De Guzman vs.

Court of Appeals

Article 1732 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 Court of Appeals referred to the fact that private respondent held
no certificate of public convenience. A certificate of public convenience is not
a requisite for the incurring of liability. That liability arises the moment a
person or firm acts as a common carrier, without regard to whether or not
such carrier has also complied with the requirements of the applicable
regulatory statute and implementing regulations and has been granted a
certificate of public convenience or other franchise. To exempt private
respondent from the liabilities of a common carrier because he has not
secured the necessary certificate of public convenience, would be offensive
to sound public policy; that would be to reward private respondent precisely
for failing to comply with applicable statutory requirements.

Planters Products, Inc. vs. CA

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 the charterer be charged, 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, 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.
 Fisher vs. Yangco

In construing Act 98 for the alleged violation, the test is whether the
refusal of YSC to carry the explosives without qualification or conditions may
have the effect of subjecting any person or locality or the traffic is such
explosives to an unduly unreasonable or unnecessary prejudice or
discrimination. Common carriers in this jurisdiction cannot lawfully decline to
accept a particular class of goods unless it appears that for some sufficient
reason the discrimination for such is reasonable and necessary. YSC has not
met those conditions.
The nature of the business of a common carrier as a public
employment is such that it is within the power of the State to impose such
just regulations in the interest of the public as the legislator may deem
proper.

US vs. Quinahon

There is no pretense that it actually cost more to handle the rice for
the province than it did for the merchants with whom the special contracts
were made. There was a clear discrimination against the province which is
prohibited by the law. It is however not believed that the law prohibits
common carriers from making special rates for the handling and transporting
of merchandise, when the same are made for the purpose of increasing their
business and to manage their important interests upon the same principles
which are regarded as sound and adopted in other trades and pursuits.
Absolute equality is not required in all cases. It is only unjust, undue and
unreasonable discrimination which the law forbids. The law of equality is in
force only where the services performed in the different cases are
substantially the same and the circumstances and conditions are similar.

Loadstar Shipping Co., Inc. vs. CA

Loadstar submits that the vessel was a private carrier because it was
not issued a CPC; it did not have a regular trip or schedule nor a fixed route;
and there was only “one shipper, one consignee for a special cargo.”
The SC held that Loadstar is a common carrier. It is not necessary that
the carrier be issued a CPC, and this character is not altered by the fact that
the carriage of the goods in question was periodic, occasional, episodic or
unscheduled.

First Philippine Industrial Corporation vs. CA

Based on Article 1732 NCC, 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. (De Guzman Ruling
upheld)
Respondent’s argument that the term “common carrier” as used in
Section 133(j) of the Local Government Code refers only to common carriers
transporting goods and passengers through moving vehicles or vessels either
by land, sea or water is erroneous. The definition of “common carriers” in
NCC 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 transporting of the passengers
or goods should be by motor vehicle.

Home Insurance Company vs. American Steamship Agencies, Inc.

The NCC provisions on common carriers should not apply where the
common carrier is not acting as such but as a private carrier. 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 valid.
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 strict public
policy governing common carrier 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. The stipulation exempting the owner from
liability for negligence of its agent is not against public policy and is deemed
valid. Recovery can’t be had, for loss or damage to the cargo against
shipowners, unless the same is due to personal acts or negligence of said
owner or its managers, as distinguished from agents or employees.

San Pablo vs. PANTRANCO

Considering the environmental circumstances of the case, the

conveyance of passengers, trucks and cargo from Matnog to Allen is certainly
not a ferry boat service but a coastwise or interisland shipping service. Under
no circumstance can the sea between Matnog and Allen be considered a
continuation of the highway. While a ferry boat service has been considered
as a continuation of the highway when crossing rivers or even lakes, which
are small body of waters - separating the land, however, when as in this case
the two terminals, Matnog and Allen are separated by an open sea it can not
be considered as a continuation of the highway. Respondent PANTRANCO
should secure a separate CPC for the operation of an interisland or coastwise
shipping service in accordance with the provisions of law. Its CPC as a bus
transportation cannot be merely amended to include this water service under
the guise that it is a mere private ferry service.
 The contention of private respondent PANTRANCO that its ferry service
operation is as a private carrier, not as a common carrier for its exclusive use
in the ferrying of its passenger buses and cargo trucks is absurd. PANTRANCO
does not deny that it charges its passengers separately from the charges for
the bus trips and issues separate tickets whenever they board the MV "Black
Double" that crosses Matnog to Allen, PANTRANCO cannot pretend that in
issuing tickets to its passengers it did so as a private carrier and not as a
common carrier. The Court does not see any reason why inspite of its
amended franchise to operate a private ferry boat service it cannot accept
walk-in passengers just for the purpose of crossing the sea between Matnog
and Allen. Indeed evidence to this effect has been submitted.

National Steel Corporation vs. CA

In the instant case, it is undisputed that VSI did not offer its services to
the general public. It carried passengers or goods only for those it chose
under a special contract of charter party. It is a private carrier that renders
tramping service and as such, does not transport cargo or shipment for the
general public. Its services are available only to specific persons who enter
into a special contract of charter party with its owner. 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
contracts of private carriage or charter party.
Unlike in a contract involving a common carrier, private carriage does
not involve the general public. Hence, the stringent provisions of the Civil
Code on common carriers protecting the general public cannot justifiably be
applied to a ship transporting commercial goods as a private carrier.

KMU vs. Garcia

“The issuance of a Certificate of Public Convenience is determined by public

need. The presumption of public need for a service shall be deemed in favor
of the applicant, while the burden of proving that there is no need for the
proposed service shall be the oppositor's.”

By its terms, public convenience or necessity generally means

something fitting or suited to the public need. As one of the basic
requirements for the grant of a CPC, public convenience and necessity exists
when the proposed facility or service meets a reasonable want of the public
and supply a need which the existing facilities do not adequately supply. The
existence or non-existence of public convenience and necessity is therefore a
question of fact that must be established by evidence, real and/or
testimonial; empirical data; statistics and such other means necessary, in a
public hearing conducted for that purpose. The object and purpose of such
procedure, among other things, is to look out for, and protect, the interests of
both the public and the existing transport operators.
 Tatad vs. Garcia

In law, there is a clear distinction between the "operation" of a public

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

Samar Mining Company, Inc. vs. Nordeutscher Lloyd

The validity of stipulations in bills of lading exempting the carrier from

liability for loss or damage to the goods when the same are not in its actual
custody has been upheld. There is no doubt that Art. 1738 finds no
applicability to the instant case. The said article contemplates a situation
where the goods had already reached their place of destination and are
stored in the warehouse of the carrier. The subject goods were still awaiting
transshipment to their port of destination, and were stored in the warehouse
of a third party when last seen and/or heard of.
Article 1736 is applicable to the instant suit. Under said article, the
carrier may be relieved of the responsibility for loss or damage to the goods
upon actual or constructive delivery of the same by the carrier to the
consignee, or to the person who has a right to receive them. In sales, actual
delivery has been defined as the ceding of corporeal possession by the seller,
and the actual apprehension of corporeal possession by the buyer or by some
person authorized by him to receive the goods as his representative for the
purpose of custody or disposal. By the same token, there is actual delivery in
contracts for the transport of goods when possession has been turned over to
the consignee or to his duly authorized agent and a reasonable time is given
him to remove the goods. The court a quo found that there was actual
delivery to the consignee through its duly authorized agent, the carrier.

Eastern Shipping Lines vs. Intermediate Appellate Court

1) The law of the country to which the goods are to be transported governs
the liability of the common carrier in case of their loss, destruction or
deterioration. As the cargoes in question were transported from Japan to the
Philippines, the liability of Petitioner Carrier is governed primarily by the Civil
Code. However, in all matters not regulated by said Code, the rights and
obligations of common carrier shall be governed by the Code of Commerce
and by special laws. Thus, the Carriage of Goods by Sea Act, a special law, is
suppletory to the provisions of the Civil Code.
(2) Under the Civil Code, common carriers, from the nature of their business
and for reasons of public policy, are bound to observe extraordinary diligence
in the vigilance over goods, according to all the circumstances of each case.
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;

Petitioner Carrier claims that the loss of the vessel by fire exempts it
from liability under the phrase "natural disaster or calamity.” However, the
Court said that fire may not be considered a natural disaster or calamity. This
must be so as it arises almost invariably from some act of man or by human
means. It does not fall within the category of an act of God unless caused by
lightning or by other natural disaster or calamity. It may even be caused by
the actual fault or privity of the carrier.
As the peril of the fire is not comprehended within the exception in
Article 1734, supra, Article 1735 of the Civil Code provides that all cases than
those mention 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.
And even if fire were to be considered a "natural disaster" within the
meaning of Article 1734 of the Civil Code, it is required under Article 1739 of
the same Code that the "natural disaster" must have been the "proximate
and only cause of the loss," and that the carrier has "exercised due diligence
to prevent or minimize the loss before, during or after the occurrence of the
disaster.” This Petitioner Carrier has also failed to establish satisfactorily.

National Development Company vs. CA

Significantly, under the provisions of the Code of Commerce,

particularly Articles 826 to 839, the shipowner or carrier, is not exempt from
liability for damages arising from collision due to the fault or negligence of
the captain. Primary liability is imposed on the shipowner or carrier in
recognition of the universally accepted doctrine that the shipmaster or
captain is merely the representative of the owner who has the actual or
constructive control over the conduct of the voyage.
The agreement between NDC and MCP shows that MCP is appointed as
agent, a term broad enough to include the concept of ship agent in maritime
law. In fact MCP was even conferred all the powers of the owner of the
vessel, including the power to contract in the name of the NDC. Both owner
and agent should be declared jointly and severally liable since the obligation
which is the subject of the action had its origin in a fortuitous act and did not
arise from contract.

Gelisan vs. Alday

 The court has held in several decisions that the registered owner of a
public service is responsible for damages that may arise from consequences
incident to its operation or that may be caused to any of the passengers
therein. The claim of the petitioners that he is not liable in view of the lease
contract executed by and between him and Espiritu which exempts him from
liability to 3rd persons, cannot be sustained because it appears that the lease
contract had not been approved by the Public Service Commission. It is a
settled rule in our jurisprudence that if the property covered by a Franchise is
transferred or lease to another without obtaining the requisite approval, the
transfer is not binding upon the public and 3rd persons. However, Gelisan is
not without recourse because he has a right to be indemnified by Espiritu for
the amount he may be required to pay. This is due to the fact that the lease
contract in question, although not effective against the public is valid and
binding between the contracting parties.

Benedicto vs. Intermediate Appellate Court

The prevailing doctrine in common carriers make the owner liable for
consequences having from the operations of the carrier even though the
specific vehicle involved may have been transferred to another person. This
doctrine rests upon the principle in dealing with vehicles registered under
Public Service Law, the public has the right to assume that the registered
owner is the actual or lawful owner thereof. It would be very difficult and
often impossible as a practical matter, for members of the general public to
enforce the rights of action that they may have for injuries inflicted by the
vehicles being negligently operated if they should be required to prove who
the actual owner is. The registered owner is not allowed to deny liability by
proving the identity of the alleged transferee. Thus, contrary to petitioner’s
claim, private respondents are not required to go beyond the vehicle’s
certificate of registration to ascertain the owner of the carrier.

PHILTRANCO Service Enterprise, Inc. vs. Court of Appeals

We have consistently held that the liability of the registered owner of a

public service vehicle, like petitioner Philtranco, for damages arising from the
tortious acts of the driver is primary, direct, and joint and several or solidary
with the driver. As to solidarity, Article 2194 expressly provides:

Art. 2194. The responsibility of two or more persons who are liable for
a quasi-delict is solidary.

Since the employer's liability is primary, direct and solidary, its only
recourse if the judgment for damages is satisfied by it is to recover what it
has paid from its employee who committed the fault or negligence which
gave rise to the action based on quasi-delict. Article 2181 of the Civil Code
provides:
 Art. 2181. Whoever pays for the damage caused by his dependents or
employees may recover from the latter what he has paid or delivered in
satisfaction of the claim.

Santos vs. Sibug

Although SANTOS, as the kabit was the true owner as against VIDAD,
the latter, as the registered owner/operator and grantee of the franchise, is
directly and primarily responsible and liable for the damages caused to
SIBUG, the injured party, as a consequence of the negligent or careless
operation of the vehicle. This ruling is based on the principle that the
operator of record is considered the operator of the vehicle in contemplation
of law as regards the public and third persons even if the vehicle involved in
the accident had been sold to another where such sale had not been
approved by the then Public Service Commission.

Lita Enterprises Inc. vs. Intermediate Appellate Court

Unquestionably, the parties herein operated under an arrangement,

comonly 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. 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.

Teja Marketing vs. Intermediate Appellate Court

The ruling in Lita Enterprises Inc. vs. IAC is upheld. The defect of in existence
of a contract is permanent and cannot be cured by ratification or by
prescription. The mere lapse of time cannot give efficacy to contracts that
are null and void.

Magboo vs. Bernardo

The features which characterize the boundary system are not sufficient to
withdraw the relationship between the parties from that of employer and
employee. The owner continued to be the operator of the vehicle in legal
contemplation and as such, he is responsible for the consequences incident
to its operation. 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.

Ganzon vs. CA

Petitioner Ganzon failed to show that the loss of the scrap iron due to
any cause enumerated in Art. 1734. The order of the acting Mayor did not
constitute valid authority for petitioner to carry out. In any case, the
intervention of the municipal officials was not of a character that would
render impossible the fulfillment by the carrier of its obligation. The
petitioner was not duly bound to obey the illegal order to dump into the sea
the scrap of 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.
By the delivery made during Dec. 1, 1956, the scraps were
unconditionally placed in the possession and control of the common carrier,
and upon their receipt by the carrier of transportation, the contract of
carriage was deemed perfected. Consequently, Ganzon’s extraordinary
responsibility for the loss, destruction or deterioration of the goods
commenced. According to Art 1738, such extraordinary responsibility would
cease only upon the delivery by the carrier to the consignee or persons with
right to receive them. The fact that part of the shipment had not been loaded
on board did not impair the contract of transportation as the goods remained
in the custody & control of the carrier.

Eastern Shipping Lines vs. Court of Appeals

The heavy seas and rains referred to in the master’s report were not
caso fortuito but normal occurrences that an ocean-going vessel, particularly
in the month of September which, in our area, is a month of rains and heavy
seas would encounter as a matter of routine. They are not unforeseen nor
unforeseeable. These are conditions that ocean-going vessels would
encounter and provide for, in the ordinary course of a voyage. That rain water
(not sea water) found its way into the holds of the Jupri Venture is a clear
indication that care and foresight did not attend the closing of the ship's
hatches so that rain water would not find its way into the cargo holds of the
ship.
Since the carrier has failed to establish any caso fortuito, the
presumption by law of fault or negligence on the part of the carrier applies;
and the carrier must present evidence that it has observed the extraordinary
diligence required by Article 1733 of the Civil Code in order to escape liability
for damage or destruction to the goods that it had admittedly carried in this
case. No such evidence exists of record. Thus, the carrier cannot escape
liability.
 Sarkies Tours Phils vs. Court of Appeals

Under the Civil Code, 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 transported by them, and this
liability lasts from the time the goods are unconditionally placed in the
possession of, and received by the carrier for transportation until the same
are delivered, actually or constructively, by the carrier to the person who has
a right to receive them, unless the loss is due to any of the excepted causes
under Article 1734 thereof.
Where the common carrier accepted its passenger's baggage for
transportation and even had it placed in the vehicle by its own employee, its
failure to collect the freight charge is the common carrier's own lookout. It is
responsible for the consequent loss of the baggage. In the instant case,
defendant appellant's employee even helped Fatima Minerva Fortades and
her brother load the luggages/baggages in the bus' baggage compartment,
without asking that they be weighed, declared, receipted or paid for. Neither
was this required of the other passengers.

Valenzuela Hardwood & Industrial Supply vs. Court of Appeals

In a contract of private carriage, the parties may validly stipulate that

responsibility for the cargo rests solely on the charterer, exempting the
shipowner from liability for loss of or damage to the cargo caused even by
the negligence of the ship captain. Pursuant to Article 1306 17 of the Civil
Code, such stipulation is valid because it is freely entered into by the parties
and the same is not contrary to law, morals, good customs, public order, or
public policy. Indeed, their contract of private carriage is not even a contract
of adhesion. We stress that in a contract of private carriage, the parties may
freely stipulate their duties and obligations which perforce would be binding
on them. Unlike in a contract involving a common carrier, private carriage
does not involve the general public. Hence, the stringent provisions of the
Civil Code on common carriers protecting the general public cannot justifiably
be applied to a ship transporting commercial goods as a private carrier.
Consequently, the public policy embodied therein is not contravened by
stipulations in a charter party that lessen or remove the protection given by
law in contracts involving common carriers.

Yobido vs. Court of Appeals

The explosion of the new tire is not a fortuitous event. There are
human factors involved in the situation. The fact that the tire was new did not
imply that it was entirely free from manufacturing defects or that it was
properly mounted on the vehicle. Neither may the fact that the tire bought
and used is of a brand name noted for quality, resulting in the conclusion that
it could not explode within five day’s use. It is settled that an accident caused
either by defects in the automobile or through the negligence of its driver is
not a caso fortuito. Moreover, a common carrier may not be absolved from
liability in case of force majeure. A common carrier must still prove that it
was not negligent in causing the death or injury resulting from the accident.
Thus, having failed to overthrow the presumption of negligence with clear
and convincing evidence, petitioners are hereby held liable for damages.

Compania Maritima vs. Insurance Co. of North America

The receipt of goods by the carrier has been said to lie at the
foundation of the contract to carry and deliver, and if actually no goods are
received there can be no such contract. The liability and responsibility of the
carrier under a contract for the carriage of goods commence on their actual
delivery to, or receipt by, the carrier or an authorized agent and delivery to a
lighter in charge of a vessel for shipment on the vessel, where it is the
custom to deliver in that way, is a good delivery and binds the vessel
receiving the freight, the liability commencing at the time of delivery to the
lighter and, similarly, where there is a contract to carry goods from one port
to another, and they cannot be loaded directly on the vessel and lighters are
sent by the vessel to bring the goods to it, the lighters are for the time its
substitutes, so that the bill of landing is applicable to the goods as soon as
they are placed on the lighters.

Whenever the control and possession of goods passes to the carrier

and nothing remains to be done by the shipper, then it can be said with
certainty that the relation of shipper and carrier has been established. A bill
of lading is not indispensable for the creation of a contract of carriage. The
bill of lading is juridically a documentary proof of the stipulations and
conditions agreed upon by both parties. The liability of the carrier as common
carrier begins with the actual delivery of the goods for transportation, and
not merely with the formal execution of a receipt or bill of lading; the
issuance of a bill of lading is not necessary to complete delivery and
acceptance. Even where it is provided by statute that liability commences
with the issuance of the bill of lading, actual delivery and acceptance are
sufficient to bind the carrier.

Lu Do vs. Binamira

While delivery of the cargo to the consignee, or to the person who has
a right to receive them, contemplated in Article 1736, because in such case
the goods are still in the hands of the Government and the owner cannot
exercise dominion over them, we believe however that the parties may agree
to limit the liability of the carrier considering that the goods have still to
through the inspection of the customs authorities before they are actually
turned over to the consignee. This is a situation where we may say that the
carrier losses control of the goods because of a custom regulation and it is
unfair that it be made responsible for what may happen during the
interregnum.

American President Lines, Ltd. vs. Klepper

With regard to the contention of the carrier that COGSA should control
in this case, the same is of as moment. Art. 1763 of the New Civil Code
provides that “the laws of the country to which the goods are transported
shall govern the liability of the common carrier in case of loss, destruction
and deterioration.” This means that the law of the Philippines on the New
Civil Code. Under 1766 of NCC, “in all matter not regulated by this Code, the
rights and obligations of common carriers shall be governed by the Code of
Commerce and by Special Laws.” Art. 1736-1738, NCC governs said rights
and obligations. Therefore, although Sec 4(5) of COGSA states that the
carrier shall not be liable in an amount exceeding $500 per package unless
the value of the goods had been declared by the shipper and asserted in the
bill of lading, said section is merely supplementary to the provisions of the
New Civil Code.

Servando vs. Phil. Steam

The court a quo held that the delivery of the shipment in question to the
warehouse of the Bureau of Customs is not the delivery contemplated by
Article 1736; and since the burning of the warehouse occurred before actual
or constructive delivery of the goods to the appellees, the loss is chargeable
against the appellant.
It should be pointed out, however, that in the bills of lading issued for
the cargoes in question, the parties agreed to limit the responsibility of the
carrier for the loss or damage that may be caused to the shipment therein
the following stipulation:

Clause 14. Carrier shall not be responsible for loss or damage to shipments
billed 'owner's risk' unless such loss or damage is due to negligence of
carrier. Nor shall carrier be responsible for loss or damage caused by force
majeure, dangers or accidents of the sea or other waters; war; public
enemies; . . . fire . ...

We sustain the validity of the above stipulation; there is nothing

therein that is contrary to law, morals or public policy.

Appellees would contend that the above stipulation does not bind them
because it was printed in fine letters on the back-of the bills of lading; and
that they did not sign the same. This argument overlooks the pronouncement
of this Court in Ong Yiu vs. Court of Appeals, where the same issue was
resolved in this wise:
 “While it may be true that petitioner had not signed the plane ticket,
he is nevertheless bound by the provisions thereof. 'Such provisions have
been held to be a part of the contract of carriage, and valid and binding upon
the passenger regardless of the latter's lack of knowledge or assent to the
regulation'. It is what is known as a contract of 'adhesion', in regards which it
has been said that contracts of adhesion wherein one party imposes a ready
made form of contract on the other, as the plane ticket in the case at bar, are
contracts not entirely prohibited. The one who adheres to the contract is in
reality free to reject it entirely; if he adheres, he gives his consent."

Saludo, Jr. vs. Court of Appeals

Except as may be prohibited by law, there is nothing to prevent an

inverse order of events, that is, the execution of the bill of lading even prior
to actual possession and control by the carrier of the cargo to be transported.
There is no law which requires that the delivery of the goods for carriage and
the issuance of the covering bill of lading must coincide in point of time or,
for that matter, that the former should precede the latter. While we agree
with petitioners' statement that "an airway bill estops the carrier from
denying receipt of goods of the quantity and quality described in the bill," a
further reading and a more faithful quotation of the authority cited would
reveal that "(a) bill of lading may contain constituent elements of estoppel
and thus become something more than a contract between the shipper and
the carrier. . . . (However), as between the shipper and the carrier, when no
goods have been delivered for shipment no recitals in the bill can estop the
carrier from showing the true facts . . . Between the consignor of goods and
receiving carrier, recitals in a bill of lading as to the goods shipped raise only
a rebuttable presumption that such goods were delivered for shipment. As
between the consignor and a receiving carrier, the fact must outweigh the
recital."

There is a holding in most jurisdictions that the acceptance of a bill of

lading without dissent raises a presumption that all terms therein were
brought to the knowledge of the shipper and agreed to by him, and in the
absence of fraud or mistake, he is estopped from thereafter denying that he
assented to such terms. This rule applies with particular force where a
shipper accepts a bill of lading with full knowledge of its contents, and
acceptance under such circumstances makes it a binding contract. In order
that any presumption of assent to a stipulation in a bill of lading limiting the
liability of a carrier may arise, it must appear that the clause containing this
exemption from liability plainly formed a part of the contract contained in the
bill of lading. A stipulation printed on the back of a receipt or bill of lading or
on papers attached to such receipt will be quite as effective as if printed on
its face, if it is shown that the consignor knew of its terms. Thus, where a
shipper accepts a receipt which states that its conditions are to be found on
the back, such receipt comes within the general rule, and the shipper is held
to have accepted and to be bound by the conditions there to be found.
 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. 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.

Macam vs. CA

The extraordinary responsibility of the common carriers lasts until

actual or constructive delivery of the cargoes to the consignee or to the
person who has a right to receive them. PAKISTAN BANK was indicated in the
bills of lading as consignee whereas GPC was the notify party. However, in
the export invoices GPC was clearly named as buyer/importer. Petitioner also
referred to GPC as such in his demand letter to respondent WALLEM and in
his complaint before the trial court. This premise draws us to conclude that
the delivery of the cargoes to GPC as buyer/importer which, conformably with
Art. 1736 had, other than the consignee, the right to receive them was
proper.

The real issue is whether respondents are liable to petitioner for

releasing the goods to GPC without the bills of lading or bank guarantee.
From the testimony of petitioner, we gather that he has been transacting with
GPC as buyer/importer for around two (2) or three (3) years already. When
mangoes and watermelons are in season, his shipment to GPC using the
facilities of respondents is twice or thrice a week. The goods are released to
GPC. It has been the practice of petitioner to request the shipping lines to
immediately release perishable cargoes such as watermelons and fresh
mangoes through telephone calls by himself or his "people." In transactions
covered by a letter of credit, bank guarantee is normally required by the
shipping lines prior to releasing the goods. But for buyers using telegraphic
transfers, petitioner dispenses with the bank guarantee because the goods
are already fully paid. In his several years of business relationship with GPC
and respondents, there was not a single instance when the bill of lading was
first presented before the release of the cargoes.
 Maersk Line vs. CA

While it is true 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 to deliver at a given date or time, delivery of shipment or cargo
should at least be made within a reasonable time.
While there was no special contract entered into by the parties
indicating the date of arrival of the subject shipment, petitioner nevertheless,
was very well aware of the specific date when the goods were expected to
arrive as indicated in the bill of lading itself. In this regard, there arises no
need to execute another contract for the purpose as it would be a mere
superfluity. In the case before us, we find that a delay in the delivery of the
goods spanning a period of two months and seven days falls was beyond the
realm of reasonableness.

Ysmael vs. Barretto

Limiting the common carrier’s liability for loss or damage from any
cause or for any reason for less than 1/8 the actual value of the goods is
unconscionable and therefore against public policy. A common carrier cannot
lawfully stipulate for exemption from liability, unless such exemption is just
and reasonable and the contract is freely and fairly made.

Shewaram vs. Philippine Airlines

It can not be said that a contract has been entered into between a
passenger and the common carrier, embodying the conditions as printed at
the back of the ticket. The fact that those conditions are printed at the back
of the ticket stub in letters so small that they are hard to read would not
warrant the presumption that the passenger was aware of those conditions
such that he had "fairly and freely agreed" to those conditions. The
passenger is considered not having agreed to the stipulation on the ticket, as
manifested by the fact that he did not sign the ticket.

Ong Yiu vs. Court of Appeals

While it may be true that the passenger had not signed the plane
ticket, he is nevertheless bound by the provisions thereof. "Such provisions
have been held to be a part of the contract of carriage, and valid and binding
upon the passenger regardless of the latter's lack of knowledge or assent to
the regulation". It is what is known as a contract of "adhesion", in regards
which it has been said that contracts of adhesion wherein one party imposes
a ready made form of contract on the other, as the plane ticket in the case at
bar, are contracts not entirely prohibited. The one who adheres to the
contract is in reality free to reject it entirely; if he adheres, he gives his
consent. A contract limiting liability upon an agreed valuation does not offend
against the policy of the law forbidding one from contracting against his own
negligence.

Sea Land Services, Inc. vs. IAC

Since the liability of a common carrier for loss of or damage to goods

transported by it under a contract of carriage so governed by the laws of the
country of destination and the goods in question were shipped from the
United States to the Philippines, the liability of common carrier to the
consignee is governed primarily by the Civil Code. Applying the Civil Code
provisions (Article 1749 and 1750) the stipulation in the bill of lading limiting
the liability of the common carrier for loss or damages to the shipment
covered by said rule unless the shipper declares the value of the shipment
and pays additional charges is valid and binding on the consignee.

Citadel Lines, Inc. vs. CA

Basic is the rule that a stipulation limiting the liability of the carrier to
the value of the goods appearing in the bill of lading, unless the shipper or
owner declares a greater value, is binding. Furthermore, 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 fairly and freely agreed upon.

In this case, the award based on the alleged market value of the goods
is erroneous. It is provided in a clause in the BOL that its liability is limited to
US$2.00/kilo. The consignee also admits in the memorandum that the value
of the goods does not appear in the bill of lading. Hence, the stipulation on
the carrier’s limited liability applies.

Everett Seamship Corp. vs. CA

In the bill of lading, the carrier made it clear that all claims for which it
may be liable shall be adjusted and settled on the basis of the shipper's net
invoice cost plus freight and insurance premiums, if paid, and in no event
shall the carrier be liable for any loss of possible profits or any consequential
loss. Its liability would only be up to One Hundred Thousand (Y100,000.00)
Yen. However, the shipper, had the option to declare a higher valuation if the
value of its cargo was higher than the limited liability of the carrier.
Considering that the shipper did not declare a higher valuation, it had itself to
blame for not complying with the stipulations.
The commercial Invoice does not in itself sufficiently and convincingly
show that the common carrier has knowledge of the value of the cargo as
contended by the shipper.
 British Airways vs. CA

The contract of transportation was exclusively between the passenger

and common carrier BA. The latter merely endorsing the Manila to Hong
Kong log of the former’s journey to PAL, as its subcontractor or agent.
Conditions of contracts were one of continuous air transportation. Well-
settled rule that an agent is also responsible for any negligence in the
performance of its function and is liable for damages which the principal may
suffer by reason of its negligent act. When an action is based on breach of
contract of carriage, the passenger can only sue BA and not PAL, since the
latter was not a party in the contract.

The contention of BA with respect to limited liability was overruled

although it is recognized in the Philippines, stating that BA had waived the
defense of limited liability when it allowed Mahtani(the passenger) to testify
as to the actual damages he incurred due to the misplacement of his
luggage, without any objection.

H.E. Heacock Co. vs. Macondray

Three kinds of stipulations have often been made in a bill of lading.

The first is one exempting the carrier from any and all liability for loss or
damage occasioned by its own negligence. The second is one providing for an
unqualified limitation of such liability to an agreed valuation. And the third is
one limiting the liability of the carrier to an agreed valuation unless the
shipper declares a higher value and pays a higher rate of freight. According
to an almost uniform weight of authority, the first and second kinds of
stipulations are invalid as being contrary to public policy, but the third is valid
and enforceable.

If a common carrier gives to a shipper the choice of two rates and if

the shipper makes such a choice, understandingly and freely, and names his
valuation, he cannot thereafter recover more than the value which he thus
places upon his property. A limitation of liability based upon an agreed value
does not conflict with any sound principle of public policy; and it is not
conformable to plain principles of justice that a shipper may understate value
in order to reduce the rate and then recover a larger value in case of loss.

Sweet Lines Inc. vs. TEVES

Considered in the light of circumstances prevailing in the inter-island

shipping industry in the country today, We find and hold that Condition No.
14 printed at the back of the passage tickets should be held as void and
unenforceable for the following reasons first, under circumstances obligation
in the inter-island shipping industry, it is not just and fair to bind passengers
to the terms of the conditions printed at the back of the passage tickets, on
which Condition No. 14 is Printed in fine letters, and second, Condition No. 14
subverts the public policy on transfer of venue of proceedings of this nature,
since the same will prejudice rights and interests of innumerable passengers
located in different places of the country who, under Condition No. 14, will
have to file suits against petitioner only in the City of Cebu. Considering the
expense and trouble a passenger residing outside of Cebu City would incur to
prosecute a claim in the City of Cebu, he would most probably decide not to
file the action at all. The condition will thus defeat, instead of enhance, the
ends of justice. Upon the other hand, petitioner has branches or offices in the
respective ports of call of its vessels and can afford to litigate in any of these
places. Hence, the filing of the suit in the CFI of Misamis Oriental, as was
done in the instant case, will not cause inconvenience to, much less
prejudice, petitioner.

Under Art. 2220 of the Civil Code, moral damages are justly due in
breaches of contract where the defendant acted fraudulently or in bad faith.
Both the Trial Court and the Appellate Court found that there was bad faith
on the part of petitioner in that:

(1) Defendants- Appellants did not give notice to plaintiffs-appellates as to

the change of scheduled of the vessel;
(2) Knowing fully well that it would take no less than fifteen hours to effect
the repairs of the damaged engine, defendants- appellants instead made
announce ment of assurance that the vessel would leave within a short
period of time, and when plaintiff-appellees wanted to leave the port and
gave up the trip, defendants- appellants employees would come and say, “we
are leaving already”.
(3) Defendants- appellants did not offer to refund plaintiffs-appellees’ tickets
nor provide them with transportation form Tacloban to Catbalogan.

Quisumbing Sr. vs. Court of Appeals

The highjacking-robbery was force majeure. The hijackers do not board

an airplane through a blatant display of firepower and violent fury. Firearms,
hand-grenades, dynamite, and explosives are introduced into the airplane
surreptitiously and with the utmost cunning and stealth, although there is an
occasional use of innocent hostages who will be coldly murdered unless a
plane is given to the hijackers' complete disposal.

PAL was not negligent so as to overcome the force majeure nature of

the hi-jacking. Hijackers do not board an airplane through a blatant display of
firepower and violent fury. Firearms and grenades are brought to the plane
surreptitiously. PAL could not have been faulted for want of diligence,
particularly for failing to take positive measures to implement Civil
Aeronautics Administration regulations prohibiting civilians from carrying
firearms on board the plane. The use of the most sophisticated electronic
detection devices may have minimized hijacking but still ineffective against
truly determining hijackers.
 Pan American World Airways, Inc. vs. Rapadas

The Warsaw Convention governs the availment of the liability

limitations where the baggage check is combined with or incorporated in the
passenger ticket. In the case at bar, the baggage check is combined with the
passenger ticket in one document of carriage. The passenger ticket complies
with Article 3, which provides:
(c) a notice to the effect that, if the passenger's journey involves an
ultimate destination or stop in a country other than the country of departure,
the Warsaw Convention may be applicable and that the Convention governs
and in most cases limits the liability of carriers for death or personal injury
and in respect of loss of or damage to baggage.

The provisions in the plane ticket are sufficient to govern the

limitations of liabilities of the airline for loss of luggage. The passenger, upon
contracting with the airline and receiving the plane ticket, was expected to
be vigilant insofar as his luggage is concerned. If the passenger fails to
adduce evidence to overcome the stipulations, he cannot avoid the
application of the liability limitations.

The facts show that the private respondent actually refused to register
the attache case and chose to take it with him despite having been ordered
by the PANAM agent to check it in. In attempting to avoid registering the
luggage by going back to the line, private respondent manifested a disregard
of airline rules on allowable handcarried baggages. Prudence of a reasonably
careful person also dictates that cash and jewelry should be removed from
checked-in-luggage and placed in one's pockets or in a handcarried Manila-
paper or plastic envelope.

The alleged lack of enough time for him to make a declaration of a

higher value and to pay the corresponding supplementary charges cannot
justify his failure to comply with the requirement that will exclude the
application of limited liability.

Alitalia vs. Intermediate Appellate Court

The Warsaw Convention's provisions, do not regulate or exclude

liability for other breaches of contract by the carrier' or misconduct of its
officers and employees, or for some particular or exceptional type of damage,
Otherwise, an air carrier would be exempt from any liability for damages in
the event of its absolute refusal, in bad faith, to comply with a contract of
carriage, which is absurd. In the case at bar, no bad faith or otherwise
improper conduct may be ascribed to the employees of petitioner airline; and
Dr. Pablo's luggage was eventually returned to her, belatedly, it is true, but
without appreciable damage.
 There can be no doubt that Dr. Pablo underwent profound distress and
anxiety, which gradually turned to panic and finally despair, from the time
she learned that her suitcases were missing up to the time when, having
gone to Rome, she finally realized that she would no longer be able to take
part in the conference. Certainly, the compensation for the injury suffered by
Dr. Pablo cannot under the circumstances be restricted to that prescribed by
the Warsaw Convention for delay in the transport of baggage.

She is not, of course, entitled to be compensated for loss or damage to

her luggage. As already mentioned, her baggage was ultimately delivered to
her in Manila, tardily, but safely.

Nocum vs. Laguna Tayabas Bus Company

Fairness demands that in measuring a common carrier's duty towards

its passengers, allowance must be given to the reliance that should be
reposed on the sense of responsibility of all the passengers in regard to their
common safety. It is to be presumed that a passenger will not take with him
anything dangerous to the lives and limbs of his co-passengers, not to speak
of his own. Not to be lightly considered must be the right to privacy to which
each passenger is entitled. He cannot be subjected to any unusual search,
when he protests the innocuousness of his baggage and nothing appears to
indicate the contrary, as in the case at bar. In other words, inquiry may be
verbally made as to the nature of a passenger's baggage when such is not
outwardly perceptible, but beyond this, constitutional boundaries are already
in danger of being transgressed. Calling a policeman to his aid, as suggested
by the service manual invoked by the trial judge, in compelling the passenger
to submit to more rigid inspection, after the passenger had already declared
that the box contained mere clothes and other miscellaneous, could not have
justified invasion of a constitutionally protected domain.

Mecenas vs. CA

The behaviour of the captain of the "Don Juan" in tills instance-playing

mahjong "before and up to the time of collision constitutes behaviour that is
simply unacceptable on the part of the master of a vessel to whose hands the
lives and welfare of at least seven hundred fifty (750) passengers had been
entrusted. Whether or not Capt. Santisteban was "off-duty" or "on-duty" at or
around the time of actual collision is quite immaterial; there is, both
realistically speaking and in contemplation of law, no such thing as "off-duty"
hours for the master of a vessel at sea that is a common carrier upon whom
the law imposes the duty of extraordinary diligence.

The record shows that the "Don Juan" sank within ten (10) to fifteen
(15) minutes after initial contact with the "Tacloban City. While the failure of
Capt. Santisteban to supervise his officers and crew in the process of
abandoning the ship and his failure to avail of measures to prevent the too
rapid sinking of his vessel after collision, did not cause the collision by
themselves, such failures doubtless contributed materially to the consequent
loss of life and, moreover, were indicative of the kind and level of diligence
exercised by Capt. Santisteban in respect of his vessel and his officers and
men prior to actual contact between the two (2) vessels. The officer-on-watch
in the "Don Juan" admitted that he had failed to inform Capt. Santisteban not
only of the "imminent danger of collision" but even of "the actual collision
itself " There is also evidence that the "Don Juan" was carrying more
passengers than she had been certified as allowed to carry.

Under these circumstances, a presumption of gross negligence on the

part of the vessel (her officers and crew) and of its ship-owner arises.

Negros Navigation Co., Inc. vs. CA

The Duty to exercise due diligence includes the duty to take passengers or
cargoes that are within the carrying capacity of the vessel. (Same Ruling with
Mecenas)

Korean Airlines Co., LTD. vs. CA

The status of Lapuz as standby passenger was changed to that of a

confirmed passenger when his name was entered in the passenger manifest
of KAL for its Flight No. KE 903. His clearance through immigration and
customs clearly shows that he had indeed been confirmed as a passenger of
KAL in that flight. KAL thus committed a breach of the contract of carriage
between them when it failed to bring Lapuz to his destination.

This Court has held that a contract to transport passengers is different

in kind and degree from any other contractual relation. The business of the
carrier is mainly with the traveling public. It invites people to avail
themselves of the comforts and advantages it offers. The contract of air
carriage generates a relation attended with a public duty. Passengers have
the right to be treated by the carrier's employees with kindness, respect,
courtesy and due consideration. They are entitled to be protected against
personal misconduct, injurious language, indignities and abuses from such
employees. So it is that any discourteous conduct on the part of these
employees toward a passenger gives the latter an action for damages against
the carrier.

