases where one willfully causes inCury to property, or in cases of breach of contract where the other party acts fraudulently or in bad faith. 4Bemplary damages are imposed by way of eBample or correction for the public good, when the party to a contract acts in wanton, fraudulent, oppressive or malevolent manner. ,ttorneys fees are allowed when eBemplary damages are awarded and when the party to a suit is compelled to incur eBpenses to protect his interest. $8 There being no breach of contract nor proof that :,7 acted in wanton, fraudulent or malevolent manner, there is no basis for the award of any form of damages. /either should :,7 be held liable to reimburse respondents the amount of MFS0**.**. It has been sufficiently proven that the amount pertained to IF!, an agency separate and distinct from :,7, in payment for the accommodations provided to respondents. The payments did not in any manner accrue to the benefit of :,7. However, we find that the !ourt of ,ppeals correctly dismissed :,7s counterclaim for litigation eBpenses, eBemplary damages and attorneys fees. The action was filed by respondents in utmost good faith and not manifestly frivolous. #espondents honestly believed that :,7 breached its contract. , persons right to litigate should not be penali9ed by holding him liable for damages. This is especially true when the filing of the case is to enforce what he believes to be his rightful claim against another although found to be erroneous.$0 <HERE!ORE, in view of the foregoing, the instant petition is ",#T7L G#,/T4+. The 6ctober 1, (**( decision of the !ourt of ,ppeals and its :anuary $(, (**% resolution in !,-G.#. !. /o. &8%%*, are #4.4#F4+ and F4T ,FI+4 insofar as the finding of breach on the part of petitioner and the award of damages, attorneys fees and costs of the suit in favor of respondents is concerned. ,ccordingly, there being no breach of contract on the part of petitioner, the award of actual, moral and eBemplary damages, as well as attorneys fees and costs of the suit in favor of respondents 'ichael and :eanette ,suncion, is +474T4+ for lack of basis. However, the dismissal for lack of merit of petitioners counterclaim for litigation eBpenses, eBemplary damages and attorneys fees, is FMFT,I/4+. /o pronouncement as to costs. F6 6#+4#4+.

G.R. No. 1>52>> =e"ember 15, 2010 AIR !RANCE, "etitioner, vs. 3ONI!ACIO H. GILLEGO, &'b&t%t'te( b0 ,%& &'r-%-%#+ ,e%r& repre&e#te( b0 =o*ore& P. G%**e+o, #espondent. +4!IFI6/ CILLARAMA, ?R., J.: 5or review is the +ecision$ dated :une )*, (**% of the !ourt of ,ppeals E!,D in !,-G.#. !. /o. &?&08 which affirmed the +ecision( dated :anuary ), $11? of the #egional Trial !ourt E#T!D of 'akati !ity, ranch $)8 in !ivil !ase /o. 1)-()(0. The facts follow2 Fometime in ,pril $11), respondent onifacio H. Gillego, ) then incumbent !ongressman of the Fecond +istrict of Forsogon and !hairman of the House of #epresentatives !ommittee on !ivil, "olitical and Human #ights, was invited to participate as one of the keynote speakers at the 01th Inter-"arliamentary !onference Fymposium on "arliament Guardian of Human #ights to be held in

udapest, Hungary and Tokyo, :apan from 'ay $1 to ((, $11). The "hilippines is a member of the Inter-"arliamentary Mnion which organi9ed the event.% 6n 'ay $?, $11), respondent left 'anila on board petitioner ,ir 5rances aircraft bound for "aris, 5rance. He arrived in "aris early morning of 'ay $8, $11) E&2** a.m.D. 3hile waiting at the +e Gaulle International ,irport for his connecting flight to udapest scheduled at )2$& p.m. that same day, respondent learned that petitioner had another aircraft bound for udapest with an earlier departure time E$*2** a.m.D than his scheduled flight. He then went to petitioners counter at the airport and made arrangements for the change in his booking. He was given a corresponding ticket and boarding pass for 5light /o. (*(% and also a new baggage claim stub for his checked-in luggage.