1. SULPICIO v.
CA
Petitioner: SULPICIO LINES, INC.
Respondent: The Honorable COURT OF APPEALS and TITO DURAN TABUQUILDE
and ANGELINA DE PAZ TABUQUILDE
G.R. No. 113578 July 14, 1995
Lessons Applicable: Exceptions to Contracting Parties
FACTS:
 October 23, 1988: Tito Duran Tabuquilde (Tito) and his 3-year old daughter
Jennifer Anne (Anne) boarded the M/V Dona Marilyn at North Harbor, Manila,
bringing with them several pieces of luggage.
 Storm Signal No. 2 had been raised by the PAG-ASA authorities over Leyte as
early as 5:30 P.M. of October 23, 1988 and which signal was raised to Signal No.
3 by 10 P.M
 ship captain ordered the vessel to proceed to Tacloban when prudence dictated
that he should have taken it to the nearest port for shelter, thus violating his duty
to exercise extraordinary diligence in the carrying of passengers safely to their
destination
 October 24, 1988 morning: M/V Dona Marilyn, while in transit, encountered
inclement weather which caused huge waves due to Typhoon Unsang.
 Angelina Tabuquilde contacted the Sulpicio Office to verify radio reports that the
vessel M/V Dona Marilyn was missing
 Sulpicio Lines assured her that the ship was merely "hiding" thereby assuaging
her anxiety
 October 24, 1988 2:00 P.M.: vessel capsized, throwing Tito and Anne, along with
hundreds of passengers, into the sea.
 Tito tried to keep himself and his daughter afloat but to no avail as the waves got
stronger and he was subsequently separated from his daughter despite his efforts.
 October 25, 1988 11:00 A.M.: He found himself on Almagro Island in Samar
 He immediately searched for his daughter among the survivors in the island, but
failed
 Angelina tried to seek the assistance of the Sulpicio Lines in Manila to no avail
 Angelina spent sleepless nights worrying about her husband and daughter in view
of the refusal of Sulpicio Lines to release a verification of the sinking of the ship
 October 26, 1988: Tito and other survivors in the Almagro Island were fetched and
were brought to Tacloban Medical Center for treatment
 October 31, 1988: Tito reported the loss of his daughter and was informed that the
corpse of a child with his daughter's description had been found
 Tito wrote a letter to his wife, reporting the sad fact that Jennifer Anne was dead
 Angelina suffered from shock and severe grief upon receipt of the news
 November 3, 1988: coffin bearing the corpse of Anne was buried
 November 24, 1988: Tito filed a claim for damages against Sulpicio Lines for the
death of Anne and the loss of his belongings worth P27,580
 Trial Court: in favor of Tito
 actual damages, P30,000.00 for the death of Anne
 P100,000.00 as moral damages
 P50,000.00 as exemplary damages
 P50,000.00 as attorney's fees, and costs
ISSUE: W/N Tito has a right to recover damage for his lost belongings
HELD:
NO. Court of Appeals is AFFIRMED with the MODIFICATION that the award of
P27,580.00 as actual damages for the loss of the contents of the pieces of baggage is
deleted and that the award of P30,000.00 under Article 2206 in relation Article 1764 is
increased to P50,000.00.
 There is no showing that the value of the contents of the lost pieces of baggage
was based on the bill of lading or was previously declared by Tito before he
boarded the ship
 Article 2206 of the Civil Code of the Philippines:
“Only deaths caused by a crime as quasi delict are entitled to actual and
compensatory damages without the need of proof of the said damages.
The amount of damages for death caused by a crime or quasi delict shall be
at least Three Thousand Pesos, even though there may have been mitigating
circumstances.”
 Deducing alone from said provision, one can conclude that damages arising
from culpa contractual are not compensable without proof of special damages
sustained by the heirs of the victim.
Transpo April 5 GB pg. 1
 With respect to the award of moral damages, the general rule is that said damages
are not recoverable in culpa contractual except when the presence of bad faith
was proven

 in breach of contract of carriage, moral damages may be recovered when it results

in the death of a passenger

 With respect to the award of exemplary damages, Article 2232 of the Civil Code of
the Philippines gives the Court the discretion to grant said damages in breach of
contract when the defendant acted in a wanton, fraudulent and reckless manner

 The crew assumed a greater risk when, instead of dropping anchor in or at the
periphery of the Port of Calapan, or returning to the port of Manila which is nearer,
proceeded on its voyage on the assumption that it will be able to beat and race
with the typhoon and reach its destination before it (Unsang) passes

