1. NATIONAL DEVELOPM ENT COM PANY vs.

THE COURT OF APPEALS and DEVELOPMENT

INSURANCE & SURETY CORPORATION

FACTS:

In accordance with a memorandum agreement entered into between defendants NDC and MCP on
September 1 3, 1 962, defendant NDC as the first preferred mortgagee of three ocean going vessels including
one with the name 'Dona Nati' appointed defendant MCP as its agent to manage and operate said vessel for
and in its behalf and account. Thus, on February 28, 1 964 the E. Philipp Corporation of New York loaded on
board the vessel "Dona Nati" at San Francisco, California, a total of 1,200 bales of American raw cotton
consigned to the order of Manila Banking Corporation, Manila and the People's Bank and Trust Company acting
for and in behalf of the Pan Asiatic Commercial Company, Inc., who represents Riverside Mills Corporation.
Also loaded on the same vessel at Tokyo, Japan, were the cargo of Kyokuto Boekui, Kaisa, Ltd., consigned to
the order of Manila Banking Corporation consisting of 200 cartons of sodium lauryl sulfate and 1 0 cases of
aluminum foil. En route to Manila the vessel Dofia Nati figured in a collision at 6:04 a.m. on April 15, 1 964 at
Ise Bay, Japan with a Japanese vessel 'SS Yasushima Maru' as a result of which 550 bales of aforesaid cargo
of American raw cotton were lost and/or destroyed, of which 535 bales as damaged were landed and sold on
the authority of the General Average Surveyor for Yen 6,045,-500 and 15 bales were not landed and deemed
lost. The damaged and lost cargoes was worth P344,977.86 which amount, the plaintiff as insurer, paid to the
Riverside Mills Corporation as holder of the negotiable bills of lading duly endorsed Also considered totally lost
were the aforesaid shipment of Kyokuto, Boekui Kaisa Ltd., consigned to the order of Manila Banking
Corporation, Manila, acting for Guilcon, Manila, The total loss was P1 9,938.00 which the plaintiff as insurer
paid to Guilcon as holder of the duly endorsed bill of lading Thus, the plaintiff had paid as insurer the total
amount of P364,915.86 to the consignees or their successors-in-interest, for the said lost or damaged cargoes.
Hence, plaintiff filed this complaint to recover said amount from the defendants-NDC and MCP as owner and
ship agent respectively, of the said 'Dofia Nati' vessel.

On April 22, 1 965, the Development Insurance and Surety Corporation filed before the then Court of
First Instance of Manila an action for the recovery of the sum of P364,91 5.86 plus attorney's fees of P1
0,000.00 against NDC and MCP.

On November 1 2, 1 969, after DISC and MCP presented their respective evidence, the trial court
rendered a decision ordering the defendants MCP and NDC to pay jointly and solidarity to DISC the sum of
P364,91 5.86 plus the legal rate of interest and attorney's fees of P1 0,000.00. Likewise, in said decision, the
trial court granted MCP's cross-claim against NDC.

MCP interposed its appeal on December 20, 1 969, while NDC filed its appeal on February 17, 1 970.

On appeal, NDC argument is to the effect that the Carriage of Goods by Sea Act should apply to the
case at bar and not the Civil Code or the Code of Commerce. That under Section 4 (2) of said Act, the carrier is
not responsible for the loss or damage resulting from the "act, neglect or default of the master, mariner, pilot or
the servants of the carrier in the navigation or in the management of the ship." Thus, NDC would have been
relieved of liability under the Carriage of Goods by Sea Act.

On the other hand, MCP insists that their liability should be limited to P200.00 per package or per bale
of raw cotton as stated in paragraph 1 7 of the bills of lading and the cause of action, if any, against them IS
BARRED BY THE STATUTE OF LIMITATION AND HAS ALREADY PRESCRIBED.

ISSUE:

1. Which laws govern loss or destruction of goods due to collision of vessels outside Philippine
waters?
2. What is MCP’s extent of liability?
3. Does the action already prescribe?

HELD:

1
1. This issue has already been laid to rest by this Court of Eastern Shipping Lines Inc. v. IAC (1 50 SCRA
469-470 [1 987]) where it was held under similar circumstance "that the law of the country to which the
goods are to be transported governs the liability of the common carrier in case of their loss, destruction
or deterioration" (Article 1 753, Civil Code). Thus, the rule was specifically laid down that for cargoes
transported from Japan to the Philippines, the liability of the carrier is governed primarily by the Civil
Code and in all matters not regulated by said Code, the rights and obligations of common carrier shall
be governed by the Code of commerce and by laws (Article 1 766, Civil Code). Hence, the Carriage of
Goods by Sea Act, a special law, is merely suppletory to the provision of the Civil Code.

In the case at bar, it has been established that the goods in question are transported from San
Francisco, California and Tokyo, Japan to the Philippines and that they were lost or due to a collision
which was found to have been caused by the negligence or fault of both captains of the colliding
vessels. Under the above ruling, it is evident that the laws of the Philippines will apply, and it is
immaterial that the collision actually occurred in foreign waters, such as Ise Bay, Japan.

2. Solidarily liable with NDC. As found by the trial court and by the Court of Appeals, the Memorandum
Agreement of September 1 3, 1 962 (Exhibit 6, Maritime) shows that NDC appointed MCP as Agent, a
term broad enough to include the concept of Ship-agent in Maritime Law. In fact, MCP was even
conferred all the powers of the owner of the vessel, including the power to contract in the name of the
NDC (Decision, CA G.R. No. 4651 3, p. 1 2; Rollo, p. 40). Consequently, under the circumstances,
MCP cannot escape liability.

It is well settled that both the owner and agent of the offending vessel are liable for the damage done
where both are impleaded (Philippine Shipping Co. v. Garcia Vergara, 96 Phil. 281 [1 906]).
Consequently, the agent, even though he may not be the owner of the vessel, is liable to the shippers
and owners of the cargo transported by it, for losses and damages occasioned to such cargo, without
prejudice, however, to his rights against the owner of the ship, to the extent of the value of the vessel,
its equipment, and the freight (Behn Meyer Y Co. v. McMicking et al. 11 Phil. 276 [1 908]).

3. No. The bills of lading issued allow transshipment of the cargo, which simply means that the date of
arrival of the ship Dona Nati on April 1 8,1 964 was merely tentative to give allowances for such
contingencies that said vessel might not arrive on schedule at Manila and therefore, would necessitate
the trans-shipment of cargo, resulting in consequent delay of their arrival. In fact, because of the
collision, the cargo which was supposed to arrive in Manila on April 1 8, 1 964 arrived only on June 1 2,
1 3, 1 8, 20 and July 1 0, 1 3 and 1 5, 1 964. Hence, had the cargoes in question been saved, they
could have arrived in Manila on the above-mentioned dates. Accordingly, the complaint in the instant
case was filed on April 22, 1 965, that is, long before the lapse of one (1 ) year from the date the lost or
damaged cargo "should have been delivered" in the light of Section 3, sub-paragraph (6) of the
Carriage of Goods by Sea Act.

2
2. Tatad vs Sec. Garcia

FACTS:

Petitioners Francisco S. Tatad, John H. Osmena and Rodolfo G. Biazon are members of the Philippine Senate
and are suing in their capacities as Senators and as taxpayers. Respondent Jesus B. Garcia, Jr. is the
incumbent Secretary of the Department of Transportation and Communications (DOTC), while private
respondent EDSA LRT Corporation, Ltd. is a private corporation organized under the laws of Hongkong.

In 1989, DOTC planned to construct a light railway transit line along EDSA, a major thoroughfare in
Metropolitan Manila, which shall traverse the cities of Pasay, Quezon, Mandaluyong and Makati. The plan was
intended to provide a mass transit system along EDSA and alleviate the congestion and growing transportation
problem in the metropolis.

In accordance with the provisions of R.A. No. 6957 and to set the EDSA LRT III project underway, DOTC, on
January 22, 1991 and March 14, 1991, issued Department Orders Nos. 91-494 and 91-496, respectively
creating the Prequalification Bids and Awards Committee (PBAC) and the Technical Committee.

The deadline set for submission of prequalification documents was March 21, 1991, later extended to April 1,
1991. Five groups responded to the invitation namely, ABB Trazione of Italy, Hopewell Holdings Ltd. of
Hongkong, Mansteel International of Mandaue, Cebu, Mitsui & Co., Ltd. of Japan, and EDSA LRT Consortium.

After evaluating the prequalification, bids, the PBAC issued a Resolution on May 9, 1991 declaring that of the
five applicants, only the EDSA LRT Consortium "met the requirements of garnering at least 21 points per
criteria [sic], except for Legal Aspects, and obtaining an over-all passing mark of at least 82 points"

Finding this proposal to be in compliance with the bid requirements, DOTC and respondent EDSA LRT
Corporation, Ltd., in substitution of the EDSA LRT Consortium, entered into an "Agreement to Build, Lease and
Transfer a Light Rail Transit System for EDSA" under the terms of the BOT Law (Rollo, pp. 147-177).

In a letter dated March 13, 1992, Executive Secretary Franklin Drilon, who replaced Executive Secretary Orbos,
informed Secretary Prado that the President could not grant the requested approval for the following reasons:
(1) that DOTC failed to conduct actual public bidding in compliance with Section 5 of the BOT Law; (2) that the
law authorized public bidding as the only mode to award BOT projects, and the prequalification proceedings
was not the public bidding contemplated under the law; (3) that Item 14 of the Implementing Rules and
Regulations of the BOT Law which authorized negotiated award of contract in addition to public bidding was of
doubtful legality; and (4) that congressional approval of the list of priority projects under the BOT or BT Scheme
provided in the law had not yet been granted at the time the contract was awarded (Rollo, pp. 178-179).

In view of the comments of Executive Secretary Drilon, the DOTC and private respondents re-negotiated the
agreement.

According to the agreements, the EDSA LRT III will use light rail vehicles from the Czech and Slovak Federal
Republics and will have a maximum carrying capacity of 450,000 passengers a day, or 150 million a year to be
achieved-through 54 such vehicles operating simultaneously. The EDSA LRT III will run at grade, or street
level, on the mid-section of EDSA for a distance of 17.8 kilometers from F.B. Harrison, Pasay City to North
Avenue, Quezon City. The system will have its own power facility (Revised and Restated Agreement, Sec. 2.3
(ii); Rollo p. 55). It will also have thirteen (13) passenger stations and one depot in 16-hectare government
property at North Avenue (Supplemental Agreement, Sec. 11; Rollo, pp. 91-92).

It was argued by the Petitioners that THE AGREEMENT OF APRIL 22, 1992, AS AMENDED BY THE
SUPPLEMENTAL AGREEMENT OF MAY 6, 1993, INSOFAR AS IT GRANTS EDSA LRT CORPORATION,
LTD., A FOREIGN CORPORATION, THE OWNERSHIP OF EDSA LRT III, A PUBLIC UTILITY, VIOLATES
THE CONSTITUTION AND, HENCE, IS UNCONSTITUTIONAL

ISSUE: Can respondent EDSA LRT Corporation, Ltd., a foreign corporation, own the facilities and equipment
used EDSA LRT III project?

3
HELD:

YES. The Constitution, in no uncertain terms, requires a franchise for the operation of a public utility. However,
it does not require a franchise before one can own the facilities needed to operate a public utility so long as it
does not operate them to serve the public.

Section 11 of Article XII of the Constitution provides:

No franchise, certificate or any other form of authorization for the operation of a public utility shall be granted
except to citizens of the Philippines or to corporations or associations organized under the laws of the
Philippines at least sixty per centum of whose capital is owned by such citizens, nor shall such franchise,
certificate or authorization be exclusive character or for a longer period than fifty years . . . (Emphasis supplied).

In law, there is a clear distinction between the "operation" of a public utility and the ownership of the facilities
and equipment used to serve the public.

Ownership is defined as a relation in law by virtue of which a thing pertaining to one person is completely
subjected to his will in everything not prohibited by law or the concurrence with the rights of another (Tolentino,
II Commentaries and Jurisprudence on the Civil Code of the Philippines 45 [1992]).

The right to operate a public utility may exist independently and separately from the ownership of the facilities
thereof. One can own said facilities without operating them as a public utility, or conversely, one may operate a
public utility without owning the facilities used to serve the public. The devotion of property to serve the public
may be done by the owner or by the person in control thereof who may not necessarily be the owner thereof.

While private respondent is the owner of the facilities necessary to operate the EDSA. LRT III, it admits that it is
not enfranchised to operate a public utility (Revised and Restated Agreement, Sec. 3.2; Rollo, p. 57). In view of
this incapacity, private respondent and DOTC agreed that on completion date, private respondent will
immediately deliver possession of the LRT system by way of lease for 25 years, during which period DOTC
shall operate the same as a common carrier and private respondent shall provide technical maintenance and
repair services to DOTC (Revised and Restated Agreement, Secs. 3.2, 5.1 and 5.2; Rollo, pp. 57-58, 61-62).

In sum, private respondent will not run the light rail vehicles and collect fees from the riding public. It will have
no dealings with the public and the public will have no right to demand any services from it.

4
3. Radio Communications vs. NTC

Ponente: J. Gutierrez Jr.

FACTS:

Petitioner has been operating a radio communications system since 1957 under its legislative franchise granted
by Republic Act No. 2036 which was enacted on June 23, 1957.

In 1968, the petitioner established a radio telegraph service in Sorsogon, Sorsogon. In 1971, another radio
telegraph service was put up in San Jose, Mindoro followed by another in Catarman, Samar in 1976. The
installation of radio telephone services started in 1971 in San Jose, Mindoro; then in Sorsogon, Sorsogon and
Catarman, Samar in 1983.

In a decision dated June 24, 1980 in NTC Case No. 80-08, private respondent Kayumanggi Radio Network
Incorporated was authorized by the public respondent to operate radio communications systems in Catarman,
Samar and in San Jose, Mindoro.

On December 14, 1983, the private respondent filed a complaint with the NTC alleging that the petitioner was
operating in Catarman, Samar and in San Jose, Mindoro without a certificate of public covenience and
necessity. The petitioner, on the other hand, counter-alleged that its telephone services in the places subject of
the complaint are covered by the legislative franchise recognized by both the public respondent and its
predecessor, the Public Service Commission. In its supplemental reply, the petitioner further stated that it has
been in operation in the questioned places long before private respondent Kayumanggi filed its application to
operate in the same places.

After conducting a hearing, NTC, in its decision dated August 22, 1984 ordered petitioner RCPI to immediately
cease or desist from the operation of its radio telephone services in Catarman Northern Samar; San Jose,
Occidental Mindoro; and Sorsogon, Sorsogon stating that under Executive Order No. 546, a certificate of public
convenience and necessity is mandatory for the operation of communication utilities and services including
radio communications.

On September 4, 1984, the petitioner filed a motion for reconsideration which was denied

Petitioner's main argument states that the abolition of the Public Service Commission under Presidential Decree
No. 1 and the creation of the National Telecommunications Commission under Executive Order No. 546 to
replace the defunct Public Service Commission did not affect sections 14 and 15 of the Public Service Law
(Commonwealth Act. No. 146, as amended).
The provisions of the Public Service Law pertinent to the petitioner's allegation are as follows:
Section 13. (a) the Commission shall have jurisdiction, supervision, and control over all public services
and their franchises, equipment and other properties, and in the exercise of its authority, it shall have
the necessary powers and the aid of public force: ...

Section 14. The following are exempted from the provisions of the preceding section:

xxx xxx xxx

(d) Radio companies except with respect to the fixing of rates;

xxx xxx xxx

Section 15. With the exception of those enumerated in the preceding section, no public service shall
operate in the Philippines without possessing a valid and subsisting certificate from the Public Service
Commission, known as "certificate of public convenience," or "certificate of convenience and public
necessity," as the case may be, to the effect that the operation of said service and the authorization to
do business will promote the public interests in a proper and suitable manner. ...

ISSUE:

Whether or not petitioner RCPI, a grantee of a legislative franchise to operate a radio company, is required to
secure a certificate of public convenience and necessity before it can validly operate its radio stations including
radio telephone services in the aforementioned areas.
5
RULING:

Yes. Petition dismissed.

Presidential Decree No. 1- the Public Service Commission was abolished and its functions were transferred to
three specialized regulatory boards, as follows: the Board of Transportation, the Board of Communications and
the Board of Power and Waterworks. The functions so transferred were still subject to the limitations provided in
sections 14 and 15 of the Public Service Law, as amended.

The succeeding Executive Order No. 546- the Board of Communications and the Telecommunications Control
Bureau were abolished and their functions were transferred to the National Telecommunications Commission
Section 15- b. Establish, prescribe and regulate areas of operation of particular operators of public service
communications; and determine and prescribe charges or rates pertinent to the operation of such public utility
facilities and services except in cases where charges or rates are established by international bodies
or associations of which the Philippines is a participating member or by bodies recognized by the Philippine
Government as the proper arbiter of such charges or rates; c. Grant permits for the use of radio frequencies for
wireless telephone and telegraph systems and radio communication systems including amateur radio stations
and radio and television broadcasting systems;

The exemption enjoyed by radio companies from the jurisdiction of the Public Service Commission and the
Board of Communications no longer exists because of the changes effected by the Reorganization Law and
implementing executive orders.

The petitioner's claim that its franchise cannot be affected by Executive Order No. 546 on the ground that it has
long been in operation since 1957 cannot be sustained.

Today, a franchise, being merely a privilege emanating from the sovereign power of the state and owing its
existence to a grant, is subject to regulation by the state itself by virtue of its police power through its
administrative agencies. Pangasinan transportation Co.- statutes enacted for the regulation of public utilities,
being a proper exercise by the State of its police power, are applicable not only to those public utilities coming
into existence after its passage, but likewise to those already established and in operation.

Executive Order No. 546, being an implementing measure of P.D. No. I insofar as it amends the Public Service
Law (CA No. 146, as amended) is applicable to the petitioner who must be bound by its provisions.

The position of the petitioner that by the mere grant of its franchise under RA No. 2036 it can operate a radio
communications system anywhere within the Philippines is erroneous.

Sec. 4(a). This franchise shall not take effect nor shall any powers thereunder be exercised by the grantee until
the Secretary of Public works and Communications shall have allotted to the grantee the frequencies and wave
lengths to be used, and issued to the grantee a license for such case.

Thus, in the words of R.A. No. 2036 itself, approval of the then Secretary of Public Works and Communications
was a precondition before the petitioner could put up radio stations in areas where it desires to operate.
The records of the case do not show any grant of authority from the then Secretary of Public Works and
Communications before the petitioner installed the questioned radio telephone services in San Jose, Mindoro in
1971. The same is true as regards the radio telephone services opened in Sorsogon, Sorsogon and Catarman,
Samar in 1983. No certificate of public convenience and necessity appears to have been secured by the
petitioner from the public respondent when such certificate, was required by the applicable public utility
regulations.

The Constitution mandates that a franchise cannot be exclusive in nature nor can a franchise be granted except
that it must be subject to amendment, alteration, or even repeal by the legislature when the common good so
requires.

6
4. Sps. Fernando vs. Northwest Airlines, Inc. G.R. No. 212038, February 08, 2017

FACTS:

Spouses Jesus and Elizabeth S. Fernando (Fernandos) are frequent flyers of Northwest Airlines, Inc. and are
holders of Elite Platinum World Perks Card, the highest category given to frequent flyers of the carrier. They are
known in the musical instruments and sports equipment industry in the Philippines being the owners of JB
Music and JB Sports with outlets all over the country. They likewise own the five (5) star Hotel Elizabeth in
Baguio City and Cebu City, and the chain of Fersal Hotels and Apartelles in the country.

The Fernandos initiated the filing of the instant case which arose from two (2) separate incidents: first, when
Jesus Fernando arrived at Los Angeles (LA) Airport on December 20, 2001; second, when the Fernandos were
to depart from the LA Airport on January 29, 2002. The factual antecedents are as
follows:chanRoblesvirtualLawlibrarya

Arrival at Los Angeles Airport on December 20, 2001:

Jesus Fernando arrived at the LA Airport via Northwest Airlines Flight No. NW02 to join his family for
Christmas, however upon arrival at the airport it was found out that his documents reflect his return
ticket as August 2001. So he approached a Northwest personnel who was later identified as Linda
Puntawongdaycha, but the latter merely glanced at his ticket without checking its status with the
computer and peremptorily said that the ticket has been used and could not be considered as valid. He
then explained to the personnel that he was about to use the said ticket on August 20 or 21, 2001 on
his way back to Manila from LA but he could not book any seat because of some ticket restrictions so
he, instead, purchased new business class ticket on the said date. Hence, the ticket remains unused
and perfectly valid.

The Immigration Officer brought Jesus Fernando to the interrogation room of the Immigration and
Naturalization Services (INS) where he was asked humiliating questions for more than two (2) hours.
When he was finally cleared by the Immigration Officer, he was granted only a twelve (12)-day stay in
the United States (US), instead of the usual six (6) months.

Departure from the LA Airport on January 29, 2002:

When the Fernandos reached the gate area where boarding passes need to be presented, Northwest
supervisor Linda Tang stopped them and demanded for the presentation of their paper tickets (coupon
type). They failed to present the same since, according to them, Northwest issued electronic tickets
(attached to the boarding passes) which they showed to the supervisor. In the presence of the other
passengers, Linda Tang rudely pulled them out of the queue. Elizabeth Fernando explained to Linda
Tang that the matter could be sorted out by simply verifying their electronic tickets in her computer and
all she had to do was click and punch in their Elite Platinum World Perks Card number. But Linda Tang
arrogantly told them that if they wanted to board the plane, they should produce their credit cards and
pay for their new tickets, otherwise Northwest would order their luggage off-loaded from the plane.
Exasperated and pressed for time, the Fernandos rushed to the Northwest Airline Ticket counter to
clarify the matter. They were assisted by Northwest personnel Jeanne Meyer who retrieved their control
number from her computer and was able to ascertain that the Fernandos’ electronic tickets were valid
and they were confirmed passengers on both NW Flight No. 001 for Narita Japan and NW 029 for
Manila on that day. To ensure that the Fernandos would no longer encounter any problem with Linda
Tang, Jeanne Meyer printed coupon tickets for them who were then advised to rush back to the
boarding gates since the plane was about to depart. But when the Fernandos reached the boarding
gate, the plane had already departed. They were able to depart, instead, the day after, or on January
30, 2002, and arrived in the Philippines on January 31, 2002.

Northwest airlines employees on the other hand claim that they were “courteous” and “was very kind
enough” to assist them. Meyer verified their bookings and “printed paper tickets” for them.
Unfortunately, when they went back to the boarding gate, the plane had departed. Northwest offered
alternative arrangements for them to be transported to Manila on the same day on another airline,
7
 either through Philippine Airlines or Cathay Pacific Airways, but they refused. Northwest also offered
them free hotel accommodations but they, again, rejected the offer Northwest then made arrangements
for the transportation of the Fernandos from the airport to their house in LA, and booked the Fernandos
on a Northwest flight that would leave the next day, January 30, 2002. On January 30, 2002, the
Fernandos flew to Manila on business class seats.

