Case Summary (G.R. No. 245258)
Procedural History
The respondent filed Civil Case No. 91-491 in the Regional Trial Court (Branch 24, Cagayan de Oro), which rendered judgment dismissing the complaint. The respondent appealed to the Court of Appeals (CA-G.R. CV No. 39901), which reversed and awarded moral and exemplary damages, attorney’s fees, and costs. The petitioner sought review under Rule 45; the Supreme Court denied the petition, affirmed the Court of Appeals’ decision except that it set aside the award of attorney’s fees.
Issue Presented
The petitioner framed a question whether a passenger’s rights upon interruption of a vessel’s voyage are governed by the Civil Code provision on common carriers or by Article 698 of the Code of Commerce. The Supreme Court reformulated the issue more precisely as whether a common carrier is liable for damages to a passenger who disembarked after the vessel returned to port because of engine trouble when the vessel had sailed with only one operating engine.
Facts
The respondent purchased a ticket for the M/V Asia Thailand from Cebu City to Cagayan de Oro City and boarded on the evening of November 12, 1991. He observed repair work on an engine and the vessel departed with only one engine running. After an hour the vessel stopped near Kawit Island and dropped anchor; some passengers demanded return to Cebu City, and the captain complied. Upon return to Cebu City, the respondent and other passengers who wished to disembark were allowed to do so. The respondent then took another vessel of the petitioner the next day to reach Cagayan de Oro. He alleged fear, mental distress, additional expenses and loss of income caused by the petitioner’s conduct.
Trial Court Findings
The trial court treated the action as one for breach of contract and applied Civil Code provisions (Articles 1170, 1172, 1173 and Article 2201), concluding that liability for damages required fraud, negligence, or bad faith and that such elements were not shown. The trial court found that the petitioner did not conceal the engine defect, that passengers had the option to return their tickets, and that the respondent was negligent in disembarking without inquiry after a microphone announcement allowing disembarkation. The complaint was dismissed.
Court of Appeals Ruling
The Court of Appeals reversed, applying Article 1755 (common carrier’s duty to use utmost diligence) and several Civil Code provisions (Articles 2201, 2208, 2217, 2232). The CA concluded the vessel was unseaworthy and that the petitioner failed to exercise the required utmost diligence by sailing with one engine under repair. The CA found bad faith/wantonness and awarded P20,000.00 as moral damages, P10,000.00 as exemplary damages, P5,000.00 as attorney’s fees, and costs.
Supreme Court’s Legal Framework and Approach
The Supreme Court acknowledged the contract was one of common carriage, making the Civil Code provisions on common carriers the primary law, with the Code of Commerce and special laws to supply matters not regulated therein (Article 1766, Civil Code). Given the decision date, the 1987 Constitution governs the legal context. The Court focused on Article 1755 (utmost diligence of common carriers) and on the regime of damages under Title XVIII of the Civil Code (Articles 2199–2234 and related provisions).
Seaworthiness and Breach of Duty
Applying Article 1755, the Court held that the petitioner failed to exercise the requisite extraordinary/utmost diligence. The vessel had undergone repairs on a cylinder head, departed with only one functioning engine that later conked out, causing the vessel to drift and anchor—facts that established unseaworthiness and a breach of the carrier’s duty to ensure the ship was fit to sail. The carrier’s decision to commence the voyage under those conditions constituted actionable failure to observe the diligence required of common carriers.
Application of Article 698, Code of Commerce
The Court recognized that Article 698 of the Code of Commerce governs interruptions of a voyage after its commencement (fare pro rata, indemnity when interruption caused exclusively by the captain, etc.), and that Article 698 applies suppletorily under Article 1766 of the Civil Code. However, because the interruption was caused by the carrier’s failure to exercise utmost diligence (i.e., vessel disability stemming from the carrier’s conduct), Article 698 must be read together with the Civil Code provisions on damages (Articles 2199, 2200, 2201, 2208, and Article 21), making the carrier liable for pecuniary losses reasonably attributable to the non-performance.
Compensatory (Actual) Damages
The Court agreed with the CA that compensatory damages for delay were not properly proven. The respondent disembarked voluntarily and took another vessel the following day; any further delay in arrival resulted from his decision to disembark. Actual damages must be supported by evidence, and the respondent failed to prove loss of income or other pecuniary loss for the relevant date(s). Consequently, no award of compensatory damages was sustained.
Moral and Exemplary Damages
The Supreme Court concurred with the CA that moral and exemplary da
...continue readingCase Syllabus (G.R. No. 245258)
Citation and Procedural Posture
- Reported at 324 Phil. 513; Third Division; G.R. No. 118126; Decision promulgated March 04, 1996.
- Petition for review on certiorari under Rule 45 of the Rules of Court filed by Trans-Asia Shipping Lines, Inc. (petitioner) seeking relief from the decision of the Court of Appeals dated November 23, 1994 (CA-G.R. CV No. 39901).
