common carriers transpo

7/28/2019 Common Carriers Transpo

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EN BANC

G.R. No. L-15122 March 10, 1920

THE UNITED STATES, plaintiff-appellee,vs.TAN PIACO, VENTURA ESTUYA, PEDRO HOMERES, MAXIMINO GALSA and EMILIOLEOPANDO, defendants.TAN PIACO, appellant.

Recaredo Ma. Calvo for appellant.Attorney-General Paredes for appellee.

JOHNSON, J. :

Said defendants were charged with a violation of the Public Utility Law (Act No. 2307 asamended by Acts Nos. 2362 and 2694), in that they were operating a public utility withoutpermission from the Public Utility Commissioner.

Upon the complain presented each of said defendants were arrested and brought to trial.After hearing the evidence the Honorable Cayetano Lukban, judge, found that the evidencewas insufficient to support the charges against Ventura Estuya, Pedro Homeres, MaximinoGalsa and Emilio Leopando, and absolved them from all liability under the complaint anddischarged them from all liability under the complaint and discharged them from the custodyof the law. The lower court found the defendant Tan Piaco guilty of the crime charged in thecomplaint and sentence him to pay a fine of P100, and, in case of insolvency, to suffersubsidiary imprisonment, and to pay one-fifth part of the costs. From that sentence Tan Piacoappealed to this court.

The facts proved during the trial of the cause may be stated as follows:

The appellant rented two automobile trucks and was using them upon the highways of theProvince of Leyte for the purpose of carrying some passengers and freight; that he carriedpassengers and freight under a special contract in each case; that he had not held himselfout to carry all passengers and all freight for all persons who might offer passengers andfreight.

The Attorney-General, in a carefully prepared brief, says: "The question is whether theappellant, under the above facts, was a public utilityunder the foregoing definitions," and wastherefore subject to the control and regulation of the Public Utility Commission. "We have notfound anything in the evidence showing that the appellant operated the trucks in question forpublic use. These trucks, so far as indicated by the evidence and as far as the appellant isconcerned, furnished service under special agreements to carry particular persons and

property. . . . For all that we can deduce from the evidence, these passengers, or the ownersof the freight, may have controlled the whole vehicles 'both as to content, direction, and timeof use,' which facts, under all the circumstances of the case, would, in our opinion, take awaythe defendant's business from the provisions of the Public Utility Act."

In support of the conclusion of the Attorney-General, he cites the case ofTerminal TaxicabCo. vs. Kutz(241 U. S.. 252). In that case the Terminal Taxicab Co. furnished automobilesfrom its central garage on special orders and did not hold itself out to accommodate any and

all persons. The plaintiff reserve to itself the right to refuse service. The Supreme Court of the

United States, speaking through Mr. Justice Holmes, said: "The bargains made by the plaintiffare individual, and however much they may tend towards uniformity in price, probably havenot the mechanical fixity of charges that attend the use of taxicabs from the stations to thehotels. The court is of the opinion that that part of the business is not to be regarded as apublic utility. It is true that all business, and for the matter of that, every life in all its details,has a public aspect, some bearing upon the welfare of the country in which it is passed." Thecourt held that by virtue of the fact that said company did not hold itself out to serve any andall persons, it was not a public utility and was not subject to the jurisdiction of the public utilitycommission.

Upon the facts adduced during the trial of the cause, and for the foregoing reasons, theAttorney-General recommends that the sentence of the lower court be revoked and that theappellant be absolved from all liability under the complaint.

Section 14 of Act No. 2307, as amended by section 9 of Act No. 2694, provides that: "ThePublic Utility Commission or Commissioners shall have general supervision and regulation of,

jurisdiction and control over, all public utilities. . . . The term 'public utility' is hereby defined toinclude every individual, copartnership, association, corporation or joint stock company, etc.,etc., that now or hereafter may own, operate, managed, or control any common carrier,railroad, street railway, etc., etc., engaged in the transportation of passengers, cargo, etc.,etc., for public use."

Under the provisions of said section, two things are necessary: (a) The individual,copartnership, etc., etc., must be a public utility; and (b) the business in which such

individual, copartnership, etc. etc., is engaged must be for public use. So long as theindividual or copartnership, etc., etc., is engaged in a purely private enterprise, withoutattempting to render service to all who may apply, he can in no sense be considered a publicutility, for public use.

"Public use" means the same as "use by the public." The essential feature of the public use isthat it is not confined to privilege individuals, but is open to the indefinite public. It is thisindefinite or unrestricted quality that gives it its public character. In determining whether a useis public, we must look not only the character of the business to be done, but also to theproposed mode of doing it. If the use is merely optional with the owners, or the public benefitis merely incidental, it is not a public use, authorizing the exercise of the jurisdiction of thepublic utility commission. There must be, in general, a right which the law compels the powerto give to the general public. It is not enough that the general prosperity of the public ispromoted. Public use is not synonymous with public interest. The true criterion by which to

judge of the character of the use is whether the public may enjoy it by rightor only by

permission.

For all of the foregoing reasons, we agree with the Attorney-General that the appellant wasnot operating a public utility, for public use, and was not, therefore, subject to the jurisdictionof the Public Utility Commission.

Therefore, the sentence of the lower court is hereby revoked, and it is hereby ordered anddecreed that the complaint be dismissed and that the defendant be absolved from all liabilityunder the same, and that he be discharged from the custody of the law, without any findingas to costs. So ordered.

Arellano, C.J., Torres, Araullo, Street, Malcolm and Avancea, JJ., concur.


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EN BANC

G.R. No. L-25599 April 4, 1968

HOME INSURANCE COMPANY, plaintiff-appellee,vs.AMERICAN STEAMSHIP AGENCIES, INC. and LUZON STEVEDORING CORPORATION,defendants,AMERICAN STEAMSHIP AGENCIES, INC., defendant-appellant.

William H. Quasha and Associates for plaintiff-appellee.Ross, Selph, Salcedo and Associates for defendant-appellant.

BENGZON, J.P., J .:

"Consorcio Pesquero del Peru of South America" shipped freight pre-paid at Chimbate, Peru,21,740 jute bags of Peruvian fish meal through SS Crowborough, covered by clean bills oflading Numbers 1 and 2, both dated January 17, 1963. The cargo, consigned to San MiguelBrewery, Inc., now San Miguel Corporation, and insured by Home Insurance Company for$202,505, arrived in Manila on March 7, 1963 and was discharged into the lighters of LuzonStevedoring Company. When the cargo was delivered to consignee San Miguel Brewery Inc.,there were shortages amounting to P12,033.85, causing the latter to lay claims against LuzonStevedoring Corporation, Home Insurance Company and the American Steamship Agencies,

owner and operator of SS Crowborough.

Because the others denied liability, Home Insurance Company paid the consigneeP14,870.71 the insurance value of the loss, as full settlement of the claim. Having beenrefused reimbursement by both the Luzon Stevedoring Corporation and American Steamship

Agencies, Home Insurance Company, as subrogee to the consignee, filed against them onMarch 6, 1964 before the Court of First Instance of Manila a complaint for recovery ofP14,870.71 with legal interest, plus attorney's fees.

In answer, Luzon Stevedoring Corporation alleged that it delivered with due diligence thegoods in the same quantity and quality that it had received the same from the carrier. It alsoclaimed that plaintiff's claim had prescribed under Article 366 of the Code of Commercestating that the claim must be made within 24 hours from receipt of the cargo.

American Steamship Agencies denied liability by alleging that under the provisions of theCharter party referred to in the bills of lading, the charterer, not the shipowner, wasresponsible for any loss or damage of the cargo. Furthermore, it claimed to have exerciseddue diligence in stowing the goods and that as a mere forwarding agent, it was notresponsible for losses or damages to the cargo.

On November 17, 1965, the Court of First Instance, after trial, absolved Luzon StevedoringCorporation, having found the latter to have merely delivered what it received from the carrierin the same condition and quality, and ordered American Steamship Agencies to pay plaintiffP14,870.71 with legal interest plus P1,000 attorney's fees. Said court cited the followinggrounds:

(a) The non-liability claim of American Steamship Agencies under the charter partycontract is not tenable because Article 587 of the Code of Commerce makes the

ship agent also civilly liable for damages in favor of third persons due to theconduct of the captain of the carrier;

(b) The stipulation in the charter party contract exempting the owner from liability isagainst public policy under Article 1744 of the Civil Code;

(c) In case of loss, destruction or deterioration of goods, common carriers arepresumed at fault or negligent under Article 1735 of the Civil Code unless theyprove extraordinary diligence, and they cannot by contract exempt themselves fromliability resulting from their negligence or that of their servants; and

(d) When goods are delivered to the carrier in good order and the same are in badorder at the place of destination, the carrier is prima facie liable.

Disagreeing with such judgment, American Steamship Agencies appealed directly to Us. Theappeal brings forth for determination this legal issue: Is the stipulation in the charter party ofthe owner's non-liability valid so as to absolve the American Steamship Agencies from liabilityfor loss?

The bills of lading,1 covering the shipment of Peruvian fish meal provide at the back thereofthat the bills of lading shall be governed by and subject to the terms and conditions of thecharter party, if any, otherwise, the bills of lading prevail over all the agreements.

