Jurisprudence: G.R. No. 131166 September 30, 1999

FIRST DIVISION



G.R. No. 131166 September 30, 1999

CALTEX (PHILIPPINES), INC., petitioner,
vs.
SULPICIO LINES, INC., GO SIOC SO, ENRIQUE S. GO, EUSEBIO S. GO, CARLOS S. GO, VICTORIANO S. GO, DOMINADOR S. GO, RICARDO S. GO, EDWARD S. GO, ARTURO S. GO, EDGAR S. GO, EDMUND S. GO, FRANCISCO SORIANO, VECTOR SHIPPING CORPORATION, TERESITA G. CAÑEZAL, AND SOTERA E. CAÑEZAL, respondents.



PARDO, J.:

Is the charterer of a sea vessel liable for damages resulting from a collision between the chartered vessel and a passenger ship?

When MT Vector left the port of Limay, Bataan, on December 19, 1987 carrying petroleum products of Caltex (Philippines), Inc. (hereinafter Caltex) no one could have guessed that it would collide with MV Doña Paz, killing almost all the passengers and crew members of both ships, and thus resulting in one of the country's worst maritime disasters.

The petition before us seeks to reverse the Court of Appeals decision 1 holding petitioner jointly liable with the operator of MT Vector for damages when the latter collided with Sulpicio Lines, Inc.'s passenger ship MV Doña Paz.

The facts are as follows:

On December 19, 1987, motor tanker MT Vector left Limay, Bataan, at about 8:00 p.m., enroute to Masbate, loaded with 8,800 barrels of petroleum products shipped by petitioner Caltex. 2 MT Vector is a tramping motor tanker owned and operated by Vector Shipping Corporation, engaged in the business of transporting fuel products such as gasoline, kerosene, diesel and crude oil. During that particular voyage, the MT Vector carried on board gasoline and other oil products owned by Caltex by virtue of a charter contract between
them. 3

On December 20, 1987, at about 6:30 a.m., the passenger ship MV Doña Paz left the port of Tacloban headed for Manila with a complement of 59 crew members including the master and his officers, and passengers totaling 1,493 as indicated in the Coast Guard Clearance. 4 The MV Doña Paz is a passenger and cargo vessel owned and operated by Sulpicio Lines, Inc. plying the route of Manila/ Tacloban/ Catbalogan/ Manila/ Catbalogan/ Tacloban/ Manila, making trips twice a week.

At about 10:30 p.m. of December 20, 1987, the two vessels collided in the open sea within the vicinity of Dumali Point between Marinduque and Oriental Mindoro. All the crewmembers of MV Doña Paz died, while the two survivors from MT Vector claimed that they were sleeping at the time of the incident.1âwphi1.nêt

The MV Doña Paz carried an estimated 4,000 passengers; many indeed, were not in the passenger manifest. Only 24 survived the tragedy after having been rescued from the burning waters by vessels that responded to distress calls. 5 Among those who perished were public school teacher Sebastian Cañezal (47 years old) and his daughter Corazon Cañezal (11 years old), both unmanifested passengers but proved to be on board the vessel.

On March 22, 1988, the board of marine inquiry in BMI Case No. 659-87 after investigation found that the MT Vector, its registered operator Francisco Soriano, and its owner and actual operator Vector Shipping Corporation, were at fault and responsible for its collision with MV Doña Paz. 6

On February 13, 1989, Teresita Cañezal and Sotera E. Cañezal, Sebastian Cañezal's wife and mother respectively, filed with the Regional Trial Court, Branch 8, Manila, a complaint for "Damages Arising from Breach of Contract of Carriage" against Sulpicio Lines, Inc. (hereafter Sulpicio). Sulpicio, in turn, filed a third party complaint against Francisco Soriano, Vector Shipping Corporation and Caltex (Philippines), Inc. Sulpicio alleged that Caltex chartered MT Vector with gross and evident bad faith knowing fully well that MT Vector was improperly manned, ill-equipped, unseaworthy and a hazard to safe navigation; as a result, it rammed against MV Doña Paz in the open sea setting MT Vector's highly flammable cargo ablaze.

On September 15, 1992, the trial court rendered decision dismissing, the third party complaint against petitioner. The dispositive portion reads:

WHEREFORE, judgment is hereby rendered in favor of plaintiffs and against defendant-3rd party plaintiff Sulpicio Lines, Inc., to wit:

1. For the death of Sebastian E. Cañezal and his 11-year old daughter Corazon G. Cañezal, including loss of future earnings of said Sebastian, moral and exemplary damages, attorney's fees, in the total amount of P 1,241,287.44 and finally;

2. The statutory costs of the proceedings.

Likewise, the 3rd party complaint is hereby DISMISSED for want of substantiation and with costs against the 3rd party plaintiff.

IT IS SO ORDERED.

DONE IN MANILA, this 15th day of September 1992.

ARSENIO M. GONONG

Judge 7

On appeal to the Court of Appeals interposed by Sulpicio Lines, Inc., on April 15, 1997, the Court of Appeal modified the trial court's ruling and included petitioner Caltex as one of the those liable for damages. Thus:

WHEREFORE, in view of all the foregoing, the judgment rendered by the Regional Trial Court is hereby MODIFIED as follows:

WHEREFORE, defendant Sulpicio Lines, Inc., is ordered to pay the heirs of Sebastian E. Cañezal and Corazon Cañezal:

1. Compensatory damages for the death of Sebastian E. Cañezal and Corazon Cañezal the total amount of ONE HUNDRED THOUSAND PESOS (P100,000);

2. Compensatory damages representing the unearned income of Sebastian E. Cañezal, in the total amount of THREE HUNDRED SIX THOUSAND FOUR HUNDRED EIGHTY (P306,480.00) PESOS;

3. Moral damages in the amount of THREE HUNDRED THOUSAND PESOS (P300,000.00);

4. Attorney's fees in the concept of actual damages in the amount of FIFTY THOUSAND PESOS (P50,000.00);

5. Costs of the suit.

Third party defendants Vector Shipping Co. and Caltex (Phils.), Inc. are held equally liable under the third party complaint to reimburse/indemnify defendant Sulpicio Lines, Inc. of the above-mentioned damages, attorney's fees and costs which the latter is adjudged to pay plaintiffs, the same to be shared half by Vector Shipping Co. (being the vessel at fault for the collision) and the other half by Caltex (Phils.), Inc. (being the charterer that negligently caused the shipping of combustible cargo aboard an unseaworthy vessel).

SO ORDERED.

JORGE S. IMPERIAL

Associate Justice

WE CONCUR:

RAMON U. MABUTAS, JR. PORTIA ALIÑO HERMACHUELOS

Associate Justice Associate Justice. 8

Hence, this petition.

We find the petition meritorious.

First: The charterer has no liability for damages under Philippine Maritime laws.

The respective rights and duties of a shipper and the carrier depends not on whether the carrier is public or private, but on whether the contract of carriage is a bill of lading or equivalent shipping documents on the one hand, or a charter party or similar contract on the other. 9

Petitioner and Vector entered into a contract of affreightment, also known as a voyage charter. 10

A charter party is a contract by which an entire ship, or some principal part thereof, is let by the owner to another person for a specified time or use; a contract of affreightment is one by which the owner of a ship or other vessel lets the whole or part of her to a merchant or other person for the conveyance of goods, on a particular voyage, in consideration of the payment of freight. 11

A contract of affreightment may be either time charter, wherein the leased vessel is leased to the charterer for a fixed period of time, or voyage charter, wherein the ship is leased for a single voyage. In both cases, the charter-party provides for the hire of the vessel only, either for a determinate period of time or for a single or consecutive voyage, the ship owner to supply the ship's store, pay for the wages of the master of the crew, and defray the expenses for the maintenance of the ship. 12

Under a demise or bareboat charter on the other hand, the charterer mans the vessel with his own people and becomes, in effect, the owner for the voyage or service stipulated, subject to liability for damages caused by negligence.

If the charter is a contract of affreightment, which leaves the general owner in possession of the ship as owner for the voyage, the rights and the responsibilities of ownership rest on the owner. The charterer is free from liability to third persons in respect of the ship. 13

Second: MT Vector is a common carrier

Charter parties fall into three main categories: (1) Demise or bareboat, (2) time charter, (3) voyage charter. Does a charter party agreement turn the common carrier into a private one? We need to answer this question in order to shed light on the responsibilities of the parties.

In this case, the charter party agreement did not convert the common carrier into a private carrier. The parties entered into a voyage charter, which retains the character of the vessel as a common carrier.

In Planters Products, Inc. vs. Court of Appeals, 14 we said:

It is therefore imperative that a public carrier shall remain as such, notwithstanding the charter of the whole portion of a vessel of one or more persons, provided the charter is limited to the ship only, as in the case of a time-charter or the voyage charter. It is only when the charter includes both the vessel and its crew, as in a bareboat or demise that a common carrier becomes private, at least insofar as the particular voyage covering the charter-party is concerned. Indubitably, a ship-owner in a time or voyage charter retains possession and control of the ship, although her holds may, for the moment, be the property of the charterer.

Later, we ruled in Coastwise Lighterage Corporation vs. Court of Appeals: 15

Although a charter party may transform a common carrier into a private one, the same however is not true in a contract of affreightment . . .

A common carrier is a person or corporation whose regular business is to carry passengers or property for all persons who may choose to employ and to remunerate him. 16 MT Vector fits the definition of a common carrier under Article 1732 of the Civil Code. In Guzman vs. Court of Appeals, 17 we ruled:

The Civil Code defines "common carriers" in the following terms:

Art. 1732. Common carriers are persons, corporations, firms or associations engaged in the business of carrying or transporting passengers for passengers or goods or both, by land, water, or air for compensation, offering their services to the public.

The above article makes no distinction between one whose principal business activity is the carrying of persons or goods or both, and one who does such carrying only as an ancillary activity (in local idiom, as "a sideline"). Article 1732 also carefully avoids making any distinction between a person or enterprise offering transportation service on a regular or scheduled basis and one offering such services on an occasional, episodic or unscheduled basis. Neither does Article 1732 distinguish between a carrier offering its services to the "general public," i.e., the general community or population, and one who offers services or solicits business only from a narrow segment of the general population. We think that Article 1733 deliberately refrained from making such distinctions.

It appears to the Court that private respondent is properly characterized as a common carrier even though he merely "back-hauled" goods for other merchants from Manila to Pangasinan, although such backhauling was done on a periodic, occasional rather than regular or scheduled manner, and even though respondent's principal occupation was not the carriage of goods for others. There is no dispute that private respondent charged his customers a fee for hauling their goods; that the fee frequently fell below commercial freight rates is not relevant here.

