G.R. No.

L-28512 February 28, 1973

PEDRO R. DAVILA and PRECIOSA C. TIRO, plaintiffs-appellants,

vs.
PHILIPPINE AIR LINES, defendant-appellant.

Dizon, De Guzman and Vitug and Pedro R. Davila for plaintiffs-appellants.

Siguion Reyna, Montecillo, Belo and Ongsiako for defendant-appellant.

MAKALINTAL, J.:

In Civil Case No. 5728 of the Court of First Instance of Iloilo (Pedro R. Davila and Preciosa C. Tirol,
plaintiffs, vs. Philippine Air Lines, Inc., defendant) judgment was rendered ordering the defendant to
pay the plaintiffs various sums of money, as follows:

(1) For the death of Pedro T. Davila, Jr. the amount of P6,000.00;

(2) For the loss of the earning capacity of the deceased at the rate of P12,000.00 per
annum for five (5) years in the amount of Sixty Thousand Pesos. (P60,000.00);

(3) For moral damages in favor of the plaintiffs Ten Thousand Pesos (P10,000.00);

(4) For exemplary damages in the amount of Ten Thousand Pesos (P10,000.00);

(5) For actual damages the amount of Five Thousand Pesos (P5,000.00) broken down
to as follows: A rolex watch valued at P600.00; a pistol worth P300.00; burial expenses
P600.00; for the lot and the mausoleum P3,500.00;

(6) For Attorney's fees the amount of Ten Thousand Pesos (P10,000.00) or a total
amount of One Hundred and One Thousand Pesos (P101,000.00)

To pay the costs of this proceedings.

Both parties appealed directly to this Court in view of the aggregate of the amounts awarded, the
judgment having been rendered before the effect

ivity of Rep. Act No. 5440. In this appeal the plaintiffs seek an increase in said amounts, and the
defendant, complete exoneration from, or at least mitigation of, liability.

The case arose from the tragic crash of a passenger plane of the defendant which took the lives of all
its crew and passengers. The plane, identified as PI-C133, was a DC-3 type of aircraft, manufactured
in 1942 and acquired by the defendant in 1948. It had flown almost 18,000 hours at the time of its ill-
fated flight. Despite its age, however, it had been certified as airworthy by the Civil Aeronautics
Administration. On November 23, 1960, at 5:30 in the afternoon, it took off from the Manduriao
Airport, Iloilo, on its way to Manila, with 33 people on board, including the plane's complement. It did
not reach its destination, but crashed at Mt. Baco, Mindoro, one hour and fifteen minutes after take-
off. A massive search was undertaken by the defendant and by other parties as soon as it was
realized that the plane's arrival in Manila was overdue. The plaintiffs, parents of Pedro T. Davila, Jr.,
who was one of the passengers, had no definite news of what had happened to their son, getting
what information they could only from conflicting newspaper reports, until they received, on
December 19, 1960, a letter of condolence from the defendant's president Andres Soriano, informing
them that their son had died in the crash. And it was only on December 29 that his body was
recovered an taken back to Iloilo.

The issues before the trial court, and now before Us in this appeal, are whether or not the defendant
is liable for violation of its contract of carriage and if so, for how much. The provisions of the Civil
Code on this substantive question of liability are clear and explicit. Article 1733 binds common
carriers, "from the nature of their business and by reasons of public policy, ... to observe extraordinary
diligence in the vigilance ... for the safety of the passengers transported by them according to all the
circumstances of each case." Article 1755 establishes the standard of care required of a common
carrier, which is, "to carry the passengers safely as far as human care and foresight can provide,
using the utmost diligence of very cautious persons, with due regard for all the circumstances." Article
1756 fixes the burden of proof by providing that "in case of death of or injuries to passengers,
common carriers are presumed to have been at fault or to have acted negligently, unless they prove
that they observed extraordinary diligence as prescribed in Articles 1733 and 1755." Lastly, Article
1757 states that "the responsibility of a common carrier for the safety of passengers ... cannot be
dispensed with or lessened by stipulation, by the posting of notices, by statements on tickets, or
otherwise."

The route prescribed by the Civil Aeronautics Administration for the flight of plane PI-C113 in the
afternoon of November 23, 1960 was Iloilo-Romblon-Manila, the latter stage, denominated as airway
"Amber I," being a straight lane from Romblon to Manila. The prescribed elevation of the flight was
6,000 ft. The plane reported its position after take-off and again when it was abeam the Roxas homer.
However, it did not intercept airway "Amber I" over Romblon as it was supposed to do, and the pilot
did not give his position then although Romblon was a compulsory checking point. The fact was that
the plane had deviated from the prescribed route by 32 miles to the west when it crashed at Mt. Baco.
The reading of the altimeter of the plane when its wreckage was found was 6,800 ft.

There is a suggestion that in the course of the flight between Romblon and Mindoro the aircraft was
drifted westward by the cross-winds then blowing in the region. The defendant, however, has not
given a definite explanation as to why, if such was the case, the pilot failed to make the necessary
correction in his flight to compensate for the drift. According to the defendant's witness, Maj. Mijares,
Chief of the Aviation Safety Division of the Civil Aeronautics Administration and Chairman of the CAA
Investigating Committee, there was a navigational error, to which several factors contributed: "the
weather observation at that time from the Weather Bureau was not so good between Mt. Baco and
Romblon and the wind aloft was quite strong, which would be also one of the causes for the drifting of
the aircraft; and the other strong probability, I would say, would be the malfunction of the aircraft's
navigational instrument." He further explained that "a cross-wind can drift the plane if the pilot will not
make the necessary correction, if his navigational instrument is malfunctioning and the visual
reference outside the aircraft could not make the necessary corrections."

There is nothing in the testimony of Maj. Mijares to show just how strong the cross-winds were in the
region at the time, although in the investigation of the accident by the Senate Committee on
transportation there was testimony that the cross-winds had a velocity of either 20 to 25 knots or 25 to
35 knots an hour. Considering the relatively short distance from Romblon to Mt. Baco and the brief
span of time it would take to fly that distance, cross-winds with the velocity stated could not have
possibly deviated the plane by as much as 32 miles.

The defendant points out that the navigational instrument on board the plane consisted of two (2) sets
of automatic direction finders (ADF) which, when found after the crash, showed a reading that the
aircraft was heading north, which was the proper flight direction. This point, however, is of no vital
significance in this case since it does not explain why the aircraft was 32 miles off its prescribed route
in the first place. It is suggested that the pilot did not notice the drift of his plane because of poor
visibility due to thick clouds, which prevented him from making the corresponding correction on the
basis of visual references to the terrain outside. But according to Maj. Mijares himself the report from
the Weather Bureau at the time showed that visibility was 15 miles between Romblon and Mt. Baco
and that the clouds from 2,700 to 7,000 ft. elevation were "scattered." And the profile of the probable
weather cross-section along airway "Amber I" during the flight (Exh. 33-A) shows that at 6,000 ft. the
airlane was clear and free of clouds. The suggestion therefore that the pilot was practically flying blind
and consequently failed to notice the drift of the aircraft is not justified by the evidence. Indeed even
the investigating team of the defendant under the chairmanship of Capt. Jaime Manzano concluded in
its report that "based on the limited evidences available, the board is of the opinion that the probable
cause was the inability of the pilot to intersect airway "Amber I" over Romblon and to maintain track
within its designated airway lane for reasons unknown."

What is undisputed therefore is that the pilot did not follow the route prescribed for his flight, at least
between Romblon and Manila. Since up to that point over Romblon, where he was supposed to
intersect airway "Amber I" the weather was clear, the most reasonable conclusion is that his failure to
do so was intentional, and that he probably wanted to fly on a straight line to Manila. It was a violation
of air-craft traffic rules to which, under the circumstances, the accident may be directly attributable.

In any case, absent a satisfactory explanation on the part of the defendant as to how and why the
accident occurred, the presumption is that it was at fault, under Article 1756 of the Civil Code.

The next question relates to the amount of damages that should be awarded to the plaintiffs, parents
of the deceased. The trial court fixed the indemnity for his death in the amount of P6,000.00.
Pursuant to current jurisprudence on the point it should be increased to P12,000.00. 1
The deceased was employed as manager of a radio station 2, from which he was earning P8,400.00 a
year, consisting of a monthly salary of P600.00 and allowance of P100.00. As a lawyer and junior
partner of his father in the law office, he had an annual income of P3,600.00. From farming he was
getting an average of P3,000.00. All in all therefore the deceased had gross earnings of P15,000.00 a
year.

According to Article 2206, paragraph (1), of the Civil Code, "the defendant shall be liable for the loss
of the earning capacity of the deceased and indemnity shall be paid to the heirs of the latter." This
Article, while referring to "damages for death caused by crime or quasi-delict," is expressly made
applicable by Article 1764 "to the death of a passenger caused by the breach of contract by a
common carrier."

The deceased, Pedro Davila, Jr., was single and 30 years of age when he died. At that age one's
normal life expectancy is 33-1/3 years, according to the formula (2/3 x [80-30]) adopted by this Court
in the case of Villa Rey Transit, Inc. vs. Court of Appeals3 on the basis of the American Expectancy
Table of Mortality or the Actuarial of Combined Experience Table of Mortality. However, although the
deceased was in relatively good health, his medical history shows that he had complained of and
been treated for such ailments as backaches, chest pains and occasional feelings of tiredness. It is
reasonable to make an allowance for these circumstances and consider, for purposes of this case, a
reduction of his life expectancy to 25 years.

In the same case of Villa Revenue Transit this Court stated:

"... earning capacity, as an element of damages to one's estate for his death by wrongful act is
necessarily his net earning capacity or his capacity to acquire money, less the necessary expense for
his own living. Stated otherwise, the amount recoverable is not loss of the entire earnings, but rather
the loss of that portion of the earnings which the beneficiary would have received. In other words,
only net earnings, not gross earnings, are to be considered, that is, the total of the earnings less
expenses necessary in the creation of such earnings or income and less living and other incidental
expenses."

Considering the fact that the deceased was getting his income from three (3) different sources,
namely from managing a radio station, from law practice and from farming, the expenses incidental to
the generation of such income were necessarily more than if he had only one source. Together with
his living expenses, a deduction of P600.00 a month, or P7,200.00 a year, seems to Us reasonable,
leaving a net yearly income of P7,800.00. This amount, multiplied by 25 years, or P195,000.00 is the
amount which should be awarded to the plaintiffs in this particular respect.

Actual losses sustained consist of the following, as found by the trial court: "Rolex Watch — P600.00;
pistol — P300.00; Burial Expenses — P600.00; and cost of cemetery lot and mausoleum -
P3,500.00."

