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British Airways, Inc. v.

Court of Appeals
FACTS:
First International Trading and General Services Co., is a duly licensed domestic recruitment and placement agency; it received a
telex message from its principal ROLACO Engineering and Contracting Services in Jeddah, Saudi Arabia to recruit Filipino contract
workers in behalf of said principal.
ROLACO paid to the Jeddah branch of petitioner British Airways, Inc. airfare tickets for 93contract workers with specific instruction
to transport said workers to Jeddah on or before March 30, 1981
March 1981: First International was informed by British Airways that ROLACO hadforwarded 93 prepaid tickets; First International
instructed its travel agent, ADB Travel and Tours. Inc., to book the 93 workers with petitioner but the latter failed to fly said workers,
thereby compelling private respondent to borrow money in the amount of P304, 416.00 in order to purchase airline tickets from the
other airlines for the 93 workers it had recruited who must leave immediately since the visas of said workers are valid only for 45
days and the Bureau of Employment Services mandates that contract workers must be sent to the job site within a period of 30 days
June 1981: First International was again informed by British Airways that it had received a prepaid ticket advice from its Jeddah
branch for the transportation of 27 contract workers; First International instructed its travel agent to book the 27 contract workers
with the petitioner but the latter was only able to book and confirm 16 seats on its June 9, 1981flight; on the date of the scheduled
flight only 9 workers were able to board said flight while the remaining 7 workers were rebooked to June 30, 1981 which bookings
were again cancelled by the petitioner without any prior notice to either private respondent or the workers; thereafter, the 7
workers were rebooked to the July 4,1981 flight of petitioner with 6 more workers booked for said flight; but the confirmed
bookings of the 13 workers were again cancelled and rebooked to July 7, 1981
First International paid the travel tax of the said workers as required by British Airways
butwhen the receipt of the tax payments was submitted, the latter informed FirstInternational that it can only confirm the seats of
the 12 workers on its July 7, 1981 flight ;but the confirmed seats of said workers were again cancelled without any prior notice either
to First International or said workers; the 12 workers were finally able to leave for Jeddah after First International had bought tickets
from the other airlines
July 1981: First International sent a letter to petitioner demanding compensation for the damages in the amount of P350, 000.00 it
had incurred by the latters repeated failure to
transport its contract workers despite confirmed bookings and payment of thecorresponding travel taxes
British Airways contention:
It received a telex message from Jeddah advising that ROLACO had prepaid the airfares of 100 persons to transport First
Internationals contract workers from Manila to Jeddah on or before March 30, 1981; however, due to the unavailability of space
and limited time, it had to return to its sponsor in Jeddah the prepaid ticket advice consequently not even one of the alleged 93
contract workers were booked in any of its flights
ISSUE:
WON British Airways is liable
RULING:
Yes. Its repeated failures to transport First Internationals workers in its flight despite confirmed booking of said workers clearly
constitutes breach of contract and bad faith on its part.
Two aspects of contract of common carriage of passengers:
a. contract to carry at some future time consensual and is necessarily perfected by mere consent
b. contract of carriage or of common carriage itself real contract for not until the carrier is actually used can the carrier be said to
have already assumed the obligation of a carrier contract to carry was involved in the case; its elements are consent, consideration
and object certain
CONSENT: British Airways consent to the contract was manifested by its acceptance of
thePTA or prepaid ticket advice that ROLACO has prepaid the airfares of the FirstInternationals contract workers advising the
appellant that it must transport the contract workers on or before the end of March, 1981 and the other batch in June, 1981
CONSIDERATION: the fare paid for the passengers by the principal of First International
OBJECT CERTAIN: the transport of the passengers from the place of departure to the place of destination
Even if a prepaid ticket advice (PTA) is merely an advice from the sponsors that an airline is authorized to issue a ticket and thus no
ticket was yet issued, the fact remains that the passage had already been paid for by the principal of the appellee, and the appellant
had accepted such payment
First International has fully complied with the obligation, namely, the payment of the fare and its willingness for its contract workers
to leave for their place of destination.

On the other hand, British Airways was remiss in its obligation to transport the contract workers on their flight despite confirmation
and bookings made by First Internationals travelling agent. British Airways should have refused acceptance of the PTA from the First
Internationals principal or to at least inform by First International that it could not accommodate the contract workers.
_________________
# 2 GANZON vs.COURT OF APPEALS and GELACIO E. TUMAMBING
G.R. No. L-48757, May 30, 1988
FACTS: Petioner, Gelacio Tumambing contracted the services of Mauro B. Ganzon to haul 305 tons of scrap iron from Mariveles,
Bataan, to the port of Manila on board the lighter LCT "Batman. Pursuant to that agreement, Mauro B. Ganzon sent his lighter
"Batman" to Mariveles where it docked in three feet of water. Gelacio Tumambing delivered the scrap iron to defendant Filomeno
Niza, captain of the lighter, for loading which was actually begun on the same date by the crew of the lighter under the captain's
supervision. When about half of the scrap iron was already loaded, Mayor Jose Advincula of Mariveles, Bataan, arrived and
demanded P5,000.00 from Gelacio Tumambing. The latter resisted the shakedown and after a heated argument between them,
Mayor Jose Advincula drew his gun and fired at Gelacio Tumambing who sustained injuries.
After sometime, the loading of the scrap iron was resumed. But on December 4, 1956, Acting Mayor Basilio Rub, accompanied by
three policemen, ordered captain Filomeno Niza and his crew to dump the scrap iron where the lighter was docked. The rest was
brought to the compound of NASSCO. Later on Acting Mayor Rub issued a receipt stating that the Municipality of Mariveles had
taken custody of the scrap iron.
Tumabing sued Ganzon; the latter alleged that the goods have not been unconditionally placed under his custody and control to
make him liable. The trial court dismissed the case but on appeal, respondent Court rendered a decision reversing the decision of
the trial court and ordering Ganzon to pay damages.
ISSUE: Whether or not a contract of carriage has been perfected.
Ruling: Yes. By the said act of delivery, the scraps were unconditionally placed in the possession and control of the common carrier,
and upon their receipt by the carrier for transportation, the contract of carriage was deemed perfected. Consequently, the
petitioner-carrier's extraordinary responsibility for the loss, destruction or deterioration of the goods commenced. Pursuant to Art.
1736, such extraordinary responsibility would cease only upon the delivery, actual or constructive, by the carrier to the consignee, or
to the person who has a right to receive them. The fact that part of the shipment had not been loaded on board the lighter did not
impair the said contract of transportation as the goods remained in the custody and control of the carrier, albeit still unloaded.
Before Ganzon could be absolved from responsibility on the ground that he was ordered by competent public authority to unload
the scrap iron, it must be shown that Acting Mayor Basilio Rub had the power to issue the disputed order, or that it was lawful, or
that it was issued under legal process of authority. The appellee failed to establish this. Indeed, no authority or power of the acting
mayor to issue such an order was given in evidence. Neither has it been shown that the cargo of scrap iron belonged to the
Municipality of Mariveles. What we have in the record is the stipulation of the parties that the cargo of scrap iron was accumulated
by the appellant through separate purchases here and there from private individuals. The fact remains that the order given by the
acting mayor to dump the scrap iron into the sea was part of the pressure applied by Mayor Jose Advincula to shakedown
Tumambing for P5,000.00. The order of the acting mayor did not constitute valid authority for Ganzon and his representatives to
carry out.
_____________
G.R. No. 95582 October 7, 1991
DANGWA TRANSPORTATION CO., INC. and THEODORE LARDIZABAL y MALECDAN, petitioners,
vs.
COURT OF APPEALS, INOCENCIA CUDIAMAT, et al respondents.
Facts:
Private respondents filed a complaint for damages against petitioners for the death of Cudiamat as a result of a vehicular accident.
It was alleged that while petitioner Lardizabal was driving a passenger bus belonging to petitioner corporation in a reckless and
imprudent manner and without due regard to traffic rules and regulations and safety to persons and property, it ran over its
passenger, Cudiamat. However, 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.
On the other hand, petitioners 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.

The trial court rendered a decision, effectively in favor of petitioners. Private respondents appealed to the Court of Appeals which
set aside the decision of the lower court. Petitioners' motion for reconsideration was denied by the Court of Appeals hence this
petition.
Issue: Whether petitioners are negligent and liable for the damages claimed.
Held: YES. The Court affirmed the decision of CA.
It is the duty of common carriers of passengers, including common carriers by railroad train, streetcar, or motorbus, 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.
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 passenger
owes to its patrons extends to persons boarding cars as well as to those alighting therefrom.
It has also been repeatedly held that in an action based on a contract of carriage, the court need not make an express finding of fault
or negligence on the part of the carrier in order to hold it responsible to pay the damages sought by the passenger. 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.
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 passengers safely as far as human care and foresight can provide, using utmost
diligence of very cautious persons, with a due regard for all the circumstances.
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.
_______________
LRTA V. NAVIDAD (2003)
G.R. NO. 145804 FEBRUARY 6, 2003
FACTS:
October 14, 1993, 7:30 p.m. : Drunk Nicanor Navidad (Nicanor) entered the EDSA LRT station after purchasing a token.
While Nicanor was standing at the platform near the LRT tracks, the guard Junelito Escartin approached him.
Due to misunderstanding, they had a fist fight
Nicanor fell on the tracks and killed instantaneously upon being hit by a moving train operated by Rodolfo Roman
December 8, 1994: The widow of Nicanor, along with her children, filed a complaint for damages against Escartin, Roman, LRTA,
Metro Transit Org. Inc. and Prudent (agency of security guards) for the death of her husband.
LRTA and Roman filed a counter-claim against Nicanor and a cross-claim against Escartin and Prudent
Prudent: denied liability averred that it had exercised due diligence in the selection and surpervision of its security guards
LRTA and Roman: presented evidence
Prudent and Escartin: demurrer contending that Navidad had failed to prove that Escartin was negligent in his assigned task
RTC: In favour of widow and against Prudent and Escartin, complaint against LRT and Roman were dismissed for lack of merit
CA: reversed by exonerating Prudent and held LRTA and Roman liable
ISSUE: W/N LRTA and Roman should be liable according to the contract of carriage
HELD: NO. Affirmed with Modification: (a) nominal damages is DELETED (CANNOT co-exist w/ compensatory damages) (b) Roman is
absolved.
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 off exercising utmost diligence in ensuring the safety of passengers
Civil Code:

Art. 1755. A common carrier is bound to carry the passengers safely as far as human care and foresight can provide, using the
utmost diligence of very cautious persons, with a due regard for all the circumstances
Art. 1756. In case of death 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
Art. 1759. Common carriers are liable for the death of or injuries to passengers through the negligence or wilful acts of the
formers 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

Art. 1763. A common carrier is responsible for injuries suffered by a passenger on account of the wilful acts or negligence of
other passengers or of strangers, if the common carriers employees through the exercise of the diligence of a good father of a
family could have prevented or stopped the act or omission.
Carriers presumed to be at fault or been negligent and by simple proof of injury, the passenger is relieaved of the duty to still
establish the fault or negligence of the carrier or of its employees and the burden shifts upon the carrier to prove that the injury
is due to an unforeseen event or to force majeure
Where it hires its own employees or avail itself of the services of an outsider or an independent firm to undertake the task, the
common carrier is NOT relieved of its responsibilities under the contract of carriage
GR: Prudent can be liable only for tort under Art. 2176 and related provisions in conjunction with Art. 2180 of the Civil Code.
(Tort may arise even under a contract, where tort [quasi-delict liability] is that which breaches the contract)
EX: if employers liability is negligence or fault on the part of the employee, employer can be made liable on the basis of the
presumption juris tantum that the employer failed to exercise diligentissimi patris families in the selection and supervision of its
employees.
EX to the EX: Upon showing due diligence in the selection and supervision of the employee
Factual finding of the CA: NO link bet. Prudent and the death of Nicanor for the reason that the negligence of Escartin was NOT
proven
NO showing that Roman himself is guilty of any culpable act or omission, he must also be absolved from liability
Contractual tie bet. LRT and Nicanor is NOT itself a juridical relation bet. Nicanor and Roman
Roman can be liable only for his own fault or negligence
__________________
First Philippine Industrial Corp. vs. CA
Facts:

Petitioner is a grantee of a pipeline concession under Republic Act No. 387. Sometime in January 1995, petitioner applied for
mayors permit in Batangas. 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. The respondent City Treasurer denied the protest, thus, petitioner filed a complaint
before the Regional Trial Court of Batangas for tax refund. Respondents assert that pipelines are not included in the term common
carrier which refers solely to ordinary carriers or motor vehicles. The trial court dismissed the complaint, and such was affirmed by
the Court of Appeals.
Issue:
Whether a pipeline business is included in the term common carrier so as to entitle the petitioner to the exemption
Held:
Article 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.
______________
6. NATIONAL STEEL CORPORATION, petitioner vs. COURT OF APPEALS AND VLASONS SHIPPING, INC., respondents.
FACTS:
National Steel Corporation (NSC) as Charterer and defendant Vlasons Shipping, Inc. (VSI) as Owner, entered into a Contract of
Voyage Charter Hire (Affreightment) whereby NSC hired VSIs vessel, the MV VLASONS I to make one (1) voyage to load steel
products at Iligan City and discharge them at North Harbor, Manila. VSI carried passengers or goods only for those it chose under a
special contract of charter party. The vessel arrived with the cargo in Manila, but when the vessels three (3) hatches containing
the shipment were opened, nearly all the skids of tin plates and hot rolled sheets were allegedly found to be wet and rusty. NSC filed
its complaint against defendant before the CFI wherein it claimed that it sustained losses 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 -- all in violation of defendants undertaking under their Contract of Voyage Charter Hire. Hence the
petitioner filed for a claim of damages amounting to P941,145.58, alleging the negligence of the master and crew of the ship.
In its answer, defendant denied liability for the alleged damage claiming that the MV VLASONS I was seaworthy in all respects for
the carriage of plaintiffs 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.
The trial court ruled in favor of VSI; it was affirmed by the CA on appeal.
ISSUE:
1.
2.

WON Vlasons Shipping is made liable notwithstanding the Charter Party stipulations.
WON Vlazons is a private carrier.

HELD:
1.

NO. The courts rule the negative. At bottom, this appeal really hinges on a factual issue as to then, how, and who caused
the damages to the cargo. Ranged against NSC are two formidable thrusts. First, it was found that such damage was
brought about during the unloading process when the rain seeped into the cargo due to the negligence of the stevedores
employed by it. Second and more importantly, the agreement between the parties The Contact of Voyage Charter Party
for Hire placed the burden of proof of such loss or damage upon the shipper, not upon the ship owner. Such stipulation,
while disadvantageous to the NSC, is valid because the parties entered into a contract of private charter, not one of
common carriage. Basic too is the doctrine that courts cannot relieve a party from the effects of a private contract fully
entered into, on the ground that it is allegedly one-sided or unfair to the plaintiff. It has been held that the true test of a
common carrier of passengers/goods is the carriage of the same, provided it has space, for all who opt to avail for its
transportation service for a fee.

2.

Yes. At the outset, it is essential to establish whether VSI contracted with NSC as a common carrier or as a private carrier.
The resolution of this preliminary question determines the law, standard of diligence and burden of proof applicable to the
present case. 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. 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 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
ship owner, obtains the use and service of all or some part of a ship for a period of time or a voyage or voyages.

In the instant case, it is undisputed that VSI did not offer its services to the general public. As found by the RTC, it carried passengers
or goods only for those it chose under a special contract of charter party. As correctly concluded by the CA, the MV Vlasons I was
not a common but a private carrier. Consequently, the rights and obligations of VSI and NSC, including their respective liability for
damage to the cargo, are determined primarily by stipulations in their contract of private carriage or charter party.
____________

# 7 BASCOS vs.COURT OF APPEALS and RODOLFO A. CIPRIANO


G.R. No. 101089
April 7, 1993
FACTS: Rodolfo A. Cipriano representing Cipriano Trading Enterprise (CIPTRADE for short) entered into a hauling contract with Jibfair
Shipping Agency Corp whereby the former bound itself to haul the latters 2,000 m/tons of soya bean meal to the warehouse in
Calamba, Laguna. To carry out its obligation, CIPTRADE, through Cipriano, subcontracted with Bascos to transport and to deliver 400
sacks of soya bean meal from the Manila Port Area to Calamba, Laguna. 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 their contract.
Cipriano demanded reimbursement from petitioner but the latter refused to pay. Eventually, Cipriano filed a complaint for a sum of
money and damages with writ of preliminary attachment for breach of a contract of carriage. The trial court granted the writ of
preliminary attachment.
In her answer, petitioner interposed the defense that there was no contract of carriage since CIPTRADE leased her cargo truck to
load the cargo from Manila Port Area to Laguna and that the truck carrying the cargo was hijacked and being a force majeure,
exculpated petitioner from any liability
After trial, the trial court rendered a decision in favor of Cipriano and against Bascos ordering the latter to pay the former for actual
damages for attorneys fees and cost of suit.
The Urgent Motion To Dissolve/Lift preliminary Attachment Bascos is DENIED for being moot and academic.
Petitioner appealed to the Court of Appeals but respondent Court affirmed the trial courts judgment.
Hence this petition for review on certiorari

ISSUE:
(1) WON petitioner a common carrier
(2) WON the hijacking referred to a force majeure

HELD: The petition is DISMISSED and the decision of the Court of Appeals is hereby AFFIRMED.
1. YES
In disputing the conclusion of the trial and appellate courts that petitioner was a common carrier, she alleged in this petition that
the contract between her and Cipriano was lease of the truck. She also stated that: she was not catering to the general public. Thus,
in her answer to the amended complaint, she said that she does business under the same style of A.M. Bascos Trucking, offering her
trucks for lease to those who have cargo to move, not to the general public but to a few customers only in view of the fact that it is
only a small business.
We agree with the respondent Court in its finding that petitioner is a common carrier.
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. 12 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. 13
But petitioner argues that there was only a contract of lease because they offer their services only to a select group of people.
Regarding the first contention, the holding of the Court in De Guzman vs. Court of Appeals 14 is instructive. In referring to Article
1732 of the Civil Code, it held thus:
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.
2. NO
Likewise, We affirm the holding of the respondent court that 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. 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.
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; xx
(6) That the common carriers 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; xx
NOTES:
1. She cited as evidence certain affidavits which referred to the contract as lease. These affidavits were made by Jesus Bascos and
by petitioner herself and Cipriano and CIPTRADE did not object to the presentation of affidavits by petitioner where the transaction
was referred to as a lease contract. Both the trial and appellate courts have dismissed them as self-serving and petitioner contests
the conclusion. We are bound by the appellate courts factual conclusions. Yet, granting that the said evidence were not self-serving,
the same were 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. Furthermore, petitioner presented no other proof of the
existence of the contract of lease. He who alleges a fact has the burden of proving it.
2. Having affirmed the findings of the respondent Court on the substantial issues involved, We find no reason to disturb the
conclusion that the motion to lift/dissolve the writ of preliminary attachment has been rendered moot and academic by the decision
on the merits.
_____________
SPOUSES CRUZ vs. SUN HOLIDAYS, INC.
FACTS:
Spouses Dante and Leonora Cruz (petitioners) lodged a Complaint on January 25, 2001 against Sun Holidays, Inc. (respondent) with
the Regional Trial Court (RTC) of Pasig City for damages arising from the death of their son Ruelito C. Cruz (Ruelito) who perished
with his wife on September 11, 2000 on board the boat M/B Coco Beach III that capsized en route to Batangas from Puerto Galera,
Oriental Mindoro where the couple had stayed at Coco Beach Island Resort (Resort) owned and operated by respondent. 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 Beach Mountain 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 passengers, including petitioners son and his wife, died during the incident.
ISSUE:
Whether or not respondent is a common carrier.
RULING:
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.