Under the Carriage of Goods by Sea Act :

Sec. 3. (1) The carrier shall be bound before and at the beginning of the voyage to exercise due diligence to —

(a) Make the ship seaworthy;

(b) Properly man, equip, and supply the ship;

xxx xxx xxx

Thus, the carriers are deemed to warrant impliedly the seaworthiness of the ship. For a vessel to be seaworthy, it must be adequately equipped for the voyage and manned with a sufficient number of competent officers and crew. The failure of a common carrier to maintain in seaworthy condition the vessel involved in its contract of carriage is a clear breach of its duty prescribed in Article 1755 of the Civil Code. 18

The provisions owed their conception to the nature of the business of common carriers. This business is impressed with a special public duty. The public must of necessity rely on the care and skill of common carriers in the vigilance over the goods and safety of the passengers, especially because with the modern development of science and invention, transportation has become more rapid, more complicated and somehow more hazardous. 19 For these reasons, a passenger or a shipper of goods is under no obligation to conduct an inspection of the ship and its crew, the carrier being obliged by law to impliedly warrant its seaworthiness.

This aside, we now rule on whether Caltex is liable for damages under the Civil Code.

Third: Is Caltex liable for damages under the Civil Code?

We rule that it is not.

Sulpicio argues that Caltex negligently shipped its highly combustible fuel cargo aboard an unseaworthy vessel such as the MT Vector when Caltex:

1. Did not take steps to have M/T Vector's certificate of inspection and coastwise license renewed;

2. Proceeded to ship its cargo despite defects found by Mr. Carlos Tan of Bataan Refinery Corporation;

3. Witnessed M/T Vector submitting fake documents and certificates to the Philippine Coast Guard.

Sulpicio further argues that Caltex chose MT Vector transport its cargo despite these deficiencies.

1. The master of M/T Vector did not posses the required Chief Mate license to command and navigate the vessel;

2. The second mate, Ronaldo Tarife, had the license of a Minor Patron, authorized to navigate only in bays and rivers when the subject collision occurred in the open sea;

3. The Chief Engineer, Filoteo Aguas, had no license to operate the engine of the vessel;

4. The vessel did not have a Third Mate, a radio operator and lookout; and

5. The vessel had a defective main engine. 20

As basis for the liability of Caltex, the Court of Appeals relied on Articles 20 and 2176 of the Civil Code, which provide:

Art. 20. — Every person who contrary to law, willfully or negligently causes damage to another, shall indemnify the latter for the same.

Art. 2176. — Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is called a quasi-delict and is governed by the provisions of this Chapter.

And what is negligence?

The Civil Code provides:

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

If the law does not state the diligence which is to be observed in the performance, that which is expected of a good father of a family shall be required.

In Southeastern College, Inc. vs. Court of Appeals, 21 we said that negligence, as commonly understood, is conduct which naturally or reasonably creates undue risk or harm to others. It may be the failure to observe that degree of care, precaution, and vigilance, which the circumstances justly demand, or the omission to do something which ordinarily regulate the conduct of human affairs, would do.

The charterer of a vessel has no obligation before transporting its cargo to ensure that the vessel it chartered complied with all legal requirements. The duty rests upon the common carrier simply for being engaged in "public service." 22 The Civil Code demands diligence which is required by the nature of the obligation and that which corresponds with the circumstances of the persons, the time and the place. Hence, considering the nature of the obligation between Caltex and MT Vector, liability as found by the Court of Appeals is without basis.1âwphi1.nêt

The relationship between the parties in this case is governed by special laws. Because of the implied warranty of seaworthiness, 23 shippers of goods, when transacting with common carriers, are not expected to inquire into the vessel's seaworthiness, genuineness of its licenses and compliance with all maritime laws. To demand more from shippers and hold them liable in case of failure exhibits nothing but the futility of our maritime laws insofar as the protection of the public in general is concerned. By the same token, we cannot expect passengers to inquire every time they board a common carrier, whether the carrier possesses the necessary papers or that all the carrier's employees are qualified. Such a practice would be an absurdity in a business where time is always of the essence. Considering the nature of transportation business, passengers and shippers alike customarily presume that common carriers possess all the legal requisites in its operation.

Thus, the nature of the obligation of Caltex demands ordinary diligence like any other shipper in shipping his cargoes.

A cursory reading of the records convinces us that Caltex had reasons to believe that MT Vector could legally transport cargo that time of the year.

Atty. Poblador: Mr. Witness, I direct your attention to this portion here containing the entries here under "VESSEL'S DOCUMENTS

1. Certificate of Inspection No. 1290-85, issued December 21, 1986, and Expires December 7, 1987", Mr. Witness, what steps did you take regarding the impending expiry of the C.I. or the Certificate of Inspection No. 1290-85 during the hiring of MT Vector?

Apolinario Ng: At the time when I extended the Contract, I did nothing because the tanker has a valid C.I. which will expire on December 7, 1987 but on the last week of November, I called the attention of Mr. Abalos to ensure that the C.I. be renewed and Mr. Abalos, in turn, assured me they will renew the same.

Q: What happened after that?

A: On the first week of December, I again made a follow-up from Mr. Abalos, and said they were going to send me a copy as soon as possible, sir. 24

xxx xxx xxx

Q: What did you do with the C.I.?

A: We did not insist on getting a copy of the C.I. from Mr. Abalos on the first place, because of our long business relation, we trust Mr. Abalos and the fact that the vessel was able to sail indicates that the documents are in order. . . . 25

On cross examination —

Atty. Sarenas: This being the case, and this being an admission by you, this Certificate of Inspection has expired on December 7. Did it occur to you not to let the vessel sail on that day because of the very approaching date of expiration?

Apolinar Ng: No sir, because as I said before, the operation Manager assured us that they were able to secure a renewal of the Certificate of Inspection and that they will in time submit us a
copy. 26

Finally, on Mr. Ng's redirect examination:

Atty. Poblador: Mr. Witness, were you aware of the pending expiry of the Certificate of Inspection in the coastwise license on December 7, 1987. What was your assurance for the record that this document was renewed by the MT Vector?

Atty. Sarenas: . . .

Atty. Poblador: The certificate of Inspection?

A: As I said, firstly, we trusted Mr. Abalos as he is a long time business partner; secondly, those three years; they were allowed to sail by the Coast Guard. That are some that make me believe that they in fact were able to secure the necessary renewal.

Q: If the Coast Guard clears a vessel to sail, what would that mean?

Atty. Sarenas: Objection.

Court: He already answered that in the cross examination to the effect that if it was allowed, referring to MV Vector, to sail, where it is loaded and that it was scheduled for a destination by the Coast Guard, it means that it has Certificate of Inspection extended as assured to this witness by Restituto Abalos. That in no case MV Vector will be allowed to sail if the Certificate of inspection is, indeed, not to be extended. That was his repeated explanation to the cross-examination. So, there is no need to clarify the same in the re-direct examination. 27

Caltex and Vector Shipping Corporation had been doing business since 1985, or for about two years before the tragic incident occurred in 1987. Past services rendered showed no reason for Caltex to observe a higher degree of diligence.

Clearly, as a mere voyage charterer, Caltex had the right to presume that the ship was seaworthy as even the Philippine Coast Guard itself was convinced of its seaworthiness. All things considered, we find no legal basis to hold petitioner liable for damages.

As Vector Shipping Corporation did not appeal from the Court of Appeals' decision, we limit our ruling to the liability of Caltex alone. However, we maintain the Court of Appeals' ruling insofar as Vector is concerned.

WHEREFORE, the Court hereby GRANTS the petition and SETS ASIDE the decision of the Court of Appeals in CA-G.R. CV No. 39626, promulgated on April 15, 1997, insofar as it held Caltex liable under the third party complaint to reimburse/indemnify defendant Sulpicio Lines, Inc. the damages the latter is adjudged to pay plaintiffs-appellees. The Court AFFIRMS the decision of the Court of Appeals insofar as it orders Sulpicio Lines, Inc. to pay the heirs of Sebastian E. Cañezal and Corazon Cañezal damages as set forth therein. Third-party defendant-appellee Vector Shipping Corporation and Francisco Soriano are held liable to reimburse/indemnify defendant Sulpicio Lines, Inc. whatever damages, attorneys' fees and costs the latter is adjudged to pay plaintiffs-appellees in the case.

No costs in this instance.

SO ORDERED.

Davide, Jr., C.J., Kapunan and Ynares-Santiago, JJ., concur.

Puno, J., no part due to close relation with a party.

Jurisprudence: G.R. No. L-16567 March 27, 1961

EN BANC

G.R. No. L-16567             March 27, 1961

DELGADO BROTHERS, INC., petitioner,
vs.
HOME INSURANCE COMPANY and THE COURT OF APPEALS, respondents.

Leocadio de Asis and A.C. Cruz for petitioner.
William H. Quasha for respondents.

BARRERA, J.:

This is an appeal by certiorari to review the decision of the Court of Appeals (in CA-G.R. No. 20441-R), reversing the judgment of dismissal of the Court of First Instance of Manila (in Civil Case No. 29144) and, instead, ordering petitioner-defendant Delgado Brothers, Inc. to pay to respondent-plaintiff Home Insurance Company, the sum of P1,436.86, plus 6% per annum interest from the commencement of the action until fully paid.

On March 7, 1956, respondent Home Insurance Company filed with the Court of First Instance of Manila a complaint against petitioner Delgado Brothers, Inc. alleging that on February 17, 1955, Victor Bijou & Co. of 14 East 37th Street, New York 16, New York, U.S.A., shipped at New York for Manila aboard the vessel S.S. Leoville and consigned to the Judy Philippines, Inc. of Manila, a shipment of 1 case Linen Handkerchiefs and 2 cases cotton piece goods, for which, the New York agent of said vessel, the Barber Steamship Lines, Inc., issued Bill of Lading No. 119; that said shipment as insured with herein respondent by the shipper and/or consignee; that said vessel arrived at the Port of Manila on March 30, 1955 and, thereafter, said shipment was unloaded complete and in good order from said vessel by petitioner, but the latter delivered the same to the consignee with 1 case of Linen Handkerchiefs in bad order, with a shortage of 503 yards of Linen Print Handkerchiefs, to the prejudice, loss and damage of shipper and or consignee in the sum of P1,287.20; that the shipper and/or consignee filed its claim with petitioner for said loss in the sum of $713.08 (P1,436.86); and since respondent dent paid the amount to the shipper and\or consignee, the former was subrogated to the shipper's and/or consignee's rights and interests; that notwithstanding respondent's claim against petitioner, the latter failed and refused to pay the shipper and/or consignee and/or respondent the total claim of P1,287.20; and that as it result of petitioner's gross and evident bad faith to pay the claim of the shipper and/or consignee and/or respondent, it was compelled to file the Case and will incur attorney's fees in the sum of P478.95. Respondent prayed that petitioner pay to it the sum of P1,287.20, with legal interest thereon from the filing of the complaint until fully, paid; P149.66, the difference between P1,436.86 paid by respondent to the shipper and/or consignee and the said sum of P1,287.20; and P478.95 as attorney's fees, plus costs.

