transpo first 10 cases

7/25/2019 Transpo First 10 Cases

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COMMON CARRIERS

CONCEPT, PARTIES, AND PERFECTION

1. EVERETTE STEAMSHIP CORP VS CA ET AL GR NO 122494 10/8/1998

SECOND DIVISION

[G.R. No. 122494. October 8, 1998]

EVERETT STEAMSHIP CORPORATION, petitioner, vs.COURT OF APPEALS andHERNANDEZ TRADING CO. INC., respondents.

D E C I S I O N

MARTINEZ, J.:

Petitioner Everett Steamship Corporation, through this petition for review, seeks the reversalof the decision[1]of the Court of Appeals, dated June 14, 1995, in CA-G.R. No. 428093, whichaffirmed the decision of the Regional Trial Court of Kalookan City, Branch 126, in Civil Case No.C-15532, finding petitioner liable to private respondent Hernandez Trading Co., Inc. for the valueof the lost cargo.

Private respondent imported three crates of bus spare parts marked as MARCO C/No.12, MARCO C/No. 13 and MARCO C/No. 14, from its supplier, Maruman Trading Company, Ltd.(Maruman Trading), a foreign corporation based in Inazawa, Aichi, Japan. The crates wereshipped from Nagoya, Japan to Manila on board ADELFAEVERETTE, a vessel owned bypetitioners principal, Everett Orient Lines. The said crates were covered by Bill of Lading No.

NGO53MN.

Upon arrival at the port of Manila, it was discovered that the crate marked MARCO C/No. 14was missing. This was confirmed and admitted by petitioner in its letter of January 13, 1992addressed to private respondent, which thereafter made a formal claim upon petitioner for thevalue of the lost cargo amounting to One Million Five Hundred Fifty Two Thousand Five Hundred(Y1,552,500.00) Yen, the amount shown in an Invoice No. MTM-941, dated November 14,1991. However, petitioner offered to pay only One Hundred Thousand (Y100,000.00) Yen, themaximum amount stipulated under Clause 18 of the covering bill of lading which limits the liabilityof petitioner.

Private respondent rejected the offer and thereafter instituted a suit for collection docketedas Civil Case No. C-15532, against petitioner before the Regional Trial Court of Caloocan City,

Branch 126.

At the pre-trial conference, both parties manifested that they have no testimonial evidence tooffer and agreed instead to file their respective memoranda.

On July 16, 1993, the trial court rendered judgment[2]in favor of private respondent, orderingpetitioner to pay: (a) Y1,552,500.00; (b) Y20,000.00 or its peso equivalent representing the actualvalue of the lost cargo and the material and packaging cost; (c) 10% of the total amount as anaward for and as contingent attorneys fees; and (d) to pay the cost of the suit. The trial court ruled:
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Considering defendants categorical admission of loss and its failure to overcome thepresumption of negligence and fault, the Court conclusively finds defendant liable to theplaintiff. The next point of inquiry the Court wants to resolve is the extent of the liabilityof the defendant. As stated earlier, plaintiff contends that defendant should be heldliable for the whole value for the loss of the goods in the amount of Y1,552,500.00because the terms appearing at the back of the bill of lading was so written in fine prints

and that the same was not signed by plaintiff or shipper thus, they are not bound by theclause stated in paragraph 18 of the bill of lading. On the other hand, defendant merelyadmitted that it lost the shipment but shall be liable only up to the amount ofY100,000.00.

The Court subscribes to the provisions of Article 1750 of the New Civil Code -

Art. 1750. A contract fixing the sum that may be recovered by the owner orshipper for the loss, destruction or deterioration of the goods is valid, if it isreasonable and just under the circumstances, and has been fairly and freelyagreed upon.

It is required, however, that the contract must be reasonable and just under the

circumstances and has been fairly and freely agreed upon. The requirements providedin Art. 1750 of the New Civil Code must be complied with before a common carrier canclaim a limitation of its pecuniary liability in case of loss, destruction or deterioration ofthe goods it has undertaken to transport.

In the case at bar, the Court is of the view that the requirements of said article have notbeen met. The fact that those conditions are printed at the back of the bill of lading inletters so small that they are hard to read would not warrant the presumption that theplaintiff or its supplier was aware of these conditions such that he had fairly and freelyagreed to these conditions. It can not be said that the plaintiff had actually entered intoa contract with the defendant, embodying the conditions as printed at the back of thebill of lading that was issued by the defendant to plaintiff.

On appeal, the Court of Appeals deleted the award of attorneys fees but affirmed the trialcourts findings with the additional observation that private respondent can not be bound by theterms and conditions of the bill of lading because it was not privy to the contract of carriage. Itsaid:

As to the amount of liability, no evidence appears on record to show that the appellee(Hernandez Trading Co.) consented to the terms of the Bill of Lading. The shippernamed in the Bill of Lading is Maruman Trading Co., Ltd. whom the appellant (EverettSteamship Corp.) contracted with for the transportation of the lost goods.

Even assuming arguendo that the shipper Maruman Trading Co., Ltd. accepted theterms of the bill of lading when it delivered the cargo to the appellant, still it does notnecessarily follow that appellee Hernandez Trading Company as consignee is bound

thereby considering that the latter was never privy to the shipping contract.

x x x x x x x x x

Never having entered into a contract with the appellant, appellee should therefore notbe bound by any of the terms and conditions in the bill of lading.

Hence, it follows that the appellee may recover the full value of the shipment lost, thebasis of which is not the breach of contract as appellee was never a privy to the anycontract with the appellant, but is based on Article 1735 of the New Civil Code, there


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being no evidence to prove satisfactorily that the appellant has overcome thepresumption of negligence provided for in the law.

Petitioner now comes to us arguing that the Court of Appeals erred (1) in ruling that theconsent of the consignee to the terms and conditions of the bill of lading is necessary to makesuch stipulations binding upon it; (2) in holding that the carriers limited package liability as

stipulated in the bill of lading does not apply in the instant case; and (3) in allowing privaterespondent to fully recover the full alleged value of its lost cargo.

We shall first resolve the validity of the limited liability clause in the bill of lading.

A stipulation in the bill of lading limiting the common carriers liability for loss or destruction ofa cargo to a certain sum, unless the shipper or owner declares a greater value, is sanctioned bylaw, particularly Articles 1749 and 1750 of the Civil Code which provide:

ART. 1749. A stipulation that the common carriers liability is limited to the value of thegoods appearing in the bill of lading, unless the shipper or owner declares a greatervalue, is binding.

ART. 1750. A contract fixing the sum that may be recovered by the owner or shipper for

the loss, destruction, or deterioration of the goods is valid, if it is reasonable and justunder the circumstances, and has been freely and fairly agreed upon.

Such limited-liability clause has also been consistently upheld by this Court in a number ofcases.[3]Thus, in Sea Land Service, Inc. vs Intermediate Appellate Court [4],we ruled:

It seems clear that even if said section 4 (5) of the Carriage of Goods by Sea Act did not exist,the validity and binding effect of the liability limitation clause in the bill of lading here arenevertheless fully sustainable on the basis alone of the cited Civil Code Provisions. That saidstipulation is just and reasonable is arguable from the fact that it echoes Art. 1750 itself inproviding a limit to liability only if a greater value is not declared for the shipment in the bill oflading. To hold otherwise would amount to questioning the justness and fairness of the lawitself, and this the private respondent does not pretend to do. But over and above thatconsideration, the just and reasonable character of such stipulation is implicit in it giving theshipper or owner the option of avoiding accrual of liability limitation by the simple and surely farfrom onerous expedient of declaring the nature and value of the shipment in the bill of lading..

Pursuant to the afore-quoted provisions of law, it is required that the stipulation limiting thecommon carriers liability for loss must be reasonable and just under the circumstances, and hasbeen freely and fairly agreed upon.

