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EN BANC

[G.R. No. L-6393. January 31, 1955.]

A. MAGSAYSAY, INC., plaintiff-appellee, vs. ANASTACIO AGAN, defendant-appellant.

Custodio A. Villalva for appellant.


Quijano, Alidio & Azores for appellee.

SYLLABUS

1. ADMIRALTY LAW; VESSELS; ACCIDENTAL STRANDING; AVERAGES. — The law on averages is contained
in the Code of Commerce. Under that law, averages are classified into simple or particular and general or gross. Generally
speaking, simple or particular averages include all expenses and damages caused to the vessel or cargo which have not inured to
the common benefit (Art. 809) and are, therefore, to be borne only by the owner of the property which gave rise to the same (Art.
810); while general or gross averages include "all the damages and expenses which are deliberately caused in order to save the
vessel, its cargo, or both at the same time, from a real and known risk" (Art. 811). Being for the common benefit, gross averages
are to be borne by the owners of the articles saved (Art. 812).
2. ID.; ID.; ID.; CLASSIFICATION OF AVERAGES. — In classifying averages into simple or particular and general or
gross and defining each class, the Code (Arts. 809 and 811) at the same time enumerates certain specific cases as coming
specially under one or the other denomination. While the expenses incurred in putting a vessel afloat may well come under
number 2 of article 809 — which refers to expenses suffered by the vessel "by reason of an accident of the sea or force majeure"
— and should therefore be classified as particular average, the said expenses do not fit into any of the specific cases of general
average enumerated in article 811. No. 6 of this article does mention "expenses caused in order to float a vessel," but it
specifically refers to "a vessel intentionally stranded for the purpose of saving it" and would have no application where the
stranding was not intentional.
3. ID.; ID.; GENERAL AVERAGE; ITS REQUISITES. — The following are the requisites for general average: (1)
there must be a common danger; (2) for the common safety part of the vessel or of the cargo or both is sacrificed deliberately; (3)
from the expenses or damages caused follows the successful saving of the vessel and cargo; and (4) the expenses or damages
should have been incurred or inflicted after taking proper legal steps and authority.
4. ID.; ID.; ID.; ID. — It is the deliverance from an immediate peril, by a common sacrifice, that constitutes the essence
of general average (Columbian Insurance Co. of Alejandria vs. Ashby & Stribling, 13 Peters 331, 10 L. ed. 186). Where there is
no proof that the stranded vessel had to be put afloat to save it from an imminent danger, and what does appear is that the vessel
had to be salvaged in order to enable it "to proceed to its port or destination," the expenses incurred in floating the vessel do not
constitute general average. It is the safety of the property, and not of the voyage, which constitutes the true foundation of general
average.
5. ID.; ID.; ID.; ID. — Even if the salvage operation was a success, yet if the sacrifice was for the benefit of the vessel -
to enable it to proceed to its destination — and not for the purpose of saving the cargo, the cargo owners are not in law bound to
contribute to the expense.

DECISION

REYES, A., J p:

The S S "San Antonio", a vessel owned and operated by plaintiff, left Manila on October 6, 1949, bound for Basco,
Batanes, via Aparri, Cagayan, with general cargo belonging to different shippers, among them the defendant. The vessel reached
Aparri on the 10th of that month, and after a day's stopover in that port, weighed anchor to proceed to Basco. But while still in
port, it ran aground at the mouth of the Cagayan river, and, attempts to refloat it under its own power having failed, plaint iff had it
refloated by the Luzon Stevedoring Co. at an agreed compensation. Once afloat, the vessel returned to Manila to refuel and then
proceeded to Basco, the port of destination. There the cargoes were delivered to their respective owners or consignees, who, with
the exception of defendant, made a deposit or signed a bond to answer for their contribution to the average.
On the theory that the expenses incurred in floating the vessel constitute general average to which both ship and cargo
should contribute, plaintiff brought the present action in the Court of First Instance of Manila to make defendant pay his
contribution, which, as determined by the average adjuster, amounts to P841.40. Defendant, in his answer, denies liability for this
amount, alleging, among other things, that the stranding of the vessel was due to the fault, negligence and lack of skill of its
master, that the expenses incurred in putting it afloat did not constitute general average, and that the liquidation of the average
was not made in accordance with law. After trial, the lower court found for plaintiff and rendered judgment against the defendant
for the amount of the claim, with legal interests. From this judgment defendant has appealed directly to this Court.
Although appellant assigns various errors, under our view of the case only the following need be considered:
"The trial court erred in allowing the general average for floating a vessel unintentionally stranded inside
a port and at the mouth of a river during a fine weather."
For the purposes of this assignment of error we may well accept the finding below that the stranding of plaintiff's vessel
was due to the sudden shifting of the sandbars at the mouth of the river which the port pilot did not anticipate. The standing may,
therefore, be regarded as accidental, and the question is whether the expenses incurred in floating a vessel so stranded should be
considered general average and shared by the cargo owners.
The law on averages is contained in the Code of Commerce. Under that law, averages are classified into simple or
particular and general or gross. Generally speaking, simple or particular averages include all expenses and damages caused to the
vessel or cargo which have not inured to the common benefit (Art. 809, and are, therefore, to be borne only by the owner of the
property which gave rise to the same (Art. 810); while general or gross averages include "all the damages and expenses which are
deliberately caused in order to save the vessel, its cargo, or both at the same time, from a real and known risk" (Art. 811). Being
for the common benefit, gross averages are to be borne by the owners of the articles saved (Art. 812).
In classifying averages into simple or particular and general or gross and defining each class, the Code (Art. 809 and
811) at the same time enumerates certain specific cases as coming specially under one or the other denomination. Going over the
specific cases enumerated we find that, while the expenses incurred in putting plaintiff's vessel afloat may well come under
number 2 of article 809 — which refers to expenses suffered by the vessel "by reason of an accident of the sea or force majeure"
— and should therefore be classified as particular average, the said expenses do not fit into any of the specific cases of general
average enumerated in article 811. No. 6 of this article does mention "expenses caused in order to float a vessel," but it
specifically refers to "a vessel intentionally stranded for the purpose of saving it" and would have no application where, as in the
present case, the stranding was not intentional.
Let us now see whether the expenses here in question could come within the legal concept of general average. Tolentino,
in his commentaries on the Code of Commerce, gives the following requisites for general average:
"First, there must be a common danger. This means, that both the ship and the cargo, after it has been
loaded, are subject to the same danger, whether during the voyage, or in the port of loading or unloading; that the
danger arises from accidents of the sea, dispositions of the authority, or faults of men, provided, that the
circumstance producing the peril should be ascertained and imminent - or may rationally be said to be certain and
imminent. This last requirement excludes measures undertaken against a distant peril.
"Second, that for the common safety part of the vessel or of the cargo or both is sacrificed deliberately.
"Third, that from the expenses or damages caused follows the successful saving of the vessel and cargo.
"Fourth, that the expenses or damages should have been incurred or inflicted after taking proper legal
steps and authority." (Vol. I, 7th ed., p. 155.)
With respect to the first requisite, the evidence does not disclose that the expenses sought to be recovered from defendant
were incurred to save vessel and cargo from a common danger. The vessel ran aground in fine weather inside the port at the
mouth of a river, a place described as "very shallow". It would thus appear that vessel and cargo were at the time in no imminent
danger or a danger which might "rationally be sought to be certain and imminent." It is, of course, conceivable that, if left
indefinitely at the mercy of the elements, they would run the risk of being destroyed. But as stated in the above quotation, "this
last requirement excludes measures undertaken against a distant peril." It is the deliverance from an immediate, impending peril,
by a common sacrifice, that constitutes the essence of general average. (The Columbian Insurance- Company of Alexandria vs.
Ashby & Stribling et al., 13 Peters 331; 10 L. Ed., 186). In the present case there is no proof that the vessel had to be put afloat to
save it from an imminent danger. What does appear from the testimony of plaintiff's manager is that the vessel had to be salvaged
in order to enable it "to proceed to its port of destination." But as was said in the case just cited, it is the safety of the property, and
not of the voyage, which constitutes the true foundation of general average.
As to the second requisite, we need only repeat that the expenses in question were not incurred for the common safety of
vessel and cargo, since they, or at least the cargo, were not in imminent peril. The cargo could, without need of expensive salvage
operation, have been unloaded by the owners if they had been required to do so.
With respect to the third requisite, the salvage operation, it is true, was a success. But as the sacrifice was for the benefit
of the vessel — to enable it to proceed to destination — and not for the purpose of saving the cargo, the cargo owners are not in
law bound to contribute to the expenses.
The final requisite has not been proved, for it does not appear that the expenses here in question were incurred after
following the procedure laid down in articles 813 et seq.
In conclusion, we find that plaintiff has not made out a case for general average, with the result that its claim for
contribution against the defendant cannot be granted.
Wherefore, the decision appealed from is reversed and plaintiff's complaint ordered dismissed with costs.
Paras, C. J., Bengzon, Padilla, Montemayor, Jugo, Bautista Angelo, and Reyes, J. B. L., JJ., concur.
||| (A. Magsaysay, Inc. v. Agan, G.R. No. L-6393, [January 31, 1955], 96 PHIL 504-510)
FIRST DIVISION

[G.R. No. 106999. June 20, 1996.]

PHILIPPINE HOME ASSURANCE CORPORATION, petitioner, vs. COURT OF APPEALS and


EASTERN SHIPPING LINES, INC., respondents.

Diosdado Z. Reloj, Jr. for petitioner.


Del Rosario & Del Rosario for private respondent.

SYLLABUS

1. REMEDIAL LAW; EVIDENCE; FINDINGS OF TRIAL COURT, GENERALLY RESPECTED; EXCEPTIONS. — While it is
well-settled rule that only questions of law may be raised in a petition for review under Rule 45 of the Rules of Court, it is equally
well-settled that the same admits of the following exceptions, namely: (a) when the conclusion is a finding grounded entirely on
speculation, surmises or conjectures; (b) when the inference made is manifestly mistaken, absurd or impossible; (c) where there is a
grave abuse of discretion; (d) when the judgment is based on a misapprehension of facts; (e) when the findings of fact are conflicting;
(f) when the Court of Appeals, in making its findings, went beyond the issues of the case and the same is contrary to the admissions of
both appellant and appellee; (g) when the findings of the Court of Appeals are contrary to those of the trial court; (h) when the
findings of fact are conclusions without citation of specific evidence on which they are based; (i) when the facts set forth in the
petition as well as in the petitioners' main and reply briefs are not disputed by the respondents; and (j) when the finding of fact of the
Court of Appeals is premised on the supposed absence of evidence and is contradicted by the evidence on record. Thus, if there is a
showing, as in the instant case, that the findings complained of are totally devoid of support in the records, or that they are so glaringly
erroneous as to constitute grave abuse of discretion, the same may be properly reviewed and evaluated by this Court.
2. COMMERCIAL LAW; COMMON CARRIER; LIABILITY FOR EXPENSES IN SALVAGE OPERATION AND
TRANSSHIPMENT OF GOODS VIA DIFFERENT CARRIER; CASE AT BAR. — What is at issue here is who, among the carrier,
consignee or insurer of the goods, is liable for the additional charges or expenses incurred by the owner of the ship in the salvage
operations and in the transshipment of the goods via a different carrier. In our jurisprudence, fire may not be considered a natural
disaster or calamity since it almost always arises from some act of man or by human means. It cannot be an act of God unless caused
by lightning or a natural disaster or casualty not attributable to human agency. In the case at bar, it is not disputed that a small flame
was detected on the acetylene cylinder and that by reason thereof, the same exploded despite efforts to extinguish the fire. Neither is
there any doubt that the acetylene cylinder, obviously fully loaded, was stored in the accommodation area near the engine room and
not in a storage area considerably far, and in a safe distance, from the engine room. Moreover, there was no showing, and none was
alleged by the parties, that the fire was caused by a natural disaster or calamity not attributable to human agency. On the contrary,
there is strong evidence indicating that the acetylene cylinder caught fire because of the fault and negligence of respondent ESLI, its
captain and its crew. As a rule, general or gross averages include all damages and expenses which are deliberately caused in order in
order to save the vessel, its cargo, or both at the same time, from a real and known risk. While the instant case may technically fall
within the purview of the said provision, the formalities prescribed under Articles 813 and 814 of the Code of Commerce in order to
incur the expenses and cause the damage corresponding to gross average were not complied with. Consequently, respondent ESLI's
claim for contribution from the consignees of the cargo at the time of the occurrence of the average turns to naught. Hence, cargo
consignees cannot be made liable to respondent carrier for additional freight and salvage charges. Respondent carrier must refund the
amount paid under protest for additional freight and salvage charges.
3. REMEDIAL LAW; EVIDENCE; RULES OF ADMISSIBILITY; TESTIMONY GENERALLY CONFINED TO PERSONAL
KNOWLEDGE; HEARSAY EXCLUDED. — The Statement of Facts and the Marine Note of Protest issued by Captain Licaycay are
hearsay evidence. He who issued the said documents was not presented in court to testify to the truth of the facts he stated therein.
Section 36, Rule 130 of the Rules of Court provides that any evidence, whether oral or documentary, is hearsay if its probative value is
not based on the personal knowledge of the witness but on the knowledge of some other person not on the witness stand.
Consequently, hearsay evidence, whether objected to or not, has no probative value unless the proponent can show that the evidence
falls within the exceptions to the hearsay evidence rule. It is excluded because the party against whom it is presented is deprived of his
right and opportunity to cross-examine the persons to whom the statements or writings are attributed.

DECISION
KAPUNAN, J p:

Eastern Shipping Lines, Inc. (ESLI) loaded on board SS Eastern Explorer in Kobe, Japan, the following shipment for
carriage to Manila and Cebu, freight pre-paid and in good order and condition, viz: (a) two (2) boxes internal combustion engine
parts, consigned to William Lines, Inc. under Bill of Lading No. 042283; (b) ten (10) metric tons (334 bags) ammonium chlorid e,
consigned to Orca's Company under Bill of Lading No. KCE-12; (c) two hundred (200) bags Glue 300, consigned to Pan Oriental
Match Company under Bill of Lading No. KCE-8; and (d) garments, consigned to Ding Velayo under Bills of Lading Nos. KMA-
73 and KMA-74.
While the vessel was off Okinawa, Japan, a small flame was detected on the acetylene cylinder located in the
accommodation area near the engine room on the main deck level. As the crew was trying to extinguish the fire, the acetylene
cylinder suddenly exploded sending a flash of flame throughout the accommodation area, thus causing death and severe injuries
to the crew and instantly setting fire to the whole superstructure of the vessel. The incident forced the master and the crew to
abandon the ship.
Thereafter, SS Eastern Explorer was found to be a constructive total loss and its voyage was declared abandoned.
Several hours later, a tugboat under the control of Fukuda Salvage Co. arrived near the vessel and commenced to tow the
vessel for the port of Naha, Japan.
Fire fighting operations were again conducted at the said port. After the fire was extinguished, the cargoes which were
saved were loaded to another vessel for delivery to their original ports of destination. ESLI charged the consignees several
amounts corresponding to additional freight and salvage charges, as follows: (a) for the goods covered by Bill of Lading No.
042283, ESLI charged the consignee the sum of P1,927.65, representing salvage charges assessed against the goods; (b) for the
goods covered by Bill of Lading No. KCE-12, ESLI charged the consignee the sum of P2,980.64 for additional freight and
P826.14 for salvage charges against the goods; (c) for the goods covered by Bill of Lading No. KCE-8, ESLI charged the
consignee the sum of P3,292.26 for additional freight and P4,130.68 for salvage charges against the goods; and (d) for the goods
under Bills of Lading Nos. KMA-73 and KMA-74, ESLI charged the consignee the sum of P8,337.06 for salvage charges against
the goods.
The charges were all paid Philippine Home Assurance Corporation (PHAC) under protest for and in behalf of the
consignees.
PHAC, as subrogee of the consignees, thereafter filed a complaint before the Regional Trial Court of Manila, Branch 39,
against ESLI to recover the sum paid under protest on the ground that the same were actually damages directly brought about by
the fault, negligence, illegal act and/or breach of contract of ESLI.
In its answer, ESLI contended that it exercised the diligence required by law in the handling, custody and carriage of the
shipment; that the fire was caused by an unforeseen event; that the additional freight charges are due and demandable pursuan t to
the Bill of Lading; 1 and that salvage charges are properly collectible under Act No. 2616, known as the Salvage Law.
The trial court dismissed PHAC's complaint and ruled in favor of ESLI ratiocinating thus:
The question to be resolved is whether or not the fire on the vessel which was caused by the explosion of an
acetylene cylinder loaded on the same was the fault or negligence of the defendant.
Evidence has been presented that the SS "Eastern Explorer" was a seaworthy vessel (Deposition of Jumpei Maeda,
October 23, 1980, p. 3) and before the ship loaded the Acetylene Cylinder No. NCW 875, the same has been
tested, checked and examined and was certified to have complied with the required safety measures and standards
(Deposition of Senjei Hayashi, October 23, 1980, pp. 2-3). When the fire was detected by the crew, fire fighting
operations was immediately conducted but due to the explosion of the acetylene cylinder, the crew were unable to
contain the fire and had to abandon the ship to save their lives and were saved from drowning by passing vessels
in the vicinity. The burning of the vessel rendering it a constructive total loss and incapable of pursuing its voyage
to the Philippines was, therefore, not the fault or negligence of defendant but a natural disaster or calamity which
nobody would like to happen. The salvage operations conducted by Fukuda Salvage Company (Exhibits "4-A"
and "6-A") was perfectly a legal operation and charges made on the goods recovered were legitimate charges.
Act No. 2616, otherwise known as the Salvage Law, is thus applicable to the case at bar. Section 1 of Act No.
2616 states:
"Section 1. When in case of shipwreck, the vessel or its cargo shall be beyond the control of the crew, or
shall have been abandoned by them, and picked up and conveyed to a safe place by other persons, the
latter shall be entitled to a reward for the salvage.

Those who, not being included in the above paragraph, assist in saving a vessel or its cargo from
shipwreck, shall be entitled to like reward."
In relation to the above provision, the Supreme Court has ruled in Erlanger & Galinger v. Swedish East Asiatic
Co., Ltd., 34 Phil. 178, that three elements are necessary to a valid salvage claim, namely (a) a marine peril (b)
service voluntarily rendered when not required as an existing duty or from a special contract and (c) success in
whole or in part, or that the service rendered contributed to such success.
The above elements are all present in the instant case. Salvage charges may thus be assessed on the cargoes saved
from the vessel. As provided for in Section 13 of the Salvage Law, "The expenses of salvage, as well as the
reward for salvage or assistance, shall be a charge on the things salvaged or their value." In Manila Railroad Co.
v. Macondray Co., 37 Phil. 583, it was also held that "when a ship and its cargo are saved together, the salvage
allowance should be charged against the ship and cargo in the proportion of their respective values, the same as in
a case of general average . . ." Thus, the "compensation to be paid by the owner of the cargo is in proportion to the
value of the vessel and the value of the cargo saved." (Atlantic Gulf and Pacific Co. v. Uchida Kisen Kaisha, 42
Phil. 321). (Memorandum for Defendant, Records, pp. 212-213).
With respect to the additional freight charged by defendant from the consignee of the goods, the same are also validly demandable.
As provided by the Civil Code:
"Article 1174. Except in cases expressly specified by law, or when it is otherwise declared by stipulation, or when
the nature of the obligation require the assumption of risk, no person shall be responsible for those events which
could not be foreseen, or which though foreseen, were inevitable."
"Article 1266. The debtor in obligations to do shall also be released when the prestation becomes legally or
physically impossible without the fault of the obligor."
The burning of "EASTERN EXPLORER" while off Okinawa rendered it physically impossible for defendant to comply with its
obligation of delivering the goods to their port of destination pursuant to the contract of carriage. Under Article 1266 of the Civil
Code, the physical impossibility of the prestation extinguished defendant's obligation.
It is but legal and equitable for the defendant therefore, to demand additional freight from the consignees for forwarding the goods
from Naha, Japan to Manila and Cebu City on board another vessel, the "EASTERN MARS." This finds support under Article 844 of
the Code of Commerce which provides as follows:
"Article 844. A captain who may have taken on board the goods saved from the wreck shall continue his course to
the port of destination; and on arrival should deposit the same, with judicial intervention at the disposal of their
legitimate owners. . . .
The owners of the cargo shall defray all the expenses of this arrival as well as the payment of the freight which,
after taking into consideration the circumstances of the case, may be fixed by agreement or by a judicial decision."
Furthermore, the terms and conditions of the Bill of Lading authorize the imposition of additional freight charges in case of forced
interruption or abandonment of the voyage. At the dorsal portion of the Bills of Lading issued to the consignees is this st ipulation:
"12. All storage, transshipment, forwarding or other disposition of cargo at or from a port of distress or other place
where there has been a forced interruption or abandonment of the voyage shall be at the expense of the owner,
shipper, consignee of the goods or the holder of this bill of lading who shall be jointly and severally liable for all
freight charges and expenses of every kind whatsoever, whether payable in advance or not that may be incurred by
the cargo in addition to the ordinary freight, whether the service be performed by the named carrying vessel or by
carrier's other vessels or by strangers. All such expenses and charges shall be due and payable day by day
immediately when they are incurred."
The bill of lading is a contract and the parties are bound by its terms (Govt. of the Philippine Islands vs. Ynchausti and Co., 40 Phil.
219). The provision quoted is binding upon the consignee.
Defendant therefore, can validly require payment of additional freight from the consignee. Plaintiff can not thus recover the additional
freight paid by the consignee to defendant. (Memorandum for Defendant, Record, pp. 215-216). 2
On appeal to the Court of Appeals, respondent court affirmed the trial court's findings and conclusions, 3 hence, the
present petition for review before this Court on the following errors:
I. THE RESPONDENT COURT ERRONEOUSLY ADOPTED WITH APPROVAL THE TRIAL COURT'S
FINDING THAT THE BURNING OF THE SS "EASTERN EXPLORER", RENDERING IT A
CONSTRUCTIVE TOTAL LOSS, IS A NATURAL DISASTER OR CALAMITY WHICH NOBODY WOULD
LIKE TO HAPPEN, DESPITE EXISTING JURISPRUDENCE TO THE CONTRARY.
II. THE RESPONDENT COURT ARBITRARILY RULED THAT THE BURNING OF THE SS "EASTERN
EXPLORER" WAS NOT THE FAULT AND NEGLIGENCE OF RESPONDENT EASTERN SHIPPING
LINES.
III. THE RESPONDENT COURT COMMITTED GRAVE ABUSE OF DISCRETION IN RULING THAT
DEFENDANT HAD EXERCISED THE EXTRAORDINARY DILIGENCE IN THE VIGILANCE OVER THE
GOODS AS REQUIRED BY LAW.
IV. THE RESPONDENT COURT ARBITRARILY RULED THAT THE MARINE NOTE OF PROTEST AND
STATEMENT OF FACTS ISSUED BY THE VESSEL'S MASTER ARE NOT HEARSAY DESPITE THE
FACT THAT THE VESSEL'S MASTER, CAPT. LICAYLICAY WAS NOT PRESENTED IN COURT,
WITHOUT EXPLANATION WHATSOEVER FOR HIS NON-PRESENTATION, THUS, PETITIONER WAS
DEPRIVED OF ITS RIGHT TO CROSS-EXAMINE THE AUTHOR THEREOF.
V. THE RESPONDENT COURT ERRONEOUSLY ADOPTED WITH APPROVAL THE TRIAL COURT'S
CONCLUSION THAT THE EXPENSES OR AVERAGES INCURRED IN SAVING THE CARGO
CONSTITUTE GENERAL AVERAGE.
VI. THE RESPONDENT COURT ERRONEOUSLY ADOPTED THE TRIAL COURT'S RULING THAT
PETITIONER WAS LIABLE TO RESPONDENT CARRIER FOR ADDITIONAL FREIGHT AND SALVAGE
CHARGES. 4
It is quite evident that the foregoing assignment of errors challenges the findings of fact and the appreciation of evidence
made by the trial court and later affirmed by respondent court. While it is a well-settled rule that only questions of law may be
raised in a petition for review under Rule 45 of the Rules of Court, it is equally well-settled that the same admits of the following
exceptions, namely: (a) when the conclusion is a finding grounded entirely on speculation, surmises or conjectures; (b) when the
inference made is manifestly mistaken, absurd or impossible; (c) where there is a grave abuse of discretion; (d) when the
judgment is based on a misapprehension of facts; (e) when the findings of fact are conflicting; (f) when the Court of Appeals, in
making its findings, went beyond the issues of the case and the same is contrary to the admissions of both appellant and appellee;
(g) when the findings of the Court of Appeals are contrary to those of the trial court; (h) when the findings of fact are conclusions
without citation of specific evidence on which they are based; (i) when the facts set forth in the petition as well as in the
petitioners' main and reply briefs are nor disputed by the respondents; and (j) when the finding of fact of the Court of Appeals is
premised on the supposed absence of evidence and is contradicted by the evidence on record. 5 Thus, if there is a showing, as in
the instant case, that the findings complained of are totally devoid of support in the records, or that they are so glaringly erroneous
as to constitute grave abuse of discretion, the same may be properly reviewed and evaluated by this Court.
It is worthy to note at the outset that the goods subject of the present controversy were neither lost nor damaged in transit
by the fire that razed the carrier. In fact, the said goods were all delivered to the consignees, even if the transshipment took longer
than necessary. What is at issue therefore is not whether or not the carrier is liable for the loss, damage, or deterioration of the
goods transported by them but who, among the carrier, consignee or insurer of the goods, is liable for the additional charges or
expenses incurred by the owner of the ship in the salvage operations and in the transshipment of the goods via a different carrier.
In absolving respondent carrier of any liability, respondent Court of Appeals sustained the trial court's finding that the
fire that gutted the ship was a natural disaster or calamity. Petitioner takes exception to this conclusion and we agree.
In our jurisprudence, fire may not be considered a natural disaster or calamity since it almost always arises from some
act of man or by human means. It cannot be an act of God unless caused by lightning or a natural disaster or casualty not
attributable to human agency. 6
In the case at bar, it is not disputed that a small flame was detected on the acetylene cylinder and that by reason thereof,
the same exploded despite efforts to extinguish the fire. Neither is there any doubt that the acetylene cylinder, obviously fully
loaded, was stored in the accommodation area near the engine room and not in a storage area considerably far, and in a safe
distance, from the engine room. Moreover, there was no showing, and none was alleged by the parties, that the fire was caused by
a natural disaster or calamity not attributable to human agency. On the contrary, there is strong evidence indic ating that the
acetylene cylinder caught fire because of the fault and negligence of respondent ESLI, its captain and its crew.
First, the acetylene cylinder which was fully loaded should not have been stored in the accommodation area near the
engine room where the heat generated therefrom could cause the acetylene cylinder to explode by reason of spontaneous
combustion. Respondent ESLI should have easily foreseen that the acetylene cylinder, containing highly inflammable material,
was in a real danger of exploding because it was stored in close proximity to the engine room.

Second, respondent ESLI should have known that by storing the acetylene cylinder in the accommodation area supposed
to be reserved for passengers, it unnecessarily exposed its passengers to grave danger and injury. Curious passengers, ignorant of
the danger the tank might have on humans and property, could have handled the same or could have lighted and smoked
cigarettes while repairing in the accommodation area.
Third, the fact that the acetylene cylinder was checked, tested and examined and subsequently certified as having
complied with the safety measures and standards by qualified experts 7 before it was loaded in the vessel only shows to a great
extent that negligence was present in the handling of the acetylene cylinder after it was loaded and while it was on board the ship.
Indeed, had the respondent and its agents not been negligent in storing the acetylene cylinder near the engine room, then the same
would not have leaked and exploded during the voyage.
Verily, there is no merit in the finding of the trial court to which respondent court erroneously agreed that the fire was
not fault or negligence of respondent but a natural disaster or calamity. The records are simply wanting in this regard.
Anent petitioner's objection to the admissibility of Exhibits "4" and "5", the Statement of Facts and the Marine Note of
Protest issued by Captain Tiburcio A. Licaylicay, we find the same impressed with merit because said documents are hearsay
evidence. Capt. Licaylicay, Master of S.S. Eastern Explorer who issued the said documents, was not presented in court to testify
to the truth of the facts he stated therein; instead, respondent ESLI presented Junpei Maeda, its Branch Manager in Tokyo and
Yokohama, Japan, who evidently had no personal knowledge of the facts stated in the documents at issue. It is clear from Section
36, Rule 130 of the Rules of Court that any evidence, whether oral or documentary, is hearsay if its probative value is not based
on the personal knowledge of the witness but on the knowledge of some other person not on the witness stand. Consequently,
hearsay evidence, whether objected to or not, has no probative value unless the proponent can show that the evidence falls within
the exceptions to the hearsay evidence rule. 8 It is excluded because the party against whom it is presented is deprived of his right
and opportunity to cross-examine the persons to whom the statements or writings are attributed.
On the issue of whether or not respondent court committed an error in concluding that the expenses incurred in saving
the cargo are considered general average, we rule in the affirmative. As a rule, general or gross averages include all damages and
expenses which are deliberately caused in order to save the vessel, its cargo, or both at the same time, from a real and known
risk. 9 While the instant case may technically fall within the purview of the said provision, the formalities prescribed
under Article 813 10 and 814 11 of the Code of Commerce in order to incur the expenses and cause the damage corresponding to
gross average were not complied with. Consequently, respondent ESLI's claim for contribution from the consignees of the cargo
at the time of the occurrence of the average turns to naught.
Prescinding from the foregoing premises, it indubitably follows that the cargo consignees cannot be made liable to
respondent carrier for additional freight and salvage charges. Consequently, respondent carrier must refund to herein petitioner
the amount it paid under protest for additional freight and salvage charges in behalf of the consignee.
WHEREFORE, the judgment appealed from is hereby REVERSED and SET ASIDE. Respondent Eastern Shipping
Lines, Inc. is ORDERED to return to petitionerPhilippine Home Assurance Corporation the amount it paid under protest in behalf
of the consignees herein.
SO ORDERED.
||| (Philippine Home Assurance Corp. v. Court of Appeals, G.R. No. 106999, [June 20, 1996], 327 PHIL 255-269)
SECOND DIVISION

[G.R. No. 110398. November 7, 1997.]

NEGROS NAVIGATION CO., INC., petitioner, vs. THE COURT OF APPEALS, RAMON MIRANDA,
SPS. RICARDO and VIRGINIA DE LA VICTORIA,respondents.

Hernandez, Velicara, Vibar and Santiago for petitioner.


Aquino and Miranda for private respondents.

SYNOPSIS

This is a petition for review on certiorari of the decision of the Court of Appeals affirming with modification the Regional Trial
Court's award of damages to private respondents for the death of their four relatives as a result of the sinking of M/V Don Juan, a
vessel owned by petitioner. The issues raised in this petition were: first, whether the members of private respondents; families were
actually passengers of the M/V Don Juan; second, whether the ruling in the previous case (Mecenas vs. Court of Appeals) involving
the same incident be binding on this case; third, whether the total loss of the M/V Don Juan extinguished petitioner's liability; and
whether the damages awarded by the appellate court are excessive, unreasonable and unwarranted.
The decision of the Court of Appeals affirmed with the modification as to the amount of damages. On the first issue, the Supreme
Court held that the fact that the victims were passengers of the M/V Don Juan was sufficiently testified to by private respondents
Ramon Miranda, who purchased from the company four special cabin tickets for his family and niece. On the second issue, the Court
ruled that adherence to the Mecenas case was dictated by the Court's policy of maintaining stability in jurisprudence in accordance
with the legal maxim "stare decisis et non quieta movere" (Follow past precedents and do not disturb what has been settled.) Where,
as in this case, the same questions relating to the same event have been put forward by parties similarly situated as in a previous case
litigated and decided by a competent court, the rule of stare decisis is a bar to attempt to relitigate the same issue. Indeed, the evidence
presented in the instant case was the same as those presented in the Mecenas case. As to the third case, the rule is that a shipowner
may be held liable for injuries to passengers notwithstanding the exclusively real and hypothecary nature of martime law if fault can
be attributed to shipowner. As to the damages awarded, the Court ruled that the principle of stare decisis does not apply here in view
of the differences in the personal circumstances of the victims. For that matter differentiation would be justified even if private
respondents had joined the private respondents in the Mecenas case. The doctrine of stare decisis works as a bar only against issues
litigated in a previous case.

SYLLABUS

1. REMEDIAL LAW; ACTION; JUDGMENT; STARE DECISIS; WHEN THE RULE BARS AN ATTEMPT TO RELITIGATE
THE SAME ISSUE; CASE AT BAR. — Adherence to theMecenas case (Mecenas v. Intermediate Appellate Court, 180 SCRA 87) is
dictated by this Court's policy of maintaining stability in jurisprudence in accordance with the legal maxim "stare decisis et non quieta
movere" (Follow past precedents and do not disturb what has been settled.) Where, as in this case, the same questions relating to the
same event have been put forward by parties similarly situated as in a previous case litigated and decided by a competent court, the
rule of stare decisis is a bar to any attempt to relitigate the same issue. (J.M. Tuason & Corp. v. Mariano, 85 SCRA 644 (1978)). In
(Woulfe v. Associated Realties Corporation, 130 N.J. Eq. 519, 23 A. 2d 399, 401 (1942)), the Supreme Court of New Jersey held that
where substantially similar cases to the pending case were presented and applicable principles declared in prior decisions, the court
was bound by the principle of stare decisis. Similarly, in State ex rel. Tollinger v. Gill, 75 Ohio App. __, 62 N.E. 2d 760 (1944), it was
held that under the doctrine of stare decisis a ruling is final even as to parties who are strangers to the original proceeding and not
bound by the judgment under the res judicatadoctrine. The Philadelphia court expressed itself in this wise: "Stare decisis simply
declares that, for the sake of certainty, a conclusion reached in one case should be applied to those which follow, if the facts are
substantially the same, even though the parties may be different."' Thus, in J. M. Tuason v. Mariano, supra this Court relied on its
rulings in other cases involving different parties in sustaining the validity of a land title on the principle of "stare decisis et non quieta
movere."
2. ID.; ID.; ID.; ID.; WHEN NOT APPLICABLE; CASE AT BAR. — Petitioner contends that, assuming that the Mecenas case
applies, private respondents should be allowed to claim only P43,857.14 each as moral damages because in the Mecenas case, the
amount of P307,500.00 was awarded to the seven children of the Mecenas couple. Under petitioner's formula, Ramon Miranda should
receive P43,857.14, while the De la Victoria spouses should receive P97,714.28. Here is where the principle of stare decisis does not
apply in view of differences in the personal circumstances of the victims. For that matter, differentiation would be justified even if
private respondents had joined the private respondents in the Mecenas case. The doctrine of stare decisis works as a bar only against
issues litigated in a previous case. Where the issue involved was not raised nor presented to the court and not passed upon by the court
in the previous case, the decision in the previous case is not stare decisisof the question presently presented. The decision in
the Mecenas case relates to damages for which petitioner was liable to the claimants in that case. In the case at bar, the award of
P300,000.00 for moral damages is reasonable considering the grief petitioner Ramon Miranda suffered as a result of the loss o f his
entire family.
3. CIVIL LAW; DAMAGES; WHEN SHIPOWNER HELD LIABLE FOR INJURIES TO PASSENGERS; CASE AT BAR. — The
rule is well-entrenched in our jurisprudence that a shipowner may be held liable for injuries to passengers notwithstanding the
exclusively real and hypothecary nature of maritime law if fault can be attributed to the shipowner. In Mecenas, this Court found
petitioner guilty of negligence in (1) allowing or tolerating the ship captain and crew members in playing mahjong during the voyage,
(2) in failing to maintain the vessel seaworthy and (3) in allowing the ship to carry more passengers than it was allowed to carry.
Petitioner is, therefore, clearly liable for damages to the full extent.
4. ID.; ID.; LOSS OF EARNING CAPACITY; FORMULA FOR DETERMINING LIFE EXPECTANCY; APPLICATION IN CASE
AT BAR. — The accepted formula for determining life expectancy is 2/3 multiplied by (80 minus the age of the deceased). It may be
that in the Philippines the age of retirement generally is 65 but, in calculating the life expectancy of individuals for the purpose of
determining loss of earning capacity under Art. 2206(1) of the Civil Code, it is assumed that the deceased would have earned income
even after retirement from a particular job. In this case, the trial court took into account the fact that Mrs. Miranda had a master's
degree and a good prospect of becoming principal of the school in which she was teaching. There was reason to believe that her
income would have increased through the years and she could still earn more after her retirement, e.g., by becoming a consultant, had
she not died. The gross earnings which Mrs. Miranda could reasonably be expected to earn were it not for her untimely death was,
therefore, correctly computed by the trial court to be P218,077.92 (given a gross annual income of P10,224.00 and life expectancy of
21.33 years). In the case at bar, we hold that a deduction of 50% from Mrs. Miranda's gross earnings (P218,077.92) would be
reasonable, so that her net earning capacity should be P109,038.96. There is no basis for supposing that her living expenses constituted
a smaller percentage of her gross income than the living expenses in the decided cases. To hold that she would have used only a small
part of her income for herself, a larger part going to the support of her children would be conjectural and unreasonable.
5. ID.; ID.; ACTUAL DAMAGES; WHEN PROPER; CASE AT BAR. — The award of actual damages in the amount of P23,075.00
was determined by the Court of Appeals on the basis of receipts submitted by private respondents. This amount is reasonable
considering the expenses incurred by private respondent Miranda in organizing three search teams to look for his family, spending for
transportation in going to places such as Batangas City and Iloilo, where survivors and the bodies of other victims were found, making
long distance calls, erecting a monument in honor of the four victims, spending for obituaries in the Bulletin Today and for food,
masses and novenas. Indemnity for death is given to compensate for violation of the rights of the deceased, i.e., his right to life and
physical integrity. On the other hand, damages incidental to or arising out of such death are for pecuniary losses of the beneficiaries of
the deceased.
6. ID.; ID.; EXEMPLARY DAMAGES, CONSTRUED; CASE AT BAR. — The award of exemplary damages should be increased to
P300,000.00 for Ramon Miranda and P100,000.00 for the de la Victoria spouses in accordance with our ruling in the Mecenas case:
Exemplary damages are designed by our civil law to permit the courts to reshape behavior that is socially deleterious in its
consequence by creating negative incentives or deterrents against such behaviour. In requiring compliance with the standard of
extraordinary diligence, a standard which is in fact that of the highest possible degree of diligence, from common carriers and in
creating a presumption of negligence against them, the law seeks to compel them to control their employees, to tame their reckless
instincts and to force them to take adequate care of human beings and their property. The Court will take judicial notice of the dreadful
regularity with which grievous maritime disasters occur in our waters with massive loss of life. The bulk of our population is too poor
to afford domestic air transportation. So it is that notwithstanding the frequent sinking of passenger vessels in our waters, crowds of
people continue to travel by sea. This Court is prepared to use the instruments given to it by the law for securing the ends of law and
public policy. One of those instruments is the institution of exemplary damages; one of those ends, of special importance in an
archipelagic state like the Philippines, is the safe and reliable carriage of people and goods by sea. ACTIHa

DECISION

MENDOZA, J p:

This is a petition for review on certiorari of the decision of the Court of Appeals affirming with modification the Regional Trial
Court's award of damages to private respondents for the death of relatives as a result of the sinking of petitioner's vessel.
In April of 1980, private respondent Ramon Miranda purchased from the Negros Navigation Co., Inc. four special cabin tickets
(#74411, 74412, 74413 and 74414) for his wife, daughter, son and niece who were going to Bacolod City to attend a family reunion.
The tickets were for Voyage No. 457-A of the M/V Don Juan, leaving Manila at 1:00 p.m. on April 22, 1980.
The ship sailed from the port of Manila on schedule. LLphil
At about 10:30 in the evening of April 22, 1980, the Don Juan collided off the Tablas Strait in Mindoro, with the M/T Tacloban City,
an oil tanker owned by the Philippine National Oil Company (PNOC) and the PNOC Shipping and Transport Corporation
(PNOC/STC). As a result, the M/V Don Juan sank. Several of her passengers perished in the sea tragedy. The bodies of some of the
victims were found and brought to shore, but the four members of private respondents' families were never found.
Private respondents filed a complaint on July 16, 1980 in the Regional Trial Court of Manila, Branch 34, against the Negros
Navigation, the Philippine National Oil Company (PNOC), and the PNOC Shipping and Transport Corporation (PNOC/STC), seeking
damages for the death of Ardita de la Victoria Miranda, 48, Rosario V. Miranda, 19, Ramon V. Miranda, Jr., 16, and Elfreda de la
Victoria, 26.
In its answer, petitioner admitted that private respondents purchased ticket numbers 74411, 74412, 74413 and 74414; that the ticket
numbers were listed in the passenger manifest; and that the Don Juan left Pier 2, North Harbor, Manila on April 22, 1980 and sank
that night after being rammed by the oil tanker M/T Tacloban City, and that, as a result of the collision, some of the passengers of the
M/V Don Juan died. Petitioner, however, denied that the four relatives of private respondents actually boarded the vessel as shown by
the fact that their bodies were never recovered. Petitioner further averred that the Don Juan was seaworthy and manned by a full and
competent crew, and that the collision was entirely due to the fault of the crew of the M/T Tacloban City.
On January 20, 1986, the PNOC and petitioner Negros Navigation Co., Inc. entered into a compromise agreement whereby petitioner
assumed full responsibility for the payment and satisfaction of all claims arising out of or in connection with the collision and
releasing the PNOC and the PNOC/STC from any liability to it. The agreement was subsequently held by the trial court to be binding
upon petitioner, PNOC and PNOC/STC. Private respondents did not join in the agreement.
After trial, the court rendered judgment on February 21, 1991, the dispositive portion of which reads as follows:
WHEREFORE, in view of the foregoing, judgment is hereby rendered in favor of the plaintiffs, ordering all the
defendants to pay jointly and severally to the plaintiffs damages as follows:
To Ramon Miranda:
P42,025.00 for actual damages;
P152,654.55 as compensatory damages for loss of
earning capacity of his wife;
P90,000.00 as compensatory damages for wrongful
death of three (3) victims;
P300,000.00 as moral damages;
P50,000.00 as exemplary damages, all in the total
amount of P634,679.55; and
P40,000.00 as attorney's fees.
To Spouses Ricardo and Virginia de la Victoria:
P12,000.00 for actual damages;
P158,899.00 as compensatory damages for loss of
earning capacity;
P30,000.00 as compensatory damages for wrongful
death;
P100,000.00 as moral damages;
P20,000.00 as exemplary damages, all in the total
amount of P320,899.00; and
P15,000.00 as attorney's fees.
On appeal, the Court of Appeals 1 affirmed the decision of the Regional Trial Court with modification —
1. Ordering and sentencing defendants-appellants, jointly and severally, to pay plaintiff-appellee Ramon Miranda
the amount of P23,075.00 as actual damages instead of P42,025.00;
2. Ordering and sentencing defendants-appellants, jointly and severally, to pay plaintiff-appellee Ramon Miranda
the amount of P150,000.00, instead of P90,000.00, as compensatory damages for the death of his wife and two
children;
3. Ordering and sentencing defendants-appellants, jointly and severally, to pay plaintiffs-appellees Dela Victoria
spouses the amount of P50,000,00, instead of P30,000.00, as compensatory damages for the death of their
daughter Elfreda Dela Victoria;
Hence this petition, raising the following issues:
(1) whether the members of private respondents' families were actually passengers of the Don Juan;
(2) whether the ruling in Mecenas vs. Court of Appeals, 2 finding the crew members of petitioner to be grossly
negligent in the performance of their duties, is binding in this case;
(3) whether the total loss of the M/V Don Juan extinguished petitioner's liability; and
(4) whether the damages awarded by the appellate court are excessive, unreasonable and unwarranted.
First. The trial court held that the fact that the victims were passengers of the M/V Don Juan was sufficiently proven by private
respondent Ramon Miranda, who testified that he purchased tickets numbered 74411, 74412, 74413 and 74414 at P131.30 each from
the Makati office of petitioner for Voyage No. 47-A of the M/V Don Juan, which was leaving Manila on April 22, 1980. This was
corroborated by the passenger manifest (Exh. E) on which the numbers of the tickets and the names of Ardita Miranda and her
children and Elfreda de la Victoria appear.
Petitioner contends that the purchase of the tickets does not necessarily mean that the alleged victims actually took the trip. Petitioner
asserts that it is common knowledge that passengers purchase tickets in advance but do not actually use them. Hence, private
respondent should also prove the presence of the victims on the ship. The witnesses who affirmed that the victims were on the ship
were biased and unreliable.
This contention is without merit. Private respondent Ramon Miranda testified that he personally took his family and his niece to the
vessel on the day of the voyage and stayed with them on the ship until it was time for it to leave. There is no reason he should claim
members of his family to have perished in the accident just to maintain an action. People do not normally lie about so grave a matter
as the loss of dear ones. It would be more difficult for private respondents to keep the existence of their relatives if indeed they are
alive than it is for petitioner to show the contrary. Petitioner's only proof is that the bodies of the supposed victims were not among
those recovered from the site of the mishap. But so were the bodies of the other passengers reported missing not recovered, as this
Court noted in the Mecenas 3 case.
Private respondent Miranda's testimony was corroborated by Edgardo Ramirez. Ramirez was a seminarian and one of the survivors of
the collision. He testified that he saw Mrs. Miranda and Elfreda de la Victoria on the ship and that he talked with them. He knew Mrs.
Miranda who was his teacher in the grade school. He also knew Elfreda who was his childhood friend and townmate. Ramirez said he
was with Mrs. Miranda and her children and niece from 7:00 p.m. until 10:00 p.m. when the collision happened and that he in fact had
dinner with them. Ramirez said he and Elfreda stayed on the deck after dinner and it was there where they were jolted by the collision
of the two vessels. Recounting the moments after the collision, Ramirez testified that Elfreda ran to fetch Mrs. Miranda. He escorted
her to the room and then tried to go back to the deck when the lights went out. He tried to return to the cabin but was not able to do so
because it was dark and there was a stampede of passengers from the deck.
Petitioner casts doubt on Ramirez' testimony, claiming that Ramirez could not have talked with the victims for about three hours and
not run out of stories to tell, unless Ramirez had a "storehouse" of stories. But what is incredible about acquaintances thrown together
on a long journey staying together for hours on end, in idle conversation precisely to while the hours away?
Petitioner also points out that it took Ramirez three (3) days before he finally contacted private respondent Ramon Miranda to tell him
about the fate of his family. But it is not improbable that it took Ramirez three days before calling on private respondent Miranda to
tell him about the last hours of Mrs. Miranda and her children and niece, in view of the confusion in the days following the collision as
rescue teams and relatives searched for survivors.
Indeed, given the facts of this case, it is improper for petitioner to even suggest that private respondents' relatives did not board the ill-
fated vessel and perish in the accident simply because their bodies were not recovered.
Second. In finding petitioner guilty of negligence and in failing to exercise the extraordinary diligence required of it in the carriage of
passengers, both the trial court and the appellate court relied on the findings of this Court in Mecenas vs. Intermediate Appellate
Court, 4 which case was brought for the death of other passengers. In that case it was found that although the proximate cause of the
mishap was the negligence of the crew of the M/T Tacloban City, the crew of the Don Juan was equally negligent as it found that the
latter's master, Capt. Rogelio Santisteban, was playing mahjong at the time of collision, and the officer on watch, Senior Third Mate
Rogelio De Vera, admitted that he failed to call the attention of Santisteban to the imminent danger facing them. This court found that
Capt. Santisteban and the crew of the M/V Don Juan failed to take steps to prevent the collision or at least delay the sinking of the
ship and supervise the abandoning of the ship.

Petitioner Negros Navigation was found equally negligent in tolerating the playing of mahjong by the ship captain and other crew
members while on board the ship and failing to keep the M/V Don Juan seaworthy so much so that the ship sank within 10 to 15
minutes of its impact with the M/T Tacloban City.
In addition, the Court found that the Don Juan was overloaded. The Certificate of Inspection, dated August 27, 1979, issued by the
Philippine Coast Guard Commander at Iloilo City stated that the total number of persons allowed on the ship was 864, of whom 810
are passengers, but there were actually 1,004 on board the vessel when it sank, 140 persons more than the maximum number that
could be safely carried by it.
Taking these circumstances together, and the fact that the M/V Don Juan, as the faster and better-equipped vessel, could have avoided
a collision with the PNOC tanker, this Court held that even if the Tacloban City had been at fault for failing to observe an
internationally-recognized rule of navigation, the Don Juan was guilty of contributory negligence. Through Justice Feliciano, this
Court held:
The grossness of the negligence of the "Don Juan" is underscored when one considers the foregoing
circumstances in the context of the following facts: Firstly, the "Don Juan" was more than twice as fast as the
"Tacloban City." The "Don Juan's" top speed was 17 knots; while that of the "Tacloban City" was 6.3 knots.
Secondly, the "Don Juan" carried the full complement of officers and crew members specified for a passenger
vessel of her class. Thirdly, the "Don Juan" was equipped with radar which was functioning that night. Fourthly,
the "Don Juan's" officer on-watch had sighted the "Tacloban City" on his radar screen while the latter was still
four (4) nautical miles away. Visual confirmation of radar contact was established by the "Don Juan" while the
"Tacloban City" was still 2.7 miles away. In the total set of circumstances which existed in the instant case, the
"Don Juan," had it taken seriously its duty of extraordinary diligence, could have easily avoided the collision with
the "Tacloban City." Indeed, the "Don Juan" might well have avoided the collision even if it had
exercised ordinary diligence merely. LibLex
It is true that the "Tacloban City" failed to follow Rule 18 of the International Rules of the Road which requires
two (2) power-driven vessels meeting end on or nearly end on each to alter her course to starboard (right) so that
each vessel may pass on the port side (left) of the other. The "Tacloban City," when the two (2) vessels were only
three-tenths (0.3) of a mile apart, turned (for the second time) 15º to port side while the "Don Juan" veered hard to
starboard . . . [But] "route observance" of the International Rules of the Road will not relieve a vessel from
responsibility if the collision could have been avoided by proper case and skill on her part or even by a departure
from the rules.
In the petition at bar, the "Don Juan" having sighted the "Tacloban City" when it was still a long way off was
negligent in failing to take early preventive action and in allowing the two (2) vessels to come to such close
quarters as to render the collision inevitable when there was no necessity for passing so near to the "Tacloban
City" as to create that hazard or inevitability, for the "Don Juan" could choose its own distance. It is noteworthy
that the "Tacloban City," upon turning hard to port shortly before the moment of collision, signalled its intention
to do so by giving two (2) short blasts with its horn. The "Don Juan" gave no answering horn blast to signal its
own intention and proceeded to turn hard to starboard.
We conclude that Capt. Santisteban and Negros Navigation are properly held liable for gross negligence in
connection with the collision of the "Don Juan" and "Tacloban City" and the sinking of the "Don Juan' leading to
the death of hundreds of passengers. . . . 5
Petitioner criticizes the lower court's reliance on the Mecenas case, arguing that, although this case arose out of the same incident as
that involved in Mecenas, the parties are different and trial was conducted separately. Petitioner contends that the decision in this case
should be based on the allegations and defenses pleaded and evidence adduced in it or, in short, on the record of this case.
The contention is without merit. What petitioner contends may be true with respect to the merits of the individual claims against
petitioner but not as to the cause of the sinking of its ship on April 22, 1980 and its liability for such accident, of which there can only
be one truth. Otherwise, one would be subscribing to the sophistry: truth on one side of the Pyrenees, falsehood on the other!
Adherence to the Mecenas case is dictated by this Court's policy of maintaining stability in jurisprudence in accordance with the legal
maxim "stare decisis et non quieta movere" (Follow past precedents and do not disturb what has been settled.) Where, as in this case,
the same questions relating to the same event have been put forward by parties similarly situated as in a previous case litigated and
decided by a competent court, the rule of stare decisis is a bar to any attempt to relitigate the same issue. 6 In Woulfe v. Associated
Realties Corporation, 7 the Supreme Court of New Jersey held that where substantially similar cases to the pending case were
presented and applicable principles declared in prior decisions, the court was bound by the principle of stare decisis. Similarly, in State
ex rel. Tollinger vs. Gill, 8 it was held that under the doctrine of stare decisis a ruling is final even as to parties who are strangers to the
original proceeding and not bound by the judgment under the res judicata doctrine. The Philadelphia court expressed itself in this
wise: "Stare decisis simply declares that, for the sake of certainty, a conclusion reached in one case should be applied to those which
follow, if the facts are substantially the same, even though the parties may be different." 9 Thus, in J . M. Tuason v.Mariano, supra,
this Court relied on its rulings in other cases involving different parties in sustaining the validity of a land title on the principle of
"stare decisis et non quieta movere."
Indeed, the evidence presented in this case was the same as those presented in the Mecenas case, to wit:
Document Mecenas case This case
Decision of Commandant, Exh. 10 10 Exh. 11-B-NN/X
Phil. Coast Guard
in BMI Case No.
415-80 dated 3/26/81
Decision of the Minister Exh. 11 11 Exh. ZZ
of National Defense
dated 3/12/82
Resolution on the Exh. 13 12 Exh. AAA
motion for (private
reconsideration respondents)
of the decision
of the Minister
of National
Defense dated
7/24/84
Certificate of Exh. 1-A 13 Exh. 19-NN
inspection dated
8/27/79
Certificate of Stability Exh. 6-A 14 Exh. 19-D-NN
dated 12/16/76
Nor is it true that the trial court merely based its decision on the Mecenas case. The trial court made its own independent findings on
the basis of the testimonies of witnesses, such as Senior Third Mate Rogelio de Vera, who incidentally gave substantially the same
testimony on petitioner's behalf before the Board of Marine Inquiry. The trial court agreed with the conclusions of the then Minister of
National Defense finding both vessels to be negligent.
Third. The next issue is whether petitioner is liable to pay damages notwithstanding the total loss of its ship. The issue is not one of
first impression. The rule is well-entrenched in our jurisprudence that a shipowner may be held liable for injuries to passengers
notwithstanding the exclusively real and hypothecary nature of maritime law if fault can be attributed to the shipowner. 15
In Mecenas, this Court found petitioner guilty of negligence in (1) allowing or tolerating the ship captain and crew members in playing
mahjong during the voyage, (2) in failing to maintain the vessel seaworthy and (3) in allowing the ship to carry more passengers that it
was allowed to carry. Petitioner is, therefore, clearly liable for damages to the full extent.
Fourth. Petitioner contends that, assuming that the Mecenas case applies, private respondents should be allowed to claim only
P43,857.14 each as moral damages because in the Mecenas case, the amount of P307,500.00 was awarded to the seven children of the
Mecenas couple. Under petitioner's formula, Ramon Miranda should receive P43,857.14, while the De la Victoria spouses should
receive P97,714.28.
Here is where the principle of stare decisis does not apply in view of differences in the personal circumstances of the victims. For that
matter, differentiation would be justified even if private respondents had joined the private respondents in the Mecenas case. The
doctrine of stare decisis works as a bar only against issues litigated in a previous case. Where the issue involved was not raised nor
presented to the court and not passed upon by the court in the previous case, the decision in the previous case is not stare decisis of the
question presently presented. 16 The decision in the Mecenas case relates to damages for which petitioner was liable to the claimants
in that case.
In the case at bar, the award of P300,000.00 for moral damages is reasonable considering the grief petitioner Ramon Miranda suffered
as a result of the loss of his entire family. As a matter of fact, three months after the collision, he developed a heart condition
undoubtedly caused by the strain of the loss of his family. The 100,000.00 given to Mr. and Mrs. de la Victoria is likewise reasonable
and should be affirmed.
As for the amount of civil indemnity awarded to private respondents, the appellate court's award of P50,000.00 per victim should be
sustained. The amount of P30,000.00 formerly set in De Lima v. Laguna Tayabas Co., 17 Heirs of Amparo delos Santos v. Court of
Appeals, 18 and Philippine Rabbit Bus Lines, Inc. v. Intermediate Appellate Court 19 as benchmark was subsequently increased to
P50,000.00 in the case of Sulpicio Lines, Inc. v. Court of Appeals, 20 which involved the sinking of another interisland ship on
October 24, 1988.

We now turn to the determination of the earning capacity of the victims. With respect to Ardita Miranda, the trial court awarded
damages computed as follows: 21
In the case of victim Ardita V. Miranda whose age at the time of the accident was 48 years, her life expectancy
was computed to be 21.33 years, and therefore, she could have lived up to almost 70 years old. Her gross earnings
for 21.33 years based on P10,224.00 per annum, would be P218,077.92. Deducting therefrom 30% as her living
expenses, her net earnings would be P152,654.55, to which plaintiff Ramon Miranda is entitled to compensatory
damages for the loss of earning capacity of his wife. In considering 30% as the living expenses of Ardita Miranda,
the Court takes into account the fact that plaintiff and his wife were supporting their daughter and son who were
both college students taking Medicine and Law respectively.
In accordance with the ruling in Villa-Rey Transit, Inc. v. Court of Appeals, 22 we think the life expectancy of Ardita Miranda was
correctly determined to be 21.33 years, or up to age 69. Petitioner contends, however, that Mrs. Miranda would have retired from her
job as a public school teacher at 65, hence her loss of earning capacity should be reckoned up to 17.33 years only.
The accepted formula for determining life expectancy is 2/3 multiplied by (80 minus the age of the deceased). It may be that in the
Philippines the age of retirement generally is 65 but, in calculating the life expectancy of individuals for the purpose of determining
loss of earning capacity under Art. 2206(1) of the Civil Code, it is assumed that the deceased would have earned income even after
retirement from a particular job. In this case, the trial court took into account the fact that Mrs. Miranda had a master's degree and a
good prospect of becoming principal of the school in which she was teaching. There was reason to believe that her income would have
increased through the years and she could still earn more after her retirement, e.g., by becoming a consultant, had she not died. The
gross earnings which Mrs. Miranda could reasonably be expected to earn were it not for her untimely death was, therefore, correctly
computed by the trial court to be P218,077.92 (given a gross annual income of P10,224.00 and life expectancy of 21.33 years).
Petitioner contends that from the amount of gross earnings, 60% should be deducted as necessary living expenses, not merely 30% as
the trial court allowed. Petitioner contends that 30% is unrealistic, considering that Mrs. Miranda's earnings would have been subject
to taxes, social security deductions and inflation.
We agree with this contention. In Villa-Rey Transit, Inc. v. Court of Appeals, 23 the Court allowed a deduction of P1,184.00 for living
expenses from the P2,184.00 annual salary of the victim, which is roughly 54.2% thereof. The deceased was 29 years old and a
training assistant in the Bacnotan Cement Industries. In People v. Quilation, 24the deceased was a 26-year old laborer earning a daily
wage. The court allowed a deduction of P120,000.00 which was 51.3% of his annual gross earnings of P234,000.00. In People
v. Teehankee, 25 the court allowed a deduction of P19,800.00, roughly 42.4% thereof from the deceased's annual salary of P46,659.21.
The deceased, Maureen Hultman, was 17 years old and had just received her first paycheck as a secretary. In the case at bar, we hold
that a deduction of 50% from Mrs. Miranda's gross earnings (P218,077.92) would be reasonable, so that her net earning capacity
should be P109,038.96. There is no basis for supposing that her living expenses constituted a smaller percentage of her gross income
than the living expenses in the decided cases. To hold that she would have used only a small part of her income for herself, a larger
part going to the support of her children would be conjectural and unreasonable.
As for Elfreda de la Victoria, the trial court found that, at the time of her death, she was 26 years old, a teacher in a private school in
Malolos, Bulacan, earning P6,192.00 per annum. Although a probationary employee, she had already been working in the school for
two years at the time of her death and she had a general efficiency rating of 92.85% and it can be presumed that, if not for her
untimely death, she would have become a regular teacher. Hence, her loss of earning capacity is P111,456.00, computed as follows:
On the other hand, the award of actual damages in the amount of P23,075.00 was determined by the Court of Appeals on the basis of
receipts submitted by private respondents. This amount is reasonable considering the expenses incurred by private respondent Miranda
in organizing three search teams to look for his family, spending for transportation in going to places such as Batangas City and Iloilo,
where survivors and the bodies of other victims were found, making long distance calls, erecting a monument in honor of the four
victims, spending for obituaries in the Bulletin Today and for food, masses and novenas.
Petitioner's contention that the expenses for the erection of a monument and other expenses for memorial services for the victims
should be considered included in the indemnity for death awarded to private respondents is without merit. Indemnity for death is given
to compensate for violation of the rights of the deceased, i.e., his right to life and physical integrity. 26 On the other hand, damages
incidental to or arising out of such death are for pecuniary losses of the beneficiaries of the deceased.
As for the award of attorney's fees, we agree with the Court of Appeals that the amount of P40,000.00 for private respondent Ramon
Miranda and P15,000.00 for the de la Victoria spouses is justified. The appellate court correctly held:
The Mecenas case cannot be made the basis for determining the award for attorney's fees. The award would
naturally vary or differ in each case. While it is admitted that plaintiff-appellee Ramon Miranda who is himself a
lawyer, represented also plaintiff-appellees Dela Victoria spouses, we note that separate testimonial evidence were
adduced by plaintiff-appellee Ramon Miranda (TSN, February 26, 1982, p. 6) and plaintiffs-appellees spouses
Dela Victoria (TSN, August 13, 1981, p. 43). Considering the amount of work and effort put into the case as
indicated by the voluminous transcripts of stenographic notes, we find no reason to disturb the award of
P40,000.00 for plaintiff-appellee Ramon Miranda and P15,000.00 for plaintiffs-appellees Dela Victoria
spouses. 27
The award of exemplary damages should be increased to P300,000.00 for Ramon Miranda and P100,000.00 for the de la Victoria
spouses in accordance with our ruling in the Mecenas case:
Exemplary damages are designed by our civil law to permit the courts to reshape behavior that is socially
deleterious in its consequence by creating negative incentives or deterrents against such behavior. In requiring
compliance with the standard of extraordinary diligence, a standard which is in fact that of the highest possible
degree of diligence, from common carriers and in creating a presumption of negligence against them, the law
seeks to compel them to control their employees, to tame their reckless instincts and to force them to take
adequate care of human beings and their property. The Court will take judicial notice of the dreadful regularity
with which grievous maritime disasters occur in our waters with massive loss of life. The bulk of our population is
too poor to afford domestic air transportation. So it is that notwithstanding the frequent sinking of passenger
vessels in our waters, crowds of people continue to travel by sea. This Court is prepared to use the instruments
given to it by the law for securing the ends of law and public policy. One of those instruments is the institution of
exemplary damages; one of those ends, of special importance in an archipelagic state like the Philippines, is the
safe and reliable carriage of people and goods by sea. 28
WHEREFORE, the decision of the Court of Appeals is AFFIRMED with modification and petitioner is ORDERED to pay private
respondents damages as follows:
To private respondent Ramon Miranda:
P23,075.00 for actual damages;
P109,038.96 as compensatory damages for loss of
earning capacity of his wife;
P150,000.00 as compensatory damages for wrongful
death of three (3) victims;
P300,000.00 as moral damages;
P300,000.00 as exemplary damages, all in the total
amount of P882,113.96; and
P40,000.00 as attorney's fees.
To private respondents Spouses Ricardo and Virginia de la Victoria:
P12,000.00 for actual damages;
P111,456.00 as compensatory damages for loss of
earning capacity;
P50,000.00 as compensatory damages for wrongful
death;
P100,000.00 as moral damages;
P100,000.00 as exemplary damages, all in the total
amount of P373,456.00; and
P15,000.00 as attorney's fees.
Petitioners are further ordered to pay costs of suit.
In the event the Philippine National Oil Company and/or the PNOC Shipping and Transport Corporation pay or are required to pay all
or a portion of the amounts adjudged, petitioner Negros Navigation Co., Inc. shall reimburse either of them such amount or amounts
as either may have paid, and in the event of failure of Negros Navigation Co., Inc., to make the necessary reimbursement, PNOC
and/or PNOC/STC shall be entitled to a writ of execution without need of filing another action. cdll
SO ORDERED.
||| (Negros Navigation Co., Inc. v. Court of Appeals, G.R. No. 110398, [November 7, 1997], 346 PHIL 551-571)
THIRD DIVISION

[G.R. No. 93291. March 29, 1999.]

SULPICIO LINES, INC. and CRESENCIO G. CASTANEDA, petitioners, vs. COURT OF APPEALS and
AQUARIUS FISHING CO., INC., respondents.

Del Rosario & Del Rosario for petitioners.


Leong Amihan Esuerte & Associates for private respondent.

SYNOPSIS

On November 18, 1978, while the weather was good and the visibility was clear, passenger liner M/V Don Sulpicio sighted two
fishing boats ahead at the distance of about four (4) miles. The two boats, later known to be F/B Aquarius "C" and F/B Aquarius "G";
were running at a speed of 7.5 to 8 knots per hour while M/V Don Sulpiciowas running at 15.5 knots per hour toward the direction of
the two boats. When it caught up with them, it collided with F/B Aquarius "G" that resulted in the sinking of the latter. Before the
RTC of Bacolod City, the owner of the ill-fated fishing boats, Aquarius Fishing Co., Inc., filed a complaint for damages
against Sulpicio Lines, Inc.. owner of the passenger liner. On May 30, 1986, the RTC came out with a decision in favor of the
plaintiff. The CA affirmed the RTC decision. In its appeal before the Supreme Court, petitioner contended that under the Rules of the
Road and Regulations on the Prevention of Collision, M/V Don Sulpicio was the privileged vessel and the F/B Aquarius was the
burdened vessel in the crossing situation. However, the latter violated the rules, did not keep out of the way, did not slacken speed but
instead went full ahead and cross the bow of M/V Don Sulpicio. cdasia
The Supreme Court ruled that whether or not the collision occurred in a crossing situation or not is immaterial. The duty to keep out of
the way remained even if the overtaking vessel cannot determine with certainty whether she is forward of or abaft more than two
points from the vessel. M/V Don Sulpicio must assume responsibility as it was in a better position to avoid the collision. It cannot
claim that it was a privileged vessel being in the portside which can maintain its course and speed during the collision. Its stance that
F/B Aquarius "G" was a burdened vessel which should have kept out of M/V Don Sulpicio's way was not supported by facts.

SYLLABUS

1. REMEDIAL LAW; CIVIL PROCEDURE; FINDINGS OF FACTS OF THE TRIAL COURT, BINDING ON APPEAL. — Well-
settled to the point of being elementary is the doctrine that the findings by the trial court are binding on the appellate court and will not
be disturbed on appeal, unless the trial court has overlooked or ignored some fact or circumstance of sufficient weight or significance
which, if considered, would alter the situation." After a thorough review and examination of the evidence on hand, we discern no
ground or basis for disregarding the findings and conclusion arrived at below. EAcIST
2. MERCANTILE LAW; TRANSPORTATION; REGULATIONS FOR PREVENTING COLLISIONS AT SEA; DUTY TO KEEP
OUT OF WAY REMAINS WITH OVERTAKING VESSEL. — Whether or not the collision sued upon occurred in a crossing
situation is immaterial as the Court of Appeals, relying on Rule 24-C, Regulations for Preventing Collisions at the Sea, ruled that the
duty to keep out of the way remained even if the overtaking vessel cannot determine with certainty whether she is forward of or abaft
more than 2 points from the vessel. It is beyond cavil that M/V "Don Sulpicio" must assume responsibility as it was in a better position
to avoid the collision. It should have blown its horn or given signs to warn the other vessel that it was to overtake it.
Assuming argumenti ex gratia that F/B Aquarius "G" had no lookout during the collision, the omission does not suffice to
exculpate Sulpicio Lines from liability. M/V "Don Sulpicio" cannot claim that it was a privileged vessel being in the portside which
can maintain its course and speed during the collision. When it overtook F/B Aquarius "G," it was duty bound to slacken its speed and
keep away from other vessels, which it failed to do. The stance of petitioners that F/B Aquarius "G" is a burdened vessel which should
have kept out of the way of M/V "Don Sulpicio" is not supported by facts.
3. CIVIL LAW; DAMAGES; AWARD OF ACTUAL DAMAGES PROPER IN CASE AT BAR. — Anent the award of actual
damage in the amount of P564,448.80, petitioners' mere allegation that the award of actual damages is exaggerated and speculative,
without controverting the receipts and invoices when the boat was constructed and which were the bases of accounting entries in the
books of accounts presented by the private respondent, are unavailing to defeat the award;-To be sure, the private respondent amply
established the compensatory damages it suffered by reason of the collision.
4. ID.; ID.; AMOUNT OF UNREALIZED PROFIT; TOO UNCERTAIN AND ONEROUS IN CASE AT BAR. — The P10,000.00 a
month awarded by the trial court and the respondent court, for earnings that would have been derived from F/B Aquarius "G," without
indicating the material period is too uncertain and onerous to deserve serious consideration. As regards the reckoning period, there is
tenability in petitioner's submission that a fishing boat deteriorates quite quickly due to exposure to the elements. To
hold Sulpicio Lines to pay the profits that would have been realized by the private respondent for an unlimited period of time is to
burden it indefinitely, which cannot be countenanced. Failure of Aquarius Fishing Co., Inc. to come forward with controverting
evidence to the allegation of Sulpicio Lines that the ordinary lifespan of a fishing vessel is more than ten (10) years, amounted to an
admission of such allegation. The vessel was constructed in 1972 while the collision occurred in 1978. The remaining life span of F/B
Aquarius "G" was therefore four (4) years. Conformably, computed at P10,000.00 per month for a period of four (4) years, the
unrealized profits/earnings involved, amounted to at most P480,000.00.
5. ID.; ID.; ATTORNEY'S FEES; AWARD THEREOF IN CASE AT BAR, PROPER. — As regards the attorney's fees equivalent to
15% of all the awards granted by the Regional Trial Court, the propriety thereof cannot be questioned. Gross and evident bad faith on
the part of petitioner in refusing to pay the claim sued upon constrained the private respondent to enlist the services of a lawyer to
litigate. Petitioner must have placed reliance on the general rule that attorney's fees cannot be recovered as part of damages because of
the policy that no premium should be placed on the right to litigate. (Philtranco Service Enterprises, Inc. v. Court of Appeals, 273
SCRA 562; Morales v. Court of Appeals, 274 SCRA 282) But the aforecited rule is inapplicable here in the face of the stubborn
refusal of petitioner to respect the valid claim of the private respondent.
6. ID.; OBLIGATIONS AND CONTRACTS; PAYMENT OF LEGAL INTEREST PROPER, IN CASE AT BAR. — The payment of
legal interest is also in order. But it should be computed from November 18, 1978, not from March 30, 1986, when the Regional Trial
Court a quo came out with its Decision. It was from the time of the collisioncomplained of that the private respondent began to be
deprived of subject vessel. IEAaST

DECISION

PURISIMA, J p:

At bar is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court seeking the reversal of the Decision, dated
November 29, 1989, of the Court of Appeals 1 in CA GR No. 15081, and the Resolution, dated April 24, 1990, denying petitioners'
Motion for Reconsideration.
The facts that matter are as follows:
The case stemmed from a complaint for damages of Aquarius Fishing Co., Inc. against Sulpicio Lines, Inc. and Cresencio G.
Castaneda, docketed as Civil Case No. 14510 before Branch 44 of Regional Trial Court in Bacolod City. In due time, said defendants
submitted their Answer with counterclaim.
On May 30, 1986, the trial court came out with its Decision in favor of plaintiff Aquarius Fishing Co., Inc., ratiocinating and disposing
thus:
"The question to be determined is whether the collision between M/V Don Sulpicio and F/B Aquarius 'G' was due
to the negligence of the defendants or of the plaintiff. It is admitted in the evidence that at a distance of about 4
miles M/V Don Sulpicio has sighted 2 fishing boats, namely: F/B Aquarius 'C' and F/B Aquarius 'G' although
defendants maintained it was F/B Aquarius 'B'. From the evidence it appears that the 2 fishing boats had a speed
of about 7.5 to 8 knots per hour while M/V DonSulpicio was running about 15.5 knots per hour. It would appear
that the speed of M/V Don Sulpicio was more than twice as fast as the speed of the two fishing boats. The weather
at that time the accident happened was clear and visibility was good. In other words, from the distance of about
four miles at sea, the men of Don Sulpiciocould clearly see the 2 fishing boats which were ahead about 4 miles
and likewise, the men of the 2 fishing boats could clearly see M/V Don Sulpicio following. The plaintiff claims
that they continued on their speed in their course and while maintaining their speed they were rammed by M/V
Don Sulpicio.
Defendants claim that plaintiff was negligent and that the collision was due to the negligence of the men manning
F/B Aquarius 'B' and submit that considering that F/B Aquarius 'B' had no lookout and that the fishing boat was
ahead, F/B Aquarius 'B' should have given way to M/V Don Sulpicio who was following in order to
avoidcollision. And considering that F/B Aquarius 'B' was at fault, it should suffer its own damage.
xxx xxx xxx
It appears in the theory of the defendants that simply because a vessel had no lookout and that the vessel had no
lookout and that the vessel was ahead, if it is rammed by another vessel that is following, the fault would be on the
vessel that is ahead because the vessel that is ahead should always give way to the vessel that is following.
xxx xxx xxx
From this argument, it would appear that whether actual negligence was committed by the vessel ahead or not, but
as long as the vessel had no lookout and has not given way to the vessel following, the vessel following, if it ram
the vessel ahead, has no fault.

It should be noted that F/B Aquarius 'G' is a fishing vessel with a speed of only 7.5 or 8 knots per hour and
according to the master of the vessel, they are not required by law to have a lookout because the vessel is small.
M/V Don Sulpicio is a passenger boat with a speed of about 15.5 knots an hour and being a passenger boat, it is a
bigger boat and a faster boat. It is incumbent upon its master to see to it that the direction to which they are
proceeding is clear. Having seen for the first time the 2 vessels, F/B Aquarius 'C' and F/B Aquarius 'G' about 4
miles ahead and that they were almost parallel to each other or in the same line with each other, as M/V
DonSulpicio was following, M/V Don Sulpicio should have used sufficient diligence to avoid collision. It appears
from the evidence that during the incident, the weather was clear and visibility was very good. The M/V
Don Sulpicio had a clear opportunity to avoid collision, but it failed to do so. M/V Don Sulpicio believed, that
considering that it was a following vessel, it can just go thru and proceed irrespective of danger. The Court
believes that the evidence is abundant to show negligence on the part of the master of the defendants and as such,
defendants should be held responsible for all the damages suffered by F/B Aquarius 'G'.
Defendants claim that the vessel involved was F/B Aquarius 'B'. However, the evidence show that the fishing
vessel that sunk was F/B Aquarius 'G' and not F/B Aquarius 'B'. And as shown by the evidence, the total loss of
F/B Aquarius 'G' together with its articles and provisions was P564,448.80." 2
WHEREFORE, the Court finds the complaint duly supported by evidence and judgment is hereby rendered in
favor of the plaintiff and against the defendants, who are hereby ordered to pay, jointly and severally, the plaintiff
the sum of P564,448.80 for the actual loss of F/B Aquarius 'G' including its articles and provisions; the sum of
P10,000.00 per month from date of the accident representing deprivation of the use and services of F/B Aquarius
'G' and another sum of P10,000.00 for actual expenses and costs of litigation, another sum of P10,000.00 by way
of exemplary damages, another sum equivalent to 15% of the total claim of plaintiff as attorney's fees plus
P300.00 per court appearance, and to pay legal rate of interest of all the amounts so adjudged from November 18,
1978 until the entire amount is fully paid, and to pay the costs. Counterclaim is dismissed." 3
The defendants appealed to the Court of Appeals, assigning seven (7) errors which the appellate court summed up and treated as two
pivotal issues, to wit:
"1. THE COURT A QUO ERRED IN DISREGARDING THE REGULATION FOR
PREVENTING COLLISION AT SEA, MORE POPULARLY KNOWN AS THE RULES OF THE ROAD IN
DETERMINING WHICH OF THE TWO VESSELS WAS NEGLIGENT AND LIABLE, CONSIDERING
THAT M/V DON SULPICIO COMPLIED WITH THEIR PROVISIONS, WHILE F/B AQUARIUS 'G' DID
NOT; AND
2. THE COURT A QUO ERRED IN AWARDING DAMAGES, ATTORNEY'S FEES, ACTUAL EXPENSES
AND COSTS OF LITIGATION, LEGAL RATE OF INTEREST OF ALL THE AWARDS FROM NOVEMBER
18, 1978 UNTIL ALL THE AMOUNTS ARE FULLY PAID." 4
On November 29, 1989, the Court of Appeals affirmed the Decision of the trial court of origin. The Motion for Reconsideration
interposed on December 23, 1989 by appellants met the same fate. It was denied on April 24, 1990.
Undaunted, petitioners found their way to this Court via the present Petition for Review on Certiorari, contending that:
I
THE LOWER COURT ERRED IN EXONERATING THE VESSEL F/B "AQUARIUS B" AND HER MASTER
FROM NEGLIGENCE DESPITE THE ADMISSION BY AGAPITO GERBOLINGA, PATRON OF SAID
VESSEL THAT THEY HAD NO LOOKOUT DURING THE COLLISION.
II
THE LOWER COURT ERRED IN DISREGARDING THE REGULATION FOR
PREVENTING COLLISION AT SEA, MORE POPULARLY KNOWN AS THE RULES OF THE ROAD IN
DETERMINING WHICH OF THE TWO VESSELS WAS NEGLIGENT AND LIABLE.
III
THE LOWER COURT ERRED IN IMPUTING NEGLIGENCE ON THE VESSEL M/V "DON SULPICIO",
THE PRIVILEGED VESSEL WHICH COMPLIED WITH RULES 19 AND 21, RULES OF THE ROAD.
IV
THE LOWER COURT ERRED IN AWARDING TO PLAINTIFF-APPELLEE THE AMOUNT OF P564,448.80
AS ACTUAL LOSS PLUS P10,000.00 PER MONTH FROM THE PERIOD OF NOVEMBER 18, 1978
REPRESENTING DEPRIVATION OF USE AND SERVICES OF F/B "AQUARIUS B" AND ANOTHER SUM
OF P10,000.00 FOR ACTUAL EXPENSES AND COST OF LITIGATION.
V
THE LOWER COURT ERRED IN AWARDING PLAINTIFF AND AGAINST DEFENDANTS THE SUM OF
P10,000.00 AS EXEMPLARY DAMAGES.
VI
THE LOWER COURT ERRED IN AWARDING PLAINTIFF AND AGAINST THE DEFENDANT-
APPELLEE THE SUM EQUIVALENT TO 15% OF THE TOTAL CLAIM AS ATTORNEY'S FEES PLUS
P300.00 PER COURT APPEARANCE.
VII
THE LOWER COURT ERRED IN AWARDING LEGAL RATE OF INTEREST OF ALL THE AWARDS TO
PLAINTIFF-APPELLEE FROM NOVEMBER 18, 1978 UNTIL ALL THE AMOUNTS ARE FULLY PAID. 5
Placing reliance on the Rules of the Road and Regulations on the Prevention of Collision, petitioners maintain:
". . . that respondent Court of Appeals completely disregarded the rule of admission in matters adverse to one's
interest. It is very clear that the F/B 'Aquarius B', her patron and crew were negligent in this case. The Rules of the
Road which is Annex 'A' of the Philippine Merchant Rules and Regulations requires that all vessels must have a
lookout (Rule 29, Rules of the Road). All vessels irrespective of size and make must keep a lookout. There is no
exception to this rule.
xxx xxx xxx
It was clearly established by the positive testimony of second mate, Aurelio Villacampa, Jr. on July 14, 1981 and
the sketch prepared by said witness (Exhibit 2) that the two vessels were in a crossing situation. The vessel M/V
'Don Sulpicio' was approaching on the starboard or right side of the crossing vessel F/B 'Aquarius B'. The
applicable rules in such a crossing situation are Rules 19, 21, 22 and 23. We quote the above Rules as follows:
'Rule 19. When two power driven vessels are crossing, so as to involve risk of collision, the vessel which has the
other on her starboard side shall keep out of the way of the other.'
'Rule 21. Where, by any of the Rules, one of two vessels is to keep out of the way, the other shall keep her course
and speed.'
'Rule 22. Every vessel which is directed by these Rules to keep out of the way of another vessel shall, so far as
possible, take positive early action to comply with this obligation, and shall, if the circumstances of the case
admit, avoid crossing ahead of the other.'
'Rule 23. Every power-driven vessel which is directed by these Rules to keep out of the way of another vessel
shall, on approaching her, if necessary, slacken her speed or stop or reverse.'
The M/V 'DON SULPICIO' was the privileged vessel and the F/B 'Aquarius B' was the burdened vessel in the
crossing situation (Exhibits 2, 3, 4, 9, 10). However, the F/B 'Aquarius B' violated the rules, did not keep out of
the way, did not slacken speed but instead went full ahead and crossed the bow of M/V 'DON SULPICIO'. . . .
xxx xxx xxx
In the case at bar F/B 'Aquarius B' by failure to keep out of the way and slacken her speed has allowed herself to
come to close proximity to the vessel M/V 'DONSULPICIO' bringing about the collision.
The award to private respondent of the sum of P564,448.80 as actual loss is based on surmises and conjectures.
No appraisal of the value of the vessel F/B 'Aquarius B' was presented to support said claim of total loss. The
claim of P564,448.80 was derived after summarizing up invoices and receipts of alleged purchases of materials,
provisions dating back since 1972 and even after November 18, 1978 the date of the collision (Exhibits CC to
KK). This award is exxagerated (sic) and speculative." 6
On October 24, 1990, respondent Aquarius Fishing Co., Inc. sent in its Comment, stating:
"Granting for the sake argument that any or all of the petitioners' witnesses can be classified as lookouts for M/V
Don Sulpicio, their negligence is made much clearer because they could not determine risk of collision, speed was
not slackened, no warning sign was made and the course of M/V Don Sulpicio not changed to avoid thecollision.
At any rate, the office of the Coast Guard Judge Advocate which we believe is the proper authority and has the
technical competence to determine who is at fault in maritime cases has this to say on the no look out defense put
up by the petitioners:
'It is clear that the M/V Don Sulpicio was the overtaking vessel and, under the Rules on the Road, was
the burdened vessel which had the duty to take all the necessary actions to keep clear of the overtaken
vessel. It was also shown that M/V Don Sulpicio did not alter her course to reduce her speed and being at
close range with F/B 'Aquarius G', did not even give a warning signal. It was likewise shown that the
Aquarius Fishing Co., Inc. did not own a vessel named F/B 'Aquarius B' (as identified by Chief Mate
Oro), but it did own a vessel named 'Aquarius G' at the time of the incident. The fact that F/B 'Aquarius
G' had no lookout at the time of the collision does not excuse M/V Don Sulpicio from observing her duty
to keep clear of the overtaken vessel especially so when there was sufficient room for her to do so.'" 7
The Petition is not impressed with merit.
Well-settled to the point of being elementary is the doctrine that the findings by the trial court are binding on the appellate court and
will not be disturbed on appeal, "unless the trial court has overlooked or ignored some fact or circumstance of sufficient weight or
significance which, if considered, would alter the situation." 8
"Factual findings of the appellate court deemed conclusive." (Estonina v. Court of Appeals, 266 SCRA 627)
"It is a fundamental rule in criminal as well as in civil cases that in the matter of credibility of witnesses, the
findings of the trial court are given great weight and highest degree of respect by the appellate court." (Lee Eng
Hong v. Court of Appeals, 241 SCRA 392 citing Pagsuyuin v. Intermediate Appellate Court, 193 SCRA 547)

". . . It is not the function of this Court to assess and evaluate all over again the evidence, testimonial and
evidentiary, adduced by the parties particularly where, such as here, the findings of both the trial court and the
appellate court on the matter coincide." (South Sea Surety and Insurance Company, Inc. v. Court of Appeals, 244
SCRA 744)
"It is a settled principle of civil procedure that the conclusions of the trial court regarding the credibility of
witnesses are entitled to great respect from the appellate courts . . ." (Limketkai Sons Milling, Inc. v. Court of
Appeals, 250 SCRA 523, citing Serrano vs. Court of Appeals, 196 SCRA 107)
After a thorough review and examination of the evidence on hand, we discern no ground or basis for disregarding the findings and
conclusion arrived at below.
Petitioners asserted that private respondent, through its patron, admitted that the vessel had no lookout during the collision despite the
absolute rule provided in Rule 9 of the Rules of Road. To bolster its stance, it contended that it was a privileged vessel pursuant to
Rules 19, 21, 22, 23 of the Regulations for the Prevention of Collisions at Sea. cdasia
Both the trial court and the respondent court found that M/V "Don Sulpicio" was crossing at 15.5 knots per hour while F/B
Aquarius "G" was obeying a speed limit of 7.5 knots per hour. The weather was clear and visibility was good. M/V "Don Sulpicio"
was four (4) miles away when it first sighted F/B Aquarius "G". All the time up to thecollision, M/V "Don Sulpicio" maintained its
speed of 16 knots. It was only two (2) minutes before the collision when M/V "Don Sulpicio" changed its course.
Whether or not the collision sued upon occurred in a crossing situation is immaterial as the Court of Appeals, relying on Rule 24-C,
Regulations for Preventing Collisions at the Sea, ruled that the duty to keep out of the way remained even if the overtaking vessel
cannot determine with certainty whether she is forward of or abaft more than 2 points from the vessel. It is beyond cavil
that M/V "Don Sulpicio" must assume responsibility as it was in a better position to avoid the collision. It should have blown its horn
or given signs to warn the other vessel that it was to overtake it.
Assuming argumenti ex gratia that F/B Aquarius "G" had no lookout during the collision, the omission does not suffice to
exculpate Sulpicio Lines from liability. M/V"Don Sulpicio" cannot claim that it was a privileged vessel being in the portside which
can maintain its course and speed during the collision. When it overtook F/B Aquarius "G", it was duty bound to slacken its speed and
keep away from other vessels, which it failed to do. The stance of petitioners that F/B Aquarius "G" is a burdened vessel which should
have kept out of the way of M/V "Don Sulpicio" is not supported by facts.
Anent the award of actual damage in the amount of P564,448.80, petitioners' mere allegation that the award of actual damages is
exaggerated and speculative, without controverting the receipts and invoices when the boat was constructed and which were the bases
of accounting entries in the books of accounts presented by the private respondent, are unavailing to defeat the award. To be sure, the
private respondent amply established the compensatory damages it suffered by reason of thecollision.
The award of fifteen (15%) percent of the total claim sued upon as attorney's fees and the legal rate of interest adjudged are proper.
However, the P10,000.00 a month awarded by the trial court and the respondent court, for earnings that would have been derived
from F/B Aquarius "G", without indicating the material period is too uncertain and onerous to deserve serious consideration.
In awarding P10,000.00 per month, representing the supposed profits F/B "Aquarius G" could have netted, the trial court relied on the
sole testimony of Mr. Johnny L. Chua, who is in the employ of private respondent.
"The arguments of petitioners that the earnings of F/B Aquarius "G" must be shown is not applicable in this case.
F/B Aquarius "G" is just a carrier to its mother boat Aquarius "G". Its role was to carry the catch from the fishing
ground to the port and it was serving not only its mother boat, but other boats owned by respondent Aquarius. The
income of F/B Aquarius "G" is therefore impossible to really determine. The only reasonable basis is only its
rental value compared with similar boats." 9
As regards the reckoning period, there is tenability in petitioner's submission that a fishing boat deteriorates quite quickly due to
exposure to the elements. To holdSulpicio Lines to pay the profits that would have been realized by the private respondent for an
unlimited period of time is to burden it indefinitely, which cannot be countenanced.
". . . The decision awarding P10,000.00 per month reckoned from November 1978 up to the present implies
unlimited existence of the fishing vessel F/B Aquarius "G" which is not the case as any common man will
experience. The Honorable Court can take judicial notice of the deterioration of the wood in a fishing boat that is
always exposed to the elements. Surely, said existence will not last for more than ten years. Considering that the
fishing vessel is already six years old, then it has a lifespan of not more than four more years. 10
Failure of Aquarius Fishing Co., Inc. to come forward with controverting evidence to the allegation of Sulpicio Lines that the ordinary
lifespan of a fishing vessel is more than ten (10) years, amounted to an admission of such allegation. The vessel was constru cted in
1972 while the collision occurred in 1978. The remaining life span of F/B Aquarius "G" was therefore four (4) years. Conformably,
computed at P10,000.00 per month for a period of four (4) years, the unrealized profits/earnings involved, amounted to at most
P480,000.00.
As regards the attorney's fees equivalent to 15% of all the awards granted by the Regional Trial Court, the propriety thereof cannot be
questioned. Gross and evident bad faith on the part of petitioner in refusing to pay the claim sued upon constrained the private
respondent to enlist the services of a lawyer to litigate.
Petitioner must have placed reliance on the general rule that attorney's fees cannot be recovered as part of damages because of the
policy that no premium should be placed on the right to litigate. (Philtranco Service Enterprises, Inc. v. Court of Appeals, 273 SCRA
562; Morales v. Court of Appeals, 274 SCRA 282) But the aforecited rule is inapplicable here in the face of the stubborn refusal of
petitioner to respect the valid claim of the private respondent.
The payment of legal interest is also in order. But it should be computed from November 18, 1978, not from March 30, 1986, when
the Regional Trial Court a quo came out with its Decision. It was from the time of the collision complained of that the private
respondent began to be deprived of subject vessel.
WHEREFORE, the Petition is DENIED and the Decision of the Court of Appeals in CA GR CV No. 15081 AFFIRMED, with the
MODIFICATION that the award for exemplary damages is deleted for want of legal basis, and the amount of unrealized profits
awarded is fixed at P480,000.00. No pronouncement as to costs.
SO ORDERED.
||| (Sulpicio Lines, Inc. v. Court of Appeals, G.R. No. 93291, [March 29, 1999], 365 PHIL 21-34)

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