To this complaint, petitioner filed its answer on March 27, 1956, alleging as special defense that since no claim whatsoever was filed by respondent or the consignee, or their representatives against petitioner within the 15-day period from the date of the arrival of the goods before they could file a suit in the court of proper jurisdiction within 1 year from the date of said arrival at the Port of Manila, petitioner is completely relieved and released of any and all liability for loss or damage under the law and in accordance with the pertinent provisions of the management Contract with the Bureau of Customs, covering the operation of the Arrastre Service for the Port of Manila; and that petitioner in no way acts as an agent of the carrying vessel or of the importer or consignee. Petitioner, therefore, prayed for the dismissal of respondent's complaint.

On October 16, 1956, petitioner filed a motion to dismiss the complaint, on the ground that "the court has no jurisdiction over the subject matter of the complaint", to which, respondent filed an opposition on October 19, 1956, alleging that since the case is an action in admiralty, it is within the original jurisdiction of the court. On October 20, 1956, the court issued an order denying petitioner's motion to dismiss.

The case was, thereafter, tried and, after trial, the court, on March 6, 1957, rendered a decision dismissing the case and absolving petitioner from liability to respondent, not on the ground of lack of jurisdiction raised by petitioner-defendant, but on the merits of the latter's special defenses invoked in its answer.

Not satisfied with said decision, respondent appealed to the Court of Appeals which court, on December 29, 1959, rendered as already adverted to, a decision reversing the judgment of the Court of First Instance of Manila and ordering petitioner to pay to respondent the sum of P1,436.86, plus 6% per annum interest thereon from the commencement of the action until fully paid. Hence, this appeal.

Petitioner, in this instance, claims that the Court of Appeals (as did the Court of First Instance of Manila) erred in not dismissing respondent's complaint on the specific ground that it (Court of First Instance) had no jurisdiction over the subject matter of the action, the same not being an admiralty case, and the amount sought to be recovered falling within the exclusive original jurisdiction of the Municipal Court of Manila.

Appellant's contention is meritorious. In the case of Macondray & Company, Inc. v. Delgado Brothers, Inc. (G.R. No. L-13116, prom. April 28, 1960), the facts and issues of which are identical, mutatis mutandis, to the case at bar, we held:

The case at bar does not deal with any maritime or with the administration and application of any maritime law. As custodian of the sixty-eight (68) cartons of paints it had received from the MS Pleasantville, it was defendant's duty, like that of any ordinary depositary, to take good care of said goods and to turn the same over to the party entitled to its possession, subject to such qualifications as may have validly been imposed in the contract between the parties concerned. Such duty on the part of the defendant would be the same if the final destination of the goods were Manila, not Iloilo, and the goods had not been imported from another state. The only issues raised in the pleadings are (1) whether or not defendant had fully discharged its obligation to deliver the aforementioned sixty-eight (68) cartons of paint; and (2) in the negative case, the amount of indemnity due the plaintiff therefor. The determination of those questions does not require the application of any maritime law and cannot affect either navigation or maritime commerce. The foreign origin of the goods is — under the attending circumstances — immaterial to the law applicable to this case or the rights of the parties herein, or the procedure for the settlement of their disputes. Indeed, it is well settled that —

In case of controversy involving both maritime and nonmaritime subject matter, where the principal matter involved belongs to the jurisdiction of a court of common law or of equity, admiralty will not take cognizance of incidental maritime matters connected therewith but will relegate the whole controversy to the appropriate tribunal. (2 C.J.S. 66.). (Emphasis supplied.)

Respondent, however, submits that the above-quoted ruling is wrong and urges a re-examination of the issue, arguing that petitioner's arrastre service is maritime in nature and, therefore, actions against petitioner arrastre operator properly come under the jurisdiction of the Court of First Instance of Manila.

We have carefully considered respondent's argument but found nothing to justify a departure from our conclusion in the Macondray case, supra. Section 2 of the Management Contract entered into between petitioner an the Bureau of Customs on October 21, 1950 (effective January 1, 1951), reads as follows:

2. During the period while this agreement remains in force and effect, the CONTRACTOR (herein petitioner Delgado Brothers, Inc.) shall be, and the shall manager of the Arrastre Service at the Port of Manila, subject always, how ever, to the terms conditions, restrictions, subjections, supervisions and provisions in this agreement contained, with the exclusive right or privilege of receiving, handling, caring for, and delivering all merchandise, imported and exported, upon or passing over, the Philippine Government-owned wharves and piers in the Port of Manila; as also, the recording or checking of all merchandise which may be delivered to the Port of Manila at shipside, except coal, lumber and firebricks in quantity case crude oil and kerosene and gasoline in lots of over ten thousand cases or its equivalent, and whole cargoes of on commodity when consigned to one consignee only as hereafter provided, and in general to furnish lighting and water services and other incidental services, in order to undertake such work and with full power to fix the number and salaries of, and to appoint and dismiss, all officers, employees and laborers temporary and permanent, which may be necessary, and to do all acts and things which said CONTRACTOR may consider conclusive to the interests of the Arrastre Service. (Emphasis supplied.)

Under this provision, petitioner's functions as arrastre operator are (1) to receive, handle, care for, and deliver all merchandise imported and exported, upon or passing over Government-owned wharves and piers in the Port of Manila, (2) as well as to record or cheek all merchandise which may be delivered to said port at shipside, and in general, (3) to furnish light and water services and other incidental services in order to undertake its arrastre service. Note that there is nothing in those functions which relate to the trade and business of navigation (1 Am. Jur. 564), nor to the use or operation of vessels (Id. at 568). Both as to the nature of the functions and the place of their performance (upon wharves and piers shipside), petitioner's services are clearly not maritime. As we held in the Macondray case, they are no different from those of a depositary or warehouseman. Granting, arguendo, that petitioner's arrastre service depends on, assists, or furthers maritime transportation (Id. at 565), it may be deemed merely incidental to its aforementioned functions as arrastre operator and does not, thereby, make petitioner's arrastre service maritime in character.

To give admiralty jurisdiction over a contract as maritime, such contract must relate to the trade and business of the sea; it must be essentially and fully maritime in its character; it must provide for maritime services, maritime transactions, or maritime casualties. (The James T. Furber, 129 Fed. 808, cited in 66 L.R.A. 212; emphasis supplied.) See also 2 C.J.S. 66, supra.

The case of Cebu Arrastre Service v. Collector of Internal Revenue (G.R. No. L-7444, prom. May 30, 1956) cited by respondent is irrelevant to the present case, considering that the functions of the Cebu Arrastre Service involve the loading, and unloading of coastwise vessels calling at the port of Cebu and, are, therefore, of a "stevedore", subject to the percentage tax under Section 191 of the Tax Code. Similarly, the case of American Stevedores v. Porello (330 U.S. 446, 91 L. Ed. 1011) is inapplicable, involving as it does, stevedores or longshoremen, not an arrastre operator. In the instant case, Delgado Brothers, Inc. has nothing to do with the loading or unloading of cargoes to and from the ships. Its operation on and its responsibility for the merchandise and goods begins from the time they are placed upon the wharves or piers or delivered along sides of ships. Evans v. New York & Pacific Steamship Co., Ltd., et al. (145 F. 841) cited by respondent is, likewise, not in point. It should be noted that in said case, the New York & Pacific Steamship Co. Ltd. (owner of the steamship "Capac" and with whom appellant Evans has a contract evidenced by a bill of lading) and not the warehouseman or depositary Beards Erie Basin Stores, was the one sued by said appellant Evans for recovery of the value of 20 bales of rubber which said steamship failed to deliver. Hence, the District Court of New York properly held that the contract with the steamship company was maritime in nature, over which it had jurisdiction to entertain and decide. Undoubtedly, the Court of First Instance of Manila has jurisdiction in cases where suit is brought directly against the carrier or shipowner.

Respondent cannot invoke the rule against multiplicity of suits, for the simple reason that said rule has to be subservient to the superior requirement that the court must have jurisdiction. (See International Harvester Company of the Philippines v. Judge Aragon, et al., G.R. No. L-2372, prom. August 26, 1949, 84 Phil. 363.)

With these conclusions, it is needless to discuss the other points raised in the briefs.

WHEREFORE, the decision of the Court of Appeals appealed from is hereby reversed and set aside, and case dismissed, with costs against the respondent. So ordered.

Bengzon, Actg. C.J., Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Paredes and Dizon, JJ., concur.

Jurisprudence: G.R. No. L-46558 July 31, 1981

FIRST DIVISION

G.R. No. L-46558  July 31, 1981

PHILIPPINE AIR LINES, INC., Petitioner, vs. THE COURT OF APPEALS and JESUS V. SAMSON, Respondents.



D E C I S I O N



GUERRERO, J.:



This is a petition for review on Certiorari of the decision of the Court of Appeals 1 dated April 18, 1977, affirming with modification the decision of the Court of First Instance of Albay in Civil Case No. 1279, entitled “Jesus V. Samson, plaintiff, vs. Philippine Air Lines, Inc., defendant,” for damages.

The dispositive portion of the trial court’s decision reads:

“WHEREFORE, for all the foregoing considerations, judgment is hereby rendered in favor of the plaintiff and against the defendant ordering the defendant to pay the plaintiff, the following sums: P1988,000.00 as unearned income or damages; P50,000.00 for moral damages; P20,000.00 as attorney’s fees and P5,000.00 as expenses of litigation, or a total of P273,000.00. Costs against the defendant.”

The appellate court modified the above decision, to wit:

“However, Plaintiff-Appellee, who has been deprived of his job since 1954, is entitled to the legal rate of interest on the P198,000.00 unearned income from the filing of the complaint (Sec. 8, Rule 51, Rules of Court).

WHEREFORE, with the modification indicated above, the judgment appealed from is affirmed, with costs against defendant-appellant.”