The bill of lading subject of the present controversy specifically provides, among others:

18. All claims for which the carrier may be liable shall be adjusted and settled on thebasis of the shippers net invoice cost plus freight and insurance premiums, if paid, and

in no event shall the carrier be liable for any loss of possible profits or anyconsequential loss.

The carrier shall not be liable for any loss of or any damage to or in any connectionwith, goods in an amount exceeding One Hundred Thousand Yen in JapaneseCurrency (Y100,000.00) or its equivalent in any other currency per package orcustomary freight unit (whichever is least) unless the value of the goods higher thanthis amount is declared in writing by the shipper before receipt of the goods by the
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carrier and inserted in the Bill of Lading and extra freight is paid as required. (Emphasissupplied)

The above stipulations are, to our mind, reasonable and just. In the bill of lading, the carriermade it clear that its liability would only be up to One Hundred Thousand (Y100,000.00)Yen. However, the shipper, Maruman Trading, had the option to declare a higher valuation if

the value of its cargo was higher than the limited liability of the carrier. Considering thatthe shipper did not declare a higher valuation, it had itself to blame for not complying withthe stipulations.

The trial courts ratiocination that private respondent could not have fairly and freely agreedto the limited liability clause in the bill of lading because the said conditions were printed in smallletters does not make the bill of lading invalid.

We ruled in PAL, Inc. vs. Court of Appeals [5]that the jurisprudence on the matter revealsthe consistent holding of the court that contracts of adhesion are not invalid per se and that it hason numerous occasions upheld the binding effect thereof. Also, in Philippine American GeneralInsurance Co., Inc. vs. Sweet Lines , Inc .[6]this Court , speaking through the learned JusticeFlorenz D. Regalado, held:

x x x Ong Yiu vs. Court of Appeals, et.al., instructs us that contracts ofadhesion wherein one party imposes a ready-made form of contract on the other x x xare contracts not entirely prohibited. The one who adheres to the contract is in realityfree to reject it entirely; if he adheres he gives his consent. In the present case, noteven an allegation of ignorance of a party excuses non-compliance with the contractualstipulations since the responsibility for ensuring full comprehension of the provisions ofa contract of carriage devolves not on the carrier but on the owner, shipper, orconsignee as the case may be. (Emphasis supplied)

It was further explained in Ong Yiu vs Court of Appeals [7]that stipulations in contracts ofadhesion are valid and binding.

While it may be true that petitioner had not signed the plane ticket x x, he isnevertheless bound by the provisions thereof. Such provisions have been held to be apart of the contract of carriage, and valid and binding upon the passenger regardless ofthe latters lack of knowledge or assent to the regulation. It is what is known as acontract of adhesion, in regards which it has been said that contracts of adhesionwherein one party imposes a ready-made form of contract on the other, as the planeticket in the case at bar, are contracts not entirely prohibited. The one who adheres tothe contract is in reality free to reject it entirely; if he adheres, he gives his consent.x x x , a contract limiting liability upon an agreed valuation does not offend against thepolicy of the law forbidding one from contracting against his own negligence. (Emphasissupplied)

Greater vigilance, however, is required of the courts when dealing with contracts of adhesion

in that the said contracts must be carefully scrutinized in order to shield the unwary (or weakerparty) from deceptive schemes contained in ready-made covenants,[8]such as the bill of lading inquestion. The stringent requirement which the courts are enjoined to observe is in recognition of

Article 24 of the Civil Code which mandates that (i)n all contractual, property or otherrelations, when one of the parties is at a disadvantage on account of his moral dependence,ignorance, indigence, mental weakness, tender age or other handicap , the courts must bevigilant for his protection.
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The shipper, Maruman Trading, we assume, has been extensively engaged in the tradingbusiness. It can not be said to be ignorant of the business transactions it entered into involvingthe shipment of its goods to its customers. The shipper could not have known, or should knowthe stipulations in the bill of lading and there it should have declared a higher valuation of thegoods shipped. Moreover, Maruman Trading has not been heard to complain that it has beendeceived or rushed into agreeing to ship the cargo in petitioners vessel. In fact, it was not even

impleaded in this case.

The next issue to be resolved is whether or not private respondent, as consignee, who is nota signatory to the bill of lading is bound by the stipulations thereof.

Again, in Sea-Land Service, Inc. vs. Intermediate Appellate Court (supra), we held thateven if the consignee was not a signatory to the contract of carriage between the shipper and thecarrier, the consignee can still be bound by the contract. Speaking through Mr. Chief JusticeNarvasa, we ruled:

To begin with, there is no question of the right, in principle, of a consigneein a bill oflading to recover from the carrier or shipper for loss of, or damage to goods beingtransported under said bill,although that document may have been- as in practice it

oftentimes is-drawn up only by the consignor and the carrierwithout theintervention of the consignee. x x x.

x x x the right of a party in the same situation as respondent here, to recover forloss of a shipment consigned to him under a bill of lading drawn up only by andbetween the shipper and the carrier, springs from either a relation o f agency thatmay exist between him and the shipper or cons ignor, or his status as stranger inwhose favor some stipu lation is made in said contract, and who becomes a partythereto when he demands fulf illment of that stipulation, in this case the deliveryof the goods or cargo shipped. In neither capacity can he assert personally, inbar to any provision of the bill of lading, the alleged circumstance that fair andfree agreement to such provis ion was vitiated by its being in such fine print as tobe hardly readable. Parenthetically, it may be observed that in one comparatively

recent case (Phoenix Assurance Company vs. Macondray & Co., Inc., 64 SCRA 15)where this Court found that a similar package limitation clause was prin ted in thesmallest type on the back of the bill of lading, it nonetheless ruled that theconsignee was bound thereby on the strength of authority holding that suchprovisions on liability limitation are as much a part of a bill of lading as thoughphysically in it and as though placed therein by agreement of the parties.

There can, therefore, be no doubt or equivocation about the validity and enforceabilityof freely-agreed-upon stipulations in a contract of carriage or bill of lading limiting theliability of the carrier to an agreed valuation unless the shipper declares a highervalue and inserts it into said contract or bill . This proposition, moreover, rests uponan almost uniform weight of authority. (Underscoring supplied)

When private respondent formally claimed reimbursement for the missing goods frompetitioner and subsequently filed a case against the latter based on the very same bill of lading,it (private respondent) accepted the provisions of the contract and thereby made itself a partythereto, or at least has come to court to enforce it.[9]Thus, private respondent cannot now rejector disregard the carriers limited liability stipulation in the bill of lading. In other words, privaterespondent is bound by the whole stipulations in the bill of lading and must respect the same.

Private respondent, however, insists that the carrier should be liable for the full value of thelost cargo in the amount of Y1,552,500.00, considering that the shipper, Maruman Trading, had
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"fully declared the shipment x x x, the contents of each crate, the dimensions, weight and valueofthe contents,"[10]as shown in the commercial Invoice No. MTM-941.

This claim was denied by petitioner, contending that it did not know of the contents, quantityand value of "the shipment which consisted of three pre-packed crates described in Bill of LadingNo. NGO-53MN merely as 3 CASES SPARE PARTS.[11]

The bill of lading in question confirms petitioners contention. To defeat the carriers limitedliability, the aforecited Clause 18 of the bill of lading requires that the shipper shouldhave declared in writing a higher valuationof its goods before receipt thereof by the carrierand insert the said declaration in the bill of lading , with the extra freight paid. Theserequirements in the bill of lading were never complied with by the shipper, hence, the liability ofthe carrier under the limited liability clause stands. The commercial Invoice No. MTM-941 doesnot in itself sufficiently and convincingly show that petitioner has knowledge of the value of thecargo as contended by private respondent. No other evidence was proffered by privaterespondent to support is contention. Thus, we are convinced that petitioner should be liable forthe full valueof the lost cargo.