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 1733 deliberately refrained from making such distinctions.
Indeed, respondent is a common carrier. Its ferry services are so intertwined with its main business as to be properly considered
ancillary thereto. The constancy of respondents 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.
That respondent does not charge a separate fee or fare for its ferry services is of no moment. It would be imprudent to suppose that
it provides said services at a loss.
_______________
# 9 De Guzman vs. CA
Facts: Respondent Ernesto Cendana was a junk dealer. He buys scrap materials and brings those that he gathered to Manila
for resale using 2 Six-wheeler trucks. On the return trip to Pangasinan, respondent would load his vehicle with cargo which various
merchants wanted delivered, charging fee lower than the commercial rates. Sometime in November 1970, Petitioner Pedro de
Guzman contracted with respondent for the delivery of 750 cartoons of Liberty Milk. December 1, 1970, respondent loaded the
cargo. Only 150 boxes delivered to petitioner because the truck carrying the boxes, the second truck was hijacked along the way.
Petitioner commenced an action claiming the value of lost merchandise. Petitioner further argued that the respondent, being a
common carrier, is bound to exercise extraordinary diligence, which it failed to do. Private respondent denied that he was a
common carrier, and so he could not be held liable for force majeure. The trial court ruled against the respondent, but such was
reversed by the Court of appeals.
Issues: 1) Whether or not Private respondent is a common carrier. 2) Whether or not private respondent is liable for the
loss of the goods
Ruling: Yes. Private respondent is a common carrier. Article 1732 makes no distinction between one whose principal
business activity is the carrying of persons or goods or both, and one who does carrying only as an ancillary (sideline) activity. Article
1732 also 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 general population. It appears to the court that private respondent is properly
characterized as a common carrier even though he merely back-hauled Goods for other merchants from Manila to Pangasinan,
although such backhauling was done on a periodic or occasional rather than regular or scheduled manner and even though the
principals 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 fell below commercial freight rate is not relevant here. A certificate of public conveyance is not a
requisite for the incurring of liability under the Civil Code provisions governing common carriers
2) Article 1734 establishes the general rule that common carrier are responsible for the loss, destruction or deterioration of
goods which they carry. The hijacking of the carriers truck does not fall within any of the five categories of exempting causes listed
on Article 1734. The private respondent as a common carrier is presumed to have been at fault or to have acted negligently. This
presumption, however, maybe overthrown by proof of extraordinary diligence on the part of the private respondent. 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. We hold that the occurrence of
the loss must reasonably be regarded as quite beyond the control of the common carrier and properly regarded as fortuitous event.
It is necessary to recall that even common carriers are not made absolute insurers against all risks of travel and of transport of
goods, and are not held liable for acts or events which cannot be foreseen or are inevitable, provided that they shall have complied
with the rigorous standard of extraordinary diligence.
________________

G.R. No. 101503 September 15, 1993


PLANTERS PRODUCTS, INC., petitioner, vs.
COURT OF APPEALS, SORIAMONT STEAMSHIP AGENCIES AND KYOSEI KISEN KABUSHIKI KAISHA,respondents.
Facts:
Planters Products, Inc. (PPI), purchased from Mitsubishi International Corporation (MITSUBISHI) metric tons of Urea fertilizer which
the latter shipped in bulk aboard the cargo vessel M/V "Sun Plum" owned by private respondent Kyosei Kisen Kabushiki Kaisha
(KKKK). Prior to its voyage, a time charter-party on the vessel M/V "Sun Plum" was entered into between Mitsubishi as
shipper/charterer and KKKK as shipowner.
Upon arrival of the vessel at her port of call, petitioner unloaded the cargo from the holds and transported it to the consignee's
warehouse. A survey report submitted by Cargo Superintendents Company Inc. (CSCI) to the consignee (PPI) revealed a shortage in
the cargo and that a portion of the Urea fertilizer was contaminated with dirt. Consequently, PPI sent a claim letter to Soriamont
Steamship Agencies (SSA), the resident agent of the carrier (KKKK) for the cost of the alleged shortage in the goods shipped and the
diminution in value of that portion said to have been contaminated with dirt.
Respondent SSA explained that they were not able to respond to the consignee's claim for payment because they "had nothing to do
with the discharge of the shipment." Hence PPI filed an action for damages with the Court of First Instance of Manila. The court a
quo however sustained the claim of the plaintiff. On appeal, respondent CA reversed the lower court and absolved the carrier from
liability for the value of the cargo that was lost or damaged. The appellate court ruled that the cargo vessel M/V "Sun Plum" owned
by private respondent KKKK was a private carrier and not a common carrier by reason of the time charterer-party. Petitioner PPI
appeals by way of a petition for review assailing the decision of the CA.
Issue: Whether a charter-party between a shipowner and a charterer transform a common carrier into a private one as to negate
the civil law presumption of negligence in the case of loss or damage to its cargo.
Held: NO. Petition is dismissed.
It is not disputed that respondent carrier, in the ordinary course of business, operates as a common carrier, transporting goods
indiscriminately for all persons. When petitioner chartered the vessel M/V "Sun Plum", the ship captain, its officers and compliment
were under the employ of the shipowner and therefore continued to be under its direct supervision and control. Hardly then can we
charge the charterer, a stranger to the crew and to the ship, with the duty of caring for his cargo when the charterer did not have
any control of the means in doing so. This is evident in the present case considering that the steering of the ship, the manning of the
decks, the determination of the course of the voyage and other technical incidents of maritime navigation were all consigned to the
officers and crew who were screened, chosen and hired by the shipowner.
It is therefore imperative that a public carrier shall remain as such, notwithstanding the charter of the whole or portion of a vessel by
one or more persons, provided the charter is limited to the ship only, as in the case of a time-charter or voyage-charter. It is only
when the charter includes both the vessel and its crew, as in a bareboat or demise that a common carrier becomes private, at least
insofar as the particular voyage covering the charter-party is concerned. Indubitably, a shipowner in a time or voyage charter retains
possession and control of the ship, although her holds may, for the moment, be the property of the charterer.
Verily, the presumption of negligence on the part of the respondent carrier has been efficaciously overcome by the showing of
extraordinary zeal and assiduity exercised by the carrier in the care of the cargo. This was confirmed by respondent appellate court
thus
. . . the following testimonies of plaintiff-appellee's own witnesses clearly show absence of negligence by the defendant
carrier; that the hull of the vessel at the time of the discharge of the cargo was sealed and nobody could open the same
except in the presence of the owner of the cargo and the representatives of the vessel; that the cover of the hatches was
made of steel and it was overlaid with tarpaulins, three layers of tarpaulins and therefore their contents were protected
from the weather; and, that to open these hatches, the seals would have to be broken, all the seals were found to be intact.
Article 1734 of the New Civil Code provides that common carriers are not responsible for the loss, destruction or deterioration of the
goods if caused by the charterer of the goods or defects in the packaging or in the containers. The Code of Commerce also provides
that all losses and deterioration which the goods may suffer during the transportation by reason of fortuitous event, force majeure,
or the inherent defect of the goods, shall be for the account and risk of the shipper, and that proof of these accidents is incumbent
upon the carrier. The carrier, nonetheless, shall be liable for the loss and damage resulting from the preceding causes if it is proved,
as against him, that they arose through his negligence or by reason of his having failed to take the precautions which usage has
established among careful persons.
The Court agreed with respondent carrier that bulk shipment of highly soluble goods like fertilizer carries with it the risk of loss or
damage. More so, with a variable weather condition prevalent during its unloading, as was the case at bar. This is a risk the shipper
or the owner of the goods has to face. Clearly, respondent carrier has sufficiently proved the inherent character of the goods which
makes it highly vulnerable to deterioration; as well as the inadequacy of its packaging which further contributed to the loss. On the
other hand, no proof was adduced by the petitioner showing that the carrier was remise in the exercise of due diligence in order to
minimize the loss or damage to the goods it carried.

____________
HOME INSURANCE COMPANY vs. AMERICAN STEAMSHIP AGENCIES, INC. and LUZON STEVEDORING CORPORATION
G.R. No. L-25599
April 4, 1968
FACTS:
Consorcio Pesquero del Peru of South America shipped freight pre-paid at Peru, jute bags of Peruvian fish meal through SS
Crowborough, covered by clean bills of lading. The cargo, consigned to San Miguel Brewery, Inc., now San Miguel Corporation, and
insured by Home Insurance Company arrived in Manila and was discharged into the lighters of Luzon Stevedoring Company. When
the cargo was delivered to consignee San Miguel Brewery Inc., there were shortages causing the latter to lay claims against Luzon
Stevedoring Corporation, Home Insurance Company and the American Steamship Agencies (shipowner), owner and operator of SS
Crowborough.
Because the others denied liability, Home Insurance Company paid SMBI 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 before the CFI of Manila a complaint for recovery of the
payment paid with legal interest, plus attorneys fees.
In 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.
The CFI, after trial, 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 Home Insurance
Company the amount demanded with legal interest plus attorneys fees.
ISSUE:
Whether the stipulation in the charter party of the owners non-liability valid so as to absolve the American
Steamship Agencies from liability for loss.
HELD:
The judgment appealed from is hereby reversed and appellant is absolved from liability to plaintiff. The bills of lading,
covering the shipment of Peruvian fish meal provide at the back thereof that the bills of lading shall be governed by and subject to
the terms and conditions of the charter party, if any, otherwise, the bills of lading prevail over all the agreements. On the bills are
stamped Freight prepaid as per charter party. Subject to all terms, conditions and exceptions of charter party dated London, Dec.
13, 1962.
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..
The provisions of our Civil Code on common carriers were taken from Anglo-American law. Under American jurisprudence,
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.
Such doctrine We find reasonable. 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. 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.
And furthermore, in a charter of the entire vessel, the bill of lading issued by the master to the charterer, as shipper, is in
fact and legal contemplation merely a receipt and a document of title not a contract, for the contract is the charter party. The
consignee may not claim ignorance of said charter party because the bills of lading expressly referred to the same. Accordingly, the
consignees under the bills of lading must likewise abide by the terms of the charter party. And as stated, recovery cannot be had
there under, for loss or damage to the cargo, against the ship owners, unless the same is due to personal acts or negligence of said
owner or its manager, as distinguished from its other agents or employees. In this case, no such personal act or negligence has been
proved.
________________

CEBU SALVAGE CORPORATION, Petitioner, versus PHILIPPINE HOME ASSURANCE CORPORATION, Respondent.
2007-01-25 | G.R. No. 150403
FACTS:
On November 12, 1984, petitioner Cebu Salvage Corporation (as carrier) and Maria Cristina Chemicals Industries, Inc. [MCCII] (as
charterer) entered into a voyage charter wherein petitioner was to load 800 to 1,100 metric tons of silica quartz on board the M/T
Espiritu Santo at Ayungon, Negros Occidental for transport to and discharge at Tagoloan, Misamis Oriental to consignee
Ferrochrome Phils., Inc.
Pursuant to the contract, on December 23, 1984, petitioner received and loaded 1,100 metric tons of silica quartz on board the M/T
Espiritu Santo which left Ayungon for Tagoloan the next day. The shipment never reached its destination, however, because the M/T
Espiritu Santo sank in the afternoon of December 24, 1984 off the beach of Opol, Misamis Oriental, resulting in the total loss of the
cargo.
MCCII filed a claim for the loss of the shipment with its insurer, respondent Philippine Home Assurance Corporation. Respondent
paid the claim in the amount of P211,500 and was subrogated to the rights of MCCII. Thereafter, it filed a case in the RTC against
petitioner for reimbursement of the amount it paid MCCII.
After trial, the RTC rendered judgment in favor of respondent. It ordered petitioner to pay respondent P211,500 plus legal interest,
attorney's fees equivalent to 25% of the award and costs of suit.
On appeal, the CA affirmed the decision of the RTC. Hence, this petition.
Petitioner and MCCII entered into a "voyage charter," also known as a contract of affreightment wherein the ship was leased for a
single voyage for the conveyance of goods, in consideration of the payment of freight. Under a voyage charter, the shipowner
retains the possession, command and navigation of the ship, the charterer or freighter merely having use of the space in the vessel
in return for his payment of freight. An owner who retains possession of the ship remains liable as carrier and must answer for loss
or non-delivery of the goods received for transportation.[16]
Petitioner argues that the CA erred when it affirmed the RTC finding that the voyage charter it entered into with MCCII was a
contract of carriage. It insists that the agreement was merely a contract of hire wherein MCCII hired the vessel from its owner, ALS
Timber Enterprises (ALS). Not being the owner of the M/T Espiritu Santo, petitioner did not have control and supervision over the
vessel, its master and crew.[ Thus, it could not be held liable for the loss of the shipment caused by the sinking of a ship it
Issue:
May a carrier be held liable for the loss of cargo resulting from the sinking of a ship it does not own?
Ruling:
Based on the agreement signed by the parties and the testimony of petitioner's operations manager, it is clear that it was a contract
of carriage petitioner signed with MCCII. It actively negotiated and solicited MCCII's account, offered its services to ship the silica
quartz and proposed to utilize the M/T Espiritu Santo in lieu of the M/T Seebees or the M/T Shirley (as previously agreed upon in the
voyage charter) since these vessels had broken down.
There is no dispute that petitioner was a common carrier. At the time of the loss of the cargo, it was engaged in the business of
carrying and transporting goods by water, for compensation, and offered its services to the public.
From the nature of their business and for reasons of public policy, common carriers are bound to observe extraordinary diligence
over the goods they transport according to the circumstances of each case.In the event of loss of the goods, common carriers are
responsible, unless they can prove that this was brought about by the causes specified in Article 1734 of the Civil Code.[23] In all
other cases, common carriers are presumed to be at fault or to have acted negligently, unless they prove that they observed
extraordinary diligence.
Petitioner was the one which contracted with MCCII for the transport of the cargo. It had control over what vessel it would use. All
throughout its dealings with MCCII, it represented itself as a common carrier. The fact that it did not own the vessel it decided to use
to consummate the contract of carriage did not negate its character and duties as a common carrier. The MCCII (respondent's
subrogor) could not be reasonably expected to inquire about the ownership of the vessels which petitioner carrier offered to utilize.
As a practical matter, it is very difficult and often impossible for the general public to enforce its rights of action under a contract of
carriage if it should be required to know who the actual owner of the vessel is.In fact, in this case, the voyage charter itself
denominated petitioner as the "owner/operator" of the vessel.
Petitioner next contends that if there was a contract of carriage, then it was between MCCII and ALS as evidenced by the bill of
lading ALS issued

Again, we disagree.
The bill of lading was merely a receipt issued by ALS to evidence the fact that the goods had been received for transportation. It was
not signed by MCCII, as in fact it was simply signed by the supercargo of ALS. This is consistent with the fact that MCCII did not
contract directly with ALS. While it is true that a bill of lading may serve as the contract of carriage between the parties, it cannot
prevail over the express provision of the voyage charter that MCCII and petitioner executed:
To summarize, a contract of carriage of goods was shown to exist; the cargo was loaded on board the vessel; loss or non-delivery of
the cargo was proven; and petitioner failed to prove that it exercised extraordinary diligence to prevent such loss or that it was due
to some casualty or force majeure. The voyage charter here being a contract of affreightment, the carrier was answerable for the
loss of the goods received for transportation.
The idea proposed by petitioner is not only preposterous, it is also dangerous. It says that a carrier that enters into a contract of
carriage is not liable to the charterer or shipper if it does not own the vessel it chooses to use. MCCII never dealt with ALS and yet
petitioner insists that MCCII should sue ALS for reimbursement for its loss. Certainly, to permit a common carrier to escape its
responsibility for the goods it agreed to transport (by the expedient of alleging non-ownership of the vessel it employed) would
radically derogate from the carrier's duty of extraordinary diligence. It would also open the door to collusion between the carrier
and the supposed owner and to the possible shifting of liability from the carrier to one without any financial capability to answer for
the resulting damages. WHEREFORE, the petition is hereby DENIED.
___________
13. MINDANAO TERMINAL AND BROKERAGE SERVICE, INC. Petitioner, versus PHOENIX ASSURANCE COMPANY OF NEW YORK/
MCGEE & CO., INC., Respondent.
FACTS:
Del Monte Philippines, Inc. contracted petitioner Mindanao Terminal and Brokerage Service, Inc., a stevedoring company, to load
and stow a shipment of 146,288 cartons of fresh green Philippine bananas and 15,202cartons of fresh pineapples belonging to Del
Monte Fresh Produce International, Inc. into the cargo hold of the vessel M/V Mistrau. The vessel was docked at the port of Davao
City and the goods were to be transported by it to the port of Inchon, Korea in favor of consignee Taegu Industries, Inc. Del Monte
Produce insured the shipment under an "open cargo policy" with private respondent Phoenix Assurance Company of New York , a
non-life insurance company, and private respondent McGee & Co. Inc. (McGee), the underwriting manager/agent of Phoenix. The
vessel set sail from the port of Davao City and arrived at the port of Inchon, Korea. It was then discovered upon discharge that some
of the cargo was in bad condition. The Marine Cargo Damage Surveyor of Incok Loss and Average Adjuster of Korea, through its
representative Byeong Yong Ahn (Byeong),surveyed the extent of the damage of the shipment. In a survey report, it was stated
that16,069 cartons of the banana shipment and2,185 cartons of the pineapple shipment were so damaged that they no longer had
commercial value. Mindanao Terminal loaded and stowed the cargoes aboard the M/V Mistrau. The vessel set sail from the port of
Davao City and arrived at the port of Inchon, Korea. It was then discovered upon discharge that some of the cargo was in bad
condition. Del Monte Produce filed a claim under the open cargo policy for the damages to its shipment. McGees Marine Claims
Insurance Adjuster evaluated the claim and recommended that payment in the amount of $210,266.43 be made. Phoenix and
McGee instituted an action for damages against Mindanao Terminal After trial, the RTC held that the only participation of Mindanao
Terminal was to load the cargoes on board the M/V Mistrau under the direction and supervision of the ships officers, who would
not have accepted the cargoes on board the vessel and signed the foremans report unless they were properly arranged and tightly
secured to withstand voyage across the open seas. Accordingly, Mindanao Terminal cannot be held liable for whatever happened to
the cargoes after it had loaded and stowed them. Moreover, citing the survey report, it was found by the RTC that the cargoes were
damaged on account of a typhoon which M/V Mistrau had encountered during the voyage. It was further held that Phoenix and
McGee had no cause of action against Mindanao Terminal because the latter, whose services were contracted by Del Monte, a
distinct corporation from Del Monte Produce, had no contract with the assured Del Monte Produce. The RTC dismissed the
complaint and awarded the counterclaim of Mindanao Terminal in the amount of P83,945.80 as actual damages and P100,000.00 as
attorneys fees.
ISSUE: Whether or not Phoenix and McGee have a cause of action and whether Mindanao Terminal is liable for not having exercised
extraordinary diligence in the transport and storage of the cargo.
RULING: No, in the present case, Mindanao Terminal, as a stevedore, was only charged with the loading and stowing of the cargoes
from the pier to the ships cargo hold; it was never the custodian of the shipment of Del Monte Produce. A stevedore is not a
common carrier for it does not transport goods or passengers; it is not akin to a warehouseman for it does not store goods for profit.
____________
#14 ESTELA L. CRISOSTOMO v. COURT OF APPEALS and CARAVAN TRAVEL AND TOURS INTERNATIONAL, INC.
G.R. No. 138334, 25 August 2003, First Division (Ynares-Santiago, J.)
A travel agency 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. Respondents services as a travel agency include procuring
tickets and facilitating travel permits or visas as well as booking customers for tours. 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.