The Fernando’s filed a claim for damages. RTC ruled in favour of Plainitiffs which was affirmed by the CA.

ISSUE: Whether or not there was breach of contract of carriage?

RULING:

Yes. The Fernandos’ cause of action against Northwest stemmed from a breach of contract of carriage. A
contract is a meeting of minds between two persons whereby one agrees to give something or render some
service to another for a consideration. There is no contract unless the following requisites concur: (1) consent of
the contracting parties; (2) an object certain which is the subject of the contract; and (3) the cause of the
obligation which is established.

A contract of carriage is defined as one whereby a certain person or association of persons obligate themselves
to transport persons, things, or goods from one place to another for a fixed price.

Under Article 1732 of the Civil Code, this “persons, corporations, firms, or associations engaged in the business
of carrying or transporting passengers or goods or both, by land, water, or air, for compensation, offering their
services to the public” is called a common carrier. Undoubtedly, a contract of carriage existed between
Northwest and the Fernandos. They voluntarily and freely gave their consent to an agreement whose object
was the transportation of the Fernandos from LA to Manila, and whose cause or consideration was the fare paid
by the Fernandos to Northwest.32

In Alitalia Airways v. CA, et al.,33 We held that when an airline issues a ticket to a passenger confirmed for a
particular flight on a certain date, a contract of carriage arises. The passenger then has every right to expect
that he would fly on that flight and on that date. If he does not, then the carrier opens itself to a suit for breach of
contract of carnage.

When Northwest confirmed the reservations of the Fernandos, it bound itself to transport the Fernandos on their
flight on 29 January 2002. We note that the witness of Northwest admitted on cross-examination that based on
the documents submitted by the Fernandos, they were confirmed passengers on the January 29, 2002 flight.

In an action based on a breach of contract of carriage, the aggrieved party does not have to prove that the
common carrier was at fault or was negligent. All that he has to prove is the existence of the contract and the
fact of its non-performance by the carrier. As the aggrieved party, the Fernandos only had to prove the
existence of the contract and the fact of its non-performance by Northwest, as carrier, in order to be awarded
compensatory and actual damages.

Therefore, having proven the existence of a contract of carriage between Northwest and the Fernandos, and
the fact of non-performance by Northwest of its obligation as a common carrier, it is clear that Northwest
breached its contract of carriage with the Fernandos. Thus, Northwest opened itself to claims for compensatory,
actual, moral and exemplary damages, attorney’s fees and costs of suit.

8
5. PHILIPPINE AMERICAN GENERAL INSURANCE COMPANY, petitioner, vs. PKS SHIPPING
COMPANY, respondent.

FACTS: Davao Union Marketing Corporation (DUMC) contracted the services of respondent PKS Shipping
Company (PKS Shipping) for the shipment to Tacloban City of seventy-five thousand (75,000) bags of cement
worth Three Million Three Hundred Seventy-Five Thousand Pesos (P3,375,000.00). DUMC insured the goods
for its full value with petitioner Philippine American General Insurance Company (Philamgen). The goods were
loaded aboard the dumb barge Limar I. On the evening of 22 December 1988, about nine oclock, while Limar
I was being towed by respondents tugboat, MT Iron Eagle, the barge sank a couple of miles off the coast of
Dumagasa Point, in Zamboanga del Sur, bringing down with it the entire cargo of 75,000 bags of cement.
DUMC filed a formal claim with Philamgen for the full amount of the insurance. Philamgen promptly
made payment; it then sought reimbursement from PKS Shipping of the sum paid to DUMC but the shipping
company refused to pay, prompting Philamgen to file suit against PKS Shipping with the Makati RTC.
RTC dismissed the complaint after finding that the total loss of the cargo could have been caused either
by a fortuitous event, in which case the ship owner was not liable. The Court of Appeals affirmed in toto the
decision of the trial court.
The appellate court ruled that evidence to establish that PKS Shipping was a common carrier at the
time it undertook to transport the bags of cement was wanting because the peculiar method of the shipping
companys carrying goods for others was not generally held out as a business but as a casual occupation. It
then concluded that PKS Shipping, not being a common carrier, was not expected to observe the stringent
extraordinary diligence required of common carriers in the care of goods. The appellate court, moreover, found
that the loss of the goods was sufficiently established as having been due to fortuitous event, negating any
liability on the part of PKS Shipping to the shipper.
In the instant appeal, Philamgen contends that the appellate court has committed a patent error in
ruling that PKS Shipping is not a common carrier and that the fact that respondent has a limited clientele,
petitioner argues, does not militate against respondents being a common carrier and that the only way by which
such carrier can be held exempt for the loss of the cargo would be if the loss were caused by natural disaster or
calamity. Petitioner avers that typhoon "APIANG" has not entered the Philippine area of responsibility and that,
even if it did, respondent would not be exempt from liability because its employees, particularly the tugmaster,
have failed to exercise due diligence to prevent or minimize the loss.
ISSUES:

1. Whether or not PKS Shipping Company (Limar I) a common carrier?

2. Whether or not PKS Shipping Company is liable for the loss incurred by DUMC?

HELD:

1. Yes. Contrary to the conclusion made by the appellate court, its factual findings indicate that PKS
Shipping has engaged itself in the business of carrying goods for others, although for a limited clientele,
undertaking to carry such goods for a fee. The regularity of its activities in this area indicates more than
just a casual activity on its part.

The Civil Code defines common carriers in the following terms:

Article 1732. Common carriers are persons, corporations, firms or associations engaged in the
business of carrying or transporting passengers or goods or both, by land, water, or air for
compensation, offering their services to the public.

Complementary to the codal definition is Section 13, paragraph (b), of the Public Service Act; it defines
public service to be

x x x every person that now or hereafter may own, operate, manage, or control in the Philippines, for
hire or compensation, with general or limited clientele, whether permanent, occasional or accidental,
and done for general business purposes, any common carrier, railroad, street railway, subway motor
vehicle, either for freight or passenger, or both, with or without fixed route and whatever may be its
9
 classification, freight or carrier service of any class, express service, steamboat, or steamship, or
steamship line, pontines, ferries and water craft, engaged in the transportation of passengers or freight
or both, shipyard, marine repair shop, wharf or dock, ice plant, ice refrigeration plant, canal, irrigation
system, gas, electric light, heat and power, water supply and power petroleum, sewerage system, wire
or wireless communication systems, wire or wireless broadcasting stations and other similar public
services. x x x.(Underscoring supplied).

2. No. Article 1733 of the Civil Code requires common carriers to observe extraordinary diligence in the
vigilance over the goods they carry. The provisions of Article 1733, notwithstanding, common carriers
are exempt from liability for loss, destruction, or deterioration of the goods due to any of the following
causes:

(1) Flood, storm, earthquake, lightning, or other natural disaster or calamity;

(2) Act of the public enemy in war, whether international or civil;

(3) Act or omission of the shipper or owner of the goods;

(4) The character of the goods or defects in the packing or in the containers; and

(5) Order or act of competent public authority.[8]

The appellate court ruled, gathered from the testimonies and sworn marine protests of the respective
vessel masters of Limar I and MT Iron Eagle, that there was no way by which the barges or the
tugboats crew could have prevented the sinking of Limar I. The vessel was suddenly tossed by waves
of extraordinary height of six (6) to eight (8) feet and buffeted by strong winds of 1.5 knots resulting in
the entry of water into the barges hatches. The official Certificate of Inspection of the barge issued by
the Philippine Coastguard and the Coastwise Load Line Certificate would attest to the seaworthiness
of Limar I and should strengthen the factual findings of the appellate court.

10
#6. MALAYAN INSURANCE CO., INC., Petitioner, vs. PHILIPPINES FIRST INSURANCE CO., INC. and
REPUTABLE FORWARDER SERVICES, INC., Respondents.

FACTS:

Since 1989, Wyeth Philippines, Inc. (Wyeth) and respondent Reputable Forwarder Services, Inc. (Reputable)
had been annually executing a contract of carriage, whereby the latter undertook to transport and deliver the
former’s products to its customers, dealers or salesmen. 3 On November 18, 1993, Wyeth procured Marine
Policy No. MAR 13797 (Marine Policy) from respondent Philippines First Insurance Co., Inc. (Philippines First)
to secure its interest over its own products. Philippines First thereby insured Wyeth’s nutritional, pharmaceutical
and other products usual or incidental to the insured’s business while the same were being transported or
shipped in the Philippines. The policy covers all risks of direct physical loss or damage from any external cause,
if by land, and provides a limit of P6,000,000.00 per any one land vehicle.

On December 1, 1993, Wyeth executed its annual contract of carriage with Reputable. It turned out, however,
that the contract was not signed by Wyeth’s representative/s.4Nevertheless, it was admittedly signed by
Reputable’s representatives, the terms thereof faithfully observed by the parties and, as previously stated, the
same contract of carriage had been annually executed by the parties every year since 1989.5 Under the
contract, Reputable undertook to answer for "all risks with respect to the goods and shall be liable to the
COMPANY (Wyeth), for the loss, destruction, or damage of the goods/products due to any and all causes
whatsoever, including theft, robbery, flood, storm, earthquakes, lightning, and other force majeure while the
goods/products are in transit and until actual delivery to the customers, salesmen, and dealers of the
COMPANY".6 The contract also required Reputable to secure an insurance policy on Wyeth’s goods.7Thus, on
February 11, 1994, Reputable signed a Special Risk Insurance Policy (SR Policy) with petitioner Malayan for
the amount of P1,000,000.00.

Reputable received from Wyeth 1,000 boxes of Promil infant formula worth P2,357,582.70 to be delivered by
Reputable to Mercury Drug Corporation in Libis, Quezon City. Unfortunately, on the same date, the truck
carrying Wyeth’s products was hijacked by about 10 armed men. They threatened to kill the truck driver and two
of his helpers should they refuse to turn over the truck and its contents to the said highway robbers. The
hijacked truck was recovered two weeks later without its cargo.

On March 8, 1995, Philippines First, after due investigation and adjustment, and pursuant to the Marine Policy,
paid Wyeth P2,133,257.00 as indemnity. Philippines First then demanded reimbursement from Reputable,
having been subrogated to the rights of Wyeth by virtue of the payment. The latter, however, ignored the
demand.

Consequently, Philippines First instituted an action for sum of money against Reputable on August 12, 1996. 8 In
its complaint, Philippines First stated that Reputable is a "private corporation engaged in the business of a
common carrier."

In its answer,9 Reputable claimed that it is a private carrier. It also claimed that it cannot be made liable
under the contract of carriage with Wyeth since the contract was not signed by Wyeth’s representative and that
the cause of the loss was force majeure, i.e., the hijacking incident.

Reputable impleaded Malayan as third-party defendant to collect the amount in the SR Policy for P1M., but
Malayan disclaimed liability, arguing that under the SR Policy, the insurance does not cover any loss or
damage to property which at the time of the happening of such loss or damage is insured by any
marine policy and that the SR Policy expressly excluded third-party liability.

The RTC found Reputable liable to Philippines First for the amount of indemnity it paid to Wyeth and
Malayan liable to Reputable to the extent of the policy coverage.

Reputable and Malayan appealed. The CA sustained the RTC ruling. The MR filed was likewise denied. Thus,
the appeal before the SC.

Malayan now contends that Reputable is a common carrier and not liable pursuant to Article 1745(6) of the Civil
Code, thus there is no reason to hold it liable to Reputable. Reputable, asserts that it is not liable for fortuitous

11
event, but maintains Malayan’s liability to First Insurance. First Insurance maintains that Reputable is a private
carrier.

ISSUE: WHETHER OR NOT REPUTABLE IS A PRIVATE CARRIER?

HELD:

Reputable is a private carrier. Under Article 1732 of the Civil Code, common carriers are persons,
corporations, firms, or associations engaged in the business of carrying or transporting passenger or goods, or
both by land, water or air for compensation, offering their services to the public. On the other hand, a private
carrier is one wherein the carriage is generally undertaken by special agreement and it does not hold
itself out to carry goods for the general public. 28 A common carrier becomes a private carrier when it
undertakes to carry a special cargo or chartered to a special person only. 29 For all intents and purposes,
therefore, Reputable operated as a private/special carrier with regard to its contract of carriage with
Wyeth.

Thus, being a private carrier, the extent of Reputable’s liability is fully governed by the stipulations of the
contract of carriage, one of which is that it shall be liable to Wyeth for the loss of the goods/products due to any
and all causes whatsoever, including theft, robbery and other force majeure while the goods/products are in
transit and until actual delivery to Wyeth’s customers, salesmen and dealers.

The Court agrees with the RTC and CA that Reputable is a private carrier. Reputable is a special or private
carrier is warranted by the evidence on record, primarily, the unrebutted testimony of Reputable’s Vice
President and General Manager, Mr. William Ang Lian Suan, who expressly stated in open court that Reputable
serves only one customer, Wyeth. Well-entrenched in jurisprudence is the rule that factual findings of the trial
court, especially when affirmed by the appellate court, are accorded the highest degree of respect and
considered conclusive between the parties, save for certain exceptional and meritorious circumstances, none of
which are present in this case.18 Malayan relies on the alleged judicial admission of Philippines First in its
complaint that Reputable is a common carrier.

12
7. HOME INSURANCE COMPANY (insurer), plaintiff-appellee, vs. AMERICAN STEAMSHIP AGENCIES,
INC. and LUZON STEVEDORING CORPORATION, defendants,
AMERICAN STEAMSHIP AGENCIES, INC., (owner of the ship) defendant-appellant.

William H. Quasha and Associates for plaintiff-appellee.

Ross, Selph, Salcedo and Associates for defendant-appellant.

BENGZON, J.P., J.:

FACTS:

"Consorcio Pesquero del Peru of South America" shipped freight pre-paid at Chimbate, Peru, 21,740 jute
bags of Peruvian fish meal through SS Crowborough, covered by clean bills of lading Numbers 1 and 2,
both dated January 17, 1963. The cargo, consigned to San Miguel Brewery, Inc., now San Miguel
Corporation, and insured by Home Insurance Company for $202,505, arrived in Manila on March 7, 1963
and was discharged into the lighters of Luzon Stevedoring Company.

When the cargo was delivered to consignee San Miguel Brewery Inc., there were shortages amounting to
P12,033.85, causing the latter to lay claims against Luzon Stevedoring Corporation, Home Insurance
Company and the American Steamship Agencies, owner and operator of SS Crowborough.

Home Insurance Company paid the consignee P14,870.71 — the insurance value of the loss, as full settlement
of the claim. Having been refused reimbursement by both the Luzon Stevedoring Corporation and American
Steamship Agencies, Home Insurance Company, as subrogee to the consignee, filed against them on March 6,
1964 before the Court of First Instance of Manila a complaint for recovery of P14,870.71 with legal interest, plus
attorney's fees.

In an answer, Luzon Stevedoring Corporation alleged that it delivered with due diligence the goods in the same
quantity and quality that it had received the same from the carrier, also that the claim had prescribed under
Article 366 of the Code of Commerce stating that the claim must be made within 24 hours from receipt of the
cargo.

American Steamship Agencies denied liability by alleging that under the provisions of the Charter party referred
to in the bills of lading, the charterer, not the shipowner, was responsible for any loss or damage of the cargo.
Furthermore, it claimed to have exercised due diligence in stowing the goods and that as a mere forwarding
agent, it was not responsible for losses or damages to the cargo.

The Court of First Instance, absolved Luzon Stevedoring Corporation, having found the latter to have merely
delivered what it received from the carrier in the same condition and quality, and ordered American Steamship
Agencies to pay plaintiff P14,870.71 with legal interest plus P1,000 attorney's fees, on the ff. grounds:
(a) The non-liability claim of American Steamship Agencies under the charter party contract is not tenable
because Article 587 of the Code of Commerce makes the ship agent also civilly liable for damages in favor of
third persons due to the conduct of the captain of the carrier;
(b) The stipulation in the charter party contract exempting the owner from liability is against public policy under
Article 1744 of the Civil Code;
(c) In case of loss, destruction or deterioration of goods, common carriers are presumed at fault or negligent
under Article 1735 of the Civil Code unless they prove extraordinary diligence, and they cannot by contract
exempt themselves from liability resulting from their negligence or that of their servants; and
(d) When goods are delivered to the carrier in good order and the same are in bad order at the place of
destination, the carrier is prima facie liable.

American Steamship Agencies appealed directly to the SC.

ISSUE: Is the stipulation in the charter party of the owner's non-liability valid so as to absolve the American
Steamship Agencies from liability for loss?

HELD: No. A common carrier undertaking to carry a special cargo or chartered to a special person only,
becomes a private carrier. As a private carrier, a stipulation exempting the owner from liability for the negligence
of its agent is not against public policy and is deemed valid.
The Civil Code provisions on common carriers should not be applied where the carrier is not acting as
such but as a private carrier. The stipulation in the charter party absolving the owner from liability for loss due to
the negligence of its agent would be void only if the strict public policy governing common carriers is applied.

13
Such policy has no force where the public at large is not involved, as in the case of a ship totally chartered for
the use of a single party.
--
Section 2, paragraph 2 of the charter party, provides that the owner is liable for loss or damage to the goods
caused by personal want of due diligence on its part or its manager to make the vessel in all respects
seaworthy and to secure that she be properly manned, equipped and supplied or by the personal act or default
of the owner or its manager. Said paragraph, however, exempts the owner of the vessel from any loss or
damage or delay arising from any other source, even from the neglect or fault of the captain or crew or some
other person employed by the owner on board, for whose acts the owner would ordinarily be liable except for
said paragraph..

Regarding the stipulation, the Court of First Instance declared the contract as contrary to Article 587 of the
Code of Commerce making the ship agent civilly liable for indemnities suffered by third persons arising from
acts or omissions of the captain in the care of the goods and Article 1744 of the Civil Code under which a
stipulation between the common carrier and the shipper or owner limiting the liability of the former for loss or
destruction of the goods to a degree less than extraordinary diligence is valid provided it be reasonable, just
and not contrary to public policy. The release from liability in this case was held unreasonable and contrary to
the public policy on common carriers.

The provisions of our Civil Code on common carriers were taken from Anglo-American law.7 Under American
jurisprudence, a common carrier undertaking to carry a special cargo or chartered to a special person only,
becomes a private carrier.8 As a private carrier, a stipulation exempting the owner from liability for the
negligence of its agent is not against public policy,9 and is deemed valid.

14
8. Perenes vs Zarates
G.R. No. 157917; August 29, 2012

FACTS:
In June 1996, Nicolas and Teresita Zarate contracted Teodoro and Nanette Perena to transport their (Zarate’s)
son, Aaron Zarate, to and from school. The Perena were owners of a kia van being used for private school
transport.
At about 6:45am of August 22, 1996, the driver of the said private van, Clemente Alfaro, while the children were
on board including Aaron, decided to take a short cut in order to avoid traffic. The usual short cut was a railroad
crossing of the Philippine National Railway (PNR).
Alfaro saw that the barandilla (the pole used to block vehicles crossing the railway) was up which means it was
okay to cross. He then tried to overtake a bus. However, there was in fact an oncoming train but Alfaro no
longer saw the train as his view was already blocked by the bus he was trying to overtake. The bus was able to
cross unscathed but the van’s rear end was hit. During the collision, Aaron, was thrown off the van. His body hit
the railroad tracks and his head was severed. He was only 15 years old.
It turns out that Alfaro was not able to hear the train honking from 50 meters away before the collision because
the van’s stereo was playing loudly.
The Zarates sued PNR and the Perenas (Alfaro became at-large). Their cause of action against PNR was
based on quasi-delict. Their cause of action against the Perenas was based on breach of contract of common
carriage.
In their defense, the Perenas invoked that as private carriers they were not negligent in selecting Alfaro as their
driver as they made sure that he had a driver’s license and that he was not involved in any accident prior to his
being hired. In short, they observed the diligence of a good father in selecting their employee.
PNR also disclaimed liability as they insist that the railroad crossing they placed there was not meant for
railroad crossing (really, that’s their defense!).
The RTC ruled in favor of the Zarates. The Court of Appeals affirmed the RTC. In the decision of the RTC and
the CA, they awarded damages in favor of the Zarates for the loss of earning capacity of their dead son.
The Perenas appealed. They argued that the award was improper as Aaron was merely a high school student,
hence, the award of such damages was merely speculative. They cited the case of People vs Teehankee
where the Supreme Court did not award damages for the loss of earning capacity despite the fact that the
victim there was enrolled in a pilot school.

ISSUES:
1. Whether or not a school bus is a common carrier.
2. Whether or not the petitioner can be held jointly and severally liable with the PNR for damages.
3. Whether or not the indemnity for loss of Aaron’s earning capacity proper?

DECISION:
1. A school bus is a common carrier.
The petitioners are not merely private carriers. (Prior to this case, the status of private transport for school
services or school buses is not well settled as to whether or not they are private or common carriers – but they
were generally regarded as private carriers).
Common carrier is a persons, corporation, firm or association engaged in the business of carrying or
transporting passengers or goods or both by land, waster, or air for compensation, offering such services to the
public.
The true test for a common carrier is not the quantity or extent of business actually transacted or number of
conveyances BUT WHETHER the undertaking is a part of the activity that he has held out to the general public
as his occupation or business.
The Perenas, as the operators of a school bus service were: (a) engaged in transporting passengers generally
as a business, not just as a casual occupation; (b) undertaking to carry passengers over established roads by
the method by which the business was conducted; and (c) transporting students for a fee. Despite catering to a

15
limited clientèle, the Perenas operated as a common carrier because they held themselves out as a ready
transportation indiscriminately to the students of a particular school living within or near where they operated
the service and for a fee.
The common carrier’s standard of care and vigilance as to the safety of the passengers is defined by law. Given
the nature of the business and for reasons of public policy, the common carrier is bound "to observe
extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by
them, according to all the circumstances of each case." 22

2. The petitioner can be held jointly and severally liable with the PNR for damages.
Petitioner’s defense that they exercised due diligence of a good father in selecting the driver or their employee
is not a tenable defense.
Being a common carrier, what is required of the Perenas is not mere diligence of a good father but
extraordinary diligence – a fact which they failed to prove in court. Verily, their obligation as common carriers
did not cease upon their exercise of diligently choosing Alfaro as their employee.

"To observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers
transported by them, according to all the circumstances of each case." Article 1755 of the Civil Code specifies
that the common carrier should "carry the passengers safely as far as human care and foresight can
provide, using the utmost diligence of very cautious persons, with a due regard for all the
circumstances."

To successfully fend off liability in an action upon the death or injury to a passenger, the common carrier must
prove his or its observance of that extraordinary diligence; otherwise, the legal presumption that he or it was at
fault or acted negligently would stand. No device, whether by stipulation, posting of notices, statements on
tickets, or otherwise, may dispense with or lessen the responsibility of the common carrier as defined under
Article 1755 of the Civil Code. 24

The Perenas, acting as a common carrier, were already presumed to be negligent at the time of the accident
because death had occurred to their passenger. 25 The presumption of negligence, being a presumption of law,
laid the burden of evidence on their shoulders to establish that they had not been negligent.

