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1. SPOUSES DANTE CRUZ and LEONORA CRUZ vs.

SUN
HOLIDAYS, INC.

Facts:
Spouses Dante and Leonora Cruz lodged a Complaint on January 25,
2001 against Sun Holidays, Inc. with the Regional Trial Court (RTC) of
Pasig City for damages arising from the death of their son Ruelito C.
Cruz who perished with his wife on September 11, 2000 on board the
boat M/B Coco Beach III that capsized en route to Batangas from
Puerto Galera, Oriental Mindoro where the couple had stayed at Coco
Beach Island Resort owned and operated by respondent Sun Holiday.

Matute stayed at the Resort from September 8 to 11,


2000. He was originally scheduled to leave the Resort in the
afternoon of September 10, 2000, but was advised to stay for
another night because of strong winds and heavy rains. On
September 11, 2000, as it was still windy, Matute and 25 other
Resort guests including petitioners son and his wife trekked to the
other side of the Coco Beach mountain that was sheltered from the
wind where they boarded M/B Coco Beach III, which was to ferry
them to Batangas.

Shortly after the boat sailed, it started to rain. As it moved


farther away from Puerto Galera and into the open seas, the rain and
wind got stronger, causing the boat to tilt from side to side and the
captain to step forward to the front, leaving the wheel to one of the
crew members.The waves got more unwieldy. After getting hit by two
big waves which came one after the other, M/B Coco Beach III
capsized putting all passengers underwater. The passengers, who had
put on their life jackets, struggled to get out of the boat. Upon seeing
the captain, Matute and the other passengers who reached the
surface asked him what they could do to save the people who were
still trapped under the boat. The captain replied "Iligtas niyo na lang
ang sarili niyo" (Just save yourselves).

Help came after about 45 minutes when two boats owned by


Asia Divers in Sabang, Puerto Galera passed by the capsized M/B
Coco Beach III. Boarded on those two boats were 22 persons,
consisting of 18 passengers and four crew members, who were
brought to Pisa Island. Eight passengers, including petitioners son
and his wife, died during the incident.
Petitioner filed the Complaint, alleging that respondent, as a
common carrier, was guilty of negligence in allowing M/B Coco Beach
III to sail notwithstanding storm warning bulletins issued by the
(PAGASA).
RTC dismiss the case filed by the petitioner. MR was also
denied. The case was elevated to CA but the appellate court denied
petitioners appeal, hence this petition.

Issue: Whether or not respondent is a common carrier.

Held: The Civil Code defines "common carriers" in the following


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

The
above
article
makes no
distinction between one
whose principal business activity is the carrying of persons or goods
or both, and one who does such carrying only as an ancillary
activity (in local idiom, as "a sideline"). Article 1732 also carefully
avoids making any distinction between a person or enterprise
offering transportation service on a regular or scheduled basis and
one offering such service on an occasional, episodic or unscheduled

basis. Neither does Article 1732 distinguish between a carrier offering


its services to the "general public," i.e., the general community or
population, and one who offers services or solicits business only from
a narrow segment of the general population. We think that Article
1733 deliberately refrained from making such distinctions.

Corp. (SMC).The vessel used were owned by Westwind Corp. The


cargoes were insured under UCPB. On August 31, 1993, the shipment
arrived in Manila at the custody of the arrastre operator ATI and
during the unloading operation, 6 containers sustained dents due to
the forklift used in moving the said containers

Indeed, respondent is a common carrier. Its ferry services


are so intertwined with its main business as to be properly
considered ancillary thereto. The constancy of respondents ferry
services in its resort operations is underscored by its having its own
Coco Beach boats. And the tour packages it offers, which include the
ferry services, may be availed of by anyone who can afford to pay
the same. These services are thus available to the public.

Oriental Freight International Inc. (OFII), customs broker of


SMC, withdrew the containers and delivered the same at SMCs
warehouse in Calamba. During the discharge, it was discovered that
an additional 9 containers were damaged due to the forklift
operations. SMC filed a claim against UCPB. When UCPB paid and
upon signing of the subrogation receipt by the SMC, the former filed
a complaint for damages against Westwind, ATI and OFII.