Petitioner Estela L. 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.
A 5% discount on the total cost of P74,322.70 which included the airfare was given to the petitioner. The booking fee was also
waived because petitioners niece, Meriam Menor, was respondents ticketing manager.
On June 12, 1991, Menor went to her aunts residence to deliver petitioners travel documents and plane tickets. In return,
petitioner gave the full payment for the package tour. Menor then told her to be at the NAIA on Saturday, June 15, 1991, two hours
before her flight on board British Airways. Without checking her travel documents, petitioner went to NAIA and to her dismay, she
discovered that the flight she was supposed to take had already departed the previous day. She learned that her plane ticket was for
the flight scheduled on June 14, 1991. She called up Menor to complain and Menor suggested upon petitioner to take another tour
British Pageant. Petitioner was asked anew to pay US$785.00. Petitioner gave respondent US$300 as partial payment and
commenced the trip.
ISSUE:
Whether or not respondent Caravan did not observe the standard of care required of a common carrier when it informed the
petitioner wrongly of the flight schedule.
HELD:
The petition was denied for lack of merit. The decision of the Court of Appeals was affirmed.
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, affecting 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. Respondents
services as a travel agency include procuring tickets and facilitating travel permits or visas as well as booking customers for tours. 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.
The standard of care required of respondent is that of a good father of a family under Article 1173 of the Civil Code. This connotes
reasonable care consistent with that which an ordinarily prudent person would have observed when confronted with a similar
situation.
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 petitioners, 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.
_____________
AF Sanchez Brokerage vs CA and FGU Insurance
FACTS:
AF Sanchez is engaged in a broker business wherein its main job is to calculate customs duty, fees and charges as well as storage fees
for the cargoes. Part also of the services being given by AF Sanchez is the delivery of the shipment to the consignee upon the
instruction of the shipper.
Wyeth engaged the services of AF Sanchez where the latter delivered the shipment to Hizon Laboratories upon instruction of Wyeth.
Upon inspection, it was found out that at least 44 cartons containing contraceptives were in bad condition. Wyeth claimed insurance
from FGU. FGU exercising its right of subrogation claims damages against AF Sanchez who delivered the damaged goods. AF Sanchez
contended that it is not a common carrier but a brokerage firm.
AF Sanchez refused to admit liability for the damaged goods as it maintained that the damage was due to improper and insufficient
export packaging, discovered when the sealed containers were opened outside the PSI warehouse.

ISSUE:
Is AF Sanchez a common carrier?
RULING:
SC held that Art 1732 of the Civil Code in defining common carrier does not distinguish whether the activity is undertaken as a
principal activity or merely as an ancillary activity. In this case, while it is true that AF Sanchez is principally engaged as a broker, it
cannot be denied from the evidence presented that part of the services it offers to its customers is the delivery of the goods to their
respective consignees. It suffices that petitioner undertakes to deliver the goods for pecuniary consideration.
In this light, Sanchez Brokerage as a common carrier is mandated to observe, under Article 1733 of the Civil Code, extraordinary
diligence in the vigilance over the goods it transports according to all the circumstances of each case. In the event that the goods are

lost, destroyed or deteriorated, it is presumed to have been at fault or to have acted negligently, unless it proves that it observed
extraordinary diligence.
While paragraph no. 4 of Article 1734 of the Civil Code exempts a common carrier from liability if the loss or damage is due to the
character of the goods or defects in the packaging or in the containers, the rule is that if the improper packaging is known to the
carrier or his employees or is apparent upon ordinary observation, but he nevertheless accepts the same without protest or
exception notwithstanding such condition, he is not relieved of liability for the resulting damage. If the claim of Sanchez Brokerage
that some of the cartons were already damaged upon delivery to it were true, then it should naturally have received the cargo under
protest or with reservation duly noted on the receipt issued by PSI but it made no such protest or reservation (Foul Bill of Lading).
______________
# 16 Nostradamus Villanueva vs. Priscilla Domingo, et. Al, G.R.#144274

Facts: A car driven by Renato ocfemia hit a car driven by Leonardo Domingo. The registered owner of Ocfemias vehicle was
Nostradamus Villanueva, although Villanueva has traded/ swapped the vehicle for a pajero owned by albert Jaucian/ Auto palace car
Exchange. The assistant city prosecutor of manila recommended the filing of an information for reckless imprudence resulting to
damage to property and physical injuries.
The trial court found Villanueva liable and ordered him to pay damages. The court of appeals affirmed the trial court but deleted the
award for attorneys and appearance fees. Villanueva files a petition for review with Supreme Court
Issues: Whether a registered owner of a vehicle may be held liable for damages arising from accident involving the said
vehicle while it was being operated by the Employee of the vehicles buyer without the latters consent and knowledge.
Ruling: Yes. A registered owner of any vehicle is directly primarily liable to the public and third persons while it is being
operated. The petition for review is being denied and the court of appeals decision is affirmed. The public has the right to assume
that the registered owner is the actual owner, to make it easier for them to enforce actions for injuries caused to them by vehicles
negligently operated. However, the registered owner may recover from the person to whom he had sold, assigned or conveyed the
vehicle via a third party complaint. The registered owner of any vehicle, even if not used for a public service, should be primarily
responsible to the public or third persons while the vehicle being is being driven on the streets.
The main aim of registration is to identify the owner so that if any accidents happen, responsibility can be fixed on a definite
individual- the registered owner. The primary purpose is to make certain that the violators shall not escape because of lack of means
to discover him.
The law, with its aim in mind, does not relieve him directly of the responsibility that the law places upon him as an incident or
consequence of registration. If a registered owner is allowed to prove who the supposed transferee is, it would be easy for him to
escape responsibility and transfer it to an indefinite person or to one who possesses no property with which to respond financially
for the injury or damage. Whether the driver is authorized by the actual owner is irrelevant in determining the liability of the
registered owner. To require so would defeat the purpose of the enactment of motor vehicle registration. The registered owner is
the operator with respect to the public and third persons. The owner of record is the employer of the driver, the actual owner being
considered merely as his agent.
__________________
G.R. No. 160286

July 30, 2004

SPOUSES FRANCISCO M. HERNANDEZ and ANICETA ABEL-HERNANDEZ and JUAN GONZALES, petitioners,
vs.
SPOUSES LORENZO DOLOR and MARGARITA DOLOR, FRED PANOPIO, JOSEPH SANDOVAL, RENE CASTILLO, SPOUSES FRANCISCO
VALMOCINA and VIRGINIA VALMOCINA, SPOUSES VICTOR PANOPIO and MARTINA PANOPIO, and HON. COURT OF
APPEALS, respondents.
Facts:
Lorenzo Dolor, Jr. was driving an owner-type jeepney when his vehicle collided with a passenger jeepney driven by petitioner Juan
Gonzales and owned by his co-petitioner Francisco Hernandez. Lorenzo Dolor and one of his passenger, died as a result of the
collision and the others who were also on board the owner-type jeep, which was totally wrecked, suffered physical injuries. The
collision also damaged the passenger jeepney of Francisco Hernandez and caused physical injuries to its passengers. Consequently,
respondents commenced an action for damages against petitioners before the RTC, alleging that driver Gonzales was guilty of
negligence and lack of care and that the Hernandez spouses were guilty of negligence in the selection and supervision of their
employees.

Petitioners countered that the proximate cause of the death and injuries sustained by the passengers of both vehicles was the
recklessness of Lorenzo Dolor who was driving in a zigzagging manner under the influence of alcohol. Petitioners also alleged that
Gonzales was not the driver-employee of the Hernandez spouses as the former only leased the passenger jeepney on a daily basis.
The Hernandez spouses further claimed that even if an employer-employee relationship is found to exist between them, they cannot
be held liable because as employers they exercised due care in the selection and supervision of their employee.
The trial court rendered a decision in favor of respondents. Petitioners appealed the decision to the CA which affirmed the same
with modifications as to the amount of damages hence this petition for review under Rule 45 of the Rules of Court.
(Petitioners invoked Article 2184 of the Civil Code, which provides:
ARTICLE 2184. In motor vehicle mishaps, the owner is solidarily liable with his driver, if the former, who was in the vehicle,
could have, by the use of the due diligence, prevented the misfortune. It is disputably presumed that a driver was negligent,
if he had been found guilty of reckless driving or violating traffic regulations at least twice within the next preceding two
months.
If the owner was not in the motor vehicle, the provisions of article 2180 are applicable.)
Issue: Whether the Hernandez spouses are solidarily liable with Juan Gonzales, although it is of record that they were not in the
passenger jeepney driven by latter when the accident occurred.
Held: YES. They are solidarily liable. Petition is denied.
Article 2180 provides:
ARTICLE 2180. The obligation imposed by article 2176 is demandable not only for one's own acts or omissions, but also for
those of persons for whom one is responsible.
th

(5 par) Employers shall be liable for the damages caused by their employees and household helpers acting within the
scope of their assigned tasks, even though the former are not engaged in any business or industry.
On the other hand, Article 2176 provides
Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage
done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is called a quasi-delict
and is governed by the provisions of this Chapter.
While the above provisions of law do not expressly provide for solidary liability, the same can be inferred from the wordings of the
first paragraph of Article 2180 which states that the obligation imposed by article 2176 is demandable not only for one's own acts or
omissions, but also for those of persons for whom one is responsible. Moreover, Article 2180 should be read with Article 2194 of the
same Code, which categorically states that the responsibility of two or more persons who are liable for quasi-delict is solidary. In
other words, the liability of joint tortfeasors is solidary. Verily, under Article 2180 of the Civil Code, an employer may be held
solidarily liable for the negligent act of his employee.
The Court held that an employer-employee relationship exists between the Hernandez spouses and Julian Gonzales.
Indeed to exempt from liability the owner of a public vehicle who operates it under the "boundary system" on the ground that he is
a mere lessor would be not only to abet flagrant violations of the Public Service Law, but also to place the riding public at the mercy
of reckless and irresponsible drivers reckless because the measure of their earnings depends largely upon the number of trips
they make and, hence, the speed at which they drive; and irresponsible because most if not all of them are in no position to pay the
damages they might cause.
_________________
G.R. No. 181398

June 29, 2011

FEB LEASING AND FINANCE CORPORATION (now BPI LEASING CORPORATION), Petitioner,
vs.
SPOUSES SERGIO P. BAYLON and MARITESS VILLENA-BAYLON, BG HAULER, INC., and MANUEL Y. ESTILLOSO, Respondents.
Facts:
An Isuzu tanker hit Loretta, daughter of respondent spouses Baylon. Said oil tanker was registered in the name of petitioner FEB
Leasing and Finance Corporation, insured by FGU Insurance Corp., leased to BG Hauler, Inc. and was driven by the latters driver,
Estillo, at the time of the accident.

While the driver of the oil tanker was executing a left turn side by side with another vehicle upon reaching an intersection, it hit
Loretta who was then crossing. She was violently thrown away about three to five meters from the point of impact and fell to the
ground unconscious. She was brought for treatment to the Chinese General Hospital where she remained in a coma until her death
two days after.
The spouses Baylon filed with the RTC a Complaint for damages against petitioner, BG Hauler, the driver, and FGU Insurance.
Petitioner claimed that the spouses Baylon had no cause of action against it because under its lease contract with BG Hauler,
petitioner was not liable for any loss, damage, or injury that the leased oil tanker might cause. Petitioner claimed that no employeremployee relationship existed between petitioner and the driver. BG Hauler alleged that neither do the spouses Baylon have a cause
of action against it since the oil tanker was not registered in its name. BG Hauler contended that the victim was guilty of contributory
negligence in crossing the street. BG Hauler claimed that even if its driver was at fault, BG Hauler exercised the diligence of a good
father of a family in the selection and supervision of its driver. For its part, FGU Insurance averred that the victim was guilty of
contributory negligence.
The RTC found that the death of Loretta was due to the negligent act of the driver. Held that BG Hauler, as the employer, was
solidarily liable with the driver and that petitioner, as the registered owner of the oil tanker, was also solidarily liable. The Court of
Appeals held that petitioner, BG Hauler, and the driver are solidarily liable for damages arising from Lorettas death. Petitioners
liability arose from the fact that it was the registered owner of the oil tanker while BG Haulers liability emanated from a provision in
the lease contract providing that the lessee shall be liable in case of any loss, damage, or injury the leased oil tanker may cause.
Unconvinced, petitioner alone filed with this Court the present petition for review on certiorari.
Issue: Whether the registered owner of a financially leased vehicle remains liable for loss, damage, or injury caused by the vehicle
notwithstanding an exemption provision in the financial lease contract.
Held: YES. Petition is denied.
Under Section 5 of Republic Act No. 4136, as amended, all motor vehicles used or operated on or upon any highway of the
Philippines must be registered with the Bureau of Land Transportation (now LTO) for the current year. Furthermore, any
encumbrances of motor vehicles must be recorded with the Land Transportation Office in order to be valid against third parties.
In accordance with the law on compulsory motor vehicle registration, this Court has consistently ruled that, with respect to the
public and third persons, the registered owner of a motor vehicle is directly and primarily responsible for the consequences of its
operation regardless of who the actual vehicle owner might be. Well-settled is the rule that the registered owner of the vehicle is
liable for quasi-delicts resulting from its use. Thus, even if the vehicle has already been sold, leased, or transferred to another person
at the time the vehicle figured in an accident, the registered vehicle owner would still be liable for damages caused by the accident.
The sale, transfer or lease of the vehicle, which is not registered with the Land Transportation Office, will not bind third persons
aggrieved in an accident involving the vehicle. The compulsory motor vehicle registration underscores the importance of registering
the vehicle in the name of the actual owner.
The policy behind the rule is to enable the victim to find redress by the expedient recourse of identifying the registered vehicle
owner in the records of the Land Transportation Office. The registered owner can be reimbursed by the actual owner, lessee or
transferee who is known to him. Unlike the registered owner, the innocent victim is not privy to the lease, sale, transfer or
encumbrance of the vehicle. Hence, the victim should not be prejudiced by the failure to register such transaction or encumbrance.
In this case, petitioner admits that it is the registered owner of the oil tanker that figured in an accident causing the death of Loretta.
As the registered owner, it cannot escape liability for the loss arising out of negligence in the operation of the oil tanker. Its liability
remains even if at the time of the accident, the oil tanker was leased to BG Hauler and was being driven by the latters driver, and
despite a provision in the lease contract exonerating the registered owner from liability.
______________
GAUDIOSO EREZO, ET AL., plaintiffs. GAUDIOSO EREZO, plaintiff-appellee, vs. AGUEDO JEPTE, defendant-appellant.
Facts:
Defendant-appellant is the registered owner of a six by six truck. On August 9, 1949, while the same was being driven by Rodolfo
Espino y Garcia, it collided with a taxicab at the intersection of San Andres and Dakota Streets, Manila. As the truck went off the
street, it hit Ernesto Erezo and another, and the former suffered injuries, as a result of which he died. The driver was prosecuted for
homicide through reckless negligence.. The accused pleaded guilty and was sentenced to suffer imprisonment and to pay the heirs
of Ernesto Erezo the sum of P3,000. As the amount of the judgment could not be enforced against him, plaintiff brought this action
against the registered owner of the truck, the defendant-appellant.
Issue:
Whether or not the registered owner of the truck be liable for damages

Ruling:
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. How would the public or third persons know against whom to enforce their rights in case
of subsequent transfers of the vehicles? We do not imply by this doctrine, however, that the registered owner may not recover
whatever amount he had paid by virtue of his liability to third persons from the person to whom he had actually sold, assigned or
conveyed the vehicle.
Under the same principle the registered owner of any vehicle, even if not used for a public service, should primarily be responsible
to the public or to third persons for injuries caused the latter while the vehicle is being driven on the highways or streets. The
members of the Court are in agreement that the defendant-appellant should be held liable to plaintiff-appellee for the injuries
occasioned to the latter because of the negligence of the driver, even if the defendant- appellant was no longer the owner of the
vehicle at the time of the damage because he had previously sold it to another. What is the legal basis for his (defendant-appellant's)
liability?
The Revised Motor Vehicles Law (Act No. 3992, as amended) provides that no vehicle may be used or operated upon any public
highway unless the same is properly registered. It has been stated that the system of licensing and the requirement that each
machine must carry a registration number, conspicuously displayed, is one of the precautions taken to reduce the danger of injury to
pedestrians and other travellers from the careless management of automobiles, and to furnish a means of ascertaining the identity
of persons violating the laws and ordinances, regulating the speed and operation of machines upon the highways (2 R. C. L. 1176).
Not only are vehicles to be registered and that no motor vehicles are to be used or operated without being properly registered for
the current year, but that dealers in motor vehicles shall furnish the Motor Vehicles Office a report showing the name and address of
each purchaser of motor vehicle during the previous month and the manufacturer's serial number and motor number. (Section 5 [c],
Act No. 3992, as amended.)
"'One of the principal purposes of motor vehicles legislation is identification of the vehicle and of the operator, in case of accident;
and another is that the knowledge that means of detection are always available may act as a deterrent from lax observance of the
law and of the rules of conservative and safe operation. Whatever purpose there may be in these statutes, it is subordinate at the
last to the primary purpose of rendering it certain that the violator of the law or of the rules of safety shall not escape because of
lack of means to discover him.' The purpose of the statute is thwarted, and the displayed number becomes a 'snare and delusion,' if
courts would entertain such defenses as that put forward by appellee in this case. No responsible person or corporation could be
held liable for the most outrageous acts of negligence, if they should be allowed to place a "middleman' between them and the
public, and escape liability by the manner in which they recompense their servants." (King vs. Brenham Automobile Co., 145 S. W.
278, 279.)
With the above policy in mind, the question that defendant- appellant poses is: should not the registered owner be allowed at the
trial to prove who the actual and real owner is, and in accordance with such proof escape or evade responsibility and lay the same
on the person actually owning the vehicle? We hold with the trial court that the law does not allow him to do so; the law, with its
aim and policy in mind, does not relieve him directly of the responsibility that the law fixes and places upon him as an incident or
consequence of registration. Were a registered owner allowed to evade responsibility by proving who the supposed transferee or
owner is, it would be easy for him, by collusion with others or otherwise, to escape said responsibility and transfer the same to an
indefinite person, or to one who possesses no property with which to respond financially for the damage or injury done. A victim of
recklessness on the public highways is usually without means to discover or identify the person actually causing the injury or
damage. He has no means other than by a recourse to the registration in the Motor Vehicles Office to determine who is the owner.
The protection that the law aims to extend to him would become illusory were the registered owner given the opportunity to escape
liability by disproving his ownership. If the policy of the law is to be enforced and carried out, the registered owner should not be
allowed to prove the contrary to the prejudice of the person injured, that is, to prove that a third person or another has become the
owner, so that he may thereby be relieved of the responsibility to the injured person.
The above policy and application of the law may appear quite harsh and would seem to conflict with truth and justice. We do not
think it is so. A registered owner who has already sold or transferred a vehicle has the recourse to a third-party complaint, in the
same action brought against him to recover for the damage or injury done, against the vendee or transferee of the vehicle. The
inconvenience of the suit is no justification for relieving him of liability; said inconvenience is the price he pays for failure to comply
with the registration that the law demands and requires.
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.
The judgment appealed from is hereby affirmed, with costs against defendant-appellant.
__________