Fortune Express Inc. vs. CA

 Art. 1763 of the Civil Code provides that a common carrier is
responsible for injuries suffered by a passenger on account of wilfull acts of
other passengers, if the employees of the common carrier could have
prevented the act through the exercise of the diligence of a good father of a
family. In the present case, it is clear that because of the negligence of
petitioner's employees, the seizure of the bus by Mananggolo and his men
was made possible.
Despite warning by the Philippine Constabulary at Cagayan de Oro that
the Maranaos were planning to take revenge on the petitioner by burning
some of its buses and the assurance of petitioner's operation manager,
Diosdado Bravo, that the necessary precautions would be taken, petitioner
did nothing to protect the safety of its passengers. Had petitioner and its
employees been vigilant they would not have failed to see that the
malefactors had a large quantity of gasoline with them. Under the
circumstances, simple precautionary measures to protect the safety of
passengers, such as frisking passengers and inspecting their baggages,
preferably with non-intrusive gadgets such as metal detectors, before
allowing them on board could have been employed without violating the
passenger's constitutional rights.
The acts of Maranaos could not be considered as caso fortuito because
there was already a warning by the PC.
No contributory negligence could be attributed to the deceased. The
assailant's motive was to retaliate for the loss of life of two Maranaos as a
result of the collision between petitioner's bus and the jeepney in which the
two Maranaos were riding. The armed men actually allowed deceased to
retrieve something from the bus. What apparently angered them was his
attempt to help the driver of the bus by pleading for his life.

Gatchalian vs. Delim

The record yields affirmative evidence of fault or negligence on the

part of respondent common carrier. The driver did not stop to check if
anything had gone wrong with the bus when the snapping sound was heard
and made known to him by the passengers, instead told them that it was
normal. The driver's reply necessarily indicated that the same "snapping
sound" had been heard in the bus on previous occasions. This could only
mean that the bus had not been checked physically or mechanically to
determine what was causing the "snapping sound" which had occurred so
frequently that the driver had gotten accustomed to it. Such a sound is
obviously alien to a motor vehicle in good operating condition, and even a
modicum of concern for life and limb of passengers dictated that the bus be
checked and repaired. The obvious continued failure of respondent to look
after the roadworthiness and safety of the bus, coupled with the driver's
refusal or neglect to stop the mini-bus after he had heard once again the
"snapping sound" and the cry of alarm from one of the passengers,
constituted wanton disregard of the physical safety of the passengers, and
hence gross negligence on the part of respondent and his driver.
 Because what is involved here is the liability of a common carrier for
injuries sustained by passengers in respect of whose safety a common carrier
must exercise extraordinary diligence, we must construe any such purported
waiver most strictly against the common carrier. For a waiver to be valid and
effective, it must not be contrary to law, morals, public policy or good
customs. A cursory examination of the purported waiver will readily show
that appellees did not actually waive their right to claim damages from
appellant for the latter's failure to comply with their contract of carriage. All
that said document proves is that they expressed a "desire" to make the
waiver which obviously is not the same as making an actual waiver of their
right. A waiver of the kind invoked by appellant must be clear and
unequivocal.

A person is entitled to the physical integrity of his or her body; if that

integrity is violated or diminished, actual injury is suffered for which actual or
compensatory damages are due and assessable. Petitioner Gatchalian is
entitled to be placed as nearly as possible in the condition that she was
before mishap. A scar, especially one on the face of the woman, resulting
from the infliction of injury upon her, is a violation of bodily integrity, giving
raise to a legitimate claim for restoration to her condition ante.

Del Castillo vs. Jaymalin

Common carriers are responsible for the death of their passengers

(Articles 1764 and 2206 of the Civil Code). This liability includes the loss of
the earning capacity of the deceased. It appears proven that the defendant
corporations failed to exercise the diligence that was their duty to observe
according to Articles 1733 and 1755. The conductor was apprised of the fact
that Mario del Castillo was deaf and dumb. With this knowledge the
conductor should have taken extra-ordinary care for the safety of the said
passenger. In this he failed.

Phil. Rabbit Bus Lines vs. IAC

The principle about "the last clear" chance, would call for application in
a suit between the owners and drivers of the two colliding vehicles. It does
not arise where a passenger demands responsibility from the carrier to
enforce its contractual obligations. For it would be inequitable to exempt the
negligent driver of the jeepney and its owners on the ground that the other
driver was likewise guilty of negligence."

It is the rule under the substantial factor test that if the actor's conduct
is a substantial factor in bringing about harm to another, the fact that the
actor neither foresaw nor should have foreseen the extent of the harm or the
manner in which it occurred does not prevent him from being liable. The bus
driver's conduct is not a substantial factor in bringing about harm to the
passengers of the jeepney. It cannot be said that the bus was travelling at a
fast speed when the accident occurred because the speed of 80 to 90
kilometers per hour, assuming such calculation to be correct, is yet within the
speed limit allowed in highways.

Bustamante vs. CA

The doctrine, stated broadly, is that the negligence of the plaintiff does
not preclude a recovery for the negligence of the defendant where it appears
that the defendant, by exercising reasonable care and prudence, might have
avoided injurious consequences to the plaintiff notwithstanding the plaintiff's
negligence. In other words, the doctrine of last clear chance means that even
though a person's own acts may have placed him in a position of peril, and an
injury results, the injured person is entitled to recovery. As the doctrine is
usually stated, a person who has the last clear chance or opportunity of
avoiding an accident, notwithstanding the negligent acts of his opponent or
that of a third person imputed to the opponent is considered in law solely
responsible for the consequences of the accident.

All premises considered, the Court is convinced that the respondent

Court committed an error of law in applying the doctrine of last clear chance
as between the defendants, since the case at bar is not a suit between the
owners and drivers of the colliding vehicles but a suit brought by the heirs of
the deceased passengers against both owners and drivers of the colliding
vehicles. Therefore, the respondent court erred in absolving the owner and
driver of the cargo truck from liability.

Lara vs. Valencia

The owner and driver of a vehicle owes to accommodation passengers

or invited guests merely the duty to exercise reasonable care so that they
may be transported safely to their destination. Thus, "The rule is established
by weight of authority that the owner or operator of an automobile owes the
duty to an invited guest to exercise reasonable care in its operation, and not
unreasonably to expose him to danger and injury by increasing the hazard of
travel. The owner of the vehicle in the case at bar is only required to observe
ordinary care, and is not in duty bound to exercise extraordinary diligence as
required by our law.

A passenger must observe the diligence of a father of a family to avoid

injury to himself which means that if the injury to the passenger has been
proximately caused by his own negligence, the carrier cannot be held liable.

Necessito vs. Paras

 While the carrier is not an insurer of the safety of the passengers, it
should nevertheless be held to answer for the laws its equipment if such
flaws were at all discoverable. In this connection, the manufacturer of the
defective appliance is considered in law the agent of the carrier, and the
good repute of the manufacturer will not relieve the carrier from liability. The
rationale of the carrier's liability is the fact that the passenger has no privity
with the manufacturer of the defective equipment; hence, he has no remedy
against him, while the carrier usually has.

Japan Airlines vs. CA

Accordingly, there is no question that when a party is unable to fulfill

his obligation because of "force majeure," the general rule is that he cannot
be held liable for damages for non-performance. Corollarily, when JAL was
prevented from resuming its flight to Manila due to the effects of Mt. Pinatubo
eruption, whatever losses or damages in the form of hotel and meal expenses
the stranded passengers incurred, cannot be charged to JAL. Yet it is
undeniable that JAL assumed the hotel expenses of respondents for their
unexpected overnight stay on June 15, 1991.
It has been held that airline passengers must take such risks incident
to the mode of travel. In this regard, adverse weather conditions or extreme
climatic changes are some of the perils involved in air travel, the
consequences of which the passenger must assume or expect.
While JAL was no longer required to defray private respondents' living
expenses during their stay in Narita on account of the fortuitous event, JAL
had the duty to make the necessary arrangements to transport private
respondents on the first available connecting flight to Manila. Petitioner JAL
reneged on its obligation to look after the comfort and convenience of its
passengers when it declassified private respondents from "transit
passengers" to "new passengers" as a result of which private respondents
were obliged to make the necessary arrangements themselves for the next
flight to Manila.

Layugan vs. IAC

Res ipsa loquitur is a doctrine which states thus: "Where the thing
which causes injury is shown to be under the management of the defendant,
and the accident is such as in the ordinary course of things does not happen
if those who have the management use proper care, it affords reasonable
evidence, in the absence of an explanation by the defendant, that the
accident arose from want of care. The doctrine of Res ipsa loquitur as a rule
of evidence is peculiar to the law of negligence which recognizes that prima
facie negligence may be established without direct proof and furnishes a
substitute for specific proof of negligence. The doctrine can be invoked when
and only when, under the circumstances involved, direct evidence is absent
and not readily available.
 Whether the cargo truck was parked along the road or on half the
shoulder of the right side of the road would be of no moment taking into
account the warning device consisting of the lighted kerosene lamp placed
three or four meters from the back of the truck. But despite this warning
which we rule as sufficient, the Isuzu truck driven by Daniel Serrano, an
employee of the private respondent, still bumped the rear of the parked
cargo truck. As a direct consequence of such accident the petitioner
sustained injuries on his left forearm and left foot. It is clear therefore that
the absence or want of care of Daniel Serrano has been established by clear
and convincing evidence. It follows that the doctrine of Res ipsa loquitur is
inapplicable, making the employer of the driver liable for the negligence of
his employee.

La Mallorca vs. CA

The liability of the carrier for the child, who was already led by the
father to a place about 5 meters away from the bus for her safety under the
contract of carriage, persists. The relation of carrier and passenger does not
necessarily cease where the latter, after alighting from the car, aids the
carrier's servant or employee in removing his baggage from the car.

It has been recognized as a rule that the relation of carrier and

passenger does not cease at the moment the passenger alights from the
carrier's vehicle at a place selected by the carrier at the point of destination,
but continues until the passenger has had a reasonable time or a reasonable
opportunity to leave the carrier's premises. And, what is a reasonable time or
a reasonable delay within this rule is to be determined from all the
circumstances.

Aboitiz Shipping Co. vs. CA

The rule is that the relation of carrier and passenger continues until the
passenger has been landed at the port of destination and has left the vessel
owner's dock or premises. Once created, the relationship will not ordinarily
terminate until the passenger has, after reaching his destination, safely
alighted from the carrier's conveyance or had a reasonable opportunity to
leave the carrier's premises. All persons who remain on the premises a
reasonable time after leaving the conveyance are to be deemed passengers,
and what is a reasonable time or a reasonable delay within this rule is to be
determined from all the circumstances, and includes a reasonable time to see
after his baggage and prepare for his departure. The carrier-passenger
relationship is not terminated merely by the fact that the person transported
has been carried to his destination if, for example, such person remains in
the carrier's premises to claim his baggage.
When the accident occurred, the victim was in the act of unloading his
cargoes, which he had every right to do, from petitioner's vessel. Even if he
had already disembarked an hour earlier, his presence in petitioner's
premises was not without cause. The victim had to claim his baggage which
was possible only one hour after the vessel arrived since it was admittedly
standard procedure in the case of petitioner's vessels that the unloading
operations shall start only after that time.

Mallari Sr. vs. CA

Clearly, the proximate cause of the collision resulting in the death of a

passenger of the jeepney, was the sole negligence of the driver of the
passenger jeepney, petitioner Alfredo Mallari Jr., who recklessly operated and
drove his jeepney in a lane where overtaking was not allowed by traffic rules.
Under Art. 2185 of the Civil Code, unless there is proof to the contrary, it is
presumed that a person driving a motor vehicle has been negligent if at the
time of the mishap he was violating a traffic regulation.
Under Art. 1755 of the Civil Code, a common carrier is bound to carry
the passengers safely as far as human care and foresight can provide using
the utmost diligence of very cautious persons with due regard for all the
circumstances. Moreover, under Art. 1756 of the Civil Code, in case of death
or injuries to passengers, a common carrier is presumed to have been at fault
or to have acted negligently, unless it proves that it observed extraordinary
diligence. Further, pursuant to Art. 1759 of the same Code, it is liable for the
death of or injuries to passengers through the negligence or willful acts of the
former's employees. This liability of the common carrier does not cease upon
proof that it exercised all the diligence of a good father of a family in the
selection of its employees.

Bayasen vs. CA

It is a well known physical tact that cars may skid on greasy or slippery roads,
as in the instant case, without fault on account of the manner of handling the
car. Skidding means partial or complete loss of control of the car under
circumstances not necessarily implying negligence. It may occur without
fault.

Under the particular circumstances of the instant case, the petitioner- driver
who skidded could not be regarded as negligent, the skidding being an
unforeseen event, so that the petitioner had a valid excuse for his departure
from his regular course.

Cervantes vs. CA

Since the PAL agents are not privy to the said Agreement and petitioner 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. Under Article
1989 of the New Civil Code, the acts of 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 third person (herein petitioner)
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 third 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.

Calalas vs. CA

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. Insofar as contracts of carriage are concerned, some
aspects regulated by the Civil Code are those respecting the diligence
required of common carriers with regard to the safety of passengers as well
as the presumption of negligence in cases of death or injury to passengers.
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.
The driver of jeepney did not carry “safely as far as human care and
foresight could provide, using the utmost diligence of very cautious persons,
with due regard for all the circumstances" as required by Art. 1755. 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. The petitioner's driver took in more passengers
than the allowed seating capacity of the jeepney. These are violations of the
Land Transportation and Traffic Code. Therefore, there is no assumption of
risk by the passenger.

Pestaño vs. Sumayang

In the case at bar, Pestaño, as a professional driver operating a public

transport bus, should have anticipated that overtaking at a junction was a
perilous maneuver and should thus have exercised extreme caution.
Under Articles 2180 and 2176 of the Civil Code, owners and managers
are responsible for damages caused by their employees. When an injury is
caused by the negligence of a servant or an employee, the master or
employer is presumed to be negligent either in the selection or in the
supervision of that employee. This presumption may be overcome only by
satisfactorily showing that the employer exercised the care and the diligence
of a good father of a family in the selection and the supervision of its
employee.

Gillaco vs. Manila Railroad

While a passenger is entitled to protection from personal violence by

the carrier or its agents or employees, since the contract of transportation
obligates the carrier to transport a passenger safely to his destination, the
responsibility of the carrier extends only to those acts that the carrier could
foresee or avoid through the exercise of the degree of care and diligence
required of it. In the present case, the act of the train guard of the Manila
Railroad Company in shooting the passenger (because of a personal grudge
nurtured against the latter since the Japanese occupation) was entirely
unforseeable by the Manila Railroad Co. The latter had no means to ascertain
or anticipate that the two would meet, nor could it reasonably forsee every
personal rancor that might exist between each one of its many employees
and any one of the thousands of eventual passengers riding in its trains. The
shooting in question was therefore "caso fortuito" within the definition of Art.
1105 of the old Civil Code (which is the law applicable), being both
unforeseeable and inevitable under the given circumstances; and pursuant to
established doctrine, the resulting breach of the company's contract of safe
carriage with the deceased was excused thereby.

Maranan vs. Perez

The basis of the common carrier's liability under NCC for assaults on
passengers committed by its drivers rests either on (1) the doctrine of
respondeat superior or (2) the principle that it is the carrier's implied duty to
transport the passenger safely.
Under the first, which is the minority view, the carrier is liable only
when the act of the employee is within the scope of his authority and duty. It
is not sufficient that the act be within the course of employment only. Under
the second view, upheld by the majority and also by the later cases, it is
enough that the assault happens within the course of the employee's duty. It
is no defense for the carrier that the act was done in excess of authority or in
disobedience of the carrier's orders. The carrier's liability here is absolute in
the sense that it practically secures the passengers from assaults committed
by its own employees. Art. 1759, evidently follows the rule based on the
second view.
Accordingly, it is the carrier's strict obligation to select its drivers and
similar employees with due regard not only to their technical competence
and physical ability, but also, no less important, to their total personality,
including their patterns of behavior, moral fibers, and social attitude.
 PNR vs. CA

When a train boarded by the deceased passenger was so over-crowded

that he and many other passengers had no choice but to sit on the open
platforms between the coaches of the train, the common carrier is negligent.
Likewise when the train did not even slow down when it approached
the Iyam Bridge which was under repair at the time, neither did the train
stop, despite the alarm raised by other passengers that a person had fallen
off the train at lyam Bridge, there was negligence. The petitioner has the
obligation to transport its passengers to their destinations and to observe
extraordinary diligence in doing so. Death or any injury suffered by any of its
passengers gives rise to the presumption that it was negligent in the
performance of its obligation under the contract of carriage.
But while petitioner failed to exercise extraordinary diligence as
required by law, it appears that the deceased was chargeable with
contributory negligence. Since he opted to sit on the open platform between
the coaches of the train, he should have held tightly and tenaciously on the
upright metal bar found at the side of said platform to avoid falling off from
the speeding train.

Isaac vs. A.L. Ammen Trans. Co.

If the carrier’s employee is confronted with a sudden emergency, he is not

held to the same degree of care he would otherwise, be required in the
absence of such emergency.
By placing his left arm on the window, petitioner is guilty of contributory
negligence. It cannot however relieve the carrier but can only reduce its
liability (ART. 1762). It is a prevailing rule that it is negligence per se for
passengers on a railroad to protrude any part of his body and that no
recovery can be had for an injury.

Bachelor Express Inc vs. CA

The running amuck of the passenger was the proximate cause of the
incident as it triggered off a commotion and panic among the passengers
such that the passengers started running to the sole exit shoving each other
resulting in the falling off the bus by passengers Beter and Rautraut causing
them fatal injuries. The sudden act of the passenger who stabbed another
passenger in the bus is within the context of force majeure. However, in order
that a common carrier may be absolved from liability in case of force
majeure, it is not enough that the accident was caused by force majeure. The
common carrier must still prove that it was not negligent in causing the
injuries resulting from such accident. In this case, Bachelor was negligent.
Considering the factual findings of the Court of Appeals-the bus driver
did not immediately stop the bus at the height of the commotion; the bus
was speeding from a full stop; the victims fell from the bus door when it was
opened or gave way while the bus was still running; the conductor panicked
and blew his whistle after people had already fallen off the bus; and the bus
was not properly equipped with doors in accordance with law.

Cariaga vs. LTB Co

The income which deceased could earn if he should finish the medical
course and pass the corresponding board examinations must be deemed to
be within the same category provided for by Art. 2201 of the Civil Code,
which are those that are the natural and probable consequences of the
breach and which the parties had foreseen or could have reasonably foreseen
at the time the obligation was constituted.

LTB could not be held liable to pay moral damages under Article 2220 of the
Civil Code on account of breach of its contract of carriage because it did not
act fraudulently or in bad faith. LTB had exercised due diligence in the
selection and supervision of its employees like the drivers of its buses in
connection with the discharge of their duties and so it must be considered an
obligor in good faith.

Villa Rey Transit, Inc. vs. CA

Life expectancy is, not only relevant, but, also, an important element in
fixing the amount recoverable by private respondents herein. Although it is
not the sole element determinative of said amount, no cogent reason has
been given to warrant its disregard and the adoption, in the case at bar, of a
purely arbitrary standard, such as a four-year rule.
When the liability of common carrier had been fixed at a minimal rate
of only of P2,184.00 a year, which is the annual salary of deceased at the
time of his death, as a young "training assistant" and when the deceased’s
potentiality and capacity to increase his future income was not considered
said liability may be enforced upon finality of the decision.

Pan American World Airways vs. IAC

By refusing to accommodate plaintiff in said flight, defendant had

willfully and knowingly violated the contract of carriage and failed to bring
the plaintiff to her place of destination under its contract with plaintiff. Bad
faith was also present. Self enrichment or fraternal interest and not personal
ill will may have been the motive of defendant, but it is malice nevertheless.
The fact that plaintiff was ordered out under some pretext in order to
accommodate a white man in an airline owned by an American firm with a
reputation for bumping off non- Caucasian to accommodate whites is very
regrettable.

Defendant having breached its contract with plaintiff in bad faith, it is

not error to have awarded exemplary damages. The rationale behind
exemplary or corrective damages is, as the name implies, to provide an
example or correction for public good . In view of it nature, it should be
imposed in such amount as to sufficiently and effectively deter similar breach
of contract in the future by defendant and other airlines.

An award of attorney's fees is also in order, having found bad faith on

the part of defendant.

Soberano vs. MRR

In case of physical injuries, moral damages are recoverable only by the

party injured and not by his next of kin, unless there is express statutory
provision to the contrary. In this case it was Juana Soberano, not her husband
Jose, who sustained the bodily injuries.

Attorneys fees may only be awarded when the defendant's act or

omission has compelled the plaintiff to litigate with third persons or incur
expenses to protect his interest, or when the defendant acted in gross and
evident bad faith in refusing to satisfy the plaintiff's plainly valid, just and
demandable claim. It will be observed that the defendant companies offered
to settle the case by offering to the Soberanos the additional sum of P5,000.
The Soberanos, however, rejected the offer and proceeded to court to
recover damages in the total sum of P76,757.76.

Marchan vs. Mendoza

It is argued that this Court is without jurisdiction to adjudicate the

exemplary damages since there was no allegation nor prayer, nor proof, nor
counterclaim of error for the same by the respondents. It is to be observed
however, that in the complaint, plaintiffs "prayed for such other and further
relief as this Court may deem just and equitable." Now, since the body of the
complaint sought to recover damages against the defendant-carrier wherein
plaintiffs prayed for indemnification for the damages they suffered as a result
of the negligence of the driver who is appellant's employee and since
exemplary damages is intimately connected with general damages, plaintiffs
may not be expected to single out by express term the kind of damages they
are trying to recover against the defendant's carrier. Suffice it to state that
when plaintiffs prayed in their complaint for such other relief and remedies
that may be availed of under the premises, in effect, therefore, the court is
called upon the exercise and use its discretion whether the imposition of
punitive or exemplary damages even though not expressly prayed or pleaded
in the plaintiffs' complaint. Exemplary damages may be imposed by way of
example or correction only in addition, among others, to compensatory
damages, but that they cannot be recovered as a matter of right, their
determination depending upon the discretion of the court. If the amount of
exemplary damages need not be proved, it need not also be alleged, and the
reason is obvious because it is merely incidental or dependent upon what the
court may award as compensatory damages.

De Caliston vs. Court of Appeals

The deletion of the P10,000.00 awarded for loss of pension is

unjustified. Under Article 2206 of the Civil Code: The amount of damages for
death caused by a crime or quasi-delict shall be at least three thousand
pesos, even though there may have been mitigating circumstances. In
addition:
(1) The defendant shall be liable for the loss of the earning capacity of the
deceased, and the indemnity shall be paid to the heirs of the latter. .
The pension of the decedent being a sure income that was cut short by
her death for which Dalmacio was responsible, the surviving heir of the
former is entitled to the award of P 10,000.00 which is just equivalent to the
pension the decedent would have received for one year if she did not die.
On the other hand, the P5,000.00 paid to the herein petitioner by the
insurer of the passenger bus which figured in the accident may be deemed to
have come from the bus owner who procured the insurance. Since the civil
liability (ex-delicto) of the latter for the death caused by his driver is
subsidiary and, at bottom, arises from the same culpa, the insurance
proceeds should be credited in favor of the errant driver.

Philippine Airlines vs. CA 185 SCRA 110

Petitioner relies on "the principle of law generally recognized and

applied by the courts in the United States" that "the controlling element in
determining loss of earnings arising from death is, as established by
authorities, the life expectancy of the deceased or of the beneficiary,
whichever is shorter. However, resort to foreign jurisprudence would be
proper only if no law or jurisprudence is available locally to settle a
controversy. Even in the absence of local statute and case law, foreign
jurisprudence is only persuasive.
For the settlement of the issue at hand, there are enough applicable
local laws and jurisprudence. Under Article 1764 and Article 2206(1) of the
Civil Code, the award of damages for death is computed on the basis of the
life expectancy of the deceased, not of his beneficiary.

Cachero vs. Manila Yellow Taxi Cab

While under the law, employers are made responsible for the damages
caused by their employees acting within the scope of their assigned task,
plaintiff, in the present case, does not maintain his action against all the
persons who might be liable for the damages caused but on an alleged
breach of contract of carriage and against the defendant employer alone.
However, the defendant taxicab company has not committed any criminal
offense resulting in physical injuries against the plaintiff. The one that
committed the offense against plaintiff is the driver of defendant's taxicab
but he was not made party defendant to the case. Therefore, plaintiff is not
entitled to compensation for moral damages as his case does not come
within the exception of paragraph 1 of Article 2219 of the Civil Code.
The present case does not come under any of the exceptions
enumerated in Article 2208 of the Civil Code, specially of paragraph 2
thereof, because defendant's failure to meet its responsibility was not the
cause that compelled the plaintiff to litigate or to incur expenses to protect
his interests. The present action was instituted because plaintiff demanded
an exorbitant amount for moral damages and naturally the defendant did not
and could not yield to such demand. This is neither a case that comes under
paragraph 11 of said Article because the Lower Court did not deem it just and
equitable to award any amount for attorney's fees, on which point this Court
agrees.

Fores vs. Miranda

The exception to the basic rule of damages now under consideration is

a mishap resulting in the death of a passenger, in which case Article 1764
makes the common carrier expressly subject to the rule of Art. 2206, that
entitles the spouse, descendants and ascendants of the deceased passenger
to "demand moral damages for mental anguish by reason of the death of the
deceased". But the exceptional rule of Art. 1764 makes it all the more
evident that where the injured passenger does not die, moral damages are
not recoverable unless it is proved that the carrier was guilty of malice or bad
faith. We think it is clear that the mere carelessness of the carrier's driver
does not per se constitute or justify an inference of malice or bad faith on the
part of the carrier; and in the case at bar there is no other evidence of such
malice to support the award of moral damages by the Court of Appeals. To
award moral damages for breach of contract, therefore, without proof of bad
faith or malice on the part of the defendant, as required by Art. 2220, would
be to violate the clear provisions of the law, and constitute unwarranted
judicial legislation.

Lopez vs. Pan American

As a proximate result of defendant's breach in bad faith of its contracts

with plaintiffs, the latter suffered social humiliation, wounded feelings,
serious anxiety and mental anguish. For plaintiffs were travelling with first
class tickets issued by defendant and yet they were given only the tourist
class. At stop-overs, they were expected to be among the first-class
passengers by those awaiting to welcome them, only to be found among the
tourist passengers. It may not be humiliating to travel as tourist passengers;
it is humiliating to be compelled to travel as such, contrary to what is
rightfully to be expected from the contractual undertaking. Senator Lopez
was then Senate President Pro Tempore. International carriers like defendant
know the prestige of such an office. And he was former Vice-President of the
Philippines. Senator Lopez was going to the United States to attend a private
business conference of the Binalbagan-Isabela Sugar Company; but his
aforesaid rank and position were by no means left behind, and in fact he had
a second engagement awaiting him in the United States: a banquet tendered
by Filipino friends in his honor as Senate President Pro Tempore. For the
moral damages sustained by him, therefore, an award of P100,000.00 is
appropriate.
A written contract for attorney's services shall control the amount to be
paid therefor unless found by the court to be unconscionable or
unreasonable. A consideration of the attorney’s prominence as well as
comparison of the defense counsel’s fees could well establish the
reasonableness of the attorney’s fees, such as in this case.

Ortigas Jr. vs. Lufthansa

It is Our considered view that when it comes to contracts of common

carriage, inattention and lack of care on the part of the carrier resulting in the
failure of the passenger to be accommodated in the class contracted for
amounts to bad faith or fraud which entitles the passenger to the award of
moral damages in accordance with Article 2220 of the Civil Code. But in the
instant case, the breach appears to be of graver nature, since the preference
given to the Belgian passenger over plaintiff was done willfully and in wanton
disregard of plaintiff's rights and his dignity as a human being and as a
Filipino, who may not be discriminated against with impunity. What worsened
the situation of was that Lufthansa succeeded in keeping Ortigas as its
passenger by assuring him that he would be given first class accommodation
at the next stations, the proper arrangements therefor having been made
already, when in truth such was not the case.
A passenger contracts for first class accommodations for many reasons
peculiar to himself and pays a higher price therefor, and it is certainly not for
the airplane to say later, after it deprives him of his space in order to favor
another passenger, that economy class is anyway just as good as first class.
We have uniformly upheld the right of a passenger to damages in all
cases wherein, after having contracted and paid for first class
accommodations duly confirmed and validated, he is transferred over his
objection to economy, class, which he has to take in order to be able to arrive
at his destination on his scheduled time.

Philippine Rabbit Bus Lines vs. Esguerra

Moral damages are not recoverable in actions for damages predicated

on a breach of the contract of transportation, as in the instant case, in view of
the provisions of Articles 2219 and 2220 of the New Civil Code. The
exceptions are (1) where the mishap results in the death of a passenger, and
(2) where it is proved that the carrier was guilty of fraud or bad faith, even if
death does not result. The Court of Appeals found that the two vehicles
sideswiped each other at the middle of the road. In other words. both
vehicles were in their respective lanes and that they did not invade the lane
of the other. It cannot be said therefore that there was fraud or bad faith on
the part of the carrier's driver. This being the case, no moral damages are
recoverable.

Trans World Airlines vs. CA

Petitioner sacrificed the comfort of its first class passengers including

private respondent Vinluan for the sake of economy. Such inattention and
lack of care for the interest of its passengers who are entitled to its utmost
consideration, particularly as to their convenience, amount to bad faith which
entitles the passenger to the award of moral damages. More so in this case
where instead of courteously informing private respondent of his being
downgraded under the circumstances, he was angrily rebuffed by an
employee of petitioner.
At the time of this unfortunate incident, the private respondent was a
practicing lawyer, a senior partner of a big law firm in Manila. He was a
director of several companies and was active in civic and social organizations
in the Philippines. Considering the circumstances of this case and the social
standing of private respondent in the community, he is entitled to the award
of moral and exemplary damages.

Armovit vs. CA

The gross negligence committed by private respondent(Northwest

Airlines) in the issuance of the tickets by the erroneous entry of the date of
departure and without changing or correcting the error when the tickets were
presented for re-confirmation and the manner by which petitioners were
rudely informed that they were bumped off are clear indicia of such malice
and bad faith and establish that private respondent committed a breach of
contract which entitles petitioners to moral damages.
The deletion of the nominal damages by the appellate court is well-
taken since there is an award of actual damages. Nominal damages cannot
co-exist with actual or compensatory damages.

Philippine Airlines vs. CA 106 SCRA 391

There was gross negligence by PAL for allowing Capt. Bustamante to

fly on the that fateful day of the accident, even if he was sick, having tumor
on his nose. No one will certify the fitness to fly a plane of one suffering from
the disease. One month prior to the crash-landing, when the pilot was
preparing to land in Daet, private respondent warned him that they were not
in the vicinity of Daet but above the town of Ligao. The dizziness, headaches
and general debility of private respondent were after-effects of the crash-
landing. And therefore there is causal connection between the accident and
said after-effects. The negligence of PAL is clearly a quasi-delict and therefore
Art. 2219(2) is applicable, justifying the recovery of moral damages. Even
from the standpoint of the petitioner that there is an employee-employer
relationship between it and private respondent arising from the contract of
employment, private respondent is still entitled to moral damages in view of
the finding of bad faith or malice, applying the provisions of Article 2220.

Prudenciado vs. Alliance Transport

Dra. Prudenciado suffered a brain concussion which although mild can

admittedly produce the effects complained of by her and that these
symptoms can develop after several years and can lead to some, serious
handicaps or predispose the patient to other sickness. Being a doctor by
profession, her fears can be more real and intense than an ordinary person.
Otherwise stated, she is undeniably a proper recipient of moral damages
which are proportionate to her suffering.
As to exemplary damages, Article 2231 of the Civil Code provides: “In
quasi-delicts, exemplary damages may be granted if the defendant acted
with grave negligence.” The rationale behind exemplary or corrective
damages is, as the name implies, to provide an example or correction for the
public good. Respondent driver was running at high speed after turning to the
right along Taft Ave. coming from Ayala Boulevard, considering that the
traffic was clear. Failing to notice petitioner's car, he failed to apply his
brakes and did not even swerve to the right to avoid the collision. Much more,
it was raining that time and the roads are slippery. The frequent incidence of
accidents of this nature caused by taxi drivers indeed demands corrective
measures.
 I. CONCEPT OF COMMON CARRIER

DE GUZMAN vs. COURT OF APPEALS

Facts: Respondent Ernesto Cendaña is a junk dealer who 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 two six-wheeler trucks which he
owned for hauling the material to Manila. On the return trip to Pangasinan,
respondent would load his vehicles with cargo which various merchants
wanted delivered to different establishments in Pangasinan. For that service,
respondent charged freight rates which were commonly lower than regular
commercial rates.
Petitioner Pedro de Guzman a merchant and authorized dealer of
General Milk Company (Philippines), Inc. in Urdaneta, Pangasinan, contracted
with respondent for the hauling of 750 cartons of Liberty filled milk from its
warehouse in Makati to petitioner's establishment in Urdaneta. 150 cartons
were loaded on a truck driven by respondent, while 600 cartons were placed
on board the other truck which was driven by Manuel Estrada, respondent's
driver and employee. Only 150 boxes of Liberty filled milk were delivered to
petitioner. The other 600 boxes never reached petitioner, since the truck
which carried these boxes was hijacked somewhere along the MacArthur
Highway in Paniqui, Tarlac, by armed men who took with them the truck, its
driver, his helper and the cargo.
Petitioner commenced action against private respondent demanding
payment of P22,150.00, the claimed value of the lost merchandise, plus
damages and attorney's fees. Petitioner argued that private respondent,
being a common carrier, and having failed to exercise the extraordinary
diligence required of him by the law, should be held liable for the value of the
undelivered goods. Private respondent denied that he was a common carrier
and argued that he could not be held responsible for the value of the lost
goods, such loss having been due to force majeure.
The RTC ruled that private respondent was a common carrier. CA
reversed the decision and held that respondent had been engaged in
transporting return loads of freight "as a casual occupation”, a sideline to his
scrap iron business.
Issue: 1. Whether or not respondent is a common carrier.
2. Whether or not respondent is liable.

Held: 1. Yes. Article 1732 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 Court of Appeals referred to the fact that private respondent held
no certificate of public convenience. A certificate of public convenience is not
a requisite for the incurring of liability. That liability arises the moment a
person or firm acts as a common carrier, without regard to whether or not
such carrier has also complied with the requirements of the applicable
regulatory statute and implementing regulations and has been granted a
certificate of public convenience or other franchise. To exempt private
respondent from the liabilities of a common carrier because he has not
secured the necessary certificate of public convenience, would be offensive
to sound public policy; that would be to reward private respondent precisely
for failing to comply with applicable statutory requirements.

2. No. Article 1734 establishes the general rule that common carriers are
responsible for the loss, destruction or deterioration of the goods which they
carry, "unless the same is due to any of the following causes only:
(1) Flood, storm, earthquake, lightning or other natural disaster or calamity;
(2) Act of the public enemy in war, whether international or civil;
(3) Act or omission of the shipper or owner of the goods;
(4) The character-of the goods or defects in the packing or-in the containers;
and
(5) Order or act of competent public authority.

Article 1735 also provides as follows:

In all cases other than those mentioned in numbers 1, 2, 3, 4 and 5 of the
preceding article, if the goods are lost, destroyed or deteriorated, common
carriers are presumed to have been at fault or to have acted negligently,
unless they prove that they observed extraordinary diligence as required in
Article 1733.

The hijacking of the carrier's truck does not fall within any of the five
categories of exempting causes listed in Article 1734. It would follow,
therefore, that the hijacking of the carrier's vehicle must be dealt with under
the provisions of Article 1735, in other words, that the private respondent as
common carrier is presumed to have been at fault or to have acted
negligently. This presumption, however, may be overthrown by proof of
extraordinary diligence on the part of private respondent. Petitioner argues
that in the circumstances of this case, private respondent should have hired a
security guard presumably to ride with the truck carrying the 600 cartons of
Liberty filled milk. We do not believe, however, that in the instant case, the
standard of extraordinary diligence required private respondent to retain a
security guard to ride with the truck and to engage brigands in a firelight at
the risk of his own life and the lives of the driver and his helper.

Article 1745 provides in relevant part:

Any of the following or similar stipulations shall be considered unreasonable,
unjust and contrary to public policy:
(6) that the common carrier's liability for acts committed by thieves, or
of robbers who do not act with grave or irresistible threat, violence or force, is
dispensed with or diminished.

In the instant case, armed men held up the second truck owned by
private respondent which carried petitioner's cargo. Accused acted with
grave, if not irresistible, threat, violence or force. 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.

PLANTERS PRODUCTS, INC. vs. COURT OF APPEALS

Facts: PPI purchased from Mitsubishi metric tons of Urea fertilizer which the
latter shipped aboard the cargo vessel owned by KKKK from US to La Union.
Prior to its voyage, a time charter-party on the vessel was entered into
between Mitsubishi as shipper/charterer and KKKK as shipowner, in Tokyo,
Japan. Before loading the fertilizer aboard the vessel, they were all
presumably inspected by the charterer's representative and found fit to take
a load of urea. After the Urea fertilizer was loaded in bulk by stevedores hired
by and under the supervision of the shipper, the steel hatches were closed
with heavy iron lids, covered with three layers of tarpaulin, then tied with
steel bonds. The hatches remained closed and tightly sealed throughout the
entire voyage.
A private marine and cargo surveyor, Cargo Superintendents Company
Inc. (CSCI), was hired by PPI to determine the "outturn" of the cargo shipped.
The survey report submitted revealed a shortage in the cargo and that a
portion of the Urea fertilizer approximating was contaminated with dirt.
PPI sent a claim letter to Soriamont Steamship Agencies (SSA), the
resident agent of the carrier, KKKK, for the cost of the shortage in the and the
diminution in value of that portion contaminated with dirt. SSA explained that
they did not respond to the consignee's claim because it was not a formal
claim, and that they had nothing to do with the discharge of the shipment.
 PPI filed an action for damages. The defendant carrier argued that the
strict public policy governing common carriers does not apply to them
because they have become private carriers by reason of the provisions of the
charter-party. RTC ruled in favor of plaintiff, stating that “common carriers
are presumed negligent, all that a shipper has to do in a suit to recover for
loss or damage is to show receipt by the carrier of the goods and to delivery
by it of less than what it received. After that, the burden of proving that the
loss or damage was due to any of the causes which exempt him from liability
is shifted to the carrier, common or private he may be. Even if the provisions
of the charter-party are deemed valid, and the defendants considered private
carriers, it was still incumbent upon them to prove that the shortage or
contamination sustained by the cargo is attributable to the fault or
negligence on the part of the shipper or consignee in the loading, stowing,
trimming and discharge of the cargo. This they failed to do.” CA reversed the
decision, relying on the 1968 case of Home Insurance Co. v. American
Steamship Agencies, Inc., it 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. Accordingly, the Civil Code
provisions on common carriers which set forth a presumption of negligence
do not find application in the case at bar.

Issue: 1) Whether a common carrier becomes a private carrier by reason of a

charter-party.
2) Whether the shipowner was able to prove that he had exercised that
degree of diligence required of him under the law.

Held: 1.) Not necessarily. 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 the charterer be charged, 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, 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.
Respondent carrier's heavy reliance on the case of Home Insurance Co.
v. American Steamship Agencies, is misplaced for the reason that the meat of
the controversy therein was the validity of a stipulation in the charter-party
exempting the shipowners from liability for loss due to the negligence of its
agent, and not the effects of a special charter on common carriers. At any
rate, the rule in the United States that a ship chartered by a single shipper to
carry special cargo is not a common carrier, does not find application in our
jurisdiction, for we have observed that the growing concern for safety in the
transportation of passengers and /or carriage of goods by sea requires a
more exacting interpretation of admiralty laws, more particularly, the rules
governing common carriers.