Under Article 2206, in relation to Article 1764, of the Civil Code, the parents of the deceased are
entitled to moral damages for their mental anguish. The trial court awarded P10,000.00 in this
concept, and We find no justification to change the award, considering the long period of uncertainty
and suffering the plaintiffs underwent from November 23, when the plane crash occurred, to
December 19, when they received a letter from the defendant's president confirming the death of their
son, and again to the following December 29, when his body was finally recovered and taken back to
them.

With respect to the award of P10,000.00 as exemplary damages, it is Our opinion that the same
should be eliminated. According to Article 2232 of the Civil Code, in contracts and quasi-contracts the
court may award exemplary damages if the defendant acted in a wanton, fraudulent, reckless,
oppressive or malevolent manner. The failure of the defendant here to exercise extraordinary
diligence, as required by law, does not amount to anyone of the circumstances contemplated in the
said provision.

The trial court has awarded attorney's fees of P10,000.00. We do not find this award groundless or
the amount thereof unreasonable.

The total of the different items above enumerated is P232,000.00. The judgment of the court a quo is
therefore modified accordingly and the defendant is ordered to pay the said amount to the plaintiffs,
with legal interest thereon from the finality of this judgment. With costs against the defendant.
 VOL. 49, FEBRUARY 28, 1973 497
Davila vs. Philippine Air Lines
No. L-28512. February 28, 1973.PEDRO R. DAVILA and PRECIOSA C. TIRO, plaintiffs-appel-
lants,
vs.
PHILIPPINE AIR LINES, defendant-appellant
Torts and damages; Common carriers; The standard of carerequired of common carriers is that of
extraordinary dili-gence.
—– Article 1733 of the New Civil Code binds common carriers, “fromthe nature of their business and
by reasons of public policy,. . . toobserve extraordinary diligence in the vigilance . . . for the safetyof
the passengers transported by them according to all thecircumstances of each case.”
Same; Same; Burden of proof that extraordinary diligence intransporting passengers was observed is
on the common car-rier.
— –Article 1756 of the New Civil Code fixes the burden of proof byproviding that “in case of death of
or injuries to passengers,common carriers are presumed to have been at fault or to haveacted
negligently, unless they prove that they observedextraordinary diligence as prescribed in articles
1733 and 1755.”
Same; Same; Responsibility of common carriers for safe-ty of passengers cannot be dispensed with
by notice and stipu-lations.
— –Article 1757 of the New Civil Code states that “the responsibilityof a common carrier for the
safety of passengers . . . cannot bedispensed with or lessened by stipulation, by the posting
of notices, by statements on tickets, or otherwise.”
Same; Same; Facts showing common carrier did not observethe standard of care required of it.
—–The facts of the case at barshowed that (a) the pilot did not intercept airway “Amber I”
overRomblon as it was supposed to do, and that the pilot did not givehis position then although
Romblon was a compulsory checkingpoint; (b) the plane deviated from the prescribed route by 32
milesto the west when it crashed; (c) cross-winds had a velocity of either20 to 25 knots or 25 to 35
knots an hour which considering therelatively short distance from Romblon to Mt. Baco (crash
site)and the brief span of time it would take to fly that distance, cross-winds with the velocity stated
could not have possibly deviated the plane by as much as 32 miles; (d) the report of the
WeatherBureau at the time showed that visibility was 15 miles betweenRomblon and
498
498SUPREME COURT REPORTS ANNOTATED
Davila vs. Philippine Air Lines
Mt. Baco and that the clouds from 2,700 to 7,000 feet elevationwere “scattered” and the profile of the
probable weather cross-section along airway “Amber I” during the flight shows that at6,000 feet (the
plane’s prescribed altitude) the airline was clearand free of clouds; (e) the defendant airline’s
investigating teamreported that “the probable cause (of the accident) was theinability of the pilot to
intersect airway ‘Amber I’ over Romblonand maintain track within its designated airway lane for
reasonunknown”; and (f) the pilot did not follow the route prescribed forhis flight, at least between
Romblon and Manila.
HELD
: Thepilot’s action was a violation of air-traf-fic rules to which, underthe circumstances, the accident
may be directly attributable. Inany case, absent a satisfactory explanation on the part of thedefendant
as to who and why the accident occurred thepresumption is that it was at fault, under Article 1756 of
the CivilCode.
Same; Same; Indemnity of death of passenger is P12,000.
—– Pursuant to current jurisprudence on the indemnity due to theheirs of the deceased who was the
victim of a tortious act, theamount should be increased to P12,000.00.
Same; Same; Normal lifespan of the deceased who was singleand 30 years old when he died is 33-
1/3 years. However,circumstances relating to his physical condition may reduce this to25 years.
—–At the age of 30 years, one’s normal life expectancy is33-1/3 years according to the formula
adopted by this Court
in Villa Rey Transit vs. C.A. (31 SCRA 511) on the basis of the American Expectancy Table of Mortali
ty or the Actuarial of Combined Experience Table of Mortality. However, although thedeceased was in
relatively good health, his medical history showsthat he had complained of and been treated for such
ailments as backaches, chest pains and occasional feeling of tiredness. It isreasonable to make an
allowance for these circumstances andconsider, for purposes of these case, a reduction of his
lifeexpectancy to 25 years.
Same; Same; “Earning Capacity” under Art. 2206(1) inrelation to Art. 1764 of the New Civil Code
means gross earningsless necessary expenses for deceased’s own living.
—–The amountrecoverable by the heirs of a victim of tort is not loss of the entireearnings, but rather
the loss of that portion of
499
VOL. 49, FEBRUARY 28, 1973 499
Davila vs. Philippine Air Lines
 the earnings which the beneficiary would have received. In otherwords, only net earnings, not gross
earnings, are to be considered,that is, the total of the earnings less expenses necessary in
thecreation of such earnings or income and less living and otherincidental expenses. In the case at
bar, the de-ceased’s earningsfrom three sources of income was P15,000.00 a year (as radiostation
manager, lawyer-practitioner and farmer). A deduction of P600.00 a month considering that the
expenses incidental to thegeneration of such income were necessarily more than if he hadonly one
source, is reasonable. The amount of P7,800 net yearlyincome multiplied by 25 years, or
P195,000.00 is the amountwhich should be awarded to the plaintiffs.
Same; Same; When exemplary damages not justified.
—–Under Article 2232 of the Civil Code, the court may award exemplarydamages in contracts and
quasi-contracts if the defendant acted ina wanton, fraudulent, reckless, oppressive or malevolent
manner.The failure of the defendant here to exercise extraordinarydiligence, as required by law, does
not amount to anyone of thecircumstances contemplated in the said provision.
APPEAL from a judgment of the Court of First Instance of Iloilo. Rodriguez, J.
 [G.R. No. 71929 : December 4, 1990.]
192 SCRA 9
ALITALIA, Petitioner, vs. INTERMEDIATE APPELLATE COURT and FELIPA E. PABLO,
Respondents.

DECISION

NARVASA, J.:

Dr. Felipa Pablo — an associate professor in the University of the Philippines, 1 and a research
grantee of the Philippine Atomic Energy Agency — was invited to take part at a meeting of the
Department of Research and Isotopes of the Joint FAO-IAEA Division of Atomic Energy in Food and
Agriculture of the United Nations in Ispra, Italy. 2 She was invited in view of her specialized
knowledge in "foreign substances in food and the agriculture environment." She accepted the
invitation, and was then scheduled by the organizers, to read a paper on "The Fate of Radioactive
Fusion Products Contaminating Vegetable Crops." 3 The program announced that she would be the
second speaker on the first day of the meeting. 4 To fulfill this engagement, Dr. Pablo booked
passage on petitioner airline, ALITALIA.
She arrived in Milan on the day before the meeting in accordance with the itinerary and time table set
for her by ALITALIA. She was however told by the ALITALIA personnel there at Milan that her
luggage was "delayed inasmuch as the same . . . (was) in one of the succeeding flights from Rome to
Milan." 5 Her luggage consisted of two (2) suitcases: one contained her clothing and other personal
items; the other, her scientific papers, slides and other research material. But the other flights arriving
from Rome did not have her baggage on board.
By then feeling desperate, she went to Rome to try to locate her bags herself. There, she inquired
about her suitcases in the domestic and international airports, and filled out the forms prescribed by
ALITALIA for people in her predicament. However, her baggage could not be found. Completely
distraught and discouraged, she returned to Manila without attending the meeting in Ispra, Italy. : nad
Once back in Manila she demanded that ALITALIA make reparation for the damages thus suffered by
her. ALITALIA offered her "free airline tickets to compensate her for any alleged damages. . . ." She
rejected the offer, and forthwith commenced the action 6 which has given rise to the present appellate
proceedings.
As it turned out, Prof. Pablo's suitcases were in fact located and forwarded to Ispra, 7 Italy, but only
on the day after her scheduled appearance and participation at the U.N. meeting there. 8 Of course
Dr. Pablo was no longer there to accept delivery; she was already on her way home to Manila. And
for some reason or other, the suitcases were not actually restored to Prof. Pablo by ALITALIA until
eleven (11) months later, and four (4) months after institution of her action. 9
After appropriate proceedings and trial, the Court of First Instance rendered judgment in Dr. Pablo's
favor: 10
"(1) Ordering the defendant (ALITALIA) to pay . . . (her) the sum of TWENTY THOUSAND
PESOS (P20,000.00), Philippine Currency, by way of nominal damages;
(2) Ordering the defendant to pay . . . (her) the sum of FIVE THOUSAND PESOS (P5,000.00),
Philippine Currency, as and for attorney's fees; (and)
(3) Ordering the defendant to pay the costs of the suit."
ALITALIA appealed to the Intermediate Appellate Court but failed to obtain a reversal of the
judgment. 11 Indeed, the Appellate Court not only affirmed the Trial Court's decision but also
increased the award of nominal damages payable by ALITALIA to P40,000.00. 12 That increase it
justified as follows: 13
"Considering the circumstances, as found by the Trial Court and the negligence committed by
defendant, the amount of P20,000.00 under present inflationary conditions as awarded . . . to
the plaintiff as nominal damages, is too little to make up for the plaintiff's frustration and
disappointment in not being able to appear at said conference; and for the embarrassment and
humiliation she suffered from the academic community for failure to carry out an official
mission for which she was singled out by the faculty to represent her institution and the
country. After weighing carefully all the considerations, the amount awarded to the plaintiff for
nominal damages and attorney's fees should be increased to the cost of her round trip air fare
or at the present rate of peso to the dollar at P40,000,00."
ALITALIA has appealed to this Court on Certiorari. Here, it seeks to make basically the same points it
tried to make before the Trial Court and the Intermediate Appellate Court, i.e.:
 1) that the Warsaw Convention should have been applied to limit ALITALIA'S liability; and
2) that there is no warrant in fact or in law for the award to Dr. Pablo of nominal damages and
attorney's fees. 14
In addition, ALITALIA postulates that it was error for the Intermediate Appellate Court to have refused
to pass on all the assigned errors and in not stating the facts and the law on which its decision is
based. 15
Under the Warsaw Convention, 16 an air carrier is made liable for damages for:
1) the death, wounding or other bodily injury of a passenger if the accident causing it took
place on board the aircraft or in the course of its operations of embarking or disembarking; 17
2) the destruction or loss of, or damage to, any registered luggage or goods, if the occurrence
causing it took place during the carriage by air;" 18 and
3) delay in the transportation by air of passengers, luggage or goods. 19
In these cases, it is provided in the Convention that the "action for damages, however, founded, can
only be brought subject to conditions and limits set out" therein. 20
The Convention also purports to limit the liability of the carriers in the following manner: 21
1. In the carriage of passengers the liability of the carrier for each passenger is limited to the
sum of 250,000 francs . . . Nevertheless, by special contract, the carrier and the passenger
may agree to a higher limit of liability.: nad
2. a) In the carriage of registered baggage and of cargo, the liability of the carrier is limited to a
sum of 250 francs per kilogramme, unless the passenger or consignor has made, at the time
when the package was handed over to the carrier, a special declaration of interest in delivery
at destination and has paid a supplementary sum if the case so requires. In that case the
carrier will be liable to pay a sum not exceeding the declared sum, unless he proves that sum
is greater than the actual value to the consignor at delivery.
b) In the case of loss, damage or delay of part of registered baggage or cargo, or of any object
contained therein, the weight to be taken into consideration in determining the amount to which
the carrier's liability is limited shall be only the total weight of the package or packages
concerned. Nevertheless, when the loss, damage or delay of a part of the registered baggage
or cargo, or of an object contained therein, affects the value of other packages covered by the
same baggage check or the same air way bill, the total weight of such package or packages
shall also be taken into consideration in determining the limit of liability.
3. As regards objects of which the passenger takes charge himself the liability of the carrier is
limited to 5000 francs per passenger.
4. The limits prescribed . . shall not prevent the court from awarding, in accordance with its
own law, in addition, the whole or part of the court costs and of the other expenses of litigation
incurred by the plaintiff. The foregoing provision shall not apply if the amount of the damages
awarded, excluding court costs and other expenses of the litigation, does not exceed the sum
which the carrier has offered in writing to the plaintiff within a period of six months from the
date of the occurrence causing the damage, or before the commencement of the action, if that
is later.
The Warsaw Convention however denies to the carrier availment "of the provisions which exclude or
limit his liability, if the damage is caused by his wilful misconduct or by such default on his part as, in
accordance with the law of the court seized of the case, is considered to be equivalent to wilful
misconduct," or "if the damage is (similarly) caused . . by any agent of the carrier acting within the
scope of his employment." 22 The Hague Protocol amended the Warsaw Convention by removing
the provision that if the airline took all necessary steps to avoid the damage, it could exculpate itself
completely, 23 and declaring the stated limits of liability not applicable "if it is proved that the damage
resulted from an act or omission of the carrier, its servants or agents, done with intent to cause
damage or recklessly and with knowledge that damage would probably result." The same deletion
was effected by the Montreal Agreement of 1966, with the result that a passenger could recover
unlimited damages upon proof of wilful misconduct. 24
The Convention does not thus operate as an exclusive enumeration of the instances of an airline's
liability, or as an absolute limit of the extent of that liability. Such a proposition is not borne out by the
language of the Convention, as this Court has now, and at an earlier time, pointed out. 25 Moreover,
slight reflection readily leads to the conclusion that it should be deemed a limit of liability only in those
cases where the cause of the death or injury to person, or destruction, loss or damage to property or
delay in its transport is not attributable to or attended by any wilful misconduct, bad faith,
recklessness, or otherwise improper conduct on the part of any official or employee for which the
carrier is responsible, and there is otherwise no special or extraordinary form of resulting injury. The
Convention's provisions, in short, do not "regulate or exclude liability for other breaches of contract by
the carrier" 26 or misconduct of its officers and employees, or for some particular or exceptional type
of damage. Otherwise, "an air carrier would be exempt from any liability for damages in the event of
its absolute refusal, in bad faith, to comply with a contract of carriage, which is absurd." 27 Nor may it
for a moment be supposed that if a member of the aircraft complement should inflict some physical
injury on a passenger, or maliciously destroy or damage the latter's property, the Convention might
successfully be pleaded as the sole gauge to determine the carrier's liability to the passenger. Neither
may the Convention be invoked to justify the disregard of some extraordinary sort of damage
resulting to a passenger and preclude recovery therefor beyond the limits set by said Convention. It is
in this sense that the Convention has been applied, or ignored, depending on the peculiar facts
presented by each case.:-cralaw
In Pan American World Airways, Inc. v. I.A.C., 28 for example, the Warsaw Convention was applied
as regards the limitation on the carrier's liability, there being a simple loss of baggage without any
otherwise improper conduct on the part of the officials or employees of the airline or other special
injury sustained by the passenger.
On the other hand, the Warsaw Convention has invariably been held inapplicable, or as not restrictive
of the carrier's liability, where there was satisfactory evidence of malice or bad faith attributable to its
officers and employees. 29 Thus, an air carrier was sentenced to pay not only compensatory but also
moral and exemplary damages, and attorney's fees, for instance, where its employees rudely put a
passenger holding a first-class ticket in the tourist or economy section, 30 or ousted a brown Asiatic
from the plane to give his seat to a white man, 31 or gave the seat of a passenger with a confirmed
reservation to another, 32 or subjected a passenger to extremely rude, even barbaric treatment, as
by calling him a "monkey." 33
In the case at bar, no bad faith or otherwise improper conduct may be ascribed to the employees of
petitioner airline; and Dr. Pablo's luggage was eventually returned to her, belatedly, it is true, but
without appreciable damage. The fact is, nevertheless, that some special species of injury was
caused to Dr. Pablo because petitioner ALITALIA misplaced her baggage and failed to deliver it to
her at the time appointed — a breach of its contract of carriage, to be sure — with the result that she
was unable to read the paper and make the scientific presentation (consisting of slides,
autoradiograms or films, tables and tabulations) that she had painstakingly labored over, at the
prestigious international conference, to attend which she had traveled hundreds of miles, to her
chagrin and embarrassment and the disappointment and annoyance of the organizers. She felt, not
unreasonably, that the invitation for her to participate at the conference, extended by the Joint
FAO/IAEA Division of Atomic Energy in Food and Agriculture of the United Nations, was a singular
honor not only to herself, but to the University of the Philippines and the country as well, an
opportunity to make some sort of impression among her colleagues in that field of scientific activity.
The opportunity to claim this honor or distinction was irretrievably lost to her because of Alitalia's
breach of its contract.
Apart from this, there can be no doubt that Dr. Pablo underwent profound distress and anxiety, which
gradually turned to panic and finally despair, from the time she learned that her suitcases were
missing up to the time when, having gone to Rome, she finally realized that she would no longer be
able to take part in the conference. As she herself put it, she "was really shocked and distraught and
confused."
Certainly, the compensation for the injury suffered by Dr. Pablo cannot under the circumstances be
restricted to that prescribed by the Warsaw Convention for delay in the transport of baggage.
She is not, of course, entitled to be compensated for loss or damage to her luggage. As already
mentioned, her baggage was ultimately delivered to her in Manila, tardily but safely. She is however
entitled to nominal damages — which, as the law says, is adjudicated in order that a right of the
plaintiff, which has been violated or invaded by the defendant, may be vindicated and recognized,
and not for the purpose of indemnifying the plaintiff for any loss suffered — and this Court agrees that
the respondent Court of Appeals correctly set the amount thereof at P40,000.00. As to the purely
technical argument that the award to her of such nominal damages is precluded by her omission to
include a specific claim therefor in her complaint, it suffices to draw attention to her general prayer,
following her plea for moral and exemplary damages and attorney's fees, "for such other and further
just and equitable relief in the premises," which certainly is broad enough to comprehend an
application as well for nominal damages. Besides, petitioner should have realized that the explicit
assertion, and proof, that Dr. Pablo's right had been violated or invaded by it — absent any claim for
actual or compensatory damages, the prayer thereof having been voluntarily deleted by Dr. Pablo
upon the return to her of her baggage — necessarily raised the issue of nominal damages.: rd
This Court also agrees that respondent Court of Appeals correctly awarded attorney's fees to Dr.
Pablo, and the amount of P5,000.00 set by it is reasonable in the premises. The law authorizes
recovery of attorney's fees inter alia where, as here, "the defendant's act or omission has compelled
the plaintiff to litigate with third persons or to incur expenses to protect his interest," 34 or "where the
court deems it just and equitable." 35
WHEREFORE, no error being perceived in the challenged decision of the Court of Appeals, it
appearing on the contrary to be entirely in accord with the facts and the law, said decision is hereby
AFFIRMED, with costs against the petitioner.
SO ORDERED.
Alitalia v. IAC

Facts:

Dr. Felipa Pablo, an associate professor in the University of the Philippines and a research grantee of
the Philippine Atomic Energy Agency, was invited to take part at a meeting of the Department of
Research and Isotopes in Italy in view of her specialized knowledge in “foreign substances in food
and the agriculture environment”. She would be the second speaker on the first day of the meeting.
Dr. Pablo booked passage on petitioner Alitalia. She arrived in Milan on the day before the meeting,
but was told that her luggage was delayed and was in a succeeding flight from Rome to Milan. The
luggage included her materials for the presentation. The succeeding flights did not carry her luggage.
Desperate, she went to Rome to try to locate the luggage herself, but to no avail. She returned to
Manila without attending the meeting. She demanded reparation for the damages. She rejected
Alitalia’s offer of free airline tickets and commenced an action for damages. As it turned out, the
luggage was actually forwarded to Ispra, but only a day after the scheduled appearance. It was
returned to her after 11 months. The trial court ruled in favor of Dr. Pablo, and this was affirmed by
the Court of Appeals.

Issues:

(1) Whether the Warsaw Convention should be applied to limit Alitalia’s liability

(2) Whether Dr. Pablo is entitled to nominal damages

Held:

(1) Under the Warsaw Convention, an air carrier is made liable for damages for:

a. The death, wounding or other bodily injury of a passenger if the accident causing it took place
on board the aircraft or I the course of its operations of embarking or disembarking;

b. The destruction or loss of, or damage to, any registered luggage or goods, if the occurrence
causing it took place during the carriage by air; and

c. Delay in the transportation by air of passengers, luggage or goods.