The complaint filed on July 1, 1954 by plaintiff Jesus V. Samson, private respondent herein, averred that on January 8, 1951, he flew as co-pilot on a regular flight from Manila to Legaspi with stops at Daet, Camarines Norte and Pili, Camarines Sur, with Captain Delfin Bustamante as commanding pilot of a C-47 plane belonging to defendant Philippine Air Lines, Inc., now the herein petitioner; that on attempting to land the plane at Daet airport, Captain Delfin Bustamante due to his very slow reaction and poor judgment overshot the airfield and as a result, notwithstanding the diligent efforts of the plaintiff co-pilot to avert an accident, the airplane crashlanded beyond the runway; that the jolt caused the head of the plaintiff to hit and break through the thick front windshield of the airplane causing him severe brain concussion, wounds and abrasions on the forehead with intense pain and suffering (par. 6, complaint).:onad

The complaint further alleged that instead of giving plaintiff expert and proper medical treatment called for by the nature and severity of his injuries, defendant simply referred him to a company physician, a general medical practitioner, who limited the treatment to the exterior injuries without examining the severe brain concussion of plaintiff (par. 7, complaint); that several days after the accident, defendant Philippine Air Lines called back the plaintiff to active duty as co-pilot, and inspite of the latter’s repeated request for expert medical assistance, defendant had not given him any (par. 8, complaint); that as a consequence of the brain injury sustained by plaintiff from the crash, he had been having periodic dizzy spells and had been suffering from general debility and nervousness (par. 9, complaint); that defendant airline company instead of submitting the plaintiff to expert medical treatment, discharged the latter from its employ on December 21, 1953 on grounds of physical disability, thereby causing plaintiff not only to lose his job but to become physically unfit to continue as aviator due to defendant’s negligence in not giving him the proper medical attention (pars. 10-11, complaint). Plaintiff prayed for damages in the amount of P180,000.00 representing his unearned income, P50,000.00 as moral damages, P20,000.00 as attorney’s fees and P5,000.00 as expenses, or a total of P255,000.00.

In its answer filed on July 28, 1954, defendant PAL denied the substantial averments in the complaint, alleging among others, that the accident was due solely and exclusively to inevitable unforeseen circumstances whereby plaintiff sustained only superficial wounds and minor injuries which were promptly treated by defendant’s medical personnel (par. 5, answer); that plaintiff did not sustain brain injury or cerebral concussion from the accident since he passed the annual physical and medical examination given thereafter on April 24, 1951; that the headaches and dizziness experienced by plaintiff were due to emotional disturbance over his inability to pass the required up-grading or promotional course given by defendant company (par. 6, answer), and that, as confirmed by an expert neuro-surgeon, plaintiff was suffering-from neurosis and in view of this unfitness and disqualification from continuing as a pilot, defendant had to terminate plaintiff’s employment (pars. 7, 9, answer).

Further, defendant alleged that by the very nature of its business as a common carrier, it is bound to employ only pilots who are proficient and in good mental, emotional and physical condition; that the pilot, Captain Delfin Bustamante, was a competent and proficient pilot, and although he was already afflicted with a tumor of the nasopharynx even before the accident of January 8, 1951, the Civil Aeronautics Administration, in passing upon the fitness of pilots, gave Capt. Bustamante a waiver of physical standards to enable him to retain his first class airman certificate since the affliction had not in the least affected his proficiency (pars. 16-17, answer). By way of counterclaim, defendant prayed for P10,000.00 as expenses for the litigation.

On March 25, 1958, defendant filed a Motion to Dismiss on the ground that the complaint is essentially a Workmen’s Compensation claim, stating a cause of action not cognizable within the general jurisdiction of the court. The Motion to Dismiss was denied in the order of April 14, 1958. After the reception of evidence, the trial court rendered on January 15, 1973 the decision, the dispositive portion of which has been earlier cited.

The defendant Philippine Air Lines, Inc. appealed the decision to the Court of Appeals as being contrary to law and unsupported by the evidence. It raised as errors of the trial court (a) the holding that the damages allegedly suffered by plaintiff are attributable to the accident of January 8, 1951 which was due to the negligence of defendant in having allowed Capt. Delfin Bustamante to continue flying despite his alleged slow reaction and poor judgment; (b) the finding that defendant was negligent in not having given plaintiff proper and adequate expert medical treatment and assistance for the injuries allegedly sustained in the accident of January 8, 1951; and (c) in ordering defendant to pay actual or compensatory damages, moral damages and attorney’s fees to the plaintiff.

On April 18, 1977, the Court of Appeals rendered its decision affirming the judgment of the lower court but modified the award of damages by imposing legal rate of interest on the P198,000.00 unearned income from the filing of the complaint, citing Sec. 8, Rule 51 of the Rules of Court.

Its motion for reconsideration of the above judgment having been denied, Philippine Air Lines, Inc. filed this instant petition for Certiorari on the ground that the decision is not in accord with law or with the applicable jurisprudence, aside from its being replete with findings in the nature of speculation, surmises and conjectures not borne out by the evidence on record thereby resulting to misapprehension of facts and amounting to a grave abuse of discretion (p. 7, Petition).

Petitioner raises the fundamental question in the case at bar as follows: Is there a causal connection between the injuries suffered by private respondent during the accident on 8 January 1951 and the subsequent “periodic dizzy spells, headache and general debility” of which private respondent complained every now and then, on the one hand, and such “periodic dizzy spells, headache and general debility” allegedly caused by the accident and private respondent’s eventual discharge from employment, on the other? PAL submits that respondent court’s award of damages to private respondent is anchored on findings in the nature of speculations, surmises and conjectures and not borne out by the evidence on record, thereby resulting in a misapprehension of facts and amounting to a grave abuse of discretion.

Petitioner’s submission is without merit.

As found by the respondent court, the following are the essential facts of the case:

“It appears that plaintiff, a licensee aviator, was employed by defendant a few years prior to January 8, 1951 as a regular co-pilot on a guaranteed basic salary of P750.00 a month. He was assigned to and/or paired with pilot Delfin Bustamante.

Sometime in December 1950, he complained to defendant through its authorized official about the slow reaction and poor judgment of pilot Delfin Bustamante. Notwithstanding said complaint, defendant allowed the pilot to continue flying.

On January 8, 1951, the two manned the regular afternoon flight of defendant’s plane from Manila to Legaspi, with stops at Daet, Camarines Norte, and Pili, Camarines Sur. Upon making a landing at Daet, the pilot, with his slow reaction and poor judgment, overshot the airfield and, as a result of and notwithstanding diligent efforts of plaintiff to avert an accident, the airplane crash-landed beyond the runway into a mangrove. The jolt and impact caused plaintiff to hit his head upon the front windshield of the plane thereby causing his brain concussions and wounds on the forehead, with concomittant intense pain.

Plaintiff was not given proper medical attention and treatment demanded by the nature and severity of his injuries. Defendant merely referred him to its clinic attended by general practitioners on his external injuries. His brain injury was never examined, much less treated. On top of that negligence, defendant recalled plaintiff to active duty as a co-pilot, completely ignoring his plea for expert medical assistance.

Suffering periodic dizzy spells, headache and general debility, plaintiff every now and then complained to defendant. To make matters worst for plaintiff, defendant discharged him from his employment on December 21, 1953. In consequence, plaintiff has been beset with additional worries, basically financial. He is now a liability instead of a provider, of his family.

On July 1, 1954, plaintiff filed a complaint for damages. Defendant vainly sought to dismiss the complaint after filing an answer. Then, the judgment and this appeal.”

Continuing, the respondent Court of Appeals further held:

“There is no question about the employment of plaintiff by defendant, his age and salary, the overshooting by pilot Bustamante of the airfield and crashlanding in a mangrove, his hitting his head on the front windshield of the plane, his intermittent dizzy spells, headache and general debility for which he was discharged from his employment on December 21, 1953. As the lower court aptly stated:

‘From the evidence adduced by the parties, the Court finds the following facts to be uncontroverted: That the plaintiff Jesus V. Samson, on January 8, 1951 and a few years prior thereto, December 21, 1953, was a duly licensed pilot employed as a regular co-pilot of the defendant with assignment in its domestic air service in the Philippines; that on January 8, 1951, the defendant’s airplane met an accident in crashlanding at the Daet Airport, Camarines Norte by overshooting the runway and reaching the mangroves at the edge of the landing strip; that the jolt caused plaintiff’s head to hit the front windshield of the airplane causing him to suffer wounds and abrasion on the forehead; that the defendant, instead of giving the plaintiff expert and proper medical treatment called for by the nature and severity of the injuries of the plaintiff, simply referred him to the clinic of the defendant’s physicians who are only general medical practitioners and not brain specialists; that the defendant’s physicians limited their treatment to the exterior injuries on the forehead of the plaintiff and made no examination of the severe concussion of the brain of the plaintiff; that the Medical Director and Flight Surgeon of the defendant were not able to definitely determine the cause of the complaint of the plaintiff as to the periodic attack of dizziness, spells and headache; that due to this laxity of the defendant’s physician and the continuous suffering of the ailment of the plaintiff complained of, he demanded for expert medical assistance for his brain injury and to send him to the United States, which demand was turned down and in effect denied by the defendant; that instead the defendant referred the plaintiff to a neurologist, Dr. Victor Reyes; that from the time that said accident occurred on January 21, 1953, he was ordered grounded on several occasions because of his complaint of dizzy spells and headache; that instead of submitting the plaintiff to expert medical treatment as demanded by him and denied by the defendant, he was discharged from its employment on December 21, 1953 on the ground of physical disability, and that the plaintiff, at the time when the defendant’s plane met the accident, up to the time he was discharged, was regularly employed as a co-pilot and receiving a basic salary of P750.00 a month plus extra pay for flying time, and bonuses amounting to P300.00 a month.’

Even defendant-appellant itself admits as not controverted the following facts which generally admit what have been stated above as not controverted.

“In the case at bar, the following facts are not the subject of controversy:

‘(1) First, that from July 1950 to 21 December 1953, plaintiff was employed with defendant company as a first officer or co-pilot and served in that capacity in defendant’s domestic services.

(2) Second, that on January 1951, plaintiff did fly on defendant’s PI-C 94, as first officer or co-pilot, with the late Capt. Delfin Bustamante in command as pilot; that while making a landing at the Daet airport on that date, PI-C 94 did meet an accident as stated above.

(3) Third, that at or about the time of the discharge from defendant company, plaintiff had complained of “spells of dizziness,” “headaches” and “nervousness”, by reason of which he was grounded from flight duty. In short, that at that time, or approximately from November 1953 up to the date of his discharge on 21 December 1953, plaintiff was actually physically unfit to discharge his duties as pilot.

(4) Fourth, that plaintiff’s unfitness for flight duty was properly established after a thorough medical examination by competent medical experts.’cralaw (pp. 11-12, appellant’s brief)

hence, there can hardly be an issue, factual, legal or medical.”

Taking exception from “the rest of the essential facts of the case as found by the respondent court” PAL claims said facts are not fully borne out by the evidence on record and insists that the injuries suffered by private respondent during the accident on January 8, 1951 were superficial in nature; that the “periodic spells, headache, and general debility” complaint of every now and then by private respondent subsequent to the Jan. 8, 1951 incident were due to emotional disturbances and that no negligence can be attributed to Capt. Delfin Bustamante much less to PAL for the occurrence on January 8, 1951, hence PAL cannot be held liable for damages.

Petitioner claims absence of any causal connection between private respondent’s superficial injuries and his alleged subsequent “periodic spells, headache and general debility,” pointing out that these subsequent ailments were found by competent physician, including an expert neuro-surgeon, to be due to emotional disturbances insights the conclusions of Dr. Trajano V. Bernardo that respondent’s complaints were “psychosomatic symptoms” on the basis of declarations made by respondent himself, which conclusions are supported by similar diagnosis made by Drs. Damaceno J. Ago and Villaraza stating that respondent Samson was suffering from neurosis as well as the report of Dr. Victor Reyes, a neurological specialist, indicating that the symptoms were probably, most probably due to psychogenic factors and have no organic basis.

