TRANSPORTATION LAW (HOJILLA)

G.R. No. 80447; January 31, 1989

Since a contract may be violated only by the parties thereto, as against each other, in an
action upon that contract, the real parties in interest must be parties to said contract. A real
party-in-interest -plaintiff is one who has a legal right while a real party-in-interest-defendant
is one who has a correlative legal obligation whose act or omission violates the legal right of
the former. In the absence of any contract of carriage between Baliwag and George's
parents, the latter are not real parties-in-interest in an action for breach of that contract.

BALIWAG TRANSIT, INC., petitioner vs. CA and SPS. SOTERO & ZENAIDA
and son GEORGE L. CAILIPAN, respondents
MELENCIO-HERRERA, J.:
FACTS:
In 1985, a Complaint for damages arising from breach of contract of carriage was filed by
Spouses Cailipan against Baliwag Transit, alleging that George, who was a paying passenger
on a Baliwag bus, suffered multiple serious physical injuries when he was thrown off said bus
driven in a careless and negligent manner by Leonardo Cruz, the authorized bus driver, along
Marilao, Bulacan. He was hospitalized and incurred expenses worth P210,000.00.

The general rule of the common law is that every action must be brought in the name of the
party whose legal right has been invaded or infringed.
There is no question regarding the genuineness and due execution of the Release of Claims.
It is a duly notarized public document. The Release of Claims had the effect of a compromise
agreement. A compromise is a contract whereby the parties, by making reciprocal
concessions, avoid litigation or put an end to one already commenced (Article 2028, NCC).

Baliwag alleged that the cause of the injuries sustained by George was solely attributable to
his own voluntary act in that, without warning and provocation, he suddenly stood up from
his seat, headed for the door and jumped off while said bus was in motion.

RTC Decision REINSTATED, and the Complaint and Third-Party Complaint are DISMISSED.

Baliwag then filed a Third-Party Complaint against Fortune Insurance & Surety Company, Inc.,
for P50,000.00. Fortune Insurance claimed limited liability.

G.R. No. 92288; February 9, 1993

BRITISH AIRWAYS, INC., petitioner vs. CA and FIRST INTERNATIONAL

TRADING AND GENERAL SERVICES, respondents

Motions to Dismiss were filed since George, in consideration of P8,020.50 executed and
signed a "Release of Claims", witnessed by his brother Benjamin, a licensed engineer.

NOCON, J.:
Sotero Cailipan, Jr. testified that he is the father of George, who was a student, living with his
parents and totally dependent on them; that the expenses for his hospitalization were
shouldered by his parents; and that they had not signed the "Release of Claims."

FACTS:
In 1981, First International, a duly licensed domestic recruitment and placement agency,
received a telex message from its principal ROLACO Engineering and Contracting Services in
Jeddah, Saudi Arabia to recruit Filipino contract workers. ROLACO paid to the Jeddah branch
of British Airways, Inc. airfare tickets for 93 contract workers.

RTC Bulacan dismissed the Complaints, ruling that since the contract of carriage is between
Baliwag and George L. Cailipan, the latter, who is of legal age, had the exclusive right to
execute the Release of Claims which discharges Baliwag and Fortune Insurance. CA reversed.
Hence, this Petition for Review on certiorari.

As soon as BAI received a prepaid ticket advice, FITGS was immediately informed. Thereafter,
FITGS instructed its travel agent, ADB Travel and Tours. Inc., to book the 93 workers but the
latter BAI failed to fly said workers, thereby compelling FITGS to borrow P304,416.00 in order
to purchase airline tickets from the other airlines. FITGS was again informed by BAI that it
had received a prepaid ticket advice for the transportation of 27 contract workers. However,
on the date of the scheduled flight only 9 workers were able to board said flight while the
remaining 7 workers were rebooked which bookings were again cancelled by BAI without any
prior notice. Rebooking and cancellations continued.

ISSUE:
Whether the Release of Claims executed by George has legal effect.
HELD:
YES. Since the suit is one for breach of contract of carriage, the Release of Claims executed by
him, as the injured party, discharging Fortune Insurance and Baliwag from any and all
liability, is valid. He was then of legal age, a graduating student of Agricultural Engineering,
and had the capacity to do acts with legal effect (Article 37 in relation to Article 402, Civil
Code). Thus, he could sue and be sued even without the assistance of his parents.

As a result of these incidents, FITGS sent a letter to BAI demanding compensation for the
damages it had incurred by the latter's repeated failure to transport its contract workers
despite confirmed bookings and payment of the corresponding travel taxes. FITGS sent
another letter demanding P350,000.00 representing damages and unrealized profit.

Significantly, the contract of carriage was actually between George, as the paying passenger,
and Baliwag, as the common carrier. As such carrier, Baliwag was bound to carry its
passengers safely as far as human care and foresight could provide, and is liable for injuries
to them through the negligence or willful acts of its employees (Articles 1755 and 1759, Civil
Code). Thus, George had the right to be safely brought to his destination and Baliwag had the
correlative obligation to do so.

FITGS received a telex message from its principal cancelling the hiring of the remaining
recruited workers due to the delay in transporting the workers to Jeddah.
FITGS filed a complaint for damages against BAI in RTC Manila. BAI alleged that it was due to
the unavailability of space and limited time. As to consequent bookings, it was the contract
workers which did not show up on the flight schedules.

TRANSPORTATION LAW (HOJILLA)

FITGS is not anymore entitled to actual damages since its principal has already reimbursed
said expenses. However, it is entitled to an award of moral and exemplary damages for the
injury suffered as a result of BAIs failure to transport the former's workers because of the
latter's patent bad faith in the performance of its obligation. And all of these actuations
constitute malice and evident bad faith which had caused damage and besmirched the
reputation and business image of FITGS.

RTC ordered BAI to pay FITGS. CA affirmed. MR denied. Hence, this petition.
BAI contend that FITGS has no cause of action against it there being no perfected contract of
carriage existing between them as no ticket was ever issued to the contract workers and,
therefore, the obligation to transport said contract workers did not arise.
ISSUE:
Whether FITGS has cause of action against BAI.

G.R. No. 145804; February 6, 2003

LIGHT RAIL TRANSIT AUTHORITY & RODOLFO ROMAN, petitioners vs.

MARJORIE NAVIDAD, Heirs of the Late NICANOR NAVIDAD & PRUDENT
SECURITY AGENCY, respondents

HELD:
YES. FITGS had a valid cause of action for damages against BAI. A cause of action is an act or
omission of one party in violation of the legal rights of the other. BAI's repeated failure to
transport the workers in its flight despite confirmed booking of said workers clearly
constitutes breach of contract and bad faith on its part.

VITUG, J.:
FACTS:
In 1993, about 7:30pm, Nicanor Navidad, then drunk, entered the EDSA LRT station after
purchasing a "token" (representing payment of the fare). While Navidad was standing on the
platform near the LRT tracks, Junelito Escartin, the security guard assigned to the area
approached Navidad. A misunderstanding or an altercation between the two apparently
ensued that led to a fist fight. No evidence was adduced to indicate how the fight started or
who delivered the first blow or how Navidad later fell on the LRT tracks. At the exact moment
that Navidad fell, an LRT train, operated by Rodolfo Roman, was coming in. Navidad was
struck by the moving train, and he was killed instantaneously.

In dealing with the contract of common carriage of passengers for purpose of accuracy, there
are two (2) aspects of the same, namely: (a) the contract "to carry (at some future time),"
which contract is consensual and is necessarily perfected by mere consent, and (b) the
contract "of carriage" or "of common carriage" itself which should be considered as a real
contract for not until the carrier is actually used can the carrier be said to have already
assumed the obligation of a carrier.