The records showed their driver’s actual negligence. Perenas’ driver was entirely negligent when he traversed
the railroad tracks at a point not allowed for a motorist’s crossing despite being fully aware of the grave harm to
be thereby caused to his passengers; and when he disregarded the foresight of harm to his passengers by
overtaking the bus on the left side as to leave himself blind to the approach of the oncoming train that he knew
was on the opposite side of the bus.

3. The indemnity was proper.

Our law itself states that the loss of the earning capacity of the deceased shall be the liability of the guilty party
in favor of the heirs of the deceased, and shall in every case be assessed and awarded by the court "unless the
deceased on account of permanent physical disability not caused by the defendant, had no earning capacity at
the time of his death."
Aaron was enrolled in a reputable school (Don Bosco). He was of normal health and was an able-bodied
person. Further, the basis of the computation of his earning capacity was not on what he would have become. It
was based on the current minimum wage. The minimum wage was validly used because with his circumstances
at the time of his death, it is most certain that had he lived, he would at least be a minimum wage earner by the
time he starts working. This is not being speculative at all.

16
9. Asia Lighterage and Shipping Inc. vs. CA, PRUDENTIAL GUARANTEE AND ASSURANCE, INC G.R,
No. 147246, August 19, 2003

FACTS:

On June 13, 1990, 3,150 metric tons of Better Western White Wheat in bulk, valued at US$423,192.35 was
shipped by Marubeni American Corporation of Portland, Oregon on board the vessel M/V NEO CYMBIDIUM V-
26 for delivery to General Milling Corporation (consignee), insured by Prudential Guarantee and Assurance,
Inc. against loss or damage for P14,621,771.75.

On July 25, 1990, the vessel arrived in Manila and the cargo was transferred to the custody of the Asia
Lighterage and Shipping, Inc. who was contracted by the consignee as carrier to deliver the cargo to its
warehouse at Bo. Ugong, Pasig City.

On August 17, 1990, the transport of said cargo was suspended due to a warning of an incoming typhoon. As a
result of the typhoon, the barge wherein the cargo was placed developed a hole after hitting an unseen
protuberance underneath the water. Asia secured the services of Gaspar Salvaging Corporation which refloated
the barge. The hole was then patched with clay and cement.

Upon going to the wharf of the consignee, the barge again ran aground due to strong current. To avoid the
complete sinking of the barge, a portion of the goods was transferred to three other barges. On September 6,
1990 the towing bits broke and the barge sank completely, resulting in the total loss of the remaining cargo.

On January 30, 1991, Prudential indemnified the consignee in the amount of P4,104,654.22. Thereafter, as
subrogee, it sought recovery of said amount from the Asia Lighterage, but to no avail.

On July 3, 1991, the private respondent filed a complaint against the petitioner for recovery of the amount of
indemnity, attorney's fees and cost of suit. The Regional Trial Court ruled in favor of the private respondent.

Petitioner appealed to the Court of Appeals insisting that it is not a common carrier but a private carrier, that it
has no fixed and publicly known route, maintains no terminals, and issues no tickets. It points out that it is not
obliged to carry indiscriminately for any person. It is not bound to carry goods unless it consents. In short, it
does not hold out its services to the general public.

ISSUE: 1. Whether or not the petitioner is a common carrier?

(2) Assuming the petitioner is a common carrier, whether it exercised extraordinary diligence in its care and
custody of the consignees cargo.

HELD: 1. YES. Petitioner is a common carrier. Whether its carrying of goods is done on an irregular rather than
scheduled manner, and with an only limited clientele. A common carrier need not have fixed and publicly known
routes. Neither does it have to maintain terminals or issue tickets. Petitioner fits the test of a common carrier as
laid down in Bascos vs. Court of Appeals. The test to determine a common carrier is "whether the given
undertaking is a part of the business engaged in by the carrier which he has held out to the general public as
his occupation rather than the quantity or extent of the business transacted." In the case at bar, the petitioner
admitted that it is engaged in the business of shipping and lighterage, offering its barges to the public, despite
its limited clientele for carrying or transporting goods by water for compensation. Article 1732 of the Civil Code
defines common carriers as persons, corporations, firms or associations engaged in the business of carrying or
transporting passengers or goods or both, by land, water, or air, for compensation, offering their services to the
public.

2. petitioner failed to exercise extraordinary diligence in its care and custody of the consignees goods.
Common carriers are bound to observe extraordinary diligence in the vigilance over the goods transported
by them.[28] They are presumed to have been at fault or to have acted negligently if the goods are lost,
destroyed or deteriorated.[29]

17
 In the case at bar, the barge completely sank after its towing bits broke, resulting in the total loss of its
cargo. Petitioner claims that this was caused by a typhoon, hence, it should not be held liable for the loss of the
cargo. However, petitioner failed to prove that the typhoon is the proximate and only cause of the loss of the
goods, and that it has exercised due diligence before, during and after the occurrence of the typhoon to prevent
or minimize the loss.[30] The evidence show that, even before the towing bits of the barge broke, it had already
previously sustained damage when it hit a sunken object while docked at the Engineering Island. It even
suffered a hole. Clearly, this could not be solely attributed to the typhoon. The partly-submerged vessel was
refloated but its hole was patched with only clay and cement. The patch work was merely a provisional remedy,
not enough for the barge to sail safely. Thus, when petitioner persisted to proceed with the voyage, it recklessly
exposed the cargo to further damage.
meeting a typhoon head-on falls short of due diligence required from a common carrier. More importantly,
the officers/employees themselves of petitioner admitted that when the towing bits of the vessel broke that
caused its sinking and the total loss of the cargo upon reaching the Pasig River, it was no longer affected by the
typhoon. The typhoon then is not the proximate cause of the loss of the cargo; a human factor, i.e., negligence
had intervened.

------
Common carriers are bound to observe extraordinary diligence in the vigilance over the goods transported
by them.[28] They are presumed to have been at fault or to have acted negligently if the goods are lost,
destroyed or deteriorated.[29] To overcome the presumption of negligence in the case of loss, destruction or
deterioration of the goods, the common carrier must prove that it exercised extraordinary diligence. There are,
however, exceptions to this rule. Article 1734 of the Civil Code enumerates the instances when the presumption
of negligence does not attach:

Art. 1734. Common carriers are responsible for the loss, destruction, or deterioration of the goods, unless the
same is due to any of the following causes only:

(1) Flood, storm, earthquake, lightning, or other natural disaster or calamity;

(2) Act of the public enemy in war, whether international or civil;

(3) Act or omission of the shipper or owner of the goods;

(4) The character of the goods or defects in the packing or in the containers;

(5) Order or act of competent public authority.

18
10.ESTRELLITA M. BASCOS, petitioners,
vs. COURT OF APPEALS and RODOLFO A. CIPRIANO, respondents.

FACTS: Rodolfo A. Cipriano representing Cipriano Trading Enterprise (CIPTRADE for short) entered into a
hauling contract 2 with Jibfair Shipping Agency Corporation whereby the former bound itself to haul the
latter's 2,000 m/tons of soya bean meal from Magallanes Drive, Del Pan, Manila to the warehouse of Purefoods
Corporation in Calamba, Laguna. To carry out its obligation, CIPTRADE, through Rodolfo Cipriano,
subcontracted with Estrellita Bascos (petitioner) to transport and to deliver 400 sacks of soya bean meal
worth P156,404.00 from the Manila Port Area to Calamba, Laguna at the rate of P50.00 per metric ton.
Petitioner failed to deliver the said cargo. As a consequence of that failure, Cipriano paid Jibfair
Shipping Agency the amount of the lost goods in accordance with the contract.

In her answer, petitioner interposed the following defenses: that there was no contract of carriage BUT ONLY
CONTRACT OF LEASE since CIPTRADE leased her cargo truck to load the cargo from Manila Port Area to
Laguna; that CIPTRADE was liable to petitioner in the amount of P11,000.00 for loading the cargo; that the
truck carrying the cargo was hijacked along Canonigo St., Paco, Manila on the night of October 21, 1988; that
the hijacking was immediately reported to CIPTRADE and that petitioner and the police exerted all efforts to
locate the hijacked properties; that after preliminary investigation, an information for robbery and carnapping
were filed against Jose Opriano, et al.; and that hijacking, being a force majeure, exculpated petitioner from any
liability to CIPTRADE.

ISSUES: 1. Whether or not the trucking business of the petitioner is a common carrier?

2. was the hijacking referred to a force majeure?

HELD:

Yes, petitioner is a common carrier for it qualifies as such under the definition of the law. Article 1732 of the
Civil Code defines a common carrier as "(a) person, corporation or firm, or association engaged in the business
of carrying or transporting passengers or goods or both, by land, water or air, for compensation, offering their
services to the public." The test to determine a common carrier is "whether the given undertaking is a part of the
business engaged in by the carrier which he has held out to the general public as his occupation rather than the
quantity or extent of the business transacted." In this case, petitioner herself has made the admission that she
was in the trucking business, offering her trucks to those with cargo to move. Judicial admissions are conclusive
and no evidence is required to prove the same.

In De Guzman vs. Court of Appeals, referring to Article 1732 of the Civil Code, the Supreme Court held
that: "The above article makes no distinction between one whose principal business activity is the carrying of
persons or goods or both, and one who does such carrying only as an ancillary activity (in local idiom, as a
"sideline"). Article 1732 also carefully avoids making any distinction between a person or enterprise offering
transportation service on a regular or scheduled basis and one offering such service on an occasional, episodic
or unscheduled basis. Neither does Article 1732 distinguish between a carrier offering its services to the
"general public," i.e., the general community or population, and one who offers services or solicits business only
from a narrow segment of the general population. We think that Article 1732 deliberately refrained from making
such distinctions.

Evidence presented by petitioner was not sufficient to prove that the contract was one of lease. It must
be understood that a contract is what the law defines it to be and not what it is called by the contracting parties.

2. the loss of the goods was not due to force majeure.

Common carriers are obliged to observe extraordinary diligence in the vigilance over the goods transported by
them. Accordingly, they are presumed to have been at fault or to have acted negligently if the goods are lost,
destroyed or deteriorated. 18 There are very few instances when the presumption of negligence does not attach
and these instances are enumerated in Article 1734. 19 In those cases where the presumption is applied, the
common carrier must prove that it exercised extraordinary diligence in order to overcome the presumption.

19
In this case, petitioner alleged that hijacking constituted force majeure which exculpated her from liability for the
loss of the cargo. In De Guzman vs. Court of Appeals, the Court held that hijacking, not being included in the
provisions of Article 1734, must be dealt with under the provisions of Article 1735 and thus, the
common carrier is presumed to have been at fault or negligent. To exculpate the carrier from liability
arising from hijacking, he must prove that the robbers or the hijackers acted with grave or irresistible
threat, violence, or force. This is in accordance with Article 1745 of the Civil Code which provides: "Art. 1745.
Any of the following or similar stipulations shall be considered unreasonable, unjust and contrary to public policy
. . . (6) That the common carrier's liability for acts committed by thieves, or of robbers who do not act with grave
or irresistible threat, violences or force, is dispensed with or diminished"; In the same case, the Supreme Court
also held that: "Under Article 1745 (6) above, a common carrier is held responsible — and will not be allowed to
divest or to diminish such responsibility — even for acts of strangers like thieves or robbers, except where such
thieves or robbers in fact acted "with grave of irresistible threat, violence of force," We believe and so hold that
the limits of the duty of extraordinary diligence in the vigilance over the goods carried are reached where the
goods are lost as a result of a robbery which is attended by "grave or irresistible threat, violence or force."

20
11. NATIONAL STEEL CORPORATION v. COURT OF APPEALS
G.R. No. 112287 December 12, 1997

Facts:

On July 17, 1974, plaintiff National Steel Corporation (NSC) as Charterer and defendant Vlasons Shipping,
Inc. (VSI) as Owner, entered into a Contract of Voyage Charter Hire whereby NSC hired VSI’s vessel, the
MV Vlasons I to make one voyage to load steel products at Iligan City and discharge them at North Harbor,
Manila. The handling, loading and unloading of the cargoes were the responsibility of the Charterer.

In accordance with said Contract, the MV "VLASONS I" loaded at plaintiffs pier at Iligan City, the NSC's
shipment of 1,677 skids of tinplates and 92 packages of hot rolled sheets or a total of 1,769 packages
with a total weight of about 2,481.19 metric tons for carriage to Manila.

The vessel arrived with the cargo at Pier 12, North Harbor, Manila, on August 12, 1974. The following
day, August 13, 1974, when the vessel's three (3) hatches containing the shipment were opened by
plaintiff's agents, nearly all the skids of tinplates and hot rolled sheets were allegedly found to be wet
and rusty. The cargo was discharged and unloaded by stevedores hired by the Charterer.

NSC called for a survey of the shipment by the Manila Adjusters and Surveyors Company (MASCO) which was
of opinion that "rusting of the tinplates was caused by contact with SEA WATER sustained while still on
board the vessel as a consequence of the heavy weather and rough seas encountered while en route to
destination

Plaintiff filed with the defendant its claim for damages suffered due to the downgrading of the damaged tinplates
in the amount of P941,145.18 but defendant VSI refused and failed to pay.

Plaintiff claimed that it sustained losses amounting to P941,145.18 as a result of the act, neglect and default of
the master and crew in the management of the vessel as well as the want of due diligence on the part of the
defendant to make the vessel seaworthy and to make the holds and all other parts of the vessel in which the
cargo was carried, fit and safe for its reception, carriage and preservation — all in violation of defendant's
undertaking under their Contract of Voyage Charter Hire.

Defendant denied liability for the alleged damage claiming that the MV "VLASONS I" was seaworthy in all
respects for the carriage of plaintiff's cargo; that said vessel was not a "common carrier" inasmuch as she was
under voyage charter contract with the plaintiff as charterer under the charter party; that in the course of the
voyage from Iligan City to Manila, the MV "VLASONS I" encountered very rough seas, strong winds and
adverse weather condition, causing strong winds and big waves to continuously pound against the vessel and
seawater to overflow on its deck and hatch covers, that under the Contract of Voyage Charter Hire, defendant
shall not be responsible for losses/damages except on proven willful negligence of the officers of the vessel,
that the officers of said MV "VLASONS I" exercised due diligence and proper seamanship and were not willfully
negligent.

Issues:
1. WON VSI is a common carrier; and
2. Which law shall govern over the carrier’s liability and obligation?
3. Is VSI liable for damages?

Whether or not the provisions of the Civil Code on common carriers pursuant to which there exists a
presumption of negligence against the common carrier in case of loss or damage to the cargo are applicable to
a private carrier.

Held:

1. VSI is a private carrier.

Article 1732 of the Civil Code defines a common carrier as "persons, corporations, firms or associations
engaged in the business of carrying or transporting passengers or goods or both, by land, water, or air, for
compensation, offering their services to the public." It has been held that the true test of a common carrier is the
carriage of passengers or goods, provided it has space, for all who opt to avail themselves of its transportation
service for a fee.11 11 A carrier which does not qualify under the above test is deemed a private carrier.
"Generally, private carriage is undertaken by special agreement and the carrier does not hold himself
21
out to carry goods for the general public. The most typical, although not the only form of private carriage, is
the charter party, a maritime contract by which the charterer, a party other than the shipowner, obtains the use
and service of all or some part of a ship for a period of time or a voyage or voyages." 12

In the instant case, it is undisputed that VSI did not offer its services to the general public. As found by the
Regional Trial Court, it carried passengers or goods only for those it chose under a "special contract of
charter party." 13 As correctly concluded by the Court of Appeals, the MV Vlasons I "was not a common but
a private carrier."14Consequently, the contract is the between the parties.

2. The Code of Commerce governs.

Because the MV Vlasons I was a private carrier, the shipowner's obligations are governed by the foregoing
provisions of the Code of Commerce and not by the Civil Code

In an action against a private carrier for loss of, or injury to, cargo, the burden is on the plaintiff to prove that the
carrier was negligent or unseaworthy, and the fact that the goods were lost or damaged while in the carrier's
custody does not put the burden of proof on the carrier.

Since . . . a private carrier is not an insurer but undertakes only to exercise due care in the protection of the
goods committed to its care, the burden of proving negligence or a breach of that duty rests on plaintiff and
proof of loss of, or damage to, cargo while in the carrier's possession does not cast on it the burden of proving
proper care and diligence on its part or that the loss occurred from an excepted cause in the contract or bill of
lading.

3. VSI cannot be held liable for damages.

The records reveal that VSI exercised due diligence to make the ship seaworthy and fit for the carriage
of NSC's cargo of steel and tinplates. This is shown by the fact that it was drylocked and inspected by the
Philippine Coast Guard before it proceeded to Iligan City for its voyage to Manila under the contract of
voyage charter hire.24The vessel's voyage from Iligan to Manila was the vessel's first voyage after drydocking.
The Philippine Coast Guard Station in Cebu cleared it as seaworthy, fitted and equipped; it met all
requirements for trading as cargo vessel.25 The Court of Appeals itself sustained the conclusion of the trial
court that MV Vlasons I was seaworthy.

That due diligence was exercised by the officers and the crew of the MV Vlasons I was further demonstrated by
the fact that, despite encountering rough weather twice, the new tarpaulin did not give way and the ship's
hatches and cargo holds remained waterproof.

NSC had the burden of proving that the damage to the cargo was caused by the negligence of the officers and
the crew of MV Vlasons I in making their vessel seaworthy and fit for the carriage of tinplates. On the contrary,
the records reveal that it was the stevedores of NSC who were negligent in unloading the cargo from the ship.

The stevedores employed only a tent-like material to cover the hatches when strong rains occasioned by a
passing typhoon disrupted the unloading of the cargo.

22
12. FIRST PHILIPPINE INDUSTRIAL CORP. VS. CA, Batangas City
GR 124948 December 29, 1998

Facts:

Petitioner is a grantee of a pipeline concession under Republic Act No. 387. Sometime in January 1995,
petitioner applied for mayor’s permit in Batangas City. However, the Treasurer required petitioner to pay a local
tax based on gross receipts amounting to P956,076.04. In order not to hamper its operations, petitioner paid the
taxes for the first quarter of 1993 amounting to P239,019.01 under protest. On January 20, 1994, petitioner filed
a letter-protest to the City Treasurer, claiming that it is exempt from local tax since it is engaged in
transportation business as the authority of cities to impose and collect a tax on the gross receipts of
"contractors and independent contractors" under Sec. 141 (e) and 151 does not include the authority to
collect such taxes on transportation contractors.

The respondent City Treasurer denied the protest contending that petitioner cannot be considered engaged in
transportation business, thus it cannot claim exemption under Section 133 (j) of the Local Government Code.
Respondents argued that petitioner cannot be exempt from taxes under Section 133 (j) of the Local
Government Code as said exemption applies only to "transportation contractors and persons engaged
in the transportation by hire and common carriers by air, land and water." Respondents assert that
pipelines are not included in the term "common carrier" which refers solely to ordinary carriers such as
trucks, trains, ships and the like. Respondents further posit that the term "common carrier" under the
said code pertains to the mode or manner by which a product is delivered to its destination. 8

The trial court dismissed the complaint, and such was affirmed by the Court of Appeals. Hence this petition.

Issue:

Is the petitioner a common/transportation carrier and therefore exempt from business tax?

Decision:

Yes, the petitioner is a common/transportation carrier and thus exempt from business tax.

A "common carrier" may be defined, broadly, as one who holds himself out to the public as engaged in the
business of transporting persons or property from place to place, for compensation, offering his services to the
public generally.

Art. 1732 of the Civil Code defines a "common carrier" as "any person, corporation, firm or association engaged
in the business of carrying or transporting passengers or goods or both, by land, water, or air, for
compensation, offering their services to the public."

The test for determining whether a party is a common carrier of goods is:

1. He must be engaged in the business of carrying goods for others as a public employment, and
must hold himself out as ready to engage in the transportation of goods for person generally as a
business and not as a casual occupation;
2. He must undertake to carry goods of the kind to which his business is confined;
3. He must undertake to carry by the method by which his business is conducted and over his
established roads; and
4. The transportation must be for hire.

Based on the above definitions and requirements, there is no doubt that petitioner is a common carrier. It is
engaged in the business of transporting or carrying goods, i.e. petroleum products, for hire as a public
employment. It undertakes to carry for all persons indifferently, that is, to all persons who choose to employ its
services, and transports the goods by land and for compensation. The fact that petitioner has a limited clientele
does not exclude it from the definition of a common carrier.

Also, respondent's argument that the term "common carrier" as used in Section 133 (j) of the Local Government
Code refers only to common carriers transporting goods and passengers through moving vehicles or vessels
either by land, sea or water, is erroneous.

23
As correctly pointed out by petitioner, the definition of "common carriers" in the Civil Code makes no distinction
as to the means of transporting, as long as it is by land, water or air. It does not provide that the transportation
of the passengers or goods should be by motor vehicle. In fact, in the United States, oil pipe line operators are
considered common carriers. 17

Under the Petroleum Act of the Philippines (Republic Act 387), petitioner is considered a "common carrier."

From the foregoing disquisition, there is no doubt that petitioner is a "common carrier" and, therefore,
exempt from the business tax as provided for in Section 133 (j), of the Local Government Code.

24
13. Calvo v. UCPB General Insurance
G.R. No. 148496 March 19, 2002

Facts:

Petitioner Virgines Calvo, owner of Transorient Container Terminal Services, Inc. (TCTSI), and a custom
broker, entered into a contract with San Miguel Corporation (SMC) for the transfer of 114 reels of semi-chemical
fluting paper and 124 reels of kraft liner board from the port area to the Tabacalera Compound, Ermita,
Manila. The cargo was insured by respondent UCPB General Insurance Co., Inc.

On July 14, 1990, contained in 30 metal vans, said cargoes arrived in Manila on board “M/V Hayakawa Maru”.
After 24 hours, they were unloaded from vessel to the custody of the arrastre operator, Manila Port Services,
Inc. From July 23 to 25, 1990, petitioner, pursuant to her contract with SMC, withdrew the cargo from the
arrastre operator and delivered it to SMC’s warehouse in Manila. On July 25, the goods were inspected by
Marine Cargo Surveyors, reported that 15 reels of the semi-chemical fluting paper were “wet/stained/torn” and 3
reels of kraft liner board were also torn. The damages cost P93,112.00.

SMC collected the said amount from respondent UCPB under its insurance contract. Respondent on the other
hand, as a subrogee of SMC, brought a suit against petitioner in RTC, Makati City. On December 20, 1995, the
RTC rendered judgment finding petitioner liable for the damage to the shipment. The decision was affirmed by
the CA.