In claiming that there is no factual basis for the finding of the respondent court that the crash-landing caused respondent’s “brain concussion . cra ., with concomittant intense pain, for on the contrary, testimonial evidence establish the superficiality of the injuries sustained by respondent during the accident of January 8, 1951,” petitioner quotes portions of the testimony of Dr. Manuel S. Sayas, who declared that he removed the band-aid on the forehead of respondent and that he found out after removal that the latter had two contussed superficial wounds over the supra orbiter regions or just above the eyes measuring one centimeter long and one millimeter deep. He examined and found his blood pressure normal, no discharges from the nose and ears. Dr. Trajano V. Bernardo also testified that when he examined respondent Samson three days after the accident, the wound was already healed and found nothing wrong with his ears, nose and throat so that he was declared fit for duty after the sixth day.

Petitioner goes further. It contends that there is no causal connection between respondent’s superficial injuries sustained during the accident on January 8, 1951 and plaintiff’s discharge from employment with PAL on December 21, 1953. According to PAL, it was the repeated recurrence of respondent’s neurasthenic symptoms (dizzy spells, headache, nervousness) which prompted PAL’s Flight Surgeon, Dr. Bernardo, to recommend that plaintiff be grounded permanently as respondent was “psychologically unfit to resume his duties as pilot.” PAL concludes that respondent’s eventual discharge from employment with PAL was effected for absolutely valid reasons, and only after he was thoroughly examined and found unfit to carry out his responsibilities and duties as a pilot.:onad

We agree with the respondent court in finding that the dizzy spells, headache and general debility of private respondent Samson was an after-effect of the crash-landing and We find that such holding is supported by substantial evidence, which We quote from the court’s decision, to wit:

“Defendant would imply that plaintiff suffered only superficial wounds which were treated and not brain injury. It would, by the opinion of its company doctors, Dr. Bernardo and Dr. Reyes, attribute the dizzy spells and headache to organic or as phychosomatic, neurasthenic or psychogenic, which we find outlandishly exaggerated.

That plaintiff’s condition as psychosomatic rather than organic in nature is allegedly confirmed by the fact that on six (6) separate occasions after the accident he passed the required CAA physical examination for airman’s certificate. (Exhs. 78, 79, 80, 81, 83 and 92). We noticed, however, that there were other similar physical examinations conducted by the CAA on the person of plaintiff the report on which were not presented in evidence. Obviously, only those which suited defendants cause were hand-picked and offered in evidence.

We hesitate to accept the opinion of the defendant’s two physicians, considering that Dr. Bernardo admittedly referred to Dr. Reyes because he could not determine the cause of the dizzy spells and headache and the latter admitted that ‘it is extremely hard to be certain of the cause of his dizzy spells,’ and suggested a possibility that it ‘was due to postraumatic syndrome, evidently due to the injuries suffered by the plaintiff in hitting the forehead against the windshield of the plane during the accident.’ Judgment are not based on possibilities.

The admitted difficulty of defendant’s doctors in determining the cause of the dizzy spells and headache cannot be a sound basis for finding against the plaintiff and in favor of defendant. Whatever it might be, the fact is that such dizzy spells, headache and general debility was an after-effect of the crash-landing. Be it brain injury or psychosomatic, neurasthenic or psychogenic, there is no gainsaying the fact that it was caused by the crash-landing. As an effect of the cause, not fabricated or concocted, plaintiff has to be indemnified. The fact is that such effect caused his discharge.

We are prone to believe the testimony of the plaintiff’s doctors.

Dr. Morales, a surgeon, found that blood was coming from plaintiff’s ears and nose. He testified that plaintiff was suffering from cerebral concussion as a result of traumatic injury to the brain caused by his head hitting on the windshield of the plane during the crash-landing (Exhibit “G”).

Dr. Conrado Aramil, a neurologist and psychiatrist with experience in two hospitals abroad, found abnormality reflected by the electroencephalogram examination in the frontal area on both sides of plaintiff’s head (Exhibits “K”, “K-1”).

The opinion of these two specialist renders unnecessary that of plaintiff’s wife who is a physician in her own right and because of her relation to the plaintiff, her testimony and opinion may not be discussed here, although her testimony is crystallized by the opinions of Dr. Ador Dionisio, Dr. Marquez, Dr. Jose O. Chan, Dr. Yambao and Dr. Sandico.

Even the doctors presented by defendant admit vital facts about plaintiff’s brain injury. Dr. Bernardo admits that due to the incident, the plaintiff continuously complained of his fainting spells, dizziness and headache everytime he flew as a co-pilot and everytime he went to defendant’s clinic no less than 25 times (Exhibits “15” to “36”), that he complained of the same to Dr. Reyes; that he promised to help send plaintiff to the United States for expert medical assistance provided that whatever finding thereat should not be attributed to the crash-landing incident to which plaintiff did not agree and that plaintiff was completely ignored by the defendant in his plea for expert medical assistance. They admitted that they could not determine definitely the cause of the fainting spells, dizziness and headache, which justifies the demand for expert medical assistance.”

We also find the imputation of gross negligence by respondent court to PAL for having allowed Capt. Delfin Bustamante to fly on that fateful day of the accident on January 8, 1951 to be correct, and We affirm the same, duly supported as it is by substantial evidence, clearly established and cited in the decision of said court which states as follows:

“The pilot was sick. He admittedly had tumor of the nasopharynx (nose). He is now in the Great Beyond. The spot is very near the brain and the eyes. Tumor on the spot will affect the sinus, the breathing, the eyes which are very near it. No one will certify the fitness to fly a plane of one suffering from the disease.

“. cra . The fact First Pilot Bustamante has a long standing tumor of the Nasopharynx for which reason he was grounded since November 1947 is admitted in the letter (Exh. 69-A) of Dr. Bernardo to the Medical Director of the CAA requesting waiver of physical standards. The request for waiver of physical standards is itself a positive proof that the physical condition of Capt. Bustamante is short of the standard set by the CAA. The Deputy Administrator of the CAA granted the request relying on the representation and recommendation made by Dr. Bernardo (See Exh. 69). We noted, however, that the request (Exh. 69-A) says that ‘it is believed that his continuing to fly as a co-pilot does not involve any hazard.’cralaw (Italics supplied). Flying as a First Officer entails a very different responsibility than flying as a mere co-pilot. Defendant requested the CAA to allow Capt. Bustamante to fly merely as a co-pilot and it is safe to conclude that the CAA approved the request thus allowing Bustamante to fly only as a co-pilot. For having allowed Bustamante to fly as a First Officer on January 8, 1951, defendant is guilty of gross negligence and therefore should be made liable for the resulting accident.

As established by the evidence, the pilot used to get treatments from Dr. Sycangco. He used to complain of pain in the face more particularly in the nose which caused him to have sleepless nights. Plaintiff’s observation of the pilot was reported to the Chief Pilot who did nothing about it. Captain Carbonel of the defendant corroborated plaintiff of this matter. The complaint against the slow reaction of the pilot at least proved the observation. The observation could be disregarded. The fact that the complaint was not in writing does not detract anything from the seriousness thereof, considering that a miscalculation would not only cause the death of the crew but also of the passengers.

One month prior to the crash-landing, when the pilot was preparing to land in Daet, plaintiff warned him that they were not in the vicinity of Daet but above the town of Ligao. The plane hit outside the airstrip. In another instance, the pilot would hit the Mayon Volcano had not plaintiff warned him. These more than prove what plaintiff had complained of. Disregard thereof by defendant is condemnable.

To bolster the claim that Capt. Bustamante has not suffered from any kind of sickness which hampered his flying ability, appellant contends that for at least one or more years following the accident of January 8, 1951, Capt. Bustamante continued to fly for defendant company as a pilot, and did so with great skill and proficiency, and without any further accident or mishap, citing tsn. pp. 756-765, January 20, 1965. We have painstakingly perused the records, particularly the transcript of stenographic notes cited, but found nothing therein to substantiate appellant’s contention. Instead, We discovered that the citation covers the testimony of Dr. Bernardo on the physical condition of Bustamante and nothing about his skills or proficiency to fly nor on the mishaps or accidents, matters which are beyond Dr. Bernardo’s competence anyway.

Assuming that the pilot was not sick or that the tumor did not affect the pilot in managing the plane, the evidence shows that the overshooting of the runway and crash-landing at the mangrove was caused by the pilot for which acts the defendant must answer for damages caused thereby. And for this negligence of defendant’s employee, it is liable (Joaquin vs. Aniceto, 12 SCRA 308). At least, the law presumes the employer negligent imposing upon it the burden of proving that it exercised the diligence of a good father of a family in the supervision of its employees.

Defendant would want to tie plaintiff to the report he signed about the crash-landing. The report was prepared by his pilot and because the latter pleaded that he had a family too and would have nowhere to go if he lost his job, plaintiff’s compassion would not upturn the truth about the crash-landing. We are for the truth not logic of any argumentation.

At any rate, it is incorrect to say that the Accident Report (Exh. 12 & 12-A), signed by plaintiff, exculpated Capt. Bustamante from any fault. We observed that the Report does not categorically state that Capt. Bustamante was not at fault. It merely relates in chronological sequence what Capt. Bustamante and plaintiff did from the take-off from Manila to the landing in Daet which resulted in an accident. On the contrary, we may infer the negligence of Bustamante from the following portion of the Report, to wit:

“. cra . I felt his brakes strong but as we neared the intersection of the NE-SW runway, the brakes were not as strong and I glanced at the system pressure which indicated 900 lbs. per sq. m.”

It was during the above precise instance that Capt. Bustamante lost his bearing and disposition. Had he maintained the pressure on the brakes the plane would not have overshot the runway. Verily, Bustamante displayed slow reaction and poor judgment. (CA decision, pp. 8-12).

This Court is not impressed by, much less can We accept petitioner’s invocation to calibrate once again the evidence testified to in detail and plucked from the voluminous transcript to support petitioner’s own conclusion. It is not the task of this Court to discharge the functions of a trier of facts much less to enter into a calibration of the evidence, notwithstanding petitioner’s wail that the judgment of the respondent court is based entirely on speculations, surmises and conjectures. We are convinced that respondent court’s judgment is supported by strong, clear and substantial evidence.:onad

Petitioner is a common carrier engaged in the business of carrying or transporting passengers or goods or both, by land, water, or air, for compensation, offering their services to the public, as defined in Art. 1732, New Civil Code. The law is clear in requiring a common carrier to exercise the highest degree of care in the discharge of its duty and business of carriage and transportation under Arts. 1733, 1755 and 1756 of the New Civil Code. These Articles provide:

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

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

Art. 1755. A common carrier is bound to carry the passenger safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with a due regard for all the circumstances.