The convention however denies to the carrier availment of the provisions which exclude or limit his
liability, if the damage is caused by his wilful misconduct, or by such default on his part as is
considered to be equivalent to wilful misconduct. The Convention does not thus operate as an
exclusive enumeration of the instances of an airline's liability, or as an absolute limit of the extent of
that liability. It should be deemed a limit of liability only in those cases where the cause of the death or
injury to person, or destruction, loss or damage to property or delay in its transport is not attributable
to or attended by any wilful misconduct, bad faith, recklessness, or otherwise improper conduct on
the part of any official or employee for which the carrier is responsible, and there is otherwise no
special or extraordinary form of resulting injury.

In the case at bar, no bad faith or otherwise improper conduct may be ascribed to the employees of
petitioner airline; and Dr. Pablo's luggage was eventually returned to her, belatedly, it is true, but
without appreciable damage. The fact is, nevertheless, that some species of injury was caused to Dr.
Pablo because petitioner ALITALIA misplaced her baggage and failed to deliver it to her at the time
appointed - a breach of its contract of carriage. Certainly, the compensation for the injury suffered by
Dr. Pablo cannot under the circumstances be restricted to that prescribed by the Warsaw Convention
for delay in the transport of baggage.

(2) She is not, of course, entitled to be compensated for loss or damage to her luggage. She is
however entitled to nominal damages which, as the law says, is adjudicated in order that a right of the
plaintiff, which has been violated or invaded by the defendant, may be vindicated and recognized,
and not for the purpose of indemnifying the plaintiff that for any loss suffered and this Court agrees
that the respondent Court of Appeals correctly set the amount thereof at PhP 40,000.00.

The Court also agrees that respondent Court of Appeals correctly awarded attorney’s fees to Dr.
Pablo and the amount of PhP 5,000.00 set by it is reasonable in the premises. The law authorizes
recovery of attorney’s fees inter alia where, as here, the defendant’s act or omission has compelled
the plaintiff to litigate with third persons or to incur expenses to protect his interest or where the court
deems it just and equitable.
 FIRST DIVISION

G.R. No. 172682, July 27, 2016

SULPICIO LINES, INC., Petitioner, v. NAPOLEON SESANTE, NOW SUBSTITUTED BY MARIBEL

ATILANO, KRISTEN MARIE, CHRISTIAN IONE, KENNETH KERRN AND KARISNA KATE, ALL
SURNAMED SESANTE, Respondent.

DECISION

BERSAMIN, J.:

Moral damages are meant to enable the injured party to obtain the means, diversions or amusements
in order to alleviate the moral suffering. Exemplary damages are designed to permit the courts to
reshape behavior that is socially deleterious in its consequence by creating negative incentives or
deterrents against such behavior.

The Case

This appeal seeks to undo and reverse the adverse decision promulgated on June 27,
2005,1 whereby the Court of Appeals (CA) affirmed with modification the judgment of the Regional
Trial Court (RTC), Branch 91, in Quezon City holding the petitioner liable to pay temperate and moral
damages due to breach of contract of carriage.2chanrobleslaw

Antecedents

On September 18, 1998, at around 12:55 p.m., the M/V Princess of the Orient, a passenger vessel
owned and operated by the petitioner, sank near Fortune Island in Batangas. Of the 388 recorded
passengers, 150 were lost.3 Napoleon Sesante, then a member of the Philippine National Police
(PNP) and a lawyer, was one of the passengers who survived the sinking. He sued the petitioner for
breach of contract and damages.4chanrobleslaw

Sesante alleged in his complaint that the M/V Princess of the Orient left the Port of Manila while
Metro Manila was experiencing stormy weather; that at around 11:00 p.m., he had noticed the vessel
listing starboard, so he had gone to the uppermost deck where he witnessed the strong winds and big
waves pounding the vessel; that at the same time, he had seen how the passengers had been
panicking, crying for help and frantically scrambling for life jackets in the absence of the vessel's
officers and crew; that sensing danger, he had called a certain Vency Ceballos through his cellphone
to request him to inform the proper authorities of the situation; that thereafter, big waves had rocked
the vessel, tossing him to the floor where he was pinned by a long steel bar; that he had freed himself
only after another wave had hit the vessel;5 that he had managed to stay afloat after the vessel had
sunk, and had been carried by the waves to the coastline of Cavite and Batangas until he had been
rescued; that he had suffered tremendous hunger, thirst, pain, fear, shock, serious anxiety and
mental anguish; that he had sustained injuries,6 and had lost money, jewelry, important documents,
police uniforms and the .45 caliber pistol issued to him by the PNP; and that because it had
committed bad faith in allowing the vessel to sail despite the storm signal, the petitioner should pay
him actual and moral damages of P500,000.00 and P1,000,000.00, respectively. 7chanrobleslaw

In its defense, the petitioner insisted on the seaworthiness of the M/V Princess of the Orient due to its
having been cleared to sail from the Port of Manila by the proper authorities; that the sinking had
been due to force majeure; that it had not been negligent; and that its officers and crew had also not
been negligent because they had made preparations to abandon the vessel because they had
launched life rafts and had provided the passengers assistance in that regard. 8chanrobleslaw

Decision of the RTC

On October 12, 2001, the RTC rendered its judgment in favor of the respondent,9 holding as
follows:ChanRoblesVirtualawlibrary
WHEREFORE, judgment is hereby rendered in favor of plaintiff Napoleon Sesante and against
defendant Sulpicio Lines, Inc., ordering said defendant to pay plaintiff:

1. Temperate damages in the amount of P400,000.00;

2. Moral damages in the amount of One Million Pesos (P1,000,000.00);

3. Costs of suit.
SO ORDERED.10chanroblesvirtuallawlibrary
The RTC observed that the petitioner, being negligent, was liable to Sesante pursuant to Articles
1739 and 1759 of the Civil Code; that the petitioner had not established its due diligence in the
selection and supervision of the vessel crew; that the ship officers had failed to inspect the stowage of
cargoes despite being aware of the storm signal; that the officers and crew of the vessel had not
immediately sent a distress signal to the Philippine Coast Guard; that the ship captain had not called
for then "abandon ship" protocol; and that based on the report of the Board of Marine Inquiry (BMI),
the erroneous maneuvering of the vessel by the captain during the extreme weather condition had
been the immediate and proximate cause of the sinking.

The petitioner sought reconsideration, but the RTC only partly granted its motion by reducing the
temperate damages from P500,000.00 to P300,000.00. 11chanrobleslaw

Dissatisfied, the petitioner appealed.12 It was pending the appeal in the CA when Sesante passed
away. He was substituted by his heirs.13chanrobleslaw

Judgment of the CA

On June 27, 2005, the CA promulgated its assailed decision. It lowered the temperate damages to
P120,000.00, which approximated the cost of Sesante's lost personal belongings; and held that
despite the seaworthiness of the vessel, the petitioner remained civilly liable because its officers and
crew had been negligent in performing their duties.14chanrobleslaw

Sttill aggrieved, Sulpicio Lines moved for reconsideration, but the CA denied the
motion.15chanrobleslaw

Hence, this appeal.

Issues

The petitioner attributes the following errors to the CA, to wit:ChanRoblesVirtualawlibrary

I

THE ASSAILED DECISION ERRED IN SUSTAINING THE AWARD OF MORAL DAMAGES, AS THE
INSTANT CASE IS FOR ALLEGED PERSONAL INJURIES PREDICATED ON BREACH OF
CONTRACT OF CARRIAGE, AND THERE BEING NO PROOF OF BAD FAITH ON THE PART OF
SULPICIO

II

THE ASSAILED DECISION ERRED IN SUSTAINING THE AMOUNT OF MORAL DAMAGES

AWARDED, THE SAME BEING UNREASONABLE, EXCESSIVE AND UNCONSCIONABLE, AND
TRANSLATES TO UNJUST ENRICHMENT AGAINST SULPICIO

III

THE ASSAILED DECISION ERRED IN SUSTAINING THE AWARD OF TEMPERATE DAMAGES AS

THE SAME CANNOT SUBSTITUTE FOR A FAILED CLAIM FOR ACTUAL DAMAGES, THERE
BEING NO COMPETENT PROOF TO WARRANT SAID AWARD

IV

THE AWARD OF TEMPERATE DAMAGES IS UNTENABLE AS THE REQUISITE NOTICE UNDER

THE LAW WAS NOT GIVEN TO SULPICIO IN ORDER TO HOLD IT LIABLE FOR THE ALLEGED
LOSS OF SESANTE'S PERSONAL BELONGINGS

THE ASSAILED DECISION ERRED IN SUBSTITUTING THE HEIRS OF RESPONDENT SESANTE

IN THE INSTANT CASE, THE SAME BEING A PERSONAL ACTION WHICH DOES NOT SURVIVE

VI

THE ASSAILED DECISION ERRED IN APPLYING ARTICLE 1759 OF THE NEW CIVIL CODE
AGAINST SULPICIO SANS A CLEAR-CUT FINDING OF SULPICIO'S BAD FAITH IN THE
INCIDENT16chanroblesvirtuallawlibrary
In other words, to be resolved are the following, namely: (1) Is the complaint for breach of contract
and damages a personal action that does not survive the death of the plaintiff?; (2) Is the petitioner
liable for damages under Article 1759 of the Civil Code?; and (3) Is there sufficient basis for awarding
moral and temperate damages?

Ruling of the Court

The appeal lacks merit.

An action for breach of contract of carriage survives the death of the plaintiff

The petitioner urges that Sesante's complaint for damages was purely personal and cannot be
transferred to his heirs upon his death. Hence, the complaint should be dismissed because the death
of the plaintiff abates a personal action.

The petitioner's urging is unwarranted.

Section 16, Rule 3 of the Rules of Court lays down the proper procedure in the event of the death of a
litigant, viz.:ChanRoblesVirtualawlibrary
Section 16. Death of party; duty of counsel. - Whenever a party to a pending action dies, and the
claim is not thereby extinguished, it shall be the duty of his counsel to inform the court within thirty
(30) days after such death of the fact thereof, and to give the name and address of his legal
representative or representatives. Failure of counsel to comply with his duty shall be a ground for
disciplinary action.

The heirs of the deceased may be allowed to be substituted for the deceased, without requiring
the appointment of an executor or administrator and the court may appoint a guardian ad litem for the
minor heirs.

xxxx
Substitution by the heirs is not a matter of jurisdiction, but a requirement of due process.17 It protects
the right of due process belonging to any party, that in the event of death the deceased litigant
continues to be protected and properly represented in the suit through the duly appointed legal
representative of his estate.18chanrobleslaw

The application of the rule on substitution depends on whether or not the action survives the death of
the litigant. Section 1, Rule 87 of the Rules of Court enumerates the following actions that survive the
death of a party, namely: (1) recovery of real or personal property, or an interest from the estate; (2)
enforcement of liens on the estate; and (3) recovery of damages for an injury to person or property.
On the one hand, Section 5, Rule 86 of the Rules of Court lists the actions abated by death as
including: (1) claims for funeral expenses and those for the last sickness of the decedent; (2)
judgments for money; and (3) all claims for money against the deceased, arising from contract,
express or implied.