Private respondent contends that petitioner is liable as damages sustained by shipment is attributable to
improper handling in transit presumably whilst in the custody of the broker.
Petitioner claims that the spoilage or wettage took place while the goods were in the custody of either the
carrying vessel M/V Hayakawa Maru, which transported the cargo to Manila, or the arrastre operator, to whom
the goods were unloaded and who allegedly kept them in open air for nine days. She further contends that
contrary to the findings of the trial court and the Court of Appeals, she is not a common carrier but a private
carrier because, as a customs broker and warehouseman, she does not indiscriminately hold her services out
to the public but only offers the same to select parties with whom she may contract in the conduct of her
business. Thus, she cannot be held liable for damages.

Issues:

1. Whether or not Calvo is a common carrier?

2. Whether or not Calvo is liable for damages?

Decision:

1. Calvo is a common carrier. The contention of the petitioner, that she is not a common carrier but a
private carrier, has no merit.

Article 1732 provides “Common carriers are persons, corporations, firms or associations engaged in the
business of carrying or transporting passengers or goods or both, by land, water, or air for compensation,
offering their services to the public.”

It makes no distinction between one whose principal business activity is the carrying of persons or goods
or both, and one who does such carrying only as ancillary activity. Article 1732 also carefully avoids
making any distinction between a person or enterprise offering transportation service on a regular
or scheduled basis and one offering such service on an occasional, episodic or unscheduled
basis. Neither does Article 1732 distinguish between a carrier offering its services to the "general
public," i.e., the general community or population, and one who offers services or solicits business
only from a narrow segment of the general population. (De Guzman v. CA, 68 SCRA 612)

The concept of “common carrier” under Article 1732 coincides with the notion of “public service”, under the
Public Service Act which partially supplements the law on common carrier. Under Section 13, paragraph
(b) of the Public Service Act, it includes:

“ x x x every person that now or hereafter may own, operate, manage, or control in the Philippines,
for hire or compensation, with general or limited clientele, whether permanent, occasional or
accidental, and done for general business purposes, any common carrier, railroad, street railway,
traction railway, subway motor vehicle, either for freight or passenger, or both, with or without fixed route
and whatever may be its classification, freight or carrier service of any class, express service, steamboat,
25
 or steamship line, pontines, ferries and water craft, engaged in the transportation of passengers or freight
or both, shipyard, marine repair shop, wharf or dock, ice plant, ice-refrigeration plant, canal, irrigation
system, gas, electric light, heat and power, water supply and power petroleum, sewerage system, wire or
wireless communications systems, wire or wireless broadcasting stations and other similar public services.
x x x”

Thus, petitioner is a common carrier because the transportation of goods is an integral part of her
business.

2. Calvo is liable for damages.

Art. 1733 of the Civil Code provides: Common carriers, from the nature of their business and for reasons of
public policy, are bound to observe extraordinary diligence in the vigilance over the goods and for the
safety of the passengers transported by them, according to all the circumstances of each case. . .

The extraordinary diligence in the vigilance over the goods tendered for shipment requires the common
carrier to know and to follow the required precaution for avoiding damage to, or destruction of the goods
entrusted to it for sale, carriage and delivery. It requires common carriers to render service with the greatest
skill and foresight and to use all reasonable means to ascertain the nature and characteristic of goods
tendered for shipment, and to exercise due care in the handling and stowage, including such methods as
their nature requires.

From the [Survey Report], it [is] clear that the shipment was discharged from the vessel to the arrastre,
Marina Port Services Inc., in good order and condition as evidenced by clean Equipment Interchange
Reports (EIRs). Had there been any damage to the shipment, there would have been a report to that effect
made by the arrastre operator.

Anent petitioner’s insistence that the cargo could not have been damaged while in her custody as she
immediately delivered the containers to SMCs compound, suffice it to say that to prove the exercise of
extraordinary diligence, petitioner must do more than merely show the possibility that some other
party could be responsible for the damage. It must prove that it used all reasonable means to
ascertain the nature and characteristic of goods tendered for [transport] and that [it] exercise[d] due
care in the handling [thereof].

Art. 1734(4), which provides “Common carriers are responsible for the loss, destruction, or deterioration of
the goods, unless the same is due to any of the following causes only: … (4) The character of the goods or
defects in the packing or in the containers…

For the provision to apply, the Rule is that if the improper packing or, in this case, the defect/s in the
container, is/are known to the carrier or his employees or apparent upon ordinary observation, but he
nevertheless accepts the same without protest or exception notwithstanding such condition, he is not
relieved of liability for damage resulting therefrom.[14] In this case, petitioner accepted the cargo without
exception despite the apparent defects in some of the container vans. Hence, for failure of petitioner to
prove that she exercised extraordinary diligence in the carriage of goods in this case or that she is exempt
from liability, the presumption of negligence as provided under Art. 1735[15] holds.

26
14. SCHMITZ TRANSPORT & BROKERAGE CORPORATION, petitioner, vs. TRANSPORT VENTURE,
INC., INDUSTRIAL INSURANCE COMPANY, LTD., and BLACK SEA SHIPPING AND DODWELL now
INCHCAPE SHIPPING SERVICES, respondents.
GR 150255 April 22, 2005

FACTS:

On September 25, 1991, SYTCO Pte Ltd. Singapore shipped from the port of Ilyichevsk, Russia on board M/V
Alexander Saveliev 545 hot rolled steel sheets in favor of the consignee, Little Giant Steel Pipe Corporation
(Little Giant). Said cargoes were insured against all risks with Industrial Insurance Company Ltd. (Industrial
Insurance).

The vessel arrived at the port of Manila on October 24, 1991 and was assigned to a place of berth at the
outside breakwater at the Manila South Harbor.[6]

Schmitz Transport, whose services, Little Giant engaged to secure the requisite clearances, to receive the
cargoes from the shipside, and to deliver them to its (the consignees) warehouse at Cainta, Rizal, engaged the
services of TVI to send a barge and tugboat at shipside.

TVI’s tugboat Lailani towed the barge Erika V to shipside and left after positioning the barge alongside the
vessel carrying the cargo. The arrastre operator Ocean Terminal Services Inc. commenced to unload 37 of the
545 coils from the vessel unto the barge.

By 12:30 a.m. of October 27, 1991 during which the weather condition had become inclement due to an
approaching storm, the unloading unto the barge of the 37 coils was accomplished. No tugboat pulled the
barge back to the pier, however. At around 5:30 a.m. of October 27, 1991, due to strong waves. The crew of
the barge abandoned it and transferred to the vessel. The barge pitched and rolled with the waves and
eventually capsized, washing the 37 coils into the sea.[12]

Industrial Insurance paid the amount of P5,246,113.11 to the consignee and thereafter filed a complaint against
Schmitz Transport, TVI, and Black Sea through its representative Inchcape (the defendants) before the RTC of
Manila, for the recovery of the amount it paid plus adjustment fees, attorneys fees, and litigation expenses.
Industrial Insurance faulted the defendants for undertaking the unloading of the cargoes while typhoon
signal No. 1 was raised in Metro Manila.[17]

By Decision, RTC held all the defendants negligent for unloading the cargoes outside of the breakwater
notwithstanding the storm signal. All the defendants appealed to the Court of Appeals which, which
affirmed in toto the decision of the trial court, finding that all the defendants were common carriers, Black
Sea and TVI for engaging in the transport of goods and cargoes over the seas as a regular business and not as
an isolated transaction, and Schmitz Transport for entering into a contract with Little Giant to transport the
cargoes from ship to port for a fee.

Schmitz Transport filed the present petition against TVI, Industrial Insurance and Black Sea. Petitioner
asserts that in chartering the barge and tugboat of TVI, it was acting for its principal, consignee Little Giant,
hence, the transportation contract was by and between Little Giant and TVI and being an agent of the
Consignee, any negligence it committed was deemed the negligence of its principal.

Black Sea argued that the cargoes were received by the consignee through petitioner in good order, hence, it
cannot be faulted, it having had no control and supervision thereover.

TVI maintained that it acted as a passive party as it merely received the cargoes and transferred them unto the
barge upon the instruction of petitioner.

ISSUES:
(1) WON the petitioner is a common carrier;
(2) Whether the loss of the cargoes was due to a fortuitous event, independent of any act of negligence on
the part of petitioner Black Sea and TVI? And
(3) If there was negligence, whether liability for the loss may attach to Black Sea, petitioner and TVI.

HELD:
The petitioner is a common carrier. For it undertook to transport the cargoes from the shipside of M/V
Alexander Saveliev to the consignees warehouse at Cainta, Rizal. As the appellate court put it, as long as a

27
person or corporation holds [itself] to the public for the purpose of transporting goods as [a] business, [it] is
already considered a common carrier regardless if [it] owns the vehicle to be used or has to hire one. It is
settled that under a given set of facts, a customs broker may be regarded as a common carrier.

(1) The loss of the cargoes was NOT CONSIDERED an act of God.

When a fortuitous event occurs, Article 1174 of the Civil Code absolves any party from any and all liability
arising therefrom:

ART. 1174. Except in cases expressly specified by the law, or when it is otherwise declared by
stipulation, or when the nature of the obligation requires the assumption of risk, no person shall be
responsible for those events which could not be foreseen, or which though foreseen, were inevitable.

To be considered a fortuitous event, however, (1) the cause of the unforeseen and unexpected occurrence, or
the failure of the debtor to comply with his obligation, must be independent of human will; (2) it must be
impossible to foresee the event which constitute the caso fortuito, or if it can be foreseen it must be impossible
to avoid; (3) the occurrence must be such as to render it impossible for the debtor to fulfill his obligation in any
manner; and (4) the obligor must be free from any participation in the aggravation of the injury resulting to the
creditor.

The principle embodied in the act of God doctrine strictly requires that the act must be occasioned solely by
the violence of nature. Human intervention is to be excluded from creating or entering into the cause of the
mischief. When the effect is found to be in part the result of the participation of man, whether due to his
active intervention or neglect or failure to act, the whole occurrence is then humanized and removed
from the rules applicable to the acts of God.

That no tugboat towed back the barge to the pier after the cargoes were completely loaded by 12:30 in the
morning[39] is, however, the proximate cause of the loss of the cargoes. Had the barge been towed back
promptly to the pier, the deteriorating sea conditions notwithstanding, the loss could have been avoided. But the
barge was left floating in open sea until big waves set in at 5:30 a.m., causing it to sink along with the
cargoes. The loss thus falls outside the act of God doctrine.

2. The petitioner and TVI are solidarily liable while no liability attaches to Black Sea.

The petitioner being a common carrier, for it to be relieved of liability, it should, following Article 1739 of the
Civil Code, prove that it exercised due diligence to prevent or minimize the loss, before, during and after the
occurrence of the storm in order that it may be exempted from liability for the loss of the goods. While petitioner
sent checkers and a supervisor on board the vessel to counter-check the operations of TVI, it failed to take all
available and reasonable precautions to avoid the loss. After noting that TVI failed to arrange for the prompt
towage of the barge despite the deteriorating sea conditions, it should have summoned the same or
another tugboat to extend help, but it did not.

In the case of TVI, while it acted as a private carrier for which it was under no duty to observe extraordinary
diligence, it was still required to observe ordinary diligence to ensure the proper and careful handling, care
and discharge of the carried goods. If the law or contract does not state the diligence which is to be observed in
the performance, that which is expected of a good father of a family shall be required.

TVIs failure to promptly provide a tugboat did not only increase the risk that might have been
reasonably anticipated during the shipside operation, but was the proximate cause of the loss. A man of
ordinary prudence would not leave a heavily loaded barge floating for a considerable number of hours, at such
a precarious time, and in the open sea, knowing that the barge does not have any power of its own and is
totally defenceless from the ravages of the sea. That it was night time and, therefore, the members of the crew
of a tugboat would be charging overtime pay did not excuse TVI from calling for one such tugboat.

Thus, the Court holds that petitioner and TVI are solidarily liable for the loss of the cargoes.

As for Black Sea, its duty as a common carrier extended only from the time the goods were surrendered or
unconditionally placed in its possession and received for transportation until they were delivered actually or
constructively to consignee Little Giant. In the case at bar, Bill of Lading No. 2 covering the shipment provides
that delivery be made to the port of discharge or so near thereto as she may safely get, always afloat. The
delivery of the goods to the consignee was not from pier to pier but from the shipside of M/V Alexander Saveliev
and into barges. Since Black Sea had constructively delivered the cargoes to Little Giant, through
petitioner, it had discharged its duty. In fine, no liability may thus attach to Black Sea.
28
15. PEDRO DE GUZMAN vs. COURT OF APPEALS and ERNESTO CENDANA
GR L-47822 December 12, 1988

FACTS:

On November 1970, Pedro de Guzman a merchant and authorized dealer of General Milk Company Inc. in
Urdaneta, Pangasinan, contracted with Ernesto Cendana for the hauling of 750 cartons of Liberty filled
milk from a warehouse in Makati, Rizal, to Pedro’s establishment in Urdaneta on or before 4 December
1970. On 1 December 1970, Ernesto loaded in Makati the merchandise on to his trucks: 150 cartons were
loaded on a truck driven by himself, 600 cartons were placed on another truck driven by Manuel Estrada, his
driver and employee.

Only 150 boxes of Liberty filled milk were delivered to Pedro, because the other truck where the other 600 were
placed was hijacked along the MacArthur Highway in Paniqui, Tarlac. Petitioner demanded payment of P22,150
before the CFI of Pangasinan for the lost merchandise, plus damages and attorney's fees against respondent.
Petitioner argued that private respondent, being a common carrier, and having failed to exercise the
extraordinary diligence required of him by the law, should be held liable for the value of the undelivered
goods.

Private respondent denied that he was a common carrier and argued that he could not be held responsible for
the value of the lost goods, such loss having been due to force majeure.

The trial court rendered a Decision 1 finding private respondent to be a common carrier and holding him
liable for the value of the undelivered goods Arguing that respondent, being a common carrier who failed to
exercise extraordinary diligence should be held liable for the value of the undelivered goods.

The Court of Appeals reversed the judgment of the trial court and held that respondent had been engaged in
transporting return loads of freight "as a casual occupation — a sideline to his scrap iron business"
and not as a common carrier and that the hijacking was force majeure. Hence, this petition.

ISSUE:

(1) WON the respondent is a common carrier; and

(2) WON the respondent is liable for damages.

HELD:

(1) Yes, respondent is a common carrier.

Under Article 1732 of the Civil Code, Common carriers are persons, corporations, firms or associations
engaged in the business of carrying or transporting passengers or goods or both, by land, water, or air for
compensation, offering their services to the public.

It makes no distinction between one whose principal business activity is the carrying of persons or goods or
both, and one who does such carrying only as an ancillary activity, between a person or enterprise offering
transportation service on a regular or scheduled basis and one offering such service on an occasional, episodic
or unscheduled basis, nor does it distinguish between a carrier offering its services to the "general public," and
one who offers services or solicits business only from a narrow segment of the general population.

29
The private respondent is properly characterized as a common carrier even though he merely "back-hauled"
goods for other merchants from Manila to Pangasinan and such back-hauling was done on a periodic or
occasional rather than regular or scheduled manner, and even though private respondent's principal occupation
was not the carriage of goods for others. There is no dispute that private respondent charged his customers a
fee for hauling their goods; that fee frequently fell below commercial freight rates is not relevant here.

Note: The CA held that the respondent is not a common carrier because it has no CPC but the court ruled that
a certificate of public convenience is not a requisite for the incurring of liability under the Civil Code provisions
governing common carriers. That liability arises the moment a person or firm acts as a common carrier, without
regard to whether or not such carrier has also complied with the requirements of the applicable regulatory
statute and implementing regulations and has been granted a certificate of public convenience or other
franchise. To exempt private respondent from the liabilities of a common carrier because he has not secured
the necessary certificate of public convenience, would be offensive to sound public policy;

(2) The respondent is NOT LIABLE for damages.

Article 1734 establishes the general rule that common carriers are responsible for the loss, destruction or
deterioration of the goods which they carry, "unless the same is due to any of the following causes only:

(1) Flood, storm, earthquake, lightning or other natural disaster or calamity;

(2) Act of the public enemy in war, whether international or civil;
(3) Act or omission of the shipper or owner of the goods;
(4) The character-of the goods or defects in the packing or-in the containers; and
(5) Order or act of competent public authority.

While hijacking does not fall within any of the 5 categories of exempting causes in Article 1734, Article 1745 (6)
provides that, a common carrier is held responsible, and will not be allowed to divest or to diminish such
responsibility, even for acts of strangers like thieves or robbers, EXCEPT where such thieves or robbers in fact
acted "with grave or irresistible threat, violence or force."

The limits of the duty of extraordinary diligence in the vigilance over the goods carried are reached where the
goods are lost as a result of a robbery which is attended by "grave or irresistible threat, violence or force." In the
instant case, the accused acted with grave, if not irresistible, threat, violence or force. 3 of the 5 hold-uppers
were armed with firearms. They not only took the truck and its cargo but also kidnapped the driver and his
helper, detaining them for several days. The occurrence of the loss must reasonably be regarded as quite
beyond the control of the common carrier and properly regarded as a fortuitous event. Thus, respondent
herein is not liable.

30
16. Spouses Dante and Leonora Cruz v. Sun Holiday
GR 186312, June 29, 2010

FACTS:

Spouses Dante and Leonora Cruz lodged a Complaint against Sun Holidays, Inc. for damages arising from the
death of their son who perished with his wife on board the boat M/B Coco Beach III, where the couple had
stayed at Coco Beach Island Resort (Resort) owned and operated by respondent. The stay of the newly wed
Ruelito and his wife at the Resort from September 9 to 11, 2000 was by virtue of a tour package-contract with
respondent that included transportation to and from the Resort and the point of departure in Batangas.

Miguel C. Matute (Matute), a scuba diving instructor and one of the survivors, gave his account of the incident
that led to the filing of the complaint as follows:

Matute stayed at the Resort from September 8 to 11, 2000. He was originally scheduled to leave the Resort in
the afternoon of September 10, 2000, but was advised to stay for another night because of strong winds and
heavy rains.

On September 11, 2000, as it was still windy, Matute and 25 other Resort guests including petitioners son and
his wife trekked to the other side of the Coco Beachmountain that was sheltered from the wind where they
boarded M/B Coco Beach III, which was to ferry them to Batangas.

Shortly after the boat sailed, it started to rain. As it moved farther away from Puerto Galera and into the open
seas, the rain and wind got stronger, causing the boat to tilt from side to side and the captain to step forward to
the front, leaving the wheel to one of the crew members.

The waves got more unwieldy. After getting hit by two big waves which came one after the other, M/B Coco
Beach III capsized putting all passengers underwater.

The passengers, who had put on their life jackets, struggled to get out of the boat. Upon seeing the captain,
Matute and the other passengers who reached the surface asked him what they could do to save the people
who were still trapped under the boat. The captain replied Iligtas niyo na lang ang sarili niyo (Just save
yourselves).

Help came after about 45 minutes when two boats owned by Asia Divers in Sabang, Puerto Galera passed by
the capsized M/B Coco Beach III. Boarded on those two boats were 22 persons, consisting of 18 passengers
and four crew members, who were brought to Pisa Island. Eight of the passengers including the petitioners’ son
and his wife died during the accident.

At the time of Ruelitos death, he was 28 years old and employed as a contractual worker for Mitsui Engineering
& Shipbuilding Arabia, Ltd. in Saudi Arabia, with a basic monthly salary of $ 900.

Petitioners, by letter of October 26, 2000, demanded indemnification from respondent for the death of their son
in the amount of at least P 4,000,000.

Replying, respondent, by letter dated November 7, 2000, denied any responsibility for the incident which it
considered to be a fortuitous event. It nevertheless offered, as an act of commiseration, the amount of P 10,000
to petitioners upon their signing of a waiver.

As petitioners declined respondents offer, they filed the Complaint, as earlier reflected, alleging that respondent,
as a common carrier, was guilty of negligence in allowing M/B Coco Beach III to sail notwithstanding storm
warning bulletins issued by the PAGASA as early as 5:00 a.m. of September 11, 2000.

In its Answer, respondent denied being a common carrier, alleging that its boats are not available to the general
public as they only ferry Resort guests and crew members, and that it cannot be considered as ancillary to its
business as no income is derived therefrom; that it exercised extraordinary diligence as shown by the
31
conditions it had imposed before allowing M/B Coco Beach III to sail. Contrary to petitioners allegation, there
was no storm on September 11, 2000 as the Coast Guard in fact cleared the voyage; and M/B Coco Beach
III was not filled to capacity and had sufficient life jackets for its passengers. That the incident was caused by a
fortuitous event without any contributory negligence on its part, by way of Counterclaim, respondent alleged that
it is entitled to an award for attorneys fees and litigation expenses amounting to not less than P 300,000.

Carlos Bonquin, captain of M/B Coco Beach III, averred that the Resort customarily requires four conditions to
be met before a boat is allowed to sail, to wit: (1) the sea is calm, (2) there is clearance from the Coast Guard,
(3) there is clearance from the captain and (4) there is clearance from the Resorts assistant manager. He
added that M/B Coco Beach III met all four conditions on September 11, 2000, but a subasco or squall,
characterized by strong winds and big waves, suddenly occurred, causing the boat to capsize.

RTC dismissed petitioners Complaint and respondents Counterclaim.The appellate court denied petitioners
appeal, holding, among other things, that the trial court correctly ruled that respondent is a private carrier which
is only required to observe ordinary diligence; that respondent in fact observed extraordinary diligence in
transporting its guests on board M/B Coco Beach III; and that the proximate cause of the incident was a squall,
a fortuitous event.

Petitioners filed a Petition for Review.

ISSUE:

Whether or not Sun Holiday is a common carrier?

HELD:

YES. Respondent is a common carrier. Its ferry services are so intertwined with its business as to be properly
considered ancillary thereto. The constancy of respondent’s ferry services in its resort operations is
underscored by its having its own Coco Beach boats. And the tour packages it offers which include the ferry
services' may be availed of by anyone who can afford to pay the same. These services are thus available to the
public.

In the De Guzman case, Article 1732 of the Civil Code defining “common carriers” has deliberately refrained
from making distinctions on whether the carrying of persons or goods is the carrier’s principal business, whether
it is offered on a regular basis or whether it is offered to the general public or just to a narrow segment of the
general population.

Under the Civil Code, common carriers, from the nature of their business and for reasons of public policy, are
bound to observe extraordinary diligence for the safety of the passengers transported by them according to all
the circumstances of each case. They are bound to carry the passengers safely as far as human care and
foresight can provide, using the utmost diligence of very cautious persons, with due regard for all the
circumstances.

32
17. Nostradamus Villanueva v. Domingo
GR 144274, September 20, 2004

FACTS:

Respondent Priscilla R. Domingo is the registered owner of a silver Mitsubishi Lancer Car model 1980 bearing
plate No. NDW 781 91 with Leandro Luis R. Domingo (co-respondent) as authorized driver. Nostradamus
Villanueva was then the registered owner of a green Mitsubishi Lancer bearing Plate No. PHK 201 91.