In fine, the liability of petitioner for the loss of the cargo is limited to One Hundred Thousand

(Y100,000.00) Yen, pursuant to Clause 18 of the bill of lading.WHEREFORE, the decision of the Court of Appeals dated June 14, 1995 in C.A.-G.R. CV

No. 42803 is hereby REVERSED and SET ASIDE.

SO ORDERED.

Regalado, (Acting Chief Justice), Melo, Puno, andMendoza, JJ., concur.

[1]Penned by Justice Pacita Canizares-Nye and concurred in by Justices Conchita Carpio-Morales and Antonio P. Solano; Rollo, pp. 33-40.[2]Penned by Judge Oscar M. Payawal, Rollo, pp. 43-50 .[3]St. Paul Fire and Marine Insurance Co. vsMacondray & Co., 70 SCRA 122 [1976]; Sea LandServices, Inc. vsIntermediate Appellate Court, 153 SCRA 552 [1987]; Pan American World

Airways, Inc. vsIntermediate Appellate Court, 164 SCRA 268 [1988]; Phil. Airlines, Inc. vsCourtof Appeals, 255 SCRA 63 [1996].[4]153 SCRA 552 [1987][5]255 SCRA 48, 58 [1996].[6]212 SCRA 194, 212-213 [1992].[7]91 SCRA 223 [1979]; Philippine Airlines, Inc. vsCourt of Appeals, 255 SCRA 63 [1996].[8]Ayala Corporation vs. Ray Burton Development Corporation, G.R. No. 126699, August 7,1998. See also Qua Chee Gan vs. Law Union and Rock Insurance Co., Ltd., 98 Phil. 95 [1955].[9]See Mendoza vs. Philippine Air Lines, Inc. 90 Phil. 836, 845-846.[10]Rollo, p. 116.[11]Rollo, p. 13.
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2. MOF CO OINC VS SHIN YANG BROKERAGE CORPORATION GR NO 1728822

12/18/2009

SECOND DIVISION

MOF COMPANY, INC., G.R. No. 172822Petitioner,

Present:

CARPIO,*J., Chairperson,- versus - LEONARDO-DE CASTRO,*

BRION,DEL CASTILLO, and

ABAD, JJ.

SHIN YANG BROKERAGECORPORATION, Promulgated:

Respondent. December 18, 2009x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

D E C I S I O N

DEL CASTILLO, J.:

The necessity of proving lies with the person who sues.

The refusal of the consignee named in the bill of lading to pay the freightage on the claim that it is

not privy to the contract of affreightment propelled the shipper to sue for collection of money, stressing that

its sole evidence, the bill of lading, suffices to prove that the consignee is bound to pay. Petitioner now

comes to us by way of Petition for Review on Certiorari[1]under Rule 45 praying for the reversal of the

Court of Appeals' (CA) judgment that dismissed its action for sum of money for insufficiency of evidence.

Factual Antecedents

On October 25, 2001, Halla Trading Co., a company based in Korea, shipped

to Manila secondhand cars and other articles on board the vessel Hanjin Busan 0238W. The bill of lading

covering the shipment, i.e.,Bill of Lading No. HJSCPUSI14168303,[2]which was prepared by the carrier

Hanjin Shipping Co., Ltd. (Hanjin), named respondent Shin Yang Brokerage Corp. (Shin Yang) as the
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consignee and indicated that payment was on a Freight Collect basis, i.e., that the consignee/receiver of

the goods would be the one to pay for the freight and other charges in the total amount of P57,646.00.[3]

The shipment arrived in Manila on October 29, 2001. Thereafter, petitioner MOF Company, Inc.

(MOF), Hanjins exclusive general agent in the Philippines, repeatedly demanded the payment of ocean

freight, documentation fee and terminal handling charges from Shin Yang. The latter, however, failed and

refused to pay contending that it did not cause the importation of the goods, that it is only the Consolidator

of the said shipment, that the ultimate consignee did not endorse in its favor the original bill of lading and

that the bill of lading was prepared without its consent.

Thus, on March 19, 2003, MOF filed a case for sum of money before

the Metropolitan Trial Court of Pasay City (MeTC Pasay) which was docketed as Civil Case No. 206-03

and raffled to Branch 48. MOF alleged that Shin Yang, a regular client, caused the importation andshipment of the goods and assured it that ocean freight and other charges would be paid upon arrival of

the goods in Manila. Yet, after Hanjin's compliance, Shin Yang unjustly breached its obligation to

pay. MOF argued that Shin Yang, as the named consignee in the bill of lading, entered itself as a party to

the contract and bound itself to the Freight Collect arrangement. MOF thus prayed for the payment

of P57,646.00 representing ocean freight, documentation fee and terminal handling charges as well as

damages and attorneys fees.

Claiming that it is merely a consolidator/forwarder and that Bill of Lading No. HJSCPUSI14168303 was

not endorsed to it by the ultimate consignee, Shin Yang denied any involvement in shipping the goods or

in promising to shoulder the freightage. It asserted that it never authorized Halla Trading Co. to ship the

articles or to have its name included in the bill of lading. Shin Yang also alleged that MOF failed to present

supporting documents to prove that it was Shin Yang that caused the importation or the one that assured

payment of the shipping charges upon arrival of the goods in Manila.

Ruling of the Metropolitan Trial Court

On June 16, 2004, the MeTC of Pasay City, Branch 48 rendered its Decision

[4]

in favor of MOF. It ruledthat Shin Yang cannot disclaim being a party to the contract of affreightment because:

x x x it would appear that defendant has business transactions with plaintiff. This is evidentfrom defendants letters dated 09 May 2002 and 13 May 2002 (Exhibits 1 and 2,defendants Position Paper) where it requested for the release of refund of containerdeposits x x x. [In] the mind of the Court, by analogy, a written contract need not benecessary; a mutual understanding [would suffice]. Further, plaintiff would have not
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included the name of the defendant in the bill of lading, had there been no prior agreementto that effect.

In sum, plaintiff has sufficiently proved its cause of action against the defendantand the latter is obliged to honor its agreement with plaintiff despite the absence of awritten contract.[5]

The dispositive portion of the MeTC Decision reads:

WHEREFORE, premises considered, judgment is hereby rendered in favor of plaintiff andagainst the defendant, ordering the latter to pay plaintiff as follows:

1. P57,646.00 plus legal interest from the date of demand until fully paid,2. P10,000.00 as and for attorneys fees and3. the cost of suit.

SO ORDERED.[6]

Ruling of the Regional Trial Court

The Regional Trial Court (RTC) of Pasay City, Branch 108 affirmed in toto the Decision of the MeTC. It

held that:

MOF and Shin Yang entered into a contract of affreightment which Blacks Law Dictionarydefined as a contract with the ship owner to hire his ship or part of it, for the carriage ofgoods and generally take the form either of a charter party or a bill of lading.

The bill of lading contain[s] the information embodied in the contract.

Article 652 of the Code of Commerce provides that the charter party must be in writing;however, Article 653 says: If the cargo should be received without charter party havingbeen signed, the contract shall be understood as executed in accordance with whatappears in the bill of lading, the sole evidence of title with regard to the cargo fordetermining the rights and obligations of the ship agent, of the captain and of thecharterer. Thus, the Supreme Court opined in the Market Developers, Inc. (MADE) vs.Honorable Intermediate Appellate Court and Gaudioso Uy, G.R. No. 74978, September8, 1989, this kind of contract may be oral. In another case, Compania Maritima vs.Insurance Company of North America, 12 SCRA 213 the contract of affreightment bytelephone was recognized where the oral agreement was later confirmed by a formalbooking.

x x x x

Defendant is liable to pay the sum of P57,646.00, with interest until fully paid, attorneysfees of P10,000.00 [and] cost of suit.