& However, upon arriving in udapest, respondent was unable to locate his luggage at the claiming section. He sought assistance from petitioners counter at the airport where petitioners representative verified from their computer that he had indeed a checkedin luggage. He was advised to Cust wait for his luggage at his hotel and that petitioners representatives would take charge of delivering the same to him that same day. ut said luggage was never delivered by petitioners representatives despite follow-up in@uiries by respondent. Mpon his return to the "hilippines, respondents lawyer immediately wrote petitioners Ftation 'anager complaining about the lost luggage and the resulting damages he suffered while in udapest. #espondent claimed that his single luggage contained his personal effects such as clothes, toiletries, medicines for his hypertension, and the speeches he had prepared, including the notes and reference materials he needed for the conference. He was thus left with only his travel documents, pocket money and the clothes he was wearing. ecause petitioners representatives in udapest failed to deliver his luggage despite their assurances and his repeated follow-ups, respondent was forced to shop for personal items including new clothes and his medicines. ,side from these unnecessary eBpenditures of about S$,***, respondent had to prepare another speech, in which he had difficulty due to lack of data and information. #espondent thus demanded the sum of "$,***,***.** from the petitioner as compensation for his loss, inconvenience and moral damages.? "etitioner, however, continued to ignore respondents repeated follow-ups regarding his lost luggage. 6n :uly $), $11), respondent filed a complaint 8 for damages against the petitioner alleging that by reason of its negligence and breach of obligation to transport and deliver his luggage, respondent suffered inconvenience, serious anBiety, physical suffering and sleepless nights. It was further alleged that due to the physical, mental and emotional strain resulting from the loss of his luggage, aggravated by the fact that he failed to take his regular medication, respondent had to be taken to a medical clinic in Tokyo, :apan for emergency treatment. #espondent asserted that as a common carrier which advertises and offers its services to the public, petitioner is under obligation to observe eBtraordinary diligence in the vigilance over checked-in luggage and to see to it that respondents luggage entrusted to petitioners custody would accompany him on his flight and=or could be claimed by him upon arrival at his point of destination or delivered to him without delay. "etitioner should therefore be held liable for actual damages ES(,***.** or "%*,***.**D, moral damages E"$,***,***.**D, eBemplary damages E"&**,***.**D, attorneys fees E"&*,***.**D and costs of suit. "etitioner filed its answer 0 admitting that respondent was issued tickets for the flights mentioned, his subse@uent re@uest to be transferred to another flight while at the "aris airport and the loss of his checked-in luggage upon arrival at udapest, which luggage has not been retrieved to date and the respondents repeated follow-ups ignored. However, as to the rest of respondents allegations, petitioner said it has no knowledge and information sufficient to form a belief as to their truth. ,s special and affirmative defense, petitioner contended that its liability for lost checked-in baggage is governed by the 3arsaw !onvention for the Mnification of !ertain #ules #elating to International !arriage. Mnder the said treaty, petitioners liability for lost or delayed registered baggage of respondent is limited to (&* francs per kilogram or MFS(*.**, which constitutes li@uidated damages and hence respondent is not entitled to any further damage. "etitioner averred that it has taken all necessary measures to avoid loss of respondents baggage, the contents of which respondent did not declare, and that it has no intent to cause such loss, much less knew that such loss could occur. The loss of respondents luggage is due to or occasioned by force maCeure or fortuitous event or other causes beyond the carriers control. +iligent, sincere and timely efforts were eBerted by petitioner to locate respondents missing luggage and attended to his problem with utmost courtesy, concern and dispatch. "etitioner further asserted that it eBercised due diligence in the selection and supervision of its employees and acted in good faith in denying respondents demand for damages. The claims for actual, moral and eBemplary damages and attorneys fees therefore have no basis in fact and in law, and are, moreover speculative and unconscionable. In his #eply,1 respondent maintained that the loss of his luggage cannot be attributed to anything other than petitioners simple negligence and its failure to perform the diligence re@uired of a common carrier. 