22 October 1991 at about 9:45 in the evening, following a green traffic light, Domingos car then driven by
Leandro Domingo was cruising along the middle lane of South Superhighway at moderate speed from north to
south. Suddenly, a green Mitsubishi Lancer driven by Renato Dela Cruz Ocfemia darted from Vito Cruz Street
towards the South Superhighway directly into the path of Domingos car thereby hitting and bumping its left front
portion. As a result of the impact, Domingos car hit two (2) parked vehicles at the roadside, the second hitting
another parked car in front of it.

The Traffic Accident Report prepared by Traffic Investigator revealed that Renato dela Cruz Ocfemia was
driving with expired license and positive for alcoholic breath. Hence, Manila Assistant City Prosecutor
recommended the filing of information for reckless imprudence resulting to damage to property and physical
injuries.

The original complaint was amended twice: first, impleading Auto Palace Car Exchange as commercial agent
and/or buyer-seller and second, impleading Albert Jaucian as principal defendant doing business under the
name and style of Auto Palace Car Exchange.

Except for Ocfemia, all the defendants filed separate answers to the complaint. Petitioner Nostradamus
Villanueva claimed that he was no longer the owner of the car at the time of the mishap because it was
swapped with a Pajero owned by Albert Jaucian/Auto Palace Car Exchange. For her part, Linda Gonzales
declared that her presence at the scene of the accident was upon the request of the actual owner of the
Mitsubishi Lancer (PHK 201 91), Albert Jaucian, for whom she had been working as agent/seller.

On the other hand, Auto Palace Car Exchange represented by Albert Jaucian claimed that he was not the
registered owner of the car. Moreover, it could not be held subsidiary liable as employer of Ocfemia because
the latter was off-duty as utility employee at the time of the incident. Neither was Ocfemia performing a duty
related to his employment.

After trial, the trial court found petitioner liable and ordered him to pay respondent actual, moral and exemplary
damages plus appearance and attorneys fees.

ISSUE:

May the registered owner of a motor vehicle be held liable for damages arising from a vehicular accident
involving his motor vehicle while being operated by the employee of its buyer without latter’s consent and
knowledge?

HELD:

YES. The principle upon which this doctrine is based is that in dealing with vehicles registered under the Public
Service Law, the public has the right to assume or presume that the registered owner is the actual owner
thereof, for it would be difficult for the public to enforce the actions that they may have for injuries caused to
them by the vehicles being negligently operated if the public should be required to prove who the actual owner
is. (Registered-Owner Rule)

33
In synthesis, we hold that the registered owner, the defendant-appellant herein, is primarily responsible for the
damage caused to the vehicle of the plaintiff-appellee, but he (defendant-appellant) has a right to be
indemnified by the real or actual owner of the amount that he may be required to pay as damage for the injury
caused to the plaintiff-appellant.

It is immaterial whether or not the driver was actually employed by the operator of record. It is even not
necessary to prove who the actual owner of the vehicle and the employer of the driver is. Granting that, in this
case, the father of the driver is the actual owner and that he is the actual employer, following the well-settled
principle that the operator of record continues to be the operator of the vehicle in contemplation of law, as
regards the public and third person, and as such is responsible for the consequences incident to its operation,
we must hold and consider such owner-operator of record as the employer, in contemplation of law, of the
driver. And, to give effect to this policy of law as enunciated in the above cited decisions of this Court, we must
now extend the same and consider the actual operator and employer as the agent of the operator of record.

The main purpose of vehicle registration is the easy identification of the owner who can be held responsible for
any accident, damage or injury caused by the vehicle. Easy identification prevents inconvenience and prejudice
to a third party injured by one who is unknown or unidentified. To allow a registered owner to escape liability by
claiming that the driver was not authorized by the new (actual) owner results in the public detriment the law
seeks to avoid.

Finally, the issue of whether or not the driver of the vehicle during the accident was authorized is not at all
relevant to determining the liability of the registered owner. This must be so if we are to comply with the
rationale and principle behind the registration requirement under the motor vehicle law.

34
18. Duavit v. CA
GR 82318, May 18, 1989

FACTS:

From the evidence adduced by the plaintiffs, consisting of the testimonies of witnesses Virgilio Catuar, Antonio
Sarmiento, Jr., Ruperto Catuar, Jr. and Norberto Bernarte it appears that on July 28, 1971 plaintiffs Antonio
Sarmiento, Sr. and Virgilio Catuar were aboard a jeep with plate number 77-99-F-I Manila, 1971, owned by
plaintiff, Ruperto Catuar was driving the said jeep on Ortigas Avenue, San Juan, Rizal; that plaintiff's jeep, at
the time, was running moderately at 20 to 35 kilometers per hour and while approaching Roosevelt Avenue,
Virgilio Catuar slowed down; that suddenly, another jeep with plate number 99-97-F-J Manila 1971 driven by
defendant Oscar Sabiniano hit and bumped plaintiff's jeep on the portion near the left rear wheel, and as a
result of the impact plaintiff's jeep fell on its right and skidded by about 30 yards; that as a result plaintiffs jeep
was damaged, particularly the windshield, the differential, the part near the left rear wheel and the top cover of
the jeep; that plaintiff Virgilio Catuar was thrown to the middle of the road; his wrist was broken and he
sustained contusions on the head; that likewise plaintiff Antonio Sarmiento, Sr. was trapped inside the fallen
jeep, and one of his legs was fractured.

Evidence also shows that the plaintiff Virgilio Catuar spent a total of P 2,464.00 for repairs of the jeep, as shown
by the receipts of payment of labor and spare parts. Plaintiffs likewise tried to prove that plaintiff Virgilio Catuar,
immediately after the accident was taken to Immaculate Concepcion Hospital, and then was transferred to the
National Orthopedic Hospital; that while plaintiff Catuar was not confined in the hospital, his wrist was in a
plaster cast for a period of one month, and the contusions on his head were under treatment for about two (2)
weeks; that for hospitalization, medicine and allied expenses, plaintiff Catuar spent P 5,000.00.

Evidence also shows that as a result of the incident, plaintiff Antonio Sarmiento, Sr. sustained injuries on his
leg; that at first, he was taken to the National Orthopedic Hospital but later he was confined at the Makati
Medical Center from July 29, to August 29, 1971 and then from September 15 to 25, 1971; that his leg was in a
plaster cast for a period of eight (8) months; and that for hospitalization and medical attendance, plaintiff
Antonio Sarmiento, Sr. spent no less than P 13,785.25 as evidenced by receipts in his possession.

Proofs were adduced also to show that plaintiff Antonio sarmiento Sr. is employed as Assistant Accountant of
the Canlubang Sugar Estate with a salary of P1,200.00 a month; that as sideline he also works as accountant
of United Haulers Inc. with a salary of P500.00 a month; and that as a result of this incident, plaintiff Sarmiento
was unable to perform his normal work for a period of at least 8 months. On the other hand, evidence shows
that the other plaintiff Virgilio Catuar is a Chief Clerk in Canlubang Sugar Estate with a salary of P500.00 a
month, and as a result of the incident, he was incapacitated to work for a period of one (1) month.

The plaintiffs have filed this case both against Oscar Sabiniano as driver, and against Gualberto Duavit as
owner of the jeep.

Defendant Gualberto Duavit, while admitting ownership of the other jeep (Plate No. 99-07-F-J Manila, 1971),
denied that the other defendant (Oscar Sabiniano) was his employee. Duavit claimed that he has not been an
employer of defendant Oscar Sabiniano at any time up to the present.

On the other hand documentary and testimonial evidence show that defendant Oscar Sabiniano was an
employee of the Board of Liquidators from November 14, 1966 up to January 4, 1973.

Defendant Sabiniano, in his testimony, categorically admitted that he took the jeep from the garage of
defendant Duavit without the consent or authority of the latter. He testified further, that Duavit even filed
charges against him for theft of the jeep, but which Duavit did not push through as his (Sabiniano's) parents
apologized to Duavit on his behalf.

Defendant Oscar Sabiniano, on the other hand in an attempt to exculpate himself from liability, makes it appear
that he was taking all necessary precaution while driving and the accident occurred due to the negligence of
Virgilio Catuar. Sabiniano claims that it was plaintiffs vehicle which hit and bumped their jeep.
35
The trial court found Oscar Sabiniano negligent in driving the vehicle but found no employer-employee
relationship between him and the petitioner because the latter was then a government employee and he took
the vehicle without the authority and consent of the owner. The petitioner was, thus, absolved from liability
under Article 2180 of the Civil Code.

ISSUE:

WON the owner of a private vehicle which figured in an accident can be held liable under Article 2180 of the CC
when the said vehicle was neither driven by an employee of the owner nor taken with the consent of the latter.

HELD:  NO

In Duquillo v Bayot (1939), SC ruled that an owner of a vehicle cannot be held liable for an accident involving a
vehicle if the same was driven without his consent or knowledge and by a person not employed by him. This
ruling is still relevant and applicable, and hence, must be upheld.

CA’s reliance on the cases of Erezo v Jepte and Vargas v Langcay is misplaced and cannot be sustained. In
Erezo v Jepte case, defendant Jepte was held liable for the death of Erezo even if he was not really the owner
of the truck that killed the latter because he represented himself as its owner to the Motor Vehicles Office and
had it registered under his name; he was thus estopped from later on denying such representation. In Vargas,
Vargas sold her jeepney to a 3rd person, but she did not surrender to the Motor Vehicles Office the
corresponding AC plates. So when the jeepney later on figured in an accident, she was held liable by the court.
Holding that the operator of record continues to be the operator of vehicle in contemplation of law, as regards
the public and 3rd persons.

The circumstances of the above cases are entirely different from those in the present case. Herein petitioner
does not deny ownership of vehicle but denies having employed or authorized the driver Sabiniano. The jeep
was virtually stolen from the petitioner’s garage.

36
19. Equitable Leasing Corporation v. Suyom
GR 143360 , September 5, 2002

FACTS:

July 17, 1994, a Fuso Road Tractor driven by Raul Tutor rammed into the house cum store of Myrna Tamayo
located at Pier 18, Vitas, Tondo, Manila. A portion of the house was destroyed. Pinned to death under the
engine of the tractor were Respondent Myrna Tamayos son, Reniel Tamayo, and Respondent Felix Oledans
daughter, Felmarie Oledan. Injured were Respondent Oledan himself, Respondent Marissa Enano, and two
sons of Respondent Lucita Suyom.

Tutor was charged with and later convicted of reckless imprudence resulting in multiple homicide and multiple
physical injuries in Criminal Case No. 296094-SA, Metropolitan Trial Court of Manila, Branch 12.

Upon verification with the Land Transportation Office, respondents were furnished a copy of Official Receipt No.
62204139[6] and Certificate of Registration No. 08262797,[7] showing that the registered owner of the tractor
was Equitable Leasing Corporation/leased to Edwin Lim. On April 15, 1995, respondents filed against Raul
Tutor, Ecatine Corporation (Ecatine) and Equitable Leasing Corporation (Equitable) a Complaint[8] for damages
docketed as Civil Case No. 95-73522 in the RTC of Manila, Branch 14.

The trial court, upon motion of plaintiffs’ counsel, issued an Order dropping Raul Tutor, Ecatine and Edwin Lim
from the Complaint, because they could not be located and served with summonses.[9] On the other hand, in
its Answer with Counterclaim,[10] petitioner alleged that the vehicle had already been sold to Ecatine and that
the former was no longer in possession and control thereof at the time of the incident. It also claimed that Tutor
was an employee, not of Equitable, but of Ecatine.

After trial on the merits, the RTC rendered its Decision ordering petitioner to pay actual and moral damages and
attorney’s fees to respondents. It held that since the Deed of Sale between petitioner and Ecatine had not been
registered with the Land Transportation Office (LTO), the legal owner was still Equitable.[11] Thus, petitioner
was liable to respondents.[12]

ISSUE:

Is Equitable Leasing Corporation, the registered owner of the vehicle, being held liable to pay for the damages
for the negligent acts committed by the person to whom he had actually sold the vehicle?

HELD:

YES. As the registered owner of the tractor, Equitable Leasing is liable for the acts of Raul Tutor even if he was
actually the employee of Equitable’s former lessee, Ecatine Corporation, who became the actual owner of the
tractor by virtue of a deed of sale not registered with the LTO.

Under the registered owner rule Regardless of sales made of a motor vehicle, the registered owner is the
lawful operator insofar as the public and third persons are concerned; consequently, it is directly and primarily
responsible for the consequences of its operation.

In the eyes of the law, the owner/operator of record is the employer of the driver, the actual owner/operator
being considered as merely the agent of the registered owner/operator. The principle applies even if the
registered owner of any vehicle does not use it for public service.

The main aim of motor vehicle registration is to identify the owner so that if any accident happens, or any
damage or injury is caused by the vehicle, responsibility can be fixed on a definite individual, the registered
owner. Failure to register the deed of sale should not prejudice victims, who have the right to rely on the
principle that the registered owner is liable for damages caused by the negligence of the driver.

37
Equitable Leasing can’t hide behind the allegation that Tutor was Ecatine Corp’s employee, because it will
prevent victims from recovering their loss on the basis of Equitable’s inaction in failing to register the sale. The
non-registration is Equitable’s fault, which should face the legal consequences thereof.

38
20. Caravan Travel & Tours International v. Ermilinda Abejar
GR 170631 , February 20, 2016

Facts:
- 13 July 2000: Reyes was walking along the west-bound lane of Sampaguita St., United Paranaque Subd. IV,
Paranaque City. An L-300 van was traveling along the east-bound lane opposite Reyes. To avoid an
incoming vehicle, the van swerved to its left and hit Reyes. Espinosa went to her aid and loaded her in the
back of the van and told the driver, Bautista, to bring Reyes to the hospital. Instead, Bautista left the van
parked inside a nearby subdivision (with Reyes still in the van). Fortunately, an unidentified civilian helped
and drove Reyes to the hospital.

- Caravan, a corporation engaged in organizing travels and tours, was the registered owner of the van.
Bautista was Carvan's Employer and was assigned to drive the van as its service driver.
- Caravan shouldered the hospital expenses of Reyes, but Reyes died two days after the accident.
- Abejar, Reyes’s paternal aunt and the person who raised her since R was 9 y.o., filed a Complaint for
damages against B and Caravan in RTC Paranaque. Abejar alleged that Bautista was an EE of Caravan and
that it is the registered owner of the van.
- Summons could not be served on Bautista, so Abejar moved to drop Bautista as a defendant—RTC granted.
- RTC found that Bautista was grossly negligent in driving the vehicle. RTC awarded damages in favor of
Abejar. C’aravans MR was denied.

- CA affirmed with modification RTC’s decision. Caravan’s MR was denied. Hence this petition for review on
certiorari (on CA decision).

- Caravan’s Arguments:
• A has no personality to bring this suit because she isn’t a real party-in-interest
• A doesn’t exercise legal or substitute parental authority, nor is she the judicially appointed guardian of or
only living relative of Reyes, nor the executor or administrator of the estate of Reyes.

• Only the victim or the heirs can enforce an action on culpa aquiliana (such as Abejar’s action for
damages).
• Abejar didn’t offer documentary or testimonial evidence to prove that Bautista acted within the scope of his
assigned tasks when the accident occurred.
- According to Caravan, Bautista’s tasks only pertained to the transport of company personnel or
products

• Caravan argues it exercise the diligence of a good father of a family in the selection and supervision of its
Employees.
• Abejar should not have been awarded damages, and questions the Certificate provided by Abejar as proof
of expenses since its signatory (Julian Peñaloza) was not present in court and that Caravan was denied
the right to cross-examine him. And that the Certificate constitutes hearsay.
• Caravan contends that based on Art. 2206(3), CC Abejar isn't entitled to moral damages because
Caravan acted in good faith.
- That Caravan should not be held solidarity liable with B since B was already dropped as a party.
- Abejar’s Arguments:
• Caravan failed to provide proof that it exercised the requisite diligence in the selection and supervision of
Bautista.
• CA ruling on damages should be upheld
• Since Caravan is the registered owner of the van, it is directly, primarily, and solidarity liable for the
tortious acts of Bautista.

Issues:
I. WON Abejar is a real party-in-interest who may bring an action for damages against Caravan on account of
R’s death—YES.
II. WON C should be liable as an Employer, pursuant to Art. 2180, CC—YES.

Held:
I. Yes, Abejar is a real party-in-interest.

39
- Abejar exercised substitute parental authority and suffered actual loss
- She properly filed an action based on quasi-delict and she is a real party-in-interest, which is defined in Sec.
2, Rule 3, 1997 Rules of CivPro which states that “xxx the party who stands to be benefited or injured by the
judgement in the suit, or the party entitled to the avails of the suit. Unless otherwise authorized by law or
these Rules, every action must be prosecuted or defended in the name of the real party-in-interest.”

- The Court also looked at Art. 216 and 233, FC to identify persons who exercise substitute parental authority.

- Reyes’s parents and paternal grandparents are deceased, and the whereabouts of her maternal
grandparents are unknown. There is no record of Reyes having siblings. Abejar took custody of Reyes when
Reyes was a child and Abejar assumed the role of parent and exercised parental authority over Reyes.
- Consistent with Art. 220, FC, Abejar supported Reyes’s education and provided for her personal needs—
she treated Reyes as her own daughter.

- Abejar’s right to proceed against against Caravan is based on two grounds:

• Abejar suffered actual personal loss.
• Abejar is capacitated to do what Reyes’s actual parents would have been to do.

- Although Reyes was already 18 y.o. when she died (thus she had already reached the age of majority and
was emancipated), and parental authority is terminated upon emancipation, Abejar continued to support and
care for Reyes—the relationship remained the same. “The anguish and damage caused to [A] was by [R’s]
death was no different because of [R’s] emancipation”

- In any case, termination of Abejar’s parental authority is not an insurmountable legal bar that precludes the
filing of her Complaint.

- The Court has held that Art. 1902, Old CC/Art.

2176 , N e w C C is broad enough to accommodate even plaintiffs who are not relatives of the deceased.


II. Yes, Caravan is liable.

- Abejar’s Complaint is anchored on an Employer’s liability for quasi-delict provided in Art. 2180 in relation to
Art. 2176, CC.
- It was not fatal to Abejar’s cause that she herself did not adduce proof that Bautista acted within the scope of
his authority. It was sufficient that Abejar proved that Caravan was the registered owner of the van that hit
Reyes.

- According to the Court, two rules must be considered:

1. Art. 2180’s specification that “[ERs] shall be liable for the damages caused by their [EEs]…acting within
the scope of their assigned tasks[.]”
2. The operation of the registered-owner rule (ROR) that registered owners are liable for death or injuries
caused by the operation of their vehicles.
- These rules appear to be in conflict when it comes to cases in which the Employer is also the registered
owner of the vehicle.
- Art. 2180 requires proof of two things:
1. An ER-EE relationship between the driver and owner; and
2. That the driver acted within the scope of his/her assigned tasks.
- On the other hand, applying the ROR only requires the plaintiff to prove that defendant-ER is the registered-
- owner
ROR can (RO)
beofseen
the vehicle.
as early as in the case of Erezo, et al. v. Jepte (1957) where this Court
explained that the registration of motor vehicles, as required by Sec. 5(a), RA 4136 (Land Transportation and
Traffic Code), was necessary “not to make said registration the operative act by which ownership in vehicles
is transferred,… but to permit the use and operation of the vehicle upon any public highway[.]” Its “ main
aim…is to identify the owner so that if any accident happens, or that any damage or injury is caused by the
vehicle on the public highways, responsibility therefor can be fixed on a definite individual, the registered
owner.”

- Erezo v. Jepte (notwithstanding Castilex v. Vasquez3) relied on Art. 2180, CC even though the ER was also
the RO of the vehicle. The ROR was not mentioned.
- In Castilex v. Vasquez, the Court absolved Castilex of liability reasoning that it was incumbent upon the
40
 plaintiff to prove that the negligent EE was acting within the scope of his assigned tasks, which Vasquez
failed to do. The Court outlined the process necessary for an ER to be held liable for the acts of its EE:
• Under the 5th par. of Art. 2180, WON engaged in any business or industry, an ER is liable for the torts
committed by the EE within the scope of his assigned tasks. It is necessary to establish the ER-EE
relationship and once this is done, the plaintiff must show that the EE was acting within the scope of his
assigned task when the tort was committed.
- Aguilar, Sr. v. Commercial Savings Bank4, recognized the seeming conflict between Art. 2180 and the ROR
and applied the latter. The SC here reiterated the pronouncements in Erezo
v. Jepte in ruling that the bank, as the RO of the vehicle, was primarily liable to the plaintiff. The SC here
concluded that the LC erred when it concluded that the bank was not liable simply because (a) petitioner did
not prove that Borja was acting as the bank’s vice president at the time of the accident; and (b) Borja had,
according to respondent bank, already bought the car at the time of the mishap. For as long as the
respondent bank remained the registered owner of the car involved in the vehicular accident, it could not
escape primary liability.
- Preference for the ROR became more pronounced in Del Carmen, Jr. v. Bacoy which reiterated Aguilar,
stating that “[d]espite Art. 2180, we still held the bank liable for damages for the accident as said provision
should defer to the settled doctrine concerning accidents involving registered motor vehicles…”
- Filcar Transport Services v. Espinas stated that the RO of a vehicle can no longer use the defenses found in
Art. 2180.
- In Mendoza v. Sps. Gomez the Court said: “However, Aguilar, Sr., Del Carmen, Filcar, and Mendoza should
not be taken to mean that Art. 2180, CC should be completely discarded in cases where the registered-owner
rule finds application. As acknowledged in Filcar, there is no categorical statutory pronouncement in the Land
Transportation and Traffic Code (LTTC) stipulating the liability of a registered owner. The source of a
registered owner’s liability is not a distinct statutory provision, but remains to be Arts. 2176 and 2180,CC”
- It is imperative to apply the ROR in a manner that harmonizes it with Arts. 2176 and 2180, CC. Rules
must be construed in a manner that will harmonize them with other rules so as to form a uniform and
consistent system of jurisprudence—Art. 2180 should defer to the ROR, but it was never stated that
Art. 2180 should be completely abandoned.

- Appropriate Approach: Where both apply

1. Plaintiff must establish that the ER is the RO of the vehicle
2. There then arises a disputable presumption that the requirements of Art. 2180 have been proven and as
a consequence, the burden of proof shifts to the defendant to show that no liability under Art. 2180 has
arisen.
- This disputable presumption, insofar as the RO in relation to the actual driver is concerned, recognizes that
between the owner and the victim, it is the former that should carry the costs of moving forward with the
evidence.
- Registration of the vehicle is accessible to the public. Recall that A presented a copy of the Certificate of
Registration of the can that hit R— this attests to C's ownership of the van, which C did not dispute.
- In order to satisfactorily overcome the presumption, C should have:
1. Showed that it had no ER-EE relationship with B
2. That B acted outside the scope of his assigned tasks; or
3. That it exercised the diligence of a good father of a family in the selection and supervision of B.
- They failed:
1. C admitted that B was its EE at the time of the accident;
2. C was unable to prove that B was acting outside the scope of his assigned tasks. C presented no
positive evidence to show that B was acting in his private capacity at the time of the incident;
3. C failed to prove that it exercised the requisite diligence. C contented itself with B’s submission of a
nonprofessional driver’s license.
- Employing a person holding a nonprofessional driver’s license to operate another’s motor vehicle violates
Sec. 24, LTTC—C did not only fail to exercise due diligence in selecting B, it also committed an actual
violation of law.
- C’s act of providing copies of memoranda and company rules was insufficient because they failed to prove
actual compliance8
- For failing to overturn the presumption that the requirements of Article 2180 have been satisfied, petitioner
must be held liable.