2.) Yes. In an action for recovery of damages against a common carrier on

the goods shipped, the RTC’s statement on the requirements of the law was
reiterated. SC held that respondent carrier has sufficiently overcome, by clear
and convincing proof, the prima facie presumption of negligence.
It was shown during the trial that after the loading of the cargo in bulk
in the ship’s holds, the steel pontoon hatches were closed and sealed with
iron lids, then covered with 3 layers of serviceable tarpaulins which were tied
with steel bonds. The hatches remained close and tightly sealed while the
ship was in transit as the weight of the steel covers made it impossible for a
person to open without the use of the ship’s boom. Also shown, was that the
hull of the vessel was in good condition, foreclosing the possibility of spillage
of the cargo into the sea or seepage of water inside the hull of the vessel.
SC agreed that the bulk shipment of highly soluble goods like fertilizer
carries with it the risk of loss or damage. Moreso, 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.

F.C. FISHER vs.YANGCO STEAMSHIP COMPANY

Facts: The board of Yangco Steamship Co. adopted a resolution which was
ratified by the stockholders declaring classes of merchandise which are not to
be carried by the vessels of the company and prohibiting the employees to
carry dynamite, powder or other explosives. The Collector of Customs
suspended the issuance of clearances for the vessels unless they carry the
explosives. Fisher, a stockholder of YSC, filed a petition for prohibition.

Issue: Whether or not the refusal of the board of YFC to accept for carriage
"dynamite, powder or other explosives" from any and all shippers who may
offer such explosives for carriage can be held to be a lawful act.

Held: No. In construing Act 98 for the alleged violation, the test is whether
the refusal of YSC to carry the explosives without qualification or conditions
may have the effect of subjecting any person or locality or the traffic is such
explosives to an unduly unreasonable or unnecessary prejudice or
discrimination. Common carriers in this jurisdiction cannot lawfully decline to
accept a particular class of goods unless it appears that for some sufficient
reason the discrimination for such is reasonable and necessary. YSC has not
met those conditions.
The nature of the business of a common carrier as a public
employment is such that it is within the power of the State to impose such
just regulations in the interest of the public as the legislator may deem
proper.

US vs. QUINAHON

Facts: Defendants were charged for violation of Act 98, when they unloaded
in the port of Currimao 5,986 sacks of rice belonging to Ilocos Norte Provincial
Government from Manila, and charged the provincial treasurer 10 centavos
for each sack instead of 6 centavos which they have been regularly charging
for the unloading of the same kind of merchandise and under virtually the
same circumstances and conditions. They were convicted, hence they
appealed to the higher court.

Issue: Whether or not the defendants as common carriers caused prejudice

to the Ilocos Norte Government.

Held: Yes. There is no pretense that it actually cost more to handle the rice
for the province than it did for the merchants with whom the special
contracts were made. There was a clear discrimination against the province
which is prohibited by the law. It is however not believed that the law
prohibits common carriers from making special rates for the handling and
transporting of merchandise, when the same are made for the purpose of
increasing their business and to manage their important interests upon the
same principles which are regarded as sound and adopted in other trades
and pursuits. Absolute equality is not required in all cases. It is only unjust,
undue and unreasonable discrimination which the law forbids. The law of
equality is in force only where the services performed in the different cases
are substantially the same and the circumstances and conditions are similar.

LOADSTAR SHIPPING CO., INC. vs.COURT OF APPEALS

Facts: On November 19, 1984, LOADSTAR received on board its M/V

Cherokee goods(certain types of wood) for shipment. The goods were insured
with Manila Insurance Co.(MIC) against various risks including “TOTAL LOSS
BY TOTAL LOSS OF THE VESSEL”. The vessel, in turn, was insured by
Prudential Guarantee & Assurance, Inc.(PGAI) for P4 Million.
On November 20, 1984, on its way to Manila from Nasipit, Agusan del
Norte, the vessel sank off Limasawa Island. As a result of the total loss of its
shipment, the consignee made a claim with LOADSTAR which, however
ignored the same. As the insurer, MIC paid the insured in full settlement of its
claim.
 On February 4, 1985, MIC filed a complaint against Loadstar and PGAI,
alleging that the sinking of the vessel was due to the fault and negligence of
Loadstar and its employees. Loadstar claimed force majeur. PGAI averred
that MIC has no cause of action against it, Loadstar being the party insured.
PGAI was later dropped as a party defendant after it paid the insurance
proceeds to Loadstar.
The trial court rendered judgment for MIC, prompting Loadstar to go to
the CA which affirmed the decision.

Issue: Whether or not Loadstar is a private carrier.

Held: No. Loadstar submits that the vessel was a private carrier because it
was not issued a CPC; it did not have a regular trip or schedule nor a fixed
route; and there was only “one shipper, one consignee for a special cargo.”
The SC held that Loadstar is a common carrier. It is not necessary that
the carrier be issued a CPC, and this character is not altered by the fact that
the carriage of the goods in question was periodic, occasional, episodic or
unscheduled.
In support of its position Loadstar relied on the 1968 case of Home
Insurance Co. v. American Steamship Agencies, where the Court held that a
common carrier transporting special cargo or chartering the vessel to a
special person becomes a private carrier that is not subject to the provisions
of the Civil Code.
This case however is not applicable in the case at bar for the simple
reason that the actual settings are different. The records do not disclose that
the M/V Cherokee, on the date in question, undertook to carry a special cargo
or was chartered to a special person only. There was no charter party. The
bills of lading failed to show any special arrangement, but only a general
provision to the effect that the M/V Cherokee was a general cargo carrier.
Further, the bare fact that the vessel was carrying a particular type of cargo
for one shipper, which appears to be purely coincidental, is not reason
enough to convert the vessel from a common carrier to a private carrier,
especially where, as in this case, it was shown that the vessel was also
carrying passengers.
Under the facts and circumstances obtaining in this case, Loadstar fits
the definition of a common carrier under Article 1732 of the NCC. The
doctrine enunciated in the case of De Guzman v. CA was also mentioned. CA
decision is hereby affirmed.
FIRST PHILIPPINE INDUSTRIAL CORPORATION vs. COURT OF APPEALS

Facts: Petitioner is a grantee of a pipeline concession under RA 387 to

contract, install and operate oil pipelines. The first pipeline concession was
granted in 1967 and was renewed by the ERB in 1992. In 1995, petitioner
applied for a Mayor’s permit in Batangas City. Respondent treasurer required
petitioner to pay a local tax based on its gross receipts for the fiscal year in
1993 pursuant to the Local Government Code.
To avoid hampering its operations, petitioner paid the amount of tax
for the first quarter under protest. Petitioner argued that as a pipeline
operator with a government concession engaged in transporting petroleum
products via pipeline it is exempted from payment of tax based on gross
receipts. Respondent refused to make reimbursement on the ground that
petitioner is not a common carrier engaged in transportation business by
land, water or air.

Issue: Whether or not petitioner is liable to pay a local tax based on gross
receipts since it is not a common carrier.

Held: No. Based on Article 1732 NCC, 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. (De Guzman Ruling
upheld)
Respondent’s argument that the term “common carrier” as used in
Section 133(j) of the Local Government Code refers only to common carriers
transporting goods and passengers through moving vehicles or vessels either
by land, sea or water is erroneous. The definition of “common carriers” in
NCC 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 transporting of the passengers
or goods should be by motor vehicle.
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 so-called "common carrier's tax."
Petitioner is already paying 3% common carrier's 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.

HOME INSURANCE COMPANY vs. AMERICAN STEAMSHIP AGENCIES,

INC.

Facts: A Peruvian firm shipped fishmeal through the SS Chowborough

consigned to the San Miguel Brewery and insured by the Home Insurance Co.
The cargo arrived in Manila and was discharged into the lighters of Luzon
Stevedoring Co. When the cargo was delivered to SMB there were shortages.
Home Insurance Co. paid SMB P14,000 after its demand. Home
Insurance filed for reimbursement from Luzon Stevedoring and American
Steamship Agencies, owner and operator of the vessel. The lower court
absolved Luzon after finding that it observed the required diligence but
ordered ASA to reimburse Home Insurance, declaring that Art. 587 of the
Code of Commerce makes the ship agent civilly liable for damages in favor of
third persons due to the conduct of carrier’s captain and that the stipulation
in the charter party exempting owner from liability is against public policy
under Art. 1744, NCC. ASA appealed, alleging that under the provisions of the
Charter Party referred to in the bills of lading, the charterer, not the
shipowner is responsible for any loss or damage of the cargo.

Issue: Are the provisions of the NCC applicable?

Held: No. The NCC provisions on common carriers should not apply where
the common carrier is not acting as such but as a private carrier. 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 valid.
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 strict public
policy governing common carrier 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. The stipulation exempting the owner from
liability for negligence of its agent is not against public policy and is deemed
valid. Recovery can’t be had, for loss or damage to the cargo against
shipowners, unless the same is due to personal acts or negligence of said
owner or its managers, as distinguished from agents or employees.

SAN PABLO vs. PANTRANCO

Facts: PANTRANCO offers PUB service for passengers and freight. It operates
passenger buses from Metro Manila to Bicol Region and Eastern Samar. On
March 27,1980 it requested MARINA for authority to lease/purchase a vessel
for its project to operate a ferryboat service from Matnog,Sorsogon and
Allen,Samar that will provide service to company buses and freight trucks
that have to cross San Bernardo Strait.This was not given due course because
the Matnog-Allen run is adequately serviced by Cardinal Shipping Corp. and
Epitacio San Pablo and market conditions in the proposed route cannot
support the entry of additional tonnage. PANTRANCO nevertheless acquired
the vessel. It wrote the Chairman of the Board of Transportation (BOT), that it
proposes to operate a ferry service to carry its passenger buses and freight
trucks between Allen and Matnog in connection with its trips to Tacloban City.
PANTRANCO claims that it can operate a ferry service in connection with its
franchise for bus operation in the highway from Pasay City to Tacloban City
for the purpose of continuing the highway, which is interrupted by a small
body of water, the said proposed ferry operation is merely a necessary and
incidental service to its main service and obligation of transporting its
passengers from Pasay City to Tacloban City. Such being the case there is no
need to obtain a separate certificate for public convenience to operate a ferry
service. The BOT granted authority to PANTRANCO to operate a private ferry
boat service, to which the petitioners opposed.

Issue: W/N a land transportation company can be authorized to operate a

ferry service or coastwise or interisland shipping service along its authorized
route as an incident to its franchise without the need of filing a separate
application for the same.

Held: No. Considering the environmental circumstances of the case, the

conveyance of passengers, trucks and cargo from Matnog to Allen is certainly
not a ferry boat service but a coastwise or interisland shipping service. Under
no circumstance can the sea between Matnog and Allen be considered a
continuation of the highway. While a ferry boat service has been considered
as a continuation of the highway when crossing rivers or even lakes, which
are small body of waters - separating the land, however, when as in this case
the two terminals, Matnog and Allen are separated by an open sea it can not
be considered as a continuation of the highway. Respondent PANTRANCO
should secure a separate CPC for the operation of an interisland or coastwise
shipping service in accordance with the provisions of law. Its CPC as a bus
transportation cannot be merely amended to include this water service under
the guise that it is a mere private ferry service.

The contention of private respondent PANTRANCO that its ferry service

operation is as a private carrier, not as a common carrier for its exclusive use
in the ferrying of its passenger buses and cargo trucks is absurd. PANTRANCO
does not deny that it charges its passengers separately from the charges for
the bus trips and issues separate tickets whenever they board the MV "Black
Double" that crosses Matnog to Allen, PANTRANCO cannot pretend that in
issuing tickets to its passengers it did so as a private carrier and not as a
common carrier. The Court does not see any reason why inspite of its
amended franchise to operate a private ferry boat service it cannot accept
walk-in passengers just for the purpose of crossing the sea between Matnog
and Allen. Indeed evidence to this effect has been submitted.

NATIONAL STEEL CORPORATION vs. COURT OF APPEALS

Facts: On July 17, 1974, plaintiff NSC as charterer and defendant VSI as
owner, entered into a Contract of Voyage Charter Hire whereby NSC hired
VSI’s vessel, the MV ‘VLASONS I’ to make one voyage to load steel products
at Iligan City and discharge them at North Harbor Manila.
When the vessel’s 3 hatches containing the shipment were opened by
plaintiff’s agents, nearly all the skids of tinplates and hot rolled sheets were
allegedly found to be wet and rusty. The cargo was discharged and unloaded
by stevedores hired by the plaintiff.
Plaintiff filed with the defendant its claim for damages suffered due to
the downgrading of the damaged tinplates in the amount of P941,145.18 but
defendant refused and failed to pay. RTC ruled against the plaintiff, stating
that the vessel was seaworthy and that there is no proof of willful negligence
of the vessel's officers. This was affirmed by CA but modified the award of
damages, hence the appeal.

Issue: W/N VSI contracted with NSC as a common carrier or as a private

carrier.
Held: It is a private carrier. In the instant case, it is undisputed that VSI did
not offer its services to the general public. It carried passengers or goods only
for those it chose under a special contract of charter party. It is a private
carrier that renders tramping service and as such, does not transport cargo
or shipment for the general public. Its services are available only to specific
persons who enter into a special contract of charter party with its owner.
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 contracts of private carriage or charter party.
Unlike in a contract involving a common carrier, private carriage does
not involve the general public. Hence, the stringent provisions of the Civil
Code on common carriers protecting the general public cannot justifiably be
applied to a ship transporting commercial goods as a private carrier.
It is clear from the parties’ Contract of Voyage Charter Hire, that VSI
“shall not be responsible for losses except on proven wilful negligence of the
officers of the vessel.” The NANYOZAI Charter Party(an internationally
recognized Charter Party Agreement), which was incorporated in the parties’
contract of transportation, further provided that the shipowner shall not be
liable for loss of or damage to the cargo arising or resulting from
unseaworthiness, unless the same was caused by its lack of due diligence to
make the vessel seaworthy or to ensure that the same was “properly
manned, equipped and supplied.”
In view of the above, NSC must prove that the damage to its shipment
was caused by VSI’s wilful negligence or failure to exercise due diligence in
making MV Vlasons I seaworthy and fit for holding, carrying and safekeeping
the cargo. Ineluctably, the burden of proof was placed on NSC by the parties’
agreement.
The CA decision, affirming the RTC decision in favor of defendant and
dismissing the complaint is Affirmed.

KMU vs. GARCIA

Facts: The following memoranda, circulars and/or orders are sought to be

nullified by the instant petition, viz:
(a) DOTC Memorandum Order 90-395, dated June 26, 1990 relative to the
implementation of a fare range scheme for provincial bus services in the
country, allowing provincial bus operators to charge passengers rates within
a range of 15% above and 15% below the LTFRB official rate for a period of
one year.
LTFRB Chairman, Fernando, finding the MO not legally feasible
submitted a memorandum to DOTC Secretary Orbos as it contravenes the
Public Service Act for the following reasons:
i. the rates to be approved should be proposed by public service
operators
ii. there should be a publication and notice to concerned or affected
parties in the territory affected
iii. a public hearing should be held for the fixing of the rates
The chairman added that to allow bus operators to charge fares 15% above
the present LTFRB fares in the wake of the devastation, death and suffering
caused by the July 16 earthquake will not be socially warranted and will be
politically unsound.

Provincial Bus Operators Association of the Philippines, Inc. (PBOAP) filed an

application for an across-the-board fare increase of P0.085 per kilometer. It
was opposed by Philippine Consumers Foundation, Inc. and Perla C. Bautista
alleging that the proposed rates were exorbitant and unreasonable. The said
increase was granted by LTFRB.

(b) DOTC Department Order No.92-587, dated March 30, 1992, defining the
policy framework on the regulation of transport services;
Among the salient provisions of which include: “In determining public need,
the presumption of need for a service shall be deemed in favor of the
applicant. The burden of proving that there is no need for a proposed service
shall be with the oppositor(s).”

(c) DOTC Memorandum dated October 8, 1992, laying down rules and
procedures to implement Department Order No. 92-587;

(d) LTFRB Memorandum Circular No. 92-009, providing implementing

guidelines on the DOTC Department Order No. 92-587; and

(e) LTFRB Order dated March 24, 1994 in Case No. 94-3112.

Sometime in March, 1994, private respondent PBOAP, availing itself of the

deregulation policy of the DOTC allowing provincial bus operators to collect
plus 20% and minus 25% of the prescribed fare without first having filed a
petition for the purpose and without the benefit of a public hearing,
announced a fare increase of 20% percent of the existing fares.

Petitioner KMU filed a petition before the LTFRB opposing the upward
adjustment of bus fares. LTFRB dismissed the petition hence the present one.

Issue: Whether or not the assailed orders/circulars are valid.

Held: While the authority of the DOTC and the LTFRB to issue administrative
orders to regulate the transport sector is recognized, the Court found that
they committed grave abuse of discretion in issuing DOTC Department Order
No. 92-587 and LTFRB Memorandum Circular No. 92-009 promulgating the
implementing guidelines on DOTC Department Order No. 92-587, the said
administrative issuances being amendatory and violative of the Public
Service Act and the Rules of Court.
Fare Range Scheme: The 20% fare increase imposed by PBOAP without
the benefit of a petition and a public hearing is null and void and of no force
and effect.
Presumed Public Need: A CPC is an authorization granted by the LTFRB
for the operation of land transportation services for public use as required by
law. Pursuant to Section 16(a) of the Public Service Act, as amended, the
following requirements must be met before a CPC may be granted, to wit: (i)
the applicant must be a citizen of the Philippines, or a corporation or co-
partnership, association or joint-stock company constituted and organized
under the laws of the Philippines, at least 60 % of its stock or paid-up capital
must belong entirely to citizens of the Philippines; (ii) the applicant must be
financially capable of undertaking the proposed service and meeting the
responsibilities incident to its operation; and (iii) the applicant must prove
that the operation of the public service proposed and the authorization to do
business will promote the public interest in a proper and suitable manner. It
is understood that there must be proper notice and hearing before the PSC
can exercise its power to issue a CPC.
While adopting the foregoing requisites for the issuance of a CPC,
LTFRB Memorandum Circular No. 92-009, Part IV, provides for yet
incongruous and contradictory policy guideline on the issuance of a CPC. The
guidelines states:

“The issuance of a Certificate of Public Convenience is determined by public

need. The presumption of public need for a service shall be deemed in favor
of the applicant, while the burden of proving that there is no need for the
proposed service shall be the oppositor's.”

By its terms, public convenience or necessity generally means

something fitting or suited to the public need. As one of the basic
requirements for the grant of a CPC, public convenience and necessity exists
when the proposed facility or service meets a reasonable want of the public
and supply a need which the existing facilities do not adequately supply. The
existence or non-existence of public convenience and necessity is therefore a
question of fact that must be established by evidence, real and/or
testimonial; empirical data; statistics and such other means necessary, in a
public hearing conducted for that purpose. The object and purpose of such
procedure, among other things, is to look out for, and protect, the interests of
both the public and the existing transport operators.

No grave abuse of discretion however was committed in the issuance

of DOTC Memorandum Order No. 90-395 and DOTC Memorandum dated
October 8, 1992, the same being merely internal communications between
administrative officers.

TATAD vs. GARCIA

Facts: DOTC planned to construct a light railway transit line along EDSA
referred to as EDSA Light Rail Transit III (EDSA LRT III). Then President
Aquino, signed into law the Build-Operate-Transfer (BOT) Law. After
prequalifying the bidders for the construction of the said transit, it was found
that out of all the applicants, only the EDSA LRT Consortium met the
requirements. DOTC and respondent EDSA LRT Corporation, Ltd. (a private
corporation organized under the laws of HongKong) in substitution of the
EDSA LRT Consortium, entered into an "Agreement to Build, Lease and
Transfer a Light Rail Transit System for EDSA" under the terms of the BOT
Law.
DOTC sought the approval of the President but the same was denied.
Thus, DOTC, represented by Secretary Garcia, and private respondent
entered into a supplemental agreement—“Revised and Restated Agreement
to Build, Lease and Transfer a Light Rail Transit System for EDSA" so as to
clarify their respective rights and responsibilities and to submit Supplemental
Agreement to the President.
Petitioners, in their capacity as Senators and taxpayers, question the
constitutionality of the two agreements between DOTC and private
respondent. They contend that it grants EDSA LRT Corp., Ltd., a foreign
corporation, the ownership of EDSA LRT III which is a public utility. Secretary
Garcia and private respondent on the other hand, contend that the
nationality requirement for public utilities mandated by the Constitution does
not apply to private respondent.

Issue: Does the fact that EDSA LRT Corporation, Ltd., a foreign corporation,
own the facilities and equipment of the LRT III mean it also own the LRT III as
a public utility?

Held: No. What private respondent owns are the rail tracks, rolling stocks like
the coaches, rail stations, terminals and the power plant, not a public utility.
While a franchise is needed to operate these facilities to serve the public,
they do not by themselves constitute a public utility. As ruled in Iloilo Ice &
Cold Storage Co. v. Public Service Board, what constitutes a public utility is
not their ownership but their use to serve the public.
In law, there is a clear distinction between the "operation" of a public
utility and the ownership of the facilities and equipment used to serve the
public. The right to operate a public utility may exist independently and
separately from the ownership of the facilities thereof. One can own said
facilities without operating them as a public utility, or conversely, one may
operate a public utility without owning the facilities used to serve the public.
The devotion of property to serve the public may be done by the owner or by
the person in control thereof who may not necessarily be the owner thereof.
In the case at bar, private respondent and DOTC agreed that on completion
date, private respondent will immediately deliver possession of the LRT
system by way of lease for 25 years, during which period DOTC shall operate
the same as a common carrier and private respondent shall provide technical
maintenance and repair services to DOTC. Clearly, private respondent will
not run the light rail vehicles and collect fees from the riding public. It will
have no dealings with the public and the public will have no right to demand
any services from it. It is DOTC which shall operate the EDSA LRT III.
Therefore, private respondent, EDSA LRT Corp., Ltd. does not own EDSA LRT
III as a public utility.

SAMAR MINING COMPANY, INC. vs. NORDEUTSCHER LLOYD

Facts: The case arose from an importation made by plaintiff, SAMAR of one
crate Optima welded wedge wire sieves through the M/S SCHWABENSTEIN a
vessel owned by defendant NORDEUTSCHER LLOYD, (represented in the
Philippines by its agent, C.F. SHARP & CO., INC.), which shipment is covered
by Bill of Lading No. 18 duly issued to consignee SAMAR MINING COMPANY,
INC.
Upon arrival of the aforesaid vessel at the port of Manila, the
importation was unloaded and delivered in good order and condition to the
bonded warehouse of AMCYL. The goods were however never delivered to,
nor received by, the consignee at the port of destination—Davao.
Bill of lading, No. 18 sets forth in the page 2 thereof that the goods
were received by NORDEUTSCHER LLOYD at the “port of loading at Bremen,
Germany, while the freight had been prepaid up to the port of destination or
the “port of discharge of goods”—Davao. The carrier undertook to transport
the goods in its vessel, M/S SHWABENSTEIN, only up to the “port of discharge
from ship”—Manila. Thereafter, the goods were to be transhipped by the
carrier to the port of destination or “port of discharge of goods”.
Section 1, paragraph 3 of Bill of Lading No. 18, states:
“The carrier shall not be liable in any capacity whatsoever for any
delay, loss or damage occurring before the goods enter ship’s tackle to be
loaded or after the goods leave ship’s tackle to be discharged, transhipped or
forwarded. xxx”
The trial court rendered judgment in favor of plaintiff, hence the
appeal.

Issue: Whether or not the various clauses and stipulations in the Bill of
lading is valid.

Held: Yes. The validity of stipulations in bills of lading exempting the carrier
from liability for loss or damage to the goods when the same are not in its
actual custody has been upheld in PHOENIX ASSURANCE CO., LTD. vs.
UNITED STATES LINES, 22 SCRA 674 (1968).
The stipulations in the bill of lading in the PHOENIX case which are
substantially the same as the subject stipulations provides:

“The carrier shall not be liable in any capacity whatsoever for any loss or
damage to the goods while the goods are not in its actual custody.” (Par. 2,
last subpar.)

“The carrier or master, in making arrangements with any person for or in

connection with all transshipping or forwarding of the goods or the use of any
means of transportation or forwarding of goods not used or operated by the
carrier, shall be considered solely the agent of the shipper and consignee and
without any other responsibility whatsoever or for the cost thereof.” (Par. 16)

Finding the above stipulations not contrary to law, morals, good customs,
public order or public policy their validity was sustained.
 A careful perusal of the provisions of the New Civil Code on common
carriers was looked into by the Court particularly, Article 1736 and 1738.
There is no doubt that Art. 1738 finds no applicability to the instant
case. The said article contemplates a situation where the goods had already
reached their place of destination and are stored in the warehouse of the
carrier. The subject goods were still awaiting transshipment to their port of
destination, and were stored in the warehouse of a third party when last seen
and/or heard of.
Article 1736 is applicable to the instant suit. Under said article, the
carrier may be relieved of the responsibility for loss or damage to the goods
upon actual or constructive delivery of the same by the carrier to the
consignee, or to the person who has a right to receive them. In sales, actual
delivery has been defined as the ceding of corporeal possession by the seller,
and the actual apprehension of corporeal possession by the buyer or by some
person authorized by him to receive the goods as his representative for the
purpose of custody or disposal. By the same token, there is actual delivery in
contracts for the transport of goods when possession has been turned over to
the consignee or to his duly authorized agent and a reasonable time is given
him to remove the goods. The court a quo found that there was actual
delivery to the consignee through its duly authorized agent, the carrier.
Two undertakings appeared embodied and/or provided for in the Bill of
Lading in question. The first is FOR THE TRANSPORT OF GOODS from Bremen,
Germany to Manila. The second, THE TRANSSHIPMENT OF THE SAME GOODS
from Manila to Davao, with appellant acting as agent of the consignee. At the
hiatus between these two undertakings of appellant which is the moment
when the subject goods are discharged in Manila, its personality changes
from that of carrier to that of agent of the consignee. Thus, the character of
appellant's possession also changes, from possession in its own name as
carrier, into possession in the name of consignee as the latter's agent. Such
being the case, there was, in effect, actual delivery of the goods from
appellant as carrier to the same appellant as agent of the consignee. Upon
such delivery, the appellant, as erstwhile carrier, ceases to be responsible for
any loss or damage that may befall the goods from that point onwards. This
is the full import of Article 1736, as applied to the case.
The actions of appellant carrier and of its representative in the
Philippines being in full faith with the lawful stipulations of Bill of Lading No.
18 and in conformity with the provisions of the New Civil Code on common
carriers, agency and contracts, they incur no liability for the loss of the goods
in question.
Appealed decision is REVERSED. Plaintiff-appellee's complaint is
DISMISSED.

EASTERN SHIPPING LINES, INC. vs. INTERMEDIATE APPELLATE

COURT

Facts: In G.R. No. 69044, sometime in or prior to June, 1977, the M/S
ASIATICA, a vessel operated by petitioner loaded at Kobe, Japan for
transportation to Manila, 5,000 pieces of calorized lance pipes consigned to
Philippine Blooming Mills Co., Inc., and 7 cases of spare parts valued
consigned to Central Textile Mills, Inc. Both sets of goods were insured
against marine risk for with respondent.

In G.R. No. 71478, during the same period, the same vessel took on
board 128 cartons of garment fabrics and accessories consigned to Mariveles
Apparel Corporation, and two cases of surveying instruments consigned to
Aman Enterprises and General Merchandise. The 128 cartons were insured
for their stated value by respondent Nisshin and the 2 cases by respondent
Dowa.
Enroute for Kobe, Japan, to Manila, the vessel caught fire and sank,
resulting in the total loss of ship and cargo. The respective respondent
Insurers paid the corresponding marine insurance values to the consignees
concerned and were thus subrogated unto the rights of the latter as the
insured.
Respondents filed a claim for reimbursement from petitioner. The RTC
ruled in their favor to which the petitioner appealed.

Issue: (1) Which law should govern the Civil Code provisions on Common
carriers or the Carriage of Goods by Sea Act? and (2) who has the burden of
proof to show negligence of the carrier?

Held: (1) The law of the country to which the goods are to be transported
governs the liability of the common carrier in case of their loss, destruction or
deterioration. As the cargoes in question were transported from Japan to the
Philippines, the liability of Petitioner Carrier is governed primarily by the Civil
Code. However, in all matters not regulated by said Code, the rights and
obligations of common carrier shall be governed by the Code of Commerce
and by special laws. Thus, the Carriage of Goods by Sea Act, a special law, is
suppletory to the provisions of the Civil Code.
(2) Under the Civil Code, common carriers, from the nature of their
business and for reasons of public policy, are bound to observe extraordinary
diligence in the vigilance over goods, according to all the circumstances of
each case. 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;

Petitioner Carrier claims that the loss of the vessel by fire exempts it
from liability under the phrase "natural disaster or calamity.” However, the
Court said that fire may not be considered a natural disaster or calamity. This
must be so as it arises almost invariably from some act of man or by human
means. It does not fall within the category of an act of God unless caused by
lightning or by other natural disaster or calamity. It may even be caused by
the actual fault or privity of the carrier.
As the peril of the fire is not comprehended within the exception in
Article 1734, supra, Article 1735 of the Civil Code provides that all cases than
those mention 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.
In this case, the respective Insurers. as subrogees of the cargo
shippers, have proven that the transported goods have been lost. Petitioner
Carrier has also proved that the loss was caused by fire. The burden then is
upon Petitioner Carrier to proved that it has exercised the extraordinary
diligence required by law, which it failed to do.
And even if fire were to be considered a "natural disaster" within the
meaning of Article 1734 of the Civil Code, it is required under Article 1739 of
the same Code that the "natural disaster" must have been the "proximate
and only cause of the loss," and that the carrier has "exercised due diligence
to prevent or minimize the loss before, during or after the occurrence of the
disaster.” This Petitioner Carrier has also failed to establish satisfactorily.
Nor may Petitioner Carrier seek refuge from liability under the Carriage
of Goods by Sea Act, It is provided therein that:
Sec. 4(2). Neither the carrier nor the ship shall be responsible for loss
or damage arising or resulting from
(b) Fire, unless caused by the actual fault or privity of the carrier.
Both the Trial Court and the Appellate Court, in effect, found, as a fact,
that there was "actual fault" of the carrier shown by "lack of diligence" in that
when the smoke was noticed, the fire was already big; that the fire must
have started 24 hours before the same was noticed; and that after the
cargoes were stored in the hatches, no regular inspection was made as to
their condition during the voyage. The foregoing suffices to show that the
circumstances under which the fire originated and spread are such as to
show that Petitioner Carrier or its servants were negligent in connection
therewith. Consequently, the complete defense afforded by the COGSA when
loss results from fire is unavailing to Petitioner Carrier.

NATIONAL DEVELOPMENT COMPANY vs. COURT OF APPEALS

Facts: An agreement was entered onto between defendants National

Development Company (NDC) and Maritime Company of the Philippines
(MCP) in accordance of which, NDC as the first preferred mortgagee of three
ocean-giving vessels including one with the name “Dona Nati” appointed MCP
as its agents to manage and operate said vessel in its behalf.
The E. Philipp Corporation of the New York loaded on board the vessel
“Dona Nati” at San Francisco, California, a total of 1,200 bales of American
raw cotton consigned to Manila Banking Corporation, Manila and the People’s
Bank and Trust Company, acting for and in behalf of Pan Asiatic Commercial
Company, Inc. who represents Riverside Mills Corporation.
The vessel figured in a collision at Ise Bay, Japan with a Japanese
vessel as a result of which 50 bales of aforesaid cargo were lost and/or
destroyed.
Plaintiff (DISC) as insurer, paid the respective claims of holders of the
negotiable bills of lading duly endorsed to them.
Plaintiff filed complaint for reimbursement from the defendants-NDC
and MCP as owner and ship agent respectively.
 The RTC rendered a decision ordering the defendants MCP and NDC to
pay jointly and solidarity to DISC. MCP and NDC interposed their appeals. CA
affirmed the RTC’s decision.

Issue: Which law shall govern loss or destruction of goods due to collision of
vessels outside Philippine waters, and the extent of liability?

Held: This issue has already been laid to rest by this Court of Eastern
Shipping Lines Inc. v. IAC (150 SCRA 469-470 [1987])
In the case at bar, it has been established that the goods in question
are transported from San Francisco, California and Tokyo, Japan to the
Philippines and that they were lost or due to a collision which was found to
have been caused by the negligence or fault of both captains of the colliding
vessels. Under the above ruling, it is evident that the laws of the Philippines
will apply, and it is immaterial that the collision actually occurred in foreign
waters, such as Ise Bay, Japan.
It appears, however, that collision falls among matters not specifically
regulated by the Civil Code, so that no reversible error can be found in
respondent courses application to the case at bar of Articles 826 to 839, Book
Three of the Code of Commerce, which deal exclusively with collision of
vessels.
More specifically, Article 826 of the Code of Commerce provides that
where collision is imputable to the personnel of a vessel, the owner of the
vessel at fault, shall indemnify the losses and damages incurred after an
expert appraisal. But more in point to the instant case is Article 827 of the
same Code, which provides that if the collision is imputable to both vessels,
each one shall suffer its own damages and both shall be solidarily responsible
for the losses and damages suffered by their cargoes.
Significantly, under the provisions of the Code of Commerce,
particularly Articles 826 to 839, the shipowner or carrier, is not exempt from
liability for damages arising from collision due to the fault or negligence of
the captain. Primary liability is imposed on the shipowner or carrier in
recognition of the universally accepted doctrine that the shipmaster or
captain is merely the representative of the owner who has the actual or
constructive control over the conduct of the voyage.
The agreement between NDC and MCP shows that MCP is appointed as
agent, a term broad enough to include the concept of ship agent in maritime
law. In fact MCP was even conferred all the powers of the owner of the
vessel, including the power to contract in the name of the NDC. Both owner
and agent should be declared jointly and severally liable since the obligation
which is the subject of the action had its origin in a fortuitous act and did not
arise from contract.
CA decision is affirmed.

II. CONTRACTUAL EFFECTS

A. Vigilance over Goods

GELISAN vs. ALDAY

Facts: Bienvenido Gelisan is the owner of a freight truck. Defendant

Bienveido Gelisan and Roberto Roberto entered into a contact underwhich
Espiritu hired the same freight truck of Gelisan for the purpose of hauling
rice, sugar, flour and fertilizer. It also agreed that Espiritu shall bear and pay
all losses and damages attending the carriage of the goods to be hauled by
him.
Benito Alday, a trucking operator had known Roberto Espiritu. Alday
had a contact to haul the fertilizer of the Atlas Fertilizer Corporation from Pier
4, North Harbor, to its Warehouse in Mandaluyong.
Alday met Espiritu at the gate of Pier 4 and the latter offered the use of
his truck with the driver and helper. The offer was accepted by Alday and he
instructed his checker to let Roberto Espiritu haul the fertilizer. Espiritu made
two hauls of zoobags of fertilizer per trip. The fertilizer was delivered to the
driver and helper of Espiritu with the necessary waybill receipts. Espiritu,
however, did not deliver the fertilizer to the Atlas Fertilizer bodega at
Mandaluyong.
Thus, Benito Alday was compelled to pay the value of the 400 bags of
fertilizers to Atlas Fertilizer Corporation and filed a compliant against Roberto
Espiritu and Bienvenido Gelisan with the CFI of Manila.
The CFI of Manila ruled that Roberto Espiritu was the only one liable.
On appeal, CA ruled that Bienvenido Gelisan is likewise liable for being the
registered owner of the truck.

Issue: Whether or not Gelisan should be held solidarily liable with Espiritu,
being the registered owner of the truck.

Held: Yes, Gelisan should be held solidarily liable with Espiritu, being the
registered owner of the truck.
The Court has invariably held in several decisions that the registered
owner of a public service vehicle is responsible for damages that may arise
from consequences incident to its operation or that may be caused to any of
the passengers therein. The claim of the petitioner that he is not liable in
view of the lease contract executed by and between him and Roberto Espiritu
which exempts him from liability to third persons, cannot be sustained
because it appears that the lease contract, adverted to, had not been
approved by the Public service Commission. It is settled in our jurisprudence
that if the property covered by a franchise is transferred or leased to another
without obtaining the requisite approval, the transfer is not binding upon the
public or third persons. However, Gelisan is not without recourse because he
has a right to be indemnified by Roberto Espiritu for the amount that he may
be required to pay as damages for the injury caused to Benito Alday, since
the lease contract in question, although not effective against the public for
not having been approved by the Public Service Commission, is valid and
binding between the contracting parties.
The Court ruled that the petitioner is DENIED. With costs against the
petitioner.

BENEDICTO vs. IAC

Facts: Private respondent Greenhills Wood Industries Company, Inc., a

lumber manufacturing firm, operates a sawmill in Quirino.
Sometime in May 1980, private respondent bound itself to sell and
deliver to Blue Star Mahogany, Inc. (“Blue Star”), a company in Bulacan
100,000 board feet of sawn lumber with the understanding that an initial
delivery would be made on May 15, 1980. To effect its first delivery, private
respondent’s resident manager Dominador Cruz, contracted Virgilio Licuden,
the driver of a cargo truck to transport its sawn lumber to the consignee Blue
Star in Valenzuela, Bulacan. The cargo truck was registered in the name of
petitioner Ma. Luisa Benedicto, the proprietor of Macoren Trucking, a
business enterprise engaged in hauling freight.
On May 15, 1980, cruz in the presence and with the consent of driver
Licuden, supervised the loading of sawn lumber with invoice aboard the cargo
truck. Thereafter, the Manager of Blue Star called up Greenhills’ president,
informing him that the sawn lumber on board the subject cargo truck had not
yet arrived in Bulacan. The latter then informed Greenhills’ resident manager.
Still, Blue Star had not received the sawn lumber and were constrained to
look for other suppliers.
Thus, private respondent Greenhills filed criminal case against driver
Luciden for estafa and also against petitioner Benedicto for recovery of the
value of the lost sawn lumber plus damages before the RTC of Dagupan City.
The trial court ruled against Benedicto and Luciden. On appeal, the IAC
affirmed the decision of the trial court in toto.

Issue: Whether or not petitioner Benedicto, being the registered owner of

the carrier, should be held liable for the value of the undelivered or lost sawn
lumber.

Held: Yes, Benedicto is liable for the undelivered or lost sawn lumber as
registered owner. There is no dispute that petitioner Benedicto has been
holding herself out to the public as engaged in the business of hauling or
transporting goods for hire or compensation. Petitioner Benedicto is, in brief,
a common carrier.
The prevailing doctrine on common carrier makes the registered owner
liable for consequences flowing from the operations of the carrier, even
though the specific vehicle involved may already have been transferred to
another person. This doctrine rests upon the principle that in dealing with
vehicles registered under the Public Service Law, the public has the right to
assume that the registered owner is the actual or lawful owner thereof. It
would be very difficult and often impossible as a practical matter, for
members of the general public to enforce the rights of action that they may
have for injuries inflicted by the vehicles being negligently operated if they
should be required to prove who the actual owner is. The registered owner is
not allowed to deny liability by proving the identity of the alleged transferee.
In the case at bar, private respondent is not required to go beyond the
vehicle’s certificate of registration to ascertain the owner of the carrier. In
this regard, the letter presented by petitioner allegedly written by Benjamin
Tee admitting that Licuden was his driver, had no evidentiary value not only
because Benjamin Tee was not presented in court to testify on this matter
but because of the afore mentioned doctrine. To permit the ostensible or
registered owner to prove who the actual owner is, would be to set at naught
the purpose or public policy which infuses that doctrine.
The Court ruled that the Petition fro Review is Denied.