2On the of

the bills are stamped "Freight prepaid as per charter party. Subject to all terms, conditions

and exceptions of charter party dated London, Dec. 13, 1962."

A perusal of the charter party3

referred to shows that while the possession and control of theship were not entirely transferred to the charterer,

4the vessel was chartered to its full and

complete capacity (Exh. 3). Furthermore, the, charter had the option to go north or south orvice-versa,5 loading, stowing and discharging at its risk and expense.6 Accordingly, thecharter party contract is one of affreightment over the whole vessel rather than a demise. Assuch, the liability of the shipowner for acts or negligence of its captain and crew, wouldremain in the absence of stipulation.

Section 2, paragraph 2 of the charter party, provides that the owner is liable for loss ordamage to the goods caused by personal want of due diligence on its part or its manager tomake the vessel in all respects seaworthy and to secure that she be properly manned,equipped and supplied or by the personal act or default of the owner or its manager. Said

paragraph, however, exempts the owner of the vessel from any loss or damage or delayarising from any other source, even from the neglect or fault of the captain or crew or someother person employed by the owner on board, for whose acts the owner would ordinarily beliable except for said paragraph..

Regarding the stipulation, the Court of First Instance declared the contract as contrary toArticle 587 of the Code of Commerce making the ship agent civilly liable for indemnitiessuffered by third persons arising from acts or omissions of the captain in the care of thegoods and Article 1744 of the Civil Code under which a stipulation between the commoncarrier and the shipper or owner limiting the liability of the former for loss or destruction of thegoods to a degree less than extraordinary diligence is valid provided it be reasonable, justand not contrary to public policy. The release from liability in this case was held unreasonableand contrary to the public policy on common carriers.

The provisions of our Civil Code on common carriers were taken from Anglo-American law.

7

Under American jurisprudence, a common carrier undertaking to carry a special cargo or


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chartered to a special person only, becomes a private carrier.8 As a private carrier, astipulation exempting the owner from liability for the negligence of its agent is not againstpublic policy,9 and is deemed valid.

Such doctrine We find reasonable. The Civil Code provisions on common carriers should notbe applied where the carrier is not acting as such but as a private carrier. The stipulation inthe charter party absolving the owner from liability for loss due to the negligence of its agentwould be void only if the strict public policy governing common carriers is applied. Such policyhas no force where the public at large is not involved, as in the case of a ship totallychartered for the use of a single party.

And furthermore, in a charter of the entire vessel, the bill of lading issued by the master to thecharterer, as shipper, is in fact and legal contemplation merely a receipt and a document oftitle not a contract, for the contract is the charter party.10 The consignee may not claimignorance of said charter party because the bills of lading expressly referred to the same.

Accordingly, the consignees under the bills of lading must likewise abide by the terms of thecharter party. And as stated, recovery cannot be had thereunder, for loss or damage to thecargo, against the shipowners, unless the same is due to personal acts or negligence of saidowner or its manager, as distinguished from its other agents or employees. In this case, nosuch personal act or negligence has been proved.

WHEREFORE, the judgment appealed from is hereby reversed and appellant is absolvedfrom liability to plaintiff. No costs. So ordered.


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THIRD DIVISION

G.R. No. L-47822 December 22, 1988

PEDRO DE GUZMAN, petitioner,vs.COURT OF APPEALS and ERNESTO CENDANA, respondents.

Vicente D. Millora for petitioner.

Jacinto Callanta for private respondent.

FELICIANO, J .:

Respondent Ernesto Cendana, a junk dealer, was engaged in buying up used bottles andscrap metal in Pangasinan. Upon gathering sufficient quantities of such scrap material,respondent would bring such material to Manila for resale. He utilized two (2) six-wheelertrucks which he owned for hauling the material to Manila. On the return trip to Pangasinan,respondent would load his vehicles with cargo which various merchants wanted delivered todiffering establishments in Pangasinan. For that service, respondent charged freight rates

which were commonly lower than regular commercial rates.

Sometime in November 1970, petitioner Pedro de Guzman a merchant and authorized dealerof General Milk Company (Philippines), Inc. in Urdaneta, Pangasinan, contracted withrespondent for the hauling of 750 cartons of Liberty filled milk from a warehouse of GeneralMilk in Makati, Rizal, to petitioner's establishment in Urdaneta on or before 4 December 1970.

Accordingly, on 1 December 1970, respondent loaded in Makati the merchandise on to histrucks: 150 cartons were loaded on a truck driven by respondent himself, while 600 cartonswere placed on board the other truck which was driven by Manuel Estrada, respondent'sdriver and employee.

Only 150 boxes of Liberty filled milk were delivered to petitioner. The other 600 boxes neverreached petitioner, since the truck which carried these boxes was hijacked somewhere alongthe MacArthur Highway in Paniqui, Tarlac, by armed men who took with them the truck, its

driver, his helper and the cargo.

On 6 January 1971, petitioner commenced action against private respondent in the Court ofFirst Instance of Pangasinan, demanding payment of P 22,150.00, the claimed value of thelost merchandise, plus damages and attorney's fees. Petitioner argued that privaterespondent, being a common carrier, and having failed to exercise the extraordinary diligencerequired of him by the law, should be held liable for the value of the undelivered goods.

In his Answer, private respondent denied that he was a common carrier and argued that hecould not be held responsible for the value of the lost goods, such loss having been due toforce majeure.

On 10 December 1975, the trial court rendered a Decision1

finding private respondent to bea common carrier and holding him liable for the value of the undelivered goods (P 22,150.00)

as well as for P 4,000.00 as damages and P 2,000.00 as attorney's fees.

On appeal before the Court of Appeals, respondent urged that the trial court had erred inconsidering him a common carrier; in finding that he had habitually offered trucking servicesto the public; in not exempting him from liability on the ground offorce majeure; and inordering him to pay damages and attorney's fees.

The Court of Appeals reversed the judgment of the trial court and held that respondent hadbeen engaged in transporting return loads of freight "as a casualoccupation a sideline to his scrap i ron business" and not as a common carrier. Petitionercame to this Court by way of a Petition for Review assigning as errors the followingconclusions of the Court of Appeals:

1. that private respondent was not a common carrier;

2. that the hijacking of respondent's truck was force majeure; and

3. that respondent was not liable for the value of the undelivered cargo.(Rollo, p. 111)

We consider first the issue of whether or not private respondent Ernesto Cendana may,under the facts earlier set forth, be properly characterized as a common carrier.

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

Article 1732. Common carriers are persons, corporations, firms orassociations engaged in the business of carrying or transportingpassengers 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 principalbusiness activity is thecarrying of persons or goods or both, and one who does such carrying only as an ancillaryactivity (in local Idiom as "a sideline"). Article 1732 also carefully avoids making anydistinction between a person or enterprise offering transportation service on a regular orscheduled basis and one offering such service on an occasional, episodic or unscheduledbasis. 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 orsolicits business only from a narrow segment of the general population. We think that Article1733 deliberaom making such distinctions.

So understood, the concept of "common carrier" under Article 1732 may be seen to coincideneatly with the notion of "public service," under the Public Service Act (Commonwealth ActNo. 1416, as amended) which at least partially supplements the law on common carriers setforth in the Civil Code. Under Section 13, paragraph (b) of the Public Service Act, "publicservice" includes:

... every person that now or hereafter may own, operate, manage, orcontrol in the Philippines, for hire or compensation, with general orlimited clientele, whether permanent, occasional or accidental, and donefor general business purposes, any common carrier, railroad, streetrailway, traction railway, subway motor vehicle, either for freight orpassenger, or both, with or without fixed route and whatever may be itsclassification, freight or carrier service of any class, express service,

steamboat, or steamship line, pontines, ferries and water craft, engaged


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in the transportation of passengers or freight or both, shipyard, marinerepair shop, wharf or dock, ice plant,ice-refrigeration plant, canal, irrigation system, gas, electric light, heatand power, water supply and power petroleum, sewerage system, wireor wireless communications systems, wire or wireless broadcastingstations and other similar public services. ... (Emphasis supplied)

It appears to the Court that private respondent is properly characterized as a common carriereven though he merely "back-hauled" goods for other merchants from Manila to Pangasinan,although such back-hauling was done on a periodic or occasional rather than regular or

scheduled manner, and even though private respondent'sprincipaloccupation was not thecarriage of goods for others. There is no dispute that private respondent charged hiscustomers a fee for hauling their goods; that fee frequently fell below commercial freight ratesis not relevant here.

The Court of Appeals referred to the fact that private respondent held no certificate of publicconvenience, and concluded he was not a common carrier. This is palpable error. Acertificate of public convenience is not a requisite for the incurring of liability under the CivilCode provisions governing common carriers. That liability arises the moment a person or firmacts as a common carrier, without regard to whether or not such carrier has also compliedwith the requirements of the applicable regulatory statute and implementing regulations andhas been granted a certificate of public convenience or other franchise. To exempt privaterespondent from the liabilities of a common carrier because he has not secured thenecessary certificate of public convenience, would be offensive to sound public policy; thatwould be to reward private respondent precisely for failing to comply with applicable statutory

requirements. The business of a common carrier impinges directly and intimately upon thesafety and well being and property of those members of the general community who happento deal with such carrier. The law imposes duties and liabilities upon common carriers for thesafety and protection of those who utilize their services and the law cannot allow a commoncarrier to render such duties and liabilities merely facultative by simply failing to obtain thenecessary permits and authorizations.

