Spouses Perea vs Spouses Zarate, Philippine National Railways and CA

FACTS: Private respondents Zarate are engaged in the business of transporting students from
their respective residences in Paranaque to Don Bosco in Makati. Sometime in June 1996,
petitioners Zarate contracted the services of respondents to transport their son, Aaron Zarate, to
and from school.
On August 22, 1996, at about 6:45am, the driver of the private van owned by respondent
spouses, Clementa Alfaro, decided to take a short cut, a rail road crossing of the Philippine
National Highway, in order to avoid traffic. Alfaro saw that the barandilla (the pole used to
block vehicles crossing the railway) was up and thought that it was okay to cross. When he
overtook the bus, he did not see that there was a train headed straight towards him. The bus was
able to cross unscathed but the vans rear end was hit, causing Aaron, was thrown off the van.
His body hit the railroad tracks and he was decapitated. Apparently, Alfaro was not able to hear
the train honking from 50 meters away before the collision because the vans stereo was playing
loudly.
The Zarates sued PNR and the Pereas. Alfaro, on the other hand, was on the run. Their cause of
action against PNR was based on quasi-delict. Their cause of action against the Pereas was
based on breach of contract of common carriage.
In their defense, the Pereas invoked that as private carriers they were not negligent in selecting
Alfaro as their driver as they made sure that he had a drivers license and that he was not
involved in any accident prior to his being hired. In short, they observed the diligence of a good
father in selecting their employee. PNR also disclaimed liability as they insist that the railroad
crossing they placed there was not meant for railroad crossing (really, thats their defense!).
The RTC ruled in favor of the Zarates. The Court of Appeals affirmed the RTC. In the decision of
the RTC and the CA, they awarded damages in favor of the Zarates for the loss of earning
capacity of their dead son.
The Pereas appealed to the SC and argued that the award was improper as Aaron was merely a
high school student, hence, the award of such damages was merely speculative. They cited the
case of People vs Teehankee where the Supreme Court did not award damages for the loss of
earning capacity despite the fact that the victim there was enrolled in a pilot school.
ISSUES:
a.) Whether or not the defense of due diligence of a good father by the Pereas is untenable.
b.) Whether or not the award of damages for loss of income is proper.
HELD: Yes, in both issues.

Defense of Due Diligence of a Good Father

This defense is not tenable in this case. The Pereas are common carriers. They are not merely
private carriers. Private transport for schools are common carriers. The Pereas, as the operators
of a school bus service were: (a) engaged in transporting passengers generally as a business, not
just as a casual occupation; (b) undertaking to carry passengers over established roads by the
method by which the business was conducted; and (c) transporting students for a fee. Despite
catering to a limited clientle, the Pereas operated as a common carrier because they held
themselves out as a ready transportation indiscriminately to the students of a particular school
living within or near where they operated the service and for a fee.
Being a common carrier, what is required of the Pereas is not mere diligence of a good father.
What is specifically required from them by law is extraordinary diligence a fact which they
failed to prove in court. Verily, their obligation as common carriers did not cease upon their
exercise of diligently choosing Alfaro as their employee.
(It is recommended that you read the full text, the Supreme Court made an elaborate and
extensive definition of common and private carriers as well as their distinctions.)
Award of Damages for Aarons loss of earning capacity despite he being a high school
student at the time of his death
The award is proper. Aaron was enrolled in a reputable school (Don Bosco). He was of normal
health and was an able-bodied person. Further, the basis of the computation of his earning
capacity was not on what he would have become. It was based on the current minimum wage.
The minimum wage was validly used because with his circumstances at the time of his death, it
is most certain that had he lived, he would at least be a minimum wage earner by the time he
starts working. This is not being speculative at all.
The Teehankee case was different because in that case, the reason why no damages were
awarded for loss of earning capacity was that the defendants there were already assuming that
the victim would indeed become a pilot hence, that made the assumption speculative. But in
the case of Aaron, there was no speculation as to what he might be but whatever hell become,
it is certain that he will at the least be earning minimum wage.