PHILTRANCO SERVICE ENTERPRISES, INC. vs. CA

Facts: The victim Ramon Acuesta was riding in his easy rider bicycle along
Calbayog City. Also in Calbayog City, defendant Philtranco driven by
defendant Rogasiones Dolina Manilhig was being pushed by some persons in
order to start its engine. As the bus was pushed, its engine started thereby
the bus continued its running motion and it occurred at the time when Ramon
A. Acuesta who was still riding on his bicycle was directly in front of the said
bus. As the engine of Philtranco started abruptly and suddenly, its running
motion was also enhanced by the said functioning engine, thereby bumped
on the victim Ramon. As a result, fell and was ran over by the bus.

Still, the bus did not stop although it had already bumped and ran over
the victim; instead, it proceeded running. Thereafter, P/sgt. Yabao who was
then jogging approached the bus driver defendant Manilhig and signaled him
to stop, but the latter did not listen. So, the police officer introduced himself
and ordered the latter to stop. The said defendant drivers stopped the
Philtranco bus.
The trial court rendered a decision ordering the petitioners to jointly
and severally pay the private respondent. On appeal, the CA affirmed the
decision of the trial court.

Issue: Whether or not petitioner Philtranco as the registered owner of a

public service is liable for damages arising from the tortuous acts of the
driver.

Held: Yes, petitioner Philtranco as the registered owner is still liable.

Article 2176 of the Civil Code provides that, “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 provision
of this Chapter. Further, Article 2180 of the Civil Code states that, “the
obligation imposed by Art. 2176 is demandable not only for one’s own acts or
omissions, but for those of persons for whom one is responsible.
 In the case at bar, the liability of the registered owner of a public
service vehicle, like petitioner Philtranco, for damages arising from the
tortuous acts of the driver is primary, direct, and joint and severally or
solidary with the driver. Since the employer’s liability is primary, direct and
solidary, its only recourse if the judgment for damages is satisfied by it is to
recover what it has paid from its employee who committed the fault or
negligence which gave rise to the action based on quasi- delict.
The court ruled that the petition is partly granted.

SANTOS vs. SIBUG

Facts: Prior to April 26, 1963, Vidad was duly authorized passenger jeepney
operator. Also, prior to said date, petitioner Santos was the owner of a
passenger jeep, but he had no certificate of public convenience for the
operation of the vehicle as a public passenger jeep. Santos then transferred
his jeep to the name of Vidad so that it could be operated under the latter’s
certificate of public convenience. Thus, Santos became what is known as a
kabit operator. For the protection of Santos, Vidad executed a re-transfer
document to the former, which was to be a private document presumably to
be registered if and when it was decided that the passenger jeep of Santos
was to be withdrawn from the kabit agreement.
On April 26, 1963, private respondent Sibug was bumped by a
passenger jeepney operated by vidad and driven by Severo Gragas. Thus,
filed a complaint for damages. Judgment was rendered in favor of Sibug.
On April 10, 1964, the Sheriff of Manila levied on a motor vehicle,
registered in the name of Vidad, and scheduled the public auction sale. The
next day, Santos presented a third-party claim with the Sheriff, as a result,
Santos, instituted an Action for Damages and Injunction with a prayer for
Preliminary Mandatory Injunction. On October 14, 1965, branch X affirmed
Santos’ ownership of the jeepney in question.
Sibug sought relief from respondent Appellate Court. Respondent Court
held that Santos may not be permitted to prove his ownership over a
particular vehicle being levied upon but registered in another’s name in a
separate action.

Issue: Whether or not a jeepney registered in the name of Vidad, an

authorized public utility operator but is actually owned by Santos (the kabit
operator), which bumped Sibug be sold at a public auction to satisfy the
court’s award.

Held: Yes, the jeepney under the “kabit system” which bumped Sibu can be
sold at public auction to satisfy the court’s award.
Sec. 20 (g) of the Public Service Act provides: “it shall be unlawful for
any public service or for the owner, lessee or operator thereof, without the
approval or authorization of the Commission previously had- (g) to sell,
alienate, mortgage, encumber or lease its property, franchise certificates,
privileges, or rights, or any part thereof.
 In the case at bar, Santos had fictitiously sold the jeepney to Vidad,
who had become the registered owner and operator of record at the time of
the accident. It is true that Vidad had executed a re-sale to Santos, but the
document was not registered. Although Santos, as the kabit, was the true
owner as against Vidad, the latter, as the registered owner/ operator and
grantee of the franchise, is directly and primarily responsible and liable for
damages caused to Sibug, the injured party, as a consequence of the
negligent or careless operation of the vehicle. This ruling is based on the
principle that the operator of record is considered the operator of the vehicle
in contemplation of law as regards the public and third persons even if the
vehicle involved in the accident had been sold to another where such sale
had not been approved by the then Public Service commission.
The court ruled that the petition for review filed by Santos is dismissed.

LITA ENTERPRISES, INC. vs. CA

Facts: Sometime in 1966, the spouses Nicasio Ocampo and Francisca Garcia,
herein private respondent purchased in installment from the Delta Motor
Sales Corp. five Toyota Corona Standard cars to be used as taxicabs. Since
they had no franchise to operate taxicabs, they contracted with petitioner, for
the use of the latter’s certificate of public convenience in consideration of an
initial payment of P1,000 and a monthly rental of P200 per taxi cab unit.
About a year later, one of said taxicabs driven by their employee,
Emeterio Martin, collided with a motorcycle whose driver, Florante Galvez,
died from the head injuries sustained. A criminal case was filed against the
driver while a civil case was filed against Lita enterprises seeking for
damages. In the CFI of Manila, petitioner Lita Enterprises was adjudged liable
for damages as the registered owner of the taxicab. Thus, a writ of execution
was issued and one of the vehicles of respondent spouses was levied upon
and sold at public auction.
Thereafter, respondent Nicasio Ocampo decided to register his taxicab
in his name, but Lita Enterprises allegedly refused. Hence, the spouses filed a
complaint. The CFI of Manila ordered Lita Enterprises to transfer the
registration certificate. On Appeal, the IAC modified the decision.

Issue: Whether or not the parties entered into a “kabit system”

Held: Yes, the parties entered into a “kabit system”. 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 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 services. Thus, the concept of Kabit system being contrary to
public policy and void and existent, the court cannot allow either of the
parties to enforce an illegal contract bu leaves them both where it finds
them.
The Court ruled that the decisions rendered by the CFI of Manila and
IAC are hereby annulled and set aside.

TEJA MARKETING vs. IAC

Facts: On May 9, 1975, the defendant bought from the plaintiff a motorcycle
with complete accessories and a sidecar in the total consideration of
P8,000.00. Out of the total purchase price the defendant gave a down
payment of P1,700.00 with a promise that he would pay plaintiff the balance
within sixty days. The defendant, however, failed to comply with his promise
and so upon his own request, the period of paying the balance was extended
to one year in monthly installments until January 1976 when he stopped
paying anymore. The plaintiff made demands but just the same the
defendant failed to comply thus forcing plaintiff to consult a lawyer and file
this action for his damage.
It also appears and the court so finds that the defendant purchased the
motorcycle in question and the Court so finds that defendant purchased the
motorcycle in question, particularly for the purpose of engaging and using
the same in transportation business and for this purpose said trimobile unit
was attached to the plaintiff’s transportation line who had the franchise, so
much so that in the registration certificate, the plaintiff appears to be the
owner of the unit. Furthermore, it appears to have been agreed further
between, the plaintiff and the defendant, that plaintiff would undertake the
yearly registration of the unit in question with the LTC. Thus, for the
registration of the unit for the year 1976, per agreement, the defendant gave
to the plaintiff the amount of P82.00 of rits registration, as well as the
insurance coverage of the unit.
Petitioner Teja Marketing and/or Angel Jaucian filed an action for the
“sum of money with damages”. The city court rendered judgment in favor of
petitioner. On appeal, the decision was affirmed in toto.

Issue: Whether or not kabit system applies in the instant case.

Held: Yes, the parties operated under an agreement called “kabit system”.
This is a 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. 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 1404 of the Civil Code. Thus, court will not aid either party to enforce
an illegal contract, but will leave both where it finds them.
The court ruled that the petition is hereby dismissed for lack of merit.
The assailed decision of the IAC now the CA is AFFIRMED.
 MAGBOO vs. BERNARDO

Facts: The spouses Magboo are the parents of the 8-year old child killed in a
motor vehicle accident, the vehicle owned by the defendant Bernardo. At the
time of the accident, said passenger jeepney was driven by Corado Roque.
The contract between Conrado Roque and defendant Delfin Bernardo was
that Roque was to pay to defendant the sum of P8.00, which he paid to said
defendant, for privilege of driving the jeepney, it being their agreement that
whatever earnings Roque could make out of the use of the jeepney in
transporting passengers from one point to another would belong entirely to
Conrado Roque.
As a result of the accident, Conrado Roque was prosecuted for
homicide thru reckless imprudence before the CFI of Manila, and that upon
arraignment, Conrado Roque pleaded guilty to the information and was
sentenced to a jail term, to indemnify the heirs of the deceased in the sum of
P3, 000.00 with subsidiary imprisonment in case of insolvency. Conrado
Roque served his sentence but he was not able to pay the indemnity because
he was insolvent.

Issue: Whether or not an employer-employee relationship exists between a

jeepney- owner and a driver under a “boundary system” agreement.

Held: Yes, there exist an employer-employee relationship under a boundary

system arrangement. The features which characterize the boundary system-
namely, the fact that the driver does not receive a fixed wage but gets only
the excess of the amount of fares collected by him over the amount he pays
to the jeep- owner, and that the gasoline consumed by the jeepney is for the
account of the driver- are not sufficient to withdraw the relationship between
them from that of employer- employee. Consequently, the jeepney- owner is
subsidiarily liable as employer in accordance with article 103 of the Revised
Penal Code.
The Court ruled that the judgment appealed from is hereby affirmed.

GANZON vs. CA

Facts: In 1965, private respondent Tumambing contracted the services of

petitioner Ganzon to haul 305 tons of scrap iron from Mariveles, Bataan on
board the latter’s lighter. Pursuant to their agreement, private respondent
delivered the scrap iron to the captain for loading.
When half of the scrap iron was loaded, Mayor Advincula demanded
P5,000.00 from private respondents, which the latter refused to give,
prompting the Mayor to draw his gun and shoot at him. The gunshot was not
fatal but he had to be taken to a hospital.
Thereafter, the loading of the scrap iron was resumed. The Acting
Mayor, accompanied by three policemen, ordered the captain and his crew to
dump the scrap iron, with the rest brought to Nassco Compound. A receipt
was issued stating that the Municipality of Mariveles had taken custody of the
scrap iron.
Issue: Whether or not petitioner is guilty of breach of contract of
transportation and in imposing a liability against him commencing from the
time the scrap iron was placed in his custody and control have no basis in
fact and in law.

Held: Yes, petitioner is guilty of breach of the contract of transportation. 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
Article 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 headed 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.
The Court ruled that the petition is DENIED.

EASTERN SHIPPING LINES, INC. vs. CA

Facts: On September 4, 1978, thirteen coils of uncoated 7- wire stress

relieved for pre- stressed concrete were shipped on board the vessel “Jupri
Venture” owned and operated by petitioner, for delivery to stresstek Post-
Tensioning Philippines in Manila. The said cargo was insured by respondent
operator E. Razon, from whom the consignee’s broker received for delivery to
consignee’s warehouse.
It appears that while en route, the vessel encountered very rough seas
and stormy weather, for the days, which caused it to pound and roll heavily.
The coils which were wrapped in burlap cloth and cardboard paper were
stored in the lower hold of the hatch of the vessel which were rusty on one
side each and it was found that the “wetting” was caused by fresh water that
entered the hatch.
The complaint that was filed by the first Nationwide Assurance
Corporation (insurer) against Eastern Shipping Lines and F. Razon in RTC,
Manila was dismissed. On appeal, the judgment appealed from is hereby SET
ASIDE. Only Eastern Shipping Lines, Inc. filed this petition.

Issue: Whether or not rains and rough is considered as caso fortuito which
would exempt petitioner from liability for the deterioration of the cargo.

Held: No, such is not considered caso fortuito which would exempt from
liability for the deterioration of the cargo. Art. 1737 of the Civil Code provides
that, “common carrier are bound to observe extraordinary vigilance over
goods according to all circumstances of each case.” Further Article 1735 of
the Civil Code provides that, “if the goods are lost, destroyed, or
deteriorated, common carriers are presumed to have been at fault or to have
acted negligently, unless they prove that they observed extraordinary
diligence as required in Article 1733.”
In the case at bar, heavy rains and rough seas were not caso fortuito,
but normal occurrences that an ocean- going vessel, particularly in the month
of September, is a month of rains and heavy seas would encounter as a
matter of routine. They are not unforeseen nor unforeseeable. These are
conditions that ocean- going vessels would encounter and provide for, in the
ordinary course of voyage. That rain water (not sea water) found its way into
the holds of the Jupri Venture is a clear indication that care and foresight did
not attend the closing of ships hatches so that rain water would not find its
way into the cargo holds of the ship. Since, the carrier has failed to establish
any caso fortuito, the presumption by law of fault or negligence on the part of
the carrier applies.
The Court ruled that the petition is DISMISSED.

SARKIES TOURS PHILIPPINES vs. COURT OF APPEALS

Facts: On August 31, 1984, Fatima boarded petitioner’s De luxe bus in

Manila on her way to Legaspi City. Her brother helped her load three pieces
of luggage containing all of her optometry review books, materials and
equipment, trial contact lenses, passport and visa. Her belongings were kept
in the baggage compartment and during the stopover at Daet, it was
discovered that only one bag had remained in the baggage compartment.
Some of the passengers suggested retracing the route to try to recover the
items, but the driver ignored them and proceeded to Legaspi City.
Fatima reported the loss to her mother, who went to petitioner’s office.
Petitioner merely offered her one thousand pesos for each piece of luggage
lost, which she turned down. Fatima asked the help of radio stations and
even from Philtranco bus drivers who plied the same route. Thus, one of
Fatima’s bags was recovered.
Respondents, through counsel, demanded satisfaction of their
complaint from petitioner. Petitioner apologized through a letter. After more
than nine months of fruitless waiting, respondents decided to file the case.
The trial court ruled in favor of respondents. On appeal, the appellate
court affirmed the trial court’s judgment.

Issue: Whether or not petitioner is liable for the lost baggage’s of

Fatima.

Held: The petitioner is liable for the lost baggage’s. Under the Civil Code,
“common carriers from the nature of their business and for reasons of public
policy are bound to observe extraordinary diligence and vigilance over goods
transported by the,” and this liability “last from the time the goods are
unconditionally placed in the possession of, and received by the carrier for
transportation until the same are delivered, actually or constructively, by the
carrier to the person who has a right to receive them, “unless the loss is due
to any of the excepted causes under Article 1734 thereof.
 In the case at bar, the cause of the loss was petitioner’s negligence in
not ensuring that the doors of the baggage compartment of its bus were
securely fastened. As a result of this lack of care, almost all the baggage was
lost to the prejudice of the paying passengers. Thus, petitioner is held liable.
The Court affirmed the decision of the Court of Appeals with
modification.

VALENZUELA HARDWOOD AND INDUSTRIAL SUPPLY INC. vs. CA

Facts: Valenzuela hardwood entered into an agreement with Seven

Brother Shipping Corporation whereby the latter undertook to load on board
its vessel M/V Seven Ambassador the formers lauan round logs numbering
940 at the port of Isabela for shipment to Manila.
Petitioner insured the logs against loss and/or damage with South Sea
Surety and Insurance Company. The said vessel sank resulting on the loss of
plaintiff’s insured bags.
Both respondent and insurer denied liability. After trial, the court held
that the proximate cause of the los is the negligence of the captain and the
stipulation in the charter party limiting respondent’s liability is void being
against public policy citing Article 1745 of the Civil Code. The Court of
Appeals affirmed in part the RTC judgment by sustaining the liability of South
Surety and Insurance Company, but modified it by holding that Seven
Brothers was not liable for the lost of the cargo.

Issue: Whether or not the stipulation in the charter party exempting

the ship-owner from liability for the loss of the cargo arising from the
negligence of its captain valid.

Held : The stipulation in the instant case is valid. In a contract of

private carriage, the parties may validly stipulate that responsibility for the
cargo rests solely on the charterer, exempting the ship-owner from liability
for the loss of or damage to the cargo caused even by the negligence of the
ship captain. Pursuant to Article 1306 of the Civil Code, such stipulation is
valid because it is freely entered into by the parties and the same is not
contrary to law, morals, good customs, public order or public policy.
In the case at bar, the charter party between the petitioner and private
respondent stipulated that the “owners shall not be responsible for loss, split,
short landing, breakages and any kind of damages to the cargo”. This
stipulation is deemed valid as it is undisputed that private respondent acted
as a private carrier in transporting petitioner’s lauan logs. Thus, Article 1745
and other Civil Code provisions on common carriers which were cited by the
petitioner may not be applied unless expressly stipulated by the parties in
their charter party.
The petition is denied by the Court.
 YOBIDO vs. COURT OF APPEALS

Facts: Spouses Tito and Leny Tumboy and their minor children boarded
a Yobido Liner bus at Surigaodel Sur. along Picop Road, Agusan del Sur, the
left front tire of the bus exploded. The bus fell into a ravine around the three
feet from the road and struck a tree. The incident resulted in the death if Tito
Tumboy and physical injuries to other passengers.
Leny filed a case of breach of contract of carriage against petitioners.
The owners of Yobido Liner Bus.
Alberto and Cresencio Yobido raised the affirmative defense of caso
fortuito. They claimed that the bus was not full as there were only 32
passengers out of the 42 seating capacity. They also claimed that the bus
was running as speed pr “60 to 50” and that the tire was brand-new.
Respondents on the other hand, asserted the violation of the contract of
carriage was brought about by the driver’s failure to exercise the diligence
required of the carrier. Leny claimed that the was running fast in a winding
road which was not cemented and was wet because of the rain.

Issue: Whether or not the tire blow out is considered a fortuitous event
which would exempt petitioners from liability.

Held: The tire blow out is not considered as a fortuitous event which would
exempt petitioners from liability.
Article 1756 of the Civil Code provides that, “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.” Further,
Article 1755 provides that “a common carrier is bound to carry the
passengers safely as far as human care and foresight can provide using the
utmost diligence of very cautious persons with due regard for all
circumstances..”
In the case at bar, the explosion of the new tire may not be considered
a fortuitous event. There are human factors involved in the situation. The fact
that the tire was new did not imply that it was entirely free from
manufacturing defects or that it was properly mounted on the vehicle.
Neither may the fact that the tire bought and used in the vehicle is of a brand
name noted for quality, resulting in the conclusion that it could not explode
within five days use. Be that as it may, it is settled that an accident caused
either by defects in the automobile or through the negligence of its driver is
not a case fortuity that would exempt the carrier from liability for damages.
Moreover, a common carrier may not be absolved from liability in case of
force majeure or fortuitous event alone. The common carrier must still prove
that it was not negligent in causing the death or injury resulting from an
accident. Thus, having failed to discharge its duty to overthrow the
presumption of negligence with clear and convincing evidence, petitioners
are hereby held liable for damages.
The Court ruled that the Decision of the Court of Appeals is hereby
affirmed.
 COMPANIA MARITIMA vs. INSURANCE CO. OF NORTH AMERICA

Facts: Macleod and Co. contracted, first by telephone and later

confirmed by a formal written booking issued by Macleod and Co. the
services of the petitioner Campania Maritime for the shipment of bales of
hemp from Davao to Manila. Two lighters of the petitioner loaded said cargo
from Macleod’s wharf at Davao awaiting the arrival of another vessel of the
petitioner for loading. One of the lighters sunk which Macleod suffered
damage P54, 018.55. Petitioner denied the liability on the grounds that there
was no bill of lading issued thereby resulting to the non-existence of carriage
contract, that the sinking was due to a fortuitous event and that the
respondent has no personality.

Issue: Whether or not there is a perfected contract of carriage.

Held: There was a complete contract of carriage the consummation of which

has already begun when the shipper delivered the cargo to the carrier and
the latter took possession of the same by placing it on a lighter manned by its
authorized employees, under which Macleod became entitled to the privilege
secured to him by law. The responsibility of the carrier commenced on the
actual delivery to, or receipt by, the carrier or its authorized agent, of the
goods. The barges or lighters were merely employed as the first step of the
voyage.
As to the issuance of a bill of lading, although Art. 350 of the Code of
Commerce provides that the shipper as well as the carrier may mutually
demand that a bill of lading be issued, it is not indispensable. As regards to
the form of the contract of carriage, it can be said that provided there is a
meeting of the minds and from such meeting arise rights and obligations,
there should be no limitations as to form. A bill of lading is not essential to
the contract, although it may become obligatory by reason of the regulations
or as a condition imposed in the contract by the agreement of the parties
themselves. The Code of Commerce does not demand as a necessary
requisite in the contract of transportation, the delivery of a bill of lading to
the shipper, but gives the right to both the shipper and carrier to mutually
demand of each other the delivery of the said bill.
Judgment against petitioner is affirmed.

LU DO vs. BINAMIRA

Facts: Delta Company of New York shipped six cases of films and
photographic supplies to Binamira. The ship arrived in Cebu and discharged
her cargo, placing it in the custody of the arrastre operator appointed by the
Bureau of Customs. The cargo was checked both by the stevedoring company
and the arrastre operator and was found in good order. On the contract of
carriage, however, it was stipulated that the carrier in no longer liable for the
cargo upon its delivery to the hands of the customs authorities. The cargo
was later delivered to Binamira and a marine surveyor found that some were
missing valued at P324.63. Lower Court held that the carrier liable.

Issue: Whether or not the stipulations limiting the liability of the carrier
is valid.

Held: While delivery of the cargo to the customs authorities is not delivery to
the consignee of the person who has the right to receive them as
contemplated in Article 1736 of the Civil Code because in such case the
goods are still in the hands of the government and the owner cannot be
exercise dominion over them, however, the parties may agree to limit the
liability of the carrier considering that the goods have still to go through the
inspection of the customs authorities before they are actully turned over to
the consignee.
These stipulations limiting liability is not contrary to morals or public
policy. This is a situation where the carrier loses control of the goods because
of a custom regulation and it is unfair that it be made responsible for any loss
or damage that may be caused to the goods during the interregnum.
Judgment reversed.

AMERICAN PRESIDENT LINES, LTD. vs. CA

Facts: American President Lines (APL) vessel President

Washington(Carrier for short) receive and loaded on board at Los Angeles,
California, the subject of the shipment of one (1) unit of Submersible Jocky
Pump, contained in (3) boxes, complete and in good order condition, covered
by Commercial Invoice No. 602956, and Packing List. It was for transport to
Manila in favor or Lindale Development Corporation, the consignee. The
CARRIER, thru Forwarders Direct Container Lines, Inc., issued its clean Bill of
Lading No. CHI-MNL-120. The shipment was insured by FGU Ins. Corp. for
P481, 842.24
The defendant CARRIER transshipped the shipment in Hongkong on
board the vessel MS ‘Partas’, which arrived at the Port of Manila, on
September 6, 1987. On the same date, the shipment was discharged and
turned over to Marina Port Services, Inc.(Arrastre0, with one box in bad order
condition, showing signs of having been previously tampered; hence, covered
by a Turn over Survey Cargoes No. A-08851. The cargo remained with the
ARRASTRE for ten days until it was withdrawn on April 16, 1987 by the
defendant broker which delivered the same to the consignee,
aforementioned, at its warehouse, where the said shipment was examined
and inventoried, and the one box discharged from the CARRIER’s vessel in
bad order condition, was found short of one piece waster cone and one piece
Main Relief valued, per invoice, at P28, 248.58.
Private respondent FGU Ins. Corp. filed a complaint for recovery of a
sum of money against APL, Marina Port Services, Inc., and LCM Brokerage
Co., Inc. The trial court found in favor of private respondent and ordered APL
to pay private respondent the amount of P28, 248.58. In actual damages,
Issue: What law is applicable the Civil Code provisions or COGSA?

Held: The Civil Code. With regard to the contention of the carrier that
COGSA should control in this case, the same is of no moment. Art. 1763 of
the New Civil Code provides that “the laws of the country to which the goods
are transported shall govern the liability of the common carrier in case of
loss, destruction and deterioration.” This means that the law of the
Philippines on the New Civil Code. Under 1766 of NCC, “in all matter not
regulated by this Code, the rights and obligations of common carriers shall be
governed by the Code of Commerce and by Special Laws.” Art. 1736-1738,
NCC governs said rights and obligations. Therefore, although Sec 4(5) of
COGSA states that the carrier shall not be liable in an amount exceeding
$500 per package unless the value of the goods had been declared by the
shipper and asserted in the bill of lading, said section is merely
supplementary to the provisions of the New Civil Code.

SERVANDO vs. PHILIPPINE STEAM NAVIGATION CO.

Facts: Clara UY Bico and Amparo Servando loaded on board the

Philippine Steam Navigation vessel, FS-176, for carriage from Manila to
Pulupundan, Negros Occidental, cargoes of rice and colored paper as
evidenced by the corresponding bills of lading issued by the carrier.
Upon arrival of the vessel at Pulupandan in the morning of November
18, 1963, the cargoes were discharged, complete and in good order, unto the
warehouse of the Bureau of Customs. About 2:00 p.m. of the same day, said
warehouse was razed by a fire of unknown origin, destroying Servando’s
cargoes.

Issue: Whether or not the stipulations in the bill of lading limiting the
liability of carrier is valid.

Held: The court a quo held that the delivery of the shipment on question to
the warehouse of the Bureau of Customs is not the delivery contemplated by
Article 1736; and since the burning of the warehouse occurred before actual
or constructive delivery of the goods to the appellees, the loss is chargeable
against the appellant.
However, that in the bills of lading issued for the cargoes in question,
parties agreed to limit the responsibility of the carrier for the loss or damage
that may be caused to the shipment by inserting therein the following
stipulation.
“Clause 14. Carrier shall not be responsible for loss or damage to
shipments billed “owner’s risk” unless such damage is due to negligence of
carrier. Nor shall carrier be responsible for loss or damage cause by force
majeure, dangers or accidents of the sea or other waters; war; public
enemies, xxx fire xxx.”
 We sustain the validity of the above stipulation; there is nothing
therein that is contrary to law, morals or public policy. Appellees would
contend that the above stipulation does not bind them because it was printed
in fine letters on the back of the bills of lading; and that they did not sign the
same. This argument overlooks the pronouncement of this Court in Ong Yiu
vs. Court of Appeals.
“While it may be true that petitioner had not signed the plane ticket,
he is nevertheless bound by the provisions thereof. Such provisions have
been held to be part of the contract of carriage and valid and binding upon
the passenger regardless of the latter’s lack of knowledge or assent to the
regulation.”
There is nothing in the record to show that appellant carrier in delay in
the performance of its obligation nor that was the cause of the fire that broke
out in the Custom’s warehouse in anyway attributable to the negligence of
the appellant or its employees.

GANZON vs. COURT OF APPEALS

Facts: 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.” Ganzon then sent his lighter “Batman” to
Mariveles where it docked.
On December 1, 1956, Gelacio Tumambing delivered the scrap iron to
defendant Filomeno Niza; captain of the lighter, for loading which was
actually began on the same date by the crew of the lighter.
When about of the scrap of the scrap iron was already loaded, Mayor
Advincula of Mariveles, Bataan, arrived and demanded P5, 000.00 from
Tumambing.
The latter resisted the shakedown and after a heated argument, Mayor
Advincula drew his gun and fired at Tumambing. The gunshot was not fatal
but Tumambing had to be taken to a hospital in Balanga, Bataan, for
treatment.
After some time, the loading of the scrap iron was resumed. But on
December 4, 1956, Acting Mayor Basillo Rub, accompanied by the three
policemen, ordered Captain Filomeno Niza and his crew to dump the scrap
iron where the lighter was docked.
The rest was brougth to the compound of NASSCO. Acting Mayor Rub
issued a receipt stating that the Municipality of Mariveles had taken custody
of the scrap iron.

Issue: Whether or not the scrap iron were already delivered.

Held: Petitioner Ganzon insists that the scrap iron had not been
unconditionally placed under his custody and control to make him liable.
However, he completely agrees with the respondent Court’s finding that on
December 1, 1956, the private respondent delivered the scraps to Captain
Niza for loading in the lighter “Batman.” That the petitioner, thru his
employees, actually received the scraps is freely admitted.
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 extraordinay responsibility for the loss,
destruction, or deterioration of the goods commenced.
Pursuant to Art. 1738, 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 unloaded.

SALUDO, JR. vs. COURT OF APPEALS

Facts: After the death of plaintiff’s mother, Crispina Saludo, Pomierski

and Son Funeral Home of Chicago brought the remains to Continental
Mortuary Air Services which booked the shipment of the remains from
Chicago to San Francisco by TWA and from San Francisco to Manila with PAL.
The remains were taken to the Chicago Airport, but it turned out that there
were two bodies in the said airport. Somehow the two bodies were switched;
the casket bearing the remains of plaintiff’s mother was mistakenly sent to
Mexico and was opened there. The shipment was immediately loaded on PAL
flight and arrived on Manila a day after it expected arrival on October 29,
1976.
Plaintiff filed a damage suit with CFI of Leyte, contending that Trans
World Airlines and PAL were liable for misshipment, the eventual delay on the
delivery of the cargo containing the remains, and of the discourtesy of its
employees to them.
The court absolve the two airline companies of any liability. The CA
affirmed such decision.

Issue: Whether or not the carrier is liable for damages.

Held: The records reveal that petitioners, particularly Maria and Saturnino
Saludo, agonised for nearly five hours, over the possibility of losing their
mother’s mortal remains, unattended to and without any assurance from the
employees of TWA that they were doing anything about the situation. They
were entitled to the understanding and humane consideration called of by
and commensurate with the extraordinary diligence required for common
carriers, and not the cold insensitivity to their predicament. Common sense
could and should have dictated that they exert a little effort in making a more
extensive inquiry by themselves or through their superiors, rather than just
shrug off the problem with a callous and uncaring remark that they had no
knowledge about it. With all the modern communications equipment readily
available to them, it could have easily facilitated said inquiry. TWA’s
apathetic stance while not legally reprehensible is morally deplorable.
Losing a loved one, especially one’s parent, is a painful experience.
Our culture accords utmost tenderness human feelings toward and in
reverence to the dead. That the remains of the deceased were subsequently
delivered, albeit, belatedly and eventually laid in her final resting place is of
little consolation. The imperviousness displayed by TWA’s personnel, even for
just that fraction of time, was especially condemnable particularly in the
hours of bereavement of the family of Crispina Saludo, intensified by anguish
due to the uncertainty of the whereabouts of their mother’s remains. TWA’s
personnel were remiss in the observance of that genuine human concern and
professional attentiveness required and expected of them.
The foregoing observations, however, do not appear to be applicable to
respondent PAL. No attribution of discourtesy or indifference has been made
against PAL by petitioners and, in fact, petitioner Maria Saludo testified that it
was to PAL they repaired after failing to receive proper attention from TWA. It
was from PAL that they received confirmation that their mother’s remains
would be on the same flight with them.
Petitioner’s right to be treated with due courtesy in accordance with
the degree of diligence required by law to be exercised by every common
carrier was violated by the TWA and this entitles them, atleast to nominal
damages from TWA alone. Articles 2221 and 2222 of the Civil Code make it
clear that nominal damages are not intended for indemnification of loss
suffered but for the vindication or recognition of a right violated or invaded.
They are recoverable where some injury has been done but the amount of
which the evidence fails to show, the assessment of damages being left to
the discretion of the court according to the circumstances of the case.

MACAM vs. COURT OF APPEALS

Facts: Petitioner Benito Macam shipped on board the vessel Nen Jiang,
through local agent respondent Wallem Philippines Shipping, Inc.
watermelons valued at US$5,950.00 and fresh mangoes valued at
US$14,273.46. The shipment was bound for Hongkong with Pakistan Bank as
consignee and Great Prospect Company of Kowloon, Hongkong as notify
party. Petitioner’s depository bank. Consolidated Banking
Corporation(SOLIDBANK) paid petitioner in advance the total value of the
shipment of US$20,223.46.
Upon arrival in Hongkong, the shipment was delivered by respondent
WALLEM directly to GPC, not to Pakistan Bank, and without the required bill of
lading having been surrendered. Subsequently, GPC failed to pay Pakistan
Bank such that the latter, still in possession of the original bills of lading,
refused to pay petitioner through SOLIDBANK. Since SOLIDBANK already pre-
paid petitioner the value of the shipment, it demanded payment from
respondent WALLEM but was refused. Petitioner returned the amount
involved to SOLIDBANK, and then demanded payment from respondent
WALLEM in writing but to no avail.
 Hence petitioner sought collection of the value of the shipment if
US$20,223.46 from respondents before the RTC of Manila, bases on delivery
of the shipment to GPC without presentation of the bills of lading and bank
guarantee.

Issue: Whether or not respondents are liable to petitioner for releasing

the goods to GPC without the bills of lading or bank guarantee?

Held: Under Art. 1736 of the Civil Code, the extraordinary responsibility of
the common carrier lasts until actual or constructive delivery of the cargoes
to the consignee or to the person who has a right to receive them. PAKISTAN
BANK was indicated in the bills of lading as consignee whereas GPC was
notifying party. However, in the export invoices GPC was clearly named as
buyer/importer. Petitioner also referred to GPC as such in his demand letter
to respondent WALLEM and in his complaint before the trial court. This
premise draws us to conclude that the delivery of the cargoes to GPC as
buyer/importer which, conformably with Art. 1736 had, other than the
consignee, the right to receive them was proper.
The real issue is whether respondents are liable to petitioner for
releasing the goods to GPC without the bills of lading or bank guarantee.
From the testimony of petitioner, we gather that he has been
transacting with GPC as buyer/importer for around 2 to 3 years already. When
mangoes and watermelons are in season, his shipment to GPC using the
facilities of respondents is twice or thrice a week. The goods are released to
GPC. It has been the practice of petitioner to request the shipping lines to
immediately release perishable cargoes such as watermelons and fresh
mangoes through telephone calls by himself or his “people.” In transactions
covered by a letter of credit, bank guarantee is normally required by the
shipping lines prior to releasing the goods. But for buyers using telegraphic
transfers, petitioner dispenses with the bank guarantee because the goods
are already fully paid. In his several years of business relationship with GPC
and respondents, there was not a single instance when the bill of lading was
first presented before the release of the cargoes.

MAERSK LINE vs. COURT OF APPEALS

Facts: Private respondent(consignee) ordered from Eli Lilly. Inc.(shipper)

600,000 empty gelatin capsules for the manufacture of his pharmaceutical
products. The Memorandum of Shipment provides that the shipper advised
the consignee that the goods were already shipped on board the vessel of
petitioner for shipment to the Philippines via Oakland, California. The
specified date of arrival was April 3, 1977. For reasons unknown, said cargo
of capsules were mishipped and diverted to Richmond, Virginia, USA and then
transported back to Oakland, California. The goods finally arrived in the
Philippines on June 10, 1977 or after two months from the date specified. The
consignee refused to take delivery of the goods. Private respondent alleging
gross negligence and undue delay in the delivery of the goods, filed an action
for rescission of contract with damages against petitioner and shipper.
Petitioner alleged that the goods were transported in accordance with the bill
of lading(..”the Carrier does not undertake that the goods shall arrive at the
port of discharge or the place of delivery at any particular time..”) and that its
liability under the law attaches only in case of loss, destruction or
deterioration of the goods as provided for in Article 1734 NCC. The shipper
alleged that the mis-shipment was due solely to the gross negligence of
petitioner. The RTC dismissed the complaint against the shipper and ruled in
favor of the consignee. RTC ruled that the stipulation in the BOL is in the
nature of contract of adhesion and therefore void. CA affirmed said decision,
hence the present petition.

Issue: Whether or not respondent is entitled to damages resulting from delay

in the delivery of the shipment in the absence in the bill of lading of a
stipulation on the period of delivery.

Held: Yes. While it is true 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 to deliver at a given date or time, delivery of shipment or cargo
should at least be made within a reasonable time. An examination of the
subject bill of lading shows that the subject shipment was estimated to arrive
in Manila on April 3, 1977. While there was no special contract entered into
by the parties indicating the date of arrival of the subject shipment, petitioner
nevertheless, was very well aware of the specific date when the goods were
expected to arrive as indicated in the bill of lading itself. In this regard, there
arises no need to execute another contract for the purpose as it would be a
mere superfluity. In the case before us, we find that a delay in the delivery of
the goods spanning a period of two months and seven days falls was beyond
the realm of reasonableness.
With respect to the ruling that contracts of adhesion are void, SC said
that it was necessarily so and that it is a settled rule that bills of lading are
contracts not entirely prohibited.

YSMAEL vs. BARRETTO

Facts:Ysmael, a domestic corporation seeks to recover from Barretto P9,940,

which is the alleged value of four cases of merchandise which it delivered to
the steamship Andres, at Manila to be shipped to Surigao. The said
merchandise was never delivered to the consignee Solomon Sharuff. Barretto
denied all the allegations against him stating that the said merchandise was
never delivered to him. He also stated that under the provision of paragraph
7 of the printed condition at the back of the bill of lading, plaintiff’s right of
action is barred for the reason that it was not brought within 60 days from
the time the cause of action accrued. Barretto also alleged that in provision
12 of the bill of lading, he is not liable for the excess of P300.00 for any
package of silk unless the value and contents of such package are correctly
declared in the bill of lading at the time of shipment. The lower court
rendered its judgment in favor of Ysmael & co.
Issue: Whether or not the stipulation in the bill of lading limiting the liability
of defendant of not more than P300 is valid.

Held: No, the stipulation is not valid. A common carrier cannot lawfully
stipulate for exemption from liability, unless such exemption is just
andreasonable and the contract is freely and fairly made.
A common carrier cannot lawfully stipulate for the exemption from liability,
unless such exemption is just and reasonable. The carrier cannot limit its
liability for injury to or loss of goods shipped if such was caused by its own
negligence.
Based upon the findings of fact of the trial court which are sustained
by the evidence, the plaintiff delivered to the defendants 164 cases of silk
consigned and to be delivered by the defendants to Salomon Sharuff in
Surigao. Four of such cases were never delivered to the consignee, and the
evidence shows that their value is the alleged in the complaint. Also, the
goods in question were shipped from Manila on October 25, 1922, to be
delivered to Salomon Sharuff in Surigao, Plaintiff's original complaint was
filed on April 17, 1923, or a little less than six months after the shipment was
made. The lower court also points out that the conditions in question "are not
printed on the triplicate copies which were delivered to the plaintiff," and that
by reason thereof they "are not binding upon the plaintiff." The clause in
question provides that the carrier shall not be liable for loss or damage from
any cause or for any reason to an amount in excess of P300 "for any single
package of silk or other valuable cargo."
The evidence shows that 164 "cases" were shipped, and that the value
of each case was very near P2,500. In this situation, the limit of defendants'
liability for each case of silk "for loss or damage from any cause or for any
reason" would put it in the power of the defendants to have taken the whole
cargo of 164 cases of silk at a valuation of P300 for each case, or less than
one-eight of its actual value. If that rule of law should be sustained, no silk
would ever be shipped from one island to another in the Philippines. Such a
limitation of value is unconscionable and void as against public policy. There
is no merit in the appeal. The judgment of the lower court is affirmed.