Considering all the foregoing, this Court affirms in totothe decision of the Court a quo.
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SO ORDERED.[7]

Ruling of the Court of Appeals

Seeing the matter in a different light, the CA dismissed MOFs complaint and refused to award any form of

damages or attorneys fees. It opined that MOF failed to substantiate its claim that Shin Yang had a hand

in the importation of the articles to the Philippines or that it gave its consent to be a consignee of the subject

goods. In its March 22, 2006 Decision,[8]the CA said:

This Court is persuaded [that except] for the Bill of Lading, respondent has not presentedany other evidence to bolster its claim that petitioner has entered [into] an agreement of

affreightment with respondent, be it verbal or written. It is noted that the Bill of Lading wasprepared by Hanjin Shipping, not the petitioner. Hanjin is the principal while respondent isthe formers agent. (p. 43, rollo)

The conclusion of the court a quo, which was upheld by the RTC Pasay City, Branch 108xxx is purely speculative and conjectural. A court cannot rely on speculations, conjecturesor guesswork, but must depend upon competent proof and on the basis of the bestevidence obtainable under the circumstances. Litigation cannot be properly resolved bysuppositions, deductions or even presumptions, with no basis in evidence, for the truthmust have to be determined by the hard rules of admissibility and proof (Lagon vs. HoovenComalco Industries, Inc. 349 SCRA 363).

While it is true that a bill of lading serves two (2) functions: first, it is a receipt for the goodsshipped; second, it is a contract by which three parties, namely, the shipper, the carrierand the consignee who undertake specific responsibilities and assume stipulatedobligations (Belgian Overseas Chartering and Shipping N.V. vs. Phil. First Insurance Co.,Inc., 383 SCRA 23), x x x if the same is not accepted, it is as if one party does not acceptthe contract. Said the Supreme Court:

A bill of lading delivered and accepted constitutes the contract ofcarriage[,] even though not signed, because the acceptance of a papercontaining the terms of a proposed contract generally constitutes anacceptance of the contract and of all its terms and conditions of which theacceptor has actual or constructive notice (Keng Hua Paper Products

Co., Inc. vs. CA, 286 SCRA 257).

In the present case, petitioner did not only [refuse to] accept the bill of lading, but it likewisedisown[ed] the shipment x x x. [Neither did it] authorize Halla Trading Company or anyoneto ship or export the same on its behalf.

It is settled that a contract is upheld as long as there is proof of consent, subject matterand cause (Sta. Clara Homeowners Association vs. Gaston, 374 SCRA 396). In the caseat bar, there is not even any iota of evidence to show that petitioner had given its consent.
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He who alleges a fact has the burden of proving it and a mere allegationis not evidence (Luxuria Homes Inc. vs. CA, 302 SCRA 315).

The 40-footer van contains goods of substantial value. It is highly improbable for petitionernot to pay the charges, which is very minimal compared with the value of the goods, in

order that it could work on the release thereof.

For failure to substantiate its claim by preponderance of evidence, respondent has notestablished its case against petitioner.[9]

Petitionersfiled a motion for reconsideration but it was denied in a Resolution[10]dated May 25,

2006. Hence, this petition for review on certiorari.

Petitioners Arguments

In assailing the CAs Decision, MOF argues that the factual findings of both the MeTC and RTC are entitled

to great weight and respect and should have bound the CA. It stresses that the appellate court has no

justifiable reason to disturb the lower courts judgments because their conclusions are well-supported by

the evidence on record.

MOF further argues that the CA erred in labeling the findings of the lower courts as purely speculative and

conjectural. According to MOF, the bill of lading, which expressly stated Shin Yang as the consignee, is

the best evidence of the latters actual participation in the transportation of the goods. Such document,

validly entered, stands as the law among the shipper, carrier and the consignee, who are all bound by the

terms stated therein. Besides, a carriers valid claim after it fulfilled its obligation cannot just be rejected by

the named consignee upon a simple denial that it ever consented to be a party in a contract of

affreightment, or that it ever participated in the preparation of the bill of lading. As against Shin Yangs bare

denials, the bill of lading is the sufficient preponderance of evidence required to prove MOFs claim. MOF

maintains that Shin Yang was the one that supplied all the details in the bill of lading and acquiesced to be

named consignee of the shipment on a Freight Collect basis.

Lastly, MOF claims that even if Shin Yang never gave its consent, it cannot avoid its obligation to

pay, because it never objected to being named as the consignee in the bill of lading and that it only

protested when the shipment arrived in the Philippines, presumably due to a botched transaction between

it and Halla Trading Co. Furthermore, Shin Yangs letters asking for the refund of container deposits

highlight the fact that it was aware of the shipment and that it undertook preparations for the intended

release of the shipment.
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Respondents Arguments

Echoing the CA decision, Shin Yang insists that MOF has no evidence to prove that it consented to take

part in the contract of affreightment. Shin Yang argues that MOF miserably failed to present any evidence

to prove that it was the one that made preparations for the subject shipment, or that it is an actual shipping

practice that forwarders/consolidators as consignees are the ones that provide carriers details and

information on the bills of lading.

Shin Yang contends that a bill of lading is essentially a contract between the shipper and the carrier

and ordinarily, the shipper is the one liable for the freight charges. A consignee, on the other hand, is

initially a stranger to the bill of lading and can be liable only when the bill of lading specifies that the charges

are to be paid by the consignee. This liability arises from either a) the contract of agency between theshipper/consignor and the consignee; or b) the consignees availment of the stipulation pour autruidrawn

up by and between the shipper/ consignor and carrier upon the consignees demand that the goods be

delivered to it. Shin Yang contends that the fact that its name was mentioned as the consignee of the

cargoes did not make it automatically liable for the freightage because it never benefited from the

shipment. It never claimed or accepted the goods, it was not the shippers agent, it was not aware of its

designation as consignee and the original bill of lading was never endorsed to it.

Issue

The issue for resolution is whether a consignee, who is not a signatory to the bill of lading, is bound by the

stipulations thereof. Corollarily, whether respondent who was not an agent of the shipper and who did not

make any demand for the fulfillment of the stipulations of the bill of lading drawn in its favor is liable to pay

the corresponding freight and handling charges.

Our Ruling

Since the CA and the trial courts arrived at different conclusions, we are constrained to depart from thegeneral rule that only errors of law may be raised in a Petition for Review on Certiorariunder Rule 45 of the

Rules of Court and will review the evidence presented.[11]

The bill of lading is oftentimes drawn up by the shipper/consignor and the carrier without the intervention

of the consignee. However, the latter can be bound by the stipulations of the bill of lading when a) there is
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a relation of agency between the shipper or consignor and the consignee or b) when the consignee

demands fulfillment of the stipulation of the bill of lading which was drawn up in its favor.[12]

In Keng Hua Paper Products Co., Inc. v. Court of Appeals,[13]we held that once the bill of lading is

received by the consignee who does not object to any terms or stipulations contained therein, it constitutes

as an acceptance of the contract and of all of its terms and conditions, of which the acceptor has actual or

constructive notice.