Planters Product, Inc. vs CA

FACTS: Planters Products, Inc. (PPI), purchased from Mitsubishi International Corporation
(MITSUBISHI) of New York 9,329.7069 metric tons Urea 46% fertilizer which the latter
shipped in bulk on June 16, 1974 aboard the cargo vessel M/V "Sun Plum" owned by private
respondent Kyosei Kisen Kabushiki Kaisha (KKKK) from Kenai, Alaska, USA to San
Fernando, La Union, Philippines, as evidenced by Bill of Lading No. KP-1 signed by the master
of the vessel and issued on the date of departure.
On 17 May 1974, or prior to its voyage, a time charter-party on the vessel M/V "Sun Plum"
pursuant to the Uniform General Charter was entered into between Mitsubishi as
shipper/charterer and KKKK as shipowner, in Tokyo, Japan.
Before loading the fertilizer aboard the vessel, four (4) of her holds 4 were all presumably
inspected by the charterer's representative and found fit to take a load of urea in bulk pursuant to
par. 16 of the charter-party which reads:
16. At loading port, notice of readiness to be accomplished by certificate from National Cargo
Bureau inspector or substitute appointed by charterers for his account certifying the vessel's
readiness to receive cargo spaces. The vessel's hold to be properly swept, cleaned and dried at
the vessel's expense and the vessel to be presented clean for use in bulk to the satisfaction of the
inspector before daytime commences.
The hatches remained closed and tightly sealed throughout the entire voyage. Each time a dump
truck was filled up, the load of Urea was covered with tarpaulin before it was transported to the
consignees warehouse located 50m from the wharf. Midway to the warehouse, the trucks were
made to pass through a weighing scale where they were individually weighed for the purpose of
ascertaining the net weight of the cargo. The port area was windy, certain portions of the route to
the warehouse were sandy and the weather was variable, raining occasionally while the discharge
was in progress.
It was found out that there was a shortage in the cargo of 106.726 M/T and that a portion of the
Urea fertilizer approximating 18 M/T was contaminated with dirt. 23 M/T were rendered unfit
for commerce, having been polluted with sand, rust and dirt. Planters Product sent a claim letter
to Soriamont Steamship Agencies, the resident agent of the carrier for damages.
ISSUES:
1.) WON a common carrier becomes a private carrier by reason of a charter-party;
2.) WON the ship-owner was able to prove that he had exercised that degree of diligence
required of him under the law.
HELD:
1.) YES. A charter-party is defined as a contract by which an entire ship, or some
principal part thereof, is let by the owner to another person for a specified time or use;

Charter parties are of two types: (a) contract of affreightment which involves the use of shipping
space on vessels leased by the owner in part or as a whole, to carry goods for others; and, (b)
charter by demise or bareboat charter, by the terms of which the whole vessel is let to the
charterer with a transfer to him of its entire command and possession and consequent control
over its navigation, including the master and the crew, who are his servants. Contract of
affreightment may either be time charter, wherein the vessel is leased to the charterer for a fixed
period of time, or voyage charter, wherein the ship is leased for a single voyage. In both cases,
the charter-party provides for the hire of the vessel only, either for a determinate period of time
or for a single or consecutive voyage, the shipowner to supply the ships stores, pay for the
wages of the master and the crew, and defray the expenses for the maintenance of the ship.
The term common or public carrier is defined in Art. 1732 of the Civil Code. The
definition extends to carriers either by land, air or water which hold themselves out as ready to
engage in carrying goods or transporting passengers or both for compensation as a public
employment and not as a casual occupation. The distinction between a common or public
carrier and a private or special carrier lies in the character of the business, such that if the
undertaking is a single transaction, not a part of the general business or occupation, although
involving the carriage of goods for a fee, the person or corporation offering such service is a
private carrier. 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.
2.) YES. Article 1733 of the New Civil Code mandates that common carriers, by reason of the
nature of their business, should observe extraordinary diligence in the vigilance over the goods
they carry. In the case of private carriers, however, the exercise of ordinary diligence in the
carriage of goods will suffice. Moreover, in case of loss, destruction or deterioration of the
goods, common carriers are presumed to have been at fault or to have acted negligently, and the
burden of proving otherwise rests on them. On the contrary, no such presumption applies to
private carriers, for whosoever alleges damage to or deterioration of the goods carried has the
onus of proving that the cause was the negligence of the carrier.
The 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 remiss in the exercise of due diligence in order to minimize the loss or damage to the goods
it carried.