- The appeal arose from Civil Case No. 91-491 in the Regional Trial Court, Cagayan de Oro City, Branch 24 (trial court), presided over by Judge Leonardo N. Demecillo.
- Supreme Court disposition: petition denied; Court of Appeals decision affirmed except that award of attorney’s fees was set aside; costs against the petitioner. Opinion authored by Justice Davide, Jr.; Narvasa, C.J., Melo, Francisco, and Panganiban, JJ., concurred.
Issue Presented (as framed by parties and refined by the Court)
- Petitioner’s formulated issue: Whether, in case of interruption of a vessel’s voyage and consequent delay in arrival at destination, passenger rights are to be governed by Civil Code provisions on common carriers (vague) or, in absence of specific provision, by Article 698 of the Code of Commerce.
- Supreme Court’s refined issue: The precise question for resolution is whether a common carrier (petitioner) is liable for damages to a passenger (private respondent) who disembarked when the vessel returned to its port of origin after suffering engine trouble, where the voyage had commenced with only one engine running.
Material Facts
- Private respondent Atty. Renato T. Arroyo, a public attorney, purchased a ticket from petitioner for the voyage of M/V Asia Thailand from Cebu City to Cagayan de Oro City on November 12, 1991.
- At about 5:30 p.m. on November 12, 1991, the private respondent boarded and observed repair work being undertaken on a vessel engine.
- The vessel departed at around 11:00 p.m. with only one engine running.
- After about an hour of slow progress, the vessel stopped near Kawit Island and dropped anchor; it remained still for approximately half an hour.
- Some passengers, alarmed, demanded to be returned to Cebu City; the captain acceded and the vessel returned to Cebu City.
- Upon arrival in Cebu, private respondent and other passengers who requested to be brought back were allowed to disembark; the vessel then proceeded to Cagayan de Oro City.
- The private respondent boarded M/V Asia Japan (also operated by petitioner) the next day to proceed to Cagayan de Oro City, using his original ticket.
Claims, Pleadings, and Relief Sought
- Civil Case No. 91-491: private respondent pleaded that the M/V Asia Thailand’s engines conked out, leaving the vessel stalled and passengers at the mercy of the waves for more than an hour, causing fear.
- He alleged that after power was regained and the vessel returned to Cebu City, passengers were told to disembark "without the necessary precautions," resulting in being "unceremoniously dumped" and aggravating his mental distress.
- Allegations against petitioner characterized as wanton, reckless, and willful acts exposing passengers to danger, causing him to be stranded for a day with additional expenses and loss of income.
- Prayer for damages: P1,100.00 (compensatory), P50,000.00 (moral), and P25,000.00 (exemplary).
- In pre-trial brief, private respondent characterized his complaint as an action for damages arising from bad faith, breach of contract (failure to carry him to destination), and tort (emotional distress).
Trial Court Findings and Ruling
- Trial court concluded the action was for breach of contract and applied Articles 1170, 1172, and 1173 of the Civil Code (not Article 2180).
- The trial court emphasized Article 1170 on liability for fraud, negligence, or delay and Article 2201 requiring non-performance to be tainted by bad faith, malice or wanton attitude to warrant damages.
- Key factual findings:
- The vessel’s cracked cylinder head repair works were visible before departure (as early as 3:00 p.m.); plaintiff saw the repairs and could have taken another boat or returned his ticket for refund.
- No evidence of fraud, negligence, bad faith or malice by defendant; announcements were made upon return to Cebu giving passengers ten minutes to disembark, implying the vessel would proceed to Cagayan de Oro.
- Plaintiff was found negligent for disembarking without inquiring further and for being "of the impression" the boat would not proceed that evening.
- The trial court accepted defendant’s contention that the vessel returned because passengers requested it in view of the waves, not necessarily because of defective engines, noting the vessel left for Cagayan de Oro about fifteen minutes after docking.
- Disposition: Complaint dismissed; defendant’s counterclaim likewise dismissed.
Issues on Appeal to the Court of Appeals
- Private respondent assigned errors contending the trial court erred in:
- Not finding defendant-appellee guilty of fraud, delay, negligence, and bad faith.
- Not awarding moral and exemplary damages.
Court of Appeals Decision and Reasoning
- Court of Appeals (November 23, 1994) reversed the trial court and rendered judgment ordering defendant-appellee to pay:
- P20,000.00 as moral damages;
- P10,000.00 as exemplary damages;
- P5,000.00 as attorney’s fees;
- Costs of suit.
- The Court of Appeals applied Article 1755 (common carrier’s duty to carry passengers safely with utmost diligence) in relation to Articles 2201, 2208, 2217, and 2232.
- Factual and evidentiary basis relied upon:
- Admissions that repair work had been done on cylinder head and that vessel left with only one engine running.
- Logbook entries offered by defendant itself reading: "2330 HRS STBD ENGINE EMERGENCY STOP" and "2350 HRS DROP ANCHOR DUE TO. ENGINE TROUBLE, 2 ENGINE STOP," indicating engine trouble rather than