That respondent does not charge a separate fee or fare for its
ferry services is of no moment. It would be imprudent to suppose
that it provides said services at a loss. The Court is aware of the
practice of beach resort operators offering tour packages to factor
the transportation fee in arriving at the tour package price. That
guests who opt not to avail of respondents ferry services pay the
same amount is likewise inconsequential. These guests may only be
deemed to have overpaid.

The RTC dismissed the complaint and absolved Westwind and


OFII due to the facts that Westwind had no participation in the
stevedoring operations and that OFII merely facilitated the release of
the containers as customs broker. On appeal, the CA reversed the
decision of the RTC.

ISSUE:
Whether or not OFII, a customs broker, is considered as a
common carrier and is liable for the damaged containers.

2. Westwind Shipping Corp. Vs. UCPB General Insurance Co.


And Asian Terminals Inc (ATI)
G.R. No. 200289

November 15,2013

Peralta, J:
FACTS:
On August 23, 1993, Kinsho-Mataichi Corp shipped 197 metal
containers of tin-free steel for delivery to the consignee, San Miguel

HELD:
Yes. A customs broker has been regarded as a common
carrier because transportation of goods is an integral part of its
business. Under Article 1732 of the Civil Code, common carriers are
persons, corporations, firms or associations engaged in the business
of carrying or transporting passengers or goods or both, by land,
water, or air, for compensation, offering their services to the public.
Article 1732 does not distinguish between one whose
principal business activity is the carrying of goods and one who does
such carrying only as an ancillary activity. The contention, therefore,
of petitioner that it is not a common carrier but a customs broker

whose principal function is to prepare the correct customs declaration


and proper shipping documents as required by law is bereft of merit.
It suffices that petitioner undertakes to deliver the goods for
pecuniary consideration.
As a common carrier, OFII is mandated to observe, under
Article 1733 of the Civil Code, extraordinary diligence in the vigilance
over the goods it transports according to the peculiar circumstances
of each case. In the event that the goods are lost, destroyed or
deteriorated, it is presumed to have been at fault or to have acted
negligently unless it proves that it observed extraordinary diligence.
In the case at bar it was established that except for the 6
containers already damaged OFII received the cargoes from ATI in
good order and condition; and that upon its delivery to SMC
additional 9 containers were found to be in bad order as noted in the
Delivery Receipts issued by OFII and as indicated in the Report of
Cares Marine Cargo Surveyors. Instead of merely excusing itself from
liability by putting the blame to ATI and SMC it is incumbent upon
OFII to prove that it actively took care of the goods by exercising
extraordinary diligence in the carriage thereof. It failed to do so.
Hence its presumed negligence under Article 1735 of the Civil Code
remains unrebutted.

4. PHILIPPINE AMERICAN GENERAL INSURANCE COMPANY,


petitioner, vs. PKS SHIPPING COMPANY, respondent.
G.R. No. 149038, April 9, 2003

FACTS:
Davao Union Marketing Corporation (DUMC) contracted the services
of PKS Shipping Company (PKS Shipping) for the shipment to
Tacloban City of 75,000 bags of cement worth P3,375,000. DUMC
insured the goods for its full value with Philippine American General
Insurance Company (Philamgen). The goods were loaded aboard the

dumb barge Limar I belonging to PKS Shipping. On December 22,


1988 at 9pm while Limar I was being towed by PKS tugboat MT Iron
Eagle, the barge sank a couple of miles off the coast of Dumagasa
Point, in Zamboanga del Sur, bringing down with it the entire cargo of
75,000 bags of cement.
DUMC filed a formal claim with Philamgen for the full amount of the
insurance. Philamgen promptly made payment; it then sought
reimbursement from PKS Shipping of the sum paid to DUMC but the
shipping company refused to pay, so Philamgen to file suit against
PKS Shipping . The RTC dismissed the complaint on the ground of
fortuitous event. The CA affirmed on the ground that it is not a
common carrier but a casual occupation.
ISSUE: Whether or not PKS Shipping is not liable since it was not a
common carrier
HELD: NO. Petition is DENIED
Article 1732. Common carriers are persons, corporations, firms or
associations engaged in the business of carrying or transporting
passengers or goods or both, by land, water, or air for compensation,
offering their services to the public