41
Doctrine:
- The plaintiff may first prove the ER’s ownership of the vehicle involved in a mishap by presenting the
vehicle’s registration in evidence. Thereafter, a disputable presumption that the requirements for an ER’s
liability under Art. 2180, CC have been satisfied will arise. The burden of evidence then shifts to the
defendant to show that no liability under Art. 2180 has ensued. This case harmonizes the requirement of Art.
2180, in relation to Art. 2176, and the so-called “registered-owner rule”
- It is imperative to apply the registered-owner rule in a manner that harmonizes it with Arts. 2176 and 2180,
CC. Rules must be construed in a manner that will harmonize them with other rules so as to form a uniform
and consistent system of jurisprudence—Art. 2180 should defer to the registered-owner rule, but it was never
stated that Art. 2180 should be completely abandoned.

42
36. HERMINIO MARIANO, JR., vs. ILDEFONSO C. CALLEJAS and EDGAR DE BORJA,

FACTS:
Dr. Frelinda Mariano was a passenger of a Celyrosa Express bus bound for Tagaytay when she met
her death. Ildefonso C. Callejas is the registered owner of Celyrosa Express, while respondent Edgar de Borja
was the driver of the bus on which the deceased was a passenger.
At around 6:30 p.m. on November 12, 1991, along Aguinaldo Highway, San Agustin, Dasmarias,
Cavite, the Celyrosa Express bus, carrying Dr. Mariano as its passenger, collided with an Isuzu truck with trailer
bearing plate numbers PJH 906 and TRH 531. The trailer truck bumped the passenger bus on its left middle
portion. Due to the impact, the passenger bus fell on its right side on the right shoulder of the highway and
caused the death of Dr. Mariano and physical injuries to four other passengers. Dr. Mariano was 36 years old at
the time of her death. She left behind three minor children, aged four, three and two years.
Herminio, the husband, filed a complaint for breach of contract of carriage and damages against
Ildefonso, the owner and Edgar, the driver for their failure to transport his wife to her destination. Respondents
denied liability for the death of Dr. Mariano claiming that the proximate cause of the accident was the
recklessness of the driver of the trailer truck which bumped their bus. A third-party complaint against Liong Chio
Chang, the owner of the trailer truck, for indemnity for damages to petitioner.
On May 3, 1994, the said court convicted truck driver Arcadio Arcilla of the crime of reckless
imprudence resulting to homicide, multiple slight physical injuries and damage to property.
The trial court, found respondents Ildefonso Callejas and Edgar de Borja, together with Liong Chio
Chang, jointly and severally liable to pay petitioner damages and costs of suit.
Callejas and De Borja appealed to the Court of Appeals.
On May 21, 2004, the CA reversed the decision of the trial court, ruling that “the injury sustained by the
petitioner was in no way due to any defect in the means of transport or in the method of transporting or to the
negligent or willful acts of private respondent's employees, and therefore involving no issue of negligence in its
duty to provide safe and suitable cars as well as competent employees, with the injury arising wholly from
causes created by strangers over which the carrier had no control or even knowledge or could not have
prevented, the presumption is rebutted and the carrier is not and ought not to be held liable. To rule otherwise
would make the common carrier the insurer of the absolute safety of its passengers which is not the intention of
the lawmakers.”
ISSUE: Should the respondents be held liable?
HELD: No, they should not be held liable. While Celyrosa Express, a common carrier, has the express
obligation to carry the passengers safely as far as human care and foresight can provide, using the utmost
diligence of very cautious persons, with a due regard for all the circumstances, and to observe extraordinary
diligence in the discharge of its duty and thus, giving rise to the presumption of negligence of the carrier. To
overcome the presumption, respondents have to show that they observed extraordinary diligence in the
discharge of their duty, or that the accident was caused by a fortuitous event.
In Pilapil v. Court of Appeals. The SC held that: “While the law requires the highest degree of
diligence from common carriers in the safe transport of their passengers and creates a presumption of
negligence against them, it does not, however, make the carrier an insurer of the absolute safety of its
passengers.
Article 1755 of the Civil Code qualifies the duty of extraordinary care, vigilance and precaution
in the carriage of passengers by common carriers to only such as human care and foresight can
provide.
Article 1756 creates a presumption of fault or negligence on the part of the common carrier
when its passenger is injured. But, being a mere presumption, however, the same is rebuttable by
proof that the common carrier had exercised extraordinary diligence as required by law in the
performance of its contractual obligation, or that the injury suffered by the passenger was
solely due to a fortuitous event.
In the case at bar, respondents overcame the presumption of negligence against them. The totality of
evidence shows that the death of Dr. Mariano was caused by the reckless negligence of the driver of the Isuzu
trailer truck which lost its brakes and bumped the Celyrosa Express bus, owned and operated by respondents.
In fine, the evidence shows that before the collision, the passenger bus was cruising on its rightful lane
along the Aguinaldo Highway when the trailer truck coming from the opposite direction, on full speed, suddenly
swerved and encroached on its lane, and bumped the passenger bus on its left middle portion. Respondent
43
driver De Borja had every right to expect that the trailer truck coming from the opposite direction would stay on
its proper lane. He was not expected to know that the trailer truck had lost its brakes. The swerving of the trailer
truck was abrupt and it was running on a fast speed as it was found 500 meters away from the point of
collision. Secondly, any doubt as to the culpability of the driver of the trailer truck ought to vanish when he
pleaded guilty to the charge of reckless imprudence resulting to multiple slight physical injuries and damage to
property in Criminal Case No. 2223-92, involving the same incident.

37. JOSE PILAPIL vs. HON. COURT OF APPEALS and ALATCO TRANSPORTATION COMPANY, INC.

FACTS: Jose Pilapil, a passenger, boarded ALATCO's bus bearing No. 409 at San Nicolas, Iriga City on 16
September 1971 at about 6:00 P.M. Upon reaching the vicinity of the cemetery of the Baao, Camarines Sur, on
the way to Naga City, an unidentified man, hurled a stone at the left side of the bus, which hit Jose above his
left eye. Respondent's personnel rushed Jose to the provincial hospital in Naga City where he was confined and
treated. Jose was taken to Dr. Malabanan of Iriga City, subsequently, to Dr. Capulong of V. Luna Hospital, for
treatment, but Jose still lost partially his left eye's vision and sustained a permanent scar above the left eye.
Jose filed an action for recovery of damages before the Court of First Instance of Camarines Sur, Branch I,
which ordered ALATCO to pay Jose Pilapil the sum of P 10K for actual and material damages for causing a
permanent scar on the face and injuring the eye-sight, P 5K as moral and exemplary damages, P 300.00 for his
medical expenses and attorney's fees in the sum of P 1K.
ALATCO appealed to the CA and the Court of Appeals, reversed the decision.
Jose now appeals arguing that the nature of the business of a transportation company requires the
assumption of certain risks, and the stoning of the bus by a stranger resulting in injury to passenger is one such
risk from which the common carrier may not exempt itself from liability.

ISSUE: Is ALATCO liable in the instant case?

HELD: No, ALATCO is not liable. While the law requires the highest degree of diligence from common carriers
in the safe transport of their passengers and creates a presumption of negligence against them, it does not,
however, make the carrier an insurer of the absolute safety of its passengers. Article 1755 of the Civil Code
qualifies the duty of extraordinary care, vigilance and precaution in the carriage of passengers by common
carriers to only such as human care and foresight can provide. The presumption of fault or negligence against
the carrier is only a disputable presumption. It gives in where contrary facts are established proving either that
the carrier had exercised the degree of diligence required by law or the injury suffered by the passenger was
due to a fortuitous event.
In the instant case, the injury sustained was in no way due to any defect in the means of transport or in
the method of transporting or to the negligent or willful acts of private respondent's employees, and therefore
involving no issue of negligence in its duty to provide safe and suitable cars as well as competent employees.
With the injury arising wholly from causes created by strangers over which the carrier had no control or even
knowledge or could not have prevented, the presumption is rebutted and the carrier is not and ought not to be
held liable.

38. DANGWA TRANSPORTATION CO., INC. and THEODORE LARDIZABAL y MALECDAN vs. COURT OF
APPEALS, INOCENCIA CUDIAMAT

FACTS:
On March 25, 1985 at Marivic, Sapid, Mankayan, Benguet, Theodore M. Lardizabal was driving a
passenger bus of Dangwa in a reckless and imprudent manner and without due regard to traffic rules and
regulations and safety to persons and property. Pedrito Cudiamat was about to board the bus at full stop, when
he fell from the platform of the bus when it suddenly accelerated forward and was run over by the rear right tires
of the vehicle. Instead of bringing Pedrito immediately to the nearest hospital, the said driver, in utter bad faith
and without regard to the welfare of the victim, first brought his other passengers and cargo to their respective
destinations before bringing said victim to the Lepanto Hospital where he expired.
Thus, on May 13, 1985, respondents filed a complaint for damages against petitioners for the death of Pedrito
Cudiamat.
Dangwa alleged that they had observed and continued to observe the extraordinary diligence required
in the operation of the transportation company and the supervision of the employees, even as they add that
they are not absolute insurers of the safety of the public at large. Further, it was alleged that it was the victim's
own carelessness and negligence which gave rise to the subject incident, hence they prayed for the dismissal
of the complaint plus an award of damages in their favor by way of a counterclaim.
44
 On July 29, 1988, the trial court decided in favor of petitioners ruling Pedrito Cudiamat was negligent,
which negligence was the proximate cause of his death. So, the Cudiamats appealed with the CA, which
reversed the decision.

ISSUE: Is petitioner liable?

HELD: Yes, petitioner is liable. It is the duty of common carriers of passengers to stop their conveyances a
reasonable length of time in order to afford passengers an opportunity to board and enter, and they are liable
for injuries suffered by boarding passengers resulting from the sudden starting up or jerking of their
conveyances while they are doing so.
Further, even assuming that the bus was moving, the act of the victim in boarding the same cannot be
considered negligent under the circumstances, because the bus had "just started" and "was still in slow motion"
at the point where the victim had boarded and was on its platform. It is not negligence per se. An ordinarily
prudent person would have made the attempt board the moving conveyance under the same or similar
circumstances. The fact that passengers board and alight from slowly moving vehicle is a matter of common
experience both the driver and conductor in this case could not have been unaware of such an ordinary
practice.
The victim herein, by stepping and standing on the platform of the bus, is already considered a
passenger and is entitled all the rights and protection pertaining to such a contractual relation. Hence, it has
been held that the duty which the carrier passengers owes to its patrons extends to persons boarding cars as
well as to those alighting therefrom.
Common carriers, from the nature of their business and reasons of public policy, are bound to observe
extraordinary diligence for the safety of the passengers transported by the according to all the circumstances of
each case. A common carrier is bound to carry the passengers safely as far as human care and foresight can
provide, using the utmost diligence very cautious persons, with a due regard for all the circumstances.
By contract of carriage, the carrier assumes the express obligation to transport the passenger to his
destination safely and observe extraordinary diligence with a due regard for all the circumstances, and any
injury that might be suffered by the passenger is right away attributable to the fault or negligence of the carrier.
This is an exception to the general rule that negligence must be proved, and it is therefore incumbent upon the
carrier to prove that it has exercised extraordinary diligence as prescribed in Articles 1733 and 1755 of the Civil
Code. In this case, the petitioners did not exhibit extraordinary diligence.
Moreover, the circumstances under which the driver and the conductor failed to bring the gravely
injured victim immediately to the hospital for medical treatment is a patent and incontrovertible proof of their
negligence. It defies understanding and can even be stigmatized as callous indifference.

45
39. LIGHT RAIL TRANSIT AUTHORITY vs. MARJORIE NAVIDAD, HEIRS OF NICANOR NAVIDAD,
PRUDENT SECURITY AGENCY
FACTS:
On 14 October 1993, Nicanor Navidad, then drunk, entered the EDSA LRT station after purchasing a "token"
(payment of the fare). While Navidad was standing on the platform near the LRT tracks, Junelito Escartin, the
security guard assigned to the area approached Navidad. An altercation between the two ensued that led to a
fist fight. At the moment when Navidad fell, an LRT train, operated by petitioner Rodolfo Roman, was coming in.
Navidad was struck by the moving train, and he was killed instantaneously.

On 08 December 1994, the widow of Nicanor, Marjorie Navidad filed a complaint for damages against Junelito
Escartin, Rodolfo Roman, the LRTA, the Metro Transit Organization, Inc. (Metro Transit), and Prudent for the
death of her husband.
Prudent, in its answer, denied liability and averred that it had exercised due diligence in the selection
and supervision of its security guards.
The LRTA and Roman presented their evidence while Prudent and Escartin, instead of presenting
evidence, filed a demurrer contending that Navidad had failed to prove that Escartin was negligent in his
assigned task.
The trial court rendered in favor of the plaintiffs and against the defendants Prudent Security and
Junelito Escartin ordering the latter to pay jointly and severally the plaintiffs. The complaint against defendants
LRTA and Rodolfo Roman are dismissed for lack of merit.
Prudent appealed to the Court of Appeals which exonerated Prudent from any liability for the death of
Nicanor Navidad and, instead, holding the LRTA and Roman jointly and severally liable ruling that while the
deceased might not have then as yet boarded the train, a contract of carriage theretofore had already existed
when the victim entered the place where passengers were supposed to be after paying the fare and getting the
corresponding token therefor. In exempting Prudent from liability, the court stressed that there was nothing to
link the security agency to the death of Navidad. It said that Navidad failed to show that Escartin inflicted fist
blows upon the victim and the evidence merely established the fact of death of Navidad by reason of his having
been hit by the train owned and managed by the LRTA and operated at the time by Roman. The appellate court
faulted petitioners for their failure to present expert evidence to establish the fact that the application of
emergency brakes could not have stopped the train.
ISSUE: Should LRTA (Common Carrier) and Rodolfo Roman (train driver) be held liable for the death of
Nicanor Navidad?
HELD: YES, with respect to the common carrier. However, Roman is absolved from the liability. Law and
jurisprudence dictate that a common carrier, both from the nature of its business and for reasons of public
policy, is burdened with the duty of exercising utmost diligence in ensuring the safety of passengers. The Civil
Code, governing the liability of a common carrier for death of or injury to its passengers, provides:

"Article 1755. A common carrier is bound to carry the passengers safely as far as human care and
foresight can provide, using the utmost diligence of very cautious persons, with a due regard for all the
circumstances.
"Article 1756. In case of death of or injuries to passengers, common carriers are presumed to have
been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence as
prescribed in articles 1733 and 1755."
"Article 1759. Common carriers are liable for the death of or injuries to passengers through the
negligence or willful acts of the former’s employees, although such employees may have acted beyond the
scope of their authority or in violation of the orders of the common carriers.
"This liability of the common carriers does not cease upon proof that they exercised all the diligence of
a good father of a family in the selection and supervision of their employees."
"Article 1763. A common carrier is responsible for injuries suffered by a passenger on account of the
willful acts or negligence of other passengers or of strangers, if the common carrier’s employees through the
exercise of the diligence of a good father of a family could have prevented or stopped the act or omission."
The law requires common carriers to carry passengers safely using the utmost diligence of very
cautious persons with due regard for all circumstances. Such duty of a common carrier to provide safety to its
passengers so obligates it not only during the course of the trip but for so long as the passengers are within its
premises and where they ought to be in pursuance to the contract of carriage. In the absence of satisfactory
explanation by the carrier on how the accident occurred, which petitioners, according to the appellate court,
have failed to show, the presumption would be that it has been at fault, an exception from the general rule that
negligence must be proved.

46
 The foundation of LRTA’s liability is the contract of carriage and its obligation to indemnify the victim
arises from the breach of that contract by reason of its failure to exercise the high diligence required of the
common carrier. In the discharge of its commitment to ensure the safety of passengers, a carrier may choose to
hire its own employees or avail itself of the services of an outsider or an independent firm to undertake the task.
In either case, the common carrier is not relieved of its responsibilities under the contract of carriage
There being, similarly, no showing that petitioner Rodolfo Roman himself is guilty of any culpable act or
omission, he must also be absolved from liability. Needless to say, the contractual tie between the LRT and
Navidad is not itself a juridical relation between the latter and Roman; thus, Roman can be made liable only for
his own fault or negligence. Thus, in this case, Roman is absolved from liability.

47
40. LA MALLORCA VS. COURT OF APPEALS

FACTS: On December 20, 1953, noontime, husband and wife, with their minor daughters (Milagros, 13 yo,
Raquel, 4½ y.o, and Fe, 2 yo) boarded the Pambusco Bus No. 352, bearing plate TPU No. 757 (1953
Pampanga), owned and operated by the La Mallorca, at San Fernando, Pampanga, bound for Anao, Mexico,
Pampanga. The conductor of the bus, issued three tickets covering the full fares of the plaintiff and Milagros. No
fare was charged on Raquel and Fe, since both were below the height at which fare is charged in accordance
with the appellant's rules and regulations.

The bus reached Anao where it stopped to allow the passengers bound therefor including the plaintiffs to get
off. Mariano Beltran, then carrying some of their baggages, was the first to get down the bus, followed by his
wife and his children. Mariano led his companions to a shaded spot on the left pedestrians side of the road 4-5
meters away from the vehicle. Afterwards, he returned to the bus to get his other bayong, which he had left
behind, but in so doing, Raquel followed him, unnoticed by her father. While said Mariano Beltran was on the
running board of the bus waiting for the conductor to hand him his bayong, the bus, suddenly started moving
forward, evidently to resume its trip, notwithstanding the fact that the conductor has not given the driver the
customary signal to start. Incidentally, when the bus was again placed into a complete stop, it had travelled
about ten meters from the point where the plaintiffs had gotten off. At that time, Raquel was run over by the bus
with her skull crushed causing her immediate death.

Plaintiffs filed a suit for moral damages and the Trial Court held La Mallorca liable for breach of contract
of carriage.

On appeal to the Court of Appeals, La Mallorca claimed that there could not be a breach of contract in
the case, for the reason that when the child met her death, she was no longer a passenger of the bus involved
in the incident and, therefore, the contract of carriage had already terminated. Although the Court of Appeals
sustained this theory, it nevertheless found the defendant-appellant guilty of quasi-delict and held the latter
liable for damages, for the negligence of its driver, in accordance with Article 2180 of the Civil Code.

ISSUE: Should La Mallorca be held liable for breach of contract of carriage?

HELD:

Yes, La Mallorca should be held liable for contract of carriage. It has been recognized as a rule that the relation
of carrier and passenger does not cease at the moment the passenger alights from the carrier's vehicle at a
place selected by the carrier at the point of destination but continues until the passenger has had a reasonable
time or a reasonable opportunity to leave the carrier's premises. And, what is a reasonable time or a reasonable
delay within this rule is to be determined from all the circumstances.

In the present case, the father returned to the bus to get one of his baggages which was not unloaded
when they alighted from the bus. Raquel, the child that she was, must have followed the father. However,
although the father was still on the running board of the bus awaiting for the conductor to hand him the bag
or bayong, the bus started to run, so that even he (the father) had to jump down from the moving vehicle. It was
at this instance that the child, who must be near the bus, was run over and killed. In the circumstances, it
cannot be claimed that the carrier's agent had exercised the "utmost diligence" of a "very cautions person"
required by Article 1755 of the Civil Code to be observed by a common carrier in the discharge of its obligation
to transport safely its passengers. In the first place, the driver, although stopping the bus, nevertheless did not
put off the engine. Secondly, he started to run the bus even before the bus conductor gave him the signal to go
and while the latter was still unloading part of the baggages of the passengers Mariano Beltran and family. The
presence of said passengers near the bus was not unreasonable and they are, therefore, to be considered still
as passengers of the carrier, entitled to the protection under their contract of carriage.

48
#43 MARIANO C. MENDOZA AND ELVIRA LIM (driver and registered owner of mayamy bus) vs.
SPOUSES LEONORA J. GOMEZ AND GABRIEL V. GOMEZ. (owner of the truck hit by Mayamy Bus) G.R.
No. 160110, June 18, 2014

Facts:

On 7 March 1997, an Isuzu Elf truck (Isuzu truck) with plate number UAW 582, 3 owned by respondent Leonora
J. Gomez (Leonora)4 and driven by Antenojenes Perez (Perez),5 was hit by a Mayamy Transportation bus
(Mayamy bus) with temporary plate number 1376-1280, registered under the name of petitioner Elvira Lim
(Lim)7 and driven by petitioner Mariano C. Mendoza. Reckless imprudence resulting in damage to property and
multiple physical injuries was filed against Mendoza.9 Mendoza, however, eluded arrest, thus, respondents filed
a separate complaint for damages against Mendoza and Lim, seeking actual damages, compensation for lost
income, moral damages, exemplary damages, attorney’s fees and costs of the suit. Petitioners capitalized on
the issue of ownership of the bus in question. Respondents argued that although the registered owner was Lim,
the actual owner of the bus was SPO1 Cirilo Enriquez (Enriquez), who had the bus attached with Mayamy
Transportation Company (Mayamy Transport) under the so-called “kabit system.”

Respondents then impleaded both Lim and Enriquez. Petitioners, on the other hand, presented Teresita
Gutierrez (Gutierrez), whose testimony was offered to prove that Mayamy Bus or Mayamy Transport is a
business name registered under her name, and that such business is a sole proprietorship. Such was
presented by petitioners to rebut the allegation of respondents that Mayamy Transport is a corporation; and to
show, moreover, that although Gutierrez is the sole proprietor of Mayamy Transport, she was not impleaded by
respondents in the case at bar.alawred

Issue: Who is liable for the act committed?

Held:

Settled is the fact that based on the existing circumstances, Mendoza was negligent in driving the subject
Myamy bus. His negligence having caused the damage, Mendoza is certainly liable to repair said damage.
Furthermore, Mendoza’s employer may also be held liable under the doctrine of vicarious liability or imputed
negligence. Under such doctrine, a person who has not committed the act or omission which caused damage or
injury to another may nevertheless be held civilly liable to the latter either directly or subsidiarily under certain
circumstances.25
In Filcar Transport Services v. Espinas, it was held that the registered owner is deemed the employer of the
negligent driver, and is thus vicariously liable under Article 2176, in relation to Article 2180, of the Civil Code.
Citing Equitable Leasing Corporation v. Suyom,28 the Court ruled that in so far as third persons are concerned,
the registered owner of the motor vehicle is the employer of the negligent driver, and the actual employer is
considered merely as an agent of such owner. As such, there can be no other conclusion but to hold Lim
vicariously liable with Mendoza. Consequently, Mariano Mendoza and Elvira Lim are held solidarily liable to
respondent Spouses Leonora and Gabriel Gomez.