A contract of carriage generates a relation attended with public duty, neglect or malfeasance of the
carrier's employees and gives ground for an action for damages.19 Sesante's claim against the
petitioner involved his personal injury caused by the breach of the contract of carriage. Pursuant to
the aforecited rules, the complaint survived his death, and could be continued by his heirs following
the rule on substitution.

II

The petitioner is liable for breach of contract of carriage

The petitioner submits that an action for damages based on breach of contract of carriage under
Article 1759 of the Civil Code should be read in conjunction with Article 2201 of the same code; that
although Article 1759 only provides for a presumption of negligence, it does not envision automatic
liability; and that it was not guilty of bad faith considering that the sinking of M/V Princess of the Orient
had been due to a fortuitous event, an exempting circumstance under Article 1174 of the Civil Code.

The submission has no substance.

Article 1759 of the Civil Code does not establish a presumption of negligence because it explicitly
makes the common carrier liable in the event of death or injury to passengers due to the negligence
or fault of the common carrier's employees. It reads:ChanRoblesVirtualawlibrary
Article 1759. Common carriers are liable for the death or injuries to passengers through the
negligence or willful acts of the former's employees, although such employees may have acted
beyond the scope of their authority or in violation of the orders of the common carriers.
This liability of the common carriers does not cease upon proof that they exercised all the diligence of
a good father of a family in the selection and supervision of their employees.
The liability of common carriers under Article 1759 is demanded by the duty of extraordinary diligence
required of common carriers in safely carrying their passengers.20chanrobleslaw

On the other hand, Article 1756 of the Civil Code lays down the presumption of negligence against
the common carrier in the event of death or injury of its passenger, viz.:ChanRoblesVirtualawlibrary
Article 1756. In case of death of or injuries to passengers, common carriers are presumed to have
been at fault or to have acted negligently, unless they prove that they observed extraordinary
diligence as prescribed in Articles 1733 and 1755.
Clearly, the trial court is not required to make an express finding of the common carrier's fault or
negligence.21 Even the mere proof of injury relieves the passengers from establishing the fault or
negligence of the carrier or its employees.22 The presumption of negligence applies so long as there
is evidence showing that: (a) a contract exists between the passenger and the common carrier; and
(b) the injury or death took place during the existence of such contract.23 In such event, the burden
shifts to the common carrier to prove its observance of extraordinary diligence, and that an
unforeseen event or force majeure had caused the injury.24chanrobleslaw

Sesante sustained injuries due to the buffeting by the waves and consequent sinking of M/V Princess
of the Orient where he was a passenger. To exculpate itself from liability, the common carrier
vouched for the seaworthiness of M/V Princess of the Orient, and referred to the BMI report to the
effect that the severe weather condition - a force majeure - had brought about the sinking of the
vessel.

The petitioner was directly liable to Sesante and his heirs.

A common carrier may be relieved of any liability arising from a fortuitous event pursuant to Article
117425cralawred of the Civil Code. But while it may free a common carrier from liability, the provision
still requires exclusion of human agency from the cause of injury or loss. 26 Else stated, for a common
carrier to be absolved from liability in case of force majeure, it is not enough that the accident was
caused by a fortuitous event. The common carrier must still prove that it did not contribute to the
occurrence of the incident due to its own or its employees' negligence.27 We explained in Schmitz
Transport & Brokerage Corporation v. Transport Venture, Inc.,28 as
follows:ChanRoblesVirtualawlibrary
In order to be considered a fortuitous event, however, (1) the cause of the unforeseen and
unexpected occurrence, or the failure of the debtor to comply with his obligation, must be
independent of human will; (2) it must be impossible to foresee the event which constitute the caso
fortuito, or if it can be foreseen it must be impossible to avoid; (3) the occurrence must be such as to
render it impossible for the debtor to fulfill his obligation in any manner; and (4) the obligor must be
free from any participation in the aggravation of the injury resulting to the creditor.
[T]he principle embodied in the act of God doctrine strictly requires that the act must be occasioned
solely by the violence of nature. Human intervention is to be excluded from creating or
entering into the cause of the mischief. When the effect is found to be in part the result of the
participation of man, whether due to his active intervention or neglect or failure to act, the
whole occurrence is then humanized and removed from the rules applicable to the acts of
God.29 (bold underscoring supplied for emphasis)
The petitioner has attributed the sinking of the vessel to the storm notwithstanding its position on the
seaworthiness of M/V Princess of the Orient. Yet, the findings of the BMI directly contradicted the
petitioner's attribution, as follows:ChanRoblesVirtualawlibrary
7. The Immediate and the Proximate Cause of the Sinking

The Captain's erroneous maneuvers of the M/V Princess of the Orient minutes before she sunk [sic]
had caused the accident. It should be noted that during the first two hours when the ship left North
Harbor, she was navigating smoothly towards Limbones Point. During the same period, the ship was
only subjected to the normal weather stress prevailing at the time. She was then inside Manila Bar.
The waves were observed to be relatively small to endanger the safety of the ship. It was only when
the MV Princess of the Orient had cleared Limbones Pt. while navigating towards the direction of the
Fortune Island when this agonizing misfortune struck the ship.

Initially, a list of three degrees was observed. The listing of the ship to her portside had continuously
increased. It was at this point that the captain had misjudged the situation. While the ship
continuously listed to her portside and was battered by big waves, strong southwesterly winds,
prudent judgement [sic] would dictate that the Captain should have considerably reduced the ship's
speed. He could have immediately ordered the Chief Engineer to slacken down the speed.
Meanwhile, the winds and waves continuously hit the ship on her starboard side. The waves were at
least seven to eight meters in height and the wind velocity was a[t] 25 knots. The MV Princess of the
Orient being a close-type ship (seven decks, wide and high superstructure) was vulnerable and
exposed to the howling winds and ravaging seas. Because of the excessive movement, the solid and
liquid cargo below the decks must have shifted its weight to port, which could have contributed to the
tilted position of the ship.

Minutes later, the Captain finally ordered to reduce the speed of the ship to 14 knots. At the same
time, he ordered to put ballast water to the starboard-heeling tank to arrest the continuous listing of
the ship. This was an exercise in futility because the ship was already listing between 15 to 20
degrees to her portside. The ship had almost reached the maximum angle of her loll. At this stage,
she was about to lose her stability.

Despite this critical situation, the Captain executed several starboard maneuvers. Steering the course
of the Princess to starboard had greatly added to her tilting. In the open seas, with a fast speed of 14
knots, advance maneuvers such as this would tend to bring the body of the ship in the opposite side.
In navigational terms, this movement is described as the centripetal force. This force is produced by
the water acting on the side of the ship away from the center of the turn. The force is considered to
act at the center of lateral resistance which, in this case, is the centroid of the underwater area of the
ship's side away from the center of the turn. In the case of the Princess, when the Captain
maneuvered her to starboard, her body shifted its weight to port. Being already inclined to an angle of
15 degrees, coupled with the instantaneous movement of the ship, the cargoes below deck could
have completely shifted its position and weight towards portside. By this time, the ship being ravaged
simultaneously by ravaging waves and howling winds on her starboard side, finally lost her
grip.30chanroblesvirtuallawlibrary
Even assuming the seaworthiness of the MA/ Princess of the Orient, the petitioner could not escape
liability considering that, as borne out by the aforequoted findings of the BMI, the immediate and
proximate cause of the sinking of the vessel had been the gross negligence of its captain in
maneuvering the vessel.

The Court also notes that Metro Manila was experiencing Storm Signal No. 1 during the time of the
sinking.31 The BMI observed that a vessel like the M/V Princess of the Orient, which had a volume of
13.734 gross tons, should have been capable of withstanding a Storm Signal No. 1 considering that
the responding fishing boats of less than 500 gross tons had been able to weather through the same
waves and winds to go to the succor of the sinking vessel and had actually rescued several of the
latter's distressed passengers.32chanrobleslaw

III

The award of moral damages and temperate damages is proper

The petitioner argues that moral damages could be meted against a common carrier only in the
following instances, to wit: (1) in the situations enumerated by Article 2201 of the Civil Code; (2) in
cases of the death of a passenger; or (3)where there was bad faith on the part of the common carrier.
It contends that none of these instances obtained herein; hence, the award should be deleted.

We agree with the petitioner that moral damages may be recovered in an action upon breach of
contract of carriage only when: (a) death of a passenger results, or (b) it is proved that the carrier was
guilty of fraud and bad faith, even if death does not result. 33 However, moral damages may be
awarded if the contractual breach is found to be wanton and deliberately injurious, or if the one
responsible acted fraudulently or with malice or bad faith.34chanrobleslaw

The CA enumerated the negligent acts committed by the officers and crew of M/V Princess of the
Orient, viz.:ChanRoblesVirtualawlibrary
x x x. [W]hile this Court yields to the findings of the said investigation report, yet it should be observed
that what was complied with by Sulpicio Lines were only the basic and minimal safety standards
which would qualify the vessel as seaworthy. In the same report however it also revealed that the
immediate and proximate cause of the sinking of the M/V Princess of the Orient was brought by the
following: erroneous maneuvering command of Captain Esrum Mahilum and due to the weather
condition prevailing at the time of the tragedy. There is no doubt that under the circumstances the
crew of the vessel were negligent in manning it. In fact this was clearly established by the
investigation of the Board of Marine Inquiry where it was found that:ChanRoblesVirtualawlibrary
The Chief Mate, when interviewed under oath, had attested that he was not able to make stability
calculation of the ship vis-a-vis her cargo. He did not even know the metacentric height (GM) of the
ship whether it be positive or negative.

As cargo officer of the ship, he failed to prepare a detailed report of the ship's cargo stowage plan.
He likewise failed to conduct the soundings (measurement) of the ballast tanks before the ship
departed from port. He readily presumed that the ship was full of ballast since the ship was fully
ballasted when she left Cebu for Manila on 16 September 1998 and had never discharge[d] its
contents since that time.

Being the officer-in-charge for emergency situation (sic) like this, he failed to execute and supervise
the actual abandonship (sic) procedure. There was no announcement at the public address system of
abandonship (sic), no orderly distribution of life jackets and no orderly launching of life rafts. The
witnesses have confirmed this finding on their sworn statements.

There was miscalculation in judgment on the part of the Captain when he erroneously navigated the
ship at her last crucial moment. x x x

To aggravate his case, the Captain, having full command and responsibility of the MV Princess of the
Orient, had failed to ensure the proper execution of the actual abandoning of the ship.

The deck and engine officers (Second Mate, Third Mate, Chief Engineers, Second Engineer, Third
Engineer and Fourth Engineer), being in charge of their respective abandonship (sic) post, failed to
supervise the crew and passengers in the proper execution of abandonship (sic) procedure.