Fabre vs CA
FACTS: Petitioners Engracio Fabre, Jr. and his wife were owners of a Mazda minibus. They
used the bus principally in connection with a bus service for school children which they operated
in Manila. It was driven by Porfirio Cabil.
On November 2, 1984 private respondent Word for the World Christian Fellowship Inc.
(WWCF) arranged with the petitioners for the transportation of 33 members of its Young Adults
Ministry from Manila to La Union and back in consideration of which private respondent paid
petitioners the amount of P3,000.00.
The usual route to Caba, La Union was through Carmen, Pangasinan. However, the bridge at
Carmen was under repair, so that petitioner Cabil, who was unfamiliar with the area (it being his
first trip to La Union), was forced to take a detour through the town of Ba-ay in Lingayen,
Pangasinan. At 11:30 that night, petitioner Cabil came upon a sharp curve on the highway. The
road was slippery because it was raining, causing the bus, which was running at the speed of 50
kilometers per hour, to skid to the left road shoulder. The bus hit the left traffic steel brace and
sign along the road and rammed the fence of one Jesus Escano, then turned over and landed on
its left side, coming to a full stop only after a series of impacts. The bus came to rest off the road.
A coconut tree which it had hit fell on it and smashed its front portion. Because of the mishap,
several passengers were injured, particularly one Amyline Antonio, who now suffering from
paraplegia or total inability to move both legs and is permanently paralyzed from the waist down
Cabil contends that he did not see the curve until it was too late; he was not familiar with the area
and he could not have seen the curve despite the care he took in driving the bus because it was
dark and there was no sign on the road; he saw the curve when he was already within 15 to 30
meters of it; he allegedly slowed down to 30 kilometers per hour, but it was too late
Subsequently, a criminal complaint was filed against the driver and the spouses were also made
jointly liable. Spouses Fabre on the other hand contended that they are not liable since they are
not a common carrier. The RTC of Makati ruled in favor of the plaintiff and the defendants were
ordered to pay jointly and severally to the plaintiffs. The Court of Appeals affirmed the decision
of the trial court.
ISSUE: WON Petitioners are liable for the damages incurred.
HELD: YES. As already stated, this case actually involves a contract of carriage. Petitioners, the
Fabres, did not have to be engaged in the business of public transportation for the provisions of
the Civil Code on common carriers to apply to them. As this Court has held:
Art. 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.
The fact that it was raining and the road was slippery, that it was dark, that he drove his bus at 50
kilometers an hour when even on a good day the normal speed was only 20 kilometers an hour,
and that he was unfamiliar with the terrain, Cabil was grossly negligent and should be held liable
for the injuries suffered by private respondent Amyline Antonio. Pursuant to Arts. 2176 and 2180
of the Civil Code his negligence gave rise to the presumption that his employers, the Fabres,
were themselves negligent in the selection and supervision of their employee.
Due diligence in selection of employees is not satisfied by finding that the applicant possessed a
professional drivers license. The employer should also examine the applicant for his
qualifications, experience and record of service. Due diligence in supervision, on the other hand,
requires the formulation of rules and regulations for the guidance of employees and the issuance
of proper instructions as well as actual implementation and monitoring of consistent compliance
with the rules.
In the case at bar, the Fabres, in allowing Cabil to drive the bus to La Union, apparently did not
consider the fact that Cabil had been driving for school children only, from their homes to the St.
Scholasticas College in Metro Manila. They had hired him only after a two-week
apprenticeship. They had tested him for certain matters, such as whether he could remember the
names of the children he would be taking to school, which were irrelevant to his qualification to
drive on a long distance travel, especially considering that the trip to La Union was his first. The
existence of hiring procedures and supervisory policies cannot be casually invoked to overturn
the presumption of negligence on the part of an employer.
As common carriers, the Fabres were bound to exercise extraordinary diligence for the safe
transportation of the passengers to their destination. This duty of care is not excused by proof
that they exercised the diligence of a good father of the family in the selection and supervision of
their employee.