49
#44. FILCAR TRANSPORT SERVICES VS JOSE A. ESPINAS,
G.R. No. 174156 June 20, 2012

FACTS:

On November 22, 1998, at around 6:30 p.m., respondent Jose A. Espinas was driving his car along Leon
Guinto Street in Manila when he was suddenly hit by another car. After verifying with the Land Transportation
Office, Espinas learned that the owner of the other car with plate number UCF-545 is Filcar. The car was
assigned to its Corporate Secretary Atty. Candido Flor. At the time of the incident happened, the car was driven
by Timoteo Floresca, Atty. Flor’s personal driver.

On May 31, 2001, Espinas filed a complaint for damages against Filcar and Carmen Flor, President & Gen
Manager before the Metropolitan Trial Court, Makati City. Filcar argued that while it is the registered owner
of the car that hit and bumped Espinas car, the car was assigned to its Corporate Secretary Atty.
Candido Flor, the husband of Carmen Flor. Filcar further stated that when the incident happened, the
car was being driven by Atty. Flors personal driver, Timoteo Floresca.

Atty. Flor. Filcar and Carmen Flor both said that they always exercised the due diligence required of a
good father of a family in leasing or assigning their vehicles to third parties.

The MeTC, in its decision dated January 20, 2004,[4] ruled in favor of Espinas, and ordered Filcar and
Carmen Flor, jointly and severally,

The Regional Trial Court (RTC) of Manila, Branch 20, in the exercise of its appellate jurisdiction, affirmed the
MeTC decision.

CA partly granted the petition in CA-G.R. SP No. 86603; it modified the RTC decision by ruling that
Carmen Flor, President and General Manager of Filcar, is not personally liable to Espinas. The CA,
however, affirmed the liability of Filcar to pay Espinas damages. Hence, the petition.

ISSUE:

WON Filcar, as registered owner of the motor vehicle which figured in an accident, may be held liable for the
damages caused to Espinas.

HELD:

Filcar, as registered owner, is deemed the employer of the driver, Floresca, and is thus vicariously liable under
Article 2176 in relation with Article 2180 of the Civil Code

It is well settled that in case of motor vehicle mishaps, the registered owner of the motor vehicle is
considered as the employer of the tortfeasor-driver, and is made primarily liable for the tort committed by
the latter under Article 2176, in relation with Article 2180, of the Civil Code.

In Equitable Leasing Corporation v. Suyom,[11] we ruled that in so far as third persons are concerned, the
registered owner of the motor vehicle is the employer of the negligent driver, and the actual employer is
considered merely as an agent of such owner.

The rationale for the rule that a registered owner is vicariously liable for damages caused by the operation of his
motor vehicle is explained by the principle behind motor vehicle registration, which has been discussed by this
Court in Erezo, and cited by the CA in its decision:

The main aim of motor vehicle registration is to identify the owner so that if any accident happens, or
that any damage or injury is caused by the vehicle on the public highways, responsibility therefor can
be fixed on a definite individual, the registered owner.

Thus, whether there is an employer-employee relationship between the registered owner and the driver is
irrelevant in determining the liability of the registered owner who the law holds primarily and directly
responsible for any accident, injury or death caused by the operation of the vehicle in the streets and highways.

50
#45. EQUITABLE LEASING CORPORATION, petitioner, vs. LUCITA SUYOM, MARISSA ENANO, MYRNA
TAMAYO and FELIX OLEDAN, respondents.

FACTS:

Facts:
On July 17, 1994, a Fuso Road Tractor driven by Raul Tutor rammed into the house cum store of Myrna
Tamayo located at Pier 18, Vitas, Tondo, Manila. Two were pinned to death under the engine of the tractor
(namely, respondent Myrna Tamayos son, Reniel Tamayo, and Respondent Felix Oledans daughter, Felmarie
Oledan) while three (3) were injured (namely, respondent Oledan himself, Respondent Marissa Enano, and two
sons of Respondent Lucita Suyom)
Tutor was charged with and later convicted of reckless imprudence resulting in multiple homicide and multiple
physical injuries in Metropolitan Trial Court of Manila, Branch 12.
Upon verification with the Land Transportation Office, respondents were furnished a copy of Official Receipt No.
62204139 and Certificate of Registration No. 08262797, showing that the registered owner of the tractor was
Equitable Leasing Corporation/leased to Edwin Lim. On April 15, 1995, respondents filed against Raul Tutor,
Ecatine Corporation (Ecatine) and Equitable Leasing Corporation (Equitable) a complaint for damages.
The trial court, upon motion of plaintiffs counsel, issued an Order dropping Raul Tutor, Ecatine and Edwin Lim
from the Complaint, because they could not be located and served with summonses. It ruled that
After trial on the merits, the RTC rendered its Decision ordering petitioner to pay actual and moral
damages and the same was affirmed by the CA.
In its appeal, petitioner contends that it should not be held liable for the damages sustained by respondents and
that arose from the negligence of the driver of the Fuso Road Tractor, which it had already sold to Ecatine at
the time of the accident. Not having employed Raul Tutor, the driver of the vehicle, it could not have controlled
or supervised him.[18]

Issue:
WON the petitioner can be held liable.
Decision: The petitioner can be held liable for damages based on quasi-delict.
The petitioner is liable for the deaths and the injuries complained of, because it was the registered owner of the
tractor at the time of the accident on July 17, 1994.[38] The Court has consistently ruled that, regardless of sales
made of a motor vehicle, the registered owner is the lawful operator insofar as the public and third persons are
concerned; consequently, it is directly and primarily responsible for the consequences of its operation. [39] In
contemplation of law, the owner/operator of record is the employer of the driver, the actual operator and
employer being considered as merely its agent.[40] The same principle applies even if the registered owner of
any vehicle does not use it for public service. Since Equitable remained the registered owner of the tractor, it
could not escape primary liability for the deaths and the injuries arising from the negligence of the driver.
It was stressed that the failure of Equitable and/or Ecatine to register the sale with the LTO should not prejudice
respondents, who have the legal right to rely on the legal principle that the registered vehicle owner is liable for
the damages caused by the negligence of the driver. Petitioner cannot hide behind its allegation that Tutor was
the employee of Ecatine.
Additional Notes In negligence cases, the aggrieved party may sue the negligent party under (1) Article 100[19] of the
Revised Penal Code, for civil liability ex delicto; or (2) under Article 2176[20] of the Civil Code, for civil liability ex quasi
delicto.

Under Article 2176 in relation to Article 2180 [24] of the Civil Code, an action predicated on quasi delict may be instituted
against the employer for an employees act or omission. The liability for the negligent conduct of the subordinate
is direct and primary, but is subject to the defense of due diligence in the selection and supervision of the employee. [25] The
enforcement of the judgment against the employer for an action based on Article 2176 does not require the employee to be
insolvent, since the liability of the former is solidary -- the latter being statutorily considered a joint tortfeasor. [26]

In the instant case, respondents -- having failed to recover anything in the criminal case -- elected to file a separate civil
action for damages, based on quasi delict under Article 2176 of the Civil Code

51
46. GV Florida Transport v. Heirs of Romeo Battung
GR 280802, October 14, 2015

FACTS:

Battung boarded the bus of petitioner with body number 037 and plate number BVJ-525 in Delfin Albano,
Isabela, bound for Manila. He was seated at the first row behind the driver and slept during the ride. Battung
was seated at the first row behind the driver and slept during the ride. When the bus reached the Philippine
Carabao Center in Muñoz, Nueva Ecija, the bus driver, Duplio, stopped the bus and alighted to check the tires.
At this point, a man who was seated at the fourth row of the bus stood up, shot Battung at his head, and then
left with a companion. The bus conductor, Daraoay, notified Duplio of the incident and thereafter,
brought Romeo to the hospital, but the latter was pronounced dead on arrival. Hence, respondents filed a
complaint on July 15, 2008 for damages in the aggregate amount of P1,826,000.00 based on a breach of
contract of carriage against petitioner, Duplio, and Baraoay (petitioner, et al.) beforethe RTC, docketed as Civil
Case No. 22-1103.

ISSUE:

Whether petitioner is liable for damages arising from culpa contractual

HELD: NO

Where, as in the instant case, the injury sustained by the petitioner was in no way due to any defect in the
means of transport or in the method of transporting or to the negligent or wilful acts of the common carrier's
employees, and therefore involving no issue of negligence in its duty to provide safe and suitable [care] as well
as competent employees, with the injury arising wholly from causes created by strangers over which the carrier
had no control or even knowledge or could not have prevented, the presumption is rebutted and the carrier is
not and ought not to be held liable. To rule otherwise would make the common carrier the insurer of the
ABSOLUTE safety of its passengers which is not the intention of the lawmakers.

The case involves the death of Battung wholly caused by the surreptitious act of a co-passenger who, after
consummating such crime, hurriedly alighted from the vehicle.

The law exacts from common carriers (i.e., those persons, corporations, firms, or associations engaged in the
business of carrying or transporting passengers or goods or both, by land, water, or air, for compensation,
offering their services to the public) the highest degree of diligence (i.e., extraordinary diligence) in ensuring the
safety of its passengers.

Articles 1733 and 1755 of the Civil Code state:

Art. 1733. Common carriers, from the nature of their business and for reasons of public policy, are bound to
observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported
by them, according to all the circumstances of each case.

Art. 1755. A common carrier is bound to carry the passengers safely as far as human care and foresight can
provide, using the utmost diligence of very cautious persons, with a due regard for all the circumstances.

In this relation, Article 1756 of the Civil Code provides that "[i]n case of death of or injuries to passengers,
common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they
observed extraordinary diligence as prescribed in Articles 1733 and 1755." This disputable presumption may
also be overcome by a showing that the accident was caused by a fortuitous event.

The foregoing provisions notwithstanding, it should be pointed out that the law does not make the common
carrier an insurer of the ABSOLUTE safety of its passengers.

52
While the law requires the highest degree of diligence from common carriers in the safe transport of their
passengers and creates a presumption of negligence against them, it does not, however, make the carrier an
insurer of the absolute safety of its passengers.

Article 1755 of the Civil Code qualifies the duty of extraordinary care, vigilance[,] and precaution in the carriage
of passengers by common carriers to only such as human care and foresight can provide. What constitutes
compliance with said duty is adjudged with due regard to all the circumstances.

Article 1756 of the Civil Code, in creating a presumption of fault or negligence on the part of the common carrier
when its passenger is injured, merely relieves the latter, for the time being, from introducing evidence to fasten
the negligence on the former, because the presumption stands in the place of evidence. Being a mere
presumption, however, the same is rebuttable by proof that the common carrier had exercised extraordinary
diligence as required by law in the performance of its contractual obligation, or that the injury suffered by the
passenger was solely due to a fortuitous event.

In fine, we can only infer from the law the intention of the Code Commission and Congress to curb the
recklessness of drivers and operators of common carriers in the conduct of their business.

Thus, it is clear that neither the law nor the nature of the business of a transportation company makes it an
insurer of the passenger's safety, but that its liability for personal injuries sustained by its passenger rests upon
its negligence, its failure to exercise the degree of diligence that the law requires.

Therefore, it is imperative for a party claiming against a common carrier under the above-said provisions to
show that the injury or death to the passenger/s arose from the negligence of the common carrier and/or its
employees in providing safe transport to its passengers.

In Pilapil v. CA, the Court clarified that where the injury sustained by the passenger was in no way due :

(1) to any defect in the means of transport or in the method of transporting, or (2) to the negligent or willful acts
of the common carrier's employees with respect to the foregoing –

such as when the injury arises wholly from causes created by strangers which the carrier had no control of or
prior knowledge to prevent — there would be no issue regarding the common carrier's negligence in its duty to
provide safe and suitable care, as well as competent employees in relation to its transport business; as such,
the presumption of fault/negligence foisted under Article 1756 of the Civil Code should not apply:

First, as stated earlier, the presumption of fault or negligence against the carrier is only a disputable
presumption.[The presumption] gives in where contrary facts are established proving either that the carrier had
exercised the degree of diligence required by law or the injury suffered by the passenger was due to a fortuitous
event.

Since Battung's death was caused by a co-passenger, the applicable provision is Article 1763 of the Civil Code,
which states that:

"a common carrier is responsible for injuries suffered by a passenger on account of the willful acts or
negligence of other passengers or of strangers, if the common carrier's employees through the exercise of the
diligence of a good father of a family could have prevented or stopped the act or omission."

Notably, for this obligation, the law provides a lesser degree of diligence, i.e., diligence of a good father of a
family, in assessing the existence of any culpability on the common carrier's part.

Case law states that the concept of diligence of a good father of a family "connotes reasonable care consistent
with that which an ordinarily prudent person would have observed when confronted with a similar situation.

The test to determine whether negligence attended the performance of an obligation is:
53
Did the defendant in doing the alleged negligent act use that reasonable care and caution which an ordinarily
prudent person would have used in the same situation? If not, then he is guilty of negligence."

At bar, no danger i.e. intelligent reports from law enforcement agents that certain lawless elements were
planning to hijack and burn some of its buses, as to impel petitioner or its employees to implement heightened
security measures to ensure the safety of its passengers. There was also no showing that during the course of
the trip, Battung's killer made suspicious actions which would have forewarned petitioner's employees of the
need to conduct thorough checks on him or any of the passengers.

Relevantly, the Court, in Nocum v. Laguna Tayabas Bus Company, has held that common carriers should be
given sufficient leeway in assuming that the passengers they take in will not bring anything that would prove
dangerous to himself, as well as his co-passengers, unless there is something that will indicate that a more
stringent inspection should be made. Not to be lightly considered must be the right to privacy to which each
passenger is entitled. He cannot be subjected to any unusual search, when he protests the innocuousness of
his baggage and nothing appears to indicate the contrary, as in the case at bar.

In compelling the passenger to submit to more rigid inspection, after the passenger had already declared that
the box contained mere clothes and other miscellaneous, could not have justified invasion of a constitutionally
protected domain.

54
47. Nocum v. Laguna Tayabas Bus
GR L-23733, October 31, 1969

FACTS:

Nocum was a passenger in Laguna Tayabas’ Bus No. 120 then making a trip within the barrio of Dita,
Municipality of Bay, Laguna, was injured as a consequence of the explosion of firecrackers, contained in a box,
loaded in said bus and declared to its conductor as containing clothes and miscellaneous items by a co-
passenger.

Nocum sued Laguna Tayabas for breach of contract of carriage.

Trial Court: Laguna Tayabas liable since it did not observe the extraordinary or utmost diligence of a very
cautious person required by the Civil Code, and defense of fortuitous event is unavailing.

TC decision based on:

According to Severino Andaya, a witness for the plaintiff, a man with a box went up the baggage compartment
of the bus where he already was and said box was placed under the seat. They left Azcarraga at about 11:30 in
the morning and when the explosion occurred, he was thrown out. PC investigation report states that thirty
seven (37) passengers were injured.

The bus conductor, Sancho Mendoza, testified that the box belonged to a passenger whose name he does not
know and who told him that it contained miscellaneous items and clothes. He helped the owner in loading the
baggage which weighed about twelve (12) kilos and because of company regulation, he charged him for it
twenty-five centavos (P0.25). From its appearance there was no indication at all that the contents were
explosives or firecrackers. Neither did he open the box because he just relied on the word of the owner.

Dispatcher Nicolas Cornista of defendant company corroborrated the testimony of Mendoza and he said,
among other things, that he was present when the box was loaded in the truck and the owner agreed to pay its
fare. He added that they were not authorized to open the baggages of passengers because instruction from the
management was to call the police if there were packages containing articles which were against regulations.

ISSUE: Whether Laguna Tayabas Bus Co failed to exercise extraordinary diligence, and therefor is liable?

HELD: No.

The operator is not liable for damages. In overland transportation, the common carrier is not bound nor
empowered to make an examination on the contents of packages or bags, particularly those handcarried by
passengers.

In approving the draft of the Civil Code as prepared by the Code Commission, Congress must have concurred
with the Commission that by requiring the highest degree of diligence from common carriers in the safe
transport of their passengers and by creating a presumption of negligence against them. Article 1733 of the
Civil Code reasonably qualifies the extraordinary diligence required of common carriers for the safety of the
passengers transported by them to be "according to all the circumstances of each case."

In fact, Article 1755 repeats this same qualification: "A common carrier is bound to carry the passengers safely
as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with due
regard for all the circumstances."

Fairness demands that in measuring a common carrier's duty towards its passengers, allowance must
be given to the reliance that should be reposed on the sense of responsibility of all the passengers in
regard to their common safety. It is to be presumed that a passenger will not take with him anything
dangerous to the lives and limbs of his co-passengers, not to speak of his own. Not to be lightly
considered must be the right to privacy to which each passenger is entitled, he CANNOT BE
SUBJECTED TO ANY UNUSUAL SEARCH, when he protests the innocuousness of his baggage and nothing
appears to indicate the contrary, as in the case at bar.

In other words, inquiry may be VERBALLY made as to the nature of a passenger's baggage when such is not
outwardly perceptible, but beyond this, constitutional boundaries are already in danger of being transgressed.
Calling a policeman to his aid, as suggested by the service manual invoked by the trial judge, in compelling the

55
passenger to submit to more rigid inspection, after the passenger had already declared that the box contained
mere clothes and other miscellaneous, could not have justified invasion of a constitutionally protected domain.

There is need for evidence of circumstances indicating cause or causes for apprehension that the passenger's
baggage is dangerous and that it is failure of the common carrier's employee to act in the face of such evidence
that constitutes the cornerstone of the common carrier's liability.

56
48. Crisostomo v. CA
GR 138334 , August 25, 2003

FACTS:

Estela Crisostomo contracted the services of respondent Caravan Travel and Tours International, Inc. to
arrange and facilitate her booking, ticketing and accommodation in a tour dubbed "Jewels of Europe". The
package tour included the countries of England, Holland, Germany, Austria, Liechstenstein, Switzerland and
France at a total cost of P74,322.70. She was given a discount of 5% of the amount because her niece,
Meriam Menor, was the ticketing manager. Pursuant to their contract, Menor delivered the travel documents
and ticket to her aunts house, and in turn, Crisostomo gave the full payment. Menor then told Crisostomo to be
at NAIA on June 15. Crisostomo, without checking her documents, went on June 15 to NAIA, only to discover
that the flight was on June 14, and her plane ticket was for the 14th. She called Menor to complain, and Menor
was able to convince Crisostomo to take another tour package called the “British Pageant.” Crisostomo paid
partial payment and went on her trip. Upon her return, Crisostomo demanded that she be reimbursed with the
difference of the Jewels of Europe and British Pageant package. Caravan Travel refused, contending that the
tickets were non-refundable.

Crisostomo then filed a complaint before the Regional Trial Court of Makati City, claiming that it was Caravan
Travel’s fault that she missed her flight and that it was also negligent in telling her the correct date. The RTC
ruled in favor of Crisostomo, and found Caravan negligent. The Court of Appeals reversed the decision,
finding fault in both parties. Petitioner contends that respondent did not observe the standard of care required
of a common carrier when it informed her wrongly of the flight schedule. She could not be deemed more
negligent than respondent since the latter is required by law to exercise extraordinary diligence in the fulfillment
of its obligation.

ISSUE:

Is Caravan Travel and Tours International, Inc. a common carrier?

HELD:

No. The Supreme Court held that, by definition, a contract of carriage or transportation is one whereby a
certain person or association of persons obligate themselves to transport persons, things, or news from one
place to another for a fixed price. Such person or association of persons are regarded as carriers and are
classified as private or special carriers and common or public carriers. A common carrier is defined under
Article 1732 of the Civil Code as persons, corporations, firms or associations engaged in the business of
carrying or transporting passengers or goods or both, by land, water or air, for compensation, offering their
services to the public. It is obvious from the above definition that respondent is not an entity engaged in the
business of transporting either passengers or goods and is therefore, neither a private nor a common carrier.

Respondent DID NOT undertake to transport petitioner from one place to another since its covenant with its
customers is simply to make travel arrangements in their behalf. Respondent’s services as a travel agency
include procuring tickets and facilitating travel permits or visas as well as booking customers for tours.

While petitioner concededly bought her plane ticket through the efforts of respondent company, this does not
mean that the latter ipso facto is a common carrier. At most, respondent acted merely as an agent of the airline,
with whom petitioner ultimately contracted for her carriage to Europe. Respondent's obligation to petitioner in
this regard was simply to see to it that petitioner was properly booked with the airline for the appointed date and
time. Her transport to the place of destination, meanwhile, pertained directly to the airline.

The object of petitioner’s contractual relation with respondent is the latter’s service of arranging and facilitating
petitioner’s booking, ticketing and accommodation in the package tour. In contrast, the object of a contract of
carriage is the transportation of passengers or goods. It is in this sense that the contract between the parties in
this case was an ordinary one for services and not one of carriage. Petitioners submission is premised on a
wrong assumption.
57
The nature of the contractual relation between petitioner and respondent is determinative of the degree of care
required in the performance of the latters obligation under the contract. As earlier stated, respondent is not a
common carrier but a travel agency. It is thus not bound under the law to observe extraordinary diligence in the
performance of its obligation, as petitioner claims.

Therefore, it is clear that respondent performed its prestation under the contract as well as everything else that
was essential to book petitioner for the tour. Had petitioner exercised due diligence in the conduct of her
affairs, there would have been no reason for her to miss the flight. Needless to say, after the travel papers
were delivered to petitioner, it became incumbent upon her to take ordinary care of her concerns. This
undoubtedly would require that she at least read the documents in order to assure herself of the important
details regarding the trip.

Finally, the Supreme Court said that, the evidence on record shows that respondent company performed its
duty diligently and did not commit any contractual breach. Hence, petitioner cannot recover and must bear her
own damage. And thus denied the petition for lack of merit.

58
49. Fortune Express v. CA
GR 119756 , March 18, 1999

FACTS:

Pauli Caurong filed a complaint for damages against petitioner, a bus company operating in Northern
Mindanao, for the death of her husband, Atty. Talib Caorong. Atty. Caurong was shot by Maranaos in an
ambush involving said bus.

BACKGROUND OF THE STORY:

In November 1989, a bus of Fortune was involved in an accident with a passenger jeepney resulting in the
deaths of several passengers.

Crisanto Generalao, a local field agent of the Philippine Constabulary, conducted an investigation on the
accident and found that the owner of the jeepney was a Maranao and that several Maranaos were planning to
burn some of Fortune’s buses for revenge.

Generalao informed Diosdado Bravo, operations manager of Fortune, about the plot, and Bravo assured him
that they would take the necessary precautions for safety.