The Radio Officer (spark) failed to send the SOS message in the internationally accepted
communication network (VHF Channel 16). Instead, he used the Single Side Band (SSB) radio in
informing the company about the emergency situation. x x x x 35chanroblesvirtuallawlibrary
The aforestated negligent acts of the officers and crew of M/V Princess of the Orient could not be
ignored in view of the extraordinary duty of the common carrier to ensure the safety of the
passengers. The totality of the negligence by the officers and crew of M/V Princess of the Orient,
coupled with the seeming indifference of the petitioner to render assistance to Sesante, 36 warranted
the award of moral damages.

While there is no hard-and-fast rule in determining what is a fair and reasonable amount of moral
damages, the discretion to make the determination is lodged in the trial court with the limitation that
the amount should not be palpably and scandalously excessive. The trial court then bears in mind
that moral damages are not intended to impose a penalty on the wrongdoer, or to enrich the plaintiff
at the expense of the defendant.37 The amount of the moral damages must always reasonably
approximate the extent of injury and be proportional to the wrong committed. 38chanrobleslaw

The Court recognizes the mental anguish, agony and pain suffered by Sesante who fought to survive
in the midst of the raging waves of the sea while facing the immediate prospect of losing his life. His
claim for moral and economic vindication is a bitter remnant of that most infamous tragedy that left
hundreds of families broken in its wake. The anguish and moral sufferings he sustained after
surviving the tragedy would always include the memory of facing the prospect of his death from
drowning, or dehydration, or being preyed upon by sharks. Based on the established circumstances,
his survival could only have been a miracle wrought by God's grace, by which he was guided in his
desperate swim for the safety of the shore. But even with the glory of survival, he still had to grapple
with not just the memory of having come face to face with almost certain death, but also with having
to answer to the instinctive guilt for the rest of his days of being chosen to live among the many who
perished in the tragedy.39chanrobleslaw

While the anguish, anxiety, pain and stress experienced by Sesante during and after the sinking
cannot be quantified, the moral damages to be awarded should at least approximate the reparation of
all the consequences of the petitioner's negligence. With moral damages being meant to enable the
injured party to obtain the means, diversions or amusements in order to alleviate his moral and
physical sufferings,40 the Court is called upon to ensure that proper recompense be allowed to him,
through his heirs. For this purpose, the amount of P1,000,000.00, as granted by the RTC and
affirmed by the CA, is maintained.

The petitioner contends that its liability for the loss of Sesante's personal belongings should conform
with Article 1754, in relation to Articles 1998, 2000 to 2003 of the Civil Code, which
provide:ChanRoblesVirtualawlibrary
Article 1754. The provisions of Articles 1733 to 1753 shall apply to the passenger's baggage which is
not in his personal custody or in that of his employees. As to other baggage, the rules in Articles 1998
and 2000 to 2003 concerning the responsibility of hotel-keepers shall be applicable.

xxxx

Article 1998. The deposit of effects made by travellers in hotels or inns shall also be regarded as
necessary. The keepers of hotels or inns shall be responsible for them as depositaries, provided that
notice was given to them, or to their employees, of the effects brought by the guests and that, on the
part of the latter, they take the precautions which said hotel-keepers or their substitutes advised
relative to the care and vigilance of their effects.

xxxx

Article 2000. The responsibility referred to in the two preceding articles shall include the loss of, or
injury to the personal property of the guests caused by the servants or employees of the keepers of
hotels or inns as well as by strangers; but not that which may proceed from any force majeure. The
fact that travellers are constrained to rely on the vigilance of the keeper of the hotel or inn shall be
considered in determining the degree of care required of him.

Article 2001. The act of a thief or robber, who has entered the hotel is not deemed force majeure,
unless it is done with the use of arms or through an irresistible force.

Article 2002. The hotel-keeper is not liable for compensation if the loss is due to the acts of the guest,
his family, servants or visitors, or if the loss arises from the character of the things brought into the
hotel.

Article 2003. The hotel-keeper cannot free himself from responsibility by posting notices to the effect
that he is not liable for the articles brought by the guest. Any stipulation to the contrary between the
hotel-keeper and the guest whereby the responsibility of the former as set forth in Articles 1998 to
2001 is suppressed or diminished shall be void.
The petitioner denies liability because Sesante's belongings had remained in his custody all
throughout the voyage until the sinking, and he had not notified the petitioner or its employees about
such belongings. Hence, absent such notice, liability did not attach to the petitioner.

Is notification required before the common carrier becomes liable for lost belongings that remained in
the custody of the passenger?

We answer in the negative.

The rule that the common carrier is always responsible for the passenger's baggage during the
voyage needs to be emphasized. Article 1754 of the Civil Code does not exempt the common carrier
from liability in case of loss, but only highlights the degree of care required of it depending on who
has the custody of the belongings. Hence, the law requires the common carrier to observe the same
diligence as the hotel keepers in case the baggage remains with the passenger; otherwise,
extraordinary diligence must be exercised.41 Furthermore, the liability of the common carrier attaches
even if the loss or damage to the belongings resulted from the acts of the common carrier's
employees, the only exception being where such loss or damages is due to force
majeure.42chanrobleslaw

In YHT Realty Corporation v. Court of Appeals,43 we declared the actual delivery of the goods to the
innkeepers or their employees as unnecessary before liability could attach to the hotelkeepers in the
event of loss of personal belongings of their guests considering that the personal effects were inside
the hotel or inn because the hotelkeeper shall remain accountable. 44 Accordingly, actual notification
was not necessary to render the petitioner as the common carrier liable for the lost personal
belongings of Sesante. By allowing him to board the vessel with his belongings without any protest,
the petitioner became sufficiently notified of such belongings. So long as the belongings were brought
inside the premises of the vessel, the petitioner was thereby effectively notified and consequently
duty-bound to observe the required diligence in ensuring the safety of the belongings during the
voyage. Applying Article 2000 of the Civil Code, the petitioner assumed the liability for loss of the
belongings caused by the negligence of its officers or crew. In view of our finding that the negligence
of the officers and crew of the petitioner was the immediate and proximate cause of the sinking of the
M/V Princess of the Orient, its liability for Sesante's lost personal belongings was beyond question.

The petitioner claims that temperate damages were erroneously awarded because Sesante had not
proved pecuniary loss; and that the CA merely relied on his self-serving testimony.

The award of temperate damages was proper.

Temperate damages may be recovered when some pecuniary loss has been suffered but the amount
cannot, from the nature of the case, be proven with certainty.45 Article 222446 of the Civil
Codeexpressly authorizes the courts to award temperate damages despite the lack of certain proof of
actual damages.47chanrobleslaw

Indubitably, Sesante suffered some pecuniary loss from the sinking of the vessel, but the value of the
loss could not be established with certainty. The CA, which can try facts and appreciate evidence,
pegged the value of the lost belongings as itemized in the police report at P120,000.00. The valuation
approximated the costs of the lost belongings. In that context, the valuation of P120,000.00 is correct,
but to be regarded as temperate damages.

In fine, the petitioner, as a common carrier, was required to observe extraordinary diligence in
ensuring the safety of its passengers and their personal belongings. It being found herein short of the
required diligence rendered it liable for the resulting injuries and damages sustained by Sesante as
one of its passengers.

Should the petitioner be further held liable for exemplary damages?

In contracts and quasi-contracts, the Court has the discretion to award exemplary damages if the
defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner. 48 Indeed,
exemplary damages cannot be recovered as a matter of right, and it is left to the court to decide
whether or not to award them.49 In consideration of these legal premises for the exercise of the
judicial discretion to grant or deny exemplary damages in contracts and quasi-contracts against a
defendant who acted in a wanton, fraudulent,' reckless, oppressive, or malevolent manner, the Court
hereby awards exemplary damages to Sesante.

First of all, exemplary damages did not have to be specifically pleaded or proved, because the courts
had the discretion to award them for as long as the evidence so warranted. In Marchan v.
Mendoza,50 the Court has relevantly discoursed:ChanRoblesVirtualawlibrary
x x x. It is argued that this Court is without jurisdiction to adjudicate this exemplary damages
since there was no allegation nor prayer, nor proof, nor counterclaim of error for the same by
the appellees. It is to be observed however, that in the complaint, plaintiffs "prayed for such
other and further relief as this Court may deem just and equitable." Now, since the body of the
complaint sought to recover damages against the defendant-carrier wherein plaintiffs prayed
for indemnification for the damages they suffered as a result of the negligence of said Silverio
Marchan who is appellant's employee; and since exemplary damages is intimately connected
with general damages, plaintiffs may not be expected to single out by express term the kind of
damages they are trying to recover against the defendant's carrier. Suffice it to state that when
plaintiffs prayed in their complaint for such other relief and remedies that may be availed of
under the premises, in effect, therefore, the court is called upon to exercise and use its
discretion whether the imposition of punitive or exemplary damages even though not
expressly prayed or pleaded in the plaintiffs' complaint.

x x x It further appears that the amount of exemplary damages need not be proved, because its
determination depends upon the amount of compensatory damages that may be awarded to
the claimant. If the amount of exemplary damages need not be proved, it need not also be
alleged, and the reason is obvious because it is merely incidental or dependent upon what the
court may award as compensatory damages. Unless and until this premise is determined and
established, what may be claimed as exemplary damages would amount to a mere surmise or
speculation. It follows as a necessary consequence that the amount of exemplary damages
need not be pleaded in the complaint because the same cannot be predetermined. One can
merely ask that it be determined by the court if in the use of its discretion the same is
warranted by the evidence, and this is just what appellee has done. (Bold underscoring supplied
for emphasis)
And, secondly, exemplary damages are designed by our civil law to "permit the courts to reshape
behavior that is socially deleterious in its consequence by creating negative incentives or deterrents
against such behavior."51 The nature and purpose for this kind of damages have been well-stated
in People v. Dalisay,52 to wit:ChanRoblesVirtualawlibrary
Also known as 'punitive' or 'vindictive' damages, exemplary or corrective damages are intended to
serve as a deterrent to serious wrong doings, and as a vindication of undue sufferings and
wanton invasion of the rights of an injured or a punishment for those guilty of outrageous
conduct. These terms are generally, but not always, used interchangeably. In common law, there is
preference in the use of exemplary damages when the award is to account for injury to feelings and
for the sense of indignity and humiliation suffered by a person as a result of an injury that has been
maliciously and wantonly inflicted, the theory being that there should be compensation for the hurt
caused by the highly reprehensible conduct of the defendant - associated with such circumstances as
willfulness, wantonness, malice, gross negligence or recklessness, oppression, insult or fraud or
gross fraud - that intensifies the injury. The terms punitive or vindictive damages are often used to
refer to those species of damages that may be awarded against a person to punish him for his
outrageous conduct. In either case, these damages are intended in good measure to deter the
wrongdoer and others like him from similar conduct in the future. (Bold underscoring supplied
for emphasis)
The BMI found that the "erroneous maneuvers" during the ill-fated voyage by the captain of the
petitioner's vessel had caused the sinking. After the vessel had cleared Limbones Point while
navigating towards the direction of Fortune Island, the captain already noticed the listing of the vessel
by three degrees to the portside of the vessel, but, according to the BMI, he did not exercise
prudence as required by the situation in which his vessel was suffering the battering on the starboard
side by big waves of seven to eight meters high and strong southwesterly winds of 25 knots. The BMI
pointed out that he should have considerably reduced the speed of the vessel based on his
experience about the vessel - a close-type ship of seven decks, and of a wide and high
superstructure - being vulnerable if exposed to strong winds and high waves. He ought to have also
known that maintaining a high speed under such circumstances would have shifted the solid and
liquid cargo of the vessel to port, worsening the tilted position of the vessel. It was only after a few
minutes thereafter that he finally ordered the speed to go down to 14 knots, and to put ballast water to
the starboard-heeling tank to arrest the continuous listing at portside. By then, his moves became an
exercise in futility because, according to the BMI, the vessel was already listing to her portside
between 15 to 20 degrees, which was almost the maximum angle of the vessel's loll. It then became
inevitable for the vessel to lose her stability.

