G.R. No. 108897 - Sarkies Tours Philippines, Inc. vs. Court of Appeals

Parties and case background
Petitioner: Sarkies Tours Philippines, Inc., a common carrier operating bus services. Respondents/Plaintiffs: Dr. Elino G. Fortades, Marisol A. Fortades and Fatima Minerva Fortades, who brought a damage suit for loss of baggage and consequential losses, alleging breach of contract of carriage attended by bad faith.
Citation and procedural posture: G.R. No. 108897; Third Division, decision promulgated October 2, 1997. Petition for review of the Court of Appeals decision in CA-G.R. CV No. 18979 (Jan. 13, 1993) and its resolution of Feb. 19, 1993 denying reconsideration.

Factual events leading to the suit
On August 31, 1984, Fatima boarded Sarkies Tours’ De Luxe Bus No. 5 in Manila bound for Legazpi City with three pieces of luggage containing optometry review books, equipment, trial lenses, passport and visa, and Marisol’s U.S. immigration (green) card, among other personal items. Her brother Raul assisted in packing and loading the luggage.
During a stopover at Daet, it was discovered that only one bag remained in the open baggage compartment; the other pieces were missing and presumably fell off along the route. Passengers suggested retracing the route, but the bus driver proceeded to Legazpi City. Other passengers also suffered loss of baggage on that trip.

Post-incident actions by respondents and petitioner’s initial responses
Immediate actions: Fatima reported the loss to her mother; Marisol reported to petitioner’s local Legazpi office and to the head office in Manila; they also sought help from radio stations, Philtranco bus drivers, the local police, and the NBI. One of Fatima’s bags was later recovered with the assistance of a Philtranco driver.
Petitioner’s communications: In a letter dated October 1, 1984, petitioner apologized for delay and stated that a team had been sent to Bicol to recover or investigate the incident. Petitioner offered P1,000.00 for each lost bag in its local office; this offer was turned down.
Formal demand and filing suit: Respondents, through counsel, made a formal demand on September 20, 1984. After more than nine months without satisfactory resolution, respondents filed suit seeking recovery of the value of lost items, moral and exemplary damages, attorney’s fees and litigation expenses. Fatima executed an affidavit of loss to facilitate replacement of lost U.S. immigration documents.

Allegations of parties at trial
Respondents’ claim: Petitioner failed to exercise extraordinary diligence as a common carrier, resulting in the loss; petitioner acted in bad faith and offered inadequate compensation; respondents incurred expenses and emotional distress.
Petitioner’s defense: Denied liability, asserting Fatima did not declare any excess baggage and disclaimed receipt of the luggage as basis for responsibility.

Trial and appellate findings (summary facts related to evidence)
Evidence presented: Testimony of Raul (who helped pack and load the luggage) and other passengers; one bag recovered; testimony showing petitioner’s employee helped load the luggage and did not require weighing, declaration, receipting or payment; police and NBI reports; petitioner’s October 1, 1984 apology letter; travel and expenses incurred by respondents to pursue claims and to testify.
Trial court’s findings: Accepted respondents’ evidence of receipt and loss and found petitioner negligent, leading to judgment in respondents’ favor with monetary awards (detailed under Ruling).

Factual-legal issues presented
Whether petitioner, as a common carrier, had received custody/possession of Fatima’s luggage such that it could be held liable for their subsequent loss.
Whether petitioner exercised the degree of care (extraordinary diligence) required of a common carrier in safeguarding passengers’ baggage and whether any statutory exceptions (Art. 1734) applied to exculpate petitioner.

Damages and conduct issues
Whether respondents were entitled to actual damages for the value of lost items and for transportation and other expenses incurred in pursuing recovery.
Whether respondents were entitled to moral and exemplary damages based on petitioner’s conduct, including alleged bad faith and negligence.
Whether attorney’s fees and litigation expenses were properly allowable.