In 1994, the widow of Nicanor, Marjorie Navidad, along with her children, filed a complaint
for damages against Junelito Escartin, Rodolfo Roman, the LRTA, the Metro Transit
Organization, Inc. (Metro Transit), and Prudent for the death of her husband. Prudent denied
liability and averred that it had exercised due diligence in the selection and supervision of its
security guards.

In the instant case, the contract "to carry" is the one involved which is consensual and is
perfected by the mere consent of the parties.
There is no dispute as to FITGS's consent to the said contract "to carry" its contract workers
from Manila to Jeddah. BAI's consent thereto, on the other hand, was manifested by its
acceptance of the PTA or prepaid ticket advice.

RTC ordered Prudent Security and Junelito Escartin to pay jointly and severally while it
dismissed complaints against LRTA and Rodolfo Roman for lack of merit. CA exonerated
Prudent from any liability and, instead, held the LRTA and Roman jointly and severally liable.

Even if a PTA is merely an advice, the fact remains that the passage had already been paid for
by the principal of FITGS, and BAI had accepted such payment. Thus, the cause or
consideration which is the fare paid for the passengers exist in this case.

CA ratiocinated that while the deceased might not have then as yet boarded the train, a
contract of carriage had already existed when the victim entered the place where passengers
were supposed to be after paying the fare. MR denied. Hence, the recourse.

The third essential requisite of a contract is an object certain. In this contract "to carry", such
an object is the transport of the passengers from the place of departure to the place of
destination as stated in the telex.

ISSUE:
Whether LRTA and Roman are liable, as held by the CA.

Accordingly, there could be no more pretensions as to the existence of an oral contract of

carriage imposing reciprocal obligations on both parties.

HELD:
NO. Only LRTA is liable. Law and jurisprudence dictate that a common carrier, both from the
nature of its business and for reasons of public policy, is burdened with the duty of exercising
utmost diligence in ensuring the safety of passengers. The Civil Code, governing the liability
of a common carrier for death of or injury to its passengers, provides:
Article 1755. A common carrier is bound to carry the passengers safely as far as human care
and foresight can provide, using the utmost diligence of very cautious persons, with a due
regard for all the circumstances.

In the case of FITGS, it has fully complied with the obligation, namely, the payment of the
fare and its willingness for its contract workers to leave for their place of destination. On the
other hand, the facts clearly show that BAI was remiss in its obligation to transport the
contract workers on their flight despite confirmation and bookings made by FITGS's travelling
agent. Besides, BAI knew very well that time was of the essence as the prepaid ticket advice
had specified the period of compliance.

TRANSPORTATION LAW (HOJILLA)

Article 1756. In case of death of or injuries to passengers, common carriers are presumed to
have been at fault or to have acted negligently, unless they prove that they observed
extraordinary diligence as prescribed in articles 1733 and 1755.
Article 1759. Common carriers are liable for the death of or injuries to passengers through the
negligence or willful acts of the formers employees, although such employees may have
acted beyond the scope of their authority or in violation of the orders of the common carriers.
This liability of the common carriers does not cease upon proof that they exercised all the
diligence of a good father of a family in the selection and supervision of their employees.
Article 1763. A common carrier is responsible for injuries suffered by a passenger on account
of the willful acts or negligence of other passengers or of strangers, if the common carriers
employees through the exercise of the diligence of a good father of a family could have
prevented or stopped the act or omission.

would be solidary. But the lower courts already saw no connection to link Prudent to liability.
There being, similarly, no showing that petitioner Rodolfo Roman himself is guilty of any
culpable act or omission, he must also be absolved from liability.
G.R. No. L-47822; December 22, 1988

PEDRO DE GUZMAN, petitioner vs. CA and ERNESTO

CENDANA, respondents
FELICIANO, J.:
FACTS:
Ernesto Cendana, a junk dealer, was engaged in buying up used bottles and scrap metal in
Pangasinan. Upon gathering sufficient quantities, he would bring them to Manila for resale
through two (2) six-wheeler trucks which he owned. On the return trip to Pangasinan, he
would load his vehicles with cargo which various merchants wanted delivered to different
establishments in Pangasinan. For that service, he charged freight rates which were
commonly lower than regular commercial rates.

The law requires common carriers to carry passengers safely using the utmost diligence of
very cautious persons with due regard for all circumstances. Such duty of a common carrier
to provide safety to its passengers so obligates it not only during the course of the trip but
for so long as the passengers are within its premises and where they ought to be in
pursuance to the contract of carriage.

In 1970, Pedro de Guzman, a merchant and authorized dealer of General Milk Company Phil.,
Inc. in Urdaneta, Pangasinan, contracted with Cendana for the hauling of 750 cartons of
Liberty filled milk from a warehouse in Makati, Rizal, to de Guzman's establishment in
Urdaneta. Accordingly, Cendana loaded in Makati the merchandise on to his trucks: 150
cartons were loaded on a truck driven by himself, while 600 cartons were placed on board
the other truck which was driven by Manuel Estrada, his driver and employee.

The statutory provisions render a common carrier liable for death of or injury to passengers
(a) through the negligence or wilful acts of its employees or b) on account of wilful acts or
negligence of other passengers or of strangers if the common carriers employees through
the exercise of due diligence could have prevented or stopped the act or omission.

Only 150 boxes of Liberty filled milk were delivered to de Guzman. The other 600 boxes
never reached him, 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.

In case of such death or injury, a carrier is presumed to have been at fault or been negligent,
and by simple proof of injury, the passenger is relieved of the duty to still establish the fault
or negligence of the carrier or of its employees and the burden shifts upon the carrier to
prove that the injury is due to an unforeseen event or to force majeure. In the absence of
satisfactory explanation by the carrier on how the accident occurred, which petitioners,
according to the appellate court, have failed to show, the presumption would be that it has
been at fault, an exception from the general rule that negligence must be proved.

In 1971, de Guzman commenced action against Cendana in CFI Pangasinan, alleging that
Cendana, 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.

The foundation of LRTAs liability is the contract of carriage and its obligation to indemnify
the victim arises from the breach of that contract by reason of its failure to exercise the high
diligence required of the common carrier. In the discharge of its commitment to ensure the
safety of passengers, a carrier may choose to hire its own employees or avail itself of the
services of an outsider or an independent firm to undertake the task. In either case, the
common carrier is not relieved of its responsibilities under the contract of carriage.

Cendana 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.
In 1975, RTC held Cendana to be a common carrier and thus liable. CA reversed the judgment
and held that Cendana had been engaged in transporting return loads of freight "as a casual
occupation a sideline to his scrap iron business and not as a common carrier. Hence, this
Petition for Review.

The premise, however, for the employers liability is negligence or fault on the part of the
employee. Once such fault is established, the employer can then be made liable on the basis
of the presumption juris tantum that the employer failed to exercise diligentissimi patris
families in the selection and supervision of its employees. The liability is primary and can only
be negated by showing due diligence in the selection and supervision of the employee, a
factual matter that has not been shown.

ISSUE:
Whether Cendana may, under the facts, be properly characterized as a common carrier.
HELD:
YES. The Civil Code defines "common carriers" in the following terms:
Article 1732. Common carriers are persons, corporations, firms or associations engaged in the
business of carrying or transporting passengers or goods or both, by land, water, or air for
compensation, offering their services to the public.

Absent such a showing, one might ask further, how then must the liability of the common
carrier, on the one hand, and an independent contractor, on the other hand, be described? It

TRANSPORTATION LAW (HOJILLA)

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

The hijacking of the carrier's truck does not fall within any of the five (5) 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.
The precise issue that we address here relates to the specific requirements of the duty of
extraordinary diligence in the vigilance over the goods carried in the specific context of
hijacking or armed robbery.
Article 1745 provides in relevant part:

So understood, the concept of "common carrier" under Article 1732 may be seen to coincide
neatly with the notion of "public service," under the Public Service Act.