Art. 1756. In case of death of or injuries to passengers, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence as prescribed in Articles 1733 and 1755.

The duty to exercise the utmost diligence on the part of common carriers is for the safety of passengers as well as for the members of the crew or the complement operating the carrier, the airplane in the case at bar. And this must be so for any omission, lapse or neglect thereof will certainly result to the damage, prejudice, nay injuries and even death to all aboard the plane, passengers and crew members alike.

Now to the damages. The Court of Appeals affirmed the award of damages made by the trial court, stating that “the damages awarded plaintiff by the lower court are in accordance with the facts, law and jurisprudence.” The court further observed that “defendant-appellant is still fortunate, considering that the unearned income was reckoned with only up to 1968 and not up to the present as plaintiff-appellee is still living. Whatever mathematical error defendant-appellant could show by abstract argumentation, the same must be compensated by such deficiency of the damages awarded to plaintiff-appellee.”

As awarded by the trial court, private respondent was entitled to P198,000.00 as unearned income or compensatory damages; P50,000.00 for moral damages, P20,000.00 as attorney’s fees and P5,000.00 as expenses of litigation, or a total of P273,000.00.

The trial court arrived at the sum of P198,000.00 as unearned income or damages by considering that respondent Samson “could have continued to work as airline pilot for fifteen more years, he being only 38 years at the time the services were terminated by the defendant (PAL) and he would have earned P120,000.00 from 1954 to 1963 or a period of ten (10) years at the rate of one thousand per month (P750.00 basic salary plus P300.00 extra pay for extra flying time and bonuses; and considering further that in 1964 the basic pay of defendant’s pilot was increased to P12,000.00 annually, the plaintiff could have earned from 1964 to 1968 the sum of P60,000.00 in the form of salaries and another P18,000.00 as bonuses and extra pay for extra flying time at the same rate of P300 a month, or a grand total of P198,000.00 for the entire period. This claim of the plaintiff for loss or impairment of earning capacity is based on the provision of Article 2205 of the New Civil Code of the Philippines which provides that “damages may be recovered for loss or impairment of earning capacity in cases of temporary or permanent personal injury.” This provision of law has been construed and interpreted in the case of Aureliano Ropato, et al. vs. La Mallorca General Partnership, 56 O.G., 7812, which rules that law allows the recovery of damages for loss or impairment of earning capacity in cases of temporary or permanent personal injury.”  (Decision, CFI, pp. 98-99, Record on Appeal)

The respondent appellate court modified the above award by ordering payment of legal interest on the P198,000.00 unearned income from the filing of the claim, citing Sec. 8, Rule 51 of the Rules of Court.

Petitioner assails the award of the total sum of P198,000.00 as unearned income up to 1968 as being tenuous because firstly, the trial court’s finding affirmed by the respondent court is allegedly based on pure speculation and conjecture and secondly, the award of P300.00 a month as extra pay for extra flying time from 1954 to 1968 is likewise speculative. PAL likewise rejects the award of moral damages in the amount of P50,000.00 on the ground that private respondent’s action before the trial court does not fall under any of the cases enumerated in the law (Art. 2219 of the New Civil Code) for which moral damages are recoverable and that although private respondent’s action gives the appearance that it is covered under quasi-delict as provided in Art. 21 of the New Civil Code, the definition of quasi-delict in Art. 2176 of the New Civil Code expressly excludes cases where there is a pre-existing contractual relation between the parties, as in the case under consideration, where an employer-employee relationship existed between PAL and private respondent. It is further argued that private respondent’s action cannot be deemed to be covered by Art. 21, inasmuch as there is no evidence on record to show that PAL “wilfully cause(d) loss or injury to (private respondent) in a manner that is contrary to morals, good customs or public policy . cra .” Nor can private respondent’s action be considered “analogous” to either of the foregoing, for the reasons are obvious that it is not.”  (Memorandum of petitioner, pp. 418-421, Records)

Having affirmed the gross negligence of PAL in allowing Capt. Delfin Bustamante to fly the plane to Daet on January 8, 1951 whose slow reaction and poor judgment was the cause of the crash-landing of the plane which resulted in private respondent Samson hitting his head against the windshield and causing him injuries for which reason PAL terminated his services and employment as pilot after refusing to provide him with the necessary medical treatment of respondent’s periodic spells, headache and general debility produced from said injuries, We must necessarily affirm likewise the award of damages or compensation under the provisions of Art. 1711 and Art. 1712 of the New Civil Code which provide:

Art. 1711. Owners of enterprises and other employers are obliged to pay compensation for the death or injuries to their laborers, workmen, mechanics or other employees, even though the event may have been purely accidental or entirely due to a fortuitous cause, if the death or personal injury arose out of and in the course of the employment. The employer is also liable for compensation if the employee contracts any illness or disease caused by such employment or as the result of the nature of the employment. If the mishap was due to the employee’s own notorious negligence, or voluntary act, or drunkenness, the employer shall not be liable for compensation. When the employee’s lack of due care contributed to his death or injury, the compensation shall be equitably reduced.

Art. 1712. If the death or injury is due to the negligence of a fellow-worker, the latter and the employer shall be solidarily liable for compensation. If a fellow-worker’s intentional or malicious act is the only cause of the death or injury, the employer shall not be answerable, unless it should be shown that the latter did not exercise due diligence in the selection or supervision of the plaintiffs fellow-worker.

The grant of compensatory damages to the private respondent made by the trial court and affirmed by the appellate court by computing his basic salary per annum at P750.00 a month as basic salary and P300.00 a month for extra pay for extra flying time including bonus given in December every year is justified. The correct computation however should be P750 plus P300 x 12 months = P12,600 per annum x 10 years = P126,000.00 (not P120,000.00 as computed by the court a quo). The further grant of increase in the basic pay of the pilots to P12,000 annually for 1964 to 1968 totalling P60,000.00 and another P18,000.00 as bonuses and extra pay for extra flying time at the same rate of P300.00 a month totals P78,000.00. Adding P126,000.00 (1964 to 1968 compensation) makes a grand total of P204,000.00 (not P198,000.00 as originally computed).

As to the grant of moral damages in the sum of P50,000.00 We also approve the same. We have noted and considered the holding of the appellate court in the matter of bad faith on the part of PAL, stated hereunder, this wise:

“None of the essential facts material to the determination of the case have been seriously assailed: the overshooting of runway and crash-landing into the mangroves; the hitting of plaintiff’s head to the front windshield of the plane; the oozing of blood out of his ears, nose and mouth; the intermittent dizzy spells, headaches and general debility thereafter for which he was discharged from his employment; the condition of not to attribute the cause of the ailment to the crash-landing imposed in bad faith for a demanded special medical service abroad; and the resultant brain injury which defendant’s doctors could not understand nor diagnose.”

x x x

“The act of defendant-appellant in unjustly refusing plaintiff-appellee’s demand for special medical service abroad for the reason that plaintiff-appellee’s deteriorating physical condition was not due to the accident violates the provisions of Article 19 of the Civil Code on human relations “to act with justice, give everyone his due, and observe honesty and good faith.”  (CA Resolution, pp. 151-152, Records)

We reject the theory of petitioner that private respondent is not entitled to moral damages. Under the facts found by the trial court and affirmed by the appellate court and under the law and jurisprudence cited and applied, the grant of moral damages in the amount of P50,000.00 is proper and justified.

The fact that private respondent suffered physical injuries in the head when the plane crash-landed due to the negligence of Capt. Bustamante is undeniable. The negligence of the latter is clearly a quasi-delict and therefore Article 2219, (2) New Civil Code is applicable, justifying the recovery of moral damages.

Even from the standpoint of the petitioner that there is an employer-employee relationship between it and private respondent arising from the contract of employment, private respondent is still entitled to moral damages in view of the finding of bad faith or malice by the appellate court, which finding We hereby affirm, applying the provisions of Art. 2220, New Civil Code which provides that willful injury to property may be a legal ground for awarding moral damages if the court should find that, under the circumstances, such damages are justly due. The same rule applies to breaches of contract where the defendant acted fraudulently or in bad faith.

The justification in the award of moral damages under Art. 19 of the New Civil Code on Human Relations which requires that every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith, as applied by respondent court is also well-taken and We hereby give Our affirmance thereto.

With respect to the award of attorney’s fees in the sum of P20,000.00 the same is likewise correct. As pointed out in the decision of the Court of Appeals, “the plaintiff is entitled to attorney’s fees because he was forced to litigate in order to enforce his valid claim (Ganaban vs. Bayle, 30 SCRA 365; De la Cruz vs. De la Cruz, 22 SCRA 33; and many others); defendant acted in bad faith in refusing plaintiff’s valid claim (Filipino Pipe Foundry Corporation vs. Central Bank, 23 SCRA 1044); and plaintiff was dismissed and was forced to go to court to vindicate his right (Nadura vs. Benguet Consolidated, Inc., 5 SCRA 879).”

We also agree with the modification made by the appellate court in ordering payment of legal interest from the date judicial demand was made by Pilot Samson against PAL with the filing of the complaint in the lower court. We affirm the ruling of the respondent court which reads:

“Lastly, the defendant-appellant claims that the legal rate of interest on the unearned compensation should be computed from the date of the judgment in the lower court, not from the filing of the complaint, citing a case where the issue raised in the Supreme Court was limited to when the judgment was rendered in the lower court or in the appellate court, which does not mean that it should not be computed from the filing of the complaint.

Articles 1169, 2209 and 2212 of the Civil Code govern when interest shall be computed. Thereunder interest begins to accrue upon demand, extrajudicial or judicial. A complaint is a judicial demand (Cabarroguis vs. Vicente, 107 Phil. 340). Under Article 2212 of the Civil Code, interest due shall earn legal interest from the time it is judicially demanded, although the obligation may be silent upon this point.”  (CA Resolution, pp. 153-154, Records).

The correct amount of compensatory damages upon which legal interest shall accrue from the filing of the complaint is P204,000.00 as herein computed and not P198,000.00.

WHEREFORE, in view of all the foregoing, the judgment of the appellate court is hereby affirmed with slight modification in that the correct amount of compensatory damages is P204,000.00. With costs against petitioner.

SO ORDERED.

Makasiar and De Castro, JJ., concur.

Teehankee and Melencio-Herrera, JJ., concur in the result.

Jurisprudence: G.R. No. 113578 July 14, 1995

FIRST DIVISION

G.R. No. 113578 July 14, 1995

SULPICIO LINES, INC., Petitioner,
vs.
The Honorable COURT OF APPEALS and TITO DURAN TABUQUILDE and ANGELINA DE PAZ TABUQUILDE, respondents.