In Mendoza v. Philippine Air Lines, Inc.,[14]the consignee sued the carrier for damages but

nevertheless claimed that he was never a party to the contract of transportation and was a complete

stranger thereto. In debunking Mendozascontention, we held that:

x x x First, he insists that the articles of the Code of Commerce should be applied; that he

invokes the provisions of said Code governing the obligations of a common carrier tomake prompt delivery of goods given to it under a contract of transportation. Later, asalready said, he says that he was never a party to the contract of transportation and wasa complete stranger to it, and that he is now suing on a tort or a violation of his rights as astranger (culpa aquiliana). If he does not invoke the contract of carriage entered into withthe defendant company, then he would hardly have any leg to stand on. His right to promptdelivery of the can of film at the Pili Air Port stems and is derived from the contract ofcarriage under which contract, the PAL undertook to carry the can of film safely and todeliver it to him promptly. Take away or ignore that contract and the obligation to carry andto deliver and right to prompt delivery disappear. Common carriers are not obligated bylaw to carry and to deliver merchandise, and persons are not vested with the right toprompt delivery, unless such common carriers previously assume the obligation. Said

rights and obligations are created by a specific contract entered into by the parties. In thepresent case, the findings of the trial court which as already stated, are acceptedby the parties and which we must accept are to the effect that the LVN Pictures Inc.and Jose Mendoza on one side, and the defendant company on the other, enteredinto a contract of transportation (p. 29, Rec. on Appeal). One interpretation of saidfinding is that the LVN Pictures Inc. through previous agreementwithMendoza acted as the latter's agent. When he negotiated with the LVN PicturesInc. to rent the film 'Himala ng Birhen' and show it during the Naga town fiesta, hemost probably authorized and enjoined the Picture Company to ship the film forhim on the PAL on September 17th. Another interpretation is that even if the LVNPictures Inc. as consignor of its own initiative, and acting independentlyof Mendoza for the time being, made Mendoza a consignee. [Mendoza made

himself a party to the contract of transportaion when he appeared at the Pili AirPort armed with the copy of the Air Way Bill (Exh. 1) demanding the delivery of theshipment to him.] The very citation made by appellant in his memorandum supports thisview. Speaking of the possibility of a conflict between the order of the shipper on the onehand and the order of the consignee on the other, as when the shipper orders the shippingcompany to return or retain the goods shipped while the consignee demands theirdelivery, Malagarriga in his book Codigo de Comercio Comentado, Vol. 1, p. 400, citing adecision of the Argentina Court of Appeals on commercial matters, cited by Tolentino inVol. II of his book entitled 'Commentaries and Jurisprudence on the Commercial Laws of
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the Philippines' p. 209, says that the right of the shipper to countermand the shipmentterminates when the consignee or legitimate holder of the bill of lading appearswith such bill of lading before the carrier and makes himself a party to the contract.Prior to that time he is a stranger to the contract.

Still another view of this phase of the case is that contemplated in Art. 1257,

paragraph 2, of the old Civil Code (now Art. 1311, second paragraph) which readsthus:

Should the contract contain any stipulation in favor of a thirdperson, he may demand its fulfillment provided he has given noticeof his acceptance to the person bound before the stipulation hasbeen revoked.'

Here, the contract of carriage between the LVN Pictures Inc. and thedefendant carrier contains the stipulations of delivery to Mendoza as consignee.His demand for the delivery of the can of film to him at the Pili Air Port may beregarded as a notice of his acceptance of the stipulation of the delivery in his favor

contained in the contract of carriage and delivery. In this case he also made himselfa party to the contract, or at least has come to court to enforce it. His cause ofaction must necessarily be founded on its breach.[15](Emphasis Ours)

In sum, a consignee, although not a signatory to the contract of carriage between the shipper and the

carrier, becomes a party to the contract by reason of either a) the relationship of agency between the

consignee and the shipper/ consignor; b) the unequivocal acceptance of the bill of lading delivered to the

consignee, with full knowledge of its contents or c) availment of the stipulation pour autrui, i.e., when the

consignee, a third person, demands before the carrier the fulfillment of the stipulation made by the

consignor/shipper in the consignees favor, specifically the delivery of the goods/cargoes shipped.[16]

In the instant case, Shin Yang consistently denied in all of its pleadings that it authorized Halla

Trading, Co. to ship the goods on its behalf; or that it got hold of the bill of lading covering the shipment or

that it demanded the release of the cargo. Basic is the rule in evidence that the burden of proof lies upon

him who asserts it, not upon him who denies, since, by the nature of things, he who denies a fact cannot

produce any proof of it.[17]Thus, MOF has the burden to controvert all these denials, it being insistent that

Shin Yang asserted itself as the consignee and the one that caused the shipment of the goods to

the Philippines.

In civil cases, the party having the burden of proof must establish his case by preponderance of

evidence,[18]which means evidence which is of greater weight, or more convincing than that which is

offered in opposition to it.[19]Here, MOF failed to meet the required quantum of proof. Other than presenting

the bill of lading, which, at most, proves that the carrier acknowledged receipt of the subject cargo from
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the shipper and that the consignee named is to shoulder the freightage, MOF has not adduced any other

credible evidence to strengthen its cause of action. It did not even present any witness in support of its

allegation that it was Shin Yang which furnished all the details indicated in the bill of lading and that Shin

Yang consented to shoulder the shipment costs. There is also nothing in the records which would indicate

that Shin Yang was an agent of Halla Trading Co. or that it exercised any act that would bind it as a named

consignee. Thus, the CA correctly dismissed the suit for failure of petitioner to establish its cause against

respondent.

WHEREFORE, the petition is DENIED. The assailed Decision of the Court of Appeals dated March 22,

2006 dismissing petitioners complaint and the Resolution dated May 25, 2006denying the motion for

reconsideration areAFFIRMED.

SO ORDERED.

MARIANO C. DEL CASTILLOAssociate Justice

WE CONCUR:

ANTONIO T. CARPIOAssociate Justice

Chairperson

TERESITA J. LEONARDO-DE CASTROAssociate Justice

ARTURO D. BRIONAssociate Justice

ROBERTO A. ABADAssociate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case wasassigned to the writer of the opinion of the Courts Division.


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ANTONIO T. CARPIOAssociate Justice

Chairperson, Second Division

C E R T I F I C A T I O N

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons attestation, it ishereby certified that the conclusions in the above Decision had been reached in consultation before thecase was assigned to the writer of the opinion of the Courts Division.

REYNATO S. PUNOChief Justice

*Per Special Order No. 775 dated November 3, 2009.* Additional member per Special Order No. 776 dated November 3, 2009.[1]Rollo, pp. 9-38.[2]Id. at 79.[3]Id. at 80.[4]Id. at 90-94; penned by Judge Estrellita M. Paas.[5]Id. at 93.[6]Id. at 94.[7]Id. at 103-104; penned by Judge Priscilla C. Mijares.

[8]Id. at 40-45; penned by Associate Justice Eliezer R. De Los Santos and concurred in by AssociateJustices Jose C. Reyes, Jr. and Arturo G. Tayag.

[9]Id. at 43-44.[10]Id. at 48.[11]Wallem Phils. Shipping Inc. v. Prudential Guarantee & AssuranceInc., 445 Phil. 136, 149

(2003).[12]See Sea-Land Service v. Intermediate Appellate Court, 237 Phil. 531, 535-536 (1987).[13]349 Phil. 925, 933 (1998).[14]90 Phil. 836, 846 (1952).[15]Id. at 845-847.[16]CIVIL CODE OF THE PHILIPPINES, Article 1311, 2ndparagraph: If a contract should contain some

stipulation in favor of a third person, he may demand its fulfillment provided he communicated his

acceptance to the obligor before its revocation. A mere incidental benefit or interest of a person is notsufficient. The contracting parties must have clearly and deliberately conferred a favor upon a thirdperson.