Any of the following or similar stipulations shall be considered unreasonable, unjust and
contrary to public policy:
xxx xxx xxx
(5) that the common carrier shall not be responsible for the acts or omissions of his or its
employees;
(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;
and
(7) that the common carrier shall not responsible for the loss, destruction or deterioration of
goods on account of the defective condition of the car vehicle, ship, airplane or other
equipment used in the contract of carriage.

It appears to the Court that Cendana is properly characterized as a common carrier even
though he merely "back-hauled" goods for other merchants from Manila to Pangasinan,
although such back-hauling was done on a periodic or occasional rather than regular or
scheduled manner, and even though private respondent's principal occupation was not the
carriage of goods for others. There is no dispute that private respondent charged his
customers a fee for hauling their goods; that fee frequently fell below commercial freight
rates is not relevant here.
CA referred to the fact that Cendana held no certificate of public convenience, and concluded
he was not a common carrier. This is palpable error. A certificate of public convenience is not
a requisite for the incurring of liability under the Civil Code provisions governing common
carriers.

Under Article 1745 (6) above, a common carrier is held responsible and will not be allowed
to divest or to diminish such responsibility even for acts of strangers like thieves or
robbers, except where such thieves or robbers in fact acted "with grave or irresistible threat,
violence or force." We believe and so hold that the limits of the duty of extraordinary
diligence in the vigilance over the goods carried are reached where the goods are lost as a
result of a robbery which is attended by "grave or irresistible threat, violence or force."

Common carriers, "by the nature of their business and for reasons of public policy" are held
to a very high degree of care and diligence ("extraordinary diligence") in the carriage of
goods as well as of passengers. The specific import of extraordinary diligence in the care of
goods transported by a common carrier is, according to Article 1733, "further expressed in
Articles 1734, 1735 and 1745, numbers 5, 6 and 7" of the Civil Code.

In the instant case, armed men held up the second truck owned by private respondent which
carried petitioner's cargo. The decision of the trial court shows that the accused acted with
grave, if not irresistible, threat, violence or force. 3 of the 5 hold-uppers were armed with
firearms. The robbers not only took away the truck and its cargo but also kidnapped the
driver and his helper, detaining them for several days.

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;
(5) Order or act of competent public authority.

In these circumstances, 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.

It is important to point out that the above list of causes of loss, destruction or deterioration
which exempts the common carrier for responsibility is a closed list.

Cendana is not liable for the value of the undelivered merchandise which was lost because of
an event entirely beyond private respondent's control.

Article 1735, 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.

G.R. No. 186312; June 29, 2010

TRANSPORTATION LAW (HOJILLA)

afford to pay the same. These services are thus available to the public. That respondent does
not charge a separate fee or fare for its ferry services is of no moment.

SPOUSES DANTE & LEONORA CRUZ, petitioners vs. SUN HOLIDAYS, INC.,
respondent
CARPIO MORALES, J.:
FACTS:
In 2001, Spouses Cruz lodged a Complaint against Sun Holidays, Inc. in RTC Pasig for damages
arising from the death of their son Ruelito who perished with his wife in 2000 on board the
boat M/B Coco Beach III that capsized en route to Batangas from Puerto Galera, Oriental
Mindoro where the couple had stayed at Coco Beach Island Resort. The stay of the newlywed Ruelito and his wife at the Resort was by virtue of a tour package-contract with SHI that
included transportation to and from the Resort and the point of departure in Batangas.

PAGASA issued 24-hour public weather forecasts and tropical cyclone warnings for shipping
and squalls are to be expected under such weather condition. A very cautious person
exercising the utmost diligence would thus not brave such stormy weather and put other
peoples lives at risk. The extraordinary diligence required of common carriers demands that
they take care of the goods or lives entrusted to their hands as if they were their own. This
respondent failed to do.
To fully free a common carrier from any liability, the fortuitous event must have been
the proximate and only cause of the loss. And it should have exercised due diligence to
prevent or minimize the loss before, during and after the occurrence of the fortuitous event.
There was an engine trouble before the ferry capsized. The incident was, therefore, not
completely free from human intervention.

Miguel C. Matute, a scuba diving instructor and one of the survivors, gave his account of the
incident: He and 25 other Resort guests including Ruelito and his wife trekked to the other
side of the Coco Beach Mountain that was sheltered from the wind where they boarded M/B
Coco Beach III. Shortly after the boat sailed, it started to rain. After getting hit by two big
waves, the ferry capsized putting all passengers underwater.

Article 1764 vis--vis Article 2206 of the Civil Code holds the common carrier in breach of its
contract of carriage that results in the death of a passenger liable to pay the following: (1)
indemnity for death, (2) indemnity for loss of earning capacity and (3) moral damages.

The passengers, who had put on their life jackets, struggled to get out of the boat. The
captain told them Iligtas niyo na lang ang sarili niyo (Just save yourselves). Help came after
about 45 minutes when two boats owned Asia Divers passed by. Eight passengers died.

SHI ordered to pay: (1) P50,000 as indemnity for the death of Ruelito Cruz; (2) P8,316,000 as
indemnity for Ruelitos loss of earning capacity; (3) P100,000 as moral damages; (4)P100,000
as exemplary damages; (5) 10% of the total amount adjudged against respondent as
attorneys fees; and (6) the costs of suit.

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

G.R. No. 147246; August 19, 2003

Spouses Cruz, by letter, demanded indemnification for the death of their son for at
least P4,000,000. SHI denied any responsibility for the incident which it considered to be a
fortuitous event. It nevertheless offered, as an act of commiseration, P10,000 upon signing
of a waiver. Spouses Cruz declined SHIs offer, alleging that SHI, as a common carrier, was
guilty of negligence in allowing M/B Coco Beach III to sail notwithstanding storm warning
bulletins issued by PAGASA.

ASIA LIGHTERAGE AND SHIPPING, INC., petitioner vs. CA and PRUDENTIAL

GUARANTEE AND ASSURANCE, INC., respondents
PUNO, J.:
FACTS:
In 1990, 3,150 metric tons of Better Western White Wheat in bulk, valued at
US$423,192.35 was shipped by Marubeni American Corporation of Portland, Oregon on
board the vessel M/V NEO CYMBIDIUM V-26 for delivery to the consignee, General Milling
Corporation in Manila. The shipment was insured by Prudential Guarantee and Assurance,
Inc. against loss or damage for P14,621,771.75.

RTC dismissed the complaint. MR denied. CA affirmed, holding that SHI is a private carrier
which is only required to observe ordinary diligence; in fact observed extraordinary diligence
in transporting its guests on board M/B Coco Beach III; and that the proximate cause of the
incident was a squall, a fortuitous event. Hence, the petition for review.

The carrying vessel arrived in Manila and the cargo was transferred to the custody of Asia
Lighterage and Shipping, Inc., which was contracted by the consignee as carrier to deliver the
cargo to consignee's warehouse in Pasig City.

ISSUE:
Whether the resorts ferry services are considered as common carrier.
HELD:
YES. Petitioners correctly rely on De Guzman v. Court of Appeals in characterizing respondent
as a common carrier. Article 1732 defines common carriers and makes no distinction.

900 metric tons of the shipment was loaded on barge PSTSI III. The cargo did not reach its
destination. It appears that the transport of said cargo was suspended due to a warning of an
incoming typhoon. Petitioner proceeded to pull the barge to Engineering Island off Baseco to
seek shelter from the approaching typhoon. A few days after, the barge developed a list
because of a hole it sustained after hitting an unseen protuberance underneath the water.
The petitioner secured the services of Gaspar Salvaging Corporation which refloated the
barge. The hole was then patched with clay and cement.