Transpo April 5 GB pg. 2

 2. CARIAGA v. LTB, MRR
Plaintiffs-appellants: EDGARDO CARIAGA, ET AL.
Defendant-appellant: LAGUNA TAYABAS BUS COMPANY
Defendant-appellee: MANILA RAILROAD COMPANY
WHO WON: Cariaga
DOCTRINE:
- The income of the plaintiff which he could have earned if he should he finish
his course and pass the board exams must be deemed to be within the natural
and probable consequences of the breach –along with medical, hospital and
other expenses– because they could have reasonably been foreseen by the
parties at the time the plaintiff boarded the bus owned and operated by the
common carrier.
- Moral damages may only be awarded upon showing of any of the instances
enumerated under Art. 2219 of the New Civil Code or upon showing of bad
faith or fraud under Art. 2220 of the same Code.
- Attorney’s fees may only be recovered upon showing of any of the instances
enumerated under Art. 2208 of the New Civil Code.
FACTS:
- At about 1PM on June 18, 1952, a passenger bus of the Laguna Tayabas
Bus Co. (LTB) driven by Alfredo Moncada, left for Lilio, Laguna, with Edgardo
Cariaga, a fourth-year medical student of the University of Santo Tomas,
as one of its passengers.
- As the bus reached that part of the poblacion of Bay, Laguna, where the
national highway crossed a railroad track, it bumped against the engine of
a train then passing by with such terrific force that the first six wheels
of the train were derailed, the engine and the front part of the body of
the bus was wrecked, the driver of the bus died instantly, while many of
its passengers, Edgardo among them, were severely injured.
- Edgardo was first confined at the San Pablo City Hospital (June 18) and then
brought next to the De los Santos Clinic (June 20), Quezon City. He again left
such clinic to be transferred to the University of Santo Tomas Hospital (Oct
14-Nov 15) where he stayed for a relatively longer period. On this last date
he was taken back to the De los Santos Clinic (Jan 15). He was unconscious
during the first 35 days after the accident. Dr. Gustilo removed the
fractured bones which lacerated the right frontal lobe of his brain and
at the UST Hospital, Dr. Gustilo performed another operation to cover a
big hole on the right frontal part of the head with a tantalum plate.
- LTB paid the sum of P16,964.45 for all the hospital, medical and
miscellaneous expenses incurred from June 18, 1952 - April, 1953. From
January 15, 1953 - April 1953, Edgardo stayed in a private house in Quezon,
City, the LTB having agreed to give him a subsistence allowance of P10 daily
during his period of recovery, having spent in this connection the total sum of
P775.30 in addition to the amount already referred to.
- Edgardo filed a civil suit against LTB and the Manila Railroad Co. the total
sum of P312,000 as actual, compensatory, moral and exemplary
damages, and for his parents, the sum of P18,000 in the same concepts.
- LTB disclaimed liability claiming that the accident was due to the negligence
of its co-defendant Manila Railroad Co., for not providing a crossing bar at the
point where the national highway crossed the railway track, and for the reason
filed the corresponding cross-claim against the latter company to recover the
total sum of P18,194.75 representing the expenses paid to Edgardo.
- Manila Railroad Co, in turn, denied liability upon the complaint and cross-
claim alleging that it was reckless negligence of the bus driver that caused
the accident.
- The lower court held that it was the negligence of the bus driver that
caused the accident and, as a result, rendered judgment sentencing the
LTB to pay Edgardo Cariaga the sum of P10,490 as compensatory
damages, with interest at the legal rate from the filing of the complaint,
and dismissing the cross-claim against the Manila Railroad Company.
From this decision the Cariagas and the LTB appealed.
- Cariagas claim that the TC erred in awarding only P10,490 as compensatory
damages to Edgardo; in not awarding them actual and moral damages, and
in not sentencing LTB to pay attorney’s fees.
- LTB's contends that the TC should have held that the collision was due to the
fault of both the locomotive driver and the bus driver and erred, as a
consequence, in not holding the Manila Railroad Company liable upon the
cross-claim filed against it. LTB also avers that the driver of the train
locomotive, like the bus driver, violated the law, first, in sounding the whistle
only when the collision was about to take place instead of at a distance at
least 300 meters from the crossing, and second, in not ringing the locomotive
bell at all.
ISSUE/S:
1. W/N Manila Railroad Company should also be held liable in the
collision? NO
2. W/N the award of compensatory damages to Eduardo is inadequate
considering the nature and the after effects of the physical injuries
suffered by him? YES
3. W/N Edgardo Cariaga is entitled to moral damages and attorney’s fees?
NO
RULING:
1. The Supreme Court quoted the lower court’s finding regarding LTB’s contention on
Manila Railroad Company’s alleged liability to wit: “While the train was approximately
300 meters from the crossing, the engineer sounded two long and two short whistles
and upon reaching a point about 100 meters from the highway, he sounded a long
Transpo April 5 GB pg. 3
whistle which lasted up to the time the train was about to cross it. The bus proceeded
on its way without slackening its speed and it bumped against the train engine, causing
the first six wheels of the latter to be derailed…”
Moreover, LTB’s charge against Manila Railroad Company of its contributory negligence
due to an alleged violation of section 91 of Art. 1459 of MRR’s chapter by its failure to
ring the bell was not satisfactorily proven. Consequently, the burden of proof on the part
of LTB was not discharged.
The plaintiff Edgardo Cariaga is also not entitled to recover for attorney's fees,
because this case does not fall under any of the instances enumerated in Article
2208 of the Civil Code. Defendant has not committed in connection with this case any
"criminal offense resulting in physical injuries". The present complaint is not based either
on a "quasi-delict causing physical injuries” nor “any criminal offense resulting in
physical injuries” –
LTB’s driver herein being the one who committed the offense is already dead from the
collision.

2. According to Edgardo’s neurosurgeon Dr. Romeo Gustilo, it appears that, as a result
of the injuries suffered by him, his right forehead was fractured necessitating the
removal of practically all of the right frontal lobe of his brain. From the testimony
of Dr. Jose A. Fernandez, a psychiatrist, it may be gathered that, because of the physical
injuries suffered by Edgardo, his mentality has been so reduced that he can no
longer finish his studies as a medical student; that he has become completely
misfit for any kind of work; that he can hardly walk around without someone
helping him, and has to use a brace on his left leg and feet. Thus, as a result of
the physical injuries suffered by Edgardo Cariaga, he is now in a helpless
condition, virtually an invalid, both physically and mentally.
To reiterate, the sum of P2,000 awarded as moral damages by the trial court has
to be eliminated, for under the law it is not a compensation awardable in a case
like the one at bar. The claim made by said spouses for actual and compensatory
damages is likewise without merits since the present action is based upon a
breach of contract of carriage to which said spouses were not a party, and neither
can they premise their claim upon the negligence or quasi-delict of the LTB
simply because they were not themselves injured as a result of the collision
between the LTB bus and train owned by the Manila Railroad Company.

The SC is of the opinion that the income which Edgardo Cariaga could have earned
if he should finish the medical course and pass the corresponding board
examinations must be deemed to be within the natural and probable consequences
of the breach –along with medical, hospital and other expenses totaling P17,719.75–
because they could have reasonably been foreseen by the parties at the time he
boarded the bus owned and operated by the LTB. At that time he was already a fourth-
year student in medicine in a reputable university.

As regards the income that he could possibly earn as a medical practitioner, it appears
that, according to Dr. Amado Doria, a witness for the LTB, the amount of P300 could
easily be expected as the minimum monthly income of Edgardo had he finished his
studies.

Upon consideration of all the facts mentioned heretofore this Court is of the
opinion, and so holds, that the compensatory damages awarded to Edgardo
Cariaga should be increased to P25,000.

3. Plaintiffs' claim for moral damages cannot be granted. Article 2219 of the Civil
Code enumerates the instances when moral damages may be covered and the
case under consideration does not fall under any one of them. The present action
cannot come under paragraph 2 of said article because it is not one of quasi-delict
because of the pre-existing contractual relation between the Laguna Tayabas Bus
Company and Edgardo Cariaga. Neither could defendant Laguna Tayabas Bus
Company be held liable to pay moral damages to Edgardo Cariaga under Article
2220 of the Civil Code on account of breach of its contract of carriage because
said defendant did not act fraudulently or in bad faith in connection therewith.
Defendant Laguna Tayabas Bus Company had exercised due diligence in the selection
and supervision of its employees like the drivers of its buses in connection with the
discharge of their duties and so it must be considered an obligor in good faith.