[17]Acabal v. Acabal, 494 Phil. 528, 541 (2005).[18]New Testament Church of God v. Court of Appeals, 316 Phil. 330, 333 (1995).[19]Condes v. Court of Appeals, G.R. No. 161304, July 27, 2007, 528 SCRA 339, 352.
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3. DANGWA TRANSPORTATION CO VS CA 202 SCRA 574 (1991)

Republic of the PhilippinesSUPREME COURT

Manila

SECOND DIVISION

G.R. No. 95582 October 7, 1991

DANGWA TRANSPORTATION CO., INC. and THEODORE LARDIZABAL yMALECDAN, petitioners,vs.COURT OF APPEALS, INOCENCIA CUDIAMAT, EMILIA CUDIAMAT BANDOY, FERNANDOCUDLAMAT, MARRIETA CUDIAMAT, NORMA CUDIAMAT, DANTE CUDIAMAT, SAMUELCUDIAMAT and L IGAYA CUDIAMAT, all Heirs o f the late Pedrito Cudiamat represented byInocencia Cudiamat, respondents.

Francisco S. Reyes Law Office for petitioners.

Antonio C. de Guzman for private respondents.

REGALADO, J.:p

On May 13, 1985, private respondents filed a complaint 1for damages against petitioners forthe death of Pedrito Cudiamat as a result of a vehicular accident which occurred on March 25,1985 at Marivic, Sapid, Mankayan, Benguet. Among others, it was alleged that on said date,

while petitioner Theodore M. Lardizabal was driving a passenger bus belonging to petitionercorporation in a reckless and imprudent manner and without due regard to traffic rules andregulations and safety to persons and property, it ran over its passenger, Pedrito Cudiamat.However, instead of bringing Pedrito immediately to the nearest hospital, the said driver, in utterbad faith and without regard to the welfare of the victim, first brought his other passengers andcargo to their respective destinations before banging said victim to the Lepanto Hospital wherehe expired.

On the other hand, petitioners alleged that they had observed and continued to observe theextraordinary diligence required in the operation of the transportation company and thesupervision of the employees, even as they add that they are not absolute insurers of the safetyof the public at large. Further, it was alleged that it was the victim's own carelessness and

negligence which gave rise to the subject incident, hence they prayed for the dismissal of thecomplaint plus an award of damages in their favor by way of a counterclaim.

On July 29, 1988, the trial court rendered a decision, effectively in favor of petitioners, with thisdecretal portion:

IN VIEW OF ALL THE FOREGOING, judgment is hereby pronounced thatPedrito Cudiamat was negligent, which negligence was the proximate cause of


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his death. Nonetheless, defendants in equity, are hereby ordered to pay the heirsof Pedrito Cudiamat the sum of P10,000.00 which approximates the amountdefendants initially offered said heirs for the amicable settlement of the case. Nocosts.

SO ORDERED. 2

Not satisfied therewith, private respondents appealed to the Court of Appeals which, in adecision 3in CA-G.R. CV No. 19504 promulgated on August 14, 1990, set aside the decision ofthe lower court, and ordered petitioners to pay private respondents:

1. The sum of Thirty Thousand (P30,000.00) Pesos by way of indemnity fordeath of the victim Pedrito Cudiamat;

2. The sum of Twenty Thousand (P20,000.00) by way of moral damages;

3. The sum of Two Hundred Eighty Eight Thousand (P288,000.00) Pesos as

actual and compensatory damages;

4. The costs of this suit. 4

Petitioners' motion for reconsideration was denied by the Court of Appeals in its resolutiondated October 4, 1990,5hence this petition with the central issue herein being whetherrespondent court erred in reversing the decision of the trial court and in finding petitionersnegligent and liable for the damages claimed.

It is an established principle that the factual findings of the Court of Appeals as a rule are finaland may not be reviewed by this Court on appeal. However, this is subject to settled exceptions,one of which is when the findings of the appellate court are contrary to those of the trial court, in

which case a reexamination of the facts and evidence may be undertaken. 6

In the case at bar, the trial court and the Court of Appeal have discordant positions as to whobetween the petitioners an the victim is guilty of negligence. Perforce, we have had to conductan evaluation of the evidence in this case for the prope calibration of their conflicting factualfindings and legal conclusions.

The lower court, in declaring that the victim was negligent, made the following findings:

This Court is satisfied that Pedrito Cudiamat was negligent in trying to board amoving vehicle, especially with one of his hands holding an umbrella. And,without having given the driver or the conductor any indication that he wishes to

board the bus. But defendants can also be found wanting of the necessarydiligence. In this connection, it is safe to assume that when the deceasedCudiamat attempted to board defendants' bus, the vehicle's door was openinstead of being closed. This should be so, for it is hard to believe that one wouldeven attempt to board a vehicle (i)n motion if the door of said vehicle is closed.Here lies the defendant's lack of diligence. Under such circumstances, equitydemands that there must be something given to the heirs of the victim toassuage their feelings. This, also considering that initially, defendant common


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Q What happened when you delivered this passenger at thisparticular place in Lepanto?

A When we reached the place, a passenger alighted and Isignalled my driver. When we stopped we went out because I sawan umbrella about a split second and I signalled again the driver,

so the driver stopped and we went down and we saw PedritoCudiamat asking for help because he was lying down.

Q How far away was this certain person, Pedrito Cudiamat, whenyou saw him lying down from the bus how far was he?

A It is about two to three meters.

Q On what direction of the bus was he found about three metersfrom the bus, was it at the front or at the back?

AAt the back, sir. 10(Emphasis supplied.)

The foregoing testimonies show that the place of the accident and the place where one of thepassengers alighted were both between Bunkhouses 53 and 54, hence the finding of the Courtof Appeals that the bus was at full stop when the victim boarded the same is correct. Theyfurther confirm the conclusion that the victim fell from the platform of the bus when it suddenlyaccelerated forward and was run over by the rear right tires of the vehicle, as shown by thephysical evidence on where he was thereafter found in relation to the bus when it stopped.Under such circumstances, it cannot be said that the deceased was guilty of negligence.

The contention of petitioners that the driver and the conductor had no knowledge that the victimwould ride on the bus, since the latter had supposedly not manifested his intention to board the

same, does not merit consideration. When the bus is not in motion there is no necessity for aperson who wants to ride the same to signal his intention to board. A public utility bus, once itstops, is in effect making a continuous offer to bus riders. Hence, it becomes the duty of thedriver and the conductor, every time the bus stops, to do no act that would have the effect ofincreasing the peril to a passenger while he was attempting to board the same. The prematureacceleration of the bus in this case was a breach of such duty. 11

It is the duty of common carriers of passengers, including common carriers by railroad train,streetcar, or motorbus, to stop their conveyances a reasonable length of time in order to affordpassengers an opportunity to board and enter, and they are liable for injuries suffered byboarding passengers resulting from the sudden starting up or jerking of their conveyances whilethey are doing so. 12

Further, even assuming that the bus was moving, the act of the victim in boarding the samecannot be considered negligent under the circumstances. As clearly explained in the testimonyof the aforestated witness for petitioners, Virginia Abalos, th bus had "just started" and "was stillin slow motion" at the point where the victim had boarded and was on its platform. 13

It is not negligence per se, or as a matter of law, for one attempt to board a train or streetcarwhich is moving slowly. 14An ordinarily prudent person would have made the attempt board themoving conveyance under the same or similar circumstances. The fact that passengers board


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and alight from slowly moving vehicle is a matter of common experience both the driver andconductor in this case could not have been unaware of such an ordinary practice.