We turn then to the liability of private respondent as a common carrier.

Common carriers, "by the nature of their business and for reasons of public policy" 2 are heldto a very high degree of care and diligence ("extraordinary diligence") in the carriage of goodsas well as of passengers. The specific import of extraordinary diligence in the care of goodstransported by a common carrier is, according to Article 1733, "further expressed in Articles1734,1735 and 1745, numbers 5, 6 and 7" of the Civil Code.

Article 1734 establishes the general rule that common carriers are responsible for the loss,destruction or deterioration of the goods which they carry, "unless the same is due to any ofthe following causes only:

(1) Flood, storm, earthquake, lightning or othernatural disaster or calamity;(2) Act of the public enemy in war, whetherinternational or civil;(3) Act or omission of the shipper or owner of thegoods;(4) The character-of the goods or defects in thepacking or-in the containers; and(5) Order or act of competent public authority.

It is important to point out that the above list of causes of loss, destruction or deteriorationwhich exempt the common carrier for responsibility therefor, is a closed l ist. Causes fallingoutside the foregoing list, even if they appear to constitute a species of force majeure fallwithin the scope of Article 1735, which provides as follows:

In all cases other than those mentioned in numbers 1, 2, 3, 4 and 5 ofthe preceding article, if the goods are lost, destroyed or deteriorated,common carriers are presumed to have been at fault or to have actednegligently, unless they prove that they observed extraordinary diligence as required in Article 1733. (Emphasis supplied)

Applying the above-quoted Articles 1734 and 1735, we note firstly that the specific causealleged in the instant case the hijacking of the carrier's truck does not fall within any ofthe five (5) categories of exempting causes listed in Article 1734. It would follow, therefore,that the hijacking of the carrier's vehicle must be dealt with under the provisions of Article1735, in other words, that the private respondent as common carrier is presumed to havebeen at fault or to have acted negligently. This presumption, however, may be overthrown byproof of extraordinary diligence on the part of private respondent.

Petitioner insists that private respondent had not observed extraordinary diligence in the careof petitioner's goods. Petitioner argues that in the circumstances of this case, privaterespondent should have hired a security guard presumably to ride with the truck carrying the600 cartons of Liberty filled milk. We do not believe, however, that in the instant case, thestandard of extraordinary diligence required private respondent to retain a security guard to

ride with the truck and to engage brigands in a firelight at the risk of his own life and the livesof the driver and his helper.

The precise issue that we address here relates to the specific requirements of the duty ofextraordinary diligence in the vigilance over the goods carried in the specific context ofhijacking or armed robbery.

As noted earlier, the duty of extraordinary diligence in the vigilance over goods is, underArticle 1733, given additional specification not only by Articles 1734 and 1735 but also byArticle 1745, numbers 4, 5 and 6, Article 1745 provides in relevant part:

Any of the following or similar stipulations shall be consideredunreasonable, unjust and contrary to public policy:

xxx xxx xxx

(5) that the common carrier shall not be responsiblefor the acts or omissions of his or its employees;

(6) that the common carrier's liability for actscommitted by thieves, or of robbers who do notactwith grave or irresistible threat, violence or force, isdispensed with or diminished; and

(7) that the common carrier shall not responsible forthe loss, destruction or deterioration of goods onaccount of the defective condition of the car vehicle,


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ship, airplane or other equipment used in thecontract of carriage. (Emphasis supplied)

Under Article 1745 (6) above, a common carrier is held responsible and will not be allowedto divest or to diminish such responsibility even for acts of strangers like thieves orrobbers, exceptwhere such thieves or robbers in fact acted "with grave or irresistible threat,violence or force." We believe and so hold that the limits of the duty of extraordinary diligencein the vigilance over the goods carried are reached where the goods are lost as a result of arobbery which is attended by "grave or irresistible threat, violence or force."

In the instant case, armed men held up the second truck owned by private respondent whichcarried petitioner's cargo. The record shows that an information for robbery in band was filedin the Court of First Instance of Tarlac, Branch 2, in Criminal Case No. 198 entitled "People ofthe Philippines v. Felipe Boncorno, Napoleon Presno, Armando Mesina, Oscar Oria and oneJohn Doe." There, the accused were charged with willfully and unlawfully taking and carryingaway with them the second truck, driven by Manuel Estrada and loaded with the 600 cartonsof Liberty filled milk destined for delivery at petitioner's store in Urdaneta, Pangasinan. Thedecision of the trial court shows that the accused acted with grave, if not irresistible, threat,violence or force.

3Three (3) of the five (5) hold-uppers were armed with firearms. The

robbers not only took away the truck and its cargo but also kidnapped the driver and hishelper, detaining them for several days and later releasing them in another province (inZambales). The hijacked truck was subsequently found by the police in Quezon City. TheCourt of First Instance convicted all the accused of robbery, though not of robbery in band.4

In these circumstances, we hold that the occurrence of the loss must reasonably be regardedas quite beyond the control of the common carrier and properly regarded as a fortuitousevent. It is necessary to recall that even common carriers are not made absolute insurersagainst all risks of travel and of transport of goods, and are not held liable for acts or eventswhich cannot be foreseen or are inevitable, provided that they shall have complied with therigorous standard of extraordinary diligence.

We, therefore, agree with the result reached by the Court of Appeals that private respondentCendana is not liable for the value of the undelivered merchandise which was lost because ofan event entirely beyond private respondent's control.

ACCORDINGLY, the Petition for Review on certiorari is hereby DENIED and the Decision ofthe Court of Appeals dated 3 August 1977 is AFFIRMED. No pronouncement as to costs.

SO ORDERED.


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FIRST DIVISION

G.R. No. 101503 September 15, 1993

PLANTERS PRODUCTS, INC., petitioner,vs.COURT OF APPEALS, SORIAMONT STEAMSHIP AGENCIES AND KYOSEI KISEN

KABUSHIKI KAISHA, respondents.

Gonzales, Sinense, Jimenez & Associates for petitioner.

Siguion Reyna, Montecillo & Ongsiako Law Office for private respondents.

BELLOSILLO, J .:

Does a charter-party 1 between a shipowner and a charterer transform a common carrier intoa private one as to negate the civil law presumption of negligence in case of loss or damageto its cargo?

Planters Products, Inc. (PPI), purchased from Mitsubishi International Corporation(MITSUBISHI) of New York, U.S.A., 9,329.7069 metric tons (M/T) of Urea 46% fertilizerwhich the latter shipped in bulk on 16 June 1974 aboard the cargo vessel M/V "Sun Plum"owned by private respondent Kyosei Kisen Kabushiki Kaisha (KKKK) from Kenai, Alaska,U.S.A., to Poro Point, San Fernando, La Union, Philippines, as evidenced by Bill of LadingNo. KP-1 signed by the master of the vessel and issued on the date of departure.

On 17 May 1974, or prior to its voyage, a time charter-party on the vessel M/V "Sun Plum"pursuant to the Uniform General Charter

2was entered into between Mitsubishi as

shipper/charterer and KKKK as shipowner, in Tokyo, Japan.3

Riders to the aforesaid charter-party starting from par. 16 to 40 were attached to the pre-printed agreement. Addenda Nos.1, 2, 3 and 4 to the charter-party were also subsequently entered into on the 18th, 20th, 21stand 27th of May 1974, respectively.

Before loading the fertilizer aboard the vessel, four (4) of her holds4

were all presumablyinspected by the charterer's representative and found fit to take a load of urea in bulkpursuant to par. 16 of the charter-party which reads:

16. . . . At loading port, notice of readiness to be accomplished bycertificate from National Cargo Bureau inspector or substitute appointedby charterers for his account certifying the vessel's readiness to receivecargo spaces. The vessel's hold to be properly swept, cleaned and driedat the vessel's expense and the vessel to be presented clean for use inbulk to the satisfaction of the inspector before daytime commences.(emphasis supplied)

After the Urea fertilizer was loaded in bulk by stevedores hired by and under the supervisionof the shipper, the steel hatches were closed with heavy iron lids, covered with three (3)

layers of tarpaulin, then tied with steel bonds. The hatches remained closed and tightlysealed throughout the entire voyage. 5

Upon arrival of the vessel at her port of call on 3 July 1974, the steel pontoon hatches wereopened with the use of the vessel's boom. Petitioner unloaded the cargo from the holds intoits steelbodied dump trucks which were parked alongside the berth, using metal scoopsattached to the ship, pursuant to the terms and conditions of the charter-partly (whichprovided for an F.I.O.S. clause).

6The hatches remained open throughout the duration of the

discharge.7

Each time a dump truck was fil led up, its load of Urea was covered with tarpaulin before itwas transported to the consignee's warehouse located some fifty (50) meters from the wharf.Midway to the warehouse, the trucks were made to pass through a weighing scale wherethey were individually weighed for the purpose of ascertaining the net weight of the cargo.The port area was windy, certain portions of the route to the warehouse were sandy and theweather was variable, raining occasionally while the discharge was in progress. 8 Thepetitioner's warehouse was made of corrugated galvanized iron (GI) sheets, with an openingat the front where the dump trucks entered and unloaded the fertilizer on the warehouse floor.Tarpaulins and GI sheets were placed in-between and alongside the trucks to containspillages of the ferilizer. 9

It took eleven (11) days for PPI to unload the cargo, from 5 July to 18 July 1974 (except July12th, 14th and 18th).