QUIASON, J.:

This is a petition for review on certiorari under Rule 45 of the Revised Rules of Court of the decision of the Court of Appeals in CA-G.R. CV
No. 32864, which affirmed the decision of the Regional Trial Court, Branch 85, Quezon City in Civil Case No. Q-89-3048.

I

The Court of Appeals found:

On October 23, 1988, plaintiff Tito Duran Tabuquilde (hereinafter, "Tito") and his three-year old daughter Jennifer Anne boarded the M/V Dona Marilyn at North Harbor, Manila, bringing with them several pieces of luggage.

In the morning of October 24, 1988, the M/V Dona Marilyn, while in transit, encountered inclement weather which caused huge waves due to Typhoon Unsang.

Notwithstanding the fact that Storm Signal No. 2 had been raised by the PAG-ASA authorities over Leyte as early as 5:30 P.M. of October 23, 1988 and which signal was raised to Signal No. 3 by 10 P.M. of the same day, the ship captain ordered the vessel to proceed to Tacloban when prudence dictated that he should have taken it to the nearest port for shelter, thus violating his duty to exercise extraordinary diligence in the carrying of passengers safely to their destination.

At about the same time, plaintiff-appellee Angelina Tabuquilde (hereinafter, "Angelina") mother of Jennifer Anne, contacted the Sulpicio Office to verify radio reports that the vessel M/V Dona Marilyn was missing. Employees of said Sulpicio Lines assured her that the ship was merely "hiding" thereby assuaging her anxiety.

At around 2:00 P.M. of October 24, 1988, said vessel capsized, throwing plaintiff-appellee Tito and Jennifer Anne, along with hundreds of passengers, into the tumultuous sea.

Tito tried to keep himself and his daughter afloat but to no avail as the waves got stronger and he was subsequently separated from his daughter despite his efforts.

He found himself on Almagro Island in Samar the next day at round (sic) 11:00 A.M. and immediately searched for his daughter among the survivors in the island, but the search proved fruitless.

In the meantime, Angelina tried to seek the assistance of the Sulpicio Lines in Manila to no avail, the latter refusing to entertain her and hundreds of relatives of the other passengers who waited long hours outside the Manila Office. Angelina spent sleepless nights worrying about her husband Tito and daughter Jennifer Anne in view of the refusal of Sulpicio Lines to release a verification of the sinking of the ship.

On October 26, 1988, Tito and other survivors in the Almagro Island were fetched and were brought to Tacloban Medical Center for treatment.

On October 31, 1988, Tito reported the loss of his daughter, was informed that the corpse of a child with his daughter's description had been found. Subsequently, Tito wrote a letter to his wife, reporting the sad fact that Jennifer Anne was dead. Angelina suffered from shock and severe grief upon receipt of the news.

On November 3, 1988, the coffin bearing the corpse of Jennifer Anne was buried in Tanauan, Leyte.

On November 24, 1988, a claim for damages was filed by Tito with the defendant Sulpicio Lines in connection with the death of the plaintiff-appellee's daughter and the loss of Tito's belongings worth P27,580.00. (Appellees' Brief, pp. 2-4) ( Rollo, pp. 52-54).

On January 3, 1991, the trial court rendered a decision in Civil Case No. Q-89-3048 in favor of the plaintiffs Tito Duran Tabuquilde and Angelina de Paz Tabuquilde (private respondents herein) and against defendant Sulpicio Lines, Inc. (petitioner herein) ordering defendant to pay P27,580.00 as actual damages, P30,000.00 for the death of Jennifer Tabuquilde, P100,000.00 as moral damages, P50,000.00 as exemplary damages, and P50,000.00 as attorney's fees, and costs.

Petitioner appealed to the Court of Appeals which affirmed the decision of the trial court. Petitioner then filed a motion for reconsideration which was denied. Hence, this petition.

II

Generally, the findings of fact of the trial court are entitled to great weight and not disturbed except for cogent reasons (Gatmaitan v. Court of Appeals, 200 SCRA 37 [1991]). One of the accepted reasons is when the findings of fact are not supported by the evidence (Sandoval Shipyard, Inc. v. Clave, 94 SCRA 472 [1979]). Corollary to this is the rule that actual or compensatory damages, to be recovered, must be proved; otherwise, if the proof is flimsy, no damages will be awarded (Dichoso v. Court of Appeals, 192 SCRA 169 [1990]).

In the case at bench, the trial court merely mentioned the fact of the loss and the value of the contents of the pieces of baggage without stating the evidence on which it based its findings. There is no showing that the value of the contents of the lost pieces of baggage was based on the bill of lading or was previously declared by respondent Tito D. Tabuquilde before he boarded the ship. Hence, there can be no basis to award actual damages in the amount of P27,850.00.

The Court of Appeals was correct in confirming the award of damages for the death of the daughter of private respondents, a passenger on board the stricken vessel of petitioner. It is true that under Article 2206 of the Civil Code of the Philippines, only deaths caused by a crime as quasi delict are entitled to actual and compensatory damages without the need of proof of the said damages. Said Article provides:

The amount of damages for death caused by a crime or quasi delict shall be at least Three Thousand Pesos, even though there may have been mitigating circumstances. . . .

Deducing alone from said provision, one can conclude that damages arising from culpa contractual are not compensable without proof of special damages sustained by the heirs of the victim.

However, the Civil Code, in Article 1764 thereof, expressly makes Article 2206 applicable "to the death of a passenger caused by the breach of contract by a common carrier." Accordingly, a common carrier is liable for actual or compensatory damages under Article 2206 in relation to Article 1764 of the Civil Code for deaths of its passengers caused by the breach of the contract of transportation.

The trial court awarded an indemnity of P30,000.00 for the death of the daughter of private respondents. The award of damages under Article 2206 has been increased to P50,000.00 (People v. Flores, 237 SCRA 653 [1994]).

With respect to the award of moral damages, the general rule is that said damages are not recoverable in culpa contractual except when the presence of bad faith was proven (Trans World Air Lines v. Court of Appeals, 165 SCRA 143 [1988]). However, in breach of contract of carriage, moral damages may be recovered when it results in the death of a passenger (Philippine Rabbit Bus Lines, Inc. v. Esguerra, 117 SCRA 741 [1982]; Vasquez v. Court of Appeals, 138 SCRA 553 [1985]).

With respect to the award of exemplary damages, Article 2232 of the Civil Code of the Philippines gives the Court the discretion to grant said damages in breach of contract when the defendant acted in a wanton, fraudulent and reckless manner (Air France v. Carrascoso, 18 SCRA 155 [1966]).

Furthermore, in the case of Mecenas v. Court of Appeals, 180 SCRA 83 (1989), we ruled that:

. . . . The Court will take judicial notice of the dreadful regularity with which grievous maritime disasters occur in our waters with massive loss of life. The bulk of our population is too poor to afford domestic air transportation. So it is that notwithstanding the frequent sinking of passenger in our waters, crowds of people continue to travel by sea. This Court is prepared to use the instruments given to it by the law for securing the ends of law and public policy. One of those instruments is the institution of exemplary damages; one of those ends, of special importance in an archipelagic state like the Philippines, is the safe and reliable carriage of people and goods by sea. . . . (at p. 100).

A common carrier is obliged to transport its passengers to their destinations with the utmost diligence of a very cautious person (Laguna Tayabas Bus Co. v. Tiongson, 16 SCRA 940 [1966]). The trial court found that petitioner failed to exercise the extraordinary diligence required of a common carrier, which resulted in the sinking of the M/V Dona Marilyn.

The trial court correctly concluded that the sinking of M/V Dona Marilyn was due to gross negligence, thus:

. . . [i]t is undisputed that Typhoon Unsang entered the Philippine Area of Responsibility on October 21, 1988. The rain in Metro Manila started after lunch of October 23, 1988, and at about 5:00 p.m. Public Storm Signal No. 1 was hoisted over Metro Manila, Signal No. 2 in Leyte and Signal No. 3 in Samar. But at 10:00 o'clock (sic) in the morning of October 23, 1988, Public Storm Signal No. 1 was already hoisted over the province of Leyte, which is the destination of M/V Dona Marilyn. This was raised to Signal No. 2 at 4:00 p.m. and Signal No. 3 at 10:00 p.m. on the same date. The following day, October 24, 1988, at 4:00 a.m. and 10:00 a.m., Storm Signal No. 3 remained hoisted in Leyte. At 4 p.m. on October 24, 1988, Storm Signal No. 3 remained hoisted in Leyte but was reduced to Storm Signal No. 2 (Exh. G). Signal No. 1 has maximum winds at 60 kph within 36 hours; Signal No. 2 has maximum winds of from 60 kph to 100 kph within a period of 24 hours; and Signal No. 3 has maximum winds of 100 kph and above within a period of 12 hours.

Warnings of the storm signal are issued by PAG-ASA thru DZZA, Office of Civil Defense, Philippine Navy, Coast Guard, Radio Stations, and other offices, every six (6) hours as soon as a cyclone enters the Philippine Area of Responsibility.

At 10:30 a.m. on October 24, 1988, the vessel was estimated to be between Mindoro and Masbate, and the center of the typhoon then was around 130 degrees longitude with maximum winds of 65 kph (Exh. G-3), with a "radius of rough to phenomenal sea at that time of 450 kms. North and 350 kms. elsewhere; 350 kms. North center and all throughout the rest" (p. 12, TSN, Lumalda, Feb. 19, 1990).

xxx xxx xxx

In the same manner, (referring to the negligence of the crew of the ship that sank in Vasquez v. Court of Appeals, 138 SCRA 553 [1985]) the crew of the vessel M/V Dona Marilyn took a calculated risk when it proceeded despite the typhoon brewing somewhere in the general direction to which the vessel was going. The crew assumed a greater risk when, instead of dropping anchor in or at the periphery of the Port of Calapan, or returning to the port of Manila which is nearer, proceeded on its voyage on the assumption that it will be able to beat and race with the typhoon and reach its destination before it (Unsang) passes ( Rollo, pp. 45-47).

The award of attorney's fees by the trial court to respondents is also assailed by petitioner, citing Mirasol v. De la Cruz, 84 SCRA 337 (1978). In this case, the petitioner filed before the Municipal Court an action for forcible entry against the private respondent. The said court dismissed the complaint. On appeal, the Court of First Instance of Camarines Sur sustained the decision of the lower court, dismissed the appeal and awarded attorney's fees in the sum of not less than P500.00 in favor of private respondent. Upon appeal to us, we deleted the award of attorney's fees because the text of the appealed decision was bereft of any findings of fact and law to justify such an award. Moreover, there was no proof, other than the bare allegation of harassment that the adverse party had acted in bad faith. The aforementioned decision is inapposite to the instant case where the decision clearly mentions the facts and the law upon which the award of attorney's fees were based.