6n :anuary ), $11?, the trial court rendered its decision in favor of respondent and against the petitioner, as follows2 3H4#456#4, premises considered, Cudgment is rendered ordering defendant to pay plaintiff2 $. The sum of "$,***,***.** as moral damagesA (. The sum of "&**,***.** as eBemplary damagesA ). The sum of "&*,***.** as attorneys feesA and %. The costs. F6 6#+4#4+.$* The trial court found there was gross negligence on the part of petitioner which failed to retrieve respondents checked-in luggage up to the time of the filing of the complaint and as admitted in its answer, ignored respondents repeated follow-ups. It likewise found petitioner guilty of willful misconduct as it persistently disregarded the rights of respondent who was no ordinary individual but a high government official. ,s to the applicability of the limited liability for lost baggage under the 3arsaw !onvention, the trial court reCected the argument of petitioner citing the case of ,litalia v. Intermediate ,ppellate !ourt.$$ "etitioner appealed to the !,, which affirmed the trial courts decision. The !, noted that in the memorandum submitted by petitioner before the trial court it was mentioned that respondents luggage was eventually found and delivered to him, which was not denied by respondent and thus resulted in the withdrawal of the claim for actual damages. ,s to the trial courts finding of gross negligence, bad faith and willful misconduct which Custified the award of moral and eBemplary damages, the !, sustained the same, stating thus2 It bears stressing that defendant-appellant committed a breach of contract by its failure to deliver the luggage of plaintiff-appellee on time despite demand from plaintiff-appellee. The unreasonable delay in the delivery of the luggage has not been satisfactorily eBplained by defendant-appellant, either in its memorandum or in its appellants brief. Instead of Custifying the delay, defendantappellant took refuge under the provisions of the 3arsaw !onvention to escape liability. /either was there any showing of apology on the part of defendant-appellant as to the delay. 5urthermore, the unapologetic defendant-appellant even faulted plaintiffappellee for not leaving a local address in udapest in order for the defendant-appellant to contact him Eplaintiff-appelleeD in the

event the luggage is found. This actuation of defendant-appellant is a clear showing of willful misconduct and a deliberate design to avoid liability. It amounts to bad faith. ,s elucidated by !hief :ustice Hilario+avide, :r., ";b<ad faith does not simply connote bad Cudgment or negligenceA it imports a dishonest purpose or some moral obli@uity and conscious doing of a wrong, a breach of a known duty through some motive or interest or ill will that partakes of the nature of fraud."$( E4mphasis supplied.D Its motion for reconsideration having been denied, petitioner filed the present #ule %& petition raising the following grounds2 I. TH4 ,'6M/TF ,3,#+4+ T6 #4F"6/+4/T ,F '6#,7 ,/+ 4P4'"7,#L +,',G4F ,#4 4P!4FFI.4, M/!6/F!I6/, 74 ,/+ M/#4,F6/, 74. II. TH4#4 IF /6 74G,7 ,/+ 5,!TM,7 ,FIF T6 TH4 5I/+I/GF 65 TH4 T#I,7 !6M#T ,/+ TH4 !6M#T 65 ,""4,7F TH,T "4TITI6/4#F ,!TI6/F 34#4 ,TT4/+4+ L G#6FF /4G7IG4/!4, ,+ 5,ITH ,/+ 3I775M7 'IF!6/+M!T ,/+ TH,T IT ,!T4+ I/ , 3,/T6/, 5#,M+M74/T, #4!I74FF, 6""#4FFI.4 6# ',74.674/T ',//4#, T6 :MFTI5L TH4 ,3,#+ 65 '6#,7 ,/+ 4P4'"7,#L +,',G4F.$) "etitioner assails the trial and appellate courts for awarding eBtravagant sums to respondent that already tend to punish the petitioner and enrich the respondent, which is not the function at all of moral damages. Mpon the facts established, the damages awarded are definitely not proportionate or commensurate to the wrong or inCury supposedly inflicted. 3ithout belittling the problems respondent eBperienced in udapest after losing his luggage, petitioner points out that despite the unfortunate incident, respondent was able to reconstruct the speeches, notes and study guides he had earlier prepared for the conference in udapest and Tokyo, and to attend, speak and participate therein as scheduled. Fince he prepared the research and wrote his speech, considering his acknowledged and long-standing eBpertise in the field of human rights in the "hilippines, respondent should have had no difficulty delivering his speech even without his notes. In addition, there is no evidence that members of the Inter"arliamentary Mnion made derogatory statements or even knew that he was unprepared for the conference. earing in mind that the actual damages sought by respondent was only S(,***.