10A private marine and cargo surveyor, Cargo Superintendents

Company Inc. (CSCI), was hired by PPI to determine the "outturn" of the cargo shipped, by

taking draft readings of the vessel prior to and after discharge.

11

The survey report submittedby CSCI to the consignee (PPI) dated 19 July 1974 revealed a shortage in the cargo of106.726 M/T and that a portion of the Urea fertilizer approximating 18 M/T was contaminatedwith dirt. The same results were contained in a Certificate of Shortage/Damaged Cargo dated18 July 1974 prepared by PPI which showed that the cargo delivered was indeed short of94.839 M/T and about 23 M/T were rendered unfit for commerce, having been polluted withsand, rust anddirt.

12

Consequently, PPI sent a claim letter dated 18 December 1974 to Soriamont SteamshipAgencies (SSA), the resident agent of the carrier, KKKK, for P245,969.31 representing thecost of the alleged shortage in the goods shipped and the diminution in value of that portionsaid to have been contaminated with dirt. 13

Respondent SSA explained that they were not able to respond to the consignee's claim forpayment because, according to them, what they received was just a request for shortlandedcertificate and not a formal claim, and that this "request" was denied by them because they"had nothing to do with the discharge of the shipment." 14 Hence, on 18 July 1975, PPI filedan action for damages with the Court of First Instance of Manila. The defendant carrierargued that the strict public policy governing common carriers does not apply to thembecause they have become private carriers by reason of the provisions of the charter-party.The court a quo however sustained the claim of the plaintiff against the defendant carrier forthe value of the goods lost or damaged when it ruled thus: 15

. . . Prescinding from the provision of the law that a common carrier ispresumed negligent in case of loss or damage of the goods it contractsto transport, all that a shipper has to do in a suit to recover for loss ordamage is to show receipt by the carrier of the goods and to delivery byit of less than what it received. After that, the burden of proving that the

loss or damage was due to any of the causes which exempt him from


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liability is shipted to the carrier, common or private he may be. Even ifthe provisions of the charter-party aforequoted are deemed valid, and thedefendants considered private carriers, it was still incumbent upon themto prove that the shortage or contamination sustained by the cargo isattributable to the fault or negligence on the part of the shipper orconsignee in the loading, stowing, trimming and discharge of the cargo.This they failed to do. By this omission, coupled with their failure todestroy the presumption of negligence against them, the defendants areliable (emphasis supplied).

On appeal, respondent Court of Appeals reversed the lower court and absolved the carrierfrom liability for the value of the cargo that was lost or damaged. 16 Relying on the 1968 caseofHome Insurance Co. v. American Steamship Agencies, Inc.,

17the appellate court ruled

that the cargo vessel M/V "Sun Plum" owned by private respondent KKKK was a privatecarrier and not a common carrier by reason of the time charterer-party. Accordingly, the CivilCode provisions on common carriers which set forth a presumption of negligence do not findapplication in the case at bar. Thus

. . . In the absence of such presumption, it was incumbent upon theplaintiff-appellee to adduce sufficient evidence to prove the negligence ofthe defendant carrieras alleged in its complaint. It is an old and wellsettled rule that if the plaintiff, upon whom rests the burden of proving hiscause of action, fails to show in a satisfactory manner the facts uponwhich he bases his claim, the defendant is under no obligation to provehis exception or defense (Moran, Commentaries on the Rules of Court,

Volume 6, p. 2, citing Belen v. Belen, 13 Phil. 202).

But, the record shows that the plaintiff-appellee dismally failed to provethe basis of its cause of action, i.e. the alleged negligence of defendantcarrier. It appears that the plaintiff was under the impression that it didnot have to establish defendant's negligence. Be that as it may, contraryto the trial court's finding, the record of the instant case discloses ampleevidence showing that defendant carrier was not negligent in performingits obligation . . .

18(emphasis supplied).

Petitioner PPI appeals to us by way of a petition for review assailing the decision of the Courtof Appeals. Petitioner theorizes that the Home Insurance case has no bearing on the presentcontroversy because the issue raised therein is the validity of a stipulation in the charter-partydelimiting the liability of the shipowner for loss or damage to goods cause by want of due

deligence on its part or that of its manager to make the vessel seaworthy in all respects, andnot whether the presumption of negligence provided under the Civil Code applies only tocommon carriers and not to private carriers. 19 Petitioner further argues that since thepossession and control of the vessel remain with the shipowner, absent any stipulation to thecontrary, such shipowner should made liable for the negligence of the captain and crew. Infine, PPI faults the appellate court in not applying the presumption of negligence againstrespondent carrier, and instead shifting the onus probandion the shipper to show want of duedeligence on the part of the carrier, when he was not even at hand to witness what transpiredduring the entire voyage.

As earlier stated, the primordial issue here is whether a common carrier becomes a privatecarrier by reason of a charter-party; in the negative, whether the shipowner in the instantcase was able to prove that he had exercised that degree of diligence required of him underthe law.

It is said that etymology is the basis of reliable judicial decisions in commercial cases. Thisbeing so, we find it fitting to first define important terms which are relevant to our discussion.

A "charter-party" is defined as a contract by which an entire ship, or some principal partthereof, is let by the owner to another person for a specified time or use;

20a contract of

affreightment by which the owner of a ship or other vessel lets the whole or a part of her to amerchant or other person for the conveyance of goods, on a particular voyage, inconsideration of the payment of freight;

21Charter parties are of two types: (a) contract of

affreightment which involves the use of shipping space on vessels leased by the owner inpart or as a whole, to carry goods for others; and, (b) charter by demise or bareboat charter,

by the terms of which the whole vessel is let to the charterer with a transfer to him of its entirecommand and possession and consequent control over its navigation, including the masterand the crew, who are his servants. Contract of affreightment may either be time charter,wherein the vessel is leased to the charterer for a fixed period of time, or voyage charter,wherein the ship is leased for a single voyage. 22 In both cases, the charter-party provides forthe hire of vessel only, either for a determinate period of time or for a single or consecutivevoyage, the shipowner to supply the ship's stores, pay for the wages of the master and thecrew, and defray the expenses for the maintenance of the ship.

Upon the other hand, the term "common or public carrier" is defined in Art. 1732 of the CivilCode. 23 The definition extends to carriers either by land, air or water which hold themselvesout as ready to engage in carrying goods or transporting passengers or both forcompensation as a public employment and not as a casual occupation. The distinctionbetween a "common or public carrier" and a "private or special carrier" li es in the character ofthe business, such that if the undertaking is a single transaction, not a part of the general

business or occupation, although involving the carriage of goods for a fee, the person orcorporation offering such service is a private carrier.

24

Article 1733 of the New Civil Code mandates that common carriers, by reason of the natureof their business, should observe extraordinary diligence in the vigilance over the goods theycarry.

25In the case of private carriers, however, the exercise of ordinary diligence in the

carriage of goods will suffice. Moreover, in the case of loss, destruction or deterioration of thegoods, common carriers are presumed to have been at fault or to have acted negligently, andthe burden of proving otherwise rests on them.

26On the contrary, no such presumption

applies to private carriers, for whosoever alleges damage to or deterioration of the goodscarried has the onus of proving that the cause was the negligence of the carrier.

It is not disputed that respondent carrier, in the ordinary course of business, operates as acommon carrier, transporting goods indiscriminately for all persons. When petitioner

chartered the vessel M/V "Sun Plum", the ship captain, its officers and compliment wereunder the employ of the shipowner and therefore continued to be under its direct supervisionand control. Hardly then can we charge the charterer, a stranger to the crew and to the ship,with the duty of caring for his cargo when the charterer did not have any control of the meansin doing so. This is evident in the present case considering that the steering of the ship, themanning of the decks, the determination of the course of the voyage and other technicalincidents of maritime navigation were all consigned to the officers and crew who werescreened, chosen and hired by the shipowner.

27

It is therefore imperative that a public carrier shall remain as such, notwithstanding thecharter of the whole or portion of a vessel by one or more persons, provided the charter islimited to the ship only, as in the case of a time-charter or voyage-charter. It is only when thecharter includes both the vessel and its crew, as in a bareboat or demise that a commoncarrier becomes private, at least insofar as the particular voyage covering the charter-party isconcerned. Indubitably, a shipowner in a time or voyage charter retains possession and


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control of the ship, although her holds may, for the moment, be the property of the charterer.28

Respondent carrier's heavy reliance on the case ofHome Insurance Co. v. AmericanSteamship Agencies, supra, is misplaced for the reason that the meat of the controversytherein was the validity of a stipulation in the charter-party exempting the shipowners fromliability for loss due to the negligence of its agent, and not the effects of a special charter oncommon carriers. At any rate, the rule in the United States that a ship chartered by a singleshipper to carry special cargo is not a common carrier,

29does not find application in our

jurisdiction, for we have observed that the growing concern for safety in the transportation of

passengers and /or carriage of goods by sea requires a more exacting interpretation ofadmiralty laws, more particularly, the rules governing common carriers.