Complementary is Section 13, paragraph (b), of the Public


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

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

distinction between:
o

common or public carrier

private or special carrier - character of the business,


such that if the undertaking is an isolated
transaction , not a part of the business or occupation,
and the carrier does not hold itself out to carry the
goods for the general public or to a limited clientele,
although involving the carriage of goods for a fee

EX: charter party which includes both the


vessel and its crew, such as in a bareboat or
demise, where the charterer obtains the use
and service of all or some part of a ship for a
period of time or a voyage or voyages and
gets the control of the vessel and its crew.

The regularity of its activities in this area indicates more than


just a casual activity on its part

The appellate court ruled, gathered from the testimonies and


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

Findings of fact of the Court of Appeals generally conclude


this Court; none of the recognized exceptions from the rule (1) when the factual findings of the Court of Appeals and the
trial court are contradictory; (2) when the conclusion is a
finding grounded entirely on speculation, surmises, or

conjectures; (3) when the inference made by the Court of


Appeals from its findings of fact is manifestly mistaken,
absurd, or impossible; (4) when there is a grave abuse of
discretion in the appreciation of facts; (5) when the appellate
court, in making its findings, went beyond the issues of the
case and such findings are contrary to the admissions of both
appellant and appellee; (6) when the judgment of the Court
of Appeals is premised on a misapprehension of facts; (7)
when the Court of Appeals failed to notice certain relevant
facts which, if properly considered, would justify a different
conclusion; (8) when the findings of fact are themselves
conflicting; (9) when the findings of fact are conclusions
without citation of the specific evidence on which they are
based; and (10) when the findings of fact of the Court of
Appeals are premised on the absence of evidence but such
findings are contradicted by the evidence on record would
appear to be clearly extant in this instance.

vs.
SPOUSES TERESITA NICOLAS and L. ZARATE, PHILIPPINE
NATIONAL RAILWAYS, and the COURT OF APPEALS
G.R. No. 157917

August 29, 2012

FACTS:
In June 1996, Nicolas and Teresita Zarate contracted Teodoro and
Nanette Perea to transport their (Zarates) son, Aaron Zarate, to
and from school. The Pereas were owners of a van being used for
private school transport.
At about 6:45am of August 22, 1996, the driver of the said private
van, Clemente Alfaro, while the children were on board including
Aaron, decided to take a short cut in order to avoid traffic. The usual
short cut was a railroad crossing of the Philippine National Railway
(PNR).
Alfaro saw that the barandilla (the pole used to block vehicles
crossing the railway) was up which means it was okay to cross. He
then tried to overtake a bus. However, there was in fact an oncoming
train but Alfaro no longer saw the train as his view was already
blocked by the bus he was trying to overtake. The bus was able to
cross unscathed but the vans rear end was hit. During the collision,
Aaron, was thrown off the van. His body hit the railroad tracks and
his head was severed. He was only 15 years old.
It turns out that Alfaro was not able to hear the train honking from
50 meters away before the collision because the vans stereo was
playing loudly.
The Zarates sued PNR and the Pereas (Alfaro became at-large).
Their cause of action against PNR was based on quasi-delict. Their
cause of action against the Pereas was based on breach of contract
of common carriage.
5.SPOUSES TEODORO1 and NANETTE PERENA, Petitioners,