The BMI concluded that the captain had executed several starboard maneuvers despite the critical
situation of the vessel, and that the maneuvers had greatly added to the tilting of the vessel. It
observed:ChanRoblesVirtualawlibrary
x x x In the open seas, with a fast speed of 14 knots, advance maneuvers such as this would
tend to bring the body of the ship in the opposite side. In navigational terms, this movement is
described as the centripetal force. This force is produced by the water acting on the side of
the ship away from the center of the turn. The force is considered to act at the center of lateral
resistance which, in this case, is the centroid of the underwater area of the ship's side away
from the center of the turn. In the case of the Princess, when the Captain maneuvered her to
starboard, her body shifted its weight to port. Being already inclined to an angle of 15
degrees, coupled with the instantaneous movement of the ship, the cargoes below deck could
have completely shifted its position and weight towards portside. By this time, the ship being
ravaged simultaneously by ravaging waves and howling winds on her starboard side, finally
lost her grip.53chanroblesvirtuallawlibrary
Clearly, the petitioner and its agents on the scene acted wantonly and
recklessly. Wanton and recklessare virtually synonymous in meaning as respects liability for conduct
towards others.54Wanton means characterized by extreme recklessness and utter disregard for the
rights of others; or marked by or manifesting arrogant recklessness of justice or of rights or feelings of
others.55 Conduct is reckless when it is an extreme departure from ordinary care, in a situation in
which a high degree of danger is apparent. It must be more than any mere mistake resulting from
inexperience, excitement, or confusion, and more than mere thoughtlessness or inadvertence, or
simple inattention.56chanrobleslaw

The actuations of the petitioner and its agents during the incident attending the unfortunate sinking of
the M/V Princess of the Orient were far below the standard of care and circumspection that the law on
common carriers demanded. Accordingly, we hereby fix the sum of P1,000,000.00 in order to serve
fully the objective of exemplarity among those engaged in the business of transporting passengers
and cargo by sea. The amount would not be excessive, but proper. As the Court put it in Pere�a v.
Zarate:57
Anent the P1,000,000.00 allowed as exemplary damages, we should not reduce the amount if only to
render effective the desired example for the public good. As a common carrier, the Perenas needed
to be vigorously reminded to observe their duty to exercise extraordinary diligence to prevent a
similarly senseless accident from happening again. Only by an award of exemplary damages in that
amount would suffice to instill in them and others similarly situated like them the ever-present need
for greater and constant vigilance in the conduct of a business imbued with public interest. 58 (Bold
underscoring supplied for emphasis)
WHEREFORE, the Court AFFIRMS the decision promulgated on June 27, 2005 with
the MODIFICATIONS that: (a) the amount of moral damages is fixed at P1,000,000.00; (b) the
amount of P1,000,000.00 is granted as exemplary damages; and (c) the sum of P120,000.00 is
allowed as temperate damages, all to be paid to the heirs of the late Napoleon Sesante. In addition,
all the amounts hereby awarded shall earn interest of 6% per annum from the finality of this decision
until fully paid. Costs of suit to be paid by the petitioner.

SO ORDERED.
GR No. 172682, July 27, 2016
Sulpicio Lines Inc. (Petitioner) v Napoleon Sisante (Respondents)
First Division

Ponente: Bersamin, J.
Nature of Action
: Action for damages for breach of contract of carriage.
FACTS:
The M/V Princess of the Orient, a passenger vessel owned and operated by the petitioner, sank nearFortune Island in
Batangas. Of the 388 recorded passengers, 150 were lost. Napoleon Sesante, then amember of the Philippine
National Police (PNP) and a lawyer, was one of the passengers who survived thesinking. He sued the petitioner for
breach of contract and damages. In its defense, the petitioner insisted onthe seaworthiness of the M/V Princess of the
Orient due to its having been cleared to sail from the Port ofManila by the proper authorities; that the sinking had been
due to force majeure; that it had not beennegligent; and that its officers and crew had also not been negligent because
they had made preparations toabandon the vessel because they had launched life rafts and had provided the
passengers assistance in thatregard. The RTC rendered judgement in favor of plaintiff Napoleon Sesante and
ordered defendant to paytemperate and moral damages. The RTC observed that the petitioner, being negligent, was
liable to Sesante pursuant to Articles 1739 and 1759 of the Civil Code. The CA reduced the award
of the temperate damagesto the approximate cost of Sesante's lost personal belongings and held that petitioner
remained civilly liable.The petitioner has attributed the sinking of the vessel to the storm notwithstanding its position
onthe seaworthiness of M/V Princess of the Orient. Yet, the findings of the BMI directly contradicted the petitioner's
attribution, as the BMI found that petitioner’s fault was the immediate and proximate
cause ofthe sinking due to the Captain's erroneous maneuvers of the M/V Princess of the Orient minutes before
shesunk.
ISSUE:
Whether or not the petitioner is liable for moral damages.
RULING:
Yes. The Court awarded moral damages due to the totality of the negligence by the officers andcrew of the Princess
of the Orient coupled with the seeming indifference of the petitioner to renderassistance to Sesante.The petitioner
argues that moral damages could be meted against a common carrier only in thefollowing instances, to wit: (1) in the
situations enumerated by Article 2201 of the Civil Code; (2) in casesof the death of a passenger; or (3) where there
was bad faith on the part of the common carrier. It contendsthat none of these instances obtained herein; hence, the
award should be deleted.We agree with the petitioner that moral damages may be recovered in an action upon
breach ofcontract of carriage only when: (a) death of a passenger results, or (b) it is proved that the carrier was guiltyof
fraud and bad faith, even if death does not result. However, moral damages may be awarded if thecontractual breach
is found to be wanton and deliberately injurious, or if the one responsible actedfraudulently or with malice or bad
faith.The negligent acts of the officers and crew of M/V Princess of the Orient could not be ignored inview of the
extraordinary duty of the common carrier to ensure the safety of the passengers. The totality ofthe negligence by the
officers and crew of M/V Princess of the Orient, coupled with the seemingindifference of the petitioner to render
assistance to Sesante, warranted the award of moral damages.
G.R. No. 174161 February 18, 2015

R TRANSPORT CORPORATION, Petitioner,

vs.
LUISITO G. YU, Respondent.

DECISION

PERALTA, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to
reverse and set aside the Decision1 and Resolution,2 dated September 9, 2005 and August 8, 2006,
respectively, of the Court of Appeals (CA) in CA-G.R. CV No. 84175.

The antecedent facts are as follows:

At around 8:45 in the morning of December 12, 1993, Loreta J. Yu, after having alighted from a
passenger bus in front of Robinson's Galleria along the north-bound lane of Epifanio de los Santos
Avenue (EDSA), was hit and run over by a bus driven by Antonio P. Gimena, who was then employed
by petitioner R Transport Corporation. Loreta was immediately rushed to Medical City Hospital where
she was pronounced dead on arrival.3

On February 3, 1994, the husband of the deceased, respondent Luisito G. Yu, filed a Complaint for
damages before the Regional Trial Court (RTC) of Makati City against petitioner R Transport, Antonio
Gimena, and Metro Manila Transport Corporation (MMTC) for the death of his wife. MMTC denied its
liability reasoning that it is merely the registered owner of the bus involved in the incident, the actual
owner, being petitioner R Transport.4 It explained that under the Bus Installment Purchase Program
of the government, MMTC merely purchased the subject bus, among several others, for resale to
petitioner R Transport, which will in turn operate the same within Metro Manila. Since it was not
actually operating the bus which killed respondent’s wife, nor was it the employer of the driver thereof,
MMTC alleged that the complaint against it should be dismissed.5 For its part, petitioner R Transport
alleged that respondent had no cause of action against it for it had exercised due diligence in the
selection and supervision of its employees and drivers and that its buses are in good condition.
Meanwhile, the driver Antonio Gimena was declared in default for his failure to file an answer to the
complaint.

After trial on the merits, wherein the parties presented their respective witnesses and documentary
evidence, the trial court rendered judgment in favor of respondent Yu ruling that petitioner R
Transport failed to prove that it exercised the diligence required of a good father of a family in the
selection and supervision of its driver, who, by its negligence, ran over the deceased resulting in her
death. It also held that MMTC should be held solidarily liable with petitioner R Transport because it
would unduly prejudice a third person who is a victim of a tort to look beyond the certificate of
registration and prove who the actual owner is in order to enforce a right of action. Thus, the trial
court ordered the payment of damages in its Decision6 dated June 3, 2004, the dispositive portion of
which reads:

WHEREFORE, foregoing premises considered, judgment is hereby rendered ordering defendants

Rizal Transport and Metro Manila Transport Corporation to be primarily and solidarily liable and
defendant Antonio Parraba Gimena subsidiarily liable to plaintiff Luisito Yu as follows: 1. Actual
damages in the amount of Php78,357.00 subject to interest at the legal rate from the filing of the
complaint until fully paid;

2. Loss of income in the amount of Php500,000.00;

3. Moral damages in the amount of ₱150,000.00;

4. Exemplary damages in the amount of ₱20,000.00;

5. Attorney’s fees in the amount of ₱10,000.00; and

6. Costs of suit.7

On September 9, 2005, the CA affirmed the Decision of the RTC with modification that defendant
Antonio Gimena is made solidarily liable for the damages caused to respondent. According to the
appellate court, considering that the negligence of Antonio Gimena was sufficiently proven by the
records of the case, and that no evidence of whatever nature was presented by petitioner to support
its defense of due diligence in the selection and supervision of its employees, petitioner, as the
employer of Gimena, may be held liable for the damage caused. The CA noted that the fact that
petitioner is not the registered owner of the bus which caused the death of the victim does not
exculpate it from liability.8 Thereafter, petitioner’s Motion for Reconsideration was further denied by
the CA in its Resolution9dated August 8, 2006.