We quote with approval the observations of Raoul Colinvaux, the learned barrister-at-law30

As a matter of principle, it is difficult to find a valid distinction betweencases in which a ship is used to convey the goods of one and of severalpersons. Where the ship herself is let to a charterer, so that he takesover the charge and control of her, the case is different; the shipowner isnot then a carrier. But where her services only are let, the same groundsfor imposing a strict responsibility exist, whether he is employed by oneor many. The master and the crew are in each case his servants, thefreighter in each case is usually without any representative on board the

ship; the same opportunities for fraud or collusion occur; and the samedifficulty in discovering the truth as to what has taken place arises . . .

In an action for recovery of damages against a common carrier on the goods shipped, theshipper or consignee should first prove the fact of shipment and its consequent loss ordamage while the same was in the possession, actual or constructive, of the carrier.Thereafter, the burden of proof shifts to respondent to prove that he has exercisedextraordinary diligence required by law or that the loss, damage or deterioration of the cargowas due to fortuitous event, or some other circumstances inconsistent with its liability.

31

To our mind, respondent carrier has sufficiently overcome, by clear and convincing proof, theprima facie presumption of negligence.

The master of the carrying vessel, Captain Lee Tae Bo, in his deposition taken on 19 April

1977 before the Philippine Consul and Legal Attache in the Philippine Embassy in Tokyo,Japan, testified that before the fertilizer was loaded, the four (4) hatches of the vessel werecleaned, dried and fumigated. After completing the loading of the cargo in bulk in the ship'sholds, the steel pontoon hatches were closed and sealed with iron lids, then covered withthree (3) layers of serviceable tarpaulins which were tied with steel bonds. The hatchesremained close and tightly sealed while the ship was in transit as the weight of the steelcovers made it impossible for a person to open without the use of the ship's boom. 32

It was also shown during the trial that the hull of the vessel was in good condition, foreclosingthe possibility of spillage of the cargo into the sea or seepage of water inside the hull of thevessel. 33 When M/V "Sun Plum" docked at its berthing place, representatives of theconsignee boarded, and in the presence of a representative of the shipowner, the foreman,the stevedores, and a cargo surveyor representing CSCI, opened the hatches and inspectedthe condition of the hull of the vessel. The stevedores unloaded the cargo under the watchfuleyes of the shipmates who were overseeing the whole operation on rotation basis. 34

Verily, the presumption of negligence on the part of the respondent carrier has beenefficaciously overcome by the showing of extraordinary zeal and assiduity exercised by thecarrier in the care of the cargo. This was confirmed by respondent appellate court thus

. . . Be that as it may, contrary to the trial court's finding, the record of theinstant case discloses ample evidence showing that defendant carrierwas not negligent in performing its obligations . Particularly, the followingtestimonies of plaintiff-appellee's own witnesses clearly show absence ofnegligence by the defendant carrier; that the hull of the vessel at the timeof the discharge of the cargo was sealed and nobody could open the

same except in the presence of the owner of the cargo and therepresentatives of the vessel (TSN, 20 July 1977, p. 14); that the coverof the hatches was made of steel and it was overlaid with tarpaulins,three layers of tarpaulins and therefore their contents were protectedfrom the weather (TSN, 5 April 1978, p. 24); and, that to open thesehatches, the seals would have to be broken, all the seals were found tobe intact (TSN, 20 July 1977, pp. 15-16) (emphasis supplied).

The period during which private respondent was to observe the degree of diligence requiredof it as a public carrier began from the time the cargo was unconditionally placed in its chargeafter the vessel's holds were duly inspected and passed scrutiny by the shipper, up to anduntil the vessel reached its destination and its hull was reexamined by the consignee, butprior to unloading. This is clear from the limitation clause agreed upon by the parties in the

Addendum to the standard "GENCON" time charter-party which provided for an F.I.O.S.,meaning, that the loading, stowing, trimming and discharge of the cargo was to be done by

the charterer, free from all risk and expense to the carrier. 35 Moreover, a shipowner is liablefor damage to the cargo resulting from improper stowage only when the stowing is done bystevedores employed by him, and therefore under his control and supervision, not when thesame is done by the consignee or stevedores under the employ of the latter.

36

Article 1734 of the New Civil Code provides that common carriers are not responsible for theloss, destruction or deterioration of the goods if caused by the charterer of the goods ordefects in the packaging or in the containers. The Code of Commerce also provides that alllosses and deterioration which the goods may suffer during the transportation by reason offortuitous event, force majeure, or the inherent defect of the goods, shall be for the accountand risk of the shipper, and that proof of these accidents is incumbent upon the carrier. 37 Thecarrier, nonetheless, shall be liable for the loss and damage resulting from the precedingcauses if it is proved, as against him, that they arose through his negligence or by reason ofhis having failed to take the precautions which usage has established among careful persons.38

Respondent carrier presented a witness who testified on the characteristics of the fertilizershipped and the expected risks of bulk shipping. Mr. Estanislao Chupungco, a chemicalengineer working with Atlas Fertilizer, described Urea as a chemical compound consistingmostly of ammonia and carbon monoxide compounds which are used as fertilizer. Urea alsocontains 46% nitrogen and is highly soluble in water. However, during storage, nitrogen andammonia do not normally evaporate even on a long voyage, provided that the temperatureinside the hull does not exceed eighty (80) degrees centigrade. Mr. Chupungco further addedthat in unloading fertilizer in bulk with the use of a clamped shell, losses due to spillageduring such operation amounting to one percent (1%) against the bill of lading is deemed"normal" or "tolerable." The primary cause of these spillages is the clamped shell which doesnot seal very tightly. Also, the wind tends to blow away some of the materials during theunloading process.


10/39

The dissipation of quantities of fertilizer, or its daterioration in value, is caused either by anextremely high temperature in its place of storage, or when it comes in contact with water.When Urea is drenched in water, either fresh or saline, some of its particles dissolve. But thesalvaged portion which is in liquid form still remains potent and usable although no longersaleable in its original market value.

The probability of the cargo being damaged or getting mixed or contaminated with foreignparticles was made greater by the fact that the fertilizer was transported in "bulk," therebyexposing it to the inimical effects of the elements and the grimy condition of the variouspieces of equipment used in transporting and hauling it.

The evidence of respondent carrier also showed that it was highly improbable for sea waterto seep into the vessel's holds during the voyage since the hull of the vessel was in goodcondition and her hatches were tightly closed and firmly sealed, making the M/V "Sun Plum"in all respects seaworthy to carry the cargo she was chartered for. If there was loss orcontamination of the cargo, it was more likely to have occurred while the same was beingtransported from the ship to the dump trucks and finally to the consignee's warehouse. Thismay be gleaned from the testimony of the marine and cargo surveyor of CSCI whosupervised the unloading. He explained that the 18 M/T of alleged "bar order cargo" ascontained in their report to PPI was just an approximation or estimate made by them afterthefertilizer was discharged from the vessel and segregated from the rest of the cargo.

The Court notes that it was in the month of July when the vessel arrived port and unloadedher cargo. It rained from time to time at the harbor area while the cargo was being discharged

according to the supply officer of PPI, who also testified that it was windy at the waterfrontand along the shoreline where the dump trucks passed enroute to the consignee'swarehouse.

Indeed, we agree with respondent carrier that bulk shipment of highly soluble goods likefertilizer carries with it the risk of loss or damage. More so, with a variable weather conditionprevalent during its unloading, as was the case at bar. This is a risk the shipper or the ownerof the goods has to face. Clearly, respondent carrier has sufficiently proved the inherentcharacter of the goods which makes it highly vulnerable to deterioration; as well as theinadequacy of its packaging which further contributed to the loss. On the other hand, no proofwas adduced by the petitioner showing that the carrier was remise in the exercise of duediligence in order to minimize the loss or damage to the goods it carried.

WHEREFORE, the petition is DISMISSED. The assailed decision of the Court of Appeals,

which reversed the trial court, isAFFIRMED

. Consequently, Civil Case No. 98623 of the thenCourt of the First Instance, now Regional Trial Court, of Manila should be, as it is herebyDISMISSED.

Costs against petitioner.

SO ORDERED.


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SECOND DIVISION

G.R. No. 111127 July 26, 1996

MR. & MRS. ENGRACIO FABRE, JR. and PORFIRIO CABIL, petitioners,vs.COURT OF APPEALS, THE WORD FOR THE WORLD CHRISTIAN FELLOWSHIP, INC.,

AMYLINE ANTONIO, JOHN RICHARDS, GONZALO GONZALES, VICENTE V. QUE, JR.,ICLI CORDOVA, ARLENE GOJOCCO, ALBERTO ROXAS CORDERO, RICHARDBAUTISTA, JOCELYN GARCIA, YOLANDA CORDOVA, NOEL ROQUE, EDWARD TAN,ERNESTO NARCISO, ENRIQUETA LOCSIN, FRANCIS NORMAN O. LOPES, JULIUSCAESAR, GARCIA, ROSARIO MA. V. ORTIZ, MARIETTA C. CLAVO, ELVIE SENIEL,ROSARIO MARA-MARA, TERESITA REGALA, MELINDA TORRES, MARELLA MIJARES,JOSEFA CABATINGAN, MARA NADOC, DIANE MAYO, TESS PLATA, MAYETTEJOCSON, ARLENE Y. MORTIZ, LIZA MAYO, CARLOS RANARIO, ROSAMARIA T.RADOC and BERNADETTE FERRER, respondents.