Transpo April 5 GB pg. 4

 3. JAPAN AIRLINES v. ASUNCION
Petitioner: JAPAN AIRLINES
Respondent: MICHAEL ASUNCION and JEANETTE ASUNCION
G.R No. 161730 (449 SCRA 544)
January 28, 2005
FACTS:
This petition for review seeks to reverse and set aside the October 9, 2002 decision of
the Court of Appeals and its January 12, 2004 resolution, which affirmed in toto the June
10, 1997 decision of the Regional Trial Court of Makati City, Branch 61 in Civil Case No.
92-3635.
On March 27, 1992, respondents Michael and Jeanette Asuncion left Manila on board
Japan Airlines’ (JAL) Flight 742 bound for Los Angeles. Their itinerary included a stop-
over in Narita and an overnight stay at Hotel Nikko Narita. Upon arrival at Narita, Mrs.
Noriko Etou-Higuchi of JAL endorsed their applications for shore pass and directed
them to the Japanese immigration official. A shore pass is required of a foreigner aboard
a vessel or aircraft who desires to stay in the neighbourhood of the port of call for not
more than 72 hours.
During their interview, the Japanese immigration official noted that Michael appeared
shorter than his height as indicated in his passport. Because of this inconsistency,
respondents were denied shore pass entries and were brought instead to the Narita
Airport Rest House where they were billeted overnight.
Mr. Atsushi Takemoto of the International Service Center (ISC), the agency tasked by
Japan’s Immigration Department to handle passengers who were denied shore pass
entries, brought respondents to the Narita Airport Rest House where they stayed
overnight until their departure the following day for Los Angeles. Respondents were
charged US$400.00 each for their accommodation, security service and meals.
On December 12, 1992, respondents filed a complaint for damages claiming that JAL
did not fully apprise them of their travel requirements and that they were rudely and
forcibly detained at Narita Airport.
ISSUE: Whether or not JAL is liable of breach of contract of carriage.
SIDE ISSUES:
 Whether or not JAL is liable for moral, exemplary damages,
 Whether or not the plaintiff is liable for attorney’s fee and cost of suit
incurred (JAL counterclaim)
RULING:
The court finds that JAL did not breach its contract of carriage with respondents. It may
be true that JAL has the duty to inspect whether its passengers have the necessary
travel documents, however, such duty does not extend to checking the veracity of every
entry in these documents. JAL 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 JAL. This is not within the ambit
of the contract of carriage entered into by JAL and herein respondents. As such, JAL
should not be faulted for the denial of respondents’ shore pass applications.
In the Respondents claim that petitioner breached its contract of carriage when it failed
to explain to the immigration authorities that they had overnight vouchers at the Hotel
Nikko Narita. They imputed that JAL did not exhaust all means to prevent the denial of
their shore pass entry applications. JAL or any of its representatives have no authority
to interfere with or influence the immigration authorities. The most that could be
expected of JAL is to endorse respondents’ applications, which Mrs. Higuchi did
immediately upon their arrival in Narita.
Moral damages may be recovered in cases where one willfully causes injury to property,
or in cases of breach of contract where the other party acts fraudulently or in bad faith.
Exemplary damages are imposed by way of example or correction for the public good,
when the party to a contract acts in wanton, fraudulent, oppressive or malevolent
manner. Attorney’s fees are allowed when exemplary damages are awarded and when
the party to a suit is compelled to incur expenses to protect his interest.[17] There being
no breach of contract nor proof that JAL acted in wanton, fraudulent or malevolent
manner, there is no basis for the award of any form of damages.
Neither should JAL be held liable to reimburse respondents the amount of US$800.00.
It has been sufficiently proven that the amount pertained to ISC, an agency separate
and distinct from JAL, in payment for the accommodations provided to respondents.
The payments did not in any manner accrue to the benefit of JAL.
However, we find that the Court of Appeals correctly dismissed JAL’s counterclaim for
litigation expenses, exemplary damages and attorney’s fees. The action was filed by
respondents in utmost good faith and not manifestly frivolous. Respondents honestly
believed that JAL breached its contract. A person’s right to litigate should not be
penalized 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.[
WHEREFORE, in view of the foregoing, the instant petition is PARTLY GRANTED. The
October 9, 2002 decision of the Court of Appeals and its January 12, 2004 resolution in
CA-G.R. CV No. 57440, are REVERSED and SET ASIDE insofar as the finding of
breach on the part of petitioner and the award of damages, attorney’s fees and costs of
the suit in favor of respondents is concerned. Accordingly, there being no breach of
contract on the part of petitioner, the award of actual, moral and exemplary damages,
as well as attorney’s fees and costs of the suit in favor of respondents Michael and
Jeanette Asuncion, is DELETED for lack of basis. However, the dismissal for lack of
merit of petitioner’s counterclaim for litigation expenses, exemplary damages and
attorney’s fees, is SUSTAINED. No pronouncement as to costs.
Transpo April 5 GB pg. 5
 4. VICTORY LINER, INC. vs. GAMMAD
G.R. No. 159636 | November 25, 2004
FACTS:
Marie Grace Gammad was a passenger of petitioner’s bus when it fell on a ravine,
which resulted to her death. Hence, heirs of the deceased Marie Grace filed a case for
damages against Victory Liner, Inc. for breach of contract of carriage. Rosalito
Gammad, husband of deceased, completed his testimony and was scheduled for
cross-examination. However, counsel of peritioner failed to appear even after a
reschedule, and thus the court deemed the petitioner to have waived cross-
examination. The petitioner’s counsel also failed to appear at the presentation of
evidence. The court already deemed the case submitted for resolution when it
received belatedly the telegram of petitioner’s counsel requesting for postponement.
ISSUE:
(1) Is the petitioner bound by the negligence of the counsel?
(2) Is the petitioner liable for breach of contract of carriage?
(3) Is the award of damages proper?
RULING:
(1) Yes. As a general rule, client is bound by negligence of counsel. Any act
performed by a counsel within the scope of his general or implied authority is regarded
as an act of his client. Consequently, the mistake or negligence of counsel may result
in the rendition of an unfavorable judgment against the client. However, exceptions
have been recognized by the court in cases where reckless or gross negligence of
counsel deprives the client of due process of law, or when its application will