WHEREFORE, the decision of the Court of Appeals is AFFIRMED with the MODIFICATION that the award of P27,580.00 as actual damages for the loss of the contents of the pieces of baggage is deleted and that the award of P30,000.00 under Article 2206 in relation Article 1764 is increased to P50,000.00.

SO ORDERED.

Padilla, Davide, Jr. and Kapunan, JJ., concur.

Bellosillo, J., is on leave.

Jurisprudence: G.R. No. 145804 February 6, 2003

FIRST DIVISION

G.R. No. 145804.  February 6, 2003

LIGHT RAIL TRANSIT AUTHORITY & RODOLFO ROMAN, petitioners, vs. MARJORIE NAVIDAD, Heirs of the Late NICANOR NAVIDAD & PRUDENT SECURITY AGENCY, respondents.

D E C I S I O N

VITUG, J.:

The case before the Court is an appeal from the decision and resolution of the Court of Appeals, promulgated on 27 April 2000 and 10 October 2000, respectively, in CA-G.R. CV No. 60720, entitled “Marjorie Navidad and Heirs of the Late Nicanor Navidad vs. Rodolfo Roman, et. al.,” which has modified the decision of 11 August 1998 of the Regional Trial Court, Branch 266, Pasig City, exonerating Prudent Security Agency (Prudent) from liability and finding Light Rail Transit Authority (LRTA) and Rodolfo  Roman liable for damages on account of the death of Nicanor Navidad.

On 14 October 1993, about half an hour past seven o’clock in the evening, Nicanor Navidad, then drunk, entered the EDSA LRT station after purchasing a “token” (representing payment of the fare).  While Navidad was standing on the platform near the LRT tracks, Junelito Escartin, the security guard assigned to the area approached Navidad.  A misunderstanding or an altercation between the two apparently ensued that led to a fist fight.  No evidence, however, was adduced to indicate how the fight started or who, between the two, delivered the first blow or how Navidad later fell on the LRT tracks.  At the exact moment that Navidad fell, an LRT train, operated by petitioner Rodolfo Roman, was coming in.  Navidad was struck by the moving train, and he was killed instantaneously.

On 08 December 1994, the widow of Nicanor, herein respondent Marjorie Navidad, along with her children, filed a complaint for damages against Junelito Escartin, Rodolfo Roman, the LRTA, the Metro Transit Organization, Inc. (Metro Transit), and Prudent for the death of her husband.  LRTA and Roman filed a counterclaim against Navidad and a cross-claim against Escartin and Prudent.  Prudent, in its answer, denied liability and averred that it had exercised due diligence in the selection and supervision of its security guards.

The LRTA and Roman presented their evidence while Prudent and Escartin, instead of presenting evidence, filed a demurrer contending that Navidad had failed to prove that Escartin was negligent in his assigned task.  On 11 August 1998, the trial court rendered its decision; it adjudged:

“WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the defendants Prudent Security and Junelito Escartin ordering the latter to pay jointly and severally the plaintiffs the following:

“a)     1)         Actual damages of P44,830.00;

2)         Compensatory damages of P443,520.00;

3)         Indemnity for the death of Nicanor Navidad in the sum of P50,000.00;

“b)     Moral damages of P50,000.00;

“c)     Attorney’s fees of P20,000;

“d)     Costs of suit.

“The complaint against defendants LRTA and Rodolfo Roman are dismissed for lack of merit.

“The compulsory counterclaim of LRTA and Roman are likewise dismissed.”[1]

Prudent appealed to the Court of Appeals.  On 27 August 2000, the appellate court promulgated its now assailed decision exonerating Prudent from any liability for the death of Nicanor Navidad and, instead, holding the LRTA and Roman jointly and severally liable thusly:

“WHEREFORE, the assailed judgment is hereby MODIFIED, by exonerating the appellants from any liability for the death of Nicanor Navidad, Jr.  Instead, appellees Rodolfo Roman and the Light Rail Transit Authority (LRTA) are held liable for his death and are hereby directed to pay jointly and severally to the plaintiffs-appellees, the following amounts:

a)      P44,830.00 as actual damages;

b)      P50,000.00 as nominal damages;

c)      P50,000.00 as moral damages;

d)      P50,000.00 as indemnity for the death of the deceased; and

e)      P20,000.00 as and for attorney’s fees.”[2]

The appellate court ratiocinated that while the deceased might not have then as yet boarded the train, a contract of carriage theretofore had already existed when the victim entered the place where passengers were supposed to be after paying the fare and getting the corresponding token therefor.  In exempting Prudent from liability, the court stressed that there was nothing to link the security agency to the death of Navidad.  It said that Navidad failed to show that Escartin inflicted fist blows upon the victim and the evidence merely established the fact of death of Navidad by reason of his having been hit by the train owned and managed by the LRTA and operated at the time by Roman.  The appellate court faulted petitioners for their failure to present expert evidence to establish the fact that the application of emergency brakes could not have stopped the train.

The appellate court denied petitioners’ motion for reconsideration in its resolution of 10 October 2000.

In their present recourse, petitioners recite alleged errors on the part of the appellate court; viz:

“I.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED BY DISREGARDING THE FINDINGS OF FACTS BY THE TRIAL COURT

“II.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT PETITIONERS ARE LIABLE FOR THE DEATH OF NICANOR NAVIDAD, JR.

“III.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT RODOLFO ROMAN IS AN EMPLOYEE OF LRTA.”[3]

Petitioners would contend that the appellate court ignored the evidence and the factual findings of the trial court by holding them liable on the basis of a sweeping conclusion that the presumption of negligence on the part of a common carrier was not overcome.  Petitioners would insist that Escartin’s assault upon Navidad, which caused the latter to fall on the tracks, was an act of a stranger that could not have been foreseen or prevented.  The LRTA would add that the appellate court’s conclusion on the existence of an employer-employee relationship between Roman and LRTA lacked basis because Roman himself had testified being an employee of Metro Transit and not of the LRTA.

Respondents, supporting the decision of the appellate court, contended that a contract of carriage was deemed created from the moment Navidad paid the fare at the LRT station and entered the premises of the latter, entitling Navidad to all the rights and protection under a contractual relation, and that the appellate court had correctly held LRTA and Roman liable for the death of Navidad in failing to exercise extraordinary diligence imposed upon a common carrier.

Law and jurisprudence dictate that a common carrier, both from the nature of its business and for reasons of public policy, is burdened with the duty of exercising utmost diligence in ensuring the safety of passengers.[4]  The Civil Code, governing the liability of a common carrier for death of or injury to its passengers, provides:

“Article 1755. A common carrier is bound to carry the passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with a due regard for all the circumstances.

“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.”

“Article 1759. Common carriers are liable for the death of or injuries to passengers through the negligence or willful acts of the former’s employees, although such employees may have acted beyond the scope of their authority or in violation of the orders of the common carriers.

“This liability of the common carriers does not cease upon proof that they exercised all the diligence of a good father of a family in the selection and supervision of their employees.”

“Article 1763. A common carrier is responsible for injuries suffered by a passenger on account of the willful acts or negligence of other passengers or of strangers, if the common carrier’s employees through the exercise of the diligence of a good father of a family could have prevented or stopped the act or omission.”

The law requires common carriers to carry passengers safely using the utmost diligence of very cautious persons with due regard for all circumstances.[5]  Such duty of a common carrier to provide safety to its passengers so obligates it not only during the course of the trip but for so long as the passengers are within its premises and where they ought to be in pursuance to the contract of carriage.[6]  The statutory provisions render a common carrier liable for death of or injury to passengers (a)  through the negligence or wilful acts of its employees or b) on account of wilful acts or negligence of other passengers or of strangers if the common carrier’s employees through the exercise of due diligence could have prevented or stopped the act or omission.[7]  In case of such death or injury, a carrier is presumed to have been at fault or been negligent, and[8] by simple proof of injury, the passenger is relieved of the duty to still establish the fault or negligence of the carrier or of its employees and the burden shifts upon the carrier to prove that the injury is due to an unforeseen event or to force majeure.[9]  In the absence of satisfactory explanation by the carrier on how the accident occurred, which petitioners, according to the appellate court, have failed to show, the presumption would be that it has been at fault,[10] an exception from the general rule that negligence must be proved.[11]

The foundation of LRTA’s liability is the contract of carriage and its obligation to indemnify the victim arises from the breach of that contract by reason of its failure to exercise the high diligence required of the common carrier.  In the discharge of its commitment to ensure the safety of passengers, a carrier may choose to hire its own employees or avail itself of the services of an outsider or an independent firm to undertake the task.  In either case, the common carrier is not relieved of its responsibilities under the contract of carriage.

Should Prudent be made likewise liable?  If at all, that liability could only be for tort under the provisions of Article 2176[12] and related provisions, in conjunction with Article 2180,[13] of the Civil Code.  The premise, however, for the employer’s liability is negligence or fault on the part of the employee.  Once such fault is established, the employer can then be made liable on the basis of the presumption juris tantum that the employer failed to exercise diligentissimi patris families in the selection and supervision of its employees.  The liability is primary and can only be negated by showing due diligence in the selection and supervision of the employee, a factual matter that has not been shown.  Absent such a showing, one might ask further, how then must the liability of the common carrier, on the one hand, and an independent contractor, on the other hand, be described?  It would be solidary.  A contractual obligation can be breached by tort and when the same act or omission causes the injury, one resulting in culpa contractual and the other in culpa aquiliana, Article 2194[14] of the Civil Code can well apply.[15]  In fine, a liability for tort may arise even under a contract, where tort is that which breaches the contract.[16]  Stated differently, when an act which constitutes a breach of contract would have itself constituted the source of a quasi-delictual liability had no contract existed between the parties, the contract can be said to have been breached by tort, thereby allowing the rules on tort to apply.[17]

Regrettably for LRT, as well as perhaps the surviving spouse and heirs of the late Nicanor Navidad, this Court is concluded by the factual finding of the Court of Appeals that “there is nothing to link (Prudent) to the death of Nicanor (Navidad), for the reason that the negligence of its employee, Escartin, has not been duly proven x x x.”  This finding of the appellate court is not without substantial justification in our own review of the records of the case.

There being, similarly, no showing that petitioner Rodolfo Roman himself is guilty of any culpable act or omission, he must also be absolved from liability.  Needless to say, the contractual tie between the LRT and Navidad is not itself a juridical relation between the latter and Roman; thus, Roman can be made liable only for his own fault or negligence.

The award of nominal damages in addition to actual damages is untenable.  Nominal damages are adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered by him.[18]  It is an established rule that nominal damages cannot co-exist with compensatory damages.[19]

WHEREFORE, the assailed decision of the appellate court is AFFIRMED with MODIFICATION but only in that (a) the award of nominal damages is DELETED and (b) petitioner Rodolfo Roman is absolved from liability.  No costs.

SO ORDERED.

Davide, Jr., C.J., (Chairman), Ynares-Santiago, Carpio and Azcuna, JJ., concur.