Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-9671

August 23, 1957

CESAR L. ISAAC, plaintiff-appellant,

vs.
A. L. AMMEN TRANSPORTATION CO., INC., defendant-appellee.
Angel S. Gamboa for appellant.
Manuel O. Chan for appellee.
BAUTISTA ANGELO, J.:
A. L. Ammen Transportation Co., Inc., hereinafter referred to as defendant, is a corporation engaged
in the business of transporting passengers by land for compensation in the Bicol provinces and one
of the lines it operates is the one connecting Legaspi City, Albay with Naga City, Camarines Sur. One
of the buses which defendant was operating is Bus No. 31. On May 31, 1951, plaintiff boarded said
bus as a passenger paying the required fare from Ligao, Albay bound for Pili, Camarines Sur, but
before reaching his destination, the bus collided with a motor vehicle of the pick-up type coming from
the opposite direction, as a result of which plaintiff's left arm was completely severed and the
severed portion fell inside the bus. Plaintiff was rushed to a hospital in Iriga, Camarines Sur where
he was given blood transfusion to save his life. After four days, he was transferred to another
hospital in Tabaco, Albay, where he under went treatment for three months. He was moved later to
the Orthopedic Hospital where he was operated on and stayed there for another two months. For
these services, he incurred expenses amounting to P623.40, excluding medical fees which were
paid by defendant.
As an aftermath, plaintiff brought this action against defendants for damages alleging that the
collision which resulted in the loss of his left arm was mainly due to the gross incompetence and
recklessness of the driver of the bus operated by defendant and that defendant incurred in culpa
contractual arising from its non-compliance with its obligation to transport plaintiff safely to his,
destination. Plaintiff prays for judgment against defendant as follows: (1) P5,000 as expenses for his
medical treatment, and P3,000 as the cost of an artificial arm, or a total of P8,000; (2) P6,000
representing loss of earning; (3) P75,000 for diminution of his earning capacity; (4) P50,000 as moral
damages; and (5) P10,000 as attorneys' fees and costs of suit.
Defendant set up as special defense that the injury suffered by plaintiff was due entirely to the fault
or negligence of the driver of the pick-up car which collided with the bus driven by its driver and to
the contributory negligence of plaintiff himself. Defendant further claims that the accident which
resulted in the injury of plaintiff is one which defendant could not foresee or, though foreseen, was
inevitable.
The after trial found that the collision occurred due to the negligence of the driver of the pick-up car
and not to that of the driver of the bus it appearing that the latter did everything he could to avoid the
same but that notwithstanding his efforts, he was not able to avoid it. As a consequence, the court
dismissed complaint, with costs against plaintiff. This is an appeal from said decision.

It appears that plaintiff boarded a bus of defendant as paying passenger from Ligao, Albay, bound for
Pili, Camarines Sur, but before reaching his destination, the bus collided with a pick-up car which
was coming from the opposite direction and, as a, result, his left arm was completely severed and
fell inside the back part of the bus. Having this background in view, and considering that plaintiff
chose to hold defendant liable on its contractual obligation to carry him safely to his place of
destination, it becomes important to determine the nature and extent of the liability of a common
carrier to a passenger in the light of the law applicable in this jurisdiction.
In this connection, appellant invokes the rule that, "when an action is based on a contract of
carriage, as in this case, all that is necessary to sustain recovery is proof of the existence of the
contract of the breach thereof by act or omission", and in support thereof, he cites several Philippine
cases.1 With the ruling in mind, appellant seems to imply that once the contract of carriage is
established and there is proof that the same was broken by failure of the carrier to transport the
passenger safely to his destination, the liability of the former attaches. On the other hand, appellee
claims that is a wrong presentation of the rule. It claims that the decisions of this Court in the cases
cited do not warrant the construction sought to be placed upon, them by appellant for a mere perusal
thereof would show that the liability of the carrier was predicated not upon mere breach of its
contract of carriage but upon the finding that its negligence was found to be the direct or proximate
cause of the injury complained of. Thus, appellee contends that "if there is no negligence on the part
of the common carrier but that the accident resulting in injuries is due to causes which are inevitable
and which could not have been avoided or anticipated notwithstanding the exercise of that high
degree of care and skill which the carrier is bound to exercise for the safety of his passengers",
neither the common carrier nor the driver is liable therefor.
We believe that the law concerning the liability of a common carrier has now suffered a substantial
modification in view of the innovations introduced by the new Civil Code. These innovations are the
ones embodied in Articles 1733, 1755 and 1756 in so far as the relation between a common carrier
and its passengers is concerned, which, for ready reference, we quote hereunder:
ART. 1733. Common carriers, from the nature of their business and for reasons of
public policy, are bound to observe extra ordinary diligence in the vigilance over the
goods and for the safety of the passengers transported by them according to all the
circumstances of each case.
Such extraordinary diligence in the vigilance over the goods is further expressed in
articles 1734, 1735, and 1745, Nos. 5, 6, and 7, while the extraordinary diligence for
the safety of the passengers is further set forth in articles 1755 and 1756.
ART. 1755. A common carrier is bound to carry the passengers safely as far as
human care and foresight can provide, using the utmost diligence of very cautious
persons, with a due regard for all the circumstances.
ART. 1756. In case of death of or injuries to passengers, common carriers are
presumed to have been at fault or to have acted negligently, unless they prove that
they observed extraordinary diligence as prescribed in articles 1733 and 1755.
The Code Commission, in justifying this extraordinary diligence required of a common carrier, says
the following:
A common carrier is bound to carry the passengers safely as far as human care and
foresight can provide, using the utmost deligence of very cautions persons, with due
regard for all circumstances. This extraordinary diligence required of common

carriers is calculated to protect the passengers from the tragic mishaps that
frequently occur in connection with rapid modern transportation. This high standard
of care is imperatively demanded by the precariousness of human life and by the
consideration that every person must in every way be safeguarded against all injury.
(Report of the Code Commission, pp. 35-36)" (Padilla, Civil Code of the Philippines,
Vol. IV, 1956 ed., p. 197).
From the above legal provisions, we can make the following restatement of the principles governing
the liability of a common carrier: (1) the liability of a carrier is contractual and arises upon breach of
its obligation. There is breach if it fails to exert extraordinary diligence according to all circumstances
of each case; (2) a carrier is obliged to carry its passenger with the utmost diligence of a very
cautious person, having due regard for all the circumstances; (3) a carrier is presumed to be at fault
or to have acted negligently in case of death of, or injury to, passengers, it being its duty to prove
that it exercised extraordinary diligence; and (4) the carrier is not an insurer against all risks of travel.
The question that now arises is: Has defendant observed extraordinary diligence or the utmost
diligence of every cautious person, having due regard for all circumstances, in avoiding the collision
which resulted in the injury caused to the plaintiff?
After examining the evidence in connection with how the collision occurred, the lower court made the
following finding:
Hemos examinado muy detenidamente las pruebas presentadas en la vista,
principalmente, las declaraciones que hemos acotado arriba, y hernos Ilegado a la
conclusion de que el demandado ha hecho, todo cuanto estuviere de su parte para
evitar el accidente, pero sin embargo, no ha podido evitarlo.
EI hecho de que el demandado, antes del choque, tuvo que hacer pasar su truck
encima de los montones de grava que estaban depositados en la orilla del camino,
sin que haya ido mas alla, por el grave riesgo que corrian las vidas de sus pasajeros,
es prueba concluyente de lo que tenemos dicho, a saber: que el cuanto esuba de
su parte, para evitar el accidente, sin que haya podidoevitardo, por estar fuera de su
control.
The evidence would appear to support the above finding. Thus, it appears that Bus No. 31,
immediately prior to the collision, was running at a moderate speed because it had just stopped at
the school zone of Matacong, Polangui, Albay. The pick-up car was at full speed and was running
outside of its proper lane. The driver of the bus, upon seeing the manner in which the pick-up was
then running, swerved the bus to the very extreme right of the road until its front and rear wheels
have gone over the pile of stones or gravel situated on the rampart of the road. Said driver could not
move the bus farther right and run over a greater portion of the pile, the peak of which was about 3
feet high, without endangering the safety of his passengers. And notwithstanding all these efforts,
the rear left side of the bus was hit by the pick-up car.
Of course, this finding is disputed by appellant who cannot see eye to eye with the evidence for the
appellee and insists that the collision took place because the driver of the bus was going at a fast
speed. He contends that, having seen that a car was coming from the opposite direction at a
distance which allows the use of moderate care and prudence to avoid an accident, and knowing
that on the side of the road along which he was going there was a pile of gravel, the driver of the bus
should have stopped and waited for the vehicle from the opposite direction to pass, and should have
proceeded only after the other vehicle had passed. In other words, according to appellant, the act of

the driver of the bus in squeezing his way through of the bus in squeezing his way through between
the oncoming pick-up and the pile of gravel under the circumstances was considered negligent.
But this matter is one of credibility and evaluation of the evidence. This is evidence. This is the
function of the trial court. The trial court has already spoken on this matter as we have pointed out
above. This is also a matter of appreciation of the situation on the part of the driver. While the
position taken by appellant appeals more to the sense of caution that one should observe in a given
situation to avoid an accident or mishap, such however can not always be expected from one who is
placed suddenly in a predicament where he is not given enough time to take the course of action as
he should under ordinary circumstances. One who is placed in such a predicament cannot exercise
such coolness or accuracy of judgment as is required of him under ordinary circumstances and he
cannot therefore be expected to observe the same judgment, care and precaution as in the latter.
For this reason, authorities abound where failure to observe the same degree of care that as
ordinary prudent man would exercise under ordinary circumstances when confronted with a sadden
emergency was held to be warranted and a justification to exempt the carrier from liability. Thus, it
was held that "where a carrier's employee is confronted with a sudden emergency, the fact that he is
obliged to act quickly and without a chance for deliberation must be taken into account, and he is
held to the some degree of care that he would otherwise be required to exercise in the absence of
such emergency but must exercise only such care as any ordinary prudent person would exercise
under like circumstances and conditions, and the failure on his part to exercise the best judgement
the case renders possible does not establish lack of care and skill on his part which renders the
company, liable. . . . (13 C. J. S., 1412; 10 C. J.,970). Considering all the circumstances, we are
persuaded to conclude that the driver of the bus has done what a prudent man could have done to
avoid the collision and in our opinion this relieves appellee from legibility under our law.
A circumstances which miliates against the stand of appellant is the fact borne out by the evidence
that when he boarded the bus in question, he seated himself on the left side thereof resting his left
arm on the window sill but with his left elbow outside the window, this being his position in the bus
when the collision took place. It is for this reason that the collision resulted in the severance of said
left arm from the body of appellant thus doing him a great damage. It is therefore apparent that
appellant is guilty of contributory negligence. Had he not placed his left arm on the window sill with a
portion thereof protruding outside, perhaps the injury would have been avoided as is the case with
the other passenger. It is to be noted that appellant was the only victim of the collision.
It is true that such contributory negligence cannot relieve appellee of its liability but will only entitle it
to a reduction of the amount of damage caused (Article 1762, new Civil Code), but this is a
circumstance which further militates against the position taken by appellant in this case.
It is the prevailing rule that it is negligence per se for a passenger on a railroad
voluntarily or inadvertently to protrude his arm, hand, elbow, or any other part of his
body through the window of a moving car beyond the outer edge of the window or
outer surface of the car, so as to come in contact with objects or obstacles near the
track, and that no recovery can be had for an injury which but for such negligence
would not have been sustained. (10 C. J. 1139)
Plaintiff, (passenger) while riding on an interurban car, to flick the ashes, from his
cigar, thrust his hand over the guard rail a sufficient distance beyond the side line of
the car to bring it in contact with the trunk of a tree standing beside the track; the
force of the blow breaking his wrist. Held, that he was guilty of contributory
negligence as a matter of law. (Malakia vs. Rhode Island Co., 89 A., 337.)
Wherefore, the decision appealed from is affirmed, with cost against appellant.

Paras, C.J., Bengzon, Padilla, Montemayor, Reyes, A., Labrador, Concepcion, Endencia and Felix,
JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. L-31379 August 29, 1988
COMPAIA MARITIMA, petitioner,
vs.
COURT OF APPEALS and VICENTE CONCEPCION, respondents.
Rafael Dinglasan for petitioner.
Benjamin J. Molina for private respondent.

FERNAN, C.J.:
Petitioner Compaia Maritima seeks to set aside through this petition for review on certiorari the
decision 1 of the Court of Appeals dated December 5, 1965, adjudging petitioner liable to private
respondent Vicente E. Concepcion for damages in the amount of P24,652.97 with legal interest from the
date said decision shall have become final, for petitioner's failure to deliver safely private respondent's
payloader, and for costs of suit. The payloader was declared abandoned in favor of petitioner.
The facts of the case are as follows:
Private respondent Vicente E. Concepcion, a civil engineer doing business under the name and style
of Consolidated Construction with office address at Room 412, Don Santiago Bldg., Taft Avenue,
Manila, had a contract with the Civil Aeronautics Administration (CAA) sometime in 1964 for the
construction of the airport in Cagayan de Oro City Misamis Oriental.
Being a Manila based contractor, Vicente E. Concepcion had to ship his construction equipment
to Cagayan de Oro City. Having shipped some of his equipment through petitioner and having
settled the balance of P2,628.77 with respect to said shipment, Concepcion negotiated anew with
petitioner, thru its collector, Pacifico Fernandez, on August 28, 1964 for the shipment to Cagayan de
Oro City of one (1) unit payloader, four (4) units 6x6 Reo trucks and two (2) pieces of water tanks.
He was issued Bill of Lading 113 on the same date upon delivery of the equipment at the Manila
North Harbor. 2
These equipment were loaded aboard the MV Cebu in its Voyage No. 316, which left Manila on
August 30, 1964 and arrived at Cagayan de Oro City in the afternoon of September 1, 1964. The
Reo trucks and water tanks were safely unloaded within a few hours after arrival, but while the
payloader was about two (2) meters above the pier in the course of unloading, the swivel pin of the

heel block of the port block of Hatch No. 2 gave way, causing the payloader to fall. 3 The payloader
was damaged and was thereafter taken to petitioner's compound in Cagayan de Oro City.
On September 7, 1964, Consolidated Construction, thru Vicente E. Concepcion, wrote Compaia
Maritima to demand a replacement of the payloader which it was considering as a complete loss
because of the extent of damage. 4 Consolidated Construction likewise notified petitioner of its claim for
damages. Unable to elicit response, the demand was repeated in a letter dated October 2, 1964. 5
Meanwhile, petitioner shipped the payloader to Manila where it was weighed at the San Miguel
Corporation. Finding that the payloader weighed 7.5 tons and not 2.5 tons as declared in the B-111
of Lading, petitioner denied the claim for damages of Consolidated Construction in its letter dated
October 7, 1964, contending that had Vicente E. Concepcion declared the actual weight of the
payloader, damage to their ship as well as to his payloader could have been prevented. 6
To replace the damaged payloader, Consolidated Construction in the meantime bought a new one at
P45,000.00 from Bormaheco Inc. on December 3, 1964, and on July 6, 1965., Vicente E.
Concepcion filed an action for damages against petitioner with the then Court of First Instance of
Manila, Branch VII, docketed as Civil Case No. 61551, seeking to recover damages in the amount of
P41,225.00 allegedly suffered for the period of 97 days that he was not able to employ a payloader
in the construction job at the rate of P450.00 a day; P34,000.00 representing the cost of the
damaged payloader; Pl 1, 000. 00 representing the difference between the cost of the damaged
payloader and that of the new payloader; P20,000.00 representing the losses suffered by him due to
the diversion of funds to enable him to buy a new payloader; P10,000.00 as attorney's fees;
P5,000.00 as exemplary damages; and cost of the suit. 7
After trial, the then Court of First Instance of Manila, Branch VII, dismissed on April 24, 1968 the
complaint with costs against therein plaintiff, herein private respondent Vicente E. Concepcion,
stating that the proximate cause of the fall of the payloader was Vicente E. Concepcion's act or
omission in having misrepresented the weight of the payloader as 2.5 tons instead of its true weight
of 7.5 tons, which underdeclaration was intended to defraud Compaia Maritima of the payment of
the freight charges and which likewise led the Chief Officer of the vessel to use the heel block of
hatch No. 2 in unloading the payloader. 8
From the adverse decision against him, Vicente E. Concepcion appealed to the Court of Appeals
which, on December 5, 1965 rendered a decision, the dispositive portion of which reads:
IN VIEW WHEREOF, judgment must have to be as it is hereby reversed;
defendant is condemned to pay unto plaintiff the sum in damages of
P24,652.07 with legal interest from the date the present decision shall have
become final; the payloader is declared abandoned to defendant; costs
against the latter. 9
Hence, the instant petition.
The principal issue in the instant case is whether or not the act of private respondent Vicente E.
Concepcion in furnishing petitioner Compaia Maritima with an inaccurate weight of 2.5 tons instead
of the payloader's actual weight of 7.5 tons was the proximate and only cause of the damage on the
Oliver Payloader OC-12 when it fell while being unloaded by petitioner's crew, as would absolutely
exempt petitioner from liability for damages under paragraph 3 of Article 1734 of the Civil Code,
which provides:

Art. 1734. Common carriers are responsible for the loss, destruction, or
deterioration of the goods, unless the same is due to any of the following
causes only:
xxx xxx xxx
(3) Act or omission of the shipper or owner of the goods.
Petitioner claims absolute exemption under this provision upon the reasoning that private
respondent's act of furnishing it with an inaccurate weight of the payloader constitutes
misrepresentation within the meaning of "act or omission of the shipper or owner of the goods" under
the above- quoted article. It likewise faults the respondent Court of Appeals for reversing the
decision of the trial court notwithstanding that said appellate court also found that by representing
the weight of the payloader to be only 2.5 tons, private respondent had led petitioner's officer to
believe that the same was within the 5 tons capacity of the heel block of Hatch No. 2. Petitioner
would thus insist that the proximate and only cause of the damage to the payloader was private
respondent's alleged misrepresentation of the weight of the machinery in question; hence, any
resultant damage to it must be borne by private respondent Vicente E. Concepcion.
The general rule under Articles 1735 and 1752 of the Civil Code is that common carriers are
presumed to have been at fault or to have acted negligently in case the goods transported by them
are lost, destroyed or had deteriorated. To overcome the presumption of liability for the loss,
destruction or deterioration of the goods under Article 1735, the common carriers must prove that
they observed extraordinary diligence as required in Article 1733 of the Civil Code. The responsibility
of observing extraordinary diligence in the vigilance over the goods is further expressed in Article
1734 of the same Code, the article invoked by petitioner to avoid liability for damages.
Corollary is the rule that mere proof of delivery of the goods in good order to a common carrier, and
of their arrival at the place of destination in bad order, makes out prima facie case against the
common carrier, so that if no explanation is given as to how the loss, deterioration or destruction of
the goods occurred, the common carrier must be held responsible. 10 Otherwise stated, it is incumbent
upon the common carrier to prove that the loss, deterioration or destruction was due to accident or some
other circumstances inconsistent with its liability.
In the instant case, We are not persuaded by the proferred explanation of petitioner alleged to be the
proximate cause of the fall of the payloader while it was being unloaded at the Cagayan de Oro City
pier. Petitioner seems to have overlooked the extraordinary diligence required of common carriers in
the vigilance over the goods transported by them by virtue of the nature of their business, which is
impressed with a special public duty.
Thus, Article 1733 of the Civil Code provides:
Art. 1733. Common carriers, from the nature of their business and for reason
of public policy, are bound to observe extraordinary diligence in the vigilance
over the goods and for the safety of the passengers transported by them
according to all the circumstances of each case.
Such extraordinary diligence in the vigilance over the goods is further
expressed in Articles 1734, 1735 and 1745, Nos. 5, 6 and 7, ...
The extraordinary diligence in the vigilance over the goods tendered for shipment requires the
common carrier to know and to follow the required precaution for avoiding damage to, or destruction

of the goods entrusted to it for safe carriage and delivery. It requires common carriers to render
service with the greatest skill and foresight and "to use all reasonable means to ascertain the nature
and characteristic of goods tendered for shipment, and to exercise due care in the handling and
stowage including such methods as their nature requires." 11 Under Article 1736 of the Civil Code, the
responsibility to observe extraordinary diligence commences and lasts from the time the goods are
unconditionally placed in the possession of, and received by the carrier for transportation until the same
are delivered, actually or constructively, by the carrier to the consignee, or to the person who has the right
to receive them without prejudice to the provisions of Article 1738.
Where, as in the instant case, petitioner, upon the testimonies of its own crew, failed to take the
necessary and adequate precautions for avoiding damage to, or destruction of, the payloader
entrusted to it for safe carriage and delivery to Cagayan de Oro City, it cannot be reasonably
concluded that the damage caused to the payloader was due to the alleged misrepresentation of
private respondent Concepcion as to the correct and accurate weight of the payloader. As found by
the respondent Court of Appeals, the fact is that petitioner used a 5-ton capacity lifting apparatus to
lift and unload a visibly heavy cargo like a payloader. Private respondent has, likewise, sufficiently
established the laxity and carelessness of petitioner's crew in their methods of ascertaining the
weight of heavy cargoes offered for shipment before loading and unloading them, as is customary
among careful persons.
It must be noted that the weight submitted by private respondent Concepcion appearing at the lefthand portion of Exhibit 8 12 as an addendum to the original enumeration of equipment to be shipped was
entered into the bill of lading by petitioner, thru Pacifico Fernandez, a company collector, without seeing
the equipment to be shipped. 13 Mr. Mariano Gupana, assistant traffic manager of petitioner, confirmed in
his testimony that the company never checked the information entered in the bill of lading. 14 Worse, the
weight of the payloader as entered in the bill of lading was assumed to be correct by Mr. Felix Pisang,
Chief Officer of MV Cebu. 15
The weights stated in a bill of lading are prima facie evidence of the amount received and the fact
that the weighing was done by another will not relieve the common carrier where it accepted such
weight and entered it on the bill of lading. 16 Besides, common carriers can protect themselves against
mistakes in the bill of lading as to weight by exercising diligence before issuing the same. 17
While petitioner has proven that private respondent Concepcion did furnish it with an inaccurate
weight of the payloader, petitioner is nonetheless liable, for the damage caused to the machinery
could have been avoided by the exercise of reasonable skill and attention on its part in overseeing
the unloading of such a heavy equipment. And circumstances clearly show that the fall of the
payloader could have been avoided by petitioner's crew. Evidence on record sufficiently show that
the crew of petitioner had been negligent in the performance of its obligation by reason of their
having failed to take the necessary precaution under the circumstances which usage has
established among careful persons, more particularly its Chief Officer, Mr. Felix Pisang, who is
tasked with the over-all supervision of loading and unloading heavy cargoes and upon whom rests
the burden of deciding as to what particular winch the unloading of the payloader should be
undertaken. 18 While it was his duty to determine the weight of heavy cargoes before accepting them. Mr.
Felix Pisang took the bill of lading on its face value and presumed the same to be correct by merely
"seeing" it. 19 Acknowledging that there was a "jumbo" in the MV Cebu which has the capacity of lifting 20
to 25 ton cargoes, Mr. Felix Pisang chose not to use it, because according to him, since the ordinary
boom has a capacity of 5 tons while the payloader was only 2.5 tons, he did not bother to use the "jumbo"
anymore. 20
In that sense, therefore, private respondent's act of furnishing petitioner with an inaccurate weight of
the payloader upon being asked by petitioner's collector, cannot be used by said petitioner as an
excuse to avoid liability for the damage caused, as the same could have been avoided had petitioner

utilized the "jumbo" lifting apparatus which has a capacity of lifting 20 to 25 tons of heavy cargoes. It
is a fact known to the Chief Officer of MV Cebu that the payloader was loaded aboard the MV Cebu
at the Manila North Harbor on August 28, 1964 by means of a terminal crane. 21 Even if petitioner
chose not to take the necessary precaution to avoid damage by checking the correct weight of the
payloader, extraordinary care and diligence compel the use of the "jumbo" lifting apparatus as the most
prudent course for petitioner.
While the act of private respondent in furnishing petitioner with an inaccurate weight of the payloader
cannot successfully be used as an excuse by petitioner to avoid liability to the damage thus caused,
said act constitutes a contributory circumstance to the damage caused on the payloader, which
mitigates the liability for damages of petitioner in accordance with Article 1741 of the Civil Code, to
wit:
Art. 1741. If the shipper or owner merely contributed to the loss, destruction
or deterioration of the goods, the proximate cause thereof being the
negligence of the common carrier, the latter shall be liable in damages, which
however, shall be equitably reduced.
We find equitable the conclusion of the Court of Appeals reducing the recoverable amount of
damages by 20% or 1/5 of the value of the payloader, which at the time the instant case arose, was
valued at P34,000. 00, thereby reducing the recoverable amount at 80% or 4/5 of P34,000.00 or the
sum of P27,200.00. Considering that the freight charges for the entire cargoes shipped by private
respondent amounting to P2,318.40 remained unpaid.. the same would be deducted from the
P27,000.00 plus an additional deduction of P228.63 representing the freight charges for the
undeclared weight of 5 tons (difference between 7.5 and 2.5 tons) leaving, therefore, a final
recoverable amount of damages of P24,652.97 due to private respondent Concepcion.
Notwithstanding the favorable judgment in his favor, private respondent assailed the Court of
Appeals' decision insofar as it limited the damages due him to only P24,652.97 and the cost of the
suit. Invoking the provisions on damages under the Civil Code, more particularly Articles 2200 and
2208, private respondent further seeks additional damages allegedly because the construction
project was delayed and that in spite of his demands, petitioner failed to take any steps to settle his
valid, just and demandable claim for damages.
We find private respondent's submission erroneous. It is well- settled that an appellee, who is not an
appellant, may assign errors in his brief where his purpose is to maintain the judgment on other
grounds, but he may not do so if his purpose is to have the judgment modified or reversed, for, in
such case, he must appeal. 22 Since private respondent did not appeal from the judgment insofar as it
limited the award of damages due him, the reduction of 20% or 1/5 of the value of the payloader stands.
WHEREFORE, in view of the foregoing, the petition is DENIED. The decision of the Court of Appeals
is hereby AFFIRMED in all respects with costs against petitioner. In view of the length of time this
case has been pending, this decision is immediately executory.
Gutierrez, Jr., Feliciano, Bidin and Cortes JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION
G.R. No. L-55347 October 4, 1985
PHILIPPINE NATIONAL RAILWAYS, petitioner,
vs.
THE HONORABLE COURT OF APPEALS and ROSARIO TUPANG, respondents.
Arturo Samaniego for private respondent.

ESCOLIN, J.:
Invoking the principle of state immunity from suit, the Philippine National Railways, PNR for short,
instituted this petition for review on certiorari to set aside the decision of the respondent Appellate
Court which held petitioner PNR liable for damages for the death of Winifredo Tupang, a paying
passenger who fell off a train operated by the petitioner.
The pertinent facts are summarized by the respondent court as follows:
The facts show that on September 10, 1972, at about 9:00 o'clock in the
evening, Winifredo Tupang, husband of plaintiff Rosario Tupang, boarded
'Train No. 516 of appellant at Libmanan, Camarines Sur, as a paying
passenger bound for Manila. Due to some mechanical defect, the train
stopped at Sipocot, Camarines Sur, for repairs, taking some two hours before
the train could resume its trip to Manila. Unfortunately, upon passing Iyam
Bridge at Lucena, Quezon, Winifredo Tupang fell off the train resulting in his
death.The train did not stop despite the alarm raised by the other passengers
that somebody fell from the train. Instead, the train conductor Perfecto
Abrazado, called the station agent at Candelaria, Quezon, and requested for
verification of the information. Police authorities of Lucena City were
dispatched to the Iyam Bridge where they found the lifeless body of Winifredo
Tupang.
As shown by the autopsy report, Winifredo Tupang died of cardio-respiratory
failure due to massive cerebral hemorrhage due to traumatic injury [Exhibits
B and C, Folder of Exhibits],Tupang was later buried in the public cemetery of
Lucena City by the local police authorities. [Rollo, pp. 91-92]
Upon complaint filed by the deceased's widow, Rosario Tupang, the then Court of First Instance of
Rizal, after trial, held the petitioner PNR liable for damages for breach of contract of carriage and
ordered "to pay the plaintiff the sum of P12,000,00 for the death of Winifredo Tupang, plus
P20,000.00 for loss of his earning capacity and the further sum of P10,000.00 as moral damages,
and P2,000.00 as attorney's fees, and costs. 1
On appeal, the Appellate Court sustained the holding of the trial court that the PNR did not exercise
the utmost diligence required by law of a common carrier. It further increased the amount
adjudicated by the trial court by ordering PNR to pay the plaintiff an additional sum of P5,000.00 as
exemplary damages.

Moving for reconsideration of the above decision, the PNR raised for the first time, as a defense, the
doctrine of state immunity from suit. It alleged that it is a mere agency of the Philippine government
without distinct or separate personality of its own, and that its funds are governmental in character
and, therefore, not subject to garnishment or execution. The motion was denied; the respondent
court ruled that the ground advanced could not be raised for the first time on appeal.
Hence, this petition for review.
The petition is devoid of merit. The PNR was created under Rep. Act 4156, as amended. Section 4
of the said Act provides:
The Philippine national Railways shall have the following powers:
a. To do all such other things and to transact all such business directly or
indirectly necessary, incidental or conducive to the attainment of the purpose
of the corporation; and
b. Generally, to exercise all powers of a corporation under the Corporation
Law.
Under the foregoing section, the PNR has all the powers, the characteristics and attributes of a
corporation under the Corporation Law. There can be no question then that the PNR may sue and
be sued and may be subjected to court processes just like any other corporation. 2
The petitioner's contention that the funds of the PNR are not subject to garnishment or execution
hardly raises a question of first impression. In Philippine National Railways v. Union de Maquinistas,
et al., 3 then Justice Fernando, later Chief Justice, said. "The main issue posed in this certiorari
proceeding, whether or not the funds of the Philippine National Railways, could be garnished or levied
upon on execution was resolved in two recent decisions, the Philippine National Bank v. Court of
Industrial Relations [81 SCRA 314] and Philippine National Bank v. Hon. Judge Pabalan [83 SCRA 595].
This Court in both cases answered the question in the affirmative. There was no legal bar to garnishment
or execution. The argument based on non-suability of a state allegedly because the funds are
governmental in character was unavailing.So it must be again."
In support of the above conclusion, Justice Fernando cited the Court's holding in Philippine National
Bank v. Court of Industrial Relations, to wit: "The premise that the funds could be spoken of as public
in character may be accepted in the sense that the People's Homesite and Housing Corporation was
a government-owned entity. It does not follow though that they were exempt from garnishment.
National Shipyard and Steel Corporation v. Court of Industrial Relations is squarely in point. As was
explicitly stated in the opinion of then Justice, later Chief Justice, Concepcion: "The allegation to the
effect that the funds of the NASSCO are public funds of the government, and that, as such, the same
may not be garnished, attached or levied upon, is untenable for, as a government- owned and
controlled corporation, the NASSCO has a personality of its own, distinct and separate from that of
the Government. It has-pursuant to Section 2 of Executive Order No. 356, dated October 23, 1950 *
* *, pursuant to which the NASSCO has been established- 'all the powers of a corporation under the
Corporation Law * * *. 4
As far back as 1941, this Court in the case of Manila Hotel Employees Association v. Manila Hotel
Co., 5 laid down the rule that "when the government enters into commercial business, it abandons its
sovereign capacity and is to be treated like any other corporation. [Bank of the U.S. v. Planters' Bank, 9
Waitch 904, 6 L. ed. 244]. By engaging in a particular business through the instrumentality of a
corporation the government divests itself pro hac vice of its sovereign character, so as to render the

corporation subject to the rules of law governing private corporations. 6 Of Similar import is the
pronouncement in Prisco v. CIR,' that "when the government engages in business, it abdicates part of its
sovereign prerogatives and descends to the level of a citizen, ... . " In fine, the petitioner PNR cannot
legally set up the doctrine of non-suability as a bar to the plaintiff's suit for damages.

The appellate court found, the petitioner does not deny, that the train boarded by the deceased
Winifredo Tupang was so over-crowded that he and many other passengers had no choice but to sit
on the open platforms between the coaches of the train. It is likewise undisputed that the train did
not even slow down when it approached the Iyam Bridge which was under repair at the time, Neither
did the train stop, despite the alarm raised by other passengers that a person had fallen off the train
at lyam Bridge. 7
The petitioner has the obligation to transport its passengers to their destinations and to observe
extraordinary diligence in doing so. Death or any injury suffered by any of its passengers gives rise
to the presumption that it was negligent in the performance of its obligation under the contract of
carriage. Thus, as correctly ruled by the respondent court, the petitioner failed to overthrow such
presumption of negligence with clear and convincing evidence.
But while petitioner failed to exercise extraordinary diligence as required by law, 8 it appears that the
deceased was chargeable with contributory negligence. Since he opted to sit on the open platform
between the coaches of the train, he should have held tightly and tenaciously on the upright metal bar
found at the side of said platform to avoid falling off from the speeding train. Such contributory negligence,
while not exempting the PNR from liability, nevertheless justified the deletion of the amount adjudicated
as moral damages. By the same token, the award of exemplary damages must be set aside. Exemplary
damages may be allowed only in cases where the defendant acted in a wanton, fraudulent, reckless,
oppressive or malevolent manner. 9 There being no evidence of fraud, malice or bad faith on the part of
petitioner, the grant of exemplary damages should be discarded.
WHEREFORE, the decision of the respondent appellate court is hereby modified by eliminating
therefrom the amounts of P10,000.00 and P5,000.00 adjudicated as moral and exemplary damages,
respectively. No costs.
SO ORDERED.
Concepcion, Jr., Cuevas, and Alampay, JJ., concur.