SHEWARAM vs. PHILIPPINE AIR LINES, INC.

Facts: Shewaram, a paying passenger on defendant's aircraft flight from

Zamboanga City bound for Manila. He checked in three pieces of baggages, a
suitcase and two other pieces. When plaintiff Parmanand Shewaram arrived
in Manila, his suitcase did not arrive with his flight because it was sent to
Iligan. It was found out that it was mistagged by defendant’s personnel. The
station agent of the PAL in Iligan caused the baggage to be sent to Manila for
delivery to plaintiff. Defendant admitted that the two items (Transistor Radio
and the Rollflex Camera) could not be found inside the suitcase. An action for
damages was instituted against PAL. RTC ruled that the loss of the articles
was due to the negligence of the employees of PAL. PAL however was
ordered to pay damages of P100.00 only, as this was its limited liability as
stated in the ticket. (“The liability, if any, for loss or damage to checked
baggage or for delay in the delivery thereof is limited to its value and, unless
the passenger declares in advance a higher valuation and pay an additional
charge therefor, the value shall be conclusively deemed not to exceed
P100.00 for each ticket.”). An appeal was then brought up by plaintiff.

Issue: Whether or not the limited liability rule applies.

Held: No. The limited liability rule shall not apply. The requirements provided
in Article 1750 of the New Civil Code must be complied with before a
common carrier can claim a limitation of its pecuniary liability in case of loss,
destruction or deterioration of the goods it has undertaken to transport. In
the case before us We believe that the requirements of said article have not
been met. It can not be said that the appellee had actually entered into a
contract with the appellant, embodying the conditions as printed at the back
of the ticket. The fact that those conditions are printed at the back of the
ticket stub in letters so small that they are hard to read would not warrant
the presumption that the appellee was aware of those conditions such that
he had "fairly and freely agreed" to those conditions.

Shewaram did not agree to the stipulation on the ticket, as manifested by the
fact that Shewaram did not sign the ticket.

ONG YIU vs. COURT OF APPEALS

Facts: Petitioner was paying passenger of respondent Philippine Airlines on

board flight No. 946-R from Mactan Cebu bound for Butuan City. He was
scheduled to attend the trial in the Court of First instance , Br. II thereat. As a
passenger, he checked in one piece of luggage, a bull maleta. The plane left
Mactan Airport, Cebu City at about 1pm and arrived at Bacasi Airport, Butuan
City at past 2pm of the same day. Upon arrival, petitioner claimed his
luggage but it could not be found. According to petitioner, it was only after
reacting indignantly to the loss that the matter was attended by the porter
clerk which however, the later denied. When the luggage was delivered to
the petitioner with the information that the lock was open, he found out that
the folder containing documents and transcripts were missing, aside from the
two gift items for his parents-in-law. Petitioner refused to accept the
luggage. Petitioner filed a Complaint against PAL for damages for breach of
contract of transportation. The lower Court found PAL to have acted in bad
faith and with malice and declared petitioner entitled to moral damages. CA
held that PAL was guilty only of simple negligence, reversed the judgment of
the trial Court granting petitioner moral and exemplary damages, but ordered
PAL to pay plaintiff the sum of P100.00, the baggage liability assumed by it
under the condition of carriage printed at the back of the ticket. Hence the
present petition.
Issue: Whether or not PAL acted with gross negligence.

Held: No. PAL did not act in bad faith. It was the duty of PAL to look for
petitioner’s luggage which had been miscarried. PAL exerted diligent efforts
to locate the plaintiff’s baggage. Petitioner is neither entitled to exemplary
damages. Exemplary damages can only be granted if the defendant asked in
a wanton, fraudulent, reckless, oppressive or malevolent manner, which loss,
in accordance with the stipulation written at the back of the ticket is limited
to P100 per luggage plaintiff not having declared a greater value and not
having called the attention of the defendant on its value ad paid the tariff
thereon.
While it may be true that petitioner had not signed the plane ticket, he is
nevertheless bound by the provisions thereof. "Such provisions have been
held to be a part of the contract of carriage, and valid and binding upon the
passenger regardless of the latter's lack of knowledge or assent to the
regulation". It is what is known as a contract of "adhesion", in regards which
it has been said that contracts of adhesion wherein one party imposes a
ready made form of contract on the other, as the plane ticket in the case at
bar, are contracts not entirely prohibited. The one who adheres to the
contract is in reality free to reject it entirely; if he adheres, he gives his
consent. A contract limiting liability upon an agreed valuation does not offend
against the policy of the law forbidding one from contracting against his own
negligence.

SEA-LAND SERVICE, INC. vs. IAC

Facts: Sea-land, a foreign shipping and forwarding company licensed to do

business in the Philippines, received from Seaborne Trading Company in
California a shipment consigned to Sen Hiap Hing. The shipper not having
declared the value of the shipment, no value was indicated in the BOL. The
shipment was discharged in Manila, and while awaiting transshipment to
Cebu the cargo was stolen and never recovered. The lower court sentences
Sea-land to pay Cue the value of the lost cargo, the unrealized profit and
attorneys fees. The CA affirmed the decision, hence the petition.

Issue: Whether or not the consignee of seaborne freight is bound by

stipulations in the covering bill of lading limiting to a fixed amount the
liability of the carrier for loss or damage to the cargo where its value is not
declared in the bill.

Held: Yes. There is no question of the right of a consignee in a bill of lading

to recover from the carrier or shipper for loss of, or damage to, goods being
transported under said bill, although that document may have been drawn up
only by the consignor and the carrier without the intervention of the
consignee.
 Since the liability of a common carrier for loss of or damage to goods
transported by it under a contract of carriage so governed by the laws of the
country of destination and the goods in question were shipped from the
United States to the Philippines, the liability of Sea-Land has Cue is governed
primarily by the Civil Code, and as ordained by the said Code, supplementary,
in all matters not cluttered thereby, by the Code of Commerce and special
laws. One of these supplementary special laws is the Carriage of goods by
Sea Act (COGSA), made applicable to all contracts for the carriage by sea to
and from the Philippines Ports in Foreign Trade by Comm. Act. 65.
Even if Section 4(5) of COGSA did not list the validity and binding effect
of the liability limitation clause in the bill of lading here are fully substantial
on the basis alone of Article 1749 and 1750 of the Civil Code. The justices of
such stipulation is implicit in its giving the owner or shipper the option of
avoiding accrual of liability limitation by the simple expedient of declaring the
value of the shipment in the bill of lading.
The stipulation in the bill of lading limiting the liability of Sea-Land for
loss or damages to the shipment covered by said rule to US$500 per package
unless the shipper declares the value of the shipment and pays additional
charges is valid and binding on Cue.

CITADEL LINES, INC. vs. COURT OF APPEALS

Facts: Petitioner is the general agent of the vessel “Cardigan Bay/

Straight Enterprises”, while private respondent Manila Wine Merchants, Inc.
as the consignee is the importer of the subject shipment of Dunhill cigarettes
from England.
On or about March 17,1979, the vessel “Cardigan” loaded on board at
England for carriage to Manila, 180 Filbrate cartons of mixed British
manufactured cigarettes called “Dunhill International Filter” & “Dunhill
International Menthol”, as evidenced by a Bill of Lading. Clause 6 of the bills
of lading issued by the carrier states to limit the latter’s liability to US$2.00
per kilo.The shipment arrived at the port of Manila Pier 13 and the container
van was received by E. Razon an arrastre.
Thereafter, the container van containing two shipments was stripped.
One shipment was delivered and the other, containing the cigarettes were
placed in two containers due to the lack of space, both of them duly
padlocked and sealed by the representative of the carrier.
On May 1, 1979, the carrier’s headchecker discovered that one of the
container van had a different padlock and the sealed was tampered with. It
was found out that 90 cases of the cigarettes were missing. Based on the
investigation conducted by the arrastre, the cargo was not formally turned
over by the carrier.
The consignee filed a complaint against the carrier demanding
P315,000 which is the market value of the goods. The carrier admitted the
loss in its reply letter but alleged that the said matter is under the control of
the arrastre therefore, the consignee filed a complaint against the arrastre.
The lower court decided to absolve the arrastre form any liability. CA affirmed
the decision of the lower court.
Issue: Whether or not the stipulation limiting the liability of the carrier
contained in the bill of lading is binding on the consignee.

Held: Yes, the stipulation is valid. Basic is the rule that a stipulation limiting
the liability of the carrier to the value of the goods appearing in the bill of
lading, unless the shipper or owner declares a greater value, is binding.
Furthermore, 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 fairly and freely
agreed upon.
In this case, the award of P315,000 based on the alleged market value
of the goods is erroneous. It is provided in Clause 6 that its liability is limited
to US$2.00/kilo. The consignee also admits in the memorandum that the
value of the goods does not appear in the bill of lading. Hence, the stipulation
on the carrier’s limited liability applies.
The bill of lading shows that 120 cartons weight 2,978 kilos or
24.82kilos/carton. Since 90 cartons were lost and the weight of said cartons is
2,233.80, the carrier’s liability amounts only to US$4,467.60.
The judgment of CA is hereby modified.

EVERETT STEAMSHIP CORPORATION vs. COURT OF APPEALS

Facts: Private respondent Hernandez Trading Co. imported three crates of

bus spare parts from Japan from its supplier Maruman Trading based there.
The crates were shipped from Japan to Manila on board a vessel owned by
petitioner’s principal, Everett Orient Lines.
Upon arrival at the port of Manila, it was discovered that one of the crater
was missing. Respondent made a formal claim for the recovery of the actual
value of the lost spare parts contained in the missing crates. The trial court
rendered judgment in favor of private respondent, ordering petitioner to pay
Y1,552,500.00. An appeal was brought by petitioner only 100,000 yen was
offered by petitioner, the maximum amount stipulated in clause 18 of the
BOL. The Court of Appeals deleted the award of attorney's fees but affirmed
the trial court's findings with the additional observation that private
respondent can not be bound by the terms and conditions of the bill of lading
because it was not privy to the contract of carriage. Petitioner now comes to
SC arguing that the Court of Appeals erred (1) in ruling that the consent of
the consignee to the terms and conditions of the bill of lading is necessary to
make such stipulations binding upon it; (2) in holding that the carrier's limited
package liability as stipulated in the bill of lading does not apply in the
instant case; and (3) in allowing private respondent to fully recover the full
alleged value of its lost cargo.

Issue: Whether or not the petitioner is liable for the actual value and not the
maximum value recoverable under the bill of lading.
Held: No. A stipulation in the bill of lading limiting the liability of the
common carrier for the loss, damages of cargo to a certain sum, unless the
shipper declares or a higher value is sanctioned by law, particularly Articles
1749 and 1750 of the Civil Code. Pursuant to the afore-quoted provisions of
law, it is required that the stipulation limiting the common carrier's liability
for loss must be "reasonable and just under the circumstances, and has been
freely and fairly agreed upon."
The bill of lading subject of the present controversy specifically
provides, among others:
18. All claims for which the carrier may be liable shall be adjusted and settled
on the basis of the shipper's net invoice cost plus freight and insurance
premiums, if paid, and in no event shall the carrier be liable for any loss of
possible profits or any consequential loss.
The carrier shall not be liable for any loss of or any damage to or in
any connection with, goods in an amount exceeding One Hundred thousand
Yen in Japanese Currency (Y100,000.00) or its equivalent in any other
currency per package or customary freight unit (whichever is least) unless
the value of the goods higher than this amount is declared in writing by the
shipper before receipt of the goods by the carrier and inserted in the Bill of
Lading and extra freight is paid as required.

The above stipulations are, to our mind, reasonable and just. In the bill
of lading, the carrier made it clear that its liability would only be up to One
Hundred Thousand (Y100,000.00) Yen. However, the shipper, Maruman
Trading, had the option to declare a higher valuation if the value of its cargo
was higher than the limited liability of the carrier. Considering that the
shipper did not declare a higher valuation, it had itself to blame for not
complying with the stipulations.
To defeat the carrier's limited liability, the aforecited Clause 18 of the
bill of lading requires that the shipper should have declared in writing a
higher valuation of its goods before receipt thereof by the carrier and insert
the said declaration in the bill of lading, with extra freight paid. These
requirements in the bill of lading were never complied with by the shipper,
hence, the liability of the carrier under the limited liability clause stands. The
commercial Invoice does not in itself sufficiently and convincingly show that
petitioner has knowledge of the value of the cargo as contended by private
respondent.

BRITISH AIRWAYS vs. COURT OF APPEALS

Facts: Mahtani obtained the services of a certain Mr. Gemar to prepare his
travel plan to Bombay, India. Mr. Gemar purchased a ticket from British
Airways, however since it had no ticket flights from Manila to Bombay,
Mahtani had to take a connecting flight to Bombay. Prior to his departure,
Mahtani checked in the PAL counter in Manila his two pieces of luggage
containing his clothing and personal effects, confident that upon reaching
Hong Kong, the same would be transferred to the BA flight bound for
Bombay. Unfortunately, when Mahtani arrived in Bombay, he discovered that
his luggage was missing and that upon inquiry from the BA representatives,
he was told that the same might have been diverted to London. After
plaintiff waited for his luggage for one week, BA finally advised him to file a
claim. Mahtani filed his complaint for damages. BA filed a third-party
complaint against PAL alleging that the reason for the non-transfer of the
luggage was due to the latter's late arrival in Hongkong, thus leaving hardly
any time for the proper transfer of Mahtani's luggage to the BA aircraft bound
for Bombay. RTC rendered its decision in favor of Mahtani, which CA affirmed,
hence the instant petition. BA alleged that there should have been no
separate award for the luggage and the contents thereof since Mahtani failed
to declare a separate higher valuation for the luggage and therefore, its
liability is limited, at most, only to the amount stated in the ticket.

Issue: Whether or not BA is liable for the compensatory damages.

Held: Yes. The contract of transportation was exclusively between Mahtani

and BA. The latter merely endorsing the Manila to Hong Kong log of the
former’s journey to PAL, as its subcontractor or agent. Conditions of contacts
was one of continuous air transportation from Manila to Bombay. The Court of
Appeals should have been cognizant of the well-settled rule that an agent is
also responsible for any negligence in the performance of its function and is
liable for damages which the principal may suffer by reason of its negligent
act. The third-party complaint was therefore reinstated. Since the instant
petition was based on breach of contract of carriage, Mahtani can only sue BA
and not PAL, since the latter was not a party in the contract.
The contention of BA with respect to limited liability was overruled
although it is recognized in the Philippines, stating that BA had waived the
defense of limited liability when it allowed Mahtani to testify as to the actual
damages he incurred due to the misplacement of his luggage, without any
objection.

H. E. HEACOCK COMPANY vs. MACONDRAY & COMPANY, INC.

Facts: The plaintiff shipped Edmonton clocks from New York to Manila
on board a vessel of the defendant. The BOL has the following stipulations:
1. It is mutually agreed that the value of the goods receipted for above does
not exceed $500 per freight ton, or, in proportion for any part of a ton, unless
the value be expressly stated herein and ad valorem freight paid thereon.

9. Also, that in the event of claims for short delivery of, or damage to, cargo
being made, the carrier shall not be liable for more than the net invoice price
plus freight and insurance less all charges saved, and any loss or damage for
which the carrier may be liable shall be adjusted pro rata on the said basis.

The clocks were not delivered despite demands. Plaintiff claimed P420.00,
the market value of the clocks, while defendant tendered only P76.36, the
proportionate freight ton value. The trial court decided for the plaintiff for
P226.02, the invoice value plus freight and insurance. Both appealed. The
claim of the plaintiff is based upon the argument that the clause in the bill of
lading, limiting the liability of the carrier, are contrary to public order and,
therefore, null and void. The defendant, on the other hand, contends that
clause 1 is valid, and clause 9 should have not been applied by the lower
court.

Issue: May a common carrier, by stipulations inserted in the bill of lading,

limit its liability for the loss of or damage to the cargo to an agreed valuation
of the latter?

Held: Yes. Three kinds of stipulations have often been made in a bill of
lading. The first is one exempting the carrier from any and all liability for loss
or damage occasioned by its own negligence. The second is one providing for
an unqualified limitation of such liability to an agreed valuation. And the third
is one limiting the liability of the carrier to an agreed valuation unless the
shipper declares a higher value and pays a higher rate of freight. According
to an almost uniform weight of authority, the first and second kinds of
stipulations are invalid as being contrary to public policy, but the third is valid
and enforceable.
A reading of clauses 1 and 9 of the bill of lading here in question,
however, clearly shows that the present case falls within the third stipulation,
to wit: That a clause in a bill of lading limiting the liability of the carrier to a
certain amount unless the shipper declares a higher value and pays a higher
rate of freight, is valid and enforceable. Thus, if a common carrier gives to a
shipper the choice of two rates, the lower of the conditioned upon his
agreeing to a stipulated valuation of his property in case of loss, even by the
carrier's negligence, if the shipper makes such a choice, understandingly and
freely, and names his valuation, he cannot thereafter recover more than the
value which he thus places upon his property. A limitation of liability based
upon an agreed value to obtain a lower rate does not conflict with any sound
principle of public policy; and it is not conformable to plain principles of
justice that a shipper may understate value in order to reduce the rate and
then recover a larger value in case of loss.

SWEET LINES, INC. vs. TEVES

Facts: Private respondents Atty. Tandog and Tiro, a contractors bought

tickets for Voyage at the branch office of petitioner, a shipping company
transporting inter-island passengers and cargoes, at Cagayan de Oro City.
Respondents were to board petitioner's vessel bound for Tagbilaran City via
the port of Cebu. Upon learning that the vessel was not proceeding to Bohol,
since many passengers were bound for Surigao, private respondents per
advice, went to the branch office for proper relocation to another vessel.
Because the said vessel was already filled to capacity, they were forced to
agree "to hide at the cargo section to avoid inspection of the officers of the
Philippine Coastguard." Private respondents alleged that they were, during
the trip," "exposed to the scorching heat of the sun and the dust coming from
the ship's cargo of corn grits," and that the tickets they bought at Cagayan
de Oro City for Tagbilaran were not honored and they were constrained to
pay for other tickets. In view thereof, private respondents sued petitioner for
damages and for breach of contract of carriage before Court of First Instance
of Misamis Oriental. Petitioner moved to dismiss the complaint on the ground
of improper venue. This motion was premised on the condition printed at the
back of the tickets, Condition No. 14, which reads: “It is hereby agreed and
understood that any and all actions arising out of the conditions and
provisions of this ticket, irrespective of where it is issued, shall be filed in the
competent courts in the City of Cebu.” The motion was denied hence the
instant petition.

Issue: Is Condition No. 14 printed at the back of the petitioner's passage

tickets purchased by private respondents, which limits the venue of actions
arising from the contract of carriage to theCourt of First Instance of Cebu,
valid and enforceable?

Held: No. Considered in the light of circumstances prevailing in the inter-

island shipping industry in the country today, We find and hold that Condition
No. 14 printed at the back of the passage tickets should be held as void and
unenforceable for the following reasons first, under circumstances obligation
in the inter-island shipping industry, it is not just and fair to bind passengers
to the terms of the conditions printed at the back of the passage tickets, on
which Condition No. 14 is Printed in fine letters, and second, Condition No. 14
subverts the public policy on transfer of venue of proceedings of this nature,
since the same will prejudice rights and interests of innumerable passengers
located in different places of the country who, under Condition No. 14, will
have to file suits against petitioner only in the City of Cebu. Considering the
expense and trouble a passenger residing outside of Cebu City would incur to
prosecute a claim in the City of Cebu, he would most probably decide not to
file the action at all. The condition will thus defeat, instead of enhance, the
ends of justice. Upon the other hand, petitioner has branches or offices in the
respective ports of call of its vessels and can afford to litigate in any of these
places. Hence, the filing of the suit in the CFI of Misamis Oriental, as was
done in the instant case, will not cause inconvenience to, much less
prejudice, petitioner.

QUISUMBING, SR. vs. COURT OF APPEALS

Facts: Norberto Quisumbing Sr. and Gunther Leoffler were among the
passengers of PAL’s plane from Mactan City Cebu to Manila. There was an
exchange of gunshot between a Senior NBI agent Villarin and the four armed
hijackers one of which was “Zaldy” who is a suspect in the killing of Judge
Valdez. Zaldy then announced to the passengers and the pilots that it was a
hijacked and ordered the pilot not to send any SOS. The robbers divested the
passengers of their belongings including Quisumbing who was divested with
his jewelries and cash amounting to P18,650.00 and Leoffler with his watch,
wallet and cash amounting to P1,700. Quisumbing suffered a shock for a gun
had been pointed at him by one of the hold uppers. The four hijackers
succeeded in their escape upon arrival at Manila.
Contending that the "aforesaid loss is a result of breach of PAL's
contractual obligation to carry them and their belongings and effects to their
Manila destination without loss or damage, and constitutes a serious
dereliction of PAL's legal duty to exercise extraordinary diligence in the
vigilance over the same, Quisumbing and Loeffler brought suit against PAL to
recover the value of the property lost by them to the robbers as well as moral
and exemplary damages.The CFI dismissed the complaint and the CA
affirmed the CFI’s decision. Hence the instant petition. The plaintiffs declared
that their suit was instituted "... pursuant to Civil Code articles 1754, 998,
2000 and 2001 and on the ground that in relation to said Civil Code article
2001 the complained-of act of the armed robbers is not a force majeure, as
the 'use of arms' or 'irresistible force' was not taken advantage of by said
armed robbers in gaining entrance to defendant's ill-fated plane in questions.
And, with respect to said Civil Code article 1998, it is not essential that the
lost effects and belongings of plaintiffs were actually delivered to defendant's
plane personnel or that the latter were notified thereof.

Issue: 1) Whether or not hijacking-robbery was force majeure. 2) Whether or

not PAL was negligent to overcome the hi-jacking-robbery.

Held: 1) Yes. The Court ruled that under the facts, "the highjacking-robbery
was force majeure," observing that: hijackers do not board an airplane
through a blatant display of firepower and violent fury. Firearms, hand-
grenades, dynamite, and explosives are introduced into the airplane
surreptitiously and with the utmost cunning and stealth, although there is an
occasional use of innocent hostages who will be coldly murdered unless a
plane is given to the hijackers' complete disposal.
2) No, PAL was not negligent so as to overcome the force majeure nature of
the hi-jacking. Hijackers do not board an airplane through a blatant display of
firepower and violent fury. Firearms and grenades are brought to the plane
surreptitiously. PAL could not have been faulted for want of diligence,
particularly for failing to take positive measures to implement Civil
Aeronautics Administration regulations prohibiting civilians from carrying
firearms on board the plane. The use of the most sophisticated electronic
detection devices may have minimized hijacking but still ineffective against
truly determining hijackers.
The petition is denied and appealed decision of CA is affirmed.

PAN AMERICAN WORLD AIRWAYS, INC. vs. RAPADAS

Facts: Private respondent held Passenger Ticket and Baggage Claim Check
for petitioner's Flight with the route from Guam to Manila. While standing in
line to board the flight at the Guam airport, Rapadas was ordered by
petitioner's handcarry control agent to check-in his Samsonite attache case.
Rapadas protested pointing to the fact that other co-passengers were
permitted to handcarry bulkier baggages. He stepped out of the line only to
go back again at the end of it to try if he can get through without having to
register his attache case. However, the same man in charge of handcarry
control did not fail to notice him and ordered him again to register his
baggage. For fear that he would miss the plane if he insisted and argued on
personally taking the valise with him, he acceded to checking it in. He then
gave his attache case to his brother who happened to be around and who
checked it in for him, but without declaring its contents or the value of its
contents. Upon arriving in Manila Rapadas claimed and was given all his
checked-in baggages except the attache case. He sent his son, Jorge Rapadas
to request for the search of the missing luggage. The petitioner exerted
efforts to locate the luggage through the Pan American World Airways-Manila
International Airport (PAN AM-MIA) Baggage Service. Rapadas received a
letter from the petitioner's counsel offering to settle the claim for the sum of
$160.00 representing the petitioner's alleged limit of liability for loss or
damage to a passenger's personal property under the contract of carriage
between Rapadas and PAN AM. Refusing to accept this kind of settlement,
Rapadas filed the instant action for damages. The lower court ruled in favor
of Rapadas after finding no stipulation giving notice to the baggage liability
limitation. On appeal, the Court of Appeals affirmed the trial court decision.
Hence, this petition.

Issue: Whether or not a passenger is bound by the terms of a passenger

ticket declaring the limitations of carrier’s liability

Held: Yes. The Warsaw Convention, as amended, specifically provides that it

is applicable to international carriage which it defines in Article 1, par. 2 as
follows:

(2) For the purposes of this Convention, the expression "international

carriage" means any carriage in which, according to the agreement between
the parties, the place of departure and the place of destination, whether or
not there be a breach in the carriage or a transhipment, are situated either
within the territories of two High Contracting Parties or within the territory of
a single High Contracting Party if there is an agreed stopping place within the
territory of another State, even if that State is not a High Contracting Party.
Carriage between two points within the territory of a single High Contracting
Party without an agreed stopping place within the territory of another State is
not international carriage for the purposes of this Convention. ("High
Contracting Party" refers to a state which has ratified or adhered to the
Convention, or which has not effectively denounced the Convention [Article
40A(l)]).
Nowhere in the Warsaw Convention, as amended, is such a detailed
notice of baggage liability limitations required. Nevertheless, it should
become a common, safe and practical custom among air carriers to indicate
beforehand the precise sums equivalent to those fixed by the Convention.
The Convention governs the availment of the liability limitations where the
baggage check is combined with or incorporated in the passenger ticket. In
the case at bar, the baggage check is combined with the passenger ticket in
one document of carriage. The passenger ticket complies with Article 3,
which provides:
(c) a notice to the effect that, if the passenger's journey involves an ultimate
destination or stop in a country other than the country of departure, the
Warsaw Convention may be applicable and that the Convention governs and
in most cases limits the liability of carriers for death or personal injury and in
respect of loss of or damage to baggage.

What the petitioner is concerned about is whether or not the notice,

which it did not fail to state in the plane ticket and which it deemed to have
been read and accepted by the private respondent will be considered by this
Court as adequate under the circumstances of this case. As earlier stated, the
Court finds the provisions in the plane ticket sufficient to govern the
limitations of liabilities of the airline for loss of luggage. The passenger, upon
contracting with the airline and receiving the plane ticket, was expected to
be vigilant insofar as his luggage is concerned. If the passenger fails to
adduce evidence to overcome the stipulations, he cannot avoid the
application of the liability limitations.
The facts show that the private respondent actually refused to register
the attache case and chose to take it with him despite having been ordered
by the PANAM agent to check it in. In attempting to avoid registering the
luggage by going back to the line, private respondent manifested a disregard
of airline rules on allowable handcarried baggages. Prudence of a reasonably
careful person also dictates that cash and jewelry should be removed from
checked-in-luggage and placed in one's pockets or in a handcarried Manila-
paper or plastic envelope.
The alleged lack of enough time for him to make a declaration of a
higher value and to pay the corresponding supplementary charges cannot
justify his failure to comply with the requirement that will exclude the
application of limited liability.

ALITALIA vs. IAC

Facts: Dr. Felipa Pablo, an associate professor in UP, was invited to a

meeting of the Department of Research and Isotopes of the Joint FAO-IAEA
Division of Atomic Energy in Food and Agriculture of UN in Ispra, Italy. To
fulfill this engagement, Dr. Pablo booked passage on petitioner airline,
ALITALIA. She arrived in Milan on the day before the meeting in accordance
with the itinerary and time table set for her by ALITALIA. She was however
told by the petitioner’s personnel there at Milan that her luggage was
delayed inasmuch as the same was in one of the succeeding flights from
Rome to Milan. Her luggage consisted of two suitcases. But the other flights
arriving from Rome did not have her baggage on board. The suitcases were
not actually restored to Prof. Pablo by petitioner until eleven months and four
months after the institution of her action.

Issue: Did petitioner acted in bad faith so as to entitle private respondent to

damages?
Held: No. The Warsaw Convention does not exclude liability for other
breaches of contract by the carrier. Thus:
"The Convention does not thus operate as an exclusive enumeration of the
instances of an airline's liability, or as an absolute limit of the extent of that
liability. Moreover, slight reflection readily leads to the conclusion that it
should be deemed a limit of liability only in those cases where the cause of
the death or injury to person, or destruction, loss or damage to property or
delay in its transport is not attributable to or attended by any wilful
misconduct, bad faith, recklessness, or otherwise improper conduct on the
part of any official or employee for which the carrier is responsible, and there
is otherwise no special or extraordinary form of resulting injury. The
Convention's provisions, in short, do not regulate or exclude liability for other
breaches of contract by the carrier' or misconduct of its officers and
employees, or for some particular or exceptional type of damage, Otherwise,
'an air carrier would be exempt from any liability for damages in the event of
its absolute refusal, in bad faith, to comply with a contract of carriage, which
is absurd.' Nor may it for a moment be supposed that if a member of the
aircraft complement should inflict some physical injury on a passenger, or
maliciously destroy or damage the latter's property, the Convention might
successfully be pleaded as the sole gauge to determine the carrier's liability
to the passenger. Neither may the Convention be invoked to justify the
disregard of some extraordinary sort of damage resulting to a passenger and
preclude recovery therefor beyond the limits set by said Convention. It is in
this sense that the Convention has been applied, or ignored, depending on
the peculiar facts presented by each case.

In the case at bar, no bad faith or otherwise improper conduct may be

ascribed to the employees of petitioner airline; and Dr. Pablo's luggage was
eventually returned to her, belatedly, it is true, but without appreciable
damage. The fact is, nevertheless, that some species of injury was caused to
Dr. Pablo because petitioner ALITALIA misplaced her baggage and failed to
deliver it to her at the time appointed-a breach of its contract of carriage, to
be sure-with the result that she was unable to read the paper and make the
scientific presentation (consisting of slides, autoradiograms or films, tables
and tabulations) that she had painstakingly labored over, at the prestigious
international conference, to attend which she had traveled hundreds of miles,
to her embarrassment and the disappointment and annoyance of the
organizers.
There can be no doubt that Dr. Pablo underwent profound distress and
anxiety, which gradually turned to panic and finally despair, from the time
she learned that her suitcases were missing up to the time when, having
gone to Rome, she finally realized that she would no longer be able to take
part in the conference. Certainly, the compensation for the injury suffered by
Dr. Pablo cannot under the circumstances be restricted to that prescribed by
the Warsaw Convention for delay in the transport of baggage.

She is not, of course, entitled to be compensated for loss or damage to

her luggage. As already mentioned, her baggage was ultimately delivered to
her in Manila, tardily, but safely. She is however entitled to nominal damages-
which, as the law says, is adjudicated in order that a right of the plaintiff,
which has been violated or invaded by the defendant, may be vindicated and
recognized, and not for the purpose of indemnifying the plaintiff for any loss
suffered-and this Court agrees that the respondent Court of Appeals correctly
set the amount thereof at P40,000.00."

B. Safety of Passengers

NOCUM vs. LAGUNA TAYABAS BUS CO.

Facts: A passenger boarded the respondents bus carrying a box which such
person attested to the conductor as containing clothes and miscellaneous
items.
Appellee, who was a passenger in appellant's Bus No. 120 then making a trip
within the barrio of Dita, Municipality of Bay, Laguna, was injured as a
consequence of the explosion of firecrackers, contained in the box brought by
the co-passenger.

Issue: Did LTB Co. exercise the extraordinary diligence required?

Held: Yes, fairness demands that in measuring a common carrier's duty

towards its passengers, allowance must be given to the reliance that should
be reposed on the sense of responsibility of all the passengers in regard to
their common safety. It is to be presumed that a passenger will not take with
him anything dangerous to the lives and limbs of his co-passengers, not to
speak of his own. Not to be lightly considered must be the right to privacy to
which each passenger is entitled. He cannot be subjected to any unusual
search, when he protests the innocuousness of his baggage and nothing
appears to indicate the contrary, as in the case at bar. In other words, inquiry
may be verbally made as to the nature of a passenger's baggage when such
is not outwardly perceptible, but beyond this, constitutional boundaries are
already in danger of being transgressed. Calling a policeman to his aid, as
suggested by the service manual invoked by the trial judge, in compelling the
passenger to submit to more rigid inspection, after the passenger had
already declared that the box contained mere clothes and other
miscellaneous, could not have justified invasion of a constitutionally
protected domain.

MECENAS vs. CA

Facts: M/T "Tacloban City," a barge-type oil tanker owned by the

Philippine National Oil Company (PNOC) and operated by the PNOC Shipping
and Transport Corporation (PNOC Shipping), having unloaded its cargo, left
for Negros Occidental when it collided with a carrier ship named Don Juan.
When the collision occurred, the sea was calm, the weather fair and visibility
good. As a result of this collision, the M/V "Don Juan" sank and hundreds of its
passengers perished. Among the ill-fated passengers were the parents of
petitioners, the spouses Perfecto Mecenas and Sofia Mecenas, whose bodies
were never found despite intensive search by petitioners.

Issue: Whether or not the respondents were negligent?

Held: Yes, the behaviour of the captain of the "Don Juan" in tills instance-
playing mahjong "before and up to the time of collision constitutes behaviour
that is simply unacceptable on the part of the master of a vessel to whose
hands the lives and welfare of at least seven hundred fifty (750) passengers
had been entrusted. Whether or not Capt. Santisteban was "off-duty" or "on-
duty" at or around the time of actual collision is quite immaterial; there is,
both realistically speaking and in contemplation of law, no such thing as "off-
duty" hours for the master of a vessel at sea that is a common carrier upon
whom the law imposes the duty of extraordinary diligence.

The record shows that the "Don Juan" sank within ten (10) to fifteen (15)
minutes after initial contact with the "Tacloban City. While the failure of Capt.
Santisteban to supervise his officers and crew in the process of abandoning
the ship and his failure to avail of measures to prevent the too rapid sinking
of his vessel after collision, did not cause the collision by themselves, such
failures doubtless contributed materially to the consequent loss of life and,
moreover, were indicative of the kind and level of diligence exercised by
Capt. Santisteban in respect of his vessel and his officers and men prior to
actual contact between the two (2) vessels. The officer-on-watch in the "Don
Juan" admitted that he had failed to inform Capt. Santisteban not only of the
"imminent danger of collision" but even of "the actual collision itself " There
is also evidence that the "Don Juan" was carrying more passengers than she
had been certified as allowed to carry.

Under these circumstances, a presumption of gross negligence on the part of

the vessel (her officers and crew) and of its ship-owner arises.

NEGROS NAVIGATION CO. vs. CA

Facts: Private respondent Ramon Miranda purchased from the Negros

Navigation Co., Inc. four special cabin tickets for his wife, daughter, son and
niece who were going to Bacolod City to attend a family reunion boarding the
Don Juan. Don Juan collided off the Tablas Strait in Mindoro, with the M/T
Tacloban City, an oil tanker owned by the Philippine National Oil Company
(PNOC) and the PNOC Shipping and Transport Corporation (PNOC/STC). As a
result, the M/V Don Juan sank. Several of her passengers perished in the sea
tragedy. The bodies of some of the victims were found and brought to shore,
but the four members of private respondents' families were never found.
Issue: Whether or not the petitioners exercised the extraordinary
diligence required?

Held: No. As with the Mecenas case, this Court found petitioner guilty of
negligence in (1) allowing or tolerating the ship captain and crew members in
playing mahjong during the voyage, (2) in failing to maintain the vessel
seaworthy and (3) in allowing the ship to carry more passengers than it was
allowed to carry.
Also, the duty to exercise due diligence includes the duty to take
passengers or cargoes that are within the carrying capacity of the vessel.

KOREAN AIRLINES CO. vs. CA

Facts: Juanito C. Lapuz, an automotive electrician, was contracted for

employment in Jeddah, Saudi Arabia. Lapuz was supposed to leave via
Korean Airlines. Initially, he was "wait-listed," which meant that he could only
be accommodated if any of the confirmed passengers failed to show up at
the airport before departure. When two of such passengers did not appear,
Lapuz and another person by the name of Perico were given the two
unclaimed seats. As he was about to board the said airline a KAL officer
pointed to him and shouted "Down! Down!" He was thus barred from taking
the flight. When he later asked for another booking, his ticket was canceled
by KAL. Consequently, he was unable to report for his work in Saudi Arabia
within the stipulated 2-week period and so lost his employment.

Issue: Whether or not KAL committed a breach of the Contract of

Carriage?

Held: Yes. The status of Lapuz as standby passenger was changed to that of
a confirmed passenger when his name was entered in the passenger
manifest of KAL for its Flight No. KE 903. His clearance through immigration
and customs clearly shows that he had indeed been confirmed as a
passenger of KAL in that flight. KAL thus committed a breach of the contract
of carriage between them when it failed to bring Lapuz to his destination.

This Court has held that a contract to transport passengers is different in kind
and degree from any other contractual relation. The business of the carrier is
mainly with the traveling public. It invites people to avail themselves of the
comforts and advantages it offers. The contract of air carriage generates a
relation attended with a public duty. Passengers have the right to be treated
by the carrier's employees with kindness, respect, courtesy and due
consideration. They are entitled to be protected against personal misconduct,
injurious language, indignities and abuses from such employees. So it is that
any discourteous conduct on the part of these employees toward a passenger
gives the latter an action for damages against the carrier.

FORTUNE EXPRESS vs. CA

Facts: Petitioner is a bus company in northern Mindanao. A bus of
petitioner figured in an accident with a jeepney in Kauswagan, Lanao del
Norte, resulting in the death of several passengers of the jeepney, including
two Maranaos. The Constabulary officer found out that certain Maranaos were
planning to take revenge on the petitioner by burning some of its buses.
On November 22, 1989, three armed Maranaos who pretended to be
passengers, seized a bus of petitioner at Linamon, Lanao del Norte while on
its way to Iligan City. They started pouring gasoline inside the bus, as the
other held the passenger at bay with a handgun then ordered the passenger
to get off the bus. A passenger Atty. Caorong pleaded with the Maranaos to
spare the bus driver but the Maranaos shot him.

Issue: Whether or not the petitioners were guilty of a breach of the

contract of carriage?

Held: Yes, Art. 1763 of the Civil Code provides that a common carrier is
responsible for injuries suffered by a passenger on account of wilfull acts of
other passengers, if the employees of the common carrier could have
prevented the act through the exercise of the diligence of a good father of a
family. In the present case, it is clear that because of the negligence of
petitioner's employees, the seizure of the bus by Mananggolo and his men
was made possible.
Despite warning by the Philippine Constabulary at Cagayan de Oro that
the Maranaos were planning to take revenge on the petitioner by burning
some of its buses and the assurance of petitioner's operation manager,
Diosdado Bravo, that the necessary precautions would be taken, petitioner
did nothing to protect the safety of its passengers. Had petitioner and its
employees been vigilant they would not have failed to see that the
malefactors had a large quantity of gasoline with them. Under the
circumstances, simple precautionary measures to protect the safety of
passengers, such as frisking passengers and inspecting their baggages,
preferably with non-intrusive gadgets such as metal detectors, before
allowing them on board could have been employed without violating the
passenger's constitutional rights.
The acts of Maranaos could not be considered as caso fortuito because
there was already a warning by the PC.
No contributory negligence could be attributed to the deceased. The
assailant's motive was to retaliate for the loss of life of two Maranaos as a
result of the collision between petitioner's bus and the jeepney in which the
two Maranaos were riding. The armed men actually allowed deceased to
retrieve something from the bus. What apparently angered them was his
attempt to help the driver of the bus by pleading for his life.