Several days later, Atty. Caorong was on board a bus to Iligan when three Maranaos went on board the vehicle.
The leader of the group ordered the passengers to leave the bus. Atty. Caorong later went back to get
something when he saw that the Maranaos were already pouring gasoline on the bus and on the driver. Atty.
Caorong pleaded for the life of the driver, after which the driver jumped out of the vehicle. Caorong was shot to
death as a result.

RTC dismissed the complaint and held that Fortune was not negligent. Disregarding the suggestion of providing
its buses with security guards is not an omission of petitioner’s duty. The evidence showed that the assailants
did not intend to harm the passengers. The death of Atty. Caorong was an unexpected and unforeseen
occurrence beyond petitioner’s control.

CA REVERSED RTC’s ruling declaring that Fortune is negligent. Despite the tip to Manager Bravo of the
devious plan by several Maranaos, management did not do not take any safety precautions at all.

One available safeguard that could have absolved Fortune from liability was frisking of incoming passengers
en route to dangerous areas and bag inspection at the terminals, which Fortune failed to do. The frisking
system is not novel in sensitive and dangerous places. Many companies adopt this measure. Fortune did
“absolutely nothing”.

ISSUES:
1. W/N Petitioner is liable for the death of Atty. Caorong by failing to take necessary precautions to ensure
the safety of its passengers;
2. W/N the attack by the Maranaos constituted causo fortuito?

HELD:
Petitioner is liable. Attack was NOT a fortuitous event.

Article 1763 holds common carriers liable for the injuries to passengers caused by the wilful act of other
passengers, if its employees failed to exercise the diligence of a good father in preventing the act.

Despite the warning by the constabulary officer, petitioner did nothing to protect the safety of its passengers.

Had petitioner and its employees been vigilant they would not have failed to see that the malefactors had a
large quantity of gasoline with them. Under the circumstances, simple precautionary measures to protect the
safety of passengers, such as frisking passengers and inspecting their baggages, preferably with non-intrusive
gadgets such as metal detectors, before allowing them on board could have been employed without violating
the passengers constitutional rights. As this Court intimated in Gacal v. Philippine Air Lines, Inc., a common
carrier can be held liable for failing to prevent a hijacking by frisking passengers and inspecting their baggages.

59
From the foregoing, it is evident that petitioners employees failed to prevent the attack on one of petitioners
buses because they did not exercise the diligence of a good father of a family. Hence, petitioner should be held
liable for the death of Atty. Caorong.

A common carrier is liable for failing to prevent hijacking by frisking passengers and inspecting baggages.

The seizure of the bus was not force majeure. Of the four elements to constitute an event as caso fotuito, the
element of “unforeseeable or unavoidable circumstances” was lacking. The seizure of the bus was
foreseeable, given the fact that petitioner was well-informed of the possibility, days before the incident. This
situation was likened to a case1 where the common carrier failed to take safety precautions despite warnings of
an approaching typhoon.

Petitioner is solely liable for Atty. Caorong’s death. There was no contributory negligence on the part of the
victim, since all he did was pleading for the life of the driver. His heroic effort was neither an act of negligence or
recklessness.

60
50. Raynera v. Hiceta
GR 120027, April 21, 1999

FACTS:

Petitioner Edna Raynera was the widow of Reynaldo Raynera and the mother and legal guardian of the minors
Rianna and Reianne

Respondents Freddie Hiceta and Jimmy Orpilla were the owner and driver, respectively, of an Isuzu truck-
trailer, involved in the accident.

On March 23, 1989, at about 2am, Reynaldo Raynera was on his way home. He was riding a motorcycle
traveling on the southbound lane of East Service Road, Cupang, Muntinlupa.

The Isuzu truck was travelling ahead of him at 20 to 30 kilometers per hour. The truck was loaded with two (2)
metal sheets extended on both sides, two (2) feet on the left and three (3) feet on the right. There were two (2)
pairs of red lights, about 35 watts each, on both sides of the metal plates.

The asphalt road was not well lighted. At some point on the road, Reynaldo Raynera crashed his motorcycle
into the left rear portion of the trucktrailer, which was without tail lights.

Due to the collision, Reynaldo sustained head injuries and truck helper Geraldino D. Lucelo rushed him to the
Parañaque Medical Center. Upon arrival at the hospital, the attending physician, Dr. Marivic Aguirre,
pronounced Reynaldo Raynera dead on arrival.

At the time of his death, Reynaldo was the manager of the Engineering Department, Kawasaki Motors (Phils.)
Corporation; 32 y/o; had a life expectancy of 65 y/o; annual net earnings of not less than P73,500

Heirs of deceased demanded from respondents payment of damages arising from the death of Reynaldo
Raynera as a result of the vehicular accident

Respondents refused to pay the claims. Petitioners filed with RTC Manila a complaint for damages against
respondents owner and driver of Isuzu truck. They sought recovery of damages for the death of Raynera
caused by the negligent operation of the truck-trailer at nighttime on the highway, without tail lights.

IN their defence, Respondents allege that the truck was travelling slowly on the service road, not parked
improperly at a dark portion of the road, with no tail lights, license plate and early warning device

Trial Court ruled in favor of petitioners; they found respondents negligent because the truck had no license plate
and tail lights; there were only 2 pairs of red lights, 50 watts each, on both sides of the steel plates; the truck
was improperly parked in a dark area; the respondents’ negligence was the immediate and proximate cause of
Raynera’s death; reduced responsibility of respondents by 20% on account of victim’s own negligence

Respondents appealed to the CA. CA ruled that Raynera’s bumping into the left rear portion of the truck was
the proximate cause of his death, and consequently, absolved respondents from liability. Hence, this petition for
review on certiorari

ISSUE: Whether or not respondents were negligent; If so, whether such negligence was the proximate
cause of the death of Reynaldo Raynera

HELD: NO

RATIO:
“Negligence is the omission to do something which a reasonable man, guided by those considerations which
ordinarily regulate the conduct of human affairs, would do, or the doing of something, which a prudent and
reasonable man would not do.”

Proximate cause is “that cause, which, in natural and continuous sequence, unbroken by any efficient
intervening cause, produces the injury, and without which the result would not have occurred.”

61
During the trial, it was established that the truck had no tail lights. The photographs taken of the scene of the
accident showed that there were no tail lights or license plates installed on the Isuzu truck. Instead, what were
installed were two (2) pairs of lights on top of the steel plates, and one (1) pair of lights in front of the truck. With
regard to the rear of the truck, the photos taken and the sketch in the spot report proved that there were no tail
lights.

Despite the absence of tail lights and license plate, respondents’ truck was visible in the highway. It was
traveling at a moderate speed, approximately 20 to 30 kilometers per hour. It used the service road, instead of
the highway, because the cargo they were hauling posed a danger to passing motorists. In compliance with the
Land Transportation Traffic Code (Republic Act No. 4136), respondents installed 2 pairs of lights on top of the
steel plates, as the vehicle’s cargo load extended beyond the bed or body thereof.

We find that the direct cause of the accident was the negligence of the victim. Traveling behind the truck,
he had the responsibility of avoiding bumping the vehicle in front of him. He was in control of the situation. His
motorcycle was equipped with headlights to enable him to see what was in front of him. He was traversing the
service road where the prescribed speed limit was less than that in the highway.

Traffic investigator Cpl. Virgilio del Monte testified that two pairs of 50watts bulbs were on top of the steel
plates, which were visible from a distance of 100 meters. Virgilio Santos admitted that from the tricycle where
he was on board, he saw the truck and its cargo of iron plates from a distance of ten (10) meters. In light of
these circumstances, an accident could have been easily avoided, unless the victim had been driving too fast
and did not exercise due care and prudence demanded of him under the circumstances.

It has been said that drivers of vehicles “who bump the rear of another vehicle” are presumed to be “the cause
of the accident, unless contradicted by other evidence.” The rationale behind the presumption is that the driver
of the rear vehicle has full control of the situation as he is in a position to observe the vehicle in front of him.

62
56. SINGAPORE AIRLINES LIMITED, petitioner, vs. ANDION FERNANDEZ, respondent.
GR 142305, Dec. 10, 2003

FACTS:

Respondent Andion Fernandez is an acclaimed soprano here in the Philippines and abroad. At the time of the
incident, she was availing an educational grant from the Federal Republic of Germany, pursuing a Masters
Degree in Music majoring in Voice. She was invited to sing before the King and Queen of Malaysia on February
3 and 4, 1991. For this singing engagement, an airline passage ticket was purchased from petitioner Singapore
Airlines which would transport her to Manila from Frankfurt, Germany on January 28, 1991. From Manila, she
would proceed to Malaysia on the next day.[4] It was necessary for the respondent to pass by Manila in order to
gather her wardrobe; and to rehearse and coordinate with her pianist her repertoire for the aforesaid
performance.
On January 27, 1991, Flight No. SQ 27 left Frankfurt but arrived in Singapore two hours late or at
about 11:00 in the morning of January 28, 1991. By then, the aircraft bound for Manila had left as scheduled,
leaving the respondent and about 25 other passengers stranded in the Changi Airport in Singapore. Upon
disembarkation at Singapore, the respondent approached the transit counter who referred her to the nightstop
counter and told the lady employee thereat that it was important for her to reach Manila on that day, January
28, 1991. The lady employee told her that there were no more flights to Manila for that day and that respondent
had no choice but to stay in Singapore. She was told that she can actually fly to Hong Kong going to Manila but
since her ticket was non-transferable, she would have to pay for the ticket. She then stayed overnight with her
relatives. The next day, after being brought back to the airport. The respondent approached petitioner’s male
employee at the counter to make arrangements for immediate booking only to be told: Cant you see I am doing
something. She explained her predicament but the male employee uncaringly retorted: Its your problem, not
ours.
The respondent never made it to Manila and was forced to take a direct flight
from Singapore to Malaysia on January 29, 1991, through the efforts of her mother and travel agency
in Manila. Her mother also had to travel to Malaysia bringing with her respondent’s wardrobe and personal
things needed for the performance that caused them to incur an expense of about P50,000. Because of these,
the defendant sued the petitioner and was ordered to pay for damages by the RTC which was affirmed by the
CA. The petitioner assails the award of damages contending that it exercised the extraordinary diligence
required by law under the given circumstances and that the two hours delay was due to a fortuitous event and
beyond petitioners control.

ISSUE:
Whether or not the petitioner is liable for damages.

DECISION:
The petitioner is liable for damages.
When an airline issues a ticket to a passenger, confirmed for a particular flight on a certain date, a contract of
carriage arises. The passenger then has every right to expect that he be transported on that flight and on that
date. If he does not, then the carrier opens itself to a suit for a breach of contract of carriage.
The contract of air carriage is a peculiar one. Imbued with public interest, the law requires common carriers to
carry the passengers safely as far as human care and foresight can provide, using the utmost diligence of very
cautious persons with due regard for all the circumstances. In an action for breach of contract of carriage, the
aggrieved party does not have to prove that the common carrier was at fault or was negligent. All that is
necessary to prove is the existence of the contract and the fact of its non-performance by the carrier.
In the case at bar, it is undisputed that the respondent carried a confirmed ticket for the two-legged trip
from Frankfurt to Manila: 1) Frankfurt-Singapore; and 2) Singapore-Manila. In her contract of carriage with the
petitioner, the respondent certainly expected that she would fly to Manila on Flight No. SQ 72 on January 28,

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1991. Since the petitioner did not transport the respondent as covenanted by it on said terms, the petitioner
clearly breached its contract of carriage with the respondent. The respondent had every right to sue the
petitioner for this breach. The defense that the delay was due to fortuitous events and beyond petitioners
control is unavailing.
In the instant case, petitioner was not without recourse to enable it to fulfill its obligation to transport the
respondent safely as scheduled as far as human care and foresight can provide to her destination. It maybe
that delay in the take off and arrival of commercial aircraft could not be avoided and may be caused by diverse
factors such as those testified to by defendant’s pilot. However, knowing fully well that even before the plaintiff
boarded defendants Jumbo aircraft in Frankfurt bound for Singapore, it has already incurred a delay of two
hours. Nevertheless, defendant did not take the trouble of informing plaintiff. Such information should have
been given and inquiries made in Frankfurt because even the defendant airlines manual provides that in case of
urgency to reach his or her destination on the same date, the head office of defendant in Singapore must be
informed by telephone or telefax so as the latter may make certain arrangements with other airlines in Frankfurt
to bring such a passenger with urgent business to Singapore in such a manner that the latter can catch up with
her connecting flight such as S-27/28 without spending the night in Singapore[23]
Article 2232 of the Civil Code provides that in a contractual or quasi-contractual relationship, exemplary
damages may be awarded only if the defendant had acted in a wanton, fraudulent, reckless, oppressive or
malevolent manner. In this case, petitioners employees acted in a wanton, oppressive or malevolent manner.
The award of exemplary damages is, therefore, warranted in this case.

57. BACHELOR EXPRESS, INC. vs. CA, G.R. No. 85691 July 31, 1990
FACTS: A bus owned by Bachelor Express, Inc. and driven by Cresencio Rivera was the situs of a stampede
which resulted in the death of passengers Ornominio Beter and Narcisa Rautraut. The bus came from Davao
City on its way to Cagayan de Oro City; that while in Butuan City, the bus picked up a passenger; that about 15
minutes later, a passenger at the rear portion suddenly stabbed a PC soldier which caused commotion and
panic among the passengers; that when the bus stopped, passengers Ornominio Beter and Narcisa Rautraut
were found lying down the road, the former already dead as a result of head injuries and the latter also suffering
from severe injuries which caused her death later. The passenger assailant alighted from the bus and ran
toward the bushes but was killed by the police. Thereafter, the heirs of Ornominio Beter and Narcisa Rautraut,
private respondents filed a complaint for "sum of money" against Bachelor Express, Inc. its alleged owner
Samson Yasay and the driver Rivera. Petitioner alleged that the driver was able to transport his passengers
safely to their respective places of destination except Ornominio Beter and Narcisa Rautraut who jumped off the
bus without the knowledge and consent. The trial court dismissed the complaint which was reversed and set
aside by the Court of Appeals. Petitioners asseverate that they were not negligent in the performance of their
duties and that the incident was completely and absolutely attributable to a third person, the passenger who ran
amuck, for without his criminal act, Beter and Rautraut could not have been subjected to fear and shock which
compelled them to jump off the running bus. They argue that they should not be made liable for damages
arising from acts of third persons over whom they have no control or supervision. . In effect, the petitioner, in
order to overcome the presumption of fault or negligence under the law, states that the vehicular incident
resulting in the death of passengers Beter and Rautraut was caused by force majeure or caso fortuito over
which the common carrier did not have any control.
ISSUE: Whether or not petitioner is liable.
HELD: YES. The liability of the petitioners is anchored on culpa contractual or breach of contract of carriage.
Ornominio Beter and Narcisa Rautraut were passengers of a bus belonging to petitioner Bachelor Express, Inc.
and, while passengers of the bus, suffered injuries which caused their death. Consequently, pursuant to Article
1756 of the Civil Code, petitioner Bachelor Express, Inc. is presumed to have acted negligently unless it can
prove that it had observed extraordinary diligence in accordance with Articles 1733 and 1755 of the New Civil
Code. The running amuck of the passenger was the proximate cause of the incident as it triggered off a
commotion and panic among the passengers such that the passengers started running to the sole exit shoving
each other resulting in the falling off the bus by passengers Beter and Rautraut causing them fatal injuries. The
sudden act of the passenger who stabbed another passenger in the bus is within the context of force majeure.
A caso fortuito presents the following essential characteristics: (1) The cause of the unforeseen and unexpected
occurrence, or of the failure of the debtor to comply with his obligation, must be independent of the human will.
(2) It must be impossible to foresee the event which constitutes the caso fortuito, or if it can be foreseen, it must
be impossible to avoid. (3) The occurrence must be such as to render it impossible for the debtor to fulfill his
obligation in a normal manner. And (4) the obligor (debtor) must be free from any participation in the
aggravation of the injury resulting to the creditor. As will be seen, these authorities agree that some
extraordinary circumstance independent of the will of the obligor or of his employees, is an essential element of
a caso fortuito. However, in order that a common carrier may be absolved from liability in case of force majeure,
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it is not enough that the accident was caused by force majeure. The common carrier must still prove that it was
not negligent in causing the injuries resulting from such accident. The bus driver did not immediately stop the
bus at the height of the commotion; the bus was speeding from a full stop; the victims fell from the bus door
when it was opened or gave way while the bus was still running; the conductor panicked and blew his whistle
after people had already fallen off the bus; and the bus was not properly equipped with doors in accordance
with law-it is clear that the petitioners have failed to overcome the presumption of fault and negligence found in
the law governing common carriers. The petitioners' argument that the petitioners "are not insurers of their
passengers" deserves no merit in view of the failure of the petitioners to prove that the deaths of the two
passengers were exclusively due to force majeure and not to the failure of the petitioners to observe
extraordinary diligence in transporting safely the passengers to their destinations as warranted by law.

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58. CORNELIA A. DE GILLACO, ET AL., vs. MANILA RAILROAD COMPANY G.R. No. L-8034

November 18, 1955

FACTS:

That at about 7:30 a.m., on the morning of April 1, 1946, Lieut. Tomas Gillaco, husband of the plaintiff, was a
passenger in the early morning train of the Manila Railroad Company from Calamba, Laguna to Manila;

That when the train reached the Paco Railroad station, Emilio Devesa, a train guard of the Manila Railroad
Company assigned in the Manila-San Fernando, La Union Line, happened to be in said station waiting for the
same train which would take him to Tutuban Station, where he was going to report for duty;

That Emilio Devesa had a long standing personal grudge against Tomas Gillaco, same dating back during the
Japanese occupation;

That because of this personal grudge, Devesa shot Gillaco with the carbine furnished to him by the Manila
Railroad Company for his use as such train guard, upon seeing him inside the train coach;

That Tomas Gillaco died as a result of the wound which he sustained from the shot fired by Devesa.

It is also undisputed that Devesa was convicted with homicide by final judgment of the Court of Appeals.

Appellant's contention is that, on the foregoing facts, no liability attaches to it as employer of the killer, Emilio
Devesa; that it is not responsible subsidiary ex delicto, under Art. 103 of the Revised Penal Code, because the
crime was not committed while the slayer was in the actual performance of his ordinary duties and service; nor
is it responsible ex contractu, since the complaint did not aver sufficient facts to establish such liability, and no
negligence on appellant's party was shown. The Court below held the Railroad company responsible on the
ground that a contract of transportation implies protection of the passengers against acts of personal violence
by the agents or employees of the carrier.

ISSUE:

Whether or not Manila Rail Road Company is liable for the damages for the death of Gillaco caused by Devesa

HELD:

The Manila Rail Road Company is not liable for the damages for the death of Gillaco caused by Devesa. Under
the Civil Code, a passenger is entitled to protection from personal violence by the carrier or its agents or
employees, since the contract of transportation obligates the carrier to transport a passenger safely to his
destination. But this responsibility under the law extends only to those that the carrier could foresee or avoid
through the exercise of the degree of car and diligence required of it.

The act of guard Devesa in shooting passenger Gillaco (because of a personal grudge nurtured against the
latter since the Japanese occupation) was entirely unforeseeable by the Manila Railroad Co. The latter had no
means to ascertain or anticipate that the two would meet, nor could it reasonably foresee every personal rancor
that might exist between each one of its many employees and any one of the thousands of eventual
passengers riding in its trains. The shooting in question was therefore "caso fortuito" within the definition of
article 105 of the old Civil Code, being both unforeseeable and inevitable under the given circumstances; and
pursuant to established doctrine, the resulting breach of appellant's contract of safe carriage with the late
Tomas Gillaco was excused thereby.

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No doubt that a common carrier is held to a very high degree of care and diligence in the protection of its
passengers; but, considering the vast and complex activities of modern rail transportation, to require of
appellant that it should guard against all possible misunderstanding between each and every one of its
employees and every passenger that might chance to ride in its conveyances at any time, strikes us as
demanding diligence beyond what human care and foresight can provide.

More importantly, When the crime took place, the guard had no duties to discharge. Devesa was therefore
under no obligation to safeguard the passenger of the Calamba-Manila train, where the deceased was riding;
and the killing of Gillaco was not done in line of duty. His position would be that of a passenger also waiting
transportation and not of an employee assigned to discharge duties that the Railroad had assumed by its
contract with the deceased. As a result, Devesa's assault cannot be deemed in law a breach of Gillaco's
contract of transportation by a servant or employee of the carrier.

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59. Cathay Pacific Airways vs. CA
G.R. No. 60501, March 5, 1993

Facts:

Respondent Tomas L. Alcantara was a first-class passenger of petitioner Cathay Pacific Airways, Ltd. on its
Flight No. CX-900 from Manila to Hongkong and onward from Hongkong to Jakarta on Flight No. CX-711. The
purpose of his trip was to attend a conference with the Director General of Trade of Indonesia. He checked in
his luggage which contained not only his clothing and articles for personal use but also papers and documents
he needed for the conference.

Upon his arrival in Jakarta, respondent discovered that his luggage was missing. When he inquired about his
luggage from CATHAY's representative in Jakarta, private respondent was told that his luggage was left behind
in Hongkong. His luggage finally reached Jakarta more than twenty four (24) hours after his arrival. However, it
was not delivered to him at his hotel but was required by petitioner to be picked up by an official of the
Philippine Embassy.

Because of this, respondent filed his complaint and claim for damages against petitioner with the Court of First
Instance (now Regional Trial Court) of Lanao del Norte.

Issue:

Is petitioner liable to respondent Alcantara for damages?

Ruling:

Yes, petitioner is liable to respondent Alcantara for damages.

Petitioner breached its contract of carriage with private respondent when it failed to deliver his luggage at the
designated place and time, it being the obligation of a common carrier to carry its passengers and their luggage
safely to their destination, which includes the duty not to delay their transportation, and the evidence shows that
petitioner acted fraudulently or in bad faith.

Moral damages predicated upon a breach of contract of carriage may only be recoverable in instances where
the mishap results in death of a passenger, or where the carrier is guilty of fraud or bad faith.

In the case at bar, both the trial court and the appellate court found that CATHAY was grossly negligent and
reckless when it failed to deliver the luggage of petitioner at the appointed place and time. We agree. CATHAY
alleges that as a result of mechanical trouble, all pieces of luggage on board the first aircraft bound for Jakarta
were unloaded and transferred to the second aircraft which departed an hour and a half later. Yet, as the Court
of Appeals noted, petitioner was not even aware that it left behind private respondent's luggage until its
attention was called by the Hongkong Customs authorities. More, bad faith or otherwise improper conduct may
be attributed to the employees of petitioner. While the mere failure of CATHAY to deliver respondent's luggage
at the agreed place and time did not ipso facto amount to willful misconduct since the luggage was eventually
delivered to private respondent, albeit belatedly, We are persuaded that the employees of CATHAY acted in
bad faith.

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