MENDOZA, J .:p

This is a petition for review on certiorariof the decision of the Court of Appeals 1 in CA-GRNo. 28245, dated September 30, 1992, which affirmed with modification the decision of theRegional Trial Court of Makati, Branch 58, ordering petitioners jointly and severally to paydamages to private respondent Amyline Antonio, and its resolution which denied petitioners'motion for reconsideration for lack of merit.

Petitioners Engracio Fabre, Jr. and his wife were owners of a 1982 model Mazda minibus.They used the bus principally in connection with a bus service for school children which theyoperated in Manila. The couple had a driver, Porfirio J . Cabil, whom they hired in 1981, aftertrying him out for two weeks, His job was to take school children to and from the St.Scholastica's College in Malate, Manila.

On November 2, 1984 private respondent Word for the World Christian Fellowship Inc.(WWCF) arranged with petitioners for the transportation of 33 members of its Young Adults

Ministry from Manila to La Union and back in consideration of which private respondent paidpetitioners the amount of P3,000.00.

The group was scheduled to leave on November 2, 1984, at 5:00 o'clock in the afternoon.However, as several members of the party were late, the bus did not leave the Tropical Hut atthe corner of Ortigas Avenue and EDSA until 8:00 o'clock in the evening. Petitioner PorfirioCabil drove the minibus.

The usual route to Caba, La Union was through Carmen, Pangasinan. However, the bridge atCarmen was under repair, sot hat petitioner Cabil, who was unfamiliar with the area (it beinghis first trip to La Union), was forced to take a detour through the town of Baay in Lingayen,Pangasinan. At 11:30 that night, petitioner Cabil came upon a sharp curve on the highway,running on a south to east direction, which he described as "siete." The road was slipperybecause it was raining, causing the bus, which was running at the speed of 50 kilometers per

hour, to skid to the left road shoulder. The bus hit the left traffic steel brace and sign along the

road and rammed the fence of one Jesus Escano, then turned over and landed on its leftside, coming to a full stop only after a series of impacts. The bus came to rest off the road. Acoconut tree which it had hit fell on it and smashed its front portion.

Several passengers were injured. Private respondent Amyline Antonio was thrown on thefloor of the bus and pinned down by a wooden seat which came down by a wooden seatwhich came off after being unscrewed. It took three persons to safely remove her from thisportion. She was in great pain and could not move.

The driver, petitioner Cabil, claimed he did not see the curve until it was too late. He said he

was not familiar with the area and he could not have seen the curve despite the care he tookin driving the bus, because it was dark and there was no sign on the road. He said that hesaw the curve when he was already within 15 to 30 meters of it. He allegedly slowed down to30 kilometers per hour, but it was too late.

The Lingayen police investigated the incident the next day, November 3, 1984. On the basisof their finding they filed a criminal complaint against the driver, Porfirio Cabil. The case waslater filed with the Lingayen Regional Trial Court. Petitioners Fabre paid Jesus EscanoP1,500.00 for the damage to the latter's fence. On the basis of Escano's affidavit ofdesistance the case against petitioners Fabre was dismissed.

Amyline Antonio, who was seriously injured, brought this case in the RTC of Makati, MetroManila. As a result of the accident, she is now suffering from paraplegia and is permanentlyparalyzed from the waist down. During the trial she described the operations she underwent

and adduced evidence regarding the cost of her treatment and therapy. Immediately after theaccident, she was taken to the Nazareth Hospital in Baay, Lingayen. As this hospital was notadequately equipped, she was transferred to the Sto. Nio Hospital, also in the town of Ba-ay, where she was given sedatives. An x-ray was taken and the damage to her spine wasdetermined to be too severe to be treated there. She was therefore brought to Manila, first tothe Philippine General Hospital and later to the Makati Medical Center where she underwentan operation to correct the dislocation of her spine.

In its decision dated April 17, 1989, the trial court found that:

No convincing evidence was shown that the minibus was properly checked for travel to a longdistance trip and that the driver was properly screened and tested before being admitted foremployment. Indeed, all the evidence presented have shown the negligent act of thedefendants which ultimately resulted to the accident subject of this case.

Accordingly, it gave judgment for private respondents holding:

Considering that plaintiffs Word for the World Christian Fellowship, Inc. and Ms. AmylineAntonio were the only ones who adduced evidence in support of their claim for damages, theCourt is therefore not in a position to award damages to the other plaintiffs.

WHEREFORE, premises considered, the Court hereby renders judgment against defendantsMr. & Mrs. Engracio Fabre, Jr. and Porfirio Cabil y Jamil pursuant to articles 2176 and 2180of the Civil Code of the Philippines and said defendants are ordered to pay jointly andseverally to the plaintiffs the following amount:

1) P93,657.11 as compensatory and actual damages;


12/39

2) P500,000.00 as the reasonable amount of loss of earning capacity ofplaintiff Amyline Antonio;

3) P20,000.00 as moral damages;

4) P20,000.00 as exemplary damages; and

5) 25% of the recoverable amount as attorney's fees;

6) Costs of suit.

SO ORDERED.

The Court of Appeals affirmed the decision of the trial court with respect to Amyline Antoniobut dismissed it with respect to the other plaintiffs on the ground that they failed to prove theirrespective claims. The Court of Appeals modified the award of damages as follows:

1) P93,657.11 as actual damages;

2) P600,000.00 as compensatory damages;


4) P20,000.00 as exemplary damages;

5) P10,000.00 as attorney's fees; and

6) Costs of suit.

The Court of Appeals sustained the trial court's finding that petitioner Cabil failed to exercisedue care and precaution in the operation of his vehicle considering the time and the place ofthe accident. The Court of Appeals held that the Fabres were themselves presumptivelynegligent. Hence, this petition. Petitioners raise the following issues:

I. WHETHER OR NOT PETITIONERS WERENEGLIGENT.

II. WHETHER OF NOT PETITIONERS WERELIABLE FOR THE INJURIES SUFFERED BYPRIVATE RESPONDENTS.

III WHETHER OR NOT DAMAGES CAN BEAWARDED AND IN THE POSITIVE, UP TO WHATEXTENT.

Petitioners challenge the propriety of the award of compensatory damages in the amount ofP600,000.00. It is insisted that, on the assumption that petitioners are liable an award of

P600,000.00 is unconscionable and highly speculative. Amyline Antonio testified that shewas a casual employee of a company called "Suaco," earning P1,650.00 a month, and a

dealer of Avon products, earning an average of P1,000.00 monthly. Petitioners contend thatas casual employees do not have security of tenure, the award of P600,000.00, considering

Amyline Antonio's earnings, is without factual basis as there is no assurance that she wouldbe regularly earning these amounts.

With the exception of the award of damages, the petition is devoid of merit.

First, it is unnecessary for our purpose to determine whether to decide this case on the theorythat petitioners are liable for breach of contract of carriage orculpa contractualor on thetheory ofquasi delictorculpa aquiliana as both the Regional Trial Court and the Court of

Appeals held, for although the relation of passenger and carrier is "contractual both in originand nature," nevertheless "the act that breaks the contract may be also a tort."

2In either

case, the question is whether the bus driver, petitioner Porfirio Cabil, was negligent.

The finding that Cabil drove his bus negligently, while his employer, the Fabres, who ownedthe bus, failed to exercise the diligence of a good father of the family in the selection andsupervision of their employee is fully supported by the evidence on record. These factualfindings of the two courts we regard as final and conclusive, supported as they are by theevidence. Indeed, it was admitted by Cabil that on the night in question, it was raining, and asa consequence, the road was slippery, and it was dark. He averred these facts to justify hisfailure to see that there lay a sharp curve ahead. However, it is undisputed that Cabil drovehis bus at the speed of 50 kilometers per hour and only slowed down when he noticed thecurve some 15 to 30 meters ahead.

3By then it was too late for him to avoid falling off the

road. Given the conditions of the road and considering that the trip was Cabil's first one

outside of Manila, Cabil should have driven his vehicle at a moderate speed. There istestimony4that the vehicles passing on that portion of the road should only be running 20

kilometers per hour, so that at 50 kilometers per hour, Cabil was running at a very highspeed.

Considering the foregoing the fact that it was raining and the road was slippery, that it wasdark, that he drove his bus at 50 kilometers an hour when even on a good day the normalspeed was only 20 kilometers an hour, and that he was unfamiliar with the terrain, Cabil wasgrossly negligent and should be held liable for the injuries suffered by private respondent

Amyline Antonio.

Pursuant to Arts. 2176 and 2180 of the Civil Code his negligence gave rise to thepresumption that his employers, the Fabres, were themselves negligent in the selection andsupervisions of their employee.

Due diligence in selection of employees is not satisfied by finding that the applicantpossessed a professional driver's license. The employer should also examine the applicantfor his qualifications, experience and record of service.

5Due diligence in supervision, on the

other hand, requires the formulation of rules and regulations for the guidance of employeesand issuance of proper instructions as well as actual implementation and monitoring ofconsistent compliance with the rules. 6

In the case at bar, the Fabres, in allowing Cabil to drive the bus to La Union, apparently didnot consider the fact that Cabil had been driving for school children only, from their homes tothe St. Scholastica's College in Metro Manila. 7 They had hired him only after a two-weekapprenticeship. They had hired him only after a two-week apprenticeship. They had testedhim for certain matters, such as whether he could remember the names of the children hewould be taking to school, which were irrelevant to his qualification to drive on a long distancetravel, especially considering that the trip to La Union was his first. The existence of hiring


13/39

procedures and supervisory policies cannot be casually invoked to overturn the presumptionof negligence on the part of an employer. 8

Petitioners argue that they are not liable because (1) an earlier departure (made impossibleby the congregation's delayed meeting) could have a averted the mishap and (2) under thecontract, the WWCF was directly responsible for the conduct of the trip. Neither of thesecontentions hold water. The hour of departure had not been fixed. Even if it had been, thedelay did not bear directly on the cause of the accident. With respect to the secondcontention, it was held in an early case that:

[A] person who hires a public automobile and gives the driver directions as to the place towhich he wishes to be conveyed, but exercises no other control over the conduct of thedriver, is not responsible for acts of negligence of the latter or prevented from recovering forinjuries suffered from a collision between the automobile and a train, caused by thenegligence or the automobile driver.

9

As already stated, this case actually involves a contract of carriage. Petitioners, the Fabres,did not have to be engaged in the business of public transportation for the provisions of theCivil Code on common carriers to apply to them. As this Court has held:

10

Art. 1732. Common carriers are persons, corporations, firms orassociations engaged in the business of carrying or transportingpassengers 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 principalbusiness activity is the carrying of persons or goods or both, and onewho does such carrying only as an ancillary activity (in local idiom, as "asideline"). Article 1732 also carefully avoids making any distinctionbetween a person or enterprise offering transportation service on aregular or scheduled basis and one offering such service on anoccasional, episodic or unscheduled basis. Neither does Article 1732distinguish between a carrier offering its services to the "general public,"i.e., the general community or population, and one who offers services orsolicits business only from a narrow segment of the general population.We think that Article 1732 deliberately refrained from making suchdistinctions.

As common carriers, the Fabres were found to exercise "extraordinarydiligence" for the safe transportation of the passengers to theirdestination. This duty of care is not excused by proof that they exercisethe diligence of a good father of the family in the selection andsupervision of their employee. As Art. 1759 of the Code provides:

Common carriers are liable for the death of or injuries to passengersthrough the negligence or willful acts of the former's employees althoughsuch employees may have acted beyond the scope of their authority orin violation of the orders of the common carriers.

This liability of the common carriers does not cease upon proof that theyexercised all the diligence of a good father of a family in the selectionand supervision of their employees.

The same circumstances detailed above, supporting the finding of the trial court and of theappellate court that petitioners are liable under Arts. 2176 and 2180 forquasi delict, fully

justify findings them guilty of breach of contract of carriage under Arts. 1733, 1755 and 1759of the Civil Code.

Secondly, we sustain the award of damages in favor of Amyline Antonio. However, we thinkthe Court of Appeals erred in increasing the amount of compensatory damages becauseprivate respondents did not question this award as inadequate.

11To the contrary, the award

of P500,000.00 for compensatory damages which the Regional Trial Court made isreasonable considering the contingent nature of her income as a casual employee of a

company and as distributor of beauty products and the fact that the possibility that she mightbe able to work again has not been foreclosed. In fact she testified that one of her previousemployers had expressed willingness to employ her again.

With respect to the other awards, while the decisions of the trial court and the Court ofAppeals do not sufficiently indicate the factual and legal basis for them, we find that they arenevertheless supported by evidence in the records of this case. Viewed as an action forquasidelict, this case falls squarely within the purview of Art. 2219(2) providing for the payment ofmoral damages in cases ofquasi delict. On the theory that petitioners are liable for breach ofcontract of carriage, the award of moral damages is authorized by Art. 1764, in relation to Art.2220, since Cabil's gross negligence amounted to bad faith. 12Amyline Antonio's testimony,as well as the testimonies of her father and copassengers, fully establish the physicalsuffering and mental anguish she endured as a result of the injuries caused by petitioners'negligence.

The award of exemplary damages and attorney's fees was also properly made. However, forthe same reason that it was error for the appellate court to increase the award ofcompensatory damages, we hold that it was also error for it to increase the award of moraldamages and reduce the award of attorney's fees, inasmuch as private respondents, inwhose favor the awards were made, have not appealed. 13

As above stated, the decision of the Court of Appeals can be sustained either on the theoryofquasi delictor on that of breach of contract. The question is whether, as the two courtsbelow held, petitioners, who are the owners and driver of the bus, may be made to respond

jointly and severally to private respondent. We hold that they may be. In Dangwa Trans. Co.Inc. v. Court of Appeals,

14on facts similar to those in this case, this Court held the bus

company and the driver jointly and severally liable for damages for injuries suffered by apassenger. Again, in Bachelor Express, Inc. v. Court of

Appeals15

a driver found negligent in failing to stop the bus in order to let off passengers

when a fellow passenger ran amuck, as a result of which the passengers jumped out of thespeeding bus and suffered injuries, was held also jointly and severally liable with the buscompany to the injured passengers.

The same rule of liability was applied in situations where the negligence of the driver of thebus on which plaintiff was riding concurred with the negligence of a third party who was thedriver of another vehicle, thus causing an accident. In Anuran v. Buo, 16Batangas LagunaTayabas Bus Co. v. Intermediate Appellate Court, 17 and Metro Manila Transit Corporation v.Court of Appeals,

18the bus company, its driver, the operator of the other vehicle and the

driver of the vehicle were jointly and severally held liable to the injured passenger or thelatters' heirs. The basis of this allocation of liability was explained in Viluan v. Court of

Appeals,19

thus:

Nor should it make any difference that the liability of petitioner [bus

owner] springs from contract while that of respondents [owner and driver


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of other vehicle] arises from quasi-delict. As early as 1913, we alreadyruled in Gutierrez vs. Gutierrez, 56 Phil. 177, that in case of injury to apassenger due to the negligence of the driver of the bus on which hewas riding and of the driver of another vehicle, the drivers as well as theowners of the two vehicles are jointly and severally liable for damages.Some members of the Court, though, are of the view that under thecircumstances they are liable on quasi-delict. 20

It is true that in Philippine Rabbit Bus Lines, Inc. v. Court of Appeals21

this Court exoneratedthe jeepney driver from liability to the injured passengers and their families while holding the

owners of the jeepney jointly and severally liable, but that is because that case was expresslytried and decided exclusively on the theory ofculpa contractual. As this Court thereexplained:

The trial court was therefore right in finding that Manalo (the driver) and spouses Manguneand Carreon (the jeepney owners) were negligent. However, its ruling that spouses Manguneand Carreon are jointly and severally liable with Manalo is erroneous. The driver cannot beheld jointly and severally liable with carrier in case of breach of the contract of carriage. Therationale behind this is readily discernible. Firstly, the contract of carriage is between thecarrier is exclusively responsible therefore to the passenger, even if such breach be due tothe negligence of his driver (see Viluan v. The Court of Appeals, et al., G.R. Nos. L-21477-81,

April 29, 1966, 16 SCRA 742).22

As in the case of BLTB, private respondents in this case and her coplaintiffs did not stake out

their claim against the carrier and the driver exclusively on one theory, much less on that ofbreach of contract alone. After all, it was permitted for them to allege alternative causes ofaction and join as many parties as may be liable on such causes of action

23so long as

private respondent and her coplaintiffs do not recover twice for the same injury. What is clearfrom the cases is the intent of the plaintiff there to recover from both the carrier and thedriver, thus, justifying the holding that the carrier and the driver were jointly and severallyliable because their separate and distinct acts concurred to produce the same injury.

WHEREFORE, the decision of the Court of Appeals is AFFIRMED with MODIFICATION as toaward of damages. Petitioners are ORDERED to PAY jointly and severally the privaterespondent Amyline Antonio the following amounts:

1) P93,657.11 as actual damages;

2) P500,000.00 as the reasonable amount of loss of earning capacity of plaintiff AmylineAntonio;


4) P20,000.00 as exemplary damages;

5) 25% of the recoverable amount as attorney's fees; and

6) costs of suit.

SO ORDERED.


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THIRD DIVISION

G.R. No. 115849 January 24, 1996

FIRST PHILIPPINE INTERNATIONAL BANK (Formerly Producers Bank of thePhilippines) and MERCURIO RIVERA, petitioners,vs.COURT OF APPEALS, CARLOS EJERCITO, in substitution of DEMETRIO DEMETRIA,and JOSE JANOLO, respondents.