In their defense, the Pereas invoked that as private carriers they


were not negligent in selecting Alfaro as their driver as they made

sure that he had a drivers license and that he was not involved in
any accident prior to his being hired. In short, they observed the
diligence of a good father in selecting their employee.
For its part, PNR tended to show that the proximate cause of the
collision had been the reckless crossing of the van whose driver had
not first stopped, looked and listened; and that the narrow path
traversed by the van had not been intended to be a railroad crossing
for motorists.
The RTC ruled in favor of the Zarates. The Court of Appeals affirmed
the RTC. In the decision of the RTC and the CA, they awarded
damages in favor of the Zarates for the loss of earning capacity of
their dead son.
The Pereas appealed. They argued that the award was improper as
Aaron was merely a high school student, hence, the award of such
damages was merely speculative. They cited the case of People vs
Teehankee where the Supreme Court did not award damages for the
loss of earning capacity despite the fact that the victim there was
enrolled in a pilot school.
ISSUES: Whether or not the defense of due diligence of a good
father by the Pereas is untenable.
HELD: YES
Defense of Due Diligence of a Good Father
This defense is not tenable in this case. The Pereas are common
carriers. They are not merely private carriers. (Prior to this case, the
status of private transport for school services or school buses is not
well settled as to whether or not they are private or common carriers
but they were generally regarded as private carriers).
A private carrier is one who, without making the activity a vocation,
or without holding himself or itself out to the public as ready to act
for all who may desire his or its services, undertakes, by special
agreement in a particular instance only, to transport goods or

persons from one place to another either gratuitously or for hire. The
provisions on ordinary contracts of the Civil Code govern the contract
of private carriage.The diligence required of a private carrier is only
ordinary, that is, the diligence of a good father of the family. In
contrast, a common carrier is a person, corporation, firm or
association engaged in the business of carrying or transporting
passengers or goods or both, by land, water, or air, for compensation,
offering such services to the public. Contracts of common carriage
are governed by the provisions on common carriers of the Civil Code,
the Public Service Act, and other special laws relating to
transportation. A common carrier is required to observe
extraordinary diligence, and is presumed to be at fault or to have
acted negligently in case of the loss of the effects of passengers, or
the death or injuries to passengers.
The true test for a common carrier is not the quantity or extent of
the business actually transacted, or the number and character of the
conveyances used in the activity, but whether the undertaking is a
part of the activity engaged in by the carrier that he has held out to
the general public as his business or occupation. If the undertaking is
a single transaction, not a part of the general business or occupation
engaged in, as advertised and held out to the general public, the
individual or the entity rendering such service is a private, not a
common, carrier. The question must be determined by the character
of the business actually carried on by the carrier, not by any secret
intention or mental reservation it may entertain or assert when
charged with the duties and obligations that the law imposes.
Private transport for schools are common carriers. The Pereas, as
the operators of a school bus service were: (a) engaged in
transporting passengers generally as a business, not just as a casual
occupation; (b) undertaking to carry passengers over established
roads by the method by which the business was conducted; and (c)
transporting students for a fee. Despite catering to a limited clientle,
the Pereas operated as a common carrier because they held
themselves out as a ready transportation indiscriminately to the
students of a particular school living within or near where they
operated the service and for a fee.

Being a common carrier, what is required of the Pereas is not mere


diligence of a good father. What is specifically required from them by
law is extraordinary diligence a fact which they failed to prove in
court. Verily, their obligation as common carriers did not cease upon
their exercise of diligently choosing Alfaro as their employee.

6.MANAY et al vs. CEBU AIR, INC.


April 4, 2016

GR

No.

210621

Leonen, J.