**, then clearly the trial court went way beyond that amount in determining the appropriate damages, inspite of the fact that the respondent eventually got back his baggage.$% !omparing the situation in this case to other cases awarding similar damages to the aggrieved passenger as a result of breaches of contract by international carriers, petitioner argues that even assuming that respondent was entitled to moral and eBemplary damages, the sums adCudged should be modified or reduced. It is stressed that petitioner or its agents were never rude or discourteous toward respondentA he was not subCected to humiliating treatment or comments as in the case of 7ope9, et al. v. "an ,merican 3orld ,irways, $&6rtigas, :r. v. 7ufthansa German ,irlines$? and Vulueta v. "an ,merican 3orld ,irways, Inc.$8. The mere fact that respondent was a !ongressman should not result in an automatic increase in the moral and eBemplary damages recoverable. ,s held in Iierulf v. !ourt of ,ppeals $0 the social and financial standing of a claimant may be considered only if he or she was subCected to contemptuous conduct despite the offenders knowledge of his or her social and financial standing.$1 In any event, petitioner invokes the application of the eBception to the rule that only @uestions of law may be entertained by this !ourt in a petition for review under #ule %& as to allow a factual review of the case. 5irst, petitioner contends that it has always maintained that the "admission" in its answer was only made out of inadvertence, considering that it was inconsistent with the special and affirmative defenses set forth in the same pleading. The trial court incorrectly concluded that petitioner had not prepared a "roperty Irregularity #eport E"I#D but fabricated one only as an afterthought. , "I# can only be initiated upon the instance of a passenger whose baggage had been lost, and in this case it was prepared by the station where the loss was reported. The "I# in this case was automatically and chronologically recorded in petitioners computeri9ed system. #espondent himself admitted in his testimony that he gave his "hilippine address and telephone number to the lady in charge of petitioners complaint desk in udapest. It was not necessary to furnish a passenger with a copy of the "I# since its purpose is for the airline to trace a lost baggage. 3hat respondent ought to have done was to make a BeroB copy thereof for himself.(* "etitioner reiterates that there was no bad faith or negligence on its part and the burden is on the respondent to prove by clear and convincing evidence that it acted in bad faith. #espondent in his testimony miserably failed to prove that bad faith, fraud or ill will motivated or caused the delay of his baggage. This !ourt will surely agree that mere failure of a carrier to deliver a passengers baggage at the agreed place and time did not ipso facto amount to willful misconduct as to make it liable for moral and eBemplary damages. "etitioner adduced evidence showing that it eBerted diligent, sincere and timely efforts to locate the missing baggage, eventually leading to its recovery. It attended to respondents problem with utmost courtesy, concern and dispatch. #espondent, moreover, never alleged that petitioners employees were at anytime rude, mistreated him or in anyway showed improper behavior.($ The petition is partly meritorious. , business intended to serve the travelling public primarily, a contract of carriage is imbued with public interest.(( The law governing common carriers conse@uently imposes an eBacting standard. ,rticle $8)& of the !ivil !ode provides that in case of lost or damaged goods, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed eBtraordinary diligence as re@uired by ,rticle $8)). Thus, in an action based on a breach of contract of carriage, the aggrieved party does not have to prove that the common carrier was at fault or was negligent. ,ll that he has to prove is the eBistence of the contract and the fact of its non-performance by the carrier.() That respondents checked-in luggage was not found upon arrival at his destination and was not returned to him until about two years later(% is not disputed. The action filed by the respondent is founded on such breach of the contract of carriage with petitioner who offered no satisfactory eBplanation for the unreasonable delay in the delivery of respondents baggage. The presumption of negligence was not overcome by the petitioner and hence its liability for the delay was sufficiently established. However, upon receipt of the said luggage during the pendency of the case in the trial court, respondent did not anymore press on his claim for actual or compensatory damages and neither did he adduce evidence of the actual amount of loss and damage incurred by such delayed delivery of his luggage. !onse@uently, the trial court proceeded to determine only the propriety of his claim for moral and eBemplary damages, and attorneys fees. In awarding moral damages for breach of contract of carriage, the breach must be wanton and deliberately inCurious or the one responsible acted fraudulently or with malice or bad faith.(& /ot every case of mental anguish, fright or serious anBiety calls for the award of moral damages.(? 3here in breaching the contract of carriage the airline is not shown to have acted fraudulently or in bad faith, liability for damages is limited to the natural and probable conse@uences of the breach of the obligation which the parties had foreseen or could have reasonably foreseen. In such a case the liability does not include moral and eBemplary damages.(8 ad faith should be established by clear and convincing evidence. The settled rule is that the law always presumes good faith such that any person who seeks to be awarded damages due to the acts of another has the burden of proving that the latter acted in bad faith or with ill motive.(0

In the case of Tan v. /orthwest ,irlines, Inc., (1 we sustained the !,s deletion of moral and eBemplary damages awarded to a passenger whose baggage were loaded to another plane with the same eBpected date and time of arrival but nevertheless not delivered to her on time. 3e found that respondent carrier was not motivated by malice or bad faith in doing so due to weight and balance restrictions as a safety measure. In another case involving the off-loading of private respondents baggage to another destination, taken together with petitioner airlines neglect in providing the necessary accommodations and assistance to its stranded passengers, aggravated by the discourteous acts of its employees, we upheld the !, in sustaining the trial courts decision awarding moral and eBemplary damages and attorneys fees. 3e pointed out that it is ",7s duty to provide assistance to private respondents and to any other passenger similarly inconvenienced due to delay in the completion of the transport and the receipt of their baggage.)* ,fter a careful review, we find that petitioner is liable for moral damages. "etitioners station manager, 'a. 7ourdes #eyes, testified that upon receiving the letter-complaint of respondents counsel, she immediately began working on the "I# from their computeri9ed data. ased on her testimony, a "I# is issued at the airline station upon complaint by a passenger concerning missing baggage. 5rom the information obtained in the computer-printout, it appears that a "I#)$ was initiated at petitioners udapest counter. , search teleB for the missing luggage was sent out on the following dates2 'ay $8, 'ay ($ and 'ay (), $11). ,s shown in the "I# printout, the information respondent supposedly furnished to petitioner was only his "hilippine address and telephone number, and not the address and contact number of the hotel where he was billeted at udapest. ,ccording to the witness, "I# usually is printed in two originals, one is kept by the station manager and the other copy given to the passenger. The witness further claimed that there was no record or entry in the "I# of any follow-up call made by the respondent while in udapest.)( #espondent, on the other hand, claimed that he was not given a copy of this "I# and that his repeated telephone calls to in@uire about his lost luggage were ignored. 3e hold that the trial and appellate courts did not err in finding that petitioner acted in bad faith in repeatedly ignoring respondents follow-up calls. The alleged entries in the "I# deserve scant consideration, as these have not been properly identified or authenticated by the airline station representative in udapest who initiated and inputed the said entries. 