D E C I S I O N

PANGANIBAN, J.:

In the absence of a formal deed of sale, may commitments given by bank officers in anexchange of letters and/or in a meeting with the buyers constitute a perfected andenforceable contract of sale over 101 hectares of land in Sta. Rosa, Laguna? Does thedoctrine of "apparent authority" apply in this case? If so, may the Central Bank-appointedconservator of Producers Bank (now Fi rst Philippine International Bank) repudiate such"apparent authority" after said contract has been deemed perfected? During the pendency ofa suit for specific performance, does the filing of a "derivative suit" by the majorityshareholders and directors of the distressed bank to prevent the enforcement orimplementation of the sale violate the ban against forum-shopping?

Simply stated, these are the major questions brought before this Court in the instant Petitionfor review on certiorariunder Rule 45 of the Rules of Court, to set aside the Decisionpromulgated January 14, 1994 of the respondent Court of Appeals

1in CA-G.R CV No. 35756

and the Resolution promulgated June 14, 1994 denying the motion for reconsideration. Thedispositive portion of the said Decision reads:

WHEREFORE, the decision of the lower court is MODIFIED by theelimination of the damages awarded under paragraphs 3, 4 and 6 of itsdispositive portion and the reduction of the award in paragraph 5 thereofto P75,000.00, to be assessed against defendant bank. In all otheraspects, said decision is hereby AFFIRMED.

All references to the original plaintiffs in the decision and its dispositive

portion are deemed, herein and hereafter, to legally refer to the plaintiff-appellee Carlos C. Ejercito.

Costs against appellant bank.

The dispositive portion of the trial court's2decision dated July 10, 1991, on the other hand, is

as follows:

WHEREFORE, premises considered, judgment is hereby rendered infavor of the plaintiffs and against the defendants as follows:

1. Declaring the existence of a perfected contract to buy and sell over thesix (6) parcels of land situated at Don Jose, Sta. Rosa, Laguna with an

area of 101 hectares, more or less, covered by and embraced in

Transfer Certificates of Title Nos. T-106932 to T -106937, inclusive, of theLand Records of Laguna, between the plaintiffs as buyers and thedefendant Producers Bank for an agreed price of Five and One HalfMillion (P5,500,000.00) Pesos;

2. Ordering defendant Producers Bank of the Philippines, upon finality ofthis decision and receipt from the plaintiffs the amount of P5.5 Million, toexecute in favor of said plaintiffs a deed of absolute sale over theaforementioned six (6) parcels of land, and to immediately deliver to theplaintiffs the owner's copies of T.C.T. Nos. T -106932 to T- 106937,

inclusive, for purposes of registration of the same deed and transfer ofthe six (6) titles in the names of the plaintiffs;

3. Ordering the defendants, jointly and severally, to pay plaintiffs Jose A.Janolo and Demetrio Demetria the sums of P200,000.00 each in moraldamages;

4. Ordering the defendants, jointly and severally, to pay plaintiffs the sumof P100,000.00 as exemplary damages ;

5. Ordering the defendants, jointly and severally, to pay the plaintiffs theamount of P400,000.00 for and by way of attorney's fees;

6. Ordering the defendants to pay the plaintiffs, jointly and severally,actual and moderate damages in the amount of P20,000.00;

With costs against the defendants.

After the parties filed their comment, reply, rejoinder, sur-rejoinder and reply to sur-rejoinder,the petition was given due course in a Resolution dated January 18, 1995. Thence, theparties filed their respective memoranda and reply memoranda. The First Division transferredthis case to the Third Division per resolution dated October 23, 1995. After carefullydeliberating on the aforesaid submissions, the Court assigned the case to the undersigned

ponente for the writing of this Decision.

The Parties

Petitioner First Philippine International Bank (formerly Producers Bank of the Philippines;petitioner Bank, for brevity) is a banking institution organized and existing under the laws ofthe Republic of the Philippines. Petitioner Mercurio Rivera (petitioner Rivera, for brevity) is oflegal age and was, at all times material to this case, Head-Manager of the PropertyManagement Department of the petitioner Bank.

Respondent Carlos Ejercito (respondent Ejercito, for brevity) is of legal age and is theassignee of original plaintiffs-appellees Demetrio Demetria and Jose Janolo.

Respondent Court of Appeals is the court which issued the Decision and Resolution soughtto be set aside through this petition.

The Facts
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The facts of this case are summarized in the respondent Court's Decision3as follows:

(1) In the course of its banking operations, the defendant Producer Bankof the Philippines acquired six parcels of land with a total area of 101hectares located at Don Jose, Sta. Rose, Laguna, and covered byTransfer Certificates of Title Nos. T-106932 to T-106937. The propertyused to be owned by BYME Investment and Development Corporationwhich had them mortgaged with the bank as collateral for a loan. Theoriginal plaintiffs, Demetrio Demetria and Jose O. Janolo, wanted topurchase the property and thus initiated negotiations for that purpose.

(2) In the early part of August 1987 said plaintiffs, upon the suggestion ofBYME investment's legal counsel, Jose Fajardo, met with defendantMercurio Rivera, Manager of the Property Management Department ofthe defendant bank. The meeting was held pursuant to plaintiffs' plan tobuy the property (TSN of Jan. 16, 1990, pp. 7-10). After the meeting,plaintiff Janolo, following the advice of defendant Rivera, made a formalpurchase offer to the bank through a letter dated August 30, 1987 (Exh."B"), as follows:

August 30, 1987

The Producers Bank of the PhilippinesMakati, Metro Manila

Attn. Mr. Mercurio Q. RiveraManager, Property Management Dept.

Gentleman:

I have the honor to submit my formal offer to purchase your propertiescovered by titles listed hereunder located at Sta. Rosa, Laguna, with atotal area of 101 hectares, more or less.

TCT NO. AREA

T-106932 113,580 sq. m.

T-106933 70,899 sq. m.

T-106934 52,246 sq. m.

T-106935 96,768 sq. m.

T-106936 187,114 sq. m.

T-106937 481,481 sq. m.

My offer is for PESOS: THREE MILLION FIVE HUNDRED THOUSAND(P3,500,000.00) PESOS, in cash.

Kindly contact me at Telephone Number 921-1344.

(3) On September 1, 1987, defendant Rivera made on behalf of the banka formal reply by letter which is hereunder quoted (Exh. "C"):

September 1, 1987

JP M-P GUTIERREZ ENTERPRISES142 Charisma St., Doa Andres IIRosario, Pasig, Metro Manila

Attention: JOSE O. JANOLO

Dear Sir:

Thank you for your letter-offer to buy our six (6) parcels of acquired lotsat Sta. Rosa, Laguna (formerly owned by Byme Industrial Corp.). Pleasebe informed however that the bank's counter-offer is at P5.5 million formore than 101 hectares on lot basis.

We shall be very glad to hear your position on the on the matter.

Best regards.

(4) On September 17, 1987, plaintiff Janolo, responding to Rivera'saforequoted reply, wrote (Exh. "D"):

September 17, 1987

Producers BankPaseo de RoxasMakati, Metro Manila

Attention: Mr. Mercurio Rivera

Gentlemen:

In reply to your letter regarding my proposal to purchase your 101-hectare lot located at Sta. Rosa, Laguna, I would like to amend myprevious offer and I now propose to buy the said lot at P4.250 million inCASH..

Hoping that this proposal meets your satisfaction.

(5) There was no reply to Janolo's foregoing letter of September 17,1987. What took place was a meeting on September 28, 1987 betweenthe plaintiffs and Luis Co, the Senior Vice-President of defendant bank.Rivera as well as Fajardo, the BYME lawyer, attended the meeting. Twodays later, or on September 30, 1987, plaintiff Janolo sent to the bank,through Rivera, the following letter (Exh. "E"):
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The Producers Bank of the PhilippinesPaseo de Roxas, MakatiMetro Manila

Attention: Mr. Mercurio Rivera

Re: 101 Hectares of Landin Sta. Rosa, Laguna

Gentlemen:

Pursuant to our discussion last 28 September 1987, we are pleased toinform you that we are accepting your offer for us to purchase theproperty at Sta. Rosa, Laguna, formerly owned by Byme Investment, fora total price of PESOS: FIVE MILLION FIVE HUNDRED THOUSAND(P5,500,000.00).

Thank you.

(6) On October 12, 1987, the conservator of the bank (which has beenplaced under conservatorship by the Central Bank since 1984) wasreplaced by an Acting Conservator in the person of defendant Leonida T.Encarnacion. On November 4, 1987, defendant Rivera wrote plaintiff

Demetria the following letter (Exh. "F"):

Attention: Atty. Demetrio Demetria

Dear Sir:

Your proposal to buy the properties the bank foreclosed from Bymeinvestment Corp. located at Sta. Rosa, Laguna is under study yet as ofthis time by the newly created committee for submission to the newlydesignated Acting Conservator of the bank.

For your information.

(7) What thereafter transpired was a series of demands by the plaintiffsfor compliance by the bank with what plaintiff considered as a perfectedcontract of sale, which demands were in one form or another refused bythe bank. As detailed by the trial court in its decision, on November 17,1987, plaintiffs through a letter to defendant Rivera (Exhibit "G") tenderedpayment of the amount of P5.5 million "pursuant to (our) perfected saleagreement." Defendants refused to receive both the payment and theletter. Instead, the parcels of land involved in the transaction wereadvertised by the bank for sale to any interested buyer (Exh, "H" and "H-1"). Plaintiffs demanded the e

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