FACTS: On June 13, 2008, Carlos S. Jose (Jose) purchased 20 Cebu


Pacific round-trip tickets from Manila to Palawan for himself and on
behalf of his relatives and friends. Jose alleged that he specified to
Alou, the Cebu Pacific ticketing agent that his preferred date and
time of departure from Manila to Palawan should be on July 20, 2008
at 8:20 a.m. and that his preferred date and time for their flight back
to Manila should be on July 22, 2008 at 4:15 p.m. After paying for
the tickets, Alou printed the tickets, which consisted of three (3)
pages, and recapped only the first page to him. Since the first page
contained the details he specified to Alou, he no longer read the
other pages of the flight information.
After their trip or on the afternoon of July 22, 2008, the group
proceeded to the airport for their flight back to Manila. During the
processing of their boarding passes, they were informed by Cebu

Pacific personnel that nine (9) of them could not be admitted because

appealed to the RTC, which was subsequently dismissed. Cebu Pacific

their tickets were for the 10:05 a.m. flight earlier that day. Jose

appealed to the CA, arguing that it was not at fault for the damages

informed the ground personnel that he personally purchased the

caused to the passengers.

tickets and specifically instructed the ticketing agent that all 20 of


them should be on the 4:15 p.m. flight to Manila. Upon checking the

On December 13, 2013, the CA rendered the Decision granting the

tickets, they learned that only the first two (2) pages had the

appeal and reversing the Decisions of the MeTC and the RTC.

schedule Jose specified. They were left with no other option but to

According to it, the extraordinary diligence expected of common

rebook their tickets. They then learned that their return tickets had

carriers only applies to the carriage of passengers and not to the act

been purchased as part of the promo sales of the airline, and the cost

of encoding the requested flight schedule. It was incumbent upon the

to rebook the flight would be 7,000.00 more expensive than the

passenger to exercise ordinary care in reviewing flight details and

promo tickets. The sum of the new tickets amounted to 65,000.00.

checking schedules. Cebu Pacifics counterclaim, however, was denied


since there was no evidence that Jose and his companions filed their

They offered to pay the amount by credit card but were informed by

Complaint in bad faith and with malice.

the ground personnel that they only accepted cash. They then
offered to pay in dollars, since most of them were balikbayans and

ISSUE: Whether respondent Cebu Air, Inc. is liable for damages for

had the amount on hand, but the airline personnel still refused.

the issuance of a plane ticket with an allegedly erroneous flight

Eventually, they pooled enough cash to be able to buy tickets for five

schedule

(5) of their companions. The other four (4) were left behind in
Palawan and had to spend the night at an inn, incurring additional

HELD: NO. Common carriers are required to exercise extraordinary

expenses. Upon his arrival in Manila, Jose immediately purchased

diligence in the performance of its obligations under the contract of

four (4) tickets for the companions they left behind, which amounted

carriage. This extraordinary diligence must be observed not only in

to 5,205.

the transportation of goods and services but also in the issuance of


the contract of carriage, including its ticketing operations. The

Later in July 2008, Jose went to Cebu Pacifics ticketing office in

obligation

Robinsons Galleria to complain about the allegedly erroneous booking

commences upon the issuance of the contract of carriage. Ticketing,

and the rude treatment that his group encountered from the ground

as the act of issuing the contract of carriage, is necessarily included

personnel in Palawan. Jose and his companions were unsatisfied with

in the exercise of extraordinary diligence. Once a plane ticket is

Cebu Pacifics response so they filed a Complaint for Damages

issued, the common carrier binds itself to deliver the passenger

against Cebu Pacific before Branch 59 of the Metropolitan Trial Court

safely on the date and time stated in the ticket. The contractual

of Mandaluyong. The Complaint prayed for actual damages in the

obligation of the common carrier to the passenger is governed

amount of 42,955.00, moral damages in the amount of 45,000.00,

principally by what is written on the contract of carriage.

of

the

airline

to

exercise

extraordinary

diligence

exemplary damages in the amount of 50,000.00, and attorneys


fees.