5urthermore, this !ourt cannot accept the convenient eBcuse given by petitioner that respondent should be faulted in allegedly not giving his hotel address and telephone number. It is difficult to believe that respondent, who had Cust lost his single luggage containing all his necessities for his stay in a foreign land and his reference materials for a speaking engagement, would not give an information so vital such as his hotel address and contact number to the airline counter where he had promptly and frantically filed his complaint. ,nd even assuming arguendo that his "hilippine address and contact number were the only details respondent had provided for the "I#, still there was no eBplanation as to why petitioner never communicated with respondents concerning his lost baggage long after respondent had already returned to the "hilippines. 3hile the missing luggage was eventually recovered, it was returned to respondent only after the trial of this case. 5urthermore, the alleged copy of the "I# confirmed that the only action taken by the petitioner to locate respondents luggage were teleB searches allegedly made on 'ay $8, ($ and (), $11). There was not even any attempt to eBplain the reason for the loss of respondents luggage. !learly, petitioner did not give the attention and care due to its passenger whose baggage was not transported and delivered to him at his travel destination and scheduled time. Inattention to and lack of care for the interest of its passengers who are entitled to its utmost consideration, particularly as to their convenience, amount to bad faith which entitles the passenger to an award of moral damages.)) 3hat the law considers as bad faith which may furnish the ground for an award of moral damages would be bad faith in securing the contract and in the eBecution thereof, as well as in the enforcement of its terms, or any other kind of deceit.)% 3hile respondent failed to cite any act of discourtesy, discrimination or rudeness by petitioners employees, this did not make his loss and moral suffering insignificant and less deserving of compensation. In repeatedly ignoring respondents in@uiries, petitioners employees eBhibited an indifferent attitude without due regard for the inconvenience and anBiety he eBperienced after reali9ing that his luggage was missing. "etitioner was thus guilty of bad faith in breaching its contract of carriage with the respondent, which entitles the latter to the award of moral damages.-a*phiHowever, we agree with petitioner that the sum of "$,***,***.** awarded by the trial court is eBcessive and not proportionate to the loss or suffering inflicted on the passenger under the circumstances. ,s in Trans 3orld ,irlines v. !ourt of ,ppeals )& where this !ourt after considering the social standing of the aggrieved passenger who is a lawyer and director of several companies, the amount of "&**,***.** awarded by the trial court as moral damages was still reduced to ")**,***.**, the moral damages granted to herein respondent should likewise be adCusted. The purpose of awarding moral damages is to enable the inCured party to obtain means, diversion or amusement that will serve to alleviate the moral suffering he has undergone by reason of defendantQs culpable action. 6n the other hand, the aim of awarding eBemplary damages is to deter serious wrongdoings. )? ,rticle (($? of the !ivil !ode provides that assessment of damages is left to the discretion of the court according to the circumstances of each case. This discretion is limited by the principle that the amount awarded should not be palpably eBcessive as to indicate that it was the result of preCudice or corruption on the part of the trial court. Fimply put, the amount of damages must be fair, reasonable and proportionate to the inCury suffered.)8 3here as in this case the air carrier failed to act timely on the passengers predicament caused by its employees mistake and more than ordinary inadvertence or inattention, and the passenger failed to show any act of arrogance, discourtesy or rudeness committed by the air carriers employees, the amounts of "(**,***.**, "&*,***.** and ")*,***.** as moral damages, eBemplary damages and attorneys fees would be sufficient and Custified.)0 3H4#456#4, the petition is +4/I4+. The +ecision dated :une )*, (**% of the !ourt of ,ppeals in !,-G.#. !. /o. &?&08 is hereby ,55I#'4+ with '6+I5I!,TI6/ in that the award of moral damages, eBemplary damages and attorneys fees are hereby reduced to "(**,***.**, "&*,***.** and ")*,***.**, respectively. 3ith costs against the petitioner. F6 6#+4#4+.