GATCHALIAN vs. DELIM

Facts: Petitioner Reynalda Gatchalian boarded respondent's mini bus.

While the bus was running along the highway in Barrio Payocpoc, Bauang,
Union, "a snapping sound" was suddenly heard at one part of the bus and,
shortly thereafter, the vehicle bumped a cement flower pot on the side of the
road, went off the road, turned turtle and fell into a ditch as a result
petitioner sustained injuries. As she and several others were confined in a
hospital, respondent Delim paid for the hospitalization expenses and had the
passengers sign a waiver stating that they were no longer interested to file a
complaint. Notwithstanding this document, petitioner Gathalian filed a
complaint.

Issue: Whether or not the private respondent were negligent.

Held: The record yields affirmative evidence of fault or negligence on the

part of respondent common carrier. The driver did not stop to check if
anything had gone wrong with the bus when the snapping sound was heard
and made known to him by the passengers, instead told them that it was
normal. The driver's reply necessarily indicated that the same "snapping
sound" had been heard in the bus on previous occasions. This could only
mean that the bus had not been checked physically or mechanically to
determine what was causing the "snapping sound" which had occurred so
frequently that the driver had gotten accustomed to it. Such a sound is
obviously alien to a motor vehicle in good operating condition, and even a
modicum of concern for life and limb of passengers dictated that the bus be
checked and repaired. The obvious continued failure of respondent to look
after the roadworthiness and safety of the bus, coupled with the driver's
refusal or neglect to stop the mini-bus after he had heard once again the
"snapping sound" and the cry of alarm from one of the passengers,
constituted wanton disregard of the physical safety of the passengers, and
hence gross negligence on the part of respondent and his driver.

Because what is involved here is the liability of a common carrier for injuries
sustained by passengers in respect of whose safety a common carrier must
exercise extraordinary diligence, we must construe any such purported
waiver most strictly against the common carrier. For a waiver to be valid and
effective, it must not be contrary to law, morals, public policy or good
customs. A cursory examination of the purported waiver will readily show
that appellees did not actually waive their right to claim damages from
appellant for the latter's failure to comply with their contract of carriage. All
that said document proves is that they expressed a "desire" to make the
waiver which obviously is not the same as making an actual waiver of their
right. A waiver of the kind invoked by appellant must be clear and
unequivocal.

A person is entitled to the physical integrity of his or her body; if that

integrity is violated or diminished, actual injury is suffered for which actual or
compensatory damages are due and assessable. Petitioner Gatchalian is
entitled to be placed as nearly as possible in the condition that she was
before mishap. A scar, especially one on the face of the woman, resulting
from the infliction of injury upon her, is a violation of bodily integrity, giving
raise to a legitimate claim for restoration to her condition ante.
 DEL CASTILLO vs. JAYMALIN

Facts: Mario del Castillo, a deaf-mute, son of plaintiff Severo del

Castillo boarded a bus of private respondent bus line. Upon alighting from the
bus, he fell and died as a result. Respondents contend that the proximate
cause of Mario's death was his recklessness and gross negligence in jumping
out of the bus while in motion.

Issue: Whether or not respondents exercised extraordinary diligence.

Held: No, common carriers are responsible for the death of their passengers
(Articles 1764 and 2206 of the Civil Code). This liability includes the loss of
the earning capacity of the deceased. It appears proven that the defendant
corporations failed to exercise the diligence that was their duty to observe
according to Articles 1733 and 1755. The conductor was apprised of the fact
that Mario del Castillo was deaf and dumb. With this knowledge the
conductor should have taken extra-ordinary care for the safety of the said
passenger. In this he failed.

PHILIPPINE RABBIT BUS LINES vs. IAC

Facts: Catalina Pascua with several others boarded the jeep owned by
spouses Isidro Mangune and Guillerma Carreon and driven by Tranquilino
Manalo bound for Carmen, Rosales, Pangasinan.
Upon reaching 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 and was hit by the petitioner company’s bus
causing the death of Catalina Pascua and two other passengers.

Issue: Wether or not the Doctrine of Last Clear Chance applies in the
case at bar?

Held: No, The principle about "the last clear" chance, would call for
application in a suit between the owners and drivers of the two colliding
vehicles. It does not arise where a passenger demands responsibility from the
carrier to enforce its contractual obligations. For it would be inequitable to
exempt the negligent driver of the jeepney and its owners on the ground that
the other driver was likewise guilty of negligence."

It is the rule under the substantial factor test that if the actor's conduct is a
substantial factor in bringing about harm to another, the fact that the actor
neither foresaw nor should have foreseen the extent of the harm or the
manner in which it occurred does not prevent him from being liable. The bus
driver's conduct is not a substantial factor in bringing about harm to the
passengers of the jeepney. It cannot be said that the bus was travelling at a
fast speed when the accident occurred because the speed of 80 to 90
kilometers per hour, assuming such calculation to be correct, is yet within the
speed limit allowed in highways.

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.

BUSTAMANTE vs. CA

Facts: A collision occurred between a gravel and sand truck, and a Mazda
passenger bus along the national road at Calibuyo, Tanza, Cavite. The front
left side portion (barandilla) of the body of the truck sideswiped the left side
wall of the passenger bus, ripping off the said wall from the driver's seat to
the last rear seat. Due to the impact, several passengers of the bus were
thrown out and died as a result of the injuries they sustained, Among those
killed were Rogelio Bustamante and his spouse and children, and several
others.
During the incident, the cargo truck was driven by defendant
Montesiano and owned by defendant Del Pilar; while the passenger bus was
driven by defendant Susulin. The vehicle was registered in the name of
defendant Novelo but was owned and/or operated as a passenger bus jointly
by defendants Magtibay and Serrado, under a franchise, with a line from
Naic, Cavite, to Baclaran, Paranaque, Metro Manila, and vice versa, which
Novelo sold to Magtibay on November 8, 1981, and which the latter
transferred to Serrado (Cerrado) on January 18, 1983.
After a careful perusal of the circumstances of the case, the trial court
reached the conclusion "that the negligent acts of both drivers contributed to
or combined with each other in directly causing the accident which led to the
death of the aforementioned persons. It could not be determined from the
evidence that it was only the negligent act of one of them which was the
proximate cause of the collision. In view of this, the liability of the two drivers
for their negligence must be solidary.
From said decision, only defendants Federico del Pilar and Edilberto
Montesiano, owner and driver, respectively, of the sand and gravel truck
have interposed an appeal before the respondent Court of Appeals, which set
aside the trial court’s decision. Hence the present petition.
Issue: Whether the respondent court has properly and legally applied the
doctrine of "last clear chance" in the present case despite its own finding that
appellant cargo truck driver Edilberto Montesiano was admittedly negligent in
driving his cargo truck very fast on a descending road and in the presence of
the bus driver coming from the opposite direction.

Held: The respondent court adopted the doctrine of "last clear chance." The
doctrine, stated broadly, is that the negligence of the plaintiff does not
preclude a recovery for the negligence of the defendant where it appears
that the defendant, by exercising reasonable care and prudence, might have
avoided injurious consequences to the plaintiff notwithstanding the plaintiff's
negligence. In other words, the doctrine of last clear chance means that even
though a person's own acts may have placed him in a position of peril, and an
injury results, the injured person is entitled to recovery. As the doctrine is
usually stated, a person who has the last clear chance or opportunity of
avoiding an accident, notwithstanding the negligent acts of his opponent or
that of a third person imputed to the opponent is considered in law solely
responsible for the consequences of the accident. (Sangco, Torts and
Damages, 4th Ed., 1986, p. 165).
The practical import of the doctrine is that a negligent defendant is
held liable to a negligent plaintiff, or even to a plaintiff who has been grossly
negligent in placing himself in peril, if he, aware of the plaintiffs peril, or
according to some authorities, should have been aware of it in the reasonable
exercise of due case, had in fact an opportunity later than that of the plaintiff
to avoid an accident (57 Am. Jur., 2d, pp. 798-799).
All premises considered, the Court is convinced that the respondent
Court committed an error of law in applying the doctrine of last clear chance
as between the defendants, since the case at bar is not a suit between the
owners and drivers of the colliding vehicles but a suit brought by the heirs of
the deceased passengers against both owners and drivers of the colliding
vehicles. Therefore, the respondent court erred in absolving the owner and
driver of the cargo truck from liability.

LARA vs. VALENCIA

Facts: The deceased was an inspector of the Bureau of Forestry

stationed in Davao. The defendant is engaged in the business of exporting
logs from his lumber concession in Cotabato. Lara went to said concession
upon instructions of his chief to classify the logs of defendant which were
about to be loaded on a ship anchored in the port of Parang. Lara boarded
with several others a pick-up bound for Davao and were seated at the back
on an improvised bench. Lara accidentally fell from the pick-up and as a
result he suffered serious injuries which lead to his death.

Issue: Whether or not the respondent failed to exercise the ordinary

diligence required?
Held: Yes. The owner and driver of a vehicle owes to accommodation
passengers or invited guests merely the duty to exercise reasonable care so
that they may be transported safely to their destination. Thus, "The rule is
established by weight of authority that the owner or operator of an
automobile owes the duty to an invited guest to exercise reasonable care in
its operation, and not unreasonably to expose him to danger and injury by
increasing the hazard of travel. The owner of the vehicle in the case at bar is
only required to observe ordinary care, and is not in duty bound to exercise
extraordinary diligence as required by our law.

A passenger must observe the diligence of a father of a family to avoid injury

to himself which means that if the injury to the passenger has been
proximately caused by his own negligence, the carrier cannot be held liable.

NECESSITO vs. PARAS

Facts: Severina Garces and her one-year old son boarded passenger
auto truck of the Philippine Rabbit Bus Lines. The truck entered a wooden
bridge, but the front wheels swerved to the right; the driver lost control, and
after wrecking the bridge's wooden rails, the truck fell on its right side into a
creek where water was breast deep. The mother, Severina Garces, was
drowned; the son,the truck fell on its right side into a creek where water was
breast deep. The mother, Severina Garces, was drowned; the son sustained
injuries.

Issue: Whether or not the carrier is liable

Held: While the carrier is not an insurer of the safety of the passengers, it
should nevertheless be held to answer for the laws its equipment if such
flaws were at all discoverable. In this connection, the manufacturer of the
defective appliance is considered in law the agent of the carrier, and the
good repute of the manufacturer will not relieve the carrier from liability. The
rationale of the carrier's liability is the fact that the passenger has no privity
with the manufacturer of the defective equipment; hence, he has no remedy
against him, while the carrier usually has.

JAPAN AIRLINES vs. CA

Facts: Private respondents boarded the JAL flights to Manila with a stop
over at Narita Japan at the airlines' expense. Upon arrival at Narita private
respondents were billeted at Hotel Nikko Narita for the night. The next day,
private respondents went to the airport to take their flight to Manila.
However, due to the Mt. Pinatubo eruption rendered NAIA inaccessible to
airline traffic. Hence, private respondents' trip to Manila was cancelled
indefinitely. JAL then booked another flight fort the passengers and again
answered for the hotel accommodations but still the succeeding flights were
cancelled.

Issue: Whether or not JAL was obligated to answer for the

accommodation expenses due to the force majeure.

Held: No, there is no question that when a party is unable to fulfill his
obligation because of "force majeure," the general rule is that he cannot be
held liable for damages for non-performance. Corollarily, when JAL was
prevented from resuming its flight to Manila due to the effects of Mt. Pinatubo
eruption, whatever losses or damages in the form of hotel and meal expenses
the stranded passengers incurred, cannot be charged to JAL. Yet it is
undeniable that JAL assumed the hotel expenses of respondents for their
unexpected overnight stay on June 15, 1991.
It has been held that airline passengers must take such risks incident to the
mode of travel. In this regard, adverse weather conditions or extreme
climatic changes are some of the perils involved in air travel, the
consequences of which the passenger must assume or expect.
While JAL was no longer required to defray private respondents' living
expenses during their stay in Narita on account of the fortuitous event, JAL
had the duty to make the necessary arrangements to transport private
respondents on the first available connecting flight to Manila. Petitioner JAL
reneged on its obligation to look after the comfort and convenience of its
passengers when it declassified private respondents from "transit
passengers" to "new passengers" as a result of which private respondents
were obliged to make the necessary arrangements themselves for the next
flight to Manila.

LAYUGAN vs. IAC

Facts: Pedro T. Layugan filed an action for damages against Godofredo

Isidro, alleging that while at Baretbet, Bagabag, Nueva Vizcaya, the Plaintiff
and a companion were repairing the tire of their cargo truck which was
parked along the right side of the National Highway; that defendant's truck,
driven recklessly by Daniel Serrano bumped the plaintiff, that as a result,
plaintiff was injured and hospitalized.
Defendant countered that the plaintiff was merely a bystander, not a
truck helper being a brother-in-law of the driver of said truck and hence must
suffer the damages. The trial court decided in favor of the plaintiff, which was
reversed by the CA, hence the present petition.

Issue: W/N defendant is absolved by virtue of the doctrine of res ipsa

loquitur.
Held: No. Res ipsa loquitur is a doctrine which states thus: "Where the thing
which causes injury is shown to be under the management of the defendant,
and the accident is such as in the ordinary course of things does not happen
if those who have the management use proper care, it affords reasonable
evidence, in the absence of an explanation by the defendant, that the
accident arose from want of care.
It is clear that the driver did not know his responsibilities because he
apparently did not check his vehicle before he took it on the road. If he did he
could have discovered earlier that the brake fluid pipe on the right was cut,
and could have repaired it and thus the accident could have been avoided.
Moreover, to our mind, the fact that the private respondent used to instruct
his driver to be careful in his driving, that the driver was licensed, and the
fact that he had no record of any accident, as found by the respondent court,
are not sufficient to destroy the finding of negligence of the Regional Trial
Court given the facts established at the trial The private respondent or his
mechanic, who must be competent, should have conducted a thorough
inspection of his vehicle before allowing his driver to drive it. In the light of
the circumstances obtaining in the case, we hold that Isidro failed to prove
that the diligence of a good father of a family in the supervision of his
employees which would exculpate him from solidary liability with his driver to
the petitioner.
Respondent Isidro posits that any immobile object along the highway,
like a parked truck, poses serious danger to a moving vehicle which has the
right to be on the highway. He argues that since the parked cargo truck in
this case was a threat to life and limb and property, it was incumbent upon
the driver as well as the petitioner, who claims to be a helper of the truck
driver, to exercise extreme care so that the motorist negotiating the road
would be properly forewarned of the peril of a parked vehicle. Isidro submits
that the burden of proving that care and diligence were observed is shifted to
the petitioner, for, as previously claimed, his (Isidro's) Isuzu truck had a right
to be on the road, while the immobile cargo truck had no business, so to
speak, to be there. Likewise, Isidro proffers that the petitioner must show to
the satisfaction of a reasonable mind that the driver and he (petitioner)
himself, provided an early warning device, like that required by law, or, by
some other adequate means that would properly forewarn vehicles of the
impending danger that the parked vehicle posed considering the time, place,
and other peculiar circumstances of the occasion. Absent such proof of care,
as in the case at bar, Isidro concludes, would, under the doctrine of Res ipsa
loquitur, evoke the presumption of negligence on the part of the driver of the
parked cargo truck as well as his helper, the petitioner herein, who was fixing
the flat tire of the said truck.
Respondent Isidro's contention is untenable.

LA MALLORCA vs. DE JESUS

Facts: Plaintiffs husband and wife, together with their minor children,
boarded a La Mallorca bus. Upon arrival at their destination, plaintiffs and
their children alighted from the bus and the father led them to a shaded spot
about 5 meters away from the vehicle. The father returned to the bus to get a
piece of baggage which was not unloaded. He was followed by her daughter
Raquel. While the father was still on the running board awaiting for the
conductor to give his baggage, the bus started to run so that the father had
to jump. Raquel, who was near the bus, was run over and killed.
The Lower Court rendered judgment for the plaintiff which was
affirmed by CA, holding La Mallorca liable for quasi-delict. La Mallorca
contended that when the child was killed, she was no longer a passenger and
therefore the contract of carriage had terminated.

Issue: Whether or not the deceased is considered to be still a passenger of

the bus to which the petitioner could be held liable.

Held: Yes. It is a recognized rule that the relation between carrier and
passengers does not cease at the moment the passenger alights from the
carrier’s premises, to be determined from the circumstances. In this case,
there was no utmost diligence. Firstly, the driver, although stopping the bus,
did not put off the engine. Secondly, he started to run the bus even before
the bus conductor gave him the signal and while the latter was unloading
cargo. Here the presence of said passengers near the bus was not
unreasonable and the duration of responsibility still exists.

ABOITIZ SHIPPING CORPORATION vs. CA

Facts: Anacleto Viana boarded the vessel owned by defendant ABOITIZ, at

the port at San Jose, Occidental Mindoro, bound for Manila. Said vessel
arrived at Pier 4, North Harbor, Manila, and the passengers therein
disembarked, a gangplank having been provided connecting the side of the
vessel to the pier. Instead of using said gangplank Anacleto Viana
disembarked on the third deck which was on the level with the pier. After said
vessel had landed, the Pioneer Stevedoring Corporation took over the
exclusive control of the cargoes loaded on said vessel pursuant to the
Memorandum of Agreement between the third party defendant Pioneer
Stevedoring Corporation and defendant Aboitiz. The crane owned by the third
party defendant and operated by its crane operator Alejo Figueroa was
placed alongside the vessel and one hour after the passengers of said vessel
had disembarked, it started operation by unloading the cargoes from said
vessel. While the crane was being operated, Anacleto Viana who had already
disembarked from said vessel obviously remembering that some of his
cargoes were still loaded in the vessel, went back to the vessel, and it was
while he was pointing to the crew of the said vessel to the place where his
cargoes were loaded that the crane hit him, pinning him between the side of
the vessel and the crane. He was thereafter brought to the hospital where he
later died. Private respondents Vianas filed a complaint for damages against
Aboitiz for breach of contract of carriage. Aboitiz denied responsibility
contending that at the time of the accident, the vessel was completely under
the control of Pioneer as the which handled the unloading of cargoes from the
vessel of Aboitiz. It is also averred that since the crane operator was not an
employee of Aboitiz, the latter cannot be held liable under the fellow-servant
rule. Judgment is rendered in favor of the plantiffs. The trial court absolved
Pioneer from liability for failure of the Vianas and Aboitiz to preponderantly
established a case of negligence against the crane operator which the court
ruled is never presumed. Aboitiz appealed the same to respondent Court of
Appeals which affirmed the findings of of the trial court except as to the
amount of damages awarded to the Vianas. Hence the instant petition.

Issue: Whether or not the responsibility of Aboitiz to the victim ceased when
it disembarked from the vessel.

Held: No. The rule is that the relation of carrier and passenger continues
until the passenger has been landed at the port of destination and has left
the vessel owner's dock or premises. Once created, the relationship will not
ordinarily terminate until the passenger has, after reaching his destination,
safely alighted from the carrier's conveyance or had a reasonable opportunity
to leave the carrier's premises. All persons who remain on the premises a
reasonable time after leaving the conveyance are to be deemed passengers,
and what is a reasonable time or a reasonable delay within this rule is to be
determined from all the circumstances, and includes a reasonable time to see
after his baggage and prepare for his departure. The carrier-passenger
relationship is not terminated merely by the fact that the person transported
has been carried to his destination if, for example, such person remains in
the carrier's premises to claim his baggage.
When the accident occurred, the victim was in the act of unloading his
cargoes, which he had every right to do, from petitioner's vessel. Even if he
had already disembarked an hour earlier, his presence in petitioner's
premises was not without cause. The victim had to claim his baggage which
was possible only one hour after the vessel arrived since it was admittedly
standard procedure in the case of petitioner's vessels that the unloading
operations shall start only after that time. Consequently, under the foregoing
circumstances, the victim Anacleto Viana is still deemed a passenger of said
carrier at the time of his tragic death.
As found by the Court of Appeals, the evidence does not show that
there was a cordon of drums around the perimeter of the crane, as claimed
by petitioner. It also adverted to the fact that the alleged presence of visible
warning signs in the vicinity was disputable and not indubitably established.
Thus, we are not inclined to accept petitioner's explanation that the victim
and other passengers were sufficiently warned that merely venturing into the
area in question was fraught with serious peril. Hence, Aboitiz is negligent.
Pioneer had taken the necessary safeguards insofar as its unloading
operations were concerned, a fact which appears to have been accepted by
the plaintiff therein by not impleading Pioneer as a defendant, and likewise
inceptively by Aboitiz by filing its third-party complaint only after ten months
from the institution of the suit against it. Parenthetically, Pioneer is not within
the ambit of the rule on extraordinary diligence required of, and the
corresponding presumption of negligence foisted on, common carriers like
Aboitiz.
 MALLARI SR. vs. CA

Facts: The passenger jeepney driven by petitioner Alfredo Mallari Jr. and
owned by his co-petitioner Alfredo Mallari Sr. collided with the delivery van of
respondent Bulletin along the National Highway in Barangay San Pablo,
Dinalupihan, Bataan. The impact caused the jeepney to turn around and fall
on its left side resulting in injuries to its passengers one of whom was Israel
Reyes who eventually died due to the gravity of his injuries. The widow of the
victim, filed a complaint for damages against petitioners and also against
BULLETIN, its driver Felix Angeles, and the N.V. Netherlands Insurance
Company. The trial court found that the proximate cause of the collision was
the negligence of Felix Angeles, driver of the Bulletin delivery van,
considering the fact that the left front portion of the delivery truck driven by
Felix Angeles hit and bumped the left rear portion of the passenger jeepney
driven by Alfredo Mallari Jr. Hence, the trial court held that BULLETIN and
Felix Angeles are jointly and severally liable. It also dismissed the complaint
against the other defendants Alfredo Mallari Sr. and Alfredo Mallari Jr. On
appeal the Court of Appeals modified the decision of the trial court and found
no negligence on the part of Angeles and consequently of his employer,
respondent BULLETIN. Instead, the appellate court ruled that the collision was
caused by the sole negligence of petitioner Alfredo Mallari Jr. who admitted
that immediately before the collision and after he rounded a curve on the
highway, he overtook a Fiera which had stopped on his lane and that he had
seen the van driven by Angeles before overtaking the Fiera. Hence this
petition.

Issue: Whether or not petitioners are negligent.

Held: Yes. The Court of Appeals correctly found, that the collision occurred
immediately after petitioner Mallari Jr. overtook a vehicle in front of it while
traversing a curve on the highway. This act of overtaking was in clear
violation of Sec. 41, pars. (a) and (b), of RA 4136 as amended, otherwise
known as The Land Transportation and Traffic Code.
Sec. 41. Restrictions on overtaking and passing.
(a) The driver of a vehicle shall not drive to the left side of the center line of a
highway in overtaking or passing another vehicle proceeding in the same direction,
unless such left side is clearly visible and is free of oncoming traffic for a sufficient
distance ahead to permit such overtaking or passing to be made in safety.
(b) The driver of a vehicle shall not overtake or pass another vehicle proceeding in
the same direction when approaching the crest of a grade, nor upon a curve in the
highway, where the driver's view along the highway is obstructed within a distance of
five hundred feet ahead except on a highway having two or more lanes for
movement of traffic in one direction where the driver of a vehicle may overtake or
pass another vehicle: Provided That on a highway, within a business or residential
district, having two or more lanes for movement of traffic in one direction, the driver
of a vehicle may overtake or pass another vehicle on the right.

The rule is settled that a driver abandoning his proper lane for the
purpose of overtaking another vehicle in an ordinary situation has the duty to
see to it that the road is clear and not to proceed if he cannot do so in safety.
When a motor vehicle is approaching or rounding a curve, there is special
necessity for keeping to the right side of the road and the driver does not
have the right to drive on the left hand side relying upon having time to turn
to the right if a car approaching from the opposite direction comes into view.
In the instant case, by his own admission, petitioner Mallari Jr. already
saw that the BULLETIN delivery van was coming from the opposite direction
and failing to consider the speed thereof since it was still dark at 5:00 o'clock
in the morning mindlessly occupied the left lane and overtook two vehicles in
front of it at a curve in the highway. Clearly, the proximate cause of the
collision resulting in the death of Israel Reyes, a passenger of the jeepney,
was the sole negligence of the driver of the passenger jeepney, petitioner
Alfredo Mallari Jr., who recklessly operated and drove his jeepney in a lane
where overtaking was not allowed by traffic rules. Under Art. 2185 of the Civil
Code, unless there is proof to the contrary, it is presumed that a person
driving a motor vehicle has been negligent if at the time of the mishap he
was violating a traffic regulation. As found by the appellate court, petitioners
failed to present satisfactory evidence to overcome this legal presumption.
Under Art. 1755 of the Civil Code, a common carrier is bound to carry
the passengers safely as far as human care and foresight can provide using
the utmost diligence of very cautious persons with due regard for all the
circumstances. Moreover, under Art. 1756 of the Civil Code, in case of death
or injuries to passengers, a common carrier is presumed to have been at fault
or to have acted negligently, unless it proves that it observed extraordinary
diligence. Further, pursuant to Art. 1759 of the same Code, it is liable for the
death of or injuries to passengers through the negligence or willful acts of the
former's employees. This liability of the common carrier does not cease upon
proof that it exercised all the diligence of a good father of a family in the
selection of its employees. Clearly, by the contract of carriage, the carrier
jeepney owned by Mallari Sr. assumed the express obligation to transport the
passengers to their destination safely and to observe extraordinary diligence
with due regard for all the circumstances, and any injury or death that might
be suffered by its passengers is right away attributable to the fault or
negligence of the carrier.

BAYASEN vs. CA

Facts: Petitioner was charged of Homicide Thru Reckless Imprudence, being

then the driver and person in-charge of Rural health Unit Jeep, drove along
Suyo Municipal Road, Sagada, Mountain Province in a negligent, careless and
imprudent manner. Said jeep fell over a precipice in the abovementioned
place causing thereby the death of Elena Awichen. After trial, the petitioner
was found guilty of the charge. The decision was affirmed in CA, hence the
instant petition.

Issue: Whether or not petitioner is entitled to acquittal on the ground that

the finding of the Court of Appeals that the proximate cause of the death of
Awichen was the petitioner's "negligence in driving at an unreasonable
speed" is openly contrary to the evidence of the prosecution.

Held: Yes. It is obvious that the proximate cause of the tragedy was the
skidding of the rear wheels of the jeep and not the "unreasonable speed" of
the petitioner because there is no evidence on record to prove or support the
finding that the petitioner was driving at "an unreasonable speed".
It is a well known physical tact that cars may skid on greasy or slippery
roads, as in the instant case, without fault on account of the manner of
handling the car. Skidding means partial or complete loss of control of the car
under circumstances not necessarily implying negligence. It may occur
without fault.
No negligence as a matter of law can, therefore, be charged to the
petitioner. In fact, the moment he felt that the rear wheels of the jeep
skidded, he promptly drove it to the left hand side of the road, parallel to the
slope of the mountain, because as he said, he wanted to play safe and avoid
the embankment.
Under the particular circumstances of the instant case, the petitioner-
driver who skidded could not be regarded as negligent, the skidding being an
unforeseen event, so that the petitioner had a valid excuse for his departure
from his regular course. The negligence of the petitioner not having been
sufficiently established, his guilt of the crime charged has not been proven
beyond reasonable doubt. He is, therefore, entitled to acquittal.

CERVANTES vs. CA

Facts: PAL issued to the petitioner a round trip plane ticket for Manila-
Honolulu-Los Angeles-Honolulu-Manila, which ticket expressly provided an
expiry of date of one year from issuance, i.e., until March 27, 1990. On March
23, 1990, four days before the expiry date of subject ticket, the petitioner
used it. Upon his arrival in Los Angeles on the same day, he immediately
booked his Los Angeles-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, and considering that he would be
there on April 2, 1990, petitioner made arrangements with PAL for him to
board the flight In San Francisco instead of boarding in Los Angeles. On April
2, 1990, when the petitioner 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: "TICKET NOT ACCEPTED DUE EXPIRATION OF
VALIDITY." Petitioner Cervantes filed a Complaint for Damages, for breach of
contract of carriage. But the said complaint was dismissed for lack of merit.
On appeal, the lower court’s decision was upheld, hence the instant petition.

Issue: Whether or not the act of the PAL agents in confirming subject ticket
extended the period of validity of petitioner's ticket.

Held: No. Since the PAL agents are not privy to the said Agreement and
petitioner 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, according to the Court of Appeals, acted without authority when they
confirmed the flights of the petitioner. Under Article 1989 of the New Civil
Code, 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 third person (herein petitioner) 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 third 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.
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. Petitioner 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 the petitioner. What the
employees of PAL did was one of simple negligence. No injury resulted on the
part of petitioner because he had a back-up ticket should PAL refuse to
accommodate him with the use of subject ticket. Neither can the claim for
exemplary damages be upheld. Such kind of damages is imposed by way of
example or correction for the public good, and the existence of bad faith is
established.

CALALAS vs. CA

Facts: Private respondent Eliza Sunga, then a college freshman majoring in

Physical Education at the Siliman University, took a passenger jeepney owned
and operated by petitioner Vicente 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. 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 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. Hence, this
petition. 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: Should be petitioner be absolved if his contentions are considered?

Held: No. There is no basis for the contention that the ruling in Civil Case No.
3490, finding Salva and his driver Verena liable for the damage to petitioner's
jeepney, should be binding on Sunga. 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.
Insofar as contracts of carriage are concerned, some aspects regulated by
the Civil Code are those respecting the diligence required of common carriers
with regard to the safety of passengers as well as the presumption of
negligence in cases of death or injury to passengers.
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.
Now, did the driver of jeepney carry Sunga "safely as far as human
care and foresight could provide, using the utmost diligence of very cautious
persons, with due regard for all the circumstances" as required by Art. 1755?
We do not think so. 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. The
petitioner's driver took in more passengers than the allowed seating capacity
of the jeepney. These are violations of the Land Transportation and Traffic
Code. Petitioner should have foreseen the danger of parking his jeepney with
its body protruding two meters into the highway.
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.

PESTAÑO vs. SUMAYANG

Facts: Ananias Sumayang was riding a motorcycle along the national

highway in Ilihan, Tabagon, Cebu. Riding with him was his friend Manuel
Romagos. As they came upon a junction where the highway connected with
the road leading to Tabagon, they were hit by a passenger bus driven by
Pestaño and owned by Metro Cebu which had tried to overtake them, sending
the motorcycle and its passengers hurtling upon the pavement. Apart from
the institution of criminal charges against Pestaño, Respondent-heirs, filed
this civil action for damages against petitioners. The cases were consolidated.
The lower court found petitioners liable. Said decision was affirmed by CA,
hence this petition.

Issue: Whether or not petitioner Pestaño was negligent

Held: Yes. Petitioners contend that Pestaño was not under any obligation to
slow down when he overtook the motorcycle, because the deceased had
given way to him upon hearing the bus horn. Seeing that the left side of the
road was clearly visible and free of oncoming traffic, Pestaño accelerated his
speed to pass the motorcycle. Having given way to the bus, the motorcycle
driver should have slowed down until he had been overtaken. They further
contend that the motorcycle was not in the middle of the road nearest to the
junction but was on the inner lane. This explains why the damages on the bus
were all on the right side - the right end of the bumper and the right portion
of the radiator grill were bent and dented. SC disagreed with this contention
and considered the findings of CA, based on the testimony of the witnesses,
wherein, it was found out that as the two vehicles approached the junction,
the victim raised his left arm to signal that he was turning left to Tabagon,
but that the latter and his companion were thrown off the motorcycle after it
was bumped by the overspeeding bus. As a professional driver operating a
public transport bus, Pestaño should have anticipated that overtaking at a
junction was a perilous maneuver and should thus have exercised extreme
caution.
Petitioners also aver that the CA was wrong in attributing the accident
to a faulty speedometer and in implying that the accident could have been
avoided had this instrument been properly functioning. This contention has
no factual basis. Under Articles 2180 and 2176 of the Civil Code, owners and
managers are responsible for damages caused by their employees. When an
injury is caused by the negligence of a servant or an employee, the master or
employer is presumed to be negligent either in the selection or in the
supervision of that employee. This presumption may be overcome only by
satisfactorily showing that the employer exercised the care and the diligence
of a good father of a family in the selection and the supervision of its
employee.

GILLACO vs. MANILA RAILROAD COMPANY

Facts: Lieut. Tomas Gillaco, husband of the plaintiff, was a passenger in the
early morning train of the Manila Railroad Company from Calamba, Laguna to
Manila. When the train reached the Paco Railroad station, Emilio Devesa, a
train guard of the Manila Railroad Company happened to be in said station
waiting for the same train which would take him to Tutuban Station, where he
was going to report for duty. Emilio Devesa had a long standing personal
grudge against Tomas Gillaco, because of this, Devesa shot Gillaco with the
carbine furnished to him by the Manila Railroad Company for his use as such
train guard, upon seeing him inside the train coach. Tomas died. Devesa was
convicted of homicide. A complaint for damages was filed by the victim’s
widow. Damages were awarded to the plaintiff, hence the instant petition.
Appellant's contention is that, no liability attaches to it as employer of the
Emilio Devesa because the crime was not committed while the slayer was in
the actual performance of his ordinary duties and service and that no
negligence on appellant's part was shown.

Issue: Whether or not appellant could be held liable for the acts of its
employee.

Held: No. While a passenger is entitled to protection from personal violence

by the carrier or its agents or employees, since the contract of transportation
obligates the carrier to transport a passenger safely to his destination, the
responsibility of the carrier extends only to those acts that the carrier could
foresee or avoid through the exercise of the degree of care and diligence
required of it. In the present case, the act of the train guard of the Manila
Railroad Company in shooting the passenger (because of a personal grudge
nurtured against the latter since the Japanese occupation) was entirely
unforseeable by the Manila Railroad Co. The latter had no means to ascertain
or anticipate that the two would meet, nor could it reasonably forsee every
personal rancor that might exist between each one of its many employees
and any one of the thousands of eventual passengers riding in its trains. The
shooting in question was therefore "caso fortuito" within the definition of Art.
1105 of the old Civil Code (which is the law applicable), being both
unforeseeable and inevitable under the given circumstances; and pursuant to
established doctrine, the resulting breach of the company's contract of safe
carriage with the deceased was excused thereby.

MARANAN vs. PEREZ

Facts: Rogelio Corachea, on October 18, 1960, was a passenger in a taxicab
owned and operated by Pascual Perez when he was stabbed and killed by the
driver, Simeon Valenzuela. Valenzuela was prosecuted for homicide in the
Court of First Instance of Batangas and was found guilty. While appeal was
pending in the Court of Appeals, Antonia Maranan, Rogelio's mother, filed an
action to recover damages. The court decided in plaintiff’s favor. Hence the
instant petition.

Issue: Whether or not defendant- operators could be held liable for damages

Held: Yes. Defendant-appellant relies solely on the ruling enunciated in

Gillaco v. Manila Railroad Co., 97 Phil. 884, that the carrier is under no
absolute liability for assaults of its employees upon the passengers. The
attendant facts and controlling law of that case and the one at bar are very
different however. In the Gillaco case, the passenger was killed outside the
scope and the course of duty of the guilty employee. Now here, the killing
was perpetrated by the driver of the very cab transporting the passenger, in
whose hands the carrier had entrusted the duty of executing the contract of
carriage. In other words, unlike the Gillaco case, the killing of the passenger
here took place in the course of duty of the guilty employee and when the
employee was acting within the scope of his duties.
Moreover, the Gillaco case was decided under the provisions of the
Civil Code of 1889 which, unlike the present Civil Code, did not impose upon
common carriers absolute liability for the safety of passengers against wilful
assaults or negligent acts committed by their employees. The death of the
passenger in the Gillaco case was truly a fortuitous event which exempted
the carrier from liability.
The Civil Code provisions on the subject of Common Carriers are new
and were taken from Anglo-American Law. There, the basis of the carrier's
liability for assaults on passengers committed by its drivers rests either on (1)
the doctrine of respondeat superior or (2) the principle that it is the carrier's
implied duty to transport the passenger safely.
Under the first, which is the minority view, the carrier is liable only
when the act of the employee is within the scope of his authority and duty. It
is not sufficient that the act be within the course of employment only. Under
the second view, upheld by the majority and also by the later cases, it is
enough that the assault happens within the course of the employee's duty. It
is no defense for the carrier that the act was done in excess of authority or in
disobedience of the carrier's orders. The carrier's liability here is absolute in
the sense that it practically secures the passengers from assaults committed
by its own employees. As can be gleaned from Art. 1759, the Civil Code of the
Philippines evidently follows the rule based on the second view. At least three
very cogent reasons underlie this rule. (1) the special undertaking of the
carrier requires that it furnish its passenger that full measure of protection
afforded by the exercise of the high degree of care prescribed by the law,
inter alia from violence and insults at the hands of strangers and other
passengers, but above all, from the acts of the carrier's own servants
charged with the passenger's safety; (2) said liability of the carrier for the
servant's violation of duty to passengers, is the result of the formers
confiding in the servant's hands the performance of his contract to safely
transport the passenger, delegating therewith the duty of protecting the
passenger with the utmost care prescribed by law; and (3) as between the
carrier and the passenger, the former must bear the risk of wrongful acts or
negligence of the carrier's employees against passengers, since it, and not
the passengers, has power to select and remove them.
Accordingly, it is the carrier's strict obligation to select its drivers and
similar employees with due regard not only to their technical competence
and physical ability, but also, no less important, to their total personality,
including their patterns of behavior, moral fibers, and social attitude.
Applying this stringent norm to the facts in this case, therefore, the
lower court rightly adjudged the defendant carrier liable pursuant to Art.
1759 of the Civil Code. The dismissal of the claim against the defendant
driver was also correct. Plaintiff's action was predicated on breach of contract
of carriage7 and the cab driver was not a party thereto. His civil liability is
covered in the criminal case wherein he was convicted by final judgment.

PHILIPPINE NATIONAL RAILWAYS vs. CA

Facts: Winifredo Tupang, husband of plaintiff, boarded a train of appellant at

Libmanan, Camarines Sur, as a paying passenger bound for Manila. Due to
some mechanical defect, the train stopped at Sipocot, Camarines Sur, for
repairs. Unfortunately, upon passing Iyam Bridge at Lucena, Quezon,
Winifredo Tupang fell off the train resulting in his death.The train did not stop
despite the alarm raised by the other passengers that somebody fell from the
train. Upon complaint filed by Rosario the lower court after trial, held PNR
liable for damages for breach of contract of carriage. The decision was
sustained by the appellate court hence the present petition, wherein PNR
raised for the first time, as a defense, the doctrine of state immunity from
suit. It alleged that it is a mere agency of the Philippine government without
distinct or separate personality of its own, and that its funds are
governmental in character and, therefore, not subject to garnishment or
execution.

Issue: Whether or not PNR can raise the defense of doctrine of state
immunity from suit.