De Guzman v CA and Ernesto Cadena (Dec. 22, 1988)

FACTS:
Ernesto Cendana was engaged in buying up used bottles and scrap metal in Pangasinan. Upon
gathering sufficient quantities of such scrap material, respondent would bring such material to
Manila for resale. He utilized (2) two six-wheeler trucks which he owned for the purpose. Upon
returning to Pangasinan, he would load his vehicle with cargo belonging to different merchants
to different establishments in Pangasisnan which respondents charged a freight fee for.
Sometime in November 1970, herein petitioner Pedro de Guzman, a merchant and dealer of
General Milk Company Inc. in Pangasinan contracted with respondent for hauling 750 cartons of
milk. Unfortunately, only 150 cartons made it, as the other 600 cartons were intercepted by
hijackers along Marcos Highway.
Hence, petitioners commenced an action against private respondent. In his defense, respondent
argued that he cannot be held liable due to force majuere, and that he is not a common carrier
and hence is not required to exercise extraordinary diligence.
On appeal before the Court of Appeals, Cendana urged that the trial court had erred in
considering him a common carrier; in finding that he had habitually offered trucking services to
the public; in not exempting him from liability on the ground of force majeure; and in ordering
him to pay damages and attorneys fees. The Court of Appeals reversed the judgment of the trial
court and held that Cendana had been engaged in transporting return loads of freight as a casual
occupation or a sideline to his scrap iron business and not as a common carrier.
ISSUES:
1.) WON respondent is a common carrier.
2.) WON respondent is liable for the loss of the milk cartons due to force majeure?
HELD:
1.) YES. 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.

2.) NO. In these circumstances, 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 a 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. We, therefore, agree with the result reached by the Court of
Appeals that private respondent Cendaa is not liable for the value of the undelivered
merchandise which was lost because of an event entirely beyond private respondents control.

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 addressed to the respondent City Treasurer,
the pertinent portion of which reads:
"Please note that our Company (FPIC) is a pipeline operator with a government concession
granted under the Petroleum Act. It is engaged in the business of transporting petroleum
products from the Batangas refineries, via pipeline, to Sucat and JTF Pandacan Terminals. As
such, our Company is exempt from paying tax on gross receipts under Section 133 of the Local
Government Code of 1991 x x x x
"Moreover, Transportation contractors are not included in the enumeration of contractors under
Section 131, Paragraph (h) of the Local Government Code. Therefore, the authority to impose
tax 'on contractors and other independent contractors' under Section 143, Paragraph (e) of the
Local Government Code does not include the power to levy on transportation contractors.
"The imposition and assessment cannot be categorized as a mere fee authorized under Section
147 of the Local Government Code. The said section limits the imposition of fees and charges on
business to such amounts as may be commensurate to the cost of regulation, inspection, and
licensing. Hence, assuming arguendo that FPIC is liable for the license fee, the imposition
thereof based on gross receipts is violative of the aforecited provision. The amount of
P956,076.04 (P239,019.01 per quarter) is not commensurate to the cost of regulation, inspection
and licensing. The fee is already a revenue raising measure, and not a mere regulatory
imposition."
The respondent City Treasurer denied the protest on the ground that petitioner cannot be exempt
from taxes under Sec 133 (j) of the Local Government Code as said exemption applies only to
transportation contractors and persons engaged in the transportation by hire and common
carriers by air, land and water.
ISSUE: WON Petitioner is exempted from paying taxes because it is a common carrier.
HELD: YES. There is merit in the petition. A common carrier may be defined, broadly, as one
who holds himself out to the public as engaged in the business of transporting persons or
property from place to place, for compensation, offering his services to the public generally.
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.
As correctly pointed out by petitioner, the definition of common carriers in the Civil Code
makes no distinction as to the means of transporting, as long as it is by land, water or air. It does
not provide that the transportation of the passengers or goods should be by motor vehicle. In fact,
in the United States, oil pipe line operators are considered common carriers.
It is clear that the legislative intent in excluding from the taxing power of the local government
unit the imposition of business tax against common carriers is to prevent a duplication of the socalled common carriers tax. Petitioner is already paying three (3%) percent common carriers
tax on its gross sales/earnings under the National Internal Revenue Code. To tax petitioner again
on its gross receipts in its transportation of petroleum business would defeat the purpose of the
Local Government Code.