Indeed, SHI is a common carrier. Its ferry services are so intertwined with its main business
as to be properly considered ancillary thereto. The constancy of respondents ferry services
in its resort operations is underscored by its having its own Coco Beach boats. And the tour
packages it offers, which include the ferry services, may be availed of by anyone who can

TRANSPORTATION LAW (HOJILLA)

The barge was then towed to ISLOFF terminal before it finally headed towards the
consignee's wharf. Upon reaching the Sta. Mesa spillways, the barge again ran aground due
to strong current. To avoid the complete sinking of the barge, a portion of the goods was
transferred to three other barges. The next day, the towing bits of the barge broke. It sank
completely, resulting in the total loss of the remaining cargo.

In the case at bar, the barge completely sank after its towing bits broke, resulting in the total
loss of its cargo. Petitioner claims that this was caused by a typhoon, hence, it should not be
held liable for the loss of the cargo. However, petitioner failed to prove that the typhoon is
the proximate and only cause of the loss of the goods, and that it has exercised due diligence
before, during and after the occurrence of the typhoon to prevent or minimize the loss. The
evidence shows that, even before the towing bits of the barge broke, it had already
previously sustained damage when it hit a sunken object while docked at the Engineering
Island. It even suffered a hole. Clearly, this could not be solely attributed to the typhoon.
Thus, when petitioner persisted to proceed with the voyage, it recklessly exposed the cargo
to further damage. Petitioner also still headed to the consignee's wharf despite knowledge of
an incoming typhoon.

The total proceeds from the sale of the salvaged cargo was P201,379.75. Consignee sent a
claim letter to the ALSI, and another letter to Prudential for the value of the lost cargo. In
1991, Prudential indemnified the consignee for P4,104,654.22. Thereafter, as subrogee, it
sought recovery of said amount from ALSI, but to no avail. Prudential filed a complaint for
recovery of the amount of indemnity, attorney's fees and cost of suit.
RTC ruled in favor of Prudential, making ALSI liable. CA affirmed. MR denied. Hence, the
petition. ALSI insisted that it is not a common carrier.

Accordingly, the petitioner cannot invoke the occurrence of the typhoon as force majeure to
escape liability for the loss sustained by the private respondent. Surely, meeting a typhoon
head-on falls short of due diligence required from a common carrier. The typhoon then is not
the proximate cause of the loss of the cargo; a human factor, i.e., negligence had intervened.
Petition DENIED.

ISSUE:
(1) Whether the petitioner is a common carrier; YES
(2) Assuming the petitioner is a common carrier, whether it exercised extraordinary diligence
in its care and custody of the consignee's cargo. NO

G.R. No. 125948; December 29, 1998

FIRST PHILIPPINE INDUSTRIAL CORPORATION, petitioner vs. CA,

HONORABLE PATERNO V. TAC-AN, BATANGAS CITY and ADORACION C.
ARELLANO, as City Treasurer of Batangas, respondents

HELD:
ALSI is a common carrier. Article 1732 of the Civil Code defines common carriers. In De
Guzman vs. Court of Appeals, Article 1732 makes no distinction. In the case at bar, the
principal business of the petitioner is that of lighterage and drayage and it offers its barges to
the public for carrying or transporting goods by water for compensation. Petitioner is clearly
a common carrier. Petitioner is a common carrier whether its carrying of goods is done on an
irregular rather than scheduled manner, and with an only limited clientele. A common carrier
need not have fixed and publicly known routes. Neither does it have to maintain terminals or
issue tickets.

MARTINEZ, J.:
FACTS:
FPIC is a grantee of a pipeline concession under RA 387, to contract, install and operate oil
pipelines. In 1995, it applied for a mayor's permit in Batangas City. However, before issuance,
the City Treasurer required FPIC to pay a local tax based on its gross receipts for the fiscal
year 1993 pursuant to LGC, worth P956,076.04.
In 1994, FPIC filed a letter-protest alleging that it should be exempted. The City Treasurer
denied the protest contending that FPIC cannot be considered engaged in transportation
business, thus it cannot claim exemption under Section 133 (j) of the LGC as said exemption
applies only to "transportation contractors and persons engaged in the transportation by hire
and common carriers by air, land and water."

The test to determine a common carrier is "whether the given undertaking is a part of the
business engaged in by the carrier which he has held out to the general public as his
occupation rather than the quantity or extent of the business transacted." In the case at bar,
the petitioner admitted that it is engaged in the business of shipping and lighterage, offering
its barges to the public, despite its limited clientele for carrying or transporting goods by
water for compensation.

FPIC filed with RTC Batangas City a complaint for tax refund. RTC dismissed the complaint.
Tax exemptions are strictly construed against the applicant. Neither RA 387 nor the deed of
concession grants any tax exemption upon the plaintiff. CA affirmed. MR denied. Hence, the
petition for review.

On the second issue, petitioner failed to exercise extraordinary diligence in its care and
custody of the consignee's goods.
Common carriers are bound to observe extraordinary diligence in the vigilance over the
goods transported by them. They are presumed to have been at fault or to have acted
negligently if the goods are lost, destroyed or deteriorated. To overcome the presumption of
negligence in the case of loss, destruction or deterioration of the goods, the common carrier
must prove that it exercised extraordinary diligence. There are, however, exceptions to this
rule. Article 1734 of the Civil Code enumerates the instances when the presumption of
negligence does not attach.

ISSUE:
Whether the CA erred in holding that (1) the petitioner is not a common carrier or a
transportation contractor, and (2) the exemption sought for by petitioner is not clear under
the law.
HELD:
YES. A "common carrier" may be defined, broadly, as one who holds himself out to the public
as engaged in the business of transporting persons or property from place to place, for

TRANSPORTATION LAW (HOJILLA)

compensation, offering his services to the public generally. It is defined in Art. 1732 of the
Civil Code.

Kisen Kabushiki Kaisha (KKKK) from Kenai, Alaska, U.S.A., to Poro Point, San Fernando, La
Union, Philippines.

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

In 1974, or prior to its voyage, a time charter-party on the vessel M/V "Sun Plum" pursuant
to the Uniform General Charter was entered into between Mitsubishi as shipper/charterer
and KKKK as shipowner, in Tokyo, Japan.
Before loading the fertilizer aboard the vessel, four (4) of her holds were all presumably
inspected by the charterer's representative and found fit to take a load of urea in bulk
pursuant to par. 16 of the charter-party. Upon arrival of the vessel at her port of call,
petitioner unloaded the cargo from the holds into its steel-bodied dump trucks, pursuant to
the terms and conditions of the charter-partly.

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

It took eleven (11) days for PPI to unload the cargo. 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 revealed a shortage in the cargo of 106.726 M/T and
that a portion of the Urea fertilizer approximating 18 M/T was contaminated with dirt thus
unfit for commerce.

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

Consequently, PPI sent a claim letter to Soriamont Steamship Agencies (SSA), the resident
agent of the carrier, KKKK, for P245,969.31 representing the cost of the alleged shortage in
the goods shipped and the diminution in value of that portion said to have been
contaminated with dirt.

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

PPI filed an action for damages with CFI Manila. 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. CFI sustained PPI. CA
reversed and absolved the carrier from liability for the value of the cargo that was lost or
damaged. Hence, the petition for review.

Under Art. 86 of the Petroleum Act of the Philippines (Republic Act 387), petitioner is
considered a "common carrier." The Bureau of Internal Revenue likewise considers the
petitioner a "common carrier."

ISSUE:
Whether a common carrier becomes a private carrier by reason of a charter-party. NO
In the negative, whether the ship owner in the instant case was able to prove that he had
exercised that degree of diligence required of him under the law. YES

From the foregoing disquisition, there is no doubt that petitioner is a "common carrier" and,
therefore, exempt from the business tax as provided for in Section 133 (j), of the LGC. It is
clear that the legislative intent in excluding from the taxing power of the LGU the imposition
of business tax against common carriers is to prevent a duplication of the so-called "common
carrier's tax." To tax petitioner again on its gross receipts in its transportation of petroleum
business would defeat the purpose of the LGC. Petition GRANTED.

HELD:
A "charter-party" is defined as a contract by which an entire ship, or some principal part
thereof, is let by the owner to another person for a specified time or use in consideration of
the payment of freight.

G.R. No. 101503; September 15, 1993

A "common or public carrier" is defined in Art. 1732 of the Civil Code. The definition extends
to carriers either by land, air or water which hold themselves out as ready to engage in
carrying goods or transporting passengers or both for compensation as a public employment
and not as a casual occupation. The distinction between a "common or public carrier" and a
"private or special carrier" lies in the character of the business, such that if the undertaking is
a single transaction, not a part of the general business or occupation, although involving the
carriage of goods for a fee, the person or corporation offering such service is a private
carrier.

PLANTERS PRODUCTS, INC., petitioner vs. CA, SORIAMONT STEAMSHIP

AGENCIES AND KYOSEI KISEN KABUSHIKI KAISHA, respondents
BELLOSILLO, J.:
FACTS:
Planters Products, Inc. (PPI), purchased from Mitsubishi International Corporation
(MITSUBISHI) of New York, U.S.A., 9,329.7069 metric tons of Urea 46% fertilizer which the
latter shipped in bulk in 1974 aboard the cargo vessel M/V "Sun Plum" owned by Kyosei

TRANSPORTATION LAW (HOJILLA)

G.R. No. 111127; July 26, 1996
Article 1733 of the New Civil Code mandates that common carriers, by reason of the nature
of their business, should observe extraordinary diligence in the vigilance over the goods they
carry. In the case of private carriers, however, the exercise of ordinary diligence in the
carriage of goods will suffice.

MR. & MRS. ENGRACIO FABRE, JR. and PORFIRIO CABIL, petitioners vs. CA,
THE WORD FOR THE WORLD CHRISTIAN FELLOWSHIP, INC., et
al., respondents
MENDOZA, J.:
FACTS:
Engracio Fabre, Jr. and his wife were owners of a 1982 model Mazda minibus. They used the
bus principally as a bus service for school children. The couple had a driver, Porfirio J. Cabil,
whom they hired in 1981, after trying him out for two weeks. His job was to take school
children to and from the St. Scholastica's College in Malate, Manila.

Moreover, in the case of loss, destruction or deterioration of the goods, common carriers are
presumed to have been at fault or to have acted negligently, and the burden of proving
otherwise rests on them. On the contrary, no such presumption applies to private carriers,
for whosoever alleges damage to or deterioration of the goods carried has the onus of
proving that the cause was the negligence of the carrier.

In 1984, Word for the World Christian Fellowship Inc. (WWCF) arranged with petitioners for
the transportation of 33 members of its Young Adults Ministry from Manila to La Union and
back in consideration of which it paid P3,000.00. The schedule to leave was 5pm but as
several members of the party were late, the bus did not leave until 8pm.

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.

The usual route to Caba, La Union was through Carmen, Pangasinan. However, the bridge at
Carmen was under repair, so Cabil, who was unfamiliar with the area (it being his first trip to
La Union), was forced to take a detour through the town of Baay in Lingayen, Pangasinan. At
11:30 that night, Cabil came upon a sharp curve on the highway, which he described as
"siete." The road was slippery because it was raining, causing the bus, which was running at
the speed of 50 kph, to skid. The bus hit the left traffic steel brace and rammed the fence of
one Jesus Escano, turned over and came to a full stop only after a series of impacts. A
coconut tree which it had hit fell on it and smashed its front portion.

It is therefore imperative that a public carrier shall remain as such, notwithstanding the
charter of the whole or portion of a vessel by one or more persons, provided the charter is
limited to the ship only, as in the case of a time-charter or voyage-charter. It is only when the
charter includes both the vessel and its crew, as in a bareboat or demise that a common
carrier becomes private, at least insofar as the particular voyage covering the charter-party is
concerned.
Respondent carrier has sufficiently overcome, by clear and convincing proof, the prima facie
presumption of negligence. It was cleaned thoroughly.

Cabil claimed he did not see the curve until it was too late. The Lingayen police investigated
the incident and filed a criminal complaint against Cabil. Fabre paid Jesus Escano P1,500.00
for the damage to the latter's fence.

The period during which private respondent was to observe the degree of diligence required
was prior to unloading. Moreover, a shipowner is liable for damage to the cargo resulting
from improper stowage only when the stowing is done by stevedores employed by him, and
therefore under his control and supervision, not when the same is done by the consignee or
stevedores under the employ of the latter.

Amyline Antonio, who was seriously injured, brought this case in RTC Makati. As a result of
the accident, she is now suffering from paraplegia and is permanently paralyzed from the
waist down. RTC ruled against Mr. & Mrs. Fabre and Cabil pursuant to articles 2176 and 2180
of the Civil Code and ordered them to pay jointly and severally various amounts of damages.
CA affirmed. Hence, this petition.

Article 1734 of the New Civil Code provides that common carriers are not responsible for the
loss, destruction or deterioration of the goods if caused by the charterer of the goods or
defects in the packaging or in the containers. The primary cause of these spillages is the
clamped shell which does not seal very tightly. Also, the wind tends to blow away some of
the materials during the unloading process.

Petitioners challenge the propriety of the award of compensatory damages of P600,000.00 to

Amyline Antonio who was only a casual employee and an Avon agent who earns barely
P1,500 a month.
ISSUE:
Whether petitioners were negligent and should be liable for the injuries suffered by private
respondents.

If there was loss or contamination of the cargo, it was more likely to have occurred while the
same was being transported from the ship to the dump trucks and finally to the consignee's
warehouse. This is a risk the shipper or the owner of the goods has to face. Clearly,
respondent carrier has sufficiently proved the inherent character of the goods which makes it
highly vulnerable to deterioration; as well as the inadequacy of its packaging which further
contributed to the loss. On the other hand, no proof was adduced by the petitioner showing
that the carrier was remiss in the exercise of due diligence in order to minimize the loss or
damage to the goods it carried. Petition is DISMISSED.

HELD:
YES. Both the RTC and the CA held that although the relation of passenger and carrier is
"contractual both in origin and nature," nevertheless "the act that breaks the contract may
be also a tort."

TRANSPORTATION LAW (HOJILLA)

The finding that Cabil drove his bus negligently, while his employer, the Fabres, who owned
the bus, failed to exercise the diligence of a good father of the family in the selection and
supervision of their employee is fully supported by the evidence on record. Cabil was grossly
negligent and should be held liable for the injuries suffered by Antonio.

Bascos interposed the following defenses: that there was no contract of carriage since
CIPTRADE leased her cargo truck to load the cargo; that CIPTRADE was liable for P11,000.00
for loading the cargo; that the truck carrying the cargo was hijacked along Paco, Manila; that
the hijacking was immediately reported to CIPTRADE and that all efforts were exerted to
locate the hijacked properties; that after preliminary investigation, an information for
robbery and carnapping were filed against Jose Opriano, et al.; and that hijacking, being a
force majeure, exculpated her from any liability to CIPTRADE.

Pursuant to Arts. 2176 and 2180 of the Civil Code his negligence gave rise to the presumption
that his employers, the Fabres, were themselves negligent in the selection and supervisions
of their employee. Due diligence in selection of employees is not satisfied by finding that the
applicant possessed a professional driver's license. The employer should also examine the
applicant for his qualifications, experience and record of service.

RTC ruled in favor of Cipriano. CA affirmed.

ISSUE:
Was petitioner a common carrier? YES
Was the hijacking referred to a force majeure? NO

In the case at bar, the Fabres, in allowing Cabil to drive the bus to La Union, apparently did
not consider the fact that Cabil had been driving for school children only, from their homes
to the St. Scholastica's College in Metro Manila.

HELD:
CA found that Bascos admitted that she did business under the name A.M. Bascos Trucking.
Petitioner is a common carrier. Article 1732 of the Civil Code defines a common carrier. The
test to determine a common carrier is "whether the given undertaking is a part of the
business engaged in by the carrier which he has held out to the general public as his
occupation rather than the quantity or extent of the business transacted." In this case,
petitioner herself has made the admission that she was in the trucking business, offering her
trucks to those with cargo to move. Judicial admissions are conclusive and no evidence is
required to prove the same.

This case actually involves a contract of carriage. Petitioners, the Fabres, did not have to be
engaged in the business of public transportation for the provisions of the Civil Code on
common carriers to apply to them. As common carriers, the Fabres were not found to
exercise "extraordinary diligence" for the safe transportation of the passengers to their
destination. This duty of care is not excused by proof that they exercise the diligence of a
good father of the family in the selection and supervision of their employee. As Art. 1759 of
the Code provides: Common carriers are liable for the death of or injuries to passengers
through the negligence or willful acts of the former's employees although such employees
may have acted beyond the scope of their authority or in violation of the orders of the
common carriers.

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

Petitioners are guilty of breach of contract of carriage under Arts. 1733, 1755 and 1759 of the
Civil Code. The award of damages in favor of Antonio is sustained, RTCs finding of P500,000
was reasonable. CA AFFIRMED with MODIFICATION as to award of damages.

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

G.R. No. 101089; April 7, 1993.

ESTRELLITA M. BASCOS, petitioners vs. CA and RODOLFO A. CIPRIANO,

respondents
CAMPOS, JR., J p:
FACTS:
Rodolfo A. Cipriano representing Cipriano Trading Enterprise (CIPTRADE) entered into a
hauling contract with Jibfair Shipping Agency Corporation whereby CIPTRADE bound itself to
haul 2,000 m/t of soya bean meal from Manila to the warehouse of Purefoods Corporation in
Calamba, Laguna. To carry out its obligation, CIPTRADE subcontracted with Estrellita Bascos
to transport and to deliver 400 sacks of soya bean meal worth P156,404.00 at the rate of
P50.00 per metric ton. Bascos failed to deliver the said cargo. As a consequence of that
failure, Cipriano paid Jibfair the amount of the lost goods in accordance with the contract.

Hijacking, not being included in the provisions of Article 1734, must be dealt with under the
provisions of Article 1735 and thus, the common carrier is presumed to have been at fault or
negligent. To exculpate the carrier from liability arising from hijacking, he must prove that
the robbers or the hijackers acted with grave or irresistible threat, violence, or force.
Affidavits were not enough to overcome the presumption.
Petition DISMISSED. CA decision AFFIRMED.

Cipriano demanded reimbursement from Bascos but the latter refused to pay. Eventually,
Cipriano filed a complaint for a sum of money and damages for breach of a contract of
carriage. RTC granted the writ of preliminary attachment.

G.R. No. 141910; August 6, 2002

FGU INSURANCE CORPORATION, petitioner vs. G.P. SARMIENTO

TRUCKING CORPORATION and LAMBERT M. EROLES, respondents
VITUG, J.:

TRANSPORTATION LAW (HOJILLA)

FACTS:
G.P. Sarmiento Trucking Corporation (GPS) undertook to deliver in 1994 thirty (30) units of
Condura S.D. white refrigerators aboard one of its Isuzu truck, driven by Lambert Eroles, from
the plant site of Concepcion Industries, Inc. in Alabang to the Central Luzon Appliances in
Dagupan City. While the truck was traversing McArthur highway in Tarlac, it collided with an
unidentified truck, causing it to fall into a deep canal, resulting in damage to the cargoes.

carriage, may not be held liable under the agreement. Consonantly with the axiom res inter
alios acta aliis neque nocet prodest, such contract can neither favor nor prejudice a third
person. Petitioners civil action against the driver can only be based on culpa
aquiliana, which, unlike culpa contractual, would require the claimant for damages to prove
negligence or fault on the part of the defendant.
RTC and CA AFFIRMED only insofar as Eroles is concerned, but REVERSED as regards GPS
which is ordered to pay FGU the value of the damaged and lost cargoes.

FGU Insurance Corporation (FGU), an insurer of the shipment, paid to Concepcion Industries,
Inc., the value of the covered cargoes (P204,450.00). FGU, in turn, being the subrogee,
sought reimbursement. GPS failed to heed the claim, so FGU filed a complaint for damages
and breach of contract of carriage against GPS and its driver Lambert Eroles in RTC Makati.
Respondents asserted that GPS was the exclusive hauler only of Concepcion Industries, Inc.,
since 1988, and it was not so engaged in business as a common carrier. Respondents further
claimed that the cause of damage was purely accidental.

G.R. No. 138334; August 25, 2003

ESTELA L. CRISOSTOMO, petitioner vs. CA and CARAVAN TRAVEL &

TOURSINTERNATIONAL, INC., respondents
YNARES-SANTIAGO, J.:
FACTS:
In 1991, Estela L. Crisostomo contracted the services of Caravan Travel and Tours
International, Inc. to arrange and facilitate her booking, ticketing and accommodation in a
tour dubbed Jewels of Europe for P74,322.70. Petitioner was given a 5% discount, which
included airfare, and the booking fee was also waived because petitioners niece, Meriam
Menor, was the ticketing manager.

RTC dismissed the case. MR denied. CA affirmed, citing "x x x in order for the presumption of
negligence provided for under the law governing common carrier (Article 1735, Civil Code) to
arise, the appellant must first prove that the appellee is a common carrier. Should the
appellant fail to prove that the appellee is a common carrier, the presumption would not
arise; consequently, the appellant would have to prove that the carrier was negligent.
Hence, the petition.

Pursuant to said contract, Menor went to her aunts residence a Wednesday to deliver
Crisostomos travel documents and plane tickets. Crisostomo, paid in full for the package
tour. Menor then told her to be at NAIA on Saturday for her flight on board British Airways.

ISSUE:
Whether GPS may be considered as a common carrier.

Without checking her travel documents, Crisostomo went to NAIA to take the flight from
Manila to Hongkong. To her dismay, she discovered that the flight she was supposed to take
had already departed the previous day. She thus called up Menor to complain. Subsequently,
Menor prevailed upon Crisostomo to take another tour the British Pageant. For this tour
package, petitioner was asked anew to pay US$785.00 or P20,881.00. She paid partially.

HELD:
NO. GPS, being an exclusive contractor and hauler of Concepcion Industries, Inc., rendering
or offering its services to no other individual or entity, cannot be considered a common
carrier, as defined under Art. 1732 of NCC. The true test of a common carrier is the carriage
of passengers or goods, providing space for those who opt to avail themselves of its
transportation service for a fee. Given accepted standards, GPS scarcely falls within the term
"common carrier."

Upon Crisostomos return from Europe, she demanded from Caravan the reimbursement of
P61,421.70, representing the difference between the sum she paid for Jewels of Europe
and the amount she owed respondent for the British Pageant tour. Despite several
demands, Caravan refused to reimburse the amount, contending that the same was nonrefundable.

The above conclusion notwithstanding, GPS cannot escape from liability. In culpa contractual,
upon which the action of petitioner rests as being the subrogee of Concepcion Industries,
Inc., the mere proof of the existence of the contract and the failure of its compliance
justify, prima facie, a corresponding right of relief.

Crisostomo was thus constrained to file a complaint for breach of contract of carriage and
damages in RTC Makati, which was granted but found Menor also guilty of contributory
negligence and deducted 10% from the amount being claimed as refund. CA likewise found
both parties to be at fault. However, CA held that Crisostomo is more negligent because as a
lawyer and well-traveled person, she should have known better than to simply rely on what
was told to her. This being so, she is not entitled to any form of damages. Crisostomo also
forfeited her right to the Jewels of Europe tour and must therefore pay the balance of the
price for the British Pageant tour. MR denied.

A breach upon the contract confers upon the injured party a valid cause for recovering that
which may have been lost or suffered. Respondent trucking corporation recognizes the
existence of a contract of carriage between it and petitioners assured, and admits that the
cargoes it has assumed to deliver have been lost or damaged while in its custody. In such a
situation, a default on, or failure of compliance with, the obligation gives rise to a
presumption of lack of care and corresponding liability on the part of the contractual obligor
the burden being on him to establish otherwise. GPS has failed to do so.

ISSUE:
Whether Caravan is a common carrier.

Respondent driver, on the other hand, without concrete proof of his negligence or fault, may
not himself be ordered to pay petitioner. The driver, not being a party to the contract of

10

TRANSPORTATION LAW (HOJILLA)

HELD:
NO. It is obvious that respondent is not an entity engaged in the business of transporting
either passengers or goods and is therefore, neither a private nor a common carrier. While
petitioner concededly bought her plane ticket through the efforts of respondent company,
this does not mean that the latter ipso facto is a common carrier. At most, respondent acted
merely as an agent of the airline, with whom petitioner ultimately contracted for her carriage
to Europe.

Aguedo does not deny at the time of the fatal accident the cargo truck was registered in his
name. He, however, claims that the vehicle belonged to the Port Brokerage, of which he was
the broker at the time of the accident. RTC held Jepte liable.
ISSUE:
Whether Jepte is liable as registered owner of the vehicle even if the ownership is in another.
HELD:
YES. In previous decisions, the registered owner of a certificate of public convenience is liable
to the public for the injuries or damages suffered by passengers or third persons caused by
the operation of said vehicle, even though the same had been transferred to a third person.
The principle upon which this doctrine is based is that in dealing with vehicles registered
under the Public Service Law, the public has the right to assume or presume that the
registered owner is the actual owner thereof, for it would be difficult for the public to
enforce the actions that they may have for injuries caused to them by the vehicles being
negligently operated if the public should be required to prove who the actual owner is.

The object of petitioners contractual relation with respondent is the latters service
of arranging and facilitating petitioners booking, ticketing and accommodation in the
package tour. In contrast, the object of a contract of carriage is the transportation of
passengers or goods. It is in this sense that the contract between the parties in this case was
an ordinary one for services and not one of carriage.
Respondent is not a common carrier but a travel agency. It is thus not bound under the law
to observe extraordinary diligence in the performance of its obligation, as petitioner claims.
Since the contract between the parties is an ordinary one for services, the standard of care
required of respondent is that of a good father of a family under Article 1173 of NCC.

There is a presumption that the owner of the guilty vehicle is the defendant-appellant as he
is the registered owner in the Motor Vehicle Office. The main aim of motor vehicle
registration is to identify the owner so that if any accident happens, responsibility therefore
can be fixed on a definite individual, the registered owner.

Menors negligence was not sufficiently proved. Contrary to petitioners claim, the evidence
on record shows that respondent exercised due diligence in performing its obligations under
the contract and followed standard procedure in rendering its services to petitioner.
Therefore, it is clear that respondent performed its prestation under the contract as well as
everything else that was essential to book petitioner for the tour. Had petitioner exercised
due diligence in the conduct of her affairs, there would have been no reason for her to miss
the flight. Needless to say, after the travel papers were delivered to petitioner, it became
incumbent upon her to take ordinary care of her concerns. This undoubtedly would require
that she at least read the documents.

With the above policy in mind, the question that defendant-appellant poses is: should not
the registered owner be allowed at the trial to prove who the actual and real owner is? We
hold with the trial court that the laws do not allow him to do so. The protection that the law
aims to extend would become illusory were the registered owner given the opportunity to
escape liability by disproving his ownership.
In synthesis, Jepte is primarily responsible for the damage caused to the vehicle of Erezo, but
has a right to be indemnified by the real or actual owner of the amount that he may be
required to pay as damage for the injury caused.

The negligence of the obligor in the performance of the obligation renders him liable for
damages for the resulting loss suffered by the obligee. In the case at bar, the evidence on
record shows that respondent company performed its duty diligently and did not commit any
contractual breach. Hence, petitioner cannot recover and must bear her own damage.
Petition DENIED.

G.R. No. L-26815 May 26, 19810

ADOLFO L. SANTOS, petitioner vs. ABRAHAM SIBUG and CA, respondents

MELENCIO-HERRERA, J.:
FACTS:
Before 1963, Vicente U. Vidad was a duly authorized passenger jeepney operator. Adolfo L.
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. ln other words, SANTOS became what is known in ordinary parlance as a
kabit operator. Vidad issued a private document for purposes of re-transfer.

G.R. No. L-9605; September 30, 1957

GAUDIOSO EREZO, plaintiff-appellee vs. AGUEDO JEPTE, defendantappellant

LABRADOR, J.:
FACTS:
Aguedo Jepte is the registered owner of a six by six truck. In 1949, while the same was being
driven by Rodolfo Espino, it collided with a taxicab at the intersection of San Andres and
Dakota Streets, Manila. As the truck went off the street, it hit Ernesto Erezo and another, and
the former suffered injuries, as a result of which he died. The driver was prosecuted for
homicide through reckless negligence. As the amount of the judgment could not be enforced
against him, Gaudioso Erezo brought this action against the registered owner of the truck,
Jepte.

On the ACCIDENT DATE, Abraham Sibug was bumped by a passenger jeepney operated by
VIDAD and driven by Severe Gragas. As a result, SIBUG filed a complaint for damages against
VIDAD and Gragas in CFI Manila.

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CFI sentenced VIDAD and Gragas, jointly and severally, to pay SIBUG damages. The Sheriff of
Manila levied on a motor vehicle registered in the name of VIDAD, and scheduled the public
auction sale. SANTOS presented a third-party claim alleging actual ownership of the motor
vehicle levied upon. No public sale was conducted. The Restraining Order was issued
wrongfully. RTC affirmed SANTOS' ownership of the jeepney in question.

In 1966, the spouses Nicasio M. Ocampo and Francisca Garcia purchased in installment from
the Delta Motor Sales Corporation five (5) Toyota Corona Standard cars to be used as
taxicabs. Since they had no franchise to operate taxicabs, they contracted with Lita
Enterprises, Inc., through Manuel Concordia, for the use of the latter's certificate of public
convenience in consideration of P1,000.00 and a monthly rental of P200.00 per taxicab unit.
To effectuate the agreement, the cars were registered in the name of Lita Enterprises, Inc.
Possession remained with the spouses Ocampo who operated and maintained the same
under the trade name Acme Taxi.

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. For the same basic reason, as the vehicle here in question was registered in
VIDAD'S name, the levy on execution should be enforced so that the judgment may be
satisfied, notwithstanding the fact that the secret ownership of the vehicle belonged to
another. SANTOS, as the kabit should not be allowed to defeat the levy on his vehicle and to
avoid his responsibilities as a kabit owner for he had led the public to believe that the vehicle
belonged to VIDAD. This is one way of curbing the pernicious kabit system.

After a year, one of said taxicabs driven by their employee, Emeterio Martin, collided with a
motorcycle whose driver, one Florante Galvez, died from the head injuries. A criminal case
was filed against Martin, while a civil case for damages was instituted by Rosita, heir of the
victim, against Lita Enterprises, Inc., as registered owner of the taxicab in CFI Manila.
CFI found Lita Enterprises, Inc. liable for damages. This decision having become final, a writ of
execution was issued. Two cars were levied upon and solve at public auction by Mr. Cortez
and Mr. Lopez, respectively.

As indicated in the Erezo case, supra, SANTOS' remedy as the real owner of the vehicle, is to
go against VIDAD, the actual operator who was responsible for the accident, for the recovery
of whatever damages SANTOS may suffer by reason of the execution.

In 1973, Nicasio Ocampo decided to register his taxicabs in his name. He requested the
manager of Lita Enterprises, Inc. to turn over the registration papers to him, but the latter
allegedly refused. Hence, he and his wife filed a complaint. CFI dismissed it insofar as Rosita,
Visayan Surety & Insurance Company and the Sheriff of Manila are concerned. Lita
Enterprises, Inc. is ordered to transfer the registration certificate of the three Toyota cars not
levied upon by executing a deed of conveyance in favor of Ocampo. Ocampo is ordered to
pay the rentals in arrears for the certificate of convenience. MR was denied. IAC only
modified. Hence, the petition.

ISSUE:
Whether the jeepney owned by Santos can be levied.
HELD:
YES. It was appropriate, as a matter of procedure, for SANTOS, as an ordinary third-party
claimant, to vindicate his claim of ownership in a separate action under Section 17 of Rule 39.
And this is so because property belonging to a stranger is not ordinarily subject to levy. While
it is true that the vehicle in question was in custodia legis, and should not be interfered with
without the permission of the proper Court, the property must be one in which the
defendant has proprietary interest.

ISSUE:
Whether the parties can be granted relief.
HELD:
NO. Unquestionably, the parties operated under an arrangement, commonly known as the
"kabit system", whereby a person who has been granted a certificate of convenience allows
another person who owns motors vehicles to operate under such franchise for a fee. A
certificate of public convenience is a special privilege conferred by the government. Abuse of
this privilege by the grantees thereof cannot be countenanced.

However, as a matter of substance and on the merits, the ultimate conclusion of respondent
Court nullifying the Decision of Branch X permanently enjoining the auction sale, should be
upheld. Legally speaking, it was not a "stranger's property" that was levied upon by the
Sheriff pursuant to the judgment rendered by Branch XVII. The vehicle was, in fact, registered
in the name of VIDAD, one of the judgment debtors. And what is more, the aspect of public
service, with its effects on the riding public, is involved. Petition DISMISSED.

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. Upon this premise,
it was flagrant error on the part of both the trial and appellate courts to have accorded the
parties relief from their predicament. Article 1412 of the Civil Code denies them such aid. The
principle of in pari delicto is well known not only in this jurisdiction but also in the United
States where common law prevails.

G.R. No. L-64693; April 27, 1984

LITA ENTERPRISES, INC., petitioner vs. IAC, NICASIO M. OCAMPO and

FRANCISCA P. GARCIA, respondents
ESCOLIN, J.:
FACTS:
"Ex pacto illicito non oritur actio" [No action arises out of an illicit bargain] is the tunehonored maxim that must be applied to the parties in the case at bar. Having entered into an
illegal contract, neither can seek relief from the courts, and each must bear the
consequences of his acts.

ALL proceedings ANNULLED.

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G.R. No. 162267; July 4, 2008

public highways, responsibility therefor can be fixed on a definite individual, the registered
owner.

PCI LEASING AND FINANCE, INC., petitioner vs. UCPB GENERAL INSURANCE
CO., INC., respondent

The above policy and application of the law may appear quite harsh and would seem to
conflict with truth and justice. We do not think it is so. A registered owner who has already
sold or transferred a vehicle has the recourse to a third-party complaint, in the same action
brought against him to recover for the damage or injury done, against the vendee or
transferee of the vehicle.

AUSTRIA-MARTINEZ, J.:
FACTS:
In 1990, at about 10:30 pm, a Mitsubishi Lancer car owned by United Coconut Planters Bank
was traversing the Laurel Highway, Lipa City. The car was insured with UCPB General
Insurance Inc., then driven by Flaviano Isaac with Conrado Geronimo, the Asst. Manager of
said bank. It was hit and bumped by an 18-wheeler Fuso Tanker Truck owned by PCI Leasing
& Finance, Inc. allegedly leased to and operated by Superior Gas & Equitable Co., Inc.
(SUGECO) and driven by its employee, Renato Gonzaga.

For damage or injuries arising out of negligence in the operation of a motor vehicle, the
registered owner may be held civilly liable with the negligent driver either 1) subsidiarily, if
the aggrieved party seeks relief based on a delict or crime under Articles 100 and 103 of the
Revised Penal Code; or 2) solidarily, if the complainant seeks relief based on a quasidelict under Articles 2176 and 2180 of the Civil Code.

The impact caused heavy damage to the Mitsubishi Lancer car resulting in an explosion of the
rear part of the car. The driver and passenger suffered physical injuries. However, the driver
Gonzaga continued on its way to its destination and did not bother to bring his victims to the
hospital.

In case a separate civil action is filed, the long-standing principle is that the registered owner
of a motor vehicle is primarily and directly responsible for the consequences of its operation,
including the negligence of the driver, with respect to the public and all third persons. In
contemplation of law, the registered owner of a motor vehicle is the employer of its driver,
with the actual operator and employer, such as a lessee, being considered as merely the
owner's agent. The public has the right to conclusively presume that the registered owner is
the real owner, and may sue accordingly.

UCPB GIC paid the assured UCPB P244,500.00 representing the insurance coverage of the
damaged car. As the 18-wheeler truck is registered under the name of PCI Leasing, repeated
demands were given but no payment was made. PCI Leasing alleged that it could not be held
liable for the collision, since the driver of the truck, Gonzaga, was not its employee, but that
of its co-defendant SUGECO. In fact, it was SUGECO that was the actual operator of the truck,
pursuant to a Contract of Lease.

In the case, there is not even a sale of the vehicle involved, but a mere lease, which remained
unregistered up to the time of the occurrence of the quasi-delict that gave rise to the case.
Since a lease, unlike a sale, does not even involve a transfer of title or ownership, but the
mere use or enjoyment of property, there is more reason, therefore, in this instance to
uphold the policy behind the law, which is to protect the unwitting public and provide it with
a definite person to make accountable for losses or injuries suffered in vehicular accidents.

RTC ruled in favor of UCPB GIC and ordered PCI Leasing and Renato Gonzaga, to pay jointly
and severally. CA affirmed. MR denied. Hence, the petition for review.
ISSUE:
Whether petitioner, as registered owner of a motor vehicle that figured in a quasi-delict may
be held liable, jointly and severally, with the driver, for the damages caused to third parties.

It is also important to emphasize that such principles apply to all vehicles in general, not just
those offered for public service or utility.

HELD:
YES. Petitioner claims that the CA's reliance on the Public Service Act is misplaced, since the
said law applies only to cases involving common carriers, or those which have franchises to
operate as public utilities. In contrast, the case at bar involves a private commercial vehicle
for business use, which is not offered for service to the general public. Petitioner's
contention has partial merit, as indeed, the vehicles involved are not common carriers, which
makes the Public Service Act inapplicable.

The new law, R.A. 8556, does not supersede or repeal the law on compulsory motor vehicle
registration. Thus, the rule remains the same: a sale, lease, or financial lease that is not
registered with the LTO, still does not bind third persons who are aggrieved in tortious
incidents, for the latter need only to rely on the public registration of a motor vehicle as
conclusive evidence of ownership.
Whether petitioner would act against SUGECO based on this provision is its own option.
Petition DENIED.

However, the registered owner of the vehicle driven by a negligent driver may still be held
liable under applicable jurisprudence involving laws on compulsory motor vehicle registration
and the liabilities of employers for quasi-delicts under the Civil Code.
The principle of holding the registered owner of a vehicle liable for quasi-delicts resulting
from its use is well-established in jurisprudence. Erezo v. Jepte, explained the reason behind
this principle, thus: The main aim of motor vehicle registration is to identify the owner so
that if any accident happens, or that any damage or injury is caused by the vehicle on the

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