The victim herein, by stepping and standing on the platform of the bus, is already considered apassenger and is entitled all the rights and protection pertaining to such a contractual relation.Hence, it has been held that the duty which the carrier passengers owes to its patrons extends

to persons boarding cars as well as to those alighting therefrom. 15

Common carriers, from the nature of their business and reasons of public policy, are bound toobserve extraordina diligence for the safety of the passengers transported by the according toall the circumstances of each case. 16A common carrier is bound to carry the passengerssafely as far as human care and foresight can provide, using the utmost diligence very cautiouspersons, with a due regard for all the circumstances. 17

It has also been repeatedly held that in an action based on a contract of carriage, the court neednot make an express finding of fault or negligence on the part of the carrier in order to hold itresponsible to pay the damages sought by the passenger. By contract of carriage, the carrierassumes the express obligation to transport the passenger to his destination safely and observeextraordinary diligence with a due regard for all the circumstances, and any injury that might besuffered by the passenger is right away attributable to the fault or negligence of the carrier. Thisis an exception to the general rule that negligence must be proved, and it is therefore incumbentupon the carrier to prove that it has exercised extraordinary diligence as prescribed in Articles1733 and 1755 of the Civil Code. 18

Moreover, the circumstances under which the driver and the conductor failed to bring thegravely injured victim immediately to the hospital for medical treatment is a patent andincontrovertible proof of their negligence. It defies understanding and can even be stigmatizedas callous indifference. The evidence shows that after the accident the bus could have forthwithturned at Bunk 56 and thence to the hospital, but its driver instead opted to first proceed to Bunk70 to allow a passenger to alight and to deliver a refrigerator, despite the serious condition ofthe victim. The vacuous reason given by petitioners that it was the wife of the deceased whocaused the delay was tersely and correctly confuted by respondent court:

... The pretension of the appellees that the delay was due to the fact that theyhad to wait for about twenty minutes for Inocencia Cudiamat to get dresseddeserves scant consideration. It is rather scandalous and deplorable for a wifewhose husband is at the verge of dying to have the luxury of dressing herself upfor about twenty minutes before attending to help her distressed and helplesshusband. 19

Further, it cannot be said that the main intention of petitioner Lardizabal in going to Bunk 70 was

to inform the victim's family of the mishap, since it was not said bus driver nor the conductor butthe companion of the victim who informed his family thereof. 20In fact, it was only after therefrigerator was unloaded that one of the passengers thought of sending somebody to thehouse of the victim, as shown by the testimony of Virginia Abalos again, to wit:

Q Why, what happened to your refrigerator at that particular time?

A I asked them to bring it down because that is the nearest placeto our house and when I went down and asked somebody to bring


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down the refrigerator, I also asked somebody to call the family ofMr. Cudiamat.

COURT:

Q Why did you ask somebody to call the family of Mr. Cudiamat?

A Because Mr. Cudiamat met an accident, so I ask somebody tocall for the family of Mr. Cudiamat.

Q But nobody ask(ed) you to call for the family of Mr. Cudiamat?

A No sir. 21

With respect to the award of damages, an oversight was, however, committed by respondentCourt of Appeals in computing the actual damages based on the gross income of the victim.The rule is that the amount recoverable by the heirs of a victim of a tort is not the loss of the

entire earnings, but rather the loss of that portion of the earnings which the beneficiary wouldhave received. In other words, only net earnings, not gross earnings, are to be considered, thatis, the total of the earnings less expenses necessary in the creation of such earnings or incomeand minus living and other incidental expenses. 22

We are of the opinion that the deductible living and other expense of the deceased may fairlyand reasonably be fixed at P500.00 a month or P6,000.00 a year. In adjudicating the actual orcompensatory damages, respondent court found that the deceased was 48 years old, in goodhealth with a remaining productive life expectancy of 12 years, and then earning P24,000.00 ayear. Using the gross annual income as the basis, and multiplying the same by 12 years, itaccordingly awarded P288,000. Applying the aforestated rule on computation based on the netearnings, said award must be, as it hereby is, rectified and reduced to P216,000.00. However,

in accordance with prevailing jurisprudence, the death indemnity is hereby increased toP50,000.00. 23

WHEREFORE, subject to the above modifications, the challenged judgment and resolution ofrespondent Court of Appeals are hereby AFFIRMED in all other respects.

SO ORDERED.

Melencio-Herrera (Chairperson), Paras, Padilla and Sarmiento, JJ., concur.

# Footnotes

1 Civil Case No. 584-R, Regional Trial Court, Branch 7, Baguio City.

2 Rollo, 51.

3 Penned by Justice Bonifacio A. Cacdac, Jr., with Justices Gloria C. Paras andSerafin V.C. Guingona concurring.


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4 Rollo, 26-27.

5 Ibid., 48.

6 Sabinosa vs. Court of Appeals, et al., 175 SCRA 552 (1989).

7 Original Record, 169; Judge Rodolfo D. Rodrigo, presiding.

8 Rollo, 25.

9 TSN, January 20, 1987, 26-27.

10 TSN, November 18, 1986, 3-4.

11 See Del Prado vs. Manila Electric Co., 52 Phil. 900 (1929).

12 14 Am. Jur. 2d 436.

13 TSN, January 20, 1987, 11.

14 Am. Jur. 2d 414.

15 Del Prado vs. Manila Electric Co.,supra.

16 Art. 1733, Civil Code.

17 Art. 1755, Civil Code.

18 Sy vs. Malate Tajdcab & Garage, Inc., 102 Phil. 482 (1957); BatangasTransportation Co. vs. Caguimbal, et al., 22 SCRA 171 (1968).

19 Rollo, 25.

20 TSN, June 20, 1986, 3-4.

21 TSN, January 20, 1987, 16.

22 Villa Rey Transit, Inc. vs. Court of Appeals, et al., 31 SCRA 511 (1970);Davila, et al. vs. Philippine Airlines, Inc., 49 SCRA 497 (1973).

23 People vs. Sazon, 189 SCRA 700 (1990).


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4. KOREAN AIRLINES CO VS CA 234 SCRA 717 (1994)

Republic of the PhilippinesSUPREME COURT

Manila

FIRST DIVISION

G.R. No. 114061 Augus t 3, 1994

KOREAN AIRLINES CO., LTD., petitioner,vs.COURT OF APPEALS and JUANITO C. LAPUZ, respondents.

G.R. No. 113842 Augus t 3, 1994

JUANITO C. LAPUZ, petitioner,vs.COURT OF APPEALS and KOREAN AIRLINES CO., LTD., respondents.

M.A. Aguinaldo and Associates for Korean Airlines Co., Ltd.

Camacho and Associates for Juanito Lapuz.

CRUZ, J.:

Sometime in 1980, Juanito C. Lapuz, an automotive electrician, was contracted for employmentin Jeddah, Saudi Arabia, for a period of one year through Pan Pacific Overseas RecruitingServices, Inc. Lapuz was supposed to leave on November 8, 1980, via Korean Airlines. Initially,he was "wait-listed," which meant that he could only be accommodated if any of the confirmedpassengers failed to show up at the airport before departure. When two of such passengers didnot appear, Lapuz and another person by the name of Perico were given the two unclaimedseats.

According to Lapuz, he was allowed to check in with one suitcase and one shoulder bag at thecheck-in counter of KAL. He passed through the customs and immigration sections for routinecheck-up and was cleared for departure as Passenger No. 157 of KAL Flight No. KE 903.Together with the other passengers, he rode in the shuttle bus and proceeded to the ramp ofthe KAL aircraft for boarding. However, when he was at the third or fourth rung of the stairs, aKAL officer pointed to him and shouted "Down! Down!" He was thus barred from taking theflight. When he later asked for another booking, his ticket was canceled by KAL. Consequently,he was unable to report for his work in Saudi Arabia within the stipulated 2-week period and solost his employment.


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KAL, on the other hand, alleged that on November 8, 1980, Pan Pacific Recruiting Services Inc.coordinated with KAL for the departure of 30 contract workers, of whom only 21 were confirmedand 9 were wait-listed passengers. The agent of Pan Pacific, Jimmie Joseph, after beinginformed that there was a possibility of having one or two seats becoming available, gavepriority to Perico, who was one of the supervisors of the hiring company in Saudi Arabia. Theother seat was won through lottery by Lapuz. However, only one seat became available and so,

pursuant to the earlier agreement that Perico was to be given priority, he alone was allowed toboard.