result in outright deprivation of the clients liberty or property or where the
interests of justice so require, and accord relief to the client who suffered by
reason of the lawyers gross or palpable mistake or negligence.
The exceptions, however, are not present in this case. Petitioners claim that it was
denied due process lacks basis. Petitioner too is not entirely blameless.
(2) Petitioner was correctly found liable for breach of contract of carriage. A common
carrier is bound to carry its passengers safely as far as human care and foresight can
provide, using the utmost diligence of very cautious persons, with due regard to all the
circumstances. In a contract of carriage, it is presumed that the common carrier was at
fault or was negligent when a passenger dies or is injured. Unless the presumption
is rebutted, the court need not even make an express finding of fault or
negligence on the part of the common carrier. This statutory presumption may only
be overcome by evidence that the carrier exercised extraordinary diligence.
In the instant case, there is no evidence to rebut the statutory presumption that the
proximate cause of Marie Grace’s death was the negligence of petitioner. Hence, the
courts below correctly ruled that petitioner was guilty of breach of contract of carriage.
(3) Nevertheless, the award of damages should be modified. Article 1764 in relation to
Article 2206, holds the common carrier in breach of its contract of carriage that results
in the death of a passenger liable to pay the following: (1) indemnity for death, (2)
indemnity for loss of earning capacity, and (3) moral damages.
In the present case, respondent heirs of the deceased are entitled to indemnity for the
death of Marie Grace which under current jurisprudence is fixed at P50,000.00.
The award of compensatory damages for the loss of the deceased’s earning capacity
should be deleted for lack of basis. As a rule, documentary evidence should be
presented to substantiate the claim for damages for loss of earning capacity. By
way of exception, damages for loss of earning capacity may be awarded despite
the absence of documentary evidence when (1) the deceased is self-employed
earning less than the minimum wage under current labor laws, and judicial
notice may be taken of the fact that in the deceased’s line of work no
documentary evidence is available; or (2) the deceased is employed as a daily
wage worker earning less than the minimum wage under current labor laws.
Here, the award of compensatory damages for loss of earning capacity was based
only on the testimony of respondent Rosalito. No other evidence was presented. The
award is clearly erroneous because the deceased’s earnings does not fall within the
exceptions. However, the fact of loss having been established, temperate damages in
the amount of P500,000.00 should be awarded to respondents. Under Article 2224,
temperate or moderate damages, which are more than nominal but less than
compensatory damages, may be recovered when the court finds that some
pecuniary loss has been suffered but its amount cannot, from the nature of the
case, be proved with certainty.
Anent the award of moral damages, the same cannot be lumped with exemplary
damages because they are based on different jural foundations. These damages are
Transpo April 5 GB pg. 6
different in nature and require separate determination. In culpa contractual or breach
of contract, moral damages may be recovered when the defendant acted in bad faith
or was guilty of gross negligence (amounting to bad faith) or in wanton disregard
of contractual obligations and, as in this case, when the act of breach of contract itself
constitutes the tort that results in physical injuries. By special rule in Article 1764 in
relation to Article 2206, moral damages may also be awarded in case the death of a
passenger results from a breach of carriage. On the other hand, exemplary damages,
which are awarded by way of example or correction for the public good may be
recovered in contractual obligations if the defendant acted in wanton, fraudulent,
reckless, oppressive, or malevolent manner.
Respondents in the instant case should be awarded moral damages to compensate
for the grief caused by the death of the deceased resulting from the petitioner’s breach
of contract of carriage. Furthermore, the petitioner failed to prove that it exercised the
extraordinary diligence required for common carriers, it is presumed to have acted
recklessly. Thus, the award of exemplary damages is proper. Under the
circumstances, we find it reasonable to award respondents the amount of
P100,000.00 as moral damages and P100,000.00 as exemplary damages.
For actual damages, only substantiated and proven expenses or those that
appear to have been genuinely incurred in connection with the death, wake or
burial of the victim will be recognized. Hence, actual damages should be further
reduced to P78,160.00, which was the amount supported by official receipts.
Pursuant to Article 2208, attorney’s fees may also be recovered in the case at bar
where exemplary damages are awarded. The Court finds the award of attorneys
fees equivalent to 10% of the total amount adjudged against petitioner reasonable.
be 12% per annum to be computed from default, i.e., from judicial or
extrajudicial demand under and subject to the provisions of Article 1169,
Civil Code.
2. When an obligation, not constituting a loan or forbearance of money, is
breached, an interest on the amount of damages awarded may be imposed
at the discretion of the court at the rate of 6% per annum. No interest,
however, shall be adjudged on unliquidated claims or damages except
when or until the demand can be established with reasonable certainty.
Accordingly, where the demand is established with reasonable certainty,
the interest shall begin to run from the time the claim is made judicially or
extrajudicially (Art. 1169, Civil Code) but when such certainty cannot be so
reasonably established at the time the demand is made, the interest shall
begin to run only from the date the judgment of the court is made (at which
time the quantification of damages may be deemed to have been
reasonably ascertained). The actual base for the computation of legal
interest shall, in any case, be on the amount finally adjudged.
3. When the judgment of the court awarding a sum of money becomes
final and executory, the rate of legal interest, whether the case falls
under paragraph 1 or paragraph 2, above, shall be 12% per annum
from such finality until its satisfaction, this interim period being deemed
to be by then an equivalent to a forbearance of credit.
In the instant case, petitioner should also be held liable for payment of interest as
damages for breach of contract of carriage. Considering that the amounts payable by
petitioner has been determined with certainty only in the instant petition, the interest
due shall be computed upon the finality of this decision at the rate of 12% per annum
until satisfaction.