20. ABELARDO LIM and ESMADITO GUNNABAN, petitioners, vs. COURT OF APPEALS and DONATO H. GONZALES, respondents.
FACTS: Private respondent herein purchased an Isuzu passenger jeepney from Gomercino Vallarta, a holder of a certificate of public
convenience for the operation of a public utility vehicle. He continued to operate the public transport business without transferring
the registration of the vehicle to his name. Thus, the original owner remained to be the registered owner and operator of the
vehicle. Unfortunately, the vehicle got involved in a road mishap which caused it severe damage. The ten-wheeler-truck which
caused the accident was owned by petitioner Lim and was driven by co-petitioner Gunnaban. Gunnaban admitted responsibility for
the accident, so that petitioner Lim shouldered the costs of hospitalization of those wounded, compensation for the heirs of the
deceased passenger and the restoration of the other vehicle involved. He also negotiated for the repair of the private respondent's
jeepney but the latter refused and demanded for its replacement. Hence, private respondent filed a complaint for damages against
petitioners. Meanwhile, the jeepney was left by the roadside to corrode and decay. The trial court decided in favor of private
respondent and awarded him his claim. On appeal, the Court of Appeals affirmed the decision of the trial court. Hence, petitioner
filed this petition.
ISSUE: WON the new owner of a passenger jeepney who continued to operate under the kabit system and in the course thereof met
an accident has the legal personality to bring the action for damages against the erring vehicle.

HELD: The Supreme Court affirmed the subject decision with modification as to the computation of interest. According to the Court,
the thrust of the law in enjoining the kabit system is not much as to penalize the parties but to identify the person upon whom
responsibility may be fixed in case of an accident with the end view of protecting the riding public. In the present case, it is once
apparent that the evil sought to be prevented in enjoining the kabit system does not exist. Hence, the private respondent has the
right to proceed against petitioners for the damage caused on his passenger jeepney as well as on his business.
CIVIL LAW; COMMON CARRIERS; CERTIFICATE OF PUBLIC CONVENIENCE; KABIT SYSTEM;DEFINED AND CONSTRUED AS BEING
CONTRARY TO PUBLIC POLICY;
RATIONALE: The kabit system is an arrangement whereby a person who has been granted a certificate of public convenience allows
other persons who own motor vehicles to operate them under his license, sometimes for a fee or percentage of the earnings.
Although the parties to such an agreement are not out rightly penalized by law, the kabit system is invariably recognized as being
contrary to public policy and therefore void and inexistent under Art. 1409 of the Civil Code.
_______________
Sps. Perea vs. Sps. ZarateG.R. No. 157917, August 29, 2012
#21 FACTS:
Sps. Zarate, parents of Aaron Zarate, engaged the services of Sps. Perea for the adequate and safe transportation carriage of the
former spouses son from their residence to his school.
During the effectivity of the contract of carriage, Aaron Zarate died in connection with avehicular/train collision which occurred
while Aaron was riding the contracted carrier. At thetime of the said collision, there were no safety warning signs and railings at the
site commonlyused for railroad crossing. The site of the collision was not intended by the railroad operatorfor railroad crossing at
the time of the collision. PNR refused to acknowledge any liability forthe collision. In Sps. Pereas defense, they adduces evidence
to show that they had exercised the diligence of a good father of a family in the selection and supervision of Alfaro, the driver, by
making sure that Alfaro had been issued a drivers license and had not been involved in any vehicular accident prior to the collision.
The RTC ruled in favor of Sps. Zarate and held thePereas and PNR jointly and severally liable for the death of Aaron plus damages.
The CA upheld the award for the loss of Aarons earning capacity, plus damages, and the award forAttorneys fees was deleted.
Hence, this petition
.
ISSUE:
WON the Pereas and PNR are jointly and severally liable for damages.
HELD:YES.
The defense of the Pereas that they exercised the diligence of a good father of a familyhas no merit because they operated as
common carriers and that their standard of care wasextraordinary diligence, not the ordinary diligence of a good father of a family.
The Pereas,acting as a common carrier, were already presumed to be negligent at the time of the accidentbecause death had
occurred to their passenger. The presumption for negligence, being apresumption of law, laid the burden of evidence on their
shoulders to establish that they hadnot been negligent. There is no question that the Pereas did not overturn the presumption
oftheir negligence by credible evidence. Their defense of having observed the diligence of a goodfather of a family in the selection
and supervision of their driver was not legally sufficient. PNRwas also found guilty of negligence because it did not ensure the safety
of others through theplacing of crossbars, signal lights, warning signs, and other permanent safety barriers toprevent vehicles or
pedestrians from crossing there. Hence, the Pereas and PNR should jointlyand severally be liable for the death of Aaron Zarate.
__________________

LITA ENTERPRISES, INC., vs. IAC


FACTS:
Spouses Ocampo and Garcia purchased in instalment from the Delta Motor Sales Corporation 5 Toyota Corona Standard cars to
be used as taxicabs; they had no franchise to operate taxicabs, so they contracted with Lita Enterprises for the use of the latters
certificate of public convenience in consideration of an initial payment of 1,000.00 and a monthly rental of 200.00 per taxicab unit;
the aforesaid cars were then registered in the name of Lita Enterprises. Possession, however, remained with Ocampo and Garcia.
One of the taxicabs driven by Ocampo and Garcias employee, Emeterio Martin, collided with a motorcycle whose driver, Florante
Galvez, died from the head injuries sustained therefrom.
A criminal case was filed against the driver Martin, while a civil case for damages was instituted by heir of the victim against Lita
Enterprises, as registered owner of the taxicab in the latter case. Petitioner Lita Enterprises, Inc. was adjudged liable for damages by
the CFI.
This decision having become final, a writ of execution was issued. Two of the vehicles of respondent spouses were levied upon and
sold at public auction. Thereafter, Ocampo decided to register his taxicabs in his name. He requested the manager of petitioner Lita
Enterprises, Inc. to turn over the registration papers to him, but the latter allegedly refused. Hence, he and his wife filed a complaint
against Lita Enterprises, Inc., Mrs. de Galvez and the Sheriff of Manila for reconveyance of motor vehicles with damages.
ISSUE:
Whether or not Ocampo and Garcia has a cause of action against Lita Enterprises.
RULING:
No. Unquestionably, the parties herein operated under an arrangement, commonly known as the kabit system, whereby a person
who has been granted a certificate of convenience allows another person who owns motors vehicles to operate under such
franchise for a fee. A certificate of public convenience is a special privilege conferred by the government. Abuse of this privilege by
the grantees thereof cannot be countenanced. The kabit system has been identified as one of the root causes of the prevalence of
graft and corruption in the government transportation offices. In the words of Chief Justice Makalintal, this is a pernicious system
that cannot be too severely condemned. It constitutes an imposition upon the goo faith of the government.
Although not outrightly penalized as a criminal offense, the kabit system is invariably recognized as being contrary to public policy
and, therefore, void and inexistent under Article 1409 of the Civil Code, It is a fundamental principle that the court will not aid either
party to enforce an illegal contract, but will leave them both where it finds them (pari delicto rule). Upon this premise, it was flagrant
error on the part of both the trial and appellate courts to have accorded the parties relief from their predicament. Article 1412 of
the Civil Code denies them such aid. It provides:
ART. 1412. if the act in which the unlawful or forbidden cause consists does not constitute a criminal offense, the following rules
shall be observed:
(1) when the fault, is on the part of both contracting parties, neither may recover what he has given by virtue of the contract, or
demand the performance of the others undertaking.
Having entered into an illegal contract, neither can seek relief from the courts, and each must bear the consequences of his acts.
The defect of inexistence of a contract is permanent and incurable, and cannot be cured by ratification or by prescription.
___________
#23 Teja Marketing v. Intermediate Appellate Court
Facts: Pedro Nale bought from Teja Marketing a motorcycle with complete accessories and a sidecar. A chattel mortgage
was constituted as a security for the payment of the balance of the purchase price. The records of the Land Transportation
Commission show that the motorcycle sold to the defendant was first mortgaged to the Teja Marketing by Angel Jaucian though the
Teja Marketing and Angel Jaucian are one and the same, because it was made to appear that way only as the defendant had no
franchise of his own and he attached the unit to the plaintiff's MCH Line. The agreement also of the parties here was for the plaintiff
to undertake the yearly registration of the motorcycle with the Land Transportation Commission. The plaintiff, however failed to
register the motorcycle on that year on the ground that the defendant failed to comply with some requirements such as the
payment of the insurance premiums and the bringing of the motorcycle to the LTC for stenciling, the plaintiff said that the defendant
was hiding the motorcycle from him. Lastly, the plaintiff also explained that though the ownership of the motorcycle was already
transferred to the defendant, the vehicle was still mortgaged with the consent of the defendant to the Rural Bank of Camaligan for
the reason that all motorcycle purchased from the plaintiff on credit was rediscounted with the bank.
`Teja Marketing made demands for the payment of the motorcycle but just the same Nale failed to comply, thus forcing
Teja Marketing to consult a lawyer and file an action for damage before the City Court of Naga in the amount of P546.21 for
attorney's fees and P100.00 for expenses of litigation. Teja Marketing also claimed that as of 20 February 1978, the total account of
Nale was already P2, 731, 05 as shown in a statement of account; includes not only the balance of P1, 700.00 but an additional 12%

interest per annum on the said balance from 26 January 1976 to 27 February 1978; a 2% service charge; and P546.21 representing
attorney's fees. On his part, Nale did not dispute the sale and the outstanding balance of P1,700.00 still payable to Teja Marketing;
but contends that because of this failure of Teja Marketing to comply with his obligation to register the motorcycle, Nale suffered
damages when he failed to claim any insurance indemnity which would amount to no less than P15,000.00 for the more than 2
times that the motorcycle figured in accidents aside from the loss of the daily income of P15.00 as boundary fee beginning October
1976 when the motorcycle was impounded by the LTC for not being registered. The City Court rendered judgment in favor of Teja
Marketing, dismissing the counterclaim, and ordered Nale to pay Teja Marketing On appeal to the Court of First Instance of
Camarines Sur, the decision was affirmed in toto. Nale filed a petition for review with the Intermediate Appellate Court. On 18 July
1983, the appellate court set aside the decision under review on the basis of doctrine of "pari delicto," and accordingly, dismissed
the complaint of Teja Marketing, as well as the counterclaim of Nale; without pronouncements as to costs. Hence, the petition for
review was filed by Teja Marketing and/or Angel Jaucian.
Issue: Whether the defendant can recover damages against the plaintiff?
Held: Unquestionably, the parties herein operated under an arrangement, commonly known as the "kabit system" whereby
a person who has been granted a certificate of public convenience allows another person who owns motor vehicles to operate
under such franchise for a fee. A certificate of public convenience is a special privilege conferred by the government. Abuse of this
privilege by the grantees thereof cannot be countenanced.
The "kabit system" has been identified as one of the root causes of the prevalence of graft and corruption in the
government transportation offices. Although not out rightly penalized as a criminal offense, the kabit system is invariably recognized
as being contrary to public policy and, therefore, void and in existent under Article 1409 of the Civil Code. It is a fundamental
principle that the court will not aid either party to enforce an illegal contract, but will leave both where it finds then. Upon this
premise it would be error to accord the parties relief from their predicament.
____________
SALUDO JR. V. CA
Facts:
Crispina Galdo Saludo, mother of the petitioners, died in Chicago, Illinois. Pomierski and Son Funeral Home of Chicago,
made the necessary preparations and arrangements for the shipment of the remains from Chicago to the Philippines. Pomierski
brought the remains to Continental Mortuary Air Services (CMAS) at the Chicago Airport which made the necessary arrangements
such as flights, transfers, etc. CMAS booked the shipment with PAL thru the carriers agent Air Care International. PAL Airway Bill
Ordinary was issued wherein the requested routing was from Chicago to San Francisco on board Trans World Airline (TWA) and from
San Francisco to Manila on board PAL.
Salvacion (one of the petitioners), upon arrival at San Francisco, went to the TWA to inquire about her mothers remains.
But she was told they did not know anything about it. She then called Pomierski that her mothers remains were not at the West
Coast terminal. Pomierski immediately called CMAS which informed that the remains were on a plane to Mexico City, that there
were two bodies at the terminal, and somehow they were switched. CMAS called and told Pomierski that they were sending the
remains back to California via Texas.
Petitioners filed a complaint against TWA and PAL fir the misshipment and delay in the delay of the cargo containing the
remains of the late Crispina Saludo. Petitioners alleged that private respondents received the casketed remains of Crispina on
October 26, 1976, as evidenced by the issuance of PAL Airway Bill by Air Care and from said date, private respondents were charged
with the responsibility to exercise extraordinary diligence so much so that the alleged switching of the caskets on October 27, 1976,
or one day after the private respondents received the cargo, the latter must necessarily be liable.
Issues:
Whether there was delivery of the cargo upon mere issuance of the airway bill. Whether the delay in the delivery of the
casketed remains of petitioners mother was due to the fault of respondent airline companies
HELD:
NO to both, but TWA was held to pay petitioners nominal damages of P40,000 for its violation of the degree of diligence
required by law to be exercised by every common carrier
Ordinarily, a receipt is not essential to a complete delivery of goods to the carrier for transportation but, when issued, is
competent and prima facie, but not conclusive, evidence of delivery to the carrier. A bill of lading, when properly executed and
delivered to a shipper, is evidence that the carrier has received the goods described therein for shipment. Except as modified by
statute, it is a general rule as to the parties to a contract of carriage of goods in connection with which a bill of lading is issued
reciting that goods have been received for transportation, that the recital being in essence a receipt alone, is not conclusive, but may
be explained, varied or contradicted by parol or other evidence.
In other words, on October 26, 1976 the cargo containing the casketed remains of Crispina Saludo was booked for PAL
Flight Number PR-107 leaving San Francisco for Manila on October 27, 1976, PAL Airway Bill No. 079-01180454 was issued, not as

evidence of receipt of delivery of the cargo on October 26, 1976, but merely as a confirmation of the booking thus made for the San
Francisco-Manila flight scheduled on October 27, 1976. Actually, it was not until October 28, 1976 that PAL received physical delivery
of the body at San Francisco, as duly evidenced by the Interline Freight Transfer Manifest of the American Airline Freight System and
signed for by Virgilio Rosales at 1945H, or 7:45 P.M. on said date.
Explicit is the rule under Article 1736 of the Civil Code that the extraordinary responsibility of the common carrier begins
from the time the goods are delivered to the carrier. This responsibility remains in full force and effect even when they are
temporarily unloaded or stored in transit, unless the shipper or owner exercises the right of stoppage in transitu, and terminates
only after the lapse of a reasonable time for the acceptance, of the goods by the consignee or such other person entitled to receive
them. And, there is delivery to the carrier when the goods are ready for and have been placed in the exclusive possession, custody
and control of the carrier for the purpose of their immediate transportation and the carrier has accepted them. Where such a
delivery has thus been accepted by the carrier, the liability of the common carrier commences eo instanti.
Hence, while we agree with petitioners that the extraordinary diligence statutorily required to be observed by the carrier
instantaneously commences upon delivery of the goods thereto, for such duty to commence there must in fact have been delivery of
the cargo subject of the contract of carriage. Only when such fact of delivery has been unequivocally established can the liability for
loss, destruction or deterioration of goods in the custody of the carrier, absent the excepting causes under Article 1734, attach and
the presumption of fault of the carrier under Article 1735 be invoked.
As already demonstrated, the facts in the case at bar belie the averment that there was delivery of the cargo to the carrier
on October 26, 1976. Rather, as earlier explained, the body intended to be shipped as agreed upon was really placed in the
possession and control of PAL on October 28, 1976 and it was from that date that private respondents became responsible for the
agreed cargo under their undertakings in PAL Airway Bill No. 079-01180454. Consequently, for the switching of caskets prior thereto
which was not caused by them, and subsequent events caused thereby, private respondents cannot be held liable.
The oft-repeated rule regarding a carrier's liability for delay is that in the absence of a special contract, a carrier is not an
insurer against delay in transportation of goods. When a common carrier undertakes to convey goods, the law implies a contract
that they shall be delivered at destination within a reasonable time, in the absence, of any agreement as to the time of delivery. But
where a carrier has made an express contract to transport and deliver property within a specified time, it is bound to fulfill its
contract and is liable for any delay, no matter from what cause it may have arisen. This result logically follows from the well-settled
rule that where the law creates a duty or charge, and the party is disabled from performing it without any default in himself, and has
no remedy over, then the law will excuse him, but where the party by his own contract creates a duty or charge upon himself, he is
bound to make it good notwithstanding any accident or delay by inevitable necessity because he might have provided against it by
contract. Whether or not there has been such an undertaking on the part of the carrier to be determined from the circumstances
surrounding the case and by application of the ordinary rules for the interpretation of contracts.
Echoing the findings of the trial court, the respondent court correctly declared that
In a similar case of delayed delivery of air cargo under a very similar stipulation contained in the airway bill which reads:
"The carrier does not obligate itself to carry the goods by any specified aircraft or on a specified time. Said carrier being
hereby authorized to deviate from the route of the shipment without any liability therefor", our Supreme Court ruled that
common carriers are not obligated by law to carry and to deliver merchandise, and persons are not vested with the right to
prompt delivery, unless such common carriers previously assume the obligation. Said rights and obligations are created by a
specific contract entered into by the parties (Mendoza vs. PAL, 90 Phil. 836).
There is no showing by plaintiffs that such a special or specific contract had been entered into between them and the
defendant airline companies.
And this special contract for prompt delivery should call the attention of the carrier to the circumstances surrounding the
case and the approximate amount of damages to be suffered in case of delay (See Mendoza vs. PAL, supra). There was no
such contract entered into in the instant case.
A common carrier undertaking to transport property has the implicit duty to carry and deliver it within reasonable time,
absent any particular stipulation regarding time of delivery, and to guard against delay. In case of any unreasonable delay, the
carrier shall be liable for damages immediately and proximately resulting from such neglect of duty. As found by the trial court, the
delay in the delivery of the remains of Crispina Saludo, undeniable and regrettable as it was, cannot be attributed to the fault,
negligence or malice of private respondents, a conclusion concurred in by respondent court and which we are not inclined to disturb.
__________