The common carriers obligation to exercise extraordinary diligence in


the issuance of the contract of carriage is fulfilled by requiring a full

The Metropolitan TC rendered its Decision ordering Cebu Pacific to

review of the flight schedules to be given to a prospective passenger

pay Jose and his companions 41,044.50 in actual damages and

before payment. Based on the information stated on the contract of

20,000.00 in attorneys fees with costs of suit. Cebu Pacific

carriage, all three (3) pages were recapped to petitioner Jose. The

only evidence petitioners have in order to prove their true intent of

passenger. However, the duty of an airline to disclose all the

having the entire group on the 4:15 p.m. flight is petitioner Joses

necessary information in the contract of carriage does not remove

self-serving testimony that the airline failed to recap the last page of

the correlative obligation of the passenger to exercise ordinary

the tickets to him. They have neither shown nor introduced any other

diligence in the conduct of his or her affairs. The passenger is still

evidence before the Metropolitan Trial Court, Regional Trial Court,

expected to read through the flight information in the contract of

Court of Appeals, or this Court.

carriage before making his or her purchase. If he or she fails to


exercise the ordinary diligence expected of passengers, any resulting

Even assuming that the ticketing agent encoded the incorrect flight

damage should be borne by the passenger.

information, it is incumbent upon the purchaser of the tickets to at


least check if all the information is correct before making the
purchase. Once the ticket is paid for and printed, the purchaser is
presumed to have agreed to all its terms and conditions. Considering
that respondent was entitled to deny check-in to passengers whose
names do not match their photo identification, it would have been
prudent for petitioner Jose to check if all the names of his
companions were encoded correctly. Since the tickets were for 20
passengers, he was expected to have checked each name on each
page of the tickets in order to see if all the passengers names were
encoded and correctly spelled. Had he done this, he would have
noticed that there was a different flight schedule encoded on the
third page of the tickets since the flight schedule was stated directly

7.

First Philippine Industrial Corp. v. CA, Paterno Tac-an,


Bantangas City, and Adoracion Arellano (Treasurer of
Batangas)
G.R. No. 125948, December 29, 1998

Facts:

above the passengers names. Moreover, the tickets were issued 37


days before their departure from Manila and 39 days from their
departure from Palawan. There was more than enough time to
correct any alleged mistake in the flight schedule.
Petitioners, in failing to exercise the necessary care in the conduct of
their affairs, were without a doubt negligent. Thus, they are not
entitled to damages.
Final note: The Air Passenger Bill of Rights recognizes that a contract
of carriage is a contract of adhesion, and thus, all conditions and
restrictions must be fully explained to the passenger before the
purchase of the ticket. It acknowledges that while a passenger has
the option to buy or not to buy the service, the decision of the
passenger to buy the ticket binds such passenger[.] Thus, the airline
is mandated to place in writing all the conditions it will impose on the

Petitioner is a grantee of a pipeline concession under Republic Act No.


387, as amended, to contract, install and operate pipelines.
Sometime in January 1995, petitioner applied for mayors permit in
Batangas. However, the City Treasurer required petitioner to pay a
local tax based on gross receipts amounting to P956,076.04. In order
not to hamper its operations, petitioner paid the taxes for the first
quarter of 1993 amounting to P239,019.01 under protest.
On January 20, 1994, petitioner filed a letter-protest to the City
Treasurer, claiming that it is exempt from local tax since it is engaged
in transportation business. The respondent City Treasurer denied the
protest, thus, petitioner filed a complaint before the Regional Trial
Court of Batangas for tax refund. In its complaint, petitioner alleged
that 1) the imposition and collection of the business tax on
its gross receipts violates Section 133 of the Local
Government Code which grants tax exemption to common
carriers; 2) the authority of cities to impose and collect a tax on
the gross receipts of contractors and independent contractors under

Sec.141 (e) and 151 does not inc lude the authority to
collect such taxes on transport contractors for, as defined
under Sec. 131 (h), the term contrac tors excludes
transportation contractors and, 3) the City Treasurer
illegally and erroneously imposed and collected said tax,
thus meriting the immediate refund of the tax paid.
Respondents assert that pipelines are not included in the term
common carrier which refers solely to ordinary carriers or motor
vehicles.
The trial court dismissed the complaint, and such was affirmed by the
Court of Appeals. Petitioner claims that the respondent Court of
Appeals erred in holding that 1) the petitioner is not a common
carrier or a transportation contractor, and 2) the exemption sought
for by the petitioner is not clear under the law.

Issue:
