G.R. No. 208590 . October 03, 2018
SULPICIO LINES, INC. (NOW KNOWN AS PHILIPPINE SPAN ASIA CARRIER CORPORATION), PETITIONER, V. MAJOR VICTORIO KARAAN, SPOUSES NAPOLEON LABRAGUE AND HERMINIA LABRAGUE, AND ELY LIVA, RESPONDENTS.

FACTS

Respondents were passengers aboard petitioner’s vessel, M/V Princess of the Orient, which sank on September 18, 1998. They filed a complaint for breach of contract of carriage, seeking various damages. At trial, respondents testified that during the voyage, they heard a loud sound, the vessel tilted, and the lights and engine failed. They saw no crew members assisting passengers during the panic. Major Karaan lost personal belongings and was rescued after about 15 hours. The Spouses Labrague and their helper, Ely Liva, recounted a similar harrowing experience; the spouses’ eight-year-old daughter died. Petitioner, in its defense, presented testimonies from crew members in a related case, asserting the vessel was seaworthy and the crew performed their duties, attributing the sinking to force majeure.
The Regional Trial Court (RTC) awarded damages to respondents. The Court of Appeals (CA) modified the amounts, awarding moral, temperate, and exemplary damages, including indemnity for the death of the Labragues’ daughter. The CA found petitioner liable for breach of contract due to its failure to overcome the presumption of negligence and rejected the force majeure defense. Petitioner sought review, arguing the CA erred in awarding damages and in finding negligence.

ISSUE

Whether the Court of Appeals erred in holding petitioner liable for damages arising from the sinking of M/V Princess of the Orient.

RULING

The Supreme Court denied the petition and affirmed the CA’s findings with modification on the interest rate. The legal logic is anchored on the law governing common carriers. Under Articles 1733, 1755, and 1756 of the Civil Code, common carriers are bound to observe extraordinary diligence for the safety of passengers. A breach of this duty results in a presumption of negligence, which the carrier must rebut. Here, petitioner failed to overcome this presumption. The Court concurred with the CA that petitioner did not prove the sinking was due to a fortuitous event. The testimonies of the crew from a different case were insufficient to establish that the vessel was seaworthy and that the crew exercised due diligence, especially given the respondents’ consistent accounts of a lack of crew assistance during the emergency.
The awards of damages were proper. Moral damages were warranted due to the physical suffering, mental anguish, and loss of a child experienced by respondents. Temperate damages were correctly awarded in lieu of actual damages for unreceipted losses, as the fact of loss was established. Exemplary damages were justified due to petitioner’s gross negligence, evident from its failure to ensure passenger safety, which led to a tragic loss of life. The Court modified the interest rate on the monetary awards to six percent (6%) per annum from the finality of the decision until full payment, following established jurisprudence. Thus, petitioner’s liability for damages stemming from its breach of contract of carriage was upheld.