After trial, the Regional Trial Court of Manila, Branch 30, 1adjudged KAL liable for damages,disposing as follows:

WHEREFORE, in view of the foregoing consideration, judgment is herebyrendered sentencing the defendant Korean Air Lines to pay plaintiff Juanito C.Lapuz the following:

1. The amount of TWO HUNDRED SEVENTY-TWO THOUSAND ONEHUNDRED SIXTY (P272,160.00) PESOS as actual/compensatory damages,with legal interest thereon from the date of the filing of the complaint until fullypaid.

2. The sum of TWENTY-FIVE THOUSAND (P25,000.00) PESOS as and forattorney's fees; and

3. The costs of suit.

The case is hereby dismissed with respect to defendant Pan Pacific OverseasRecruiting Services, Inc.

The counterclaims and cross-claim of defendant Korean Air Lines Co., Ltd. arelikewise dismissed.

On appeal, this decision was modified by the Court of Appeals 2 as follows:

WHEREFORE, in view of all the foregoing, the appealed judgment ishereby AFFIRMED with the following modifications: the amount of actualdamages and compensatory damages is reduced to P60,000.00 anddefendant-appellant is hereby ordered to pay plaintiff-appellant the sum ofOne Hundred Thousand Pesos (P100,000.00) by way of moral andexemplary damages, at 6% interest per annum from the date of the filingof the Complaint until fully paid.

KAL and Lapuz filed their respective motions for reconsideration, which were both denied forlack of merit. Hence, the present petitions for review which have been consolidated because ofthe identity of the parties and the similarity of the issues.

In G. R. No. 114061, KAL assails the decision of the appellate court on the following grounds:


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1. That the Court of Appeals erred in concluding that petitioner committeda breach of contract of carriage notwithstanding lack of proper, competentand sufficient evidence of the existence of such contract.

2. That the Court of Appeals erred in not according the proper evidentiaryweight to some evidence presented and the fact that private respondent

did not have any boarding pass to prove that he was allowed to boardand to prove that his airline ticket was confirmed.

3. That the Court of Appeals erred in concluding that the standbypassenger status of private respondent Lapuz was changed to aconfirmed status when his name was entered into the passengermanifest.

4. That the Court of Appeals abused its discretion in awarding moral andexemplary damages in the amount of P100,000.00 in favor of privaterespondent notwithstanding its lack of basis and private respondent didnot state such amount in his complaint nor had private respondent proventhe said damages.

5. That the Court of Appeals erred in dismissing the counterclaims.

6. That the Court of Appeals erred in dismissing the counterclaim ofpetitioner against Pan Pacific.

7. That the Court of Appeals erred in ruling that the 6% per annum legalinterest on the judgment shall be computed from the filing of thecomplaint.

In G. R. No. 113842, Lapuz seeks: (a) the setting aside of the decision of the Court of Appealsinsofar as it modifies the award of damages; b) actual and compensatory damages in the sumequivalent to 5 years' loss of earnings based on the petitioner's monthly salary of 1,600 Saudirials at the current conversion rate plus the cost of baggage and personal belongings worthP2,000 and the service fee of P3,000 paid to the recruiting agency, all with legal interest fromthe filing of the complaint until fully paid; c) moral damages of not less than P1 million andexemplary damages of not less than P500,000.00, both with interest at 6% per annum from thefiling of the complaint; and d) attorney's fees in the sum equivalent to 30% of the award ofdamages.

It is evident that the issues raised in these petitions relate mainly to the correctness of thefactual findings of the Court of Appeals and the award of damages. The Court has consistently

affirmed that the findings of fact of the Court of Appeals and the other lower courts are as a rulebinding upon it, subject to certain exceptions. As nothing in the record indicates any of suchexceptions, the factual conclusions of the appellate court must be affirmed.

The status of Lapuz as standby passenger was changed to that of a confirmed passenger whenhis name was entered in the passenger manifest of KAL for its Flight No. KE 903. His clearancethrough immigration and customs clearly shows that he had indeed been confirmed as apassenger of KAL in that flight. KAL thus committed a breach of the contract of carriagebetween them when it failed to bring Lapuz to his destination.


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This Court has held that a contract to transport passengers is different in kind and degree fromany other contractual relation. 3The business of the carrier is mainly with the traveling public. Itinvites people to avail themselves of the comforts and advantages it offers. The contract of aircarriage generates a relation attended with a public duty. Passengers have the right to betreated by the carrier's employees with kindness, respect, courtesy and due consideration. Theyare entitled to be protected against personal misconduct, injurious language, indignities and

abuses from such employees. 4So it is that any discourteous conduct on the part of theseemployees toward a passenger gives the latter an action for damages against the carrier.

The breach of contract was aggravated in this case when, instead of courteously informingLapuz of his being a "wait-listed" passenger, a KAL officer rudely shouted "Down! Down!" whilepointing at him, thus causing him embarrassment and public humiliation.

KAL argues that "the evidence of confirmation of a chance passenger status is not through theentry of the name of a chance passenger in the passenger manifest nor the clearance from theCommission on Immigration and Deportation, because they are merely means of facilitating theboarding of a chance passenger in case his status is confirmed." We are not persuaded.

The evidence presented by Lapuz shows that he had indeed checked in at the departurecounter, passed through customs and immigration, boarded the shuttle bus and proceeded tothe ramp of KAL's aircraft. In fact, his baggage had already been loaded in KAL's aircraft, to beflown with him to Jeddah. The contract of carriage between him and KAL had already beenperfected when he was summarily and insolently prevented from boarding the aircraft.

KAL's allegation that the respondent court abused its discretion in awarding moral andexemplary damages is also not tenable.

The Court of Appeals granted moral and exemplary damages because:

The findings of the court a quothat the defendant-appellant hascommitted breach of contract of carriage in bad faith and in wanton,disregard of plaintiff-appellant's rights as passenger laid the basis and

justification of an award for moral damages.

x x x x

In the instant case, we find that defendant-appellant Korean Air Linesacted in a wanton, fraudulent, reckless, oppressive or malevolent mannerwhen it "bumped off" plaintiff-appellant on November 8, 1980, and inaddition treated him rudely and arrogantly as a "patay gutom na contractworker fighting Korean Air Lines," which clearly shows malice and bad

faith, thus entitling plaintiff-appellant to moral damages.

x x x x

Considering that the plaintiff-appellant's entitlement to moral damageshas been fully established by oral and documentary evidence, exemplarydamages may be awarded. In fact, exemplary damages may be awarded,even though not so expressly pleaded in the complaint (Kapoe vs. Masa,134 SCRA 231). By the same token, to provide an example for the public


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good, an award of exemplary damages is also proper (Armovit vs. Courtof Appeals, supra).

On the other hand, Lapuz's claim that the award of P100,000.00 as moral and exemplarydamages is inadequate is not acceptable either. His prayer for moral damages of not less thanP1 million and exemplary damages of not less than P500,000.00 is overblown.

The well-entrenched principle is that moral damages depend upon the discretion of the courtbased on the circumstances of each case. 5This discretion is limited by the principle that the"amount awarded should not be palpably and scandalously excessive" as to indicate that it wasthe result of prejudice or corruption on the part of the trial court. 6Damages are not intended toenrich the complainant at the expense of the defendant. They are awarded only to alleviate themoral suffering that the injured party had undergone by reason of the defendant's culpableaction. 7There is no hard-and-fast rule in the determination of what would be a fair amount ofmoral damages since each case must be governed by its own peculiar facts.

A review of the record of this case shows that the injury suffered by Lapuz is not so serious orextensive as to warrant an award of P1.5 million. The assessment of P100,000 as moral andexemplary damages in his favor is, in our view, reasonable and realistic.

Lapuz likewise claims that the respondent court could not rule upon the propriety of the award

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