Hence, the present petition.

Petitioner essentially invokes the following ground to support its petition:

I.

THE COURT OF APPEALS ERRED IN AFFIRMING THE RULING OF THE REGIONAL TRIAL
COURT FINDING PETITIONER LIABLE FOR THE DAMAGES CAUSED BY THE NEGLIGENCE OF
ITS EMPLOYEE, WHICH WAS NOT SUPPORTED BY THE EVIDENCE ON RECORD.

Petitioner insists that the CA and the RTC were incorrect in ruling that its driver was negligent for
aside from the mere speculations and uncorroborated testimonies of the police officers on duty at the
time of the accident, no other evidence had been adduced to prove that its driver was driving in a
reckless and imprudent manner. It asserts that contrary to the findings of the courts below, the bus
from which the victim alighted is actually the proximate cause of the victim’s death for having
unloaded its passengers on the lane where the subject bus was traversing. Moreover, petitioner
reiterates its argument that since it is not the registered owner of the bus which bumped the victim, it
cannot be held liable for the damage caused by the same.

We disagree.

Time and again, it has been ruled that whether a person is negligent or not is a question of fact which
this Court cannot pass upon in a petition for review on certiorari, as its jurisdiction is limited to
reviewing errors of law.10 This Court is not bound to weigh all over again the evidence adduced by the
parties, particularly where the findings of both the trial and the appellate courts on the matter of
petitioners’ negligence coincide. As a general rule, therefore, the resolution off actual issues is a
function of the trial court, whose findings on these matters are binding on this Court, more so where
these have been affirmed by the Court of Appeals,11 save for the following exceptional and
meritorious circumstances: (1) when the factual findings of the appellate court and the trial court are
contradictory; (2) when the findings of the trial court are grounded entirely on speculation, surmises or
conjectures; (3) when the lower court’s inference from its factual findings is manifestly mistaken,
absurd or impossible; (4) when there is grave abuse of discretion in the appreciation of facts; (5)
when the findings of the appellate court go beyond the issues of the case, or fail to notice certain
relevant facts which, if properly considered, will justify a different conclusion; (6) when there is a
misappreciation of facts; (7) when the findings of fact are themselves conflicting; and (8) when the
findings of fact are conclusions without mention of the specific evidence on which they are based, are
premised on the absence of evidence, or are contradicted by evidence on record. 12

After a review of the records of the case, we find no cogent reason to reverse the rulings of the courts
below for none of the aforementioned exceptions are present herein. Both the trial and appellate
courts found driver Gimena negligent in hitting and running over the victim and ruled that his
negligence was the proximate cause of her death. Negligence has been defined as "the failure to
observe for the protection of the interests of another person that degree of care, precaution, and
vigilance which the circumstances justly demand, whereby such other person suffers injury." 13 Verily,
foreseeability is the fundamental test of negligence.14 It is the omission to do something which a
reasonable man, guided by those considerations which ordinarily regulate the conduct of human
affairs, would do, or the doing of something which a prudent and reasonable man would not do.15

In this case, the records show that driver Gimena was clearly running at a reckless speed. As testified
by the police officer on duty at the time of the incident16 and indicated in the Autopsy Report,17 not
only were the deceased’s clothes ripped off from her body, her brain even spewed out from her skull
and spilled over the road. Indeed, this Court is not prepared to believe petitioner’s contention that its
bus was travelling at a "normal speed" in preparation for a full stop in view of the fatal injuries
sustained by the deceased. Moreover, the location wherein the deceased was hit and run over further
indicates Gimena’s negligence. As borne by the records, the bus driven by Gimena bumped the
deceased in a loading and unloading area of a commercial center. The fact that he was approaching
such a busy part of EDSA should have already cautioned the driver of the bus. In fact, upon seeing
that a bus has stopped beside his lane should have signalled him to step on his brakes to slow down
for the possibility that said bus was unloading its passengers in the area. Unfortunately, he did not
take the necessary precaution and instead, drove on and bumped the deceased despite being aware
that he was traversing a commercial center where pedestrians were crossing the street. Ultimately,
Gimena should have observed due diligence of a reasonably prudent man by slackening his speed
and proceeding cautiously while passing the area.

Under Article 218018 of the New Civil Code, employers are liable for the damages caused by their
employees acting within the scope of their assigned tasks. Once negligence on the part of the
employee is established, a presumption instantly arises that the employer was remiss in the selection
and/or supervision of the negligent employee. To avoid liability for the quasi-delict committed by its
employee, it is incumbent upon the employer to rebut this presumption by presenting adequate and
convincing proof that it exercised the care and diligence of a good father of a family in the selection
and supervision of its employees.19

Unfortunately, however, the records of this case are bereft of any proof showing the exercise by
petitioner of the required diligence. As aptly observed by the CA, no evidence of whatever nature was
ever presented depicting petitioner’s due diligence in the selection and supervision of its driver,
Gimena, despite several opportunities to do so. In fact, in its petition, apart from denying the
negligence of its employee and imputing the same to the bus from which the victim alighted, petitioner
merely reiterates its argument that since it is not the registered owner of the bus which bumped the
victim, it cannot be held liable for the damage caused by the same. Nowhere was it even remotely
alleged that petitioner had exercised the required diligence in the selection and supervision of its
employee. Because of this failure, petitioner cannot now avoid liability for the quasi-delict committed
by its negligent employee.

At this point, it must be noted that petitioner, in its relentless attempt to evade liability, cites our rulings
in Vargas v. Langcay20 and Tamayo v. Aquino21 insisting that it should not be held solidarily liable
with MMTC for it is not the registered owner of the bus which killed the deceased. However, this
Court, in Jereos v. Court of Appeals, et al.,22rejected such contention in the following wise:

Finally, the petitioner, citing the case of Vargas vs. Langcay, contends that it is the registered owner
of the vehicle, rather than the actual owner, who must be jointly and severally liable with the driver of
the passenger vehicle for damages incurred by third persons as a consequence of injuries or death
sustained in the operation of said vehicle.

The contention is devoid of merit. While the Court therein ruled that the registered owner or operator
of a passenger vehicle is jointly and severally liable with the driver of the said vehicle for damages
incurred by passengers or third persons as a consequence of injuries or death sustained in the
operation of the said vehicle, the Court did so to correct the erroneous findings of the Court of
Appeals that the liability of the registered owner or operator of a passenger vehicle is merely
subsidiary, as contemplated in Art. 103 of the Revised Penal Code. In no case did the Court exempt
the actual owner of the passenger vehicle from liability. On the contrary, it adhered to the rule
followed in the cases of Erezo vs. Jepte, Tamayo vs. Aquino, and De Peralta vs. Mangusang, among
others, that the registered owner or operator has the right to be indemnified by the real or actual
owner of the amount that he may be required to pay as damage for the injury caused.

The right to be indemnified being recognized, recovery by the registered owner or operator may be
made in any form-either by a cross-claim, third-party complaint, or an independent action. The result
is the same.23

Moreover, while We held in Tamayo that the responsibility of the registered owner and actual
operator of a truck which caused the death of its passenger is not solidary, We noted therein that the
same is due to the fact that the action instituted was one for breach of contract, to wit:

The decision of the Court of Appeals is also attacked insofar as it holds that inasmuch as the third-
party defendant had used the truck on a route not covered by the registered owner's franchise, both
the registered owner and the actual owner and operator should be considered as joint tortfeasors and
should be made liable in accordance with Article 2194 of the Civil Code. This Article is as follows:

Art. 2194. The responsibility of two or more persons who are liable for a quasi-delict is
solidary.1âwphi1 But the action instituted in the case at bar is one for breach of contract, for failure of
the defendant to carry safely the deceased for her destination. The liability for which he is made
responsible, i.e., for the death of the passenger, may not be considered as arising from a quasi-delict.
As the registered owner Tamayo and his transferee Rayos may not be held guilty of tort or a quasi-
delict; their responsibility is not solidary as held by the Court of Appeals.

The question that poses, therefore, is how should the holder of the certificate of public convenience,
Tamayo, participate with his transferee, operator Rayos, in the damages recoverable by the heirs of
the deceased passenger, if their liability is not that of Joint tortfeasors in accordance with Article 2194
of the Civil Code. The following considerations must be borne in mind in determining this question. As
Tamayo is the registered owner of the truck, his responsibility to the public orto any passenger riding
in the vehicle or truck must be direct, for the reasons given in our decision in the case of Erezo vs.
Jepte, supra, as quoted above. But as the transferee, who operated the vehicle when the passenger
died, is the one directly responsible for the accident and death he should in turn be made responsible
to the registered owner for what the latter may have been adjudged to pay. In operating the truck
without transfer thereof having been approved by the Public Service Commission, the transferee
acted merely as agent of the registered owner and should be responsible to him (the registered
owner), for any damages that he may cause the latter by his negligence. 24

However, it must be noted that the case at hand does not involve a breach of contract of carriage, as
in Tamayo, but a tort or quasi-delict under Article 2176,25 in relation to Article 218026 of the New Civil
Code. As such, the liability for which petitioner is being made responsible actually arises not from a
pre-existing contractual relation between petitioner and the deceased, but from a damage caused by
the negligence of its employee. Petitioner cannot, therefore, rely on our ruling in Tamayo and escape
its solidary liability for the liability of the employer for the negligent conduct of its subordinate is direct
and primary, subject only to the defense of due diligence in the selection and supervision of the
employee.27

Indeed, this Court has consistently been of the view that it is for the better protection of the public for
both the owner of record and the actual operator to be adjudged jointly and severally liable with the
driver.28 As aptly stated by the appellate court, "the principle of holding the registered owner liable for
damages notwithstanding that ownership of the offending vehicle has already been transferred to
another is designed to protect the public and not as a shield on the part of unscrupulous transferees
of the vehicle to take refuge in, in order to free itself from liability arising from its own negligent act. " 29

Hence, considering that the negligence of driver Gimena was sufficiently proven by the records of the
case, and that no evidence of whatever nature was presented by petitioner to support its defense of
due diligence in the selection and supervision of its employees, petitioner, as the employer of
Gimena, may be held liable for damages arising from the death of respondent Yu's wife.

WHEREFORE, premises considered, the instant petition is DENIED. The Decision and Resolution,
dated September 9, 2005 and August 8, 2006, respectively, of the Court of Appeals in CA-G.R. CV
No. 84175 are hereby AFFIRMED.

SO ORDERED.