Magellan Manufacturing Marketing Corporation v. Court of Appeals


Facts:
Magellan Manufacturers Marketing Corp.(MMMC) entered into a contract with Choju Co. of Yokohama, Japan to
export 136,000 Anahaw fans in consideration of $23k. As payment thereof, a letter of credit was issued to plaintiff MMMC by the
buyer. Through its president, James Cu, MMMC then contracted F.E. Zuellig, a shipping agent, to ship the anahaw fans through the
other appellee, Orient Overseas Container Lines, Inc., (OOCL) specifying that he needed an on-board bill of lading and that
transshipment is not allowed under the letter of credit. Thereafter appellant MMMC paid F.E. Zuellig the freight charges and secured
a copy of the bill of lading which was presented to Allied Bank. The bank then credited the amount of US$23k covered by the letter
of credit to MMMCs account. However, when MMMCs president James Cu, went back to the bank later, he was informed that the
payment was refused by the buyer allegedly because there was no on-board bill of lading, and there was a transshipment of goods.
As a result of the refusal of the buyer to accept, upon appellant's request, the anahaw fans were shipped back to Manila by
appellees, for which the latter demanded from appellant payment of P246,043.43. MMMC abandoned the whole cargo and asked
appellees for damages.
Issue:

whether MMMC should be liable for damages when it exercised its option of abandonment

HELD:
No. Private respondents belatedly informed petitioner of the arrival of its goods in Manila and that if it wished to
take delivery of the cargo it would have to pay P52k, but with the last paragraph thereof stating as follows: Please can you advise
within 15 days of receipt of this letter whether you intend to take delivery of this shipment, as alternatively we will have to take legal
proceedings in order to have the cargo auctioned to recover the costs involved, as well as free the container which urgently required
for export cargoes. Clearly, therefore, private respondents offered petitioner the options: 1.) paying the shipping and demurrage
charges in order to take delivery of the goods; 2.)abandoning the same so that private respondents could sell them at public auction
and thereafter apply the proceeds in payment of the shipping and other charges. It will be remembered that in over land
transportation, an unreasonable delay in the delivery of transported goods is sufficient ground for the abandonment of goods. By
analogy, this can also apply to maritime transportation. Further, with much more reason can petitioner in the instant case properly
abandon the goods, not only because of the unreasonable delay in its delivery but because of the option which was categorically
granted to and exercised by it as a means of settling its liability for the cost and expenses of reshipment. And, said choice having
been duly communicated, the same is binding upon the parties on legal and equitable considerations of estoppel.
_____________
Trans-Asia Shipping Lines vs. CA
(GR 118126, 4 March 1996)
FACTS:
Respondent Atty. Renato Arroyo, a public attorney, bought a ticket from herein petitioner for the voyage of M/V Asia Thailand vessel
to Cagayan de Oro City from Cebu City on November 12, 1991.
At around 5:30 in the evening of November 12, 1991, respondent boarded the M/V Asia Thailand vessel during which he noticed
that some repairs were being undertaken on the engine of the vessel. The vessel departed at around 11:00 in the evening with only
one (1) engine running.
After an hour of slow voyage, the vessel stopped near Kawit Island and dropped its anchor thereat. After half an hour of stillness,
some passengers demanded that they should be allowed to return to Cebu City for they were no longer willing to continue their
voyage to Cagayan de Oro City. The captain acceded to their request and thus the vessel headed back to Cebu City.
In Cebu City, plaintiff together with the other passengers who requested to be brought back to Cebu City, were allowed to
disembark. Thereafter, the vessel proceeded to Cagayan de Oro City. Petitioner, the next day, boarded the M/V Asia Japan for its
voyage to Cagayan de Oro City, likewise a vessel of defendant.
On account of this failure of defendant to transport him to the place of destination on November 12, 1991, respondent Arroyo filed
before the trial court an action for damage arising from bad faith, breach of contract and from tort, against petitioner. The trial
court ruled only for breach of contract. The CA reversed and set aside said decision on appeal.
ISSUE:
Whether or not the petitioner Trans-Asia was negligent?
HELD:
Yes.

Before commencing the contracted voyage, the petitioner undertook some repairs on the cylinder head of one of the vessels
engines. But even before it could finish these repairs, it allowed the vessel to leave the port of origin on only one functioning engine,
instead of two. Moreover, even the lone functioning engine was not in perfect condition as sometime after it had run its course, it
conked out. This caused the vessel to stop and remain adrift at sea, thus in order to prevent the ship from capsizing, it had to drop
anchor. Plainly, the vessel was unseaworthy even before the voyage began. For a vessel to be seaworthy, it must be adequately
equipped for the voyage and manned with a sufficient number of competent officers and crew.[21] The failure of a common carrier
to maintain in seaworthy condition its vessel involved in a contract of carriage is a clear breach of is duty prescribed in Article 1755
of the Civil Code
_____________
27. REGIONAL CONTAINER LINES (RCL) OF SINGAPORE and EDSA SHIPPING AGENCY, Petitioners, versus THE NETHERLANDS
INSURANCE CO. (PHILIPPINES), INC., Respondent.
FACTS: RCL is a foreign corporation based in Singapore. It does business in the Philippines through its agent, EDSA Shipping, a
domestic corporation organized and existing under Philippine laws. Respondent Netherlands Insurance Company (Philippines), Inc.
(Netherlands Insurance) is likewise a domestic corporation engaged in the marine underwriting business.
On October 20, 1995, 405 cartons of Epoxy Molding Compound were consigned to be shipped from Singapore to Manila for Temic
Telefunken Microelectronics Philippines (Temic). U-Freight Singapore PTE Ltd. U-Freight Singapore), a forwarding agent based in
Singapore, contracted the services of Pacific Eagle Lines PTE. Ltd. (Pacific Eagle) to transport the subject cargo. The cargo was
packed, stored, and sealed by Pacific Eagle in its Refrigerated Container No. 6105660 with Seal No. 13223. As the cargo was highly
perishable, the inside of the container had to be kept at a temperature. To insure the cargo against loss and damage, Netherlands
Insurance issued a Marine Open Policy in favor of Temic to cover all losses/damages to the shipment. On October 25, 1995, the M/V
Piya Bhum docked in Manila. After unloading the refrigerated container, it was plugged to the power terminal of the pier to keep its
temperature constant. However, at midnight of October 25, 1995 - when the cargo had already been unloaded from the ship - the
temperature fluctuated. Rocha believed the fluctuation was caused by the burnt condenser fan motor of the refrigerated container.
On November 9, 1995, Temic received the shipment. It found the cargo completely damaged. Temic filed a claim for cargo loss
against Netherlands Insurance, with supporting claims documents. The defendants all disclaimed liability for the damage caused to
the cargo, citing several reasons why Netherland Insurance's claims must be rejected. Specifically, RCL and EDSA Shipping denied
negligence in the transport of the cargo; they attributed any negligence that may have caused the loss of the shipment to their codefendants. They likewise asserted that no valid subrogation exists, as the payment made by Netherlands Insurance to the
consignee was invalid. By way of affirmative defenses, RCL and EDSA Shipping averred that the Netherlands Insurance has no cause
of action, and is not the real party-in-interest, and that the claim is barred by laches/prescription.
ISSUE: WON CA correctly held RCL and EDSA Shipping liable as common carriers under the theory of presumption of negligence.
HELD: In the present case, RCL and EDSA Shipping failed to prove that they did exercise that degree of diligence required by law over
the goods they transported. Indeed, there is sufficient evidence showing that the fluctuation of the temperature in the refrigerated
container van, as recorded in the temperature chart, occurred after the cargo had been discharged from the vessel and was already
under the custody of the arrastre operator, ICTSI. This evidence, however, does not disprove that the condenser fan - which caused
the fluctuation of the temperature in the refrigerated container - was not damaged while the cargo was being unloaded from the
ship. It is settled in maritime law jurisprudence that cargoes while being unloaded generally remain under the custody of the carrier;
RCL and EDSA Shipping failed to dispute this.
RCL and EDSA Shipping could have offered evidence before the trial court to show that the damage to the condenser fan did not
occur: (1) while the cargo was in transit; (2) while they were in the act of discharging it from the vessel; or (3) while they were
delivering it actually or constructively to the consignee. They could have presented proof to show that they exercised extraordinary
care and diligence in the handling of the goods, but they opted to file a demurrer to evidence. As the order granting their demurrer
was reversed on appeal, the CA correctly ruled that they are deemed to have waived their right to present evidence, and the
presumption of negligence must stand. It is for this reason as well that we find RCL and EDSA Shipping's claim that the loss or
damage to the cargo was caused by a defect in the packing or in the containers. To exculpate itself from liability for the loss/damage
to the cargo under any of the causes, the common carrier is burdened to prove any of the causes in Article 1734 of the Civil Code
claimed by it by a preponderance of evidence. If the carrier succeeds, the burden of evidence is shifted to the shipper to prove that
the carrier is negligent.[13] RCL and EDSA Shipping, however, failed to satisfy this standard of evidence and in fact offered no
evidence at all on this point; a reversal of a dismissal based on a demurrer to evidence bars the defendant from presenting evidence
supporting its allegations. PETITION IS DENIED.
_______________

#28 G.R. No. 166640


HERMINIO MARIANO, JR., Petitioner,
v ILDEFONSO C. CALLEJAS and EDGAR DE BORJA, Respondents.
Facts:

Petitioner Herminio Mariano, Jr. is the surviving spouse of Dr. Frelinda Mariano who was a passenger of a Celyrosa Express bus
bound for Tagaytay when she met her death. Respondent 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
passenger bus was bound for Tagaytay while the trailer truck came from the opposite direction, bound for Manila. 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.
Petitioner filed a complaint for breach of contract of carriage and damages against respondents for their failure to transport
his wife and mother of his three minor children safely to her destination. Respondents denied liability for the death of Dr. Mariano.
They claimed that the proximate cause of the accident was the recklessness of the driver of the trailer truck which bumped their bus
while allegedly at a halt on the shoulder of the road in its rightful lane. Thus, respondent Callejas filed a third-party complaint
against Liong Chio Chang, doing business under the name and style of La Perla Sugar Supply, the owner of the trailer truck, for
indemnity in the event that he would be held liable for damages to petitioner.
Issue: W/N Ildefonso Callejas and Edgar de Borja, together with Liong Chio Chang, jointly and severally liable to pay petitioner
damages and costs of suit.
Ruling:
We elucidated:
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.
In the case at bar, petitioner cannot succeed in his contention that respondents failed to overcome the presumption of negligence
against them. The totality of evidence shows that the death of petitioners spouse 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.
First, we advert to the sketch prepared by PO3 Magno S. de Villa, who investigated the accident. The sketch

[13]

shows the passenger

bus facing the direction of Tagaytay City and lying on its right side on the shoulder of the road, about five meters away from the
point of impact. On the other hand, the trailer truck was on the opposite direction, about 500 meters away from the point of
impact. PO3 De Villa stated that he interviewed De Borja, respondent driver of the passenger bus, who said that he was about to
unload some passengers when his bus was bumped by the driver of the trailer truck that lost its brakes. PO3 De Villa checked out
the trailer truck and found that its brakes really failed. 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 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.
IN VIEW WHEREOF, the petition is DENIED.
___________ (double = #s 32 & 28)
HERMINIO MARIANO, JR.,vs. ILDEFONSO C. CALLEJAS
Facts:

Petitioner, Jr. is the surviving spouse of Dr. Frelinda Mariano who was a passenger of a Celyrosa Express

bus bound for Tagaytay while the trailer truck came from the opposite direction, bound for Manila. 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.

Respondents denied liability for the death of Dr. Mariano. They claimed that the proximate cause of the accident was the
recklessness of the driver of the trailer truck which bumped their bus while allegedly at a halt on the shoulder of the road in its
rightful lane. Thus, respondent Callejas filed a third-party complaint against Liong Chio Chang, doing business under the name and
style of La Perla Sugar Supply, the owner of the trailer truck, for indemnity in the event that he would be held liable for damages to
petitioner. The RTC found the respondents guilty for breach of contract of carriage while the CA reversed the the decision of the trial
court.

ISSUE:

whether respondents are guilty for breach of the contract of carriage.

HELD:

In the case at bar, petitioner cannot succeed in his contention that respondents failed to overcome the

presumption of negligence against them. The totality of evidence shows that the death of petitioners spouse 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 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. 222392, involving the same incident.

IN VIEW WHEREOF, the petition is DENIED. The Decision dated May 21, 2004 and the Resolution dated January 7, 2005 of
the Court of Appeals in CA-G.R. CV No. 66891 are AFFIRMED.
_________________
ABOITIZ SHIPPING CORPORATION vs. NEW INDIA ASSURANCE COMPANY, LTD

FACTS:
Societe Francaise Des Colloides loaded a cargo of textiles and auxiliary chemicals from France on board a vessel owned by FrancoBelgian Services, Inc. The cargo was consigned to General Textile, Inc., in Manila and insured by respondent New India Assurance
Company, Ltd. While in Hong Kong, the cargo was transferred to M/V P. Aboitiz for transshipment to Manila.
Before departing, the vessel was advised by the Japanese Meteorological Center that it was safe to travel to its destination. But

while at sea, the vessel received a report of a typhoon moving within its general path. To avoid the typhoon, the vessel changed its
course. However, it was still at the fringe of the typhoon when its hull leaked. On October 31, 1980, the vessel sank, but the captain
and his crew were saved.
Both the trial and the appellate courts found that the sinking was not due to the typhoon but to its unseaworthiness.
ISSUE:
Whether the limited liability doctrine, which limits respondents award of damages to its pro-rata share in the insurance proceeds,
applies in this case.
HELD:
No. An exception to the limited liability doctrine is when the damage is due to the fault of the shipowner or to the concurrent
negligence of the shipowner and the captain. In which case, the shipowner shall be liable to the full-extent of the damage.
In the present case, petitioner has the burden of showing that it exercised extraordinary diligence in the transport of the goods it
had on board in order to invoke the limited liability doctrine. Differently put, to limit its liability to the amount of the insurance
proceeds, petitioner has the burden of proving that the unseaworthiness of its vessel was not due to its fault or negligence.
Considering the evidence presented and the circumstances obtaining in this case, we find that petitioner failed to discharge this
burden. It initially attributed the sinking to the typhoon and relied on the BMI findings that it was not at fault. However, both the
trial and the appellate courts, in this case, found that the sinking was not due to the typhoon but to its unseaworthiness. Evidence
on record showed that the weather was moderate when the vessel sank. These factual findings of the Court of Appeals, affirming
those of the trial court are not to be disturbed on appeal, but must be accorded great weight. These findings are conclusive not only
on the parties but on this Court as well.
______________
# 30 BELGIAN OVERSEAS CHARTERING AND SHIPPING N.V. and JARDINE DAVIES TRANSPORT SERVICES, INC., petitioners, vs.
PHILIPPINE FIRST INSURANCE CO., INC., G.R. No. 143133
Facts: CMC Trading A.G. shipped on board the MN Anangel Sky at Hamburg, Germany 242 coils of various Prime Cold
Rolled Steel sheets for transportation to Manila consigned to the Philippine Steel Trading Corporation. On July 28, 1990, MN Anangel
Sky arrived at the port of Manila and, within the subsequent days, discharged the subject cargo. Four (4) coils were found to be in
bad order B.O. Tally sheet No. 154974. Finding the four (4) coils in their damaged state to be unfit for the intended purpose, the
consignee Philippine Steel Trading Corporation declared the same as total loss.
Despite receipt of a formal demand, Phil. First insurance refused to submit to the consignees claim. Consequently, Belgian
Overseas paid the consignee P506,086.50, and was subrogated to the latters rights and causes of action against defendantsappellees. Subsequently, plaintiff-appellant instituted this complaint for recovery of the amount paid by them, to the consignee as
insured.
Impugning the propriety of the suit against them, defendants-appellees imputed that the damage and/or loss was due to preshipment damage, to the inherent nature, vice or defect of the goods, or to perils, danger and accidents of the sea, or to
insufficiency of packing thereof, or to the act or omission of the shipper of the goods or their representatives. In addition thereto,
defendants-appellees argued that their liability, if there be any, should not exceed the limitations of liability provided for in the bill
of lading and other pertinent laws. Finally, defendants-appellees averred that, in any event, they exercised due diligence and
foresight required by law to prevent any damage/loss to said shipment.
Issue: Whether or not petitioners have overcome the presumption of negligence of a common carrier
Held: No. Petitioners contend that the presumption of fault imposed on common carriers should not be applied on the
basis of the lone testimony offered by private respondent. The contention is untenable. Well-settled is the rule that common
carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence and
vigilance with respect to the safety of the goods and the passengers they transport. Thus, common carriers are required to render
service with the greatest skill and foresight and to use all reasonable means to ascertain the nature and characteristics of the goods
tendered for shipment, and to exercise due care in the handling and stowage, including such methods as their nature requires. The
extraordinary responsibility lasts from the time the goods are unconditionally placed in the possession of and received for
transportation by the carrier until they are delivered, actually or constructively, to the consignee or to the person who has a right to
receive them.
Owing to this high degree of diligence required of them, common carriers, as a general rule, are presumed to have been at fault or
negligent if the goods they transported deteriorated or got lost or destroyed. That is, unless they prove that they exercised
extraordinary diligence in transporting the goods. In order to avoid responsibility for any loss or damage, therefore, they have the
burden of proving that they observed such diligence.
However, the presumption of fault or negligence will not arise if the loss is due to any of the following causes: (1) flood,
storm, earthquake, lightning, or other natural disaster or calamity; (2) an act of the public enemy in war, whether international or
civil; (3) an act or omission of the shipper or owner of the goods; (4) the character of the goods or defects in the packing or the
container; or (5) an order or act of competent public authority. This is a closed list. If the cause of destruction, loss or deterioration is
other than the enumerated circumstances, then the carrier is liable therefor.
Corollary to the foregoing, mere proof of delivery of the goods in good order to a common carrier and of their arrival in bad
order at their destination constitutes a prima facie case of fault or negligence against the carrier. If no adequate explanation is given
as to how the deterioration, the loss or the destruction of the goods happened, the transporter shall be held responsible. That

petitioners failed to rebut the prima facie presumption of negligence is revealed in the case at bar by a review of the records and
more so by the evidence adduced by respondent.
_______________
G.R. No. 159636

November 25, 2004

VICTORY LINER, INC., petitioner,


vs.
ROSALITO GAMMAD, APRIL ROSSAN P. GAMMAD, ROI ROZANO P. GAMMAD and DIANA FRANCES P. GAMMAD, respondents.
Facts:
Marie Grace Gammad, wife of respondent Rosalito, was on board an air-conditioned Victory Liner bus when it fell on a ravine while
running at a high speed resulting to her death and physical injuries to other passengers. Respondent heirs of the deceased filed a
complaint for damages arising from culpa contractual against petitioner. In its answer, the petitioner claimed that the incident was
purely accidental and that it has always exercised extraordinary diligence in its 50 years of operation.
At the pre-trial, petitioner did not want to admit the proposed stipulation that the deceased was a passenger of the Victory Liner Bus
which fell on the ravine and that she was issued Passenger Ticket. Respondents, for their part, did not accept petitioners proposal to
pay P50,000.00.
The trial court rendered its decision in favor of respondents. On appeal by petitioner, the Court of Appeals affirmed the decision of
the trial court with modification as to the amount of damages. Represented by a new counsel, petitioner filed a motion for
reconsideration. Hence, this petition for review on certiorari.
Issue: (1) Whether petitioner should be held liable for breach of contract of carriage.
(2) Whether the award of damages was proper.
Held:
(1) Petitioner was correctly found liable for breach of contract of carriage.
A common carrier is bound to carry its passengers safely as far as human care and foresight can provide, using the utmost diligence
of very cautious persons, with due regard to all the circumstances. In a contract of carriage, it is presumed that the common carrier
was at fault or was negligent when a passenger dies or is injured. Unless the presumption is rebutted, the court need not even make
an express finding of fault or negligence on the part of the common carrier. This statutory presumption may only be overcome by
evidence that the carrier exercised extraordinary diligence.
In the instant case, there is no evidence to rebut the statutory presumption that the proximate cause of Marie Graces death was the
negligence of petitioner. Hence, the courts below correctly ruled that petitioner was guilty of breach of contract of carriage.
(2) The award of damages should be modified. The petition is partially granted.
Article 1764 in relation to Article 2206 of the Civil Code, holds the common carrier in breach of its contract of carriage that results in
the death of a passenger liable to pay the following: (1) indemnity for death, (2) indemnity for loss of earning capacity, and (3) moral
damages.
In the present case, respondent heirs of the deceased are entitled to indemnity for the death of Marie Grace which under current
jurisprudence is fixed at P50,000.00.
The award of compensatory damages for the loss of the deceaseds earning capacity should be deleted for lack of basis. As a rule,
documentary evidence should be presented to substantiate the claim for damages for loss of earning capacity. By way of exception,
damages for loss of earning capacity may be awarded despite the absence of documentary evidence when (1) the deceased is selfemployed earning less than the minimum wage under current labor laws, and judicial notice may be taken of the fact that in the
deceaseds line of work no documentary evidence is available; or (2) the deceased is employed as a daily wage worker earning less
than the minimum wage under current labor laws. The RTC and CA computed the award of compensatory damages on the basis that
the deceased was 39 years of age and a Section Chief of the BIR with a salary of P83, 088 per annum when she died. No other
evidence was presented. The award is clearly erroneous because the deceaseds earnings do not fall within the exceptions.
However, the fact of loss having been established, temperate damages in the amount of P500,000.00 should be awarded to
respondents. Under Article 2224 of the Civil Code, temperate or moderate damages, which are more than nominal but less than
compensatory damages, may be recovered when the court finds that some pecuniary loss has been suffered but its amount cannot,
from the nature of the case, be proved with certainty.
Anent the award of moral damages, the same cannot be lumped with exemplary damages because they are based on different jural
foundations. These damages are different in nature and require separate determination. In culpa contractual or breach of contract,

moral damages may be recovered when the defendant acted in bad faith or was guilty of gross negligence (amounting to bad faith)
or in wanton disregard of contractual obligations and, as in this case, when the act of breach of contract itself constitutes the tort
that results in physical injuries. By special rule in Article 1764 in relation to Article 2206 of the Civil Code, moral damages may also be
awarded in case the death of a passenger results from a breach of carriage. On the other hand, exemplary damages, which are
awarded by way of example or correction for the public good may be recovered in contractual obligations if the defendant acted in
wanton, fraudulent, reckless, oppressive, or malevolent manner.
Respondents in the instant case should be awarded moral damages to compensate for the grief caused by the death of the deceased
resulting from the petitioners breach of contract of carriage. Furthermore, the petitioner failed to prove that it exercised the
extraordinary diligence required for common carriers, it is presumed to have acted recklessly. Thus, the award of exemplary
damages is proper.
The actual damages awarded by the trial court reduced by the Court of Appeals should be further reduced. In People v. Duban, it
was held that only substantiated and proven expenses or those that appear to have been genuinely incurred in connection with the
death, wake or burial of the victim will be recognized. A list of expenses and the contract/receipt for the construction of the tomb in
this case, cannot be considered competent proof and cannot replace the official receipts necessary to justify the award. Hence,
actual damages should be further reduced.
Pursuant to Article 2208 of the Civil Code, attorneys fees may also be recovered in the case at bar where exemplary damages are
awarded. The Court finds the award of attorneys fees equivalent to 10% of the total amount adjudged against petitioner
reasonable.
In the instant case, petitioner should be held liable for payment of interest as damages for breach of contract of carriage.
Considering that the amounts payable by petitioner has been determined with certainty only in the instant petition, the interest due
shall be computed upon the finality of this decision at the rate of 12% per annum until satisfaction.
___________
#32 Mariano jr v Callejas balik na!
__________
#33 Jesusa Vda de Nueca v Manila Railroad, CA
_________
34. VICENTE CALALAS, petitioner, vs. COURT OF APPEALS, ELIZA JUJEURCHE SUNGA and FRANCISCO SALVA, respondents.
FACTS: At 10 o'clock in the morning of August 23, 1989, private respondent Sunga, then a college freshman majoring in P.E at the
Siliman University, took a passenger jeepney owned and operated by petitioner Calalas. As the jeepney was filled to capacity of
about 24 passengers, Sunga was given by the conductor an "extension seat," a wooden stool at the back of the door at the rear end
of the vehicle. On the way to Poblacion Sibulan, Negros Occidental, the jeepney stopped to let a passenger off. As she was seated at
the rear of the vehicle, Sunga gave way to the outgoing passenger. Just as she was doing so, an Isuzu truck driven by Iglecerio Verena
and owned by Francisco Salva bumped the left rear portion of the jeepney. As a result, Sunga was injured. On October 9, 1989,
Sunga filed a complaint for damages against Calalas, alleging violation of the contract of carriage by the former in failing to exercise
the diligence required of him as a common carrier. Calalas, on the other hand, filed a third-party complaint against Francisco Salva,
the owner of the Isuzu truck. The lower court rendered judgment against Salva as third-party defendant and absolved Calalas of
liability, holding that it was the driver of the Isuzu truck who was responsible for the accident. It took cognizance of another case
(Civil Case No. 3490), filed by Calalas against Salva and Verena, for quasi-delict, in which Branch 37 of the same court held Salva and
his driver Verena jointly liable to Calalas for the damage to his jeepney. On appeal to the Court of Appeals, the ruling of the lower
court was reversed on the ground that Sunga's cause of action was based on a contract of carriage, not quasi-delict, and that the
common carrier failed to exercise the diligence required under the Civil Code. The appellate court dismissed the third-party
complaint against Salva and adjudged Calalas liable for damages to Sunga Petitioner contends that the ruling in Civil Case No. 3490
that the negligence of Verena was the proximate cause of the accident negates his liability and that to rule otherwise would be to
make the common carrier an insurer of the safety of its passengers. He contends that the bumping of the jeepney by the truck
owned by Salva was a caso fortuito. Petitioner further assails the award of moral damages to Sunga on the ground that it is not
supported by evidence.
ISSUE: 1. Whether the decision in the case for quasi delict between Calalas on one hand and Salva and Verena on the other hand, is
res judicata to the issue in this case
2. Whether Calalas exercised the extraordinary diligence required in the contract of carriage
3. Whether moral damages should be awarded
HELD: 1. No. The issue in Civil Case No. 3490 was whether Salva and his driver Verena were liable for quasi-delict for the damage
caused to petitioner's jeepney. On the other hand, the issue in this case is whether petitioner is liable on his contract of carriage. The
first, quasi-delict, also known as culpa aquiliana or culpa extra contractual, has as its source the negligence of the tortfeasor. The
second, breach of contract or culpa contractual, is premised upon the negligence in the performance of a contractual obligation.
Consequently, in quasi-delict, the negligence or fault should be clearly established because it is the basis of the action, whereas in
breach of contract, the action can be prosecuted merely by proving the existence of the contract and the fact that the obligor, in this

case the common carrier, failed to transport his passenger safely to his destination. In case of death or injuries to passengers, Art.
1756 of the Civil Code provides that common carriers are presumed to have been at fault or to have acted negligently unless they
prove that they observed extraordinary diligence as defined in Arts. 1733 and 1755 of the Code. This provision necessarily shifts to
the common carrier the burden of proof. It is immaterial that the proximate cause of the collision between the jeepney and the
truck was the negligence of the truck driver. The doctrine of proximate cause is applicable only in actions for quasi-delict, not in
actions involving breach of contract. The doctrine is a device for imputing liability to a person where there is no relation between
him and another party. In such a case, the obligation is created by law itself. But, where there is a pre-existing contractual relation
between the parties, it is the parties themselves who create the obligation, and the function of the law is merely to regulate the
relation thus created.

2. No. First, the jeepney was not properly parked, its rear portion being exposed about two meters from the broad shoulders of the
highway, and facing the middle of the highway in a diagonal angle. Second, it is undisputed that petitioner's driver took in more
passengers than the allowed seating capacity of the jeepney. The fact that Sunga was seated in an "extension seat" placed her in a
peril greater than that to which the other passengers were exposed. Therefore, not only was petitioner unable to overcome the
presumption of negligence imposed on him for the injury sustained by Sunga, but also, the evidence shows he was actually negligent
in transporting passengers. We find it hard to give serious thought to petitioner's contention that Sunga's taking an "extension seat"
amounted to an implied assumption of risk. It is akin to arguing that the injuries to the many victims of the tragedies in our seas
should not be compensated merely because those passengers assumed a greater risk of drowning by boarding an overloaded ferry.
This is also true of petitioner's contention that the jeepney being bumped while it was improperly parked constitutes caso fortuito. A
caso fortuito is an event which could not be foreseen, or which, though foreseen, was inevitable. This requires that the following
requirements be present: (a) the cause of the breach is independent of the debtor's will; (b) the event is unforeseeable or
unavoidable; (c) the event is such as to render it impossible for the debtor to fulfil his obligation in a normal manner, and (d) the
debtor did not take part in causing the injury to the creditor. Petitioner should have foreseen the danger of parking his jeepney with
its body protruding two meters into the highway.
3. As a general rule, moral damages are not recoverable in actions for damages predicated on a breach of contract for it is not one of
the items enumerated under Art. 2219 of the Civil Code. As an exception, such damages are recoverable: (1) in cases in which the
mishap results in the death of a passenger, as provided in Art. 1764, in relation to Art. 2206(3) of the Civil Code; and (2) in the cases
in which the carrier is guilty of fraud or bad faith, as provided in Art. 2220. In this case, there is no legal basis for awarding moral
damages since there was no factual finding by the appellate court that petitioner acted in bad faith in the performance of the
contract of carriage.
_________________
Tiu vs. Arriesgado
G.R. No. 138060, September 1, 2004
Facts: At about 10:00 p.m. of March 15, 1987, the cargo truck marked "Condor Hollow Blocks and General Merchandise" bearing
plate number GBP-675 was loaded with firewood in Bogo, Cebu and left for Cebu City. Upon reaching Sitio Aggies, Poblacion,
Compostela, Cebu, just as the truck passed over a bridge, one of its rear tires exploded. The driver, Sergio Pedrano, then parked
along the right side of the national highway and removed the damaged tire to have it vulcanized at a nearby shop, about 700 meters
away. Pedrano left his helper, Jose Mitante, Jr. to keep watch over the stalled vehicle, and instructed the latter to place a spare tire
six fathoms away behind the stalled truck to serve as a warning for oncoming vehicles. The trucks tail lights were also left on. It was
about 12:00 a.m., March 16, 1987.
At about 4:45 a.m., D Rough Riders passenger bus with plate number PBP-724 driven by Virgilio Te Laspias was cruising along the
national highway of Sitio Aggies, Poblacion, Compostela, Cebu. The passenger bus was also bound for Cebu City, and had come from
Maya, Daanbantayan, Cebu. Among its passengers were the Spouses Pedro A. Arriesgado and Felisa Pepito Arriesgado, who were
seated at the right side of the bus, about three (3) or four (4) places from the front seat.
As the bus was approaching the bridge, Laspias saw the stalled truck, which was then about 25 meters away. He applied the breaks
and tried to swerve to the left to avoid hitting the truck. But it was too late; the bus rammed into the trucks left rear. The impact
damaged the right side of the bus and left several passengers injured. Pedro Arriesgado lost consciousness and suffered a fracture in
his right colles. His wife, Felisa, was brought to the Danao City Hospital. She was later transferred to the Southern Island Medical
Center where she died shortly thereafter.
Respondent Pedro A. Arriesgado then filed a complaint for breach of contract of carriage, damages and attorneys fees before the
Regional Trial Court of Cebu City, Branch 20, against the petitioners, D Rough Riders bus operator William Tiu and his driver, Virgilio

Te Laspias on May 27, 1987. The respondent alleged that the passenger bus in question was cruising at a fast and high speed along
the national road, and that petitioner Laspias did not take precautionary measures to avoid the accident.
The petitioners, for their part, filed a Third-Party Complaint against the following: respondent Philippine Phoenix Surety and
Insurance, Inc. (PPSII), petitioner Tius insurer; respondent Benjamin Condor, the registered owner of the cargo truck; and
respondent Sergio Pedrano, the driver of the truck. They alleged that petitioner Laspias was negotiating the uphill climb along the
national highway of Sitio Aggies, Poblacion, Compostela, in a moderate and normal speed. It was further alleged that the truck was
parked in a slanted manner, its rear portion almost in the middle of the highway, and that no early warning device was displayed.
Petitioner Laspias promptly applied the brakes and swerved to the left to avoid hitting the truck head-on, but despite his efforts to
avoid damage to property and physical injuries on the passengers, the right side portion of the bus hit the cargo trucks left rear.
HELD: The rules which common carriers should observe as to the safety of their passengers are set forth in the Civil Code, Articles
1733, 1755and 1756. It is undisputed that the respondent and his wife were not safely transported to the destination agreed upon.
In actions for breach of contract, only the existence of such contract, and the fact that the obligor, in this case the common carrier,
failed to transport his passenger safely to his destination are the matters that need to be proved. This is because under the said
contract of carriage, the petitioners assumed the express obligation to transport the respondent and his wife to their destination
safely and to observe extraordinary diligence with due regard for all circumstances. Any injury suffered by the passengers in the
course thereof is immediately attributable to the negligence of the carrier. Upon the happening of the accident, the presumption of
negligence at once arises, and it becomes the duty of a common carrier to prove that he observed extraordinary diligence in the care
of his passengers. It must be stressed that in requiring the highest possible degree of diligence from common carriers and in creating
a presumption of negligence against them, the law compels them to curb the recklessness of their drivers. While evidence may be
submitted to overcome such presumption of negligence, it must be shown that the carrier observed the required extraordinary
diligence, which means that the carrier must show the utmost diligence of very cautious persons as far as human care and foresight
can provide, or that the accident was caused by fortuitous event. As correctly found by the trial court, petitioner Tiu failed to
conclusively rebut such presumption. The negligence of petitioner Laspias as driver of the passenger bus is, thus, binding against
petitioner Tiu, as the owner of the passenger bus engaged as a common carrier.
____________
PHILIPPINE CHARTER INSURANCE CORPORATION vs. UNKNOWN OWNER OF THE VESSEL M/V NATIONAL HONOR, NATIONAL
SHIPPING CORPORATION OF THE PHILIPPINES and INTERNATIONAL CONTAINER SERVICES, INC.
FACTS:
Petitioner Philippine Charter Insurance Corporation (PCIC) is the insurer of a shipment on board the vessel M/V National Honor,
represented in the Philippines by its agent, National Shipping Corporation of the Philippines (NSCP).
The M/V National Honor arrived at the Manila International Container Terminal (MICT). The International Container Terminal
Services, Incorporated (ICTSI) was furnished with a copy of the crate cargo list and bill of lading, and it knew the contents of the
crate. The following day, the vessel started discharging its cargoes using its winch crane. The crane was operated by a winchman
from the ICTSI, exclusive arrastre operator of MICT.
Denasto Dauz, Jr., the checker-inspector of the NSCP, along with the crew and the surveyor of the ICTSI, conducted an inspection of
the cargo. They inspected the hatches, checked the cargo and found it in apparent good condition. Claudio Cansino, the stevedore of
the ICTSI, placed two sling cables on each end of Crate No. 1. No sling cable was fastened on the mid-portion of the crate. In Dauzs
experience, this was a normal procedure. As the crate was being hoisted from the vessels hatch, the mid-portion of the wooden
flooring suddenly snapped in the air, about five feet high from the vessels twin deck, sending all its contents crashing down hard,
resulting in extensive damage to the shipment.
PCIC paid the damage, and as subrogee, filed a case against M/V National Honor, NSCP and ICTSI. Both RTC and CA dismissed the
complaint.
ISSUE:
Whether or not the presumption of negligence is applicable in the instant case.
HELD:
No. We agree with the contention of the petitioner that common carriers, from the nature of their business and for reasons of public
policy, are mandated 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.


However, under Article 1734 of the New Civil Code, the presumption of negligence does not apply 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;
5. Order or act of competent public authority.
The case at bar falls under one of the exceptions mentioned in Article 1734 of the Civil Code, particularly number (4) thereof, i.e., the
character of the goods or defects in the packing or in the containers. The trial court found that the breakage of the crate was not
due to the fault or negligence of ICTSI, but to the inherent defect and weakness of the materials used in the fabrication of the said
crate.
In the present case, the trial court declared that based on the record, the loss of the shipment was caused by the negligence of the
petitioner as the shipper:
The breakage and collapse of Crate No. 1 and the total destruction of its contents were not imputable to any fault or negligence on
the part of said defendant in handling the unloading of the cargoes from the carrying vessel, but was due solely to the inherent
defect and weakness of the materials used in the fabrication of said crate.
Crate No. 1 was provided by the shipper of the machineries in Seoul, Korea. There is nothing in the record which would indicate that
defendant ICTSI had any role in the choice of the materials used in fabricating this crate. Said defendant, therefore, cannot be held
as blame worthy for the loss of the machineries contained in Crate No. 1
It appears that the wooden batten used as support for the flooring was not made of good materials, which caused the middle
portion thereof to give way when it was lifted. The shipper also failed to indicate signs to notify the stevedores that extra care
should be employed in handling the shipment.
The petitioner failed to adduce any evidence to counter that of respondent ICTSI. Thus, the petition is DENIED for lack of merit.
__________
#37 Asia Lighterage and Shipping, INC vs. CA G.R. # 147246
FACTS: Asia Lighterage and Shipping, Inc was contracted as carrier to deliver 3,150 metric tons of Better Western White
Wheat in bulk, (US$423,192.35) to the consignees (General Milling Corporation) warehouse at Bo. Ugong, Pasig City. The cargo was
transferred to its custody on July 25, 1990. The shipment was insured by Prudential Guarantee and Assurance, Inc. against
loss/damage for P14,621,771.75. On August 15, 1990, 900 metric tons of the shipment was loaded on barge PSTSI III for delivery to
consignee. However, the cargo did not reach its destination.
It appears that on August 17, 1990, the transport of said cargo was suspended due to a warning of an incoming typhoon. 5
days later, the petitioner proceeded to pull the barge to Engineering Island off Baseco to seek shelter from the approaching typhoon.
PSTSI III was tied down to other barges which arrived ahead of it while weathering out the storm that night. A few days after, the
barge developed a list because of a hole it sustained after hitting an unseen protuberance underneath the water. It filed a Marine
Protest on August 28, 1990 and also secured the services of Gaspar Salvaging Corporation to refloat the barge. The hole was then
patched with clay and cement.
The barge was then towed to ISLOFF terminal before it finally headed towards the consignees wharf on September 5, 1990. Upon
reaching the Sta. Mesa spillways, 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 3 other barges. The next day, the towing bits of the barge broke. It sank completely,
resulting in the total loss of the remaining cargo. A 2nd Marine Protest was filed on September 7, 1990.
Bidding was conducted seven days later to dispose of the damaged wheat retrieved & loaded on the 3 other barges. The
total proceeds from the sale of the salvaged cargo was P201,379.75. On the same date, consignee sent a claim letter to the
petitioner, and another letter dated September 18, 1990 to the private respondent for the value of the lost cargo. On January 30,
1991, the private respondent indemnified the consignee in the amount of P4,104,654.22. Thereafter, as subrogee, it sought recovery
of said amount from the petitioner, but to no avail.
ISSUES: 1. whether petitioner is a common carrier. 2. Assuming petitioner is a common carrier, whether it exercised
extraordinary care and diligence in its care and custody of the consignees cargo.
HELD: 1.YES. Petitioner is a common carrier. 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. In De Guzman vs. CA (G.R. No. L-47822, 22 December 1988) it was held that the
definition of common carriers in Article 1732 of the Civil Code 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. There is also no distinction
between a person or enterprise offering transportation service on a regular/scheduled basis and one offering such service on an
occasional, episodic or unscheduled basis. Further, Article 1732 does not 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. Private
respondent Ernesto Cendaa was considered to be a common carrier even if his principal occupation was not the carriage for others,
but that of buying used bottles and scrap metal in Pangasinan and selling these items in Manila.
To be sure, petitioner fits the test of a common carrier as laid down in Bascos vs. CA (G.R. No. 101089, 07 April 1993, 221
SCRA 318). 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, lighterage and drayage, offering its barges to
the public, despite its limited clientele for carrying/transporting goods by water for compensation. Petitioner is clearly a common
carrier.
Therefore, 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.
2. The findings of the lower courts should be upheld. 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. They are presumed to have been at fault or to have acted negligently if the goods
are lost, destroyed or deteriorated. 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/omission of the shipper/owner of the goods; (4) The character of the
goods or defects in the packing or in the containers; (5) Order/act of competent public authority.
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/minimize the loss. 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.
Moreover, petitioner still headed to the consignees wharf despite knowledge of an incoming typhoon. During the time that
the barge was heading towards the consignees wharf on September 5, 1990, typhoon Loleng has already entered the Philippine
area of responsibility.
Accordingly, the petitioner cannot invoke the occurrence of the typhoon as force majeure to escape liability for the loss
sustained by the private respondent. Surely,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.
______________
G.R. No. 146018

June 25, 2003

EDGAR COKALIONG SHIPPING LINES, INC., Petitioner,


vs.
UCPB GENERAL INSURANCE COMPANY, INC., Respondent.
Principles:
The liability of a common carrier for the loss of goods may, by stipulation in the bill of lading, be limited to the value declared by the
shipper. On the other hand, the liability of the insurer is determined by the actual value covered by the insurance policy and the
insurance premiums paid therefor, and not necessarily by the value declared in the bill of lading.
Facts:
Nestor Angelia delivered to the Edgar Cokaliong Shipping Lines, Inc. cargo to be transported on board the M/V Tandag. Petitioner
issued Bill of Lading No. 58, freight prepaid, covering the cargo. Nestor Angelia was both the shipper and consignee of the cargo.
Zosimo Mercado likewise delivered cargo to petitioner on board the said vessel, and said voyage. Petitioner issued Bill of Lading No.
59 covering the cargo. Under the Bill of Lading, Zosimo Mercado was both the shipper and consignee of the cargo. Feliciana Legaspi,
a representative of Legaspi Marketing, insured the cargo, covered by Bill of Lading No. 59, with the UCPB General Insurance Co., Inc.
She also insured the cargo covered by Bill of Lading No. 58 with respondent.
When the vessel left port and had passed by the Mandaue-Mactan Bridge, fire ensued in the engine room, and the fire engulfed and
destroyed the entire vessel resulting in the loss of the vessel and the cargoes therein. The Captain filed the required Marine Protest.
Shortly thereafter, Feliciana Legaspi filed claims in behalf of the shippers/consignees, Angelia and Mercado, with respondent, for the
value of the cargos covered by Bill of Lading Nos. 58 and 59. She submitted, in support of her claims, Receipts and Order Slips
purportedly signed by Angelia and Mercado for the goods they received from Feliciana Legaspi. Respondent approved the claims of

Legaspi and drew and issued UCPB Checks in settlement of her claims after which she executed a Subrogation Receipts/Deeds in
favor of respondent.
Respondent, as subrogee of Feliciana Legaspi, filed a complaint anchored on torts against petitioner, with the RTC for the collection
of the total principal which it paid to Feliciana Legaspi for the loss of the cargo. The CA held that petitioner had failed "to prove that
the fire which consumed the vessel and its cargo was caused by something other than its negligence in the upkeep, maintenance
and operation of the vessel." Hence this petition for review under Rule 45 of the Rules of Court.
Issues: (1) Whether petitioner is liable for the loss of the goods.
(2) If it is liable, what is the extent of its liability.
Held: The Petition is partly meritorious.
Liability for Loss
The uncontroverted findings of the Philippine Coast Guard show that the M/V Tandag sank due to a fire, which resulted from a crack
in the auxiliary engine fuel oil service tank. The crack was located on the side of the fuel oil tank, which had a mere two-inch gap
from the engine room walling, thus precluding constant inspection and care by the crew.
Having originated from an unchecked crack in the fuel oil service tank, the fire could not have been caused by force majeure. Broadly
speaking, force majeure generally applies to a natural accident, such as that caused by a lightning, an earthquake, a tempest or a
public enemy. Hence, fire is not considered a natural disaster or calamity. Citing Eastern Shipping Lines, Inc. v. Intermediate
Appellate Court:
"Article 1680 of the Civil Code, which considers fire as an extraordinary fortuitous event refers to leases or rural lands where a
reduction of the rent is allowed when more than one-half of the fruits have been lost due to such event, considering that the law
adopts a protective policy towards agriculture.
"As the peril of fire is not comprehended within the exceptions in Article 1734, supra, Article 1735 of the Civil Code provides that in all
cases other than those mentioned in Article 1734, the common carrier shall be presumed to have been at fault or to have acted
negligently, unless it proves that it has observed the extraordinary diligence required by law."
The law provides that a common carrier is presumed to have been negligent if it fails to prove that it exercised extraordinary
vigilance over the goods it transported. Ensuring the seaworthiness of the vessel is the first step in exercising the required vigilance.
Petitioner did not present sufficient evidence showing what measures or acts it had undertaken to ensure the seaworthiness of the
vessel. Necessarily, in accordance with Article 1735 of the Civil Code, we hold petitioner responsible for the loss of the goods
covered by Bills of Lading Nos. 58 and 59.

Second Issue:
Extent of Liability
The records show that the Bills of Lading covering the lost goods contain the stipulation that in case of claim for loss or for damage
to the shipped merchandise or property, "[t]he liability of the common carrier x x x shall not exceed the value of the goods as
appearing in the bill of lading."
A stipulation that limits liability is valid as long as it is not against public policy. Citing Everett Steamship Corporation v. Court of
Appeals:
"A stipulation in the bill of lading limiting the common carriers liability for loss or destruction of a cargo to a certain sum, unless the
shipper or owner declares a greater value, is sanctioned by law, particularly Articles 1749 and 1750 of the Civil Code which provides:
Art. 1749. A stipulation that the common carriers liability is limited to the value of the goods appearing in the bill of lading, unless
the shipper or owner declares a greater value, is binding.
Art. 1750. A contract fixing the sum that may be recovered by the owner or shipper for the loss, destruction, or deterioration of the
goods is valid, if it is reasonable and just under the circumstances, and has been freely and fairly agreed upon.
In the present case, the stipulation limiting petitioners liability is not contrary to public policy. In fact, its just and reasonable
character is evident. The shippers/consignees may recover the full value of the goods by the simple expedient of declaring the true
value of the shipment in the Bill of Lading. Other than the payment of a higher freight, there was nothing to stop them from placing

the actual value of the goods therein. In fact, they committed fraud against the common carrier by deliberately undervaluing the
goods in their Bill of Lading, thus depriving the carrier of its proper and just transport fare.
____________
CENTRAL SHIPPING COMPANY, INC. vs. INSURANCE COMPANY OF NORTH AMERICA
FACTS:
petitioner received on board its vessel, the M/V Central Bohol, 376 pieces of Philippine Apitong Round Logs and
undertook to transport said shipment to Manila for delivery to Alaska Lumber Co., Inc. The cargo was insured for P3,000,000.00
against total loss under respondents Marine Cargo Policy No. MCPB-00170. While enroute to Manila, the vessel listed about 10
degrees starboardside, due to the shifting of logs in the hold. After the listing of the vessel had increased to 15 degrees, the ship
captain ordered his men to abandon ship, later on the ship completely sank. Respondent alleged that the total loss of the shipment
was caused by the fault and negligence of the petitioner and its captain .
The consignee, Alaska Lumber Co. Inc., presented a claim for the value of the shipment to the petitioner but the latter failed
and refused to settle the claim, hence respondent, being the insurer, paid said claim and now seeks to be subrogated to all the rights
and actions of the consignee as against the petitioner.
Petitioner raised as its main defense that the proximate and only cause of the sinking of its vessel and the loss of its cargo was a
.
natural disaster, a tropical storm which neither [petitioner] nor the captain of its vessel could have foreseen
ISSUES:
Whether the carrier is liable for the loss of the cargo. Whether the doctrine of limited liability is applicable.
HELD:
The Petition is devoid of merit. From the nature of their business and for reasons of public policy, common carriers
[10]
are bound to observe extraordinary diligence over the goods they transport, according to all the circumstances of each case. In
the event of loss, destruction or deterioration of the insured goods, common carriers are responsible; that is, unless they can prove
that such loss, destruction or deterioration was brought about -- among others -- by flood, storm, earthquake, lightning or other
[11]
natural disaster or calamity. In all other cases not specified under Article 1734 of the Civil Code, common carriers are presumed
[12]
to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence.
Nonetheless, to our mind it would not be sufficient to categorize the weather condition at the time as a storm within the
absolutory causes enumerated in the law. Significantly, no typhoon was observed within the Philippine area of responsibility during
that period.
Even if the weather encountered by the ship is to be deemed a natural disaster under Article 1739 of the Civil Code, petitioner
failed to show that such natural disaster or calamity was the proximate and only cause of the loss. Human agency must be entirely
excluded from the cause of injury or loss. In other words, the damaging effects blamed on the event or phenomenon must not have
been caused, contributed to, or worsened by the presence of human participation. The defense of fortuitous event or natural
[28]
disaster cannot be successfully made when the injury could have been avoided by human precaution.
Hence, if a common carrier fails to exercise due diligence -- or that ordinary care that the circumstances of the particular case
demand -- to prevent or minimize the loss before, during and after the occurrence of the natural disaster, the carrier shall be
deemed to have been negligent. The loss or injury is not, in a legal sense, due to a natural disaster under Article 1734(1).
[36]

The doctrine of limited liability under Article 587 of the Code of Commerce is not applicable to the present case. This rule
[37]
does not apply to situations in which the loss or the injury is due to the concurrent negligence of the shipowner and the captain. It
has already been established that the sinking of M/V Central Bohol had been caused by the fault or negligence of the ship captain
and the crew, as shown by the improper stowage of the cargo of logs. Closer supervision on the part of the shipowner could have
[38]
prevented this fatal miscalculation. As such, the shipowner was equally negligent. It cannot escape liability by virtue of the
limited liability rule.
_________________
#40 Juntilla v Fontanar
_____________
41. Ganzon V. CA
FACTS: November 28, 1956, Gelacio Tumambing (Gelacio) contracted the services of Mauro B. Ganzon to haul 305 tons of scrap iron
from Mariveles, Bataan, to the port of Manila on board the light LCT Batman. On December 1, 1956 Gelacio delivered the scrap
iron to Filomeno Niza, captain of the lighter, for loading which was actually begun on the same date by the crew of the lighter under
the captains supervisor. When about half of the scrap iron was already loaded, Mayor Jose Advincula of Mariveles, Bataan arrived
and demanded P5000 from Gelacio. Upon resisting, the Mayor fired at Gelacio so he had to be taken to the hospital. Loading of the
scrap iron was resumed. However, on December 4, 1956 Acting Mayor Basilio Rub (Rub), accompanied by 3 policemen, ordered
captain Filomeno Niza and his crew to dump the scrap iron where the lighter was docked. Later on Mayor Rub had taken custody of
the scrap iron. The RTC ruled in favor of Gelacio and against Ganzon
ISSUE: WON Ganzon should be held liable under the contract of carriage

HELD: YES. Ganzon thru his employees, actually received the scraps is freely admitted. Pursuant to Art. 1736, such extraordinary
responsibility would cease only upon the delivery, actual or constructive, by the carrier to the consignee, or to the person who has a
right to receive them. The fact that part of the shipment had not been loaded on board the lighter did not impair the said contract of
transportation as the goods remained in the custody and control of the carrier, albeit still unloaded. It also failed to show that the
loss of the scraps was due to any of the following causes enumerated in Article 1734 of the Civil Code, namely:
(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.
Hence, the petitioner is presumed to have been at fault or to have acted negligently. By reason of this presumption, the court is not
even required to make an express finding of fault or negligence before it could hold the petitioner answerable for the breach of the
contract of carriage. The petitioner is exempted from any liability had he been able to prove that he observed extraordinary
diligence in the vigilance over the goods in his custody, according to all the circumstances of the case, or that the loss was due to an
unforeseen event or to force majeure. As it was, there was hardly any attempt on the part of the petitioner to prove that he
exercised such extraordinary diligence. The Cout did not sustain the theory of caso fortuito - "order or act of competent public
authority"(Art. 1174 of the Civil Code). Additionally, evidenced shows no authority or power for the acting mayor to issue such an
order was given. Neither has it been shown that the cargo of scrap iron belonged to the Municipality of Mariveles. Thus, Ganzon was
not duty bound to obey the illegal order to dump into the sea the scrap iron. Moreover, there is absence of sufficient proof that the
issuance of the same order was attended with such force or intimidation as to completely overpower the will of the petitioner's
employees. The mere difficulty in the fullfilment of the obligation is not considered force majeure. Petition is DENIED.
____________
#42 Cervantes vs CA G.R. No. 125138
FACTS:
Philippines Air Lines, Inc. (PAL), issued to Nicholas Cervantes, around trip plane ticket for Manila-Honolulu-Los Angeles-HonoluluManila, which ticket expressly provided an expiry of date of 1 year from issuance (until March 27, 1990). The issuance of the said
plane ticket was in compliance with a Compromise Agreement entered into between the contending parties in 2 previous suits
before the RTC in Surigao City.
4 days before the expiry date of subject ticket, Cervantes used it. Upon his arrival in LA on the same day, he immediately booked his
LA-Manila return ticket with the PAL office, and it was confirmed for the April 2, 1990 flight.
Upon learning that the same PAL plane would make a stop-over in San Francisco, Cervantes made arrangements with PAL for him to
board the flight In San Francisco instead of boarding in Las Angeles.
On April 2, 1990, when Cervantes checked in at the PAL counter in San Francisco, he was not allowed to board. The PAL personnel
concerned marked the following notation on his ticket: "TICKETNOT ACCEPTED DUE EXPIRATION OF VALIDITY."
Cervantes filed a Complaint for Damages, for breach of contract of carriage RTC in Surigao City. But the said complaint was dismissed
for lack of merit.
Cervantes interposed an appeal to the CA - affirmed RTC.
ISSUES: (1) WON the act of the PAL agents in confirming subject ticket extended the period of validity of Cervantes' ticket. NO
(2) WON the defense of lack of authority was correctly ruled upon. YES
(3) WON the denial of the award for damages was proper. YES
RATIO:
(1)
Under Art. 1989, the acts an agent beyond the scope of his authority do not bind the principal, unless the latter ratifies the same
expressly or impliedly. Furthermore, when the 3rd person(Cervantes) knows that the agent was acting beyond his power or
authority, the principal cannot be held liable for the acts of the agent. If the said 3rd person is aware of such limits of authority, he is
to blame, and is not entitled to recover damages from the agent, unless the latter undertook to secure the principal's ratification.
Cervantes - the confirmation by the PAL's agents in Los Angeles andSan Francisco changed the compromise agreement between the
parties.
The plane ticket itself provides that it is not valid after March 27,1990. It is also stipulated in paragraph 8 of the Conditions of
Contract
4.
Lufthansa vs. Court of Appeals - the Tolentinos were issued first class tickets on April 3, 1982, which will be valid until April 10,1983.
On June 10, 1982, they changed their accommodations to economy class but the replacement tickets still contained the same
restriction. On May 7, 1983, Tolentino requested that subject tickets be extended, which request was refused by the petitioner on
the ground that the said tickets had already expired. The non-extension of their tickets prompted the Tolentinos to bring a complaint

for breach of contract of carriage against the petitioner. In ruling against the award of damages, the Court held that the "ticket
constitute the contract between the parties. It is axiomatic that
4
8. This ticket is good for carriage for one year from date of issue, except as otherwise provided in this ticket, in carrier's tariffs,
conditions of carriage, or related regulations. The fare for carriage hereunder is subject to change prior to commencement of
carriage. Carrier may refuse transportation if the applicable fare has not been paid when the terms are clear and leave no doubt as
to the intention of the contracting parties, contracts are to be interpreted according to their literal meaning."
He was aware of the risk that his ticket could expire, as it did, before he returned to the Philippines. The 2 employees did not extend
the validity of the ticket. Both had no authority to do so. Cervantes knew this from the very start when he called up the Legal
Department of PAL in the Philippines before he left for US. He knew that to secure an extension, he would have to file a written
request for extension at the PAL's office in the Philippines. Despite this knowledge, Cervantes persisted to use the ticket in question.
Since the PAL agents are not privy to the said Agreement and Cervantes knew that a written request to the legal counsel of PAL was
necessary, he cannot use what the PAL agents did to his advantage. The said agents acted without authority when they confirmed
the flights of the petitioner.
(2)
Notwithstanding PAL's failure to raise the defense of lack of authority of the said PAL agents in its answer or in a motion to dismiss,
the omission was cured since the said issue was litigated upon, as shown by the testimony of Cervantes in the course of trial.
Cervantes - the defense of lack of authority on the part of the PAL employees was deemed waived under Rule 9, Section 2 of the
Revised Rules of Court. The lack of authority of the PAL employees was neither raised in the answer nor in the motion to dismiss.
The question of whether there was authority on the part of the PAL employees was acted upon by the trial court when was
presented as a witness and the depositions of the PAL employees, Georgina M. Reyes and Ruth Villanueva, were presented.(3)
In awarding moral damages for breach of contract of carriage, the breach must be wanton and deliberately injurious or the one
responsible acted fraudulently or with malice or bad faith. Cervantes knew there was a strong possibility that he could not use the
subject ticket, so much so that he bought a back-up ticket to ensure his departure. Should there be a finding of bad faith, we are of
the opinion that it should be on Cervantes. What the employees of PAL did was one of simple negligence
Neither can the claim for exemplary damages be upheld. Such kind of damages is imposed by way of example or correction for
thepublic good, and the existence of bad faith is established. The wrongful act must be accompanied by bad faith, and an award of
damages would be allowed only if the guilty party acted in a wanton, fraudulent, reckless or malevolent manner. There is no
showing that PAL acted in such a manner. An award for attorney's fees is also improper.
The Petition is DENIED and the decision of the Court of Appeals AFFIRMED.
_______________
43. PHILIPPINE RABBIT BUS LINES, INC vs. INTERMEDIATE APPELLATE COURT, G.R.Nos. 66102-04, August 30, 1990
FACTS: About 11:00 o'clock in the morning on December 24, 1966, Catalina Pascua, Caridad Pascua, Adelaida Estomo, Erlinda
Meriales, Mercedes Lorenzo, Alejandro Morales and Zenaida Parejas boarded the jeepney owned by spouses Isidro Mangune and
Guillerma Carreon and driven by Tranquilino Manalo at Dau, Mabalacat, Pampanga bound for Carmen, Rosales, Pangasinan to spend
Christmas at their respective homes. Although they usually ride in buses, they had to ride in a jeepney that day because the buses
were full. Their contract with Manalo was for them to pay P24.00 for the trip. Upon reaching barrio Sinayoan, San Manuel, Tarlac,
the right rear wheel of the jeepney was detached, so it was running in an unbalanced position. Manalo stepped on the brake, as a
result of which, the jeepney which was then running on the eastern lane (its right of way) made a U-turn, invading and eventually
stopping on the western lane of the road in such a manner that the jeepney's front faced the south (from where it came) and its rear
faced the north (towards where it was going). The jeepney practically occupied and blocked the greater portion of the western lane,
which is the right of way of vehicles coming from the north, among which was Bus No. 753 of petitioner Philippine Rabbit Bus Lines,
Inc. (Rabbit) driven by Tomas delos Reyes. As a result of the collision, three passengers of the jeepney (Catalina Pascua, Erlinda
Meriales and Adelaida Estomo) died while the other jeepney passengers sustained physical injuries. After conducting the
investigation, the police filed with the Municipal Court of San Manuel, Tarlac, a criminal complaint against the two drivers for
Multiple Homicide. At the preliminary investigation, a probable cause was found with respect to the case of Manalo, thus, his case
was elevated to the Court of First Instance. However, finding no sufficiency of evidence as regards the case of de los Reyes, the Court
dismissed it. Manalo was convicted and sentenced to suffer imprisonment. Not having appealed, he served his sentence. The
complaint for damages was then filed before the Court of First Instance in Pangasinan where costs are adjudged against defendants
Mangune, Carreon and Manalo and Filriters Guaranty. But on appeal, the Intermediate Appellate Court reversed the above-quoted
decision by finding de los Reyes negligent.
ISSUE:
1.
2.

WON the doctrine of last clear chance is applicable in this case. WON Manalo is solely liable for the death and physical
injuries of the victims.
WON the Philippine Rabbit Bus Lines, Inc. and its driver Tomas delos Reyes who acted with diligence required to pay the
plaintiffs- appellant jointly and severally damages that the former prayed for?

Held:
1.

NO. The Court held that the doctrine of last clear chance is not applicable in this case. This doctrine shall only apply to suits
between the owners and drivers of the two colliding vehicles. The case at bar is a case where the passengers are demanding
indemnity from the carrier due to the contract of common carriage. It is clear from the evidence that it is Manalo and the
owners of the jeepney who are negligent in this case. There was no proper explanation as to why the rear wheel of the
vehicle suddenly became detached. Therefore the Court affirms the decision of the lower court and holds Manalo and the
owners liable to pay damages

2.

It cannot be said that the bus was travelling at a fast speed when the accident occurred because the speed of 80 to 90
kilometres per hour, assuming such calculation to be correct, is yet within the speed limit allowed in highways. We cannot
even fault delos Reyes for not having avoided the collision. As aforestated, the jeepney left a skid mark of about 45 meters,
measured from the time its right rear wheel was detached up to the point of collision. Delos Reyes must have noticed the
perilous condition of the jeepney from the time its right rear wheel was detached or some 90 meters away, considering that
the road was straight and points 200 meters north and south of the point of collision, visible and unobstructed. Aside from
the time element involved, there were no options available to him. As the trial court remarked that defendant de los Reyes,
could have taken either of two options: (1) to swerve to its right (western shoulder) or (2) to swerve to its left (eastern
lane), and thus steer clear of the Mangune jeepney. This Court does not so believe, considering the existing exigencies of
space and time. As to the first option, Phil. Rabbit's evidence is convincing and unrebutted that the Western shoulder of the
road was narrow and had tall grasses which would indicate that it was not passable. After a minute scrutiny of the factual
matters and duly proven evidence. The court found that the proximate cause of the accident was the negligence of Manalo
and spouses Mangune and Carreon. They all failed to exercise the precautions that are needed precisely pro hac vice. In
culpa contractual, the moment a passenger dies or is injured, the carrier is presumed to have been at fault or to have acted
negligently, and this disputable presumption may only be overcome by evidence that he had observed extra-ordinary
diligence as prescribed in Articles 1733, 1755 and 1756 of the New Civil Code or that the death or injury of the passenger
was due to a fortuitous event. The negligence of Manalo was proven during the trial by the unrebutted testimonies of
Caridad Pascua, Police Investigator Tacpal, Police Corporal Cacalda, his (Manalo's)conviction for the crime of Multiple
Homicide and Multiple Serious Injuries with Damage to Property thru Reckless Imprudence, and the application of the
doctrine of res ipsa loquitur supra. The negligence of spouses Mangune and Carreon was likewise proven during the trial. To
escape liability, defendants Mangune and Carreon offered to show thru their witness Natalio Navarro, an alleged mechanic,
that he periodically checks and maintains the jeepney of said defendants, the last on Dec. 23, the day before the collision,
which included the tightening of the bolts. This notwithstanding the right rear wheel of the vehicle was detached while in
transit. As to the cause thereof no evidence was offered. Said defendant did not even attempt to explain, much less
establish, it to be one caused by a caso fortuito

. . . .In any event, "[i]n an action for damages against the carrier for his failure to safely carry his passenger to his destination, an
accident caused either by defects in the automobile or through the negligence of its driver, is not a caso fortuito which would avoid
the carriers liability for damages. The trial court was therefore right in finding that Manalo and spouses Mangune and Carreon were
negligent.
However, its ruling that spouses Mangune and Carreon are jointly and severally liable with Manalo is erroneous. The driver
cannot be held jointly and severally liable with the carrier in case of breach of the contract of carriage. The rationale behind this is
readily discernible. Firstly, the contract of carriage is between the carrier and the passenger, and in the event of contractual liability,
the carrier is exclusively responsible therefore to the passenger, even if such breach be due to the negligence of his driver. In other
words, the carrier can neither shift his liability on the contract to his driver nor share it with him, for his driver's negligence is his.
Secondly, if We make the driver jointly and severally liable with the carrier, that would make the carrier's liability personal instead of
merely vicarious and consequently, entitled to recover only the share which corresponds to the driver, contradictory to the explicit
provision of Article 2181 of the New Civil Code. We affirm the amount of damages adjudged by the trial court, except with respect to
the indemnity for loss of life. Under Article 1764 in relation to Article 2206 of the New Civil Code, the amount of damages for the
death of a passenger is at least three thousand pesos (P3,000.00). The prevailing jurisprudence has increased the amount of
P3,000.00 to P30,000.00. ACCORDINGLY, the petition is hereby GRANTED. The decision of the IAC dated July 29, 1983 and its
resolution dated November 28, 1983 are SETASIDE.
ISSUE:
1.
2.

WON the doctrine of last clear chance is applicable in this case.


WON Manalo is solely liable for the death and physical injuries of the victims.

HELD:
The Court held that the doctrine of last clear chance is not applicable in this case. This doctrineshall only apply to suits between the
owners and drivers of the two colliding vehicles. The case at bar is a case where the passengers are demanding indemnity from the
carrier due to the contract of common carriage. It is clear from the evidence that it is Manalo and the owners of the jeepney who are
negligent in this case. There was no proper explanation as to why the rear wheel of the vehicle suddenly became detached.
Therefore the Court affirms the decision of the lower court and holds Manalo and the owners liable to pay damages.
______________
#44 Delsan Transport Lines v American Home Insurance

ROBERTO JUNTILLA, petitioner, vs. CLEMENTE FONTANAR, FERNANDO BANZON and BERFOL CAMORO, respondents.
Facts:
Plaintiff was a passenger of the public utility jeepney bearing plate No. PUJ-71-7 on the course of the trip from Danao
City to Cebu City. The jeepney was driven by defendant Berfol Camoro. It was registered under the franchise of
defendant Clemente Fontanar but was actually owned by defendant Fernando Banzon. When the jeepney reached
Mandaue City, the right rear tire exploded causing the vehicle to turn turtle. In the process, the plaintiff who was sitting
at the front seat was thrown out of the vehicle. Upon landing on the ground, the plaintiff momentarily lost
consciousness. When he came to his senses, he found that he had a lacerated wound on his right palm. Aside from this,
he suffered injuries on his left arm, right thigh and on his back. (Exh. "D"). Because of his shock and injuries, he went
back to Danao City but on the way, he discovered that his `Omega' wrist watch was lost. Upon his arrival in Danao City,
he immediately entered the Danao City Hospital to attend to his injuries, and also requested his father-in-law to proceed
immediately to the place of the accident and look for the watch. In spite of the efforts of his father-in-law, the wrist
watch, which he bought for P852.70 (Exh. "B") could no longer be found." Roberto Juntilla filed for breach of contract
with damages .
Issue:
Whether or not the defendants and/or their employee failed to exercise 'utmost and/or extraordinary diligence'
required of common carriers contemplated under Art. 1755 of the Civil Code of the Philippines.
Ruling:
In the case at bar, there are specific acts of negligence on the part of the respondents. The records show that the
passenger jeepney turned turtle and jumped into a ditch immediately after its right rear tire exploded. The evidence
shows that the passenger jeepney was running at a very fast speed before the accident. We agree with the observation
of the petitioner that a public utility jeep running at a regular and safe speed will not jump into a ditch when its right
rear tire blows up. There is also evidence to show that the passenger jeepney was overloaded at the time of the
accident. The petitioner stated that there were three (3) passengers in the front seat and fourteen (14) passengers in the
rear.
. 'In a legal sense and, consequently, also in relation to contracts, 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.' (5 Encyclopedia Juridica Espaola,
309.)" In the case at bar, the cause of the unforeseen and unexpected occurrence was not independent of the human
will. The accident was caused either through the negligence of the driver or because of mechanical defects in the tire.
Common carriers should teach their drivers not to overload their vehicles, not to exceed safe and legal speed limits, and
to know the correct measures to take when a tire blows up thus insuring the safety of passengers at all times.
"The rationale of the carrier's liability is the fact that the passenger has neither choice nor control over the carrier in the
selection and use of the equipment and appliances in use by the carrier. Having no privity whatever with the
manufacturer or vendor of the defective equipment, the passenger has no remedy against him, while the carrier usually
has. It is but logical, therefore, that the carrier, while not an insurer of the safety of his passengers, should nevertheless
be held to answer for the flaws of his equipment if such flaws were at all discoverable. . . ."
It is sufficient to reiterate that the source of a common carrier's legal liability is the contract of carriage, and by entering
into the said contract, it binds itself to carry the passengers safely as far as human care and foresight can provide, using
the utmost diligence of a very cautious person, with a due regard for all the circumstances. The records show that this
obligation was not met by the respondents.

DELSAN TRANSPORT LINES, INC., Petitioner, versus AMERICAN HOME ASSURANCE CORPORATION, Respondent.
Facts:
Delsan is a domestic corporation which owns and operates the vessel MT Larusan. On the other hand, respondent American Home
Assurance Corporation (AHAC for brevity) is a foreign insurance company duly licensed to do business in the Philippines through its agent,
the American-International Underwriters, Inc. (Phils.). It is engaged, among others, in insuring cargoes for transportation within the
Philippines.
On August 5, 1984, Delsan received on board MT Larusan a shipment consisting of 1,986.627 k/l Automotive Diesel Oil (diesel oil) at the
Bataan Refinery Corporation for transportation and delivery to the bulk depot in Bacolod City of Caltex Phils., Inc. (Caltex), pursuant to a
Contract of Afreightment. The shipment was insured by respondent AHAC against all risks.
On August 7, 1984, the shipment arrived in Bacolod City. Immediately thereafter, unloading operations commenced. The discharging had to
be stopped on account of the discovery that the port bow mooring of the vessel was intentionally cut or stolen by unknown persons.
Because there was nothing holding it, the vessel drifted westward, dragged and stretched the flexible rubber hose attached to the riser,
broke the elbow into pieces, severed completely the rubber hose connected to the tanker from the main delivery line at sea bed level and
ultimately caused the diesel oil to spill into the sea. To avoid further spillage, the vessel's crew tried water flushing to clear the line of the
diesel oil but to no avail. As a result of spillage and backflow of diesel oil, Caltex sought recovery of the loss from Delsan, but the latter
refused to pay. As insurer, AHAC paid Caltex the sum of P479,262.57 for spillage.
On February 19, 1985, AHAC, as Caltex's subrogee, instituted Civil Case against Delsan before the Manila RTC, Branch 9, for loss caused by
the spillage. It likewise prayed that it be indemnified for damages suffered and legal interest thereon. Also, on May 5, 1985, in the Manila
RTC, Branch 31, AHAC instituted Civil Case against Delsan for the loss caused by the backflow
Issue: Whether or not there was a contributory negligence on the part of the owner of the goods Caltex
Ruling:
Principally, Delsan insists that the CA committed reversible error in ruling that Article 1734 of the Civil Code cannot exculpate it from
liability for the loss of the subject cargo and in not applying the rule on contributory negligence against Caltex, the shipper-owner of the
cargo, and in not taking into consideration the fact that the loss due to backflow occurred when the diesel oil was already completely
delivered to Caltex.
We are not persuaded.
Common carriers are bound to observe extraordinary diligence in the vigilance over the goods transported by them. They are presumed to
have been at fault or to have acted negligently if the goods are lost, destroyed or deteriorated. To overcome the presumption of negligence
in 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.
Both the trial court and the CA uniformly ruled that Delsan failed to prove its claim that there was a contributory negligence on the part of
the owner of the goods - Caltex. We see no reason to depart therefrom. As aptly pointed out by the CA, it had been established that the
proximate cause of the spillage and backflow of the diesel oil was due to the severance of the port bow mooring line of the vessel and the
failure of the shore tender to close the storage tank gate valve even as a check on the drain cock showed that there was still a product on
the pipeline. To the two courts below, the actuation of the gauger and the escort surveyor, both personnel from the Caltex Bulk Depot,
negates the allegation that Caltex was remiss in its duties. As we see it, the crew of the vessel should have promptly informed the shore
tender that the port mooring line was cut off. However, Delsan did not do so on the lame excuse that there was no availablebanca. As it is,
Delsan's personnel signaled a "red light" which was not a sufficient warning because such signal only meant that the pumping of diesel oil
had been finished. Neither did the blowing of whistle suffice considering the distance of more than 2 kilometers between the vessel and the
Caltex Bulk Depot, aside from the fact that it was not the agreed signal. Had the gauger and the escort surveyor from Caltex Bulk Depot not
gone aboard the vessel to make inquiries, the shore tender would have not known what really happened. The crew of the vessel should
have exerted utmost effort to immediately inform the shore tender that the port bow mooring line was severed.
To be sure, Delsan, as the owner of the vessel, was obliged to prove that the loss was caused by one of the excepted causes if it were to
seek exemption from responsibility. Unfortunately, it miserably failed to discharge this burden by the required quantum of proof.
All told, Delsan, being a common carrier, should have exercised extraordinary diligence in the performance of its duties. Consequently, it is
obliged to prove that the damage to its cargo was caused by one of the excepted causes if it were to seek exemption from responsibility.
Having failed to do so, Delsan must bear the consequences. WHEREFORE, petition is DENIED and the assailed decision of the CA is
AFFIRMED in toto.