Held: No. The PNR was created under Rep. Act 4156, as amended. Section 4
of the said Act provides:
The Philippine national Railways shall have the following powers:
a. To do all such other things and to transact all such business directly or
indirectly necessary, incidental or conducive to the attainment of the purpose
of the corporation; and
b. Generally, to exercise all powers of a corporation under the Corporation
Law.
Under the foregoing section, the PNR has all the powers, the
characteristics and attributes of a corporation under the Corporation Law.
There can be no question then that the PNR may sue and be sued and may
be subjected to court processes just like any other corporation.
Now, is PNR negligent? Yes. The appellate court found, the petitioner
does not deny, that the train boarded by the deceased Winifredo Tupang was
so over-crowded that he and many other passengers had no choice but to sit
on the open platforms between the coaches of the train. It is likewise
undisputed that the train did not even slow down when it approached the
Iyam Bridge which was under repair at the time, Neither did the train stop,
despite the alarm raised by other passengers that a person had fallen off the
train at lyam Bridge. The petitioner has the obligation to transport its
passengers to their destinations and to observe extraordinary diligence in
doing so. Death or any injury suffered by any of its passengers gives rise to
the presumption that it was negligent in the performance of its obligation
under the contract of carriage. Thus, as correctly ruled by the respondent
court, the petitioner failed to overthrow such presumption of negligence with
clear and convincing evidence.
But while petitioner failed to exercise extraordinary diligence as
required by law, it appears that the deceased was chargeable with
contributory negligence. Since he opted to sit on the open platform between
the coaches of the train, he should have held tightly and tenaciously on the
upright metal bar found at the side of said platform to avoid falling off from
the speeding train. Such contributory negligence, while not exempting the
PNR from liability, nevertheless justified the deletion of the amount
adjudicated as moral damages and exemplary damages. Exemplary damages
may be allowed only in cases where the defendant acted in a wanton,
fraudulent, reckless, oppressive or malevolent manner.

ISAAC vs. A.L. AMMEN TRANS. CO.

Facts: Plaintiff boarded defendant’s bus as paying passenger from Albay.

The bus collided with a pick-up truck which was coming from opposite
direction trying to swerve from a pile of gravel. As a result, his left arm was
completely severed. Plaintiff chose to hold defendant liable on its contractual
obligation. Plaintiff brought an action for damages which the lower court
dismissed holding the driver of the pick-up car negligent and not that of the
bus.

Issue: Whether or not the common carrier is liable.

Held: The bus was running at a moderate speed. The driver of the bus upon
the speeding pick-up truck swerved the bus to the very extreme right of the
road. Said driver would not move the bus further without endangering the
safety of his passengers. Notwithstanding all these efforts, the rear left side
was hit. This finding of the lower court was sustained.
Also, of the carrier’s employee is confronted with a sudden emergency,
he is not held to the same degree of care he would otherwise, he required in
the absence of such emergency.
By placing his left arm on the window, he is guilty of contributory
negligence cannot relieve the carrier but can only reduce its liability (ART.
1762), this is a circumstance which further militates against plaintiff’s
position. It is a prevailing rule that it is negligence per se for passengers on a
railroad to protrude any part of his body and that no recovery can be had for
an injury.”

BACHELOR EXPRESS, vs.CA

Facts: The bus owned by Petitioners came from Davao City on its way to
Cagayan de Oro City passing Butuan City. While at Tabon-Tabon, Butuan City,
the bus picked up a passenger, that about fifteen minutes later, a passenger
at the rear portion suddenly stabbed a PC soldier which caused commotion
and panic among the passengers. When the bus stopped, passengers
Ornominio Beter and Narcisa Rautraut were found lying down the road, the
former already dead as a result of head injuries and the latter also suffering
from severe injuries which caused her death later. The passenger assailant
alighted from the bus and ran toward the bushes but was killed by the police.
Thereafter, the heirs of Ornominio Beter and Narcisa Rautraut, private
respondents herein filed a complaint for "sum of money" against Bachelor
Express, Inc., its alleged owner and the driver Rivera. The lower court
dismissed the complaint. CA reversed the decision, hence the instant
petition.

Issue: Whether or not petitioner is negligent.

Held: Yes. The liability, if any, of the petitioners is anchored on culpa

contractual or breach of contract of carriage. Art. 1732, 1733, 1755 and 1756
are applicable. There is no question that Bachelor is a common carrier.
Hence, Bachelor 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 a due regard for all the circumstances. In the case at bar,
Ornominio Beter and Narcisa Rautraut were passengers of a bus belonging to
Bachelor and, while passengers of the bus, suffered injuries which caused
their death. Consequently, pursuant to Article 1756 of the Civil Code,
Bachelor is presumed to have acted negligently unless it can prove that it
had observed extraordinary diligence in accordance with Articles 1733 and
1755 of the New Civil Code.
Bachelor denies liability for the death of Beter and Rautraut in that
their death was caused by a third person who was beyond its control and
supervision. In effect, the petitioner, in order to overcome the presumption of
fault or negligence under the law, states that the vehicular incident resulting
in the death of passengers Beter and Rautraut was caused by force majeure
or caso fortuito over which the common carrier did not have any control. The
running amuck of the passenger was the proximate cause of the incident as it
triggered off a commotion and panic among the passengers such that the
passengers started running to the sole exit shoving each other resulting in
the falling off the bus by passengers Beter and Rautraut causing them fatal
injuries. The sudden act of the passenger who stabbed another passenger in
the bus is within the context of force majeure. However, in order that a
common carrier may be absolved from liability in case of force majeure, it is
not enough that the accident was caused by force majeure. The common
carrier must still prove that it was not negligent in causing the injuries
resulting from such accident. In this case, Bachelor was negligent.
Considering the factual findings of the Court of Appeals-the bus driver
did not immediately stop the bus at the height of the commotion; the bus
was speeding from a full stop; the victims fell from the bus door when it was
opened or gave way while the bus was still running; the conductor panicked
and blew his whistle after people had already fallen off the bus; and the bus
was not properly equipped with doors in accordance with law-it is clear that
the petitioners have failed to overcome the presumption of fault and
negligence found in the law governing common carriers. The petitioners'
argument that the petitioners "are not insurers of their passengers" deserves
no merit in view of the failure of the petitioners to prove that the deaths of
the two passengers were exclusively due to force majeure and not to the
failure of the petitioners to observe extraordinary diligence in transporting
safely the passengers to their destinations as warranted by law.

FORTUNE EXPRESS, INC., vs.CA

Facts: A bus of petitioner figured in an accident with a jeepney in

Kauswagan, Lanao del Norter, resulting in the death of several passengers of
the jeepney, including two Maranaos. A constabulary agent investigated and
found out that the owner of the jeepney was a Maranao and that certain
Maranaos were planning to take revenge on the petitioner by burning some
of its buses. The operations manager of petitioner was advised to take
precautionary measures. Four days after the accident, three armed Maranaos
who pretended to be passengers seized a bus petitioner bound for Iligan City
and set it on fire. Atty. Talib Caorong, whose heirs are private respondents
herein was a passenger of the bus and was shot and killed during the
incident. The private respondents brought this suit for breach of contract of
carriage. Complaint was dismissed in the lower court but its decision was
reversed in CA, hence the instant petition, with petitioners contention that
the acts of the Maranaos is caso fortuito.

Issue: Was there breach of contract of carriage?

Held: Yes. Art. 1763 of the Civil Code provides that a common carrier is
responsible for injuries suffered by a passenger on account of wilfull acts of
other passengers, if the employees of the common carrier could have
prevented the act through the exercise of the diligence of a good father of a
family. In the present case, it is clear that because of the negligence of
petitioner's employees, the seizure of the bus by Mananggolo and his men
was made possible.
Despite warning by the Philippine Constabulary at Cagayan de Oro that
the Maranaos were planning to take revenge on the petitioner by burning
some of its buses and the assurance of petitioner's operation manager,
Diosdado Bravo, that the necessary precautions would be taken, petitioner
did nothing to protect the safety of its passengers. Had petitioner and its
employees been vigilant they would not have failed to see that the
malefactors had a large quantity of gasoline with them. Under the
circumstances, simple precautionary measures to protect the safety of
passengers, such as frisking passengers and inspecting their baggages,
preferably with non-intrusive gadgets such as metal detectors, before
allowing them on board could have been employed without violating the
passenger's constitutional rights.
Petitioner invokes the ruling in Pilapil v. Court of Appeals, and De
Guzman v. Court of Appeals, in support of its contention that the seizure of its
bus by the assailants constitutes force majeure. In Pilapil v. Court of Appeals,
it was held that a common carrier is not liable for failing to install window
grills on its buses to protect the passengers from injuries cause by rocks
hurled at the bus by lawless elements. On the other hand, in De Guzman v.
Court of Appeals, it was ruled that a common carriers is not responsible for
goods lost as a result of a robbery which is attended by grave or irresistable
threat, violence, or force.
It is clear that the cases of Pilapil and De Guzman do not apply to the
prensent case. Art. 1755 of the Civil Code provides that "a common carrier is
bound to carry the passengers as far as human care and foresight can
provide, using the utmost diligence of very cautious persons, with due regard
for all the circumstances." Thus, we held in Pilapil and De Guzman that the
respondents therein were not negligent in failing to take special precautions
against threats to the safety of passengers which could not be foreseen, such
as tortious or criminal acts of third persons. In the present case, this factor of
unforeseeability (the second requisite for an event to be considered force
majeure) is lacking. As already stated, despite the report of PC agent
Generalao that the Maranaos were planning to burn some of petitioner's
buses and the assurance of petitioner's operation manager (Diosdado Bravo)
that the necessary precautions would be taken, nothing was really done by
petitioner to protect the safety of passengers.
The petitioner contends that Atty. Caorong was guilty of contributory
negligence in returning to the bus to retrieve something. But Atty. Caorong
did not act recklessly. It should be pointed out that the intended targets of
the violence were petitioners and its employees, not its passengers. The
assailant's motive was to retaliate for the loss of life of two Maranaos as a
result of the collision between petitioner's bus and the jeepney in which the
two Maranaos were riding. Mananggolo, the leader of the group which had
hijacked the bus, ordered the passengers to get off the bus as they intended
to burn it and its driver. The armed men actually allowed Atty. Caorong to
retrieve something from the bus. What apparently angered them was his
attempt to help the driver of the bus by pleading for his life. He was playing
the role of the good Samaritan. Certainly, this act cannot be considered an
act of negligence, let alone recklessness.
 III. DAMAGES

A. Actual/Compensatory Damages

CARIAGA vs. LAGUNA TAYABAS BUS COMPANY

Facts: Edgardo Cariaga, a fourth-year medical student of the University of

Santos Tomas was a passenger in one of the buses of LTB, when it bumped
against the engine of a train passing by, when it reached that part of the
Poblacion of Bay, Laguna, where the national highway crossed a railroad
track. The front part of the body of the bus was wrecked, the driver of the bus
died, and many passengers including Edgardo were injured. The LTB paid the
sum of P16,964.45 for all the hospital, medical and miscellaneous expenses
incurred from June 18, 1952 to April 1953. From January 15, 1953 up to April
of the same year Edgardo stayed in a private house in Quezon City, the LTB
having agreed to give him a subsistence allowance of P10.00 daily during his
convalescence.
The present action was filed to recover from the LTB and the MRR Co.,
the total sum of P312,000.00 as actual, compensatory, moral and exemplary
damages, and for Edgardo’s parents, the sum of P18,000.00 in the same
concepts. The LTB disclaimed liability claiming that the accident was due to
the negligence of its co-defendant, the Manila Railroad Company, for not
providing a crossing bar at the point where the national highway crossed the
railway track, and for this reason filed the corresponding cross-claim against
the latter company to recover the total sum of P18,194.75 representing the
expenses paid to Edgardo. The Manila Railroad Company, in turn, denied
liability upon the complaint and cross-claim, alleging that it was the reckless
negligence of the bus driver that caused the accident. The lower court held
that it was the negligence of the bus driver that caused the accident and, as
a result, rendered judgment sentencing the LTB to pay Edgardo the sum of
P10,490.00 as compensatory damages, with interest at the legal rate from
the filing of the coinplaint, and dismissing the cross-claim against the Manila
Railroad Company. From this decision the Cariagas and the LTB appealed.The
Cariagas claim that the trial court erred: in awarding only P10,490.00 as
compensatory damages to Edgardo; in not awarding them actual and moral
damages, and in not sentencing appellant LTB to pay attorney's fees.

Issue: WON petitioners are entitled to an increase in compensatory

damages, and for actual and moral damages, as well as attorneys fees.

Held: The findings of the trial court was sustained. Firstly, the train whistle
had been sounded several times before it reached the crossing; secondly,
that another LTB bus which arrived at the crossing ahead of the one where
Edgardo was a passenger, paid heed to the warning and stopped before the
"crossing".
Upon the whole evidence on the matter, the lower court found that the
removal of the right frontal lobe of the brain of Edgardo reduced his
intelligence by about 50%; that due to the replacement of the right frontal
bone of his head with a tantalum plate Edgardo has to lead a quite and
retired life because "if the tantalum plate is pressed in or dented it would
cause his death." The impression one gathers from this evidence is that, as a
result of the physical injuries suffered by Edgardo Cariaga, he is now in a
helpless condition, virtually an invalid, both physically and mentally.
Appellant LTB admits that under Art. 2201 of the Civil Code the
damages for which the obligor, guilty of a breach of contract but who acted in
good faith, is liable shall be those that are the natural and probable
consequences of the breach and which the parties had foreseen or could
have reasonably foreseen at the time the obligation was constituted,
provided such damages, according to Art. 2199 of the same Code, have been
duly proved. Upon this premise it claims that only the actual damages
suffered by Edgardo consisting of medical, hospital and other expenses in the
total sum of P17,719.75 are within this category. We are of the opinion
however, that the income which Edgardo could earn if he should finish the
medical course and pass the corresponding board examinations must be
deemed to be within the same category because they could have reasonably
been foreseen by the parties at the time he boarded the bus.
Upon consideration of all the facts this Court is of the opinion, and so
holds, that the compensatory damages awarded to petitioner should be
increased to P25,000.00.The claim for moral damages and attorney's fees is
denied. Article 2219 of the Civil Code enumerates the instances when moral
damages may be covered and the case under consideration does not fall
under any one of them. The present action cannot come under Paragraph 2
of said article because it is not one of quasi-delict and cannot be considered
as such because of the pre-existing contractual relation between the Laguna
LTB and Edgardo. Neither could LTB be held liable to pay moral damages
under Article 2220 of the Civil Code on account of breach of its contract of
carriage because it did not act fraudulently or in bad faith. LTB had exercised
due diligence in the selection and supervision of its employees like the
drivers of its buses in connection with the discharge of their duties and so it
must be considered an obligor in good faith. Petitioner is not entitled to
recover attorney's fees, because this case does not fall under any of the
instances enumerated in Article 2208 of the Civil Code.

VILLA REY TRANSIT, INC. vs. CA

Facts: An Izuzu First Class passenger bus owned and operated by the
petitioner left Lingayen, Pangasinan, for Manila. Among its paying passengers
was the deceased, Policronio Quintos, Jr. When the vehicle was nearing the
Sadsaran Bridge on the national highway in barrio Sto. Domingo, municipality
of Minalin, Pampanga, it frontally hit the rear side of a bullcart filled with hay.
As a result the end of a bamboo pole placed on top of the hayload and tied to
the cart to hold it in place, hit the right side of the windshield of the bus. The
protruding end of the bamboo pole, about 8 feet long from the rear of the
bullcart, penetrated through the glass windshield and landed on the face of
deceased, which caused several wounds. Notwithstanding the medical
assistance, the Quintos died. The private respondents, brought this action
against petitioner for breach of the contract of carriage to recover the
aggregate sum of P63,750.00 as damages, including attorney's fees. Said
petitioner contended that the mishap was due to a fortuitous event, but this
pretense was rejected by the trial court and the Court of Appeals, both of
which found that the accident and the death of Policronio had been due to
the negligence of the bus driver. Hence the instant petition.

Issue: Did CA erred in its award of the damages to the heirs of Quintos?

Held: No. Petitioner maintains that the lower courts had erred in placing the
life expectancy of Quintos at 33-1/3, he being over 29 years of age at the
time of his demise and in not acting in accordance with Alcantara v. Surro in
which the damages were computed on a four year basis, despite the fact that
the victim therein was 39 years old, at the time of his death, and had a life
expectancy of 28.90 years. The case cited is not, however, controlling in the
one at bar. In the Alcantara case, none of the parties had questioned the
propriety of the four-year basis adopted by the trial court in making its award
of damages. Both parties appealed, but only as regards the amount thereof.
In addition, the case had not thereby laid down any rule on the length of time
to be used in the computation of damages. It even declared “that the
determination of the indemnity to be awarded to the heirs of a deceased
person has therefore no fixed basis. Much is left to the discretion of the court
considering the moral and material damages involved, and so it has been
said that there can be no exact or uniform rule for measuring the value of a
human life and the measure of damages cannot be arrived at by precise
mathematical calculation, but the amount recoverable depends on the
particular facts and circumstances of each case. The life expectancy of the
deceased or of the beneficiary, whichever is shorter, is an important factor.”
Thus, life expectancy is, not only relevant, but, also, an important
element in fixing the amount recoverable by private respondents herein.
Although it is not the sole element determinative of said amount, no cogent
reason has been given to warrant its disregard and the adoption, in the case
at bar, of a purely arbitrary standard, such as a four-year rule. In short, the
Court of Appeals has not erred in basing the computation of petitioner's
liability upon the life expectancy of Policronio Quintos, Jr.
With respect to the rate at which the damages shall be computed,
petitioner impugns the decision appealed from upon the ground that the
damages awarded therein will have to be paid now, whereas most of those
sought to be indemnified will be suffered years later. This argument is
basically true, and this is, perhaps, one of the reasons why the Alcantara case
points out the absence of a "fixed basis" for the ascertainment of the
damages recoverable in litigations like the one at bar. Just the same, the
force of the said argument of petitioner herein is offset by the fact that,
although payment of the award in the case at bar will have to take place
upon the finality of the decision therein, the liability of petitioner herein had
been fixed at the rate only of P2,184.00 a year, which is the annual salary of
Policronio Quintos, Jr. at the time of his death, as a young "training assistant"
in the Bacnotan Cement Industries, Inc. In other words, unlike the Alcantara
case, on which petitioner relies, the lower courts did not consider, in the
present case, Policronio's potentiality and capacity to increase his future
income. Indeed, upon the conclusion of his training period, he was supposed
to have a better job and be promoted from time to time, and, hence, to earn
more, if not considering the growing importance of trade, commerce and
industry and the concomitant rise in the income level of officers and
employees therein much more.

PAN AMERICAN WORLD AIRWAYS, INC. vs. IAC

Facts: Private respondent Teofista P. Tinitigan, filed a complaint against

petitioner for damages arising from defendant's alleged refusal to
accommodate her on Pan Am Flight No. 431 from Sto. Domingo, Republica
Dominica to San Juan, Puerto Rico notwithstanding the fact that she
possessed a confirmed plane ticket purchased from Pan Am’s Office at Sto.
Domingo and thus causing her to suffer mental anguish, serious anxiety,
besmirched reputation, wounded feelings and social humiliation She prayed
that she be awarded moral damages of P500,000.00, exemplary damages of
P200,000.00, attorney's fees of P100,000.00 and actual damages sustained
by her in the amount of US$1,546.15. Defendant denied that plaintiff was a
confirmed passenger since the ticket issued to her was on an open space
basis which meant that she could only be accommodated if any of the
confirmed passengers failed to show up at the airport before departure. The
lower court rendered judgment in favor of plaintiff and awarded the amount
of damages as prayed for. Said decision was affirmed hence the instant
petition.

Issue: Whether or not the award of damages was proper.

Held: Yes, but subject to modifications. Findings of fact show that plaintiff, a
businesswoman and a multimillionaire in her own right as evidenced
(proprietor of Sampaguita Restaurant, New York City USA; Treasurer of the
Molave Development Corp., Phil., proprietor of Cavite Household Appliances
and Rowena's Handicraft, Phil.), was on a business trip with a Pan-Am ticket.
While in Sto. Domingo, after talking thru the telephone with a certain Mrs.
Lilibeth Warner, the former said that she (plaintiff) must be in San Juan that
same day, to sign her contract or lose it. Plaintiff expected to make a profit of
$1,000 in said contract but since she wasn’t able to board the flight, said
profit was lost.
Other instances which caused moral damage to the plaintiff are the
following:
1. While plaintiff was standing in line preparatory to boarding the aircraft,
Rene Nolasco, a Pan Am employee ordered her in a loud voice to step out of
line because her ticket was not confirmed to her consternation and
embarrassment in the presence of several people who heard and order.
Despite her Pleas she was not allowed to board the aircraft. And as if to add
insult to injury, she saw that her seat was given to a white man.
2. When the plane took off without her but with her luggage on board. She
was forced to return to her hotel without any luggage much less an extra
dress. It was a good thing that the Hotel people remembered her because
they do not usually accommodate female guests, without any luggage to stay
in the hotel. While normally, hotel accommodation was paid before
departure, plaintiff was made to pay the room accommodation petition in
advance.

It is clear from the evidence that defendant issued a Passenger Ticket and
Baggage Check with assigned seat and the corresponding pass and baggage
claim symbol. Plaintiff was made to pay the fare and terminal fee. At the
immigration section, plaintiff's passport was stamped accordingly. Plaintiff's
name was included in the passenger manifest. And these show that plaintiff
was indeed a confirmed passenger of defendant's Flight 431 for San Juan.
There was, therefore, a contract or carriage perfected between plaintiff and
defendant for the latter to take plaintiff to her place of destination. By
refusing to accommodate plaintiff in said flight, defendant had willfully and
knowingly violated the contract of carriage and failed to bring the plaintiff to
her place of destination under its contract with plaintiff. Bad faith was also
present. Self enrichment or fraternal interest and not personal ill will may
have been the motive of defendant, but it is malice nevertheless. The fact
that plaintiff was ordered out under some pretext in order to accommodate a
white man in an airline owned by an American firm with a reputation for
bumping off non- Caucasian to accommodate whites is very regrettable.

Defendant having breached its contract with plaintiff in bad faith, it is not
error to have awarded exemplary damages. The rational behind exemplary or
corrective damages is, as the name implies, to provide an example or
correction for public good . In view of it nature, it should be imposed in such
amount as to sufficiently and effectively deter similar breach of contract in
the future by defendant and other airlines.

An award of attorney's fees is also in order, having found bad faith on the
part of defendant.

We believe, however the amount of some damages awarded to be exorbitant:

We therefore reduce the moral and exemplary damages to the combined
total sum of Two Hundred Thousand (P200,000.00) Pesos and the attorney's
fees to Twenty Thousand (P20,000.00) Pesos. The award of actual damages
in the amount of One Thousand Five Hundred Forty Six American dollars and
fifteen cents (US$1,546.15) computed at the exchange rate prevailing at the
time of payment is hereby retained and granted.

GATCHALIAN vs. DELIM

Facts: Reynalda Gatchalian boarded respondent’s minibus at a point in

Aringay, La Union bound for Bauang. While the bus was running along the
highway, a “snapping sound” was suddenly heard at one part of the bus and
shortly thereafter, the vehicle bumped a cement flower pot on the side of the
road, turned turtle and fell into the ditch. Upon medical examination,
petitioner was found to have sustained physical injuries on the leg, arm and
forehead.

Issue: Is petitioner entitled to actual and compensatory damages?

Held: Yes. A person is entitled to the physical integrity of his or her body; if
that integrity is violated or diminished, actual injury is suffered for which
actual or compensatory damages are due and assessable. Petitioner
Gatchalian is entitled to be placed as nearly as possible in the condition that
she was before mishap. A scar, especially one on the face of the woman,
resulting from the infliction of injury upon her, is a violation of bodily
integrity, giving raise to a legitimate claim for restoration to her condition
ante.

In Araneta v. Areglado, 104 Phil. 529, this Court awarded actual or

compensatory damages, for among other things, the surgical removal of the
scar on the face of a young boy who had been injured in a vehicular collision.
We consider that the amount of P15,000.00 to recover the cost of such
plastic surgery is not unreasonable.

SOBERANO vs. MANILA RAILROAD COMPANY

Facts: Juana Soberano boarded a bus of the Benguet Auto Line (BAL), a
subsidiary of the Manila Railroad Co. (MRR), driven by Santiago Caccam,
bound for Baguio City. In that trip, Juana brought with her 3,024 chicken eggs
to be sold in Baguio City, and some personal belongings which she needed in
that trip. About three kilometers away from Baguio City, along the Naguilian
road, the bus hit a stone embankment, causing it to fall into a 65-foot deep
precipice, resulting in death to two of its passengers and serious physical
injuries to Juana and loss and destruction of all her belongings.
Juana Soberano did not intervene in the criminal case because she
filed a formal reservation to institute a separate civil action for damages and
indemnity against the MRR and the BAL. Because of the loss of the eggs and
the destruction of the personal effects that Juana brought with her in that
trip, Jose Soberano, her husband, demanded from the defendant companies
the value thereof amounting to P370.66, of which sum the MRR paid P300.
The MRR also paid the daily expenses, allowances, subsistence,
hospitalization, medical fees and medicines of Juana Soberano, as well as the
service fees of her caretaker. The MRR has paid a total sum of P4,219. Later
the MRR offered to settle the case extrajudicially, tendering to the Soberanos
the additional sum of P5,000. The offer was rejected, and the Soberanos filed
the present action against the defendant companies and Caccam, to recover
from them damages in the total sum of P76,757.76. After due trial, the lower
court rendered the decision appealed from, dismissing at the same time the
complaint against Caccam. The Soberanos moved to have the decision
reconsidered. The motion for reconsideration was denied; hence the present
recourse.
Issue: Whether or not the amount of damages awarded is adequate.

Held: The Soberanos initially contend that the lower court erred in
disallowing their claim of P200, representing the expenses of Juana Soberano
in attending as a witness in the criminal case and attorney's fees incurred in
connection therewith. This claim was correctly denied by the lower court,
because these expenses were properly taxable in the criminal case. It may be
argued that the Soberanos could not have recovered this sum in the criminal
case because Juana Soberano expressly filed a formal reservation to institute
a separate civil action for damages, but such reservation did not preserve
whatever rights they had against Caccam on the basis of the latter's
imprudence. The reservation is ineffective as to Caccam as it did not include
him among those against whom their rights had been reserved. And the
Soberanos not having intervened in the criminal case, this claim must be
considered as having been impliedly adjudicated in the criminal case, and
cannot therefore be ventilated in the present action.
The Soberanos next contend that the lower court erred in denying their
claim for moral damages in the sum of P15,000, for the physical suffering,
mental anguish, serious anxiety and fright they suffered as a consequence of
the mishap. The lower court denied this claim on the strength of the oft-
reiterated ruling of this Court that moral damages cannot be recovered
against the employer in actions based on a breach of contract of carriage in
the absence of malice, fraud, or bad faith. The lower court rightly denied the
claim for moral damages as far as Jose Soberano is concerned. In case of
physical injuries, moral damages are recoverable only by the party injured
and not by his next of kin, unless there is express statutory provision to the
contrary. In this case it was Juana Soberano, not her husband Jose, who
sustained the bodily injuries.
The claim for attorney's fees was also properly denied by the lower
court. The Soberanos aver that they were obliged to file a separate civil
action for damages against the defendant companies. This claim is
predicated upon paragraphs (2) and (5) of article 2208 of the New Civil Code,
which provide that attorney's fees and expenses of litigation may be
recovered when the defendant's act or omission has compelled the plaintiff to
litigate with third persons or incur expenses to protect his interest, or when
the defendant acted in gross and evident bad faith in refusing to satisfy the
plaintiff's plainly valid, just and demandable claim. It will be observed that
the defendant companies offered to settle the case by offering to the
Soberanos the additional sum of P5,000. The Soberanos, however, rejected
the offer and proceeded to court to recover damages in the total sum of
P76,757.76. It was not, therefore, the defendant companies that compelled
the Soberanos to litigate, or to incur expenses in connection with the
litigation instituted by them.
Lastly, the nature and extent of the physical injuries suffered by Juana
Soberano has the effect of making her live an abnormal life. Considering all
the facts this Court is of the opinion that the sum of P5,000 in compensatory
damages awarded to her for loss of earning capacity is inadequate; the
amount should be increased to P15,000. She should also be awarded the sum
of P45.35, representing unrealized profits from the 3,024 chicken eggs which
she brought with her in the trip and which were destroyed.

MARCHAN vs. MENDOZA

Facts: A passenger bus of the Philippine Rabbit Bus Lines which was then
driven by Silverio Marchan fell into a ditch somewhere in Barrio Malanday,
Polo, Bulacan, while travelling on its way to Manila. As a result of which
Arsenio Mendoza, his wife and child, who were then inside the bus as
passengers were thrown out to the ground resulting in their multiple injuries.
Arsenio Mendoza suffered the most serious injuries which damaged his
vertebrae causing the paralysis of his lower extremities. An action was
brought to recover damages against petitioners predicated not only on a
breach of contract of carriage for failure to safely convey the plaintiffs to their
destination, but also on account of a criminal negligence on the part of
defendant driver. The lower court ruled in favor of plaintiffs. The award of
P40,000.00 as compensatory damages was affirmed by CA. It however added
the amount of P30,000.00 as exemplary damages and sustained the award of
attorney's fees in the amount of P5,000.00.

Issue: Whether or not the award of moral damages was proper.

Held: Yes. The amount of P40,000.00 awarded by the court as compensatory

damages is quite reasonable and fair, considering that plaintiff Arsenio
Mendoza had suffered paralysis on the lower extremities, which will
incapacitate him to engage in his customary occupation throughout the
remaining years of his life, especially so if we take into account that plaintiff
was only 26 years old when he met an accident and taking the average span
of life of a Filipino, he may be expected to live for 30 years more and bearing
in mind the earning capacity of Arsenio Mendoza who before the happening
of this accident derived an income of almost P100.00 a month from the
business of his father-in-law as Assistant Supervisor of the small fairs and his
income of P100.00 a month which he derived as a professional boxer.

DE CALISTON vs. CA

Facts: While driving a passenger bus in Bacolod City, private respondent

Geronimo Dalmacio ran over Juana Sonza Vda. de Darrocha (a USVA
pensioner) who died instantly, survived by her only child, Gloria Darrocha de
Caliston, the herein petitioner.
Prosecuted for homicide thru reckless imprudence, Dalmacio was convicted
by the Court of First Instance of Negros Occidental, sentenced to
imprisonment and ordered to pay the herein petitioner P15,000.00 for the
death of the victim, P5,000.00 as moral damages, P5,000.00 for burial
expenses and P10,000.00 for loss of pension which the deceased had failed
to receive.
On appeal, the former Court of Appeals modified the CFI decision by
absolving Dalmacio from the payment of the P10,000.00 for loss of pension
and credited him for the amount of P5,000.00 previously paid to the herein
petitioner under a vehicular insurance policy obtained by the bus owner.

Issue: Whether or not the deletion of the P10,000.00 awarded for loss of
pension is justified?

Held: The deletion of the P10,000.00 awarded for loss of pension is

unjustified. Under Article 2206 of the Civil Code: The amount of damages for
death caused by a crime or quasi-delict shall be at least three thousand
pesos, even though there may have been mitigating circumstances. In
addition:

(1) The defendant shall be liable for the loss of the earning capacity of the
deceased, and the indemnity shall be paid to the heirs of the latter.

The pension of the decedent being a sure income that was cut short by her
death for which Dalmacio was responsible, the surviving heir of the former is
entitled to the award of P 10,000.00 which is just equivalent to the pension
the decedent would have received for one year if she did not die.

On the other hand, the P5,000.00 paid to the herein petitioner by the insurer
of the passenger bus which figured in the accident may be deemed to have
come from the bus owner who procured the insurance. Since the civil liability
(ex-delicto) of the latter for the death caused by his driver is subsidiary and,
at bottom, arises from the same culpa, the insurance proceeds should be
credited in favor of the errant driver.

PHILIPPINE AIRLINES, INC. vs. CA

185 SCRA 110

Facts: On November 23, 1960, Starlight Flight No. 26 of the Philippine Air
Lines took off from Iloilo, on its way to Manila, with 33 persons on board,
including the plane's complement. The plane did not reach its destination but
crashed on Mt. Baco, Mindoro, one hour and fifteen minutes after takeoff .The
plane was Identified as PI-C133, a DC-3 type aircraft manufactured in 1942
and acquired by PAL in 1948. It had flown almost 18,000 hours at the time of
its illfated flight. It had been certified as airworthy by the Civil Aeronautics
Administration.
Among the fatalities was Nicanor Padilla. He was 29 years old, single.
His mother, Natividad A. Vda. de Padilla, was his only legal heir.
As a result of her son's death, Mrs. Padilla filed a complaint (which was
amended twice) against PAL, demanding payment of P600,000 as actual and
compensatory damages, plus exemplary damages and P60,000 as attorney's
fees.
 In its answer, PAL denied that the accident was caused by its
negligence or that of any of the plane's flight crew, and that, moreover, the
damages sought were excessive and speculative.
On August 31, 1973, the trial court promulgated a decision, ordering the
defendant Philippine Air Lines, Inc. to pay the plaintiff Natividad A. Vda. de
Padilla the sum of P477,000.00 as award for the expected income of the
deceased Nicanor; P10,000.00 as moral damages; P10,000.00 as attorney's
fees; and to pay the costs.
On Appeal to the Court of Appeals the decision of the trial court was affirmed
in toto.

Issue: Whether or not the respondent court erred in computing the awarded
indemnity on the basis of the life expectancy of the late Nicanor A. Padilla
rather than on the life expectancy of private respondent, and thus erred in
awarding what appears to the petitioner as the excessive sum of P477,000 as
indemnity for loss of earnings.

Held: Petitioner relies on "the principle of law generally recognized and

applied by the courts in the United States" that "the controlling element in
determining loss of earnings arising from death is, as established by
authorities, the life expectancy of the deceased or of the beneficiary,
whichever is shorter.
However, resort to foreign jurisprudence would be proper only if no law
or jurisprudence is available locally to settle a controversy. Even in the
absence of local statute and case law, foreign jurisprudence is only
persuasive.

For the settlement of the issue at hand, there are enough applicable
local laws and jurisprudence. Under Article 1764 and Article 2206(1) of the
Civil Code, the award of damages for death is computed on the basis of the
life expectancy of the deceased, not of his beneficiary. The articles provide:

Art. 1764. Damages in cases comprised in this Section shall be awarded in

accordance with Title XVIII of this Book, concerning Damages. Article 2206
shall also apply to the death of a passenger caused by the breach of contract
by a common carrier.

Art. 2206. The amount of damages for death caused by a crime or quasi-
delict shall be at least three thousand pesos, even though there may have
been mitigating circumstances. In addition:

(1) The defendant shall be liable for the loss of the earning capacity of the
deceased, and the indemnity shall be paid to the heirs of the latter; such
indemnity shall in every case be assessed and awarded by the court, unless
the deceased on account of permanent physical disability not caused by the
defendant, had no earning capacity at the time of his death.

In the case of Davila vs. PAL, 49 SCRA 497 which involved the same tragic
plane crash, this Court determined not only PALs liability for negligence or
breach of contract, but also the manner of computing the damages due the
plaintiff therein which it based on the life expectancy of the deceased, Pedro
Davila, Jr.

WHEREFORE, the petition is dismissed. The decision of the trial court is

affirmed with modification. The petitioner is ordered to pay the private
respondent or her heirs death indemnity in the sum of P417,000 (not
P477,000), with legal rate of interest of 6% per annum from the date of the
judgment on August 31, 1973, until it is fully paid. Costs against the
petitioner.

B. MORAL DAMAGES

CACHERO vs. MANILA YELLOW TAXICAB CO., INC.,

Facts: Atty. Cachero boarded a Yellow Taxicab driven by Gregorio Mira

Abinion and owned by the Manila Yellow Taxicab Co., Inc. On passing
Oroquieta between Doroteo José and Lope de Vega streets, Gregorio Mira
Abinion bumped said taxicab against a Meralco post, with the result that the
cab was badly smashed and the plaintiff fell out of the vehicle to the ground,
suffering thereby physical injuries, slight in nature.
The chauffeur was subsequently prosecuted by the City Fiscal and on
February 26, 1953, upon his plea of guilty the Municipal Court of Manila
sentenced him to suffer 1 month and 1 day of arresto mayor, and to pay the
costs.
On December 17, 1952, Tranquilino F. Cachero addressed a letter to
the Manila Yellow Taxicab Co., Inc., which was followed by another of January
6, 1953, which he asks for damages.
The Taxicab Co. to avoid expenses and time of litigation offered to
settle the case amicably with plaintiff but the latter only agreed to reduce his
demand to the sum of P72,050.20 as his only basis for settlement which, of
course, was not accepted by said company. So plaintiff instituted an action in
the Court of First Instance of Manila.
Issue: Whether or not the defendant demanded an exorbitant moral
damages?

Held: In all cases, the attorney's fees and expenses of litigation must
be reasonable.The present action was instituted because plaintiff demanded
an exorbitant amount for moral damages (P60,000) and naturally the
defendant did not and could not yield to such demand. This is neither a case
that comes under paragraph 11 of Article 2208 because the Lower Court did
not deem it just and equitable to award any amount for attorney's fees. As
We agree with the trial Judge on this point, We cannot declare that he erred
for not awarding to plaintiff any such fees in this case.
 "Realizing its obligation under its contract of carriage with the plaintiff,
and because the facts of the case, as have been shown, mark it as more
proper for the Municipal Court only, the defendant, to avoid the expense and
time of litigation, offered to settle the case amicably with plaintiff, but the
latter refused and insisted on his demand for P72,050.20 as the only basis for
settlement, thus adding a clearly petty case to the already overflowing desk
of the Honorable Members of this Court.
We admire and respect at all times a man for standing up and fighting
for his rights, and when said right consists in injuries sustained due to a
breach of a contract of carriage with us, sympathy and understanding are
added thereto. But when a person starts demanding P2,050.20 for a solitary
bruise and sprain, injuries for which the trial court, even at its generous
although erroneous best, could only grant P5,900, then respect and
sympathy give way to something else. It is time to fight, for, in our humble
opinion, there is nothing more loathsome nor truly worthy of condemnation
than one who uses his injuries for other purposes than just rectification. If
plaintiff's claim is granted, it would be a blessing, not a misfortune, to be
injured."
This case was instituted by a lawyer who, as an officer of the courts,
should be the first in helping Us in the administration of justice, and after
going over the record of this case, we do not hesitate to say that the demand
of this case, we do not hesitate to say that the demand of P72,050.20 for a
subluxation of the right humerus bone and an insignificant contusion in 'he
chest, has not even the semblance of reasonableness. The plaintiff himself
must have felt embarrassed by his own attitude when after receiving
defendant's brief as appellant, he makes in his brief as appellee the
categorical statement that he "DOES NOT NOW INSIST NOR PRETEND IN THE
LEAST to collect from the defendant all the damages he had claimed in his
complaint, but instead he is submitting his case to the sound discretion of the
Honorable Court for the award of a reasonable and equitable damages
allowable by law, to compensate the plaintiff of the suffering and losses he
had undergone and incurred because of the accident oftentimes mentioned
in this brief in which plaintiff was injured". This acknowledgment comes too
late, for plaintiff has already deprived the Court of Appeals of the occasion to
exercise its appellate jurisdiction over this case which he recklessly dumped
to this Court. We certainly cannot look with favor at this attitude of plaintiff.
Wherefore, the decision appealed from is hereby modified by reducing
the amount awarded as unearned professioral fees from P3,000 to P2,000
and by eliminating, the moral damages of P2,000 awarded by the Lower
Court to the plaintiff. Said decision is in all other respects affirmed, without
pronouncement as to costs. It is so ordered.

FORES vs. MIRANDA

Facts: Respondent was one of the passengers on a jeepney driven by

Eugenio Luga. While the vehicle was descending the Sta. Mesa bridge at an
excessive rate of speed, the driver lost control thereof, causing it to swerve
and to hit the bridge wall. The accident occurred on the morning of March 22,
1953. Five of the passengers were injured, including the respondent who
suffered a fracture of the upper right humerus. He was taken to the National
Orthopedic Hospital for treatment, and later was subjected to a series of
operations; the first on May 23, 1953, when wire loops were wound around
the broken bones and screwed into place; a second, effected to insert a metal
splint, and a third one to remove such splint. At the time of the trial, it
appears that respondent had not yet recovered the use of his right arm.
The driver was charged with serious physical injuries through reckless
imprudence, and upon interposing a plea of guilty was sentenced
accordingly.
The contention that the evidence did not sufficiently establish the identity of
the vehicle as that belonging to the petitioner was rejected by the appellate
court which found, among other things, that it carried plate No. TPU-1163,
series of 1952, Quezon City, registered in the name of Paz Fores, (appellant
herein) and that the vehicle even had the name of "Doña Paz" painted below
its windshield. No evidence to the contrary was introduced by the petitioner,
who relied on an attack upon the credibility of the two policemen who went to
the scene of the incident.
A point to be further remarked is petitioner's contention that on March
21, 1953, or one day before the accident happened, she allegedly sold the
passenger jeep that was involved therein to a certain Carmen Sackerman.
The CA awarded moral damages to respondent hence this petition.

Issue: Whether or not the award of moral damages given by the CA was
valid?

Held: No. Petitioner’s contention of loss of income and payment of attorneys

fees cannot be the basis for the award of the damages on the ground that a
review of the records failed to disclose a sufficient basis for the trial court's
appraisal, since the only evidence presented on this point consisted of
respondent's bare statement of his expenses and the said loss of income.
Petitioner fails to note that attorney's fees are included in the concept of
actual damages under the Civil Code and may be awarded whenever the
court deems it just and equitable. Moral damages are not recoverable in
damage actions predicated on a breach of the contract of transportation, in
view of Articles 2219 and 2220 of the new Civil Code, which provide as
follows:
"ART. 2219. Moral damages may be recovered in the following and
analogous cases:
(1) A criminal offense resulting in physical injuries;
(2) Quasi-delicts causing physical injuries;
ART. 2220. Willful injury to property may be a legal ground for
awarding moral damages if the court should find that, under the
circumstances, such damages are justly due. The same rule applies to
breaches of contract where the defendant acted fraudulently or in bad faith."
By contrasting the provisions of these two articles it immediately
becomes apparent that: (a) In case of breach of contract (including one of
transportation) proof of bad faith or fraud (dolus), i.e., wanton or deliberately
injurious conduct, is essential to Justify an award of moral damages; and (b)
That a breach of contract can not be considered included in the descriptive
term "analogous cases" used in Art. 2219; not only because Art. 2220
specifically provides for the damages that are caused by contractual breach,
but because the definition of quasi-delict in Art. 2176 of the Code expressly
excludes the cases where there is a "preexisting contractual relation between
the parties."
"ART. 2176. 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."
The exception to the basic rule of damages now under consideration is
a mishap resulting in the death of a passenger, in which case Article 1764
makes the common carrier expressly subject to the rule of Art. 2206, that
entitles the spouse, descendants and ascendants of the deceased passenger
to "demand moral damages for mental anguish by reason of the death of the
deceased". But the exceptional rule of Art. 1764 makes it all the more
evident that where the injured passenger does not die, moral damages are
not recoverable unless it is proved that the carrier was guilty of malice or
bad faith. We think it is clear that the mere carelessness of the carrier's
driver does not per se constitute or justify an inference of malice or bad faith
on the part of the carrier; and in the case at bar there is no other evidence of
such malice to support the award of moral damages by the Court of Appeals.
To award moral damages for breach of contract, therefore, without proof of
bad faith or malice on the part of the defendant, as required by Art. 2220,
would be to violate the clear provisions of the law, and constitute
unwarranted judicial legislation.
The suggestion that a carrier's violation of its engagement to safely
transport the passenger involves a breach of the passenger's confidence, and
therefore should be regarded as a breach of contract in bad faith, justifying
recovery of moral damages under Art. 2220 is untenable, for under it the
carrier would always be deemed in bad faith, in every case its obligation to
the passenger is infringed, and it would be never accountable for simple
negligence; while under the law (Art. 1756) "ART. 1756. In case of death of or
injuries to passengers, common carriers are presumed to have been at fault
or to have acted negligently, unless they prove that they observed
extraordinary diligence as prescribed in articles 1733 and 1755."
"ART. 1762. The contributory negligence of the passenger does not bar
recovery of damages for his death or injuries, if the proximate cause thereof
is the negligence of the common carrier, but the amount of damages shall be
equitably reduced."
The distinction between fraud, bad faith or malice in the sense of deliberate
or wanton wrong doing and negligence (as mere carelessness) is too
fundamental in our law to be ignored; their consequences being clearly
differentiated by the Code.
"ART. 2201. In contracts and quasi-contracts, the damages forwhich
the obligor who acted in good faith is liable shall be those that arc the,
natural and probable consequences of the breach of the obligation, and
which the parties have foreseen or could have reasonably foreseen at the
time the obligation was constituted.
In case of fraud, bad faith, malice or wanton attitude, the obligor shall be
responsible for all damages which may be reasonably attributed to the non-
performance of the obligation."
It is to be presumed, in the absence of statutory provision to the
contrary, that this difference was in the mind of the lawmakers when in Art.
2220 they limited recovery of moral damages to breaches of contract in bad
faith. It is true that negligence may be occasionally so gross as to amount to
malice; but that fact must be shown in evidence, and a carrier's bad faith is
not to be lightly inferred from a mere finding that the contract was breached
through negligence of the carrier's employees.
In view of the foregoing considerations, the decision of the Court of
Appeals is modified by eliminating the award of P5.000.00 by way of moral
damages the presumption is that common carriers acted negligently (and not
maliciously), and Art. 1762 speaks of negligence of the common carrier.

LOPEZ vs.PAN AMERICAN WORLD AIRWAYS

Facts: Reservations for first class accommodations in Flight No. 2 of Pan

American World Airways from Tokyo to San Francisco were made, by "Your
Travel Guide" agency, for then Senator Fernando Lopez, his wife Maria J.
Lopez, his son-in-law Alfredo Montelibano, Jr., and his daughter, Mrs. Alfredo
Montelibano, Jr. PAN-AM's San Francisco head office confirmed the
reservations. First class tickets for the abovementioned flight were
subsequently issued. As scheduled Senator Lopez and party left Manila by
Northwest Airlines. As soon as they arrived Senator Lopez requested Minister
Busuego of the Philippine Embassy to contact PAN-AM's Tokyo office
regarding their first class accommodations for that evening's flight. For the
given reason that the first class seats therein were all booked up, however,
PAN-AM's Tokyo office informed Minister Busuego that PAN-AM could not
accommodate Senator Lopez and party in that trip as first class passengers.
Senator Lopez thereupon gave their first class tickets to Minister Busuego for
him to show the same to PAN-AM's Tokyo office, but the latter firmly
reiterated that there was no accommodation for them in the first class,
stating that they could not go in that flight unless they took the tourist class
therein. They were constrained to take PAN-AM's flight from Tokyo to San
Francisco as tourist passengers. Suit for damages was thereafter filed by
Senator Lopez and party against PAN-AM. Alleging breach of contracts in bad
faith by defendant, plaintiffs asked for P500,000 actual and moral damages,
P100,000 exemplary damages, P25,000 attorney's fees plus costs. PAN-AM
filed its answer, asserting that its failure to provide first class
accommodations to plaintiffs was due to honest error of its employees. Court
of First Instance rendered its decision in favor of plaintiffs. Both however
appealed the decision. Plaintiff prayed for an increase in the award.

Issue: Whether or not plaintiff is entitled to damages.

Held: Yes. According to plaintiffs, defendant acted in bad faith because it
deliberately refused to comply with its contract to provide first class
accommodations to plaintiffs, out of racial prejudice against Orientals.
Against the foregoing, however, defendant's evidence would seek to establish
its theory of honest mistake. It said that the first class reservations of Senator
Lopez and party were made together with those of four members of the
Rufino family. The reservations employee mistakenly cancelled all the seats
that had been reserved, that is, including those of Senator Lopez and party.
Since the flight involved was still more than a month away and confident that
reinstatement would be made, Herranz forgot the matter and told no one
about it except his co-employee. From the foregoing evidence of defendant,
it is in effect admitted that defendant through its agents first cancelled
plaintiffs, reservations by mistake and thereafter deliberately and
intentionally withheld from plaintiffs or their travel agent the fact of said
cancellation, letting them go on believing that their first class reservations
stood valid and confirmed. In so misleading plaintiffs into purchasing first
class tickets in the conviction that they had confirmed reservations for the
same, when in fact they had none, defendant willfully and knowingly placed
itself into the position of having to breach its contracts with plaintiffs. All the
time, in legal contemplation such conduct already amounts to action in bad
faith. For bad faith means a breach of a known duty through some motive of
interest or ill-will.
Now on the issue of amount of damages. First, then, as to moral
damages. As a proximate result of defendant's breach in bad faith of its
contracts with plaintiffs, the latter suffered social humiliation, wounded
feelings, serious anxiety and mental anguish. For plaintiffs were travelling
with first class tickets issued by defendant and yet they were given only the
tourist class. At stop-overs, they were expected to be among the first-class
passengers by those awaiting to welcome them, only to be found among the
tourist passengers. It may not be humiliating to travel as tourist passengers;
it is humiliating to be compelled to travel as such, contrary to what is
rightfully to be expected from the contractual undertaking. Senator Lopez
was then Senate President Pro Tempore. International carriers like defendant
know the prestige of such an office. And he was former Vice-President of the
Philippines. Senator Lopez was going to the United States to attend a private
business conference of the Binalbagan-Isabela Sugar Company; but his
aforesaid rank and position were by no means left behind, and in fact he had
a second engagement awaiting him in the United States: a banquet tendered
by Filipino friends in his honor as Senate President Pro Tempore. For the
moral damages sustained by him, therefore, an award of P100,000.00 is
appropriate.
Considering also the physical discomfort of the wife of Senator Lopez
as well as the members of his family, it should be imposed in such an amount
as to sufficiently and effectively deter similar breach of contracts in the future
by defendant or other airlines. In this light, we find it just to award
P75,000.00 as exemplary or corrective damages.
A written contract for attorney's services shall control the amount to
be paid therefor unless found by the court to be unconscionable or
unreasonable. The amount of P25, 000 is reasonable, considering the
attorney’s prominence in the legal profession, and that the defense counsel’s
fees is more than half the said amount.
In concluding, let it be stressed that the amount of damages awarded
in this appeal has been determined by adequately considering the official,
political, social, and financial standing of the offended parties on one hand,
and the business and financial position of the offender on the other.

ORTIGAS, JR. vs. LUFTHANSA GERMAN AIRLINES

Facts: The Sharp Travel Service, the travel department of C. F. Sharp, Inc.,
the majority interest-in-which is held by Rocha y Cia., Inc., General Agents of
the defendant, Lufthansa German Airlines issued to the plaintiff First Class
Pan American Ticket which would take him from Manila, the place of
departure, to Hongkong, various cities in the United States, Europe, Asia, the
Far East, and then back to Manila, the place of destination. Ortigas' ticket for
all these different legs of his journey was first class. He left Manila as
scheduled. In New York, he decided to leave out some cities, included in his
original itinerary, to be in Hongkong, for several appointments he had there.
Ortigas arrived in due course in Rome. To be sure he could fly first class to
Hongkong, for his appointments there the next day, Ortigas went to the office
of the Alitalia to book passage. The man at the counter of the Alitalia office
told him it had no flight on Monday but the Lufthansa had. The man
thereupon called up the office of the Lufthansa and, after talking to an
employee thereof, told Ortigas that the Lufthansa had no first class, but only
economy seats available. Ortigas was not willing to take an economy seat
and requested the employee to call up other airlines. The employee
afterwards informed Ortigas that the Lufthansa had a first class seat
available. Ortigas immediately asked him to get the seat and to see to it that
his ticket be confirmed and validated for the flight and a first class seat. The
man thereafter asked for Ortigas' passport and other travel papers and
attached a validating sticker on flight coupon No. 4 which corresponded to
the Rome-Hongkong leg of his TWA Ticket.
The following Monday, Ortigas checked out of his hotel and took a taxi
to the terminal. He unloaded his baggage and proceeded to the counter in
charge of the Lufthansa passengers. The lady at the counter told him that
Lufthansa had no space for him that day. Ortigas requested her to check with
her main office, which she did by calling it up. After calling, she apologized
and said the plaintiff's ticket was in order and would be confirmed and
validated. On her request, Ortigas had his luggage weighed and was given
the free luggage allowance of a first class passenger. He was furthermore
asked to pay 800 liras for bus fare and 700 liras as embarkation tax. An
employee in the airport asked for his passport and other papers and, after
examining his passport, where his Filipino nationality appears, said he could
not board the plane that day because his seat would be given to a Belgian.
 After an argument with the employee, Ortigas made another request,
that the employee call other airlines to inquire if they had flights to Hongkong
that day but he once more turned down the plea and insisted that Ortigas
travel economy, with the promise that he will be transferred to first class in
Cairo and onward to Hongkong. He was constrained to agree with the
arrangement. Upon arrival in Cairo, the plaintiff requested the Lufthansa
agent to transfer him to first class but the agent said he could not and that he
did not receive any communication from Rome to that effect. At Dharham,
the plaintiff once more requested a transfer to first class but was also told by
the Lufthansa agent that he had not received any communication about the
change and the request could not be granted. In Calcutta, Ortigas once again
requested a transfer or that he be assisted in booking passage on other
planes but was also refused. It was only in Bangkok when the chief steward
asked him if he wanted to move over to first class but having been already
embarrassed and humiliated and the trip to Hongkong being only three
hours, he said he would not as a sign of protest. The foregoing facts resulted
in the filing of the case by the plaintiff against defendant, in which an award
of moral and exemplary damages was ordered and now subject of an appeal.

Issue: Whether or not plaintiff is entitled to damages.

Held: Yes. Manuel Otayza, general manager of Filital, Inc., which is the
general agent of the Alitalia in the Philippines, testified that space reservation
through telephone calls between airlines is permitted by IATA's, "Manual of
Traffic Conference Resolutions" and that telephone calls for reservation by
one airline to another is in fact accepted procedure in accordance with the
official airline guide of the Air Traffic Conference and International Air
Transport Association. There was, therefore, a valid and binding contract
between Lufthansa and the plaintiff to transport him as a first class
passenger from Rome to Hongkong, and this agreement the defendant
violated by compelling the plaintiff to travel as an economy passenger. It
cannot be said the breach was the result of an honest mistake or excusable
negligence. There is evidence that the defendant acted with bad faith and in
willful disregard of the plaintiffs rights.
It is Our considered view that when it comes to contracts of common
carriage, inattention and lack of care on the part of the carrier resulting in the
failure of the passenger to be accommodated in the class contracted for
amounts to bad faith or fraud which entitles the passenger to the award of
moral damages in accordance with Article 2220 of the Civil Code. But in the
instant case, the breach appears to be of graver nature, since the preference
given to the Belgian passenger over plaintiff was done willfully and in wanton
disregard of plaintiff's rights and his dignity as a human being and as a
Filipino, who may not be discriminated against with impunity.
Lufthansa contends, however, that there could not have been any
possible discrimination by reason of race against Ortigas because from his
appearance, said plaintiff can easily be taken for a European or white more
than his own witness Amado Castro and besides, there were other Orientals
in the same flight on that occasion. It is argued that any such policy would be
self-defeating, since it would certainly be damaging to its own business.
Again, this ratiocination is untenable, for what appears from the evidence is
not really a case of a general policy of discriminating against Orientals or
non-whites, but a specific act of Lufthansa employee at the airport of giving
preference to a Belgian after examining Ortigas passport wherein his Filipino
nationality is noted.
As found by the lower court what worsened the situation of Ortigas was
that Lufthansa succeeded in keeping him as its passenger by assuring him
that he would be given first class accommodation at Cairo, the next station,
the proper arrangements therefor having been made already, when in truth
such was not the case. Thus, instead of complying with the request of Ortigas
that other airlines be contacted to find out it they had first class space for
him, the Lufthansa employee who had indifferently told him about his
downgrading paid very little attention if ever to said request. Although
molested and embarrassed to the point that he had to take nitroglycerine
pills to ward off a possible heart attack, Ortigas hardly had any choice, since
his luggage was already in the plane. To his disappointment, when the plane
reached Cairo, he was told by the Lufthansa office there that no word at all
had been received from Rome and they had no space for him in first class.
Worse, similar false representations were made to him at Dharham and
Calcutta. It was only at Bangkok where for the first time, Ortigas was at last
informed that he could have a first class seat in that leg of the flight, from
Bangkok to Hongkong. This Ortigas rejected, if only to make patent his
displeasure and indignation at being so inconsiderately treated in the earlier
part of his journey.
Moreover, it is argued, the economy class accommodations are
not much different from first class and Ortigas was not delayed in his trip. We
cannot see the point. A passenger contracts for first class accommodations
for many reasons peculiar to himself and pays a higher price therefor, and it
is certainly not for the airplane to say later, after it deprives him of his space
in order to favor another passenger, that economy class is anyway just as
good as first class.
In the light of all the foregoing, there can be no doubt as to the
right of Ortigas to damages, both moral and exemplary. We have uniformly
upheld the right of a passenger to damages in all cases wherein, after having
contracted and paid for first class accommodations duly confirmed and
validated, he is transferred over his objection to economy, class, which he
has to take in order to be able to arrive at his destination on his scheduled
time.

DISPOSITIVE: WHEREFORE, the judgment appealed from is modified by

raising the award of moral and exemplary damages to plaintiff Ortigas to
P150,000.00 and P100,000.00, respectively. In all other respects, including as
to the payment of interests on the said amounts, the same is affirmed.
 PHILIPPINE RABBIT BUS LINES, INC. vs.ESGUERRA

Facts: Patrocinio Esguerra was a paying passenger of Bus No. 223 of

Philippine Rabbit Bus Lines, Inc. He boarded the said bus at the Manila
terminal about four o'clock in the afternoon of November 6, 1961, bound for
San Fernando, Pampanga. He sat at the left-end of the fourth row behind the
driver, close to the window. As the bus approached barrio San Marcos,
Calumpit, Bulacan, a freight truck owned and operated by the Transport
Contractors, Inc. was coming from the opposite direction. The vehicles
sideswiped each other. The window glass near the driver's seat of the Rabbit
Bus was detached and the left side of its body was damaged. The left forearm
of Patrocinio Esguerra was hit by a hard blunt object, breaking the bones into
small fragments while the soft tissues of the muscles and the skin were
mascerated. He was immediately brought to the Bulacan Provincial Hospital
in Malolos, Bulacan for treatment. The left arm was amputated.
Plaintiff filed a case against the Philippine Rabbit Bus Lines, Inc. and
the Transport Contractors, Inc., together with their respective drivers, praying
that judgment be rendered in favor of the plaintiff and against the defendants
requiring them to pay, jointly and severally damages, actual and
compensatory, moral and exemplary, litigation expenses and costs. The
Court of Appeals affirmed CFI’s decision.

Issue: Whether or not the award of moral damages is proper

Held: No. The contention of petitioners with respect to the award of moral
damages is meritorious. This Court has repeatedly held that moral damages
are not recoverable in actions for damages predicated on a breach of the
contract of transportation, as in the instant case, in view of the provisions of
Articles 2219 and 2220 of the New Civil Code. The exceptions are (1) where
the mishap results in the death of a passenger, and (2) where it is proved
that the carrier was guilty of fraud or bad faith, even if death does not result.
The Court of Appeals found that the two vehicles sideswiped each other at
the middle of the road. In other words both vehicles were in their respective
lanes and that they did not invade the lane of the other. It cannot be said
therefore that there was fraud or bad faith on the part of the carrier's driver.
This being the case, no moral damages are recoverable.

SWEET LINES vs. CA

Facts: Private respondents purchased first-class tickets from petitioner at

the latter’s office in Cebu City. They were to board petitioner’s vessel. M/V
Sweet Grace, bound for Catbalogan, Western Samar. Instead of departing at
the scheduled hour of about midnight on July 8, 1972, the vessel set sail at
3:00am of July 9, 1972, only to be towed back to cebu due to engine trouble,
arrving at about 4:00pm n the same day. Repairs having been accomplished,
the vessel lifted anchor again on July 10, 1972 at around 8:00am.
Instead of docking to Catbalogan, which was the first port of call, the vessel
proceeded direct to Tacloban at around 9:00pm of July 10, 1972. Private
respondents had no recourse but to disembark and board a ferryboat to
Catbalogan.

Hence, this suit for damages for breach of contract of carriage which the Trial
court, affirmed by the CA, decided in favor of plaintiffs.

Issue: Whether or not moral damages may be rightfully demanded.

Held: Yes. Under Art. 2220 of the Civil Code, moral damages are justly due in
breaches of contract where the defendant acted fraudulently or in bad faith.
Both the Trial Court and the Appellate Court found that there was bad faith
on the part of petitioner in that:

(1) Defendants- Appellants did not give notice to plaintiffs-appellates

as to the change of scheduled of the vessel;
(2) Knowing fully well that it would take no less than fifteen hours to
effect the repairs of the damaged engine, defendants- appellants
instead made announce ment of assurance that the vessel would
leave within a short period of time, and when plaintiff-appellees
wanted to leave the port and gave up the trip, defendants-
appellants employees would come and say, “we are leaving
already”.
(3) Defendants- appellants did not offer to refund plaintiffs-appellees’
tickets nor provide them with transportation form Tacloban to
Catbalogan.

That the finding of bad faith is binding on us, since it is not the function
of the court to analyze and review evidence on this point all over again, aside
from the fact that we find it faithful to the meaning of bad faith enunciated
thus:
“Bad faith means a breach of a known duty through some motive or
interest or ill will. Self enrichment or fraternal interest, and not personal ill
will, may have been the motive, but it is malice nevertheless.”

Under the circumstances, however, we find the award of moral damages

excessive and accordingly reduce them from P75,000.00 to P3,000.00
respectively for each of the private respondents. Judgment MODIFIED .

TRANS WORLD AIRLINES vs. CA

Facts: Rogelio A. Vinluan is a practicing lawyer who entered into a contract

for air carriage for valuable consideration with Japan Airlines first class from
Manila to Tokyo, Moscow, Paris, Hamburg, Zurich, New York, Los Angeles,
Honolulu and back to Manila thru the same airline and other airlines it
represents for which he was issued the corresponding first class tickets for
the entire trip.
 On April 18, 1979, while in Paris, he went to the office of Trans World
Airlines (TWA) and secured therefrom confirmed reservation for first class
accommodation on board its Flight No. 41 from New York to San Francisco. A
validated stub was attached to the New York-Los Angeles portion of his ticket
evidencing his confirmed reservation for said flight with the mark "OK " On
April 20, 1979, at about 8:00 o'clock A.M., Vinluan reconfirmed his
reservation for first class accommodation on board TWA Flight No. 41 with its
New York office. He was advised that his reservation was confirmed. Vinluan
presented his ticket for check-in at the counter of TWA at JFK International
Airport at about 9:45 o'clock A.M., the scheduled time of the departure being
11:00 o'clock A.M. He was informed that there was no first class seat
available for him on the flight. He asked for an explanation but TWA
employees on duty declined to give any reason. When he began to protest,
one of the TWA employees, a certain Mr. Braam, rudely threatened him with
the words "Don't argue with me, I have a very bad temper."
To be able to keep his schedule, Vinluan was compelled to take the
economy seat offered to him and he was issued a refund application" as he
was downgraded from first class to economy class.
While waiting for the departure of Flight No. 41. Vinluan noticed that
other passengers who were white Caucasians and who had checked-in later
than him were given preference in some first class seats which became
available due to "no show" passengers.
On February 15, 1980, Vinluan filed an action for damages against the
TWA in the Court of First Instance of Rizal alleging breach of contract and bad
faith. The CFI ruled in favor of Vinluan which was affirmed by the Court of
appeals with some modifications.

Issue: Whether or not Trans World should be liable for damages.

Held: Respondent had a first class ticket for Flight No. 41 of petitioner from
New York to San Francisco on April 20, 1979. It was twice confirmed and yet
respondent unceremoniously told him that there was no first class seat
available for him and that he had to be downgraded to the economy class. As
he protested, he was arrogantly threatened by one Mr. Braam. Worst still,
while he was waiting for the flight, he saw that several Caucasians who
arrived much later were accommodated in first class seats when the other
passengers did not show up.
The discrimination is obvious and the humiliation to which private
respondent was subjected is undeniable. Consequently, the award of moral
and exemplary damages by the respondent court is in order.
Indeed, private respondent had shown that the alleged switch of planes from
a Lockheed 1011 to a smaller Boeing 707 was because there were only 138
confirmed economy class passengers who could very well be accommodated
in the smaller plane and not because of maintenance problems.
Petitioner sacrificed the comfort of its first class passengers including
private respondent Vinluan for the sake of economy. Such inattention and
lack of care for the interest of its passengers who are entitled to its utmost
consideration, particularly as to their convenience, amount to bad faith which
entitles the passenger to the award of moral damages. 5 More so in this case
where instead of courteously informing private respondent of his being
downgraded under the circumstances, he was angrily rebuffed by an
employee of petitioner.
At the time of this unfortunate incident, the private respondent was a
practicing lawyer, a senior partner of a big law firm in Manila. He was a
director of several companies and was active in civic and social organizations
in the Philippines. Considering the circumstances of this case and the social
standing of private respondent in the community, he is entitled to the award
of moral and exemplary damages. However, the moral damages should be
reduced to P300,000.00, and the exemplary damages should be reduced to
P200,000.00. This award should be reasonably sufficient to indemnify private
respondent for the humiliation and embarrassment that he suffered and to
serve as an example to discourage the repetition of similar oppressive and
discriminatory acts.

ARMOVIT vs.COURT OF APPEALS

Facts: In October 1981, the petitioners decided to spend their Christmas

holidays with relatives and friends in the Philippines, so they purchased from
private respondent, (Northwest Airlines, Inc.) three (3) round trip airline
tickets from the U.S. to Manila and back, plus three (3) tickets for the rest of
the children, though not involved in the suit. Each ticket of the petitioners
which was in the handwriting of private respondent's tickets sales agent
contains the following entry on the Manila to Tokyo portion of the return
flight: from Manila to Tokyo, NW flight 002, date 17 January, time 10:30 A.M.
Status, OK.

On their return trip from Manila to the U.S. scheduled on January 17,
1982, petitioner arrived at the check-in counter of private respondent at the
Manila International Airport at 9:15 in the morning, which is a good one (1)
hour and fifteen (15) minutes ahead of the 10:30 A.M. scheduled flight time
recited in their tickets. Petitioners were rudely informed that they cannot be
accommodated inasmuch as Flight 002 scheduled at 9:15 a.m. was already
taking off and the 10:30 A.M. flight time entered in their plane tickets was
erroneous.

Previous to the said date of departure petitioners re-confirmed their

reservations through their representative Ernesto Madriaga who personally
presented the three (3) tickets at the private respondent's Roxas Boulevard
office. The departure time in the three (3) tickets of petitioners was not
changed when re-confirmed. The names of petitioners appeared in the
passenger manifest and confirmed as Passenger Nos. 306, 307, and 308,
Flight 002.

Herein petitioner Dr. Armovit protested in extreme agitation that

because of the bump-off he will not be able to keep his appointments with his
patients in the U.S. Petitioners suffered anguish, wounded feelings, and
serious anxiety day and night of January 17th until the morning of January
18th when they were finally informed that seats will be available for them on
the flight that day.

Because of the refusal of the private respondent to heed the repeated

demands of the petitioners for compensatory damages arising from the
aforesaid breach of their air-transport contracts, petitioners were compelled
to file an action for damages in the Regional Trial Court of Manila.

The RTC awarded actual damages, moral damages, exemplary

damages and nominal damages to the plaintiffs but the CA eliminated the
award for moral and nominal damages.

Issue: Whether or not the elimination of the CA of the award for moral
damages.

Held: Yes. The contention of the CA that the appellees did not take the
witness stand to testify on their "social humiliation, wounded feelings and
anxiety" and the breach of contract was not malicious or fraudulent was
without merit. The CA overlooked the fact that a year after the incident there
was a turmoil in the country because of the assassination of Benigno Aquino
and that violent demonstrations in the country were sensationalized in the
U.S. media so petitioners were advised to refrain from returning to the
Philippines at the time when they were scheduled to testify. Nevertheless,
Atty. Armovit, brother of Dr. Armovit, took the witness stand for he was there
from the time they checked in until the time they were rudely informed that
their flight had already taken off.

Angered and frustrated Dr. Armovit told the said check-in-officer that
he had to be accommodated that morning so that he could attend to all his
appointments in the U.S.; that petitioner Jacqueline Armovit also complained
about not being able to report for work at the expiration of her leave of
absence; that while petitioner had to accept private respondent's offer for
hotel accommodations at the Philippine Village Hotel so that they could follow
up and wait for their flight out of Manila the following day, petitioners did not
use their meal coupons supplied because of the limitations thereon so they
had to spend for lunch, dinner, and breakfast in the sum of P1,300.00 while
waiting to be flown out of Manila; that Dr. Armovit had to forego the
professional fees for the medical appointments he missed due to his inability
to take the January 17 flight; that the petitioners were finally able to fly out of
Manila on January 18, 1982, but were assured of this flight only on the very
morning of that day, so that they experienced anxiety until they were
assured seats for that flight.

No doubt Atty. Raymund Armovit's testimony adequately and

sufficiently established the serious anxiety, wounded feelings and social
humiliation that petitioners suffered upon having been bumped off. However,
considering the circumstances of this case whereby the private respondent
attended to the plight of the petitioners, taking care of their accommodations
while waiting and boarding them in the flight back to the U.S. the following
day, the Court finds that the petitioners are entitled to moral damages in the
amount of P100,000.00 each.

Also, the gross negligence committed by private respondent in the

issuance of the tickets with entries as to the time of the flight, the failure to
correct such erroneous entries and the manner by which petitioners were
rudely informed that they were bumped off are clear indicia of such malice
and bad faith and establish that private respondent committed a breach of
contract which entitles petitioners to moral damages.

The deletion of the nominal damages by the appellate court is well-

taken since there is an award of actual damages. Nominal damages cannot
co-exist with actual or compensatory damages.

Wherefore the decision of the CA is modified providing the award for

moral damages.

PHILIPPINE AIRLINES vs. COURT OF APPEALS

106 SCRA 391

Facts: Private respondent Jesus Samson flew as co-pilot on a regular flight

from Manila to Legaspi with Captain Delfin Bustamante in a plane belonging
to petitioner PAL. The airplane crash-landed beyond the runway due to the
slow reaction and poor judgment of said captain, when it did not maintain the
required pressure on the brakes and notwithstanding the diligent efforts of
Samson. The jolt caused injuries to Samson. And instead of PAL giving
Samson expert and proper medical treatment it referred him to a general
medical practitioner. Now, on grounds of physical disability Samson was
discharged from PAL’s employ, which caused him to file a complaint for
damages. PAL denied liability on the ground of fortuitous event, and that the
physical headaches and dizziness experience by Samson were due to
emotional disturbance over his inability to pass the required upgrading
course given by PAL. Judgement was rendered in favor of Samson in the
lower court which was affirmed by CA with some modification, by imposing
legal rate of interest on the unearned income of Samson. Hence the instant
petition.

Issue: Is there a causal connection between the injuries suffered by private

respondent during the accident and the subsequent periodic dizziness,
headache and general debility allegedly caused by the accident and private
respondent’s discharge from employment, which further warrants the award
of damages?

Held: Yes. The dizziness, headaches and general debility of private

respondent were after-effects of the crash-landing. Doctors presented by PAL
even admit the vital facts about Samson’s brain injury.
 There was also gross negligence by PAL for allowing Capt. Bustamante
to fly on the that fateful day of the accident, even if he was sick, having
tumor on his nose. No one will certify the fitness to fly a plane of one
suffering from the disease. One month prior to the crash-landing, when the
pilot was preparing to land in Daet, private respondent warned him that they
were not in the vicinity of Daet but above the town of Ligao. The plane hit
outside the airstrip. In another instance, the pilot would hit the Mayon
Volcano had not the plaintiff warned him. These more than prove what
private respondent had complained of. Disregard thereof by PAL is
condemnable.
Having affirmed the gross negligence and casual connection of the
after-effects of the accident, the award of damages was likewise affirmed.
The grant of compensatory damages[P204,000] by computing the basic
salary per annum at P750.00 a month and P300.00 a month for extra pay for
extra flying time including bonus every year is justified. The grant of moral
damages[P50,000] was also justified, having considered the bad faith of PAL.
The negligence of PAL is clearly a quasi-delict and therefore Art. 2219(2) is
applicable, justifying the recovery of moral damages. Even from the
standpoint of the petitioner that there is an employee-employer relationship
between it and private respondent arising from the contract of employment,
private respondent is still entitled to moral damages in view of the finding of
bad faith or malice, applying the provisions of Article 2220.

C. Exemplary Damages
PRUDENCIADO vs. ALLIANCE TRANSPORT SYSTEM, INC.

Facts: Petitioner was driving her own Chevrolet Bel Air car along Arroceros
Street with the intention of crossing Taft Avenue in order to turn left, to go to
the Philippine Normal College Compound where she would hold classes. She
claimed that she was driving her car at the rate of 10 kmph, that before
crossing Taft Ave. she stopped her car and looked to the right and to the left
and not noticing any on-coming vehicle on either side she slowly proceeded
on first gear to cross the same, but when she was almost at the center, near
the island thereof, Jose Leyson who was driving People's Taxicab owned and
operated by Alliance Transport System, Inc., suddenly bumped and struck
petitioner’s car, thereby causing physical injuries in different parts of her
body, suffering more particularly brain concussion while her car was
damaged to the extent of P2,451.27. The damage to the taxicab amounted to
P190.00. Petitioner filed a complaint for damages against respondents. The
lower court found Jose Leyson guilty of negligence. Alliance Transport
System, Inc. failed to prove to the satisfaction of the court that it had
exercised the required diligence of a good father of the family in the
selection, supervision and control of its employees. Both defendants were
held jointly and severally liable for the physical injuries suffered by the
plaintiff as well as for the damage to her car, in addition to the other
consequential damages prayed for. The award was P2,451.27 for actual
damages representing the cost for the repair of the car of plaintiff;
P25,000.00 as moral damages; P5,000.00 as exemplary damages; and the
further sum of P3,000.00 as attorney's fees, with costs against the
defendants. CA modified the award, reducing the amount of moral damages
from P25,000 to P2,000 and eliminating the award of exemplary damages
and attorney's fees. Hence the instant petition.

Issue: Whether or not the Court of Appeals is justified in modifying or

changing the grant of damages by the trial court.

Held: No. A careful review of the records makes it readily apparent that the
injuries sustained by petitioner are not as serious or extensive as they were
claimed to be, to warrant the damages awarded by the trial court. In fact, a
closer scrutiny of the exhibits showing a moderate damage to the car can by
no stretch of the imagination produce a logical conclusion that such
disastrous effects of the accident sought to be established, actually took
place, not to mention the fact that such were not supported by the medical
findings presented. Unquestionably, therefore, the damages imposed by the
lower court should be reduced to more reasonable levels. On the other hand,
it will be observed that the reduction of the damages made by the Court of
Appeals is both too drastic and unrealistic, to pass the test of
reasonableness, which appears to be the underlying basis to justify such
reduction. While the damages sought to be recovered were not satisfactorily
established to the extent desired by the petitioner, it was nonetheless not
disputed that an accident occurred due to the fault and negligence of the
respondents that Dra. Prudenciado suffered a brain concussion which
although mild can admittedly produce the effects complained of by her and
that these symptoms can develop after several years and can lead to some,
serious handicaps or predispose the patient to other sickness. Being a doctor
by profession, her fears can be more real and intense than an ordinary
person. Otherwise stated, she is undeniably a proper recipient of moral
damages which are proportionate to her suffering.
As to exemplary damages, Article 2231 of the Civil Code provides: “In
quasi-delicts, exemplary damages may be granted if the defendant acted
with grave negligence.” The rationale behind exemplary or corrective
damages is, as the name implies, to provide an example or correction for the
public good. The findings of the trial court is apparent, which became the
basis of the award of exemplary damages that respondent driver was running
at high speed after turning to the right along Taft Ave. coming from Ayala
Boulevard, considering that the traffic was clear. Failing to notice petitioner's
car, he failed to apply his brakes and did not even swerve to the right to
avoid the collision. Much more, it was raining that time and the roads are
slippery. The frequent incidence of accidents of this nature caused by taxi
drivers indeed demands corrective measures. This however was overruled by
CA and did not subscribed to the fact that the driver was grossly negligent, in
which this Court finds that it has erred.
DISPOSITIVE: PREMISES CONSIDERED, the assailed decision of the Court of
Appeals is hereby MODIFIED insofar as the award of damages is concerned;
and respondents are ordered to jointly and severally pay the petitioner; (1)
the sum of P2,451.27 for actual damages representing the cost of the repair
of her car; (2) the sum of P15,000.00 as moral damages; (3) the sum of
P5,000.00 as exemplary damages; and (4) the sum of P3,000.00 as attorney's
fees. No pronouncement as to costs.

MARCHAN vs. MENDOZA

Facts: A passenger bus of the Philippine Rabbit Bus Lines which was then
driven by Silverio Marchan fell into a ditch somewhere in Barrio Malanday,
Polo, Bulacan, while travelling on its way to Manila. As a result of which
Arsenio Mendoza, his wife and child, who were then inside the bus as
passengers were thrown out to the ground resulting in their multiple injuries.
Arsenio Mendoza suffered the most serious injuries which damaged his
vertebrae causing the paralysis of his lower extremities. An action was
brought to recover damages against petitioners predicated not only on a
breach of contract of carriage for failure to safely convey the plaintiffs to their
destination, but also on account of a criminal negligence on the part of
defendant driver. The lower court ruled in favor of plaintiffs. The award of
P40,000.00 as compensatory damages was affirmed by CA. It however added
the amount of P30,000.00 as exemplary damages and sustained the award of
attorney's fees in the amount of P5,000.00.

Issue: Whether or not there should be an award of exemplary damages.

Held: Yes. It is argued that this Court is without jurisdiction to adjudicate the
exemplary damages since there was no allegation nor prayer, nor proof, nor
counterclaim of error for the same by the respondents. It is to be observed
however, that in the complaint, plaintiffs "prayed for such other and further
relief as this Court may deem just and equitable." Now, since the body of the
complaint sought to recover damages against the defendant-carrier wherein
plaintiffs prayed for indemnification for the damages they suffered as a result
of the negligence of the driver who is appellant's employee and since
exemplary damages is intimately connected with general damages, plaintiffs
may not be expected to single out by express term the kind of damages they
are trying to recover against the defendant's carrier. Suffice it to state that
when plaintiffs prayed in their complaint for such other relief and remedies
that may be availed of under the premises, in effect, therefore, the court is
called upon the exercise and use its discretion whether the imposition of
punitive or exemplary damages even though not expressly prayed or pleaded
in the plaintiffs' complaint. Exemplary damages may be imposed by way of
example or correction only in addition, among others, to compensatory
damages, but that they cannot be recovered as a matter of right, their
determination depending upon the discretion of the court. If the amount of
exemplary damages need not be proved, it need not also be alleged, and the
reason is obvious because it is merely incidental or dependent upon what the
court may award as compensatory damages.
There is no reason to consider that the lower court erred in awarding
the P5,000 attorneys fees. A modification of the decision however is proper.
Respondents are entitled to interest for the amount of compensatory
damages from the date of the decision of the lower court and legal interest
on the exemplary damages from the date of the decision of the Court of
Appeals.