NOTE: Legal interest rate is now fixed at 6%.

Finally, when an obligation, regardless of its source (i.e., law, contracts, quasi-
contracts, delicts or quasi-delicts) is breached, the contravenor can be held liable
for payment of interest in the concept of actual and compensatory damages,
subject to the following rules:

1. When the obligation is breached, and it consists in the payment of a sum of

money, i.e., a loan or forbearance of money, the interest due should be that
which may have been stipulated in writing.

Furthermore, the interest due shall itself earn legal interest from the time it
is judicially demanded. In the absence of stipulation, the rate of interest shall

Transpo April 5 GB pg. 7


5. SAVELLANO v. NORTHWEST AIRLINES
Petitioner: VICTORINO SAVELLANO, VIRGINIA B. SAVELLANO and DEOGRACIAS
B. SAVELLANO
Respondent: NORTHWEST AIRLINES
G.R. No. 151783 July 8, 2003
FACTS:
Before the Court is a Petition for Review under Rule 45 of the Rules of Court, seeking
to set aside the June 29, 2001 Decision (CA) in CA-GR CV No. 47165. The dispositive
part of the Decision reads:
WHEREFORE, the judgment of July 29, 1994 is hereby REVERSED and SET
ASIDE and another rendered DISMISSING [petitioners] Complaint. No
pronouncement as to costs.
On the other hand, the dispositive portion of the Regional Trial Court (RTC) Decision
that was reversed by the CA disposed thus:
WHEREFORE, premises considered, decision is hereby rendered in favor of
the plaintiffs and against the defendant, sentencing the latter to pay to the
former, the following amounts:
1. P500,000.00 as actual damages;
2. P3,000,000.00 as moral damages;
3. P500,000.00 as exemplary damages; and
4. P500,000.00 as attorneys fees;
All such sums shall bear legal interest, i.e., 6% per annum pursuant to Article
2209 of the Civil Code (Reformina vs. Tomol, 139 SCRA 260) from the date
of the filing of the complaint until fully paid. Costs against the x x x Northwest
Airlines, Inc.
[Respondents] counterclaim is ordered dismissed, for lack of merit.
-----------
Savellano, ex-Mayor and former Chairman of COMELEC and wife were expected to
arrive at NAIA after 12 hours of travel coming from Seattle. The plane made an
emergency landing because a fire started in one of the engines.
They passengers were brought to a hotel. At around midnight, they were awakened by
a phone call from Northwest's personnel saying that they would be take a Seattle-Tokyo-
Manila route on the flight back to Manila the next day. Upon arrival at the airport they
were again advised that they would take an alternative and longer route (Seattle - Los
Angeles - Seoul- Manila) back to Manila.
ISSUE:
1. Whether or not the bump-off was a breach of the air carriage contract
2. Whether or not Savellano is entitled to actual, moral and exemplary
damages.
HELD:
1. Yes. In the condition of the airline ticket, there is nothing authorizing Northwest to
decide unilaterally what other stopping places Savellano should take and when they
should fly. Substituting aircraft without notice is entirely different from changing stopping
places or connecting cities without notice. Also, Northwest failed to show a case of
necessity for changing the stopping place.
2. On moral damages: Northwest is not guilty of bad faith. It appears that the passengers
of the distressed flight were randomly divided into 2 groups. One group taking the first
route and the other taking the longer route of flight. The selection of who was to take
the flight was handled via computer reservation system. Savellano failed to present
convincing evidence to back the allegation that Northwest was guilty of bad faith.
On exemplary damages, it is not proper. The unexpected and sudden requirement of
having to arrange connecting flights in just a few hours, in addition to the Northwest
employees' normal workload was difficult to satisfy perfectly. Northwest is not liable for
its imperfection of neglecting to consult with passengers beforehand.
Nominal damages are awarded in this case. The court considered that Savellano
suffered the inconvenience of having to wake up early to catch the flight and that they
were business class passengers who paid more for better service. It also considered
Savellano's social and official status. The court awarded P150,000 as nominal damages
in order to vindicate and recognize their right to be notified and consulted.
Notes:
*The rulings of Lopez, Zulueta and Ortigas are not applicable in this case there is no
showing that the breach was done with the same entrepreneurial motive as in Lopez or
with ill-will as in Zulueta and Ortigas.
*Good faith is presumed while bad faith is a matter of fact that needs to be proved by
the party alleging it.
Meanwhile, the other passengers took the first route. Upon arrival of Savellano at
Manila, they were teased for taking the longer and tiresome route. They also discovered
that their luggage had been ransacked and the contents stolen.
Savellano demanded damages on the ground that they suffered inconvenience,
embarrassment and humiliation for taking the longer route.
Transpo April 5 GB pg. 8
 6. LOADSTAR vs. CA
Facts:
On November 19, 1984, Loadstar received on board its vessel M/V Cherokee the
following goods for shipment:
1. 705 bales of lawanit hardwood
2. 27 boxes and crates of tilewood assemblies and others
3. 49 bundles of mouldings R & W (3) Apitong Bolidenized
The goods, amounting to P6,067,178, were insured by Manila Insurance Co. The
vessel is insured by Prudential Guarantee and Assurance, Inc. On November 20,
1984, on its way to Manila from Agusan, the vessel sank off Limasawa Island. MIC
paid the consignee P6,075,000 for the value of the goods lost, and filed a complaint
against Loadstar and PGAI, claiming subrogation into the rights of the consignee.
When PGAI paid Loadstar, it was dropped from the complaint. The trial court ruled
against Loadstar, and this was affirmed by the Court of Appeals.
Loadstar submits that the vessel was a private carrier because it was not issued a
certificate of public convenience, it did not have a regular trip or schedule nor a fixed
route, and there was only "one shipper, one consignee for a special cargo." In
refutation, MIC argues that the issue as to the classification of the M/V "Cherokee"
was not timely raised below; hence, it is barred by estoppel. While it is true that the
vessel had on board only the cargo of wood products for delivery to one consignee, it
was also carrying passengers as part of its regular business. Moreover, the bills of
lading in this case made no mention of any charter party but only a statement that the
vessel was a "general cargo carrier." Neither was there any "special arrangement"
between LOADSTAR and the shipper regarding the shipment of the cargo. The
singular fact that the vessel was carrying a particular type of cargo for one shipper is
not sufficient to convert the vessel into a private carrier.
LOADSTAR argues that as a private carrier, it cannot be presumed to have been
negligent, and the burden of proving otherwise devolved upon MIC. It also maintains
that the vessel was seaworthy, and that the loss was due to force majeure.
LOADSTAR goes on to argue that, being a private carrier, any agreement limiting its
liability, such as what transpired in this case, is valid. Since the cargo was being
shipped at "owner’s risk," LOADSTAR was not liable for any loss or damage to the
same. Finally, LOADSTAR avers that MIC’s claim had already prescribed, the case
having been instituted beyond the period stated in the bills of lading for instituting the
same — suits based upon claims arising from shortage, damage, or non-delivery of
shipment shall be instituted within sixty days from the accrual of the right of action.
MIC, on the other hand, claims that LOADSTAR was liable, notwithstanding that the
loss of the cargo was due to force majeure, because the same concurred with
LOADSTAR’s fault or negligence. Secondly, LOADSTAR did not raise the issue of
prescription in the court below; hence, the same must be deemed waived. Thirdly, the
"limited liability" theory is not applicable in the case at bar because LOADSTAR was at
fault or negligent, and because it failed to maintain a seaworthy vessel. Authorizing
the voyage notwithstanding its knowledge of a typhoon is tantamount to negligence.
Issues:
(1) Whether Loadstar was a common carrier or a private carrier
(2) Whether Loadstar exercised the degree of diligence required under the
circumstances
(3) Whether the stipulation that the goods are at “the owner’s risk” is valid
(4) Whether the action has prescribed
Held:
(1) We hold that LOADSTAR is a common carrier. It is not necessary that the carrier
be issued a certificate of public convenience, and this public character is not altered
by the fact that the carriage of the goods in question was periodic, occasional,
episodic or unscheduled. There was no charter party. The bills of lading failed to show
any special arrangement, but only a general provision to the effect that the M/V
"Cherokee" was a "general cargo carrier." Further, the bare fact that the vessel was
carrying a particular type of cargo for one shipper, which appears to be purely
coincidental, is not reason enough to convert the vessel from a common to a private
carrier, especially where, as in this case, it was shown that the vessel was also
carrying passengers.
(2) The doctrine of limited liability does not apply where there was negligence on the
part of the vessel owner or agent. LOADSTAR was at fault or negligent in not
maintaining a seaworthy vessel and in having allowed its vessel to sail despite
knowledge of an approaching typhoon. In any event, it did not sink because of any
storm that may be deemed as force majeure, inasmuch as the wind condition in the
area where it sank was determined to be moderate. Since it was remiss in the
performance of its duties, LOADSTAR cannot hide behind the "limited liability" doctrine
to escape responsibility for the loss of the vessel and its cargo.
(3) Three kinds of stipulations have often been made in a bill of lading. The first is one
exempting the carrier from any and all liability for loss or damage occasioned by its
own negligence. The second is one providing for an unqualified limitation of such
liability to an agreed valuation. And the third is one limiting the liability of the carrier to
an agreed valuation unless the shipper declares a higher value and pays a higher rate
of freight. According to an almost uniform weight of authority, the first and second
kinds of stipulations are invalid as being contrary to public policy, but the third is valid
and enforceable. Since the stipulation in question is null and void, it follows that when
MIC paid the shipper, it was subrogated to all the rights which the latter has against
the common carrier, LOADSTAR.
Transpo April 5 GB pg. 9
(4) MIC’s cause of action had not yet prescribed at the time it was concerned.
Inasmuch as neither the Civil Code nor the Code of Commerce states a specific
prescriptive period on the matter, the Carriage of Goods by Sea Act (COGSA) —
which provides for a one-year period of limitation on claims for loss of, or damage to,
cargoes sustained during transit — may be applied suppletorily to the case at bar.
This one-year prescriptive period also applies to the insurer of the goods. In this case,
the period for filing the action for recovery has not yet elapsed. Moreover, a stipulation
reducing the one-year period is null and void; it must, accordingly, be struck down.

Transpo April 5 GB pg. 10

 7. CATHAY PACIFIC V CA
GR NO L-60501
FACTS:
 Respondent Tomas L. Alcantara was a first class passenger of petitioner
Cathay Pacific Airways on its Flight No. CX-900 from Manila to Hongkong and
onward from Hongkong to Jakarta on Flight No. CX-711
o The purpose of his meeting was to attend a conference
o He checked in his luggage which contained not only his clothing
and articles for personal use but also papers and documents he
needed for the conference.
 Upon his arrival in Jakarta, respondent discovered that his luggage was
missing.
o When he inquired about his luggage from CATHAY's
representative in Jakarta, private respondent was told that his
luggage was left behind in Hongkong.
o Alcantara was offered $20.00 as "inconvenience money" to buy his
immediate personal needs until the luggage could be delivered to
him.
 His luggage finally reached Jakarta more than twenty four (24) hours after his
arrival.
o However, it was not delivered to him at his hotel but was required
by petitioner to be picked up by an official of the Philippine
Embassy.
Alcantara filed a complaint against petitioner praying for temperate, moral and
exemplary damages, plus attorney's fees.
RTC, rendered its decision ordering CATHAY to pay Plaintiff P20,000.00 for moral
damages, P5,000.00 for temperate damages, P10,000.00 for exemplary damages, and
P25,000.00 for attorney's fees, and the costs.
 CATHAY assailed the conclusion of the trial court that it was accountable for
breach of contract and questioned the non-application by the court of the
Warsaw Convention as well as the excessive damages awarded on the basis
of its finding that respondent Alcantara was rudely treated by petitioner's
employees during the time that his luggage could not be found.
CA, modified its award by increasing the moral damages to P80,000.00, exemplary
damages to P20,000.00 and temperate or moderate damages to P10,000.00. The
award of P25,000.00 for attorney's fees was maintained.
ISSUES:
(1) WON Cathay should be held liable for moral, exemplary and temperate
damages as well as attorney's fees
(2) WON the Warsaw Convention on the liability of a carrier to its
passengers should apply
HELD:
(1) YES
 Petitioner breached its contract of carriage with private respondent when it
failed to deliver his luggage at the designated place and time, it being the
obligation of a common carrier to carry its passengers and their luggage
safely to their destination,
 Which includes the duty not to delay their transportation, and the evidence
shows that petitioner acted fraudulently or in bad faith.
Both the trial court and the appellate court found that CATHAY was grossly negligent
and reckless when it failed to deliver the luggage of petitioner at the appointed place
and time.
 CATHAY alleges that as a result of mechanical trouble, all pieces of luggage
on board the first aircraft bound for Jakarta were unloaded and transferred to
the second aircraft which departed an hour and a half later.
o Yet , petitioner was not even aware that it left behind private
respondent's luggage until its attention was called by the Hongkong
Customs authorities.
 While the mere failure of CATHAY to deliver respondent's luggage at the
agreed place and time did not ipso facto amount to willful misconduct since
the luggage was eventually delivered to private respondent
Albeit belatedly, We are persuaded that the employees of CATHAY acted in bad
faith
Testimony of Romulo Palma, Commercial Attache of the Philippine Embassy at Jakarta
shows
 Petitioner's representative towards respondent Alcantara was discourteous
or arbitrary to justify the grant of moral damages.
“A: The duty officer, of course, answered back saying 'What can we do, the baggage is
missing. I cannot do anything.' something like it. 'Anyhow you can buy anything you
need, charged to Cathay Pacific.”
 20 dollars was not enough to purchase comfortable clothings appropriate for
an executive conference.
 Considering that Alcantara was not only a revenue passenger but even paid
for a first class airline accommodation and accompanied at the time by the
Commercial Attache of the Philippine Embassy who was assisting him in his
problem
 It is evident that petitioner was remiss in its duty to provide proper and
adequate assistance to a paying passenger, more so one with first class
accommodation.
Transpo April 5 GB pg. 11
The defendant airline is shown to have acted fraudulently or in bad faith, the award of
moral and exemplary damages is proper.
 However, respondent Alcantara is not entitled to temperate damages,
contrary to the ruling of the court a quo, in the absence of any showing that
he sustained some pecuniary loss.

(2) NO

 Although the Warsaw Convention has the force and effect of law in this
country, being a treaty commitment assumed by the Philippine government,
said convention does not operate as an exclusive enumeration of the
instances for declaring a carrier liable for breach of contract of carriage or as
an absolute limit of the extent of that liability.

The Warsaw Convention declares the carrier liable for damages in the enumerated
cases and under certain limitations.

 However, it must not be construed to preclude the operation of the Civil Code
and other pertinent laws.
 It does not regulate, much less exempt, the carrier from liability for damages
for violating the rights of its passengers under the contract of carriage,
especially if wilfull misconduct on the part of the carrier's employees is found
or established, which is clearly the case before Us

Transpo April 5 GB pg. 12

 8. PHILIPPINE RABBIT V IAC
G.R. Nos. 66102-04
FACTS:
 Pascua et al. boarded the jeepney owned by spouses Isidro Mangune and
Guillerma Carreon and driven by Tranquilino Manalo at Dau, Mabalacat,
Pampanga bound for Carmen, Rosales, Pangasinan
 Although they usually ride in buses, they had to ride in a jeepney that day
because the buses were full
o Their contract with Manalo was for them to pay P24.00 for the trip
The private respondents' testimonial evidence on this contractual relationship was not
controverted by Mangune, Carreon and Manalo, nor by Filriters Guaranty Assurance
Corporation, Inc., the insurer of the jeepney, with contrary evidence
 Upon reaching barrio Sinayoan, San Manuel, Tarlac, the right rear wheel of
the jeepney was detached, so it was running in an unbalanced position.
 Manalo stepped on the brake, as a result of which, the jeepney which was
then running on the eastern lane (its right of way) made a U-turn, invading
and eventually stopping on the western lane of the road in such a manner that
the jeepney's front faced the south
Almost at the time when the jeepney made a sudden U-turn and encroached on the
western lane of the highway as claimed by Rabbit and delos Reyes, or after stopping
for a couple of minutes as claimed by Mangune, Carreon and Manalo, the bus bumped
from behind the right rear portion of the jeepney.
The accident caused the death of three people and others suffered injuries
A criminal complaint against the two drivers for Multiple Homicide and complaints for
recovery of damages were then filed
 Manalo was convicted and sentenced to suffer imprisonment. Not having
appealed, he served his sentence.
RTC, rendered decision finding Manalo negligent
IAC, reversed finding delos Reyes driver of the bus negligent
ISSUE: WHO IS LIABLE?
HELD:
We reiterate that "[t]he principle about "the last clear" chance, would call for application
in a suit between the owners and drivers of the two colliding vehicles. It does not arise
where a passenger demands responsibility from the carrier to enforce its contractual
obligations. For it would be inequitable to exempt the negligent driver of the jeepney
and its owners on the ground that the other driver was likewise guilty of negligence."
 It cannot be said that the bus was travelling at a fast speed when the accident
occurred because the speed of 80 to 90 kilometers per hour, assuming such
calculation to be correct, is yet within the speed limit allowed in highways.
o We cannot even fault delos Reyes for not having avoided the
collision
 The jeepney left a skid mark of about 45 meters, measured from the time its
right rear wheel was detached up to the point of collision.
 Delos Reyes must have noticed the perilous condition of the jeepney from the
time its right rear wheel was detached or some 90 meters away, considering
that the road was straight and points 200 meters north and south of the point
of collision, visible and unobstructed.
Verily, he had little time to react to the situation. To require delos Reyes to avoid the
collision is to ask too much from him. Aside from the time element involved, there were
no options available to him.
We find that the proximate cause of the accident was the negligence of Manalo and
spouses Mangune and Carreon.
 They all failed to exercise the precautions that are needed precisely pro hac
vice.
In culpa contractual, the moment a passenger dies or is injured, the carrier is
presumed to have been at fault or to have acted negligently, and this disputable
presumption may only be overcome by evidence that he had observed extra-ordinary
diligence as prescribed in Articles 1733, 1755 and 1756 of the New Civil Code or that
the death or injury of the passenger was due to a fortuitous event
Transpo April 5 GB pg. 13
  The negligence of Manalo was proven during the trial by the unrebutted
testimonies of Caridad Pascua, Police Investigator Tacpal, Police Corporal
Cacalda, his (Manalo's) conviction for the crime of Multiple Homicide and
Multiple Serious Injuries with Damage to Property thru Reckless Imprudence,
and the application of the doctrine ofres ipsa loquitur supra.
o To escape liability, defendants Mangune and Carreon offered to
show thru their witness Natalio Navarro, an alleged mechanic, that
he periodically checks and maintains the jeepney

In any event, "[i]n an action for damages against the carrier for his failure to safely carry
his passenger to his destination, an accident caused either by defects in the automobile
or through the negligence of its driver, is not a caso fortuito which would avoid the
carriers liability for damages

 The trial court was therefore right in finding that Manalo and spouses
Mangune and Carreon were negligent.
 However, its ruling that spouses Mangune and Carreon are jointly and
severally liable with Manalo is erroneous
 The driver cannot be held jointly and severally liable with the carrier in case
of breach of the contract of carriage.

The carrier can neither shift his liability on the contract to his driver nor share it with him,
for his driver's negligence is his

Transpo April 5 GB pg. 14

 9. NORTHWEST V HESHAN
G.R. No. 179117
FACTS:
 Edward Heshan purchased three (3) roundtrip tickets from Northwest Airlines
for his wife and daughter for their trip from Manila to St. Louis, Missouri, USA
and back to attend an ice skating competition where then seven yearold Dara
was to participate
 When the event ended the Heshans proceeded to the airport to take the
connecting flight from St. Louis to Memphison their way to Los Angeles.
o At the airport, the Heshans first checked-in their luggage at the
airports curbside check-in near the entrance
o Since the arrived early the Heshans whiled away the time at a
nearby coffee shop.
 When the check in counter opened and when it was his turn petitioners
customer service agent Ken Carns (Carns) to get the boarding passes, he
was asked to step aside and wait to be called again
 After all the other departing passengers were given their boarding passes,
the Heshans were told to board the plane without any boarding pass given to
them and to just occupy open seats therein
o The Heshans noticed that only one vacant passenger seat was
available, which was offered to Dara, while Edward and Nelia were
directed to occupy two folding seats located at the rear portion of
the plane.
Upset that there were not enough passenger seats for them, the Heshans complained
to the cabin crew about the matter but were told that if they did not like to occupy the
seats, they were free to disembark from the plane which then did.
 The Heshans were later endorsed to and carried by Trans World Airways to
Los Angeles. Respondents arrived in Los Angeles at 10:30 p.m. of the same
day but had to wait for three hours at the airport to retrieve their luggage from
petitioners Flight No. 972M
Respondents sent a letter to petitioner to demand indemnification for the breach of
contract of carriage
 Petitioner replied that respondents were prohibited to board Flight No. 972M
for verbally abus[ing] [the] flight crew
Filed a complaint for damages for breach of contract
 Petitioner alleged The Heshans did not have reservations for particular seats
on the flight.
o When they requested that they be seated together, Carns denied
the request and explained that other passengers had pre-selected
seats and that the computerized seating system
o Heshans were upset upon learning that they were not seated
together on the plane, she told them that she would request other
passengers to switch places to accommodate their demand but
they cursed
o Petitioner denied that the Heshans were told to occupy folding
seats or crew seats since [Federal Aviation Authority] regulations
say no passengers are to sit there.
RTC, rendered judgment in favor of respondents were ordered to pay damages
CA, sustained the trial courts findings but reduced the award of moral and exemplary
damages to P2 million and P300,000, respectively.
ISSUE: WON petitioner should be held liable
Petitioner maintains that it did not violate the contract of carriage since respondents
were eventually transported from Memphis to Los Angeles, albeit via another airline,
and that respondents made no claim of having sustained injury during the carriage.
HELD:
An examination of the evidence presented by petitioner shows that it consisted only of
depositions of its witnesses.
 It had in its possession and disposition pertinent documents such as the flight
manifest and the planes actual seating capacity and layout which could have
clearly refuted respondents claims that there were not enough passenger
seats available for them.
Transpo April 5 GB pg. 15
 o It inexplicably failed to offer even a single piece of documentary
evidence.

 Petitioner failed to satisfactorily explain why it did not issue boarding passes
to respondents who were confirmed passengers, even after they had
checked-in their luggage three hours earlier

Coupled with petitioners failure to issue respondents their boarding passes and the
eleventh-hour directive for them to embark, reinforces the impression that the flight was
overbooked.

 Petitioners assertion that respondents disembarked from the plane when their
request to be seated together was ignored does not impress.

T]he fact that the Appellees still boarded the plane ten (10) minutes prior to the
departure time, despite knowing that they would be seated apart, is a clear
manifestation of the Appellees willingness to abandon their request and just board the
plane in order to catch their flight. But as it turns out, there were not enough seats for
the three of them as aptly found by the Court a quo, to which We subscribed

However, There is a need to substantially reduce the moral damages awarded by the
appellate court.

 While courts are given discretion to determine the amount of damages to be

awarded, it is limited by the principle that the amount awarded should not be
palpably and scandalously excessive

Transpo April 5 GB pg. 16

 10. PANTRANCO NORTH EXPRESS INC v. MARICAR BASCOS BAESA
AND FE ICO ET.AL.
G.R. Nos. 79050-51
14 November 1989
Ponente: J Cortes
Topic: last clear chance doctrine, applicability. negligence, burden of proof. Damages
DOCTRINES:
1. The doctrine of last clear chance applies only in a situation where the
defendant, having the last fair chance to avoid the impending harm and failed
to do so, becomes liable for all the consequences of the accident
notwithstanding the prior negligence of the plaintiff.
2. In order that the doctrine of last clear chance may be applied, it must be
shown that the person who allegedly had the last opportunity to avert the
accident was aware of the existence of the peril or with exercise of due care
should have been aware of it.
3. This doctrine of last chance has no application to a case where a person is to
act instantaneously, and if the injury cannot be avoided by using all means
available after the peril is or should have been discovered.
4. Section 43 (c), Article III, Chapter IV of Republic Act No. 1436 cannot apply
to case a bar where at the time of the accident, the jeepney had already
crossed the intersection.
5. A finding of negligence on the part of the driver establishes a presumption
that the employer has been negligent and the latter has the burden of proof
that it has exercised due negligence not only in the selection of its employees
but also in adequately supervising their work.
6. Plaintiff’s failure to present documentary evidence to support their claim for
damages for loss of earning capacity of the deceased victim does not bar
recovery of the damages, if such loss may be based sufficiently on their
testimonies. The indemnity for the death of a person was fixed by this Court
at (P30,000.00).
FACTS:
1. 7:00 am of 12 June 1981- Sps Ceasar and Marilyn Baesa (Sps. Baesa) and
their children Harold Jim, Marcelino and Maricar, together with spouses David
Ico and Fe O. Ico (Sps. Ico) with their son Erwin Ico and seven other persons,
were aboard a passenger jeepney on their way to a picnic at Malalam River,
Ilagan, Isabela, to celebrate the fifth wedding anniversary of Ceasar and
Marilyn Baesa.
2. The group of 15 persons rode the passenger jeepney driven by David Ico who
was also the registered owner of the jeepney.
3. From Ilagan, Isabela, they proceeded to Barrio Capayacan to deliver some
viands to one Mrs. Bascos and thenceforth to San Felipe, taking the highway
going to Malalam River.
4. Upon reaching the highway, the jeepney turned right and proceeded to
Malalam River at a speed of about 20 kph.
5. While they were proceeding towards Malalam River, a speeding
PANTRANCO bus from Aparri, on its regular route to Manila, encroached on
the jeepney’s lane while negotiating a curve, and collided with it.
6. As a result of the accident David Ico, spouses Ceasar Baesa and Marilyn
Baesa and their children, Harold Jim and Marcelino Baesa, died while the rest
of the passengers suffered injuries. The jeepney was also extensively
damaged.
7. After the accident, the driver of the PANTRANCO Bus, Ambrosio Ramirez,
boarded a car and proceeded to Santiago, Isabela. From that time on up to
the present, Ramirez has never been seen and has apparently remained in
hiding.
8. All the victims and/or their surviving heirs except herein private respondents
Maricar Baesa through her guardian Francisca O. Bascos and Fe O. Ico and
her minor children settled the case amicably under the "No Fault" insurance
coverage of PANTRANCO.
9. Maricar Baesa through her guardian Francisca O. Bascos and Fe O. Ico for
herself and for her minor children, filed separate actions for damages arising
from quasi-delict against PANTRANCO.
10. In its answer, PANTRANCO, aside from pointing to the late David Ico’s
alleged negligence as the proximate cause of the accident, invoked the
defense of due diligence in the selection and supervision of its driver,
Ambrosio Ramirez.
11. On July 3, 1984, the CFI of Pangasinan rendered a decision against
PANTRANCO awarding the total amount of Two Million Three Hundred Four
Thousand Six Hundred Forty-Seven (P2,304,647.00) as damages, plus 10%
thereof as attorney’s fees and costs to Maricar Baesa in Civil Case No. 561-
R, and the total amount of Six Hundred Fifty Two Thousand Six Hundred
Seventy-Two Pesos (P652,672.00) as damages, plus 10% thereof as
attorney’s fees and costs to Fe Ico and her children in Civil Case No. 589-R.
12. On appeal, the cases were consolidated and the Court of Appeals modified
the decision of the trial court by ordering PANTRANCO to pay the total
amount of One Million One Hundred Eighty-Nine Thousand Nine Hundred
Transpo April 5 GB pg. 17
 Twenty Seven Pesos (P1,189,927.00) as damages, plus Twenty Thousand
Pesos (P20,000.00) as attorney’s fees to Maricar Baesa, and the total amount
of Three Hundred Forty-Four Thousand Pesos (P344,000.00) plus Ten
Thousand Pesos (P10,000.00) as attorney’s fees to Fe Ico and her children,
and to pay the costs in both cases.
13. PANTRANCO filed a motion for reconsideration of the Court of Appeal’s
decision, but on June 26, 1987, it denied the same for lack of merit.
PANTRANCO then filed the instant petition for review.
ISSUES:
1. Whether or not the doctrine of the last clear change not properly applied
against the jeepney driver?
2. Whether or not Section 43 (c), Article III Chapter IV of Republic Act No.
4136 will apply?
3. Was there negligence on the part of Pantranco?
4. Did CA erred in the ruling for claim for damages?
HELD/RULING:
1. NO. For the doctrine to be applicable, it is necessary to show that the
person who allegedly had the last opportunity to avert the accident was
aware of the existence of the peril or should, with exercise of due care,
have been aware of it. One cannot be expected to avoid an accident or
injury if he does not know or could not have known the existence of the
peril.
In this case, there is nothing to show that the jeepney driver David Ico knew
of the impending danger. When he saw at a distance that the approaching
bus was encroaching on his lane, he did not immediately swerve the jeepney
to the dirt shoulder on his right since he must have assumed that the bus
driver will return the bus to its own lane upon seeing the jeepney approaching
from the opposite direction.
There was nothing to indicate to David Ico that the bus could not return
to its own lane or was prevented from returning to the proper lane by
anything beyond the control of its driver. Leo Marantan, an alternate
driver of the Pantranco bus who was seated beside the driver Ramirez
at the time of the accident, testified that Ramirez had no choice but to
swerve the steering wheel to the left and encroach on the jeepney’s lane
because there was a steep precipice on the right However, this is belied
by the evidence on record which clearly shows that there was enough
space to swerve the bus back to its own lane without any danger By the
time David Ico must have realized that the bus was not returning to its
own lane, it was already too late to swerve the jeepney to his right to
prevent an accident. The speed at which the approaching bus was
running prevented David Ico from swerving the jeepney to the right
shoulder of the road in time to avoid the collision. Thus, even assuming
that the jeepney driver perceived the danger a few seconds before the
actual collision, he had no opportunity to avoid it.
2. NO. Section 43 (c), Article III Chapter IV of Republic Act No. 4136 * which
provides that the driver of a vehicle entering a through highway or a
stop intersection shall yield the right of way to all vehicles approaching
in either direction on such through highway shall also not apply.
Petitioner itself cited Fe Ico’s testimony that the accident occurred after the
jeepney had travelled a distance of about two (2) meters from the point of
intersection. In fact, even the witness for the petitioner, Leo Marantan,
testified that both vehicles were coming from opposite directions, clearly
indicating that the jeepney had already crossed the intersection.
3. YES. The finding of negligence on the part of its driver Ambrosio Ramirez
gave rise to the presumption of negligence on the part of petitioner and the
burden of proving that it exercised due diligence not only in the selection of
its employees but also in adequately supervising their work rests with the
petitioner.
The mere issuance of rules and regulations and the formulation of
various company policies on safety, without showing that they are
being complied with, are not sufficient to exempt petitioner from liability
arising from the negligence of its employee.
4. NO. The Court finds that the Court of Appeals committed no reversible error
in fixing the amount of damages for the loss of earning capacity of the
deceased victims. While it is true that private respondents should have
presented documentary evidence to support their claim for damages for loss
of earning capacity of the deceased victims, the absence thereof does not
necessarily bar the recovery of the damages in question. The testimony of Fe
Ico and Francisca Bascos as to the earning capacity of David Ico, and the
spouses Baesa, respectively, are sufficient to establish a basis from which
the court can make a fair and reasonable estimate of the damages for the
loss of earning capacity of the three deceased victims. Moreover, in fixing the
damages for loss of earning capacity of a deceased victim, the court can
consider the nature of his occupation, his educational attainment and the
state of his health at the time of death.
However, it should be pointed out that the Court of Appeals committed error
in fixing the compensatory damages for the death of Harold Jim Baesa and
Marcelino Baesa.. In the case of People v. de la Fuente, G.R. Nos. 63251-
52, December 29, 1983, 126 SCRA 518, the indemnity for the death of a
person was fixed by this Court at Thirty Thousand Pesos (P30,000.00).
Plaintiff Maricar Baesa should therefore be awarded Sixty Thousand Pesos
(P60,000.00) as indemnity for the death of her brothers, Harold Jim Baesa
Transpo April 5 GB pg. 18
 and Marcelino Baesa or Thirty Thousand Pesos (P30,000.00) for the death
of each brother.

Dispositive:

WHEREFORE, premises considered, the petition is DENIED, and the decision of

respondent Court of Appeals is hereby AFFIRMED with the modification that the amount
of compensatory damages for the death of Harold Jim Baesa and Marcelino Baesa are
increased to Thirty Thousand Pesos (P30,000.00) each.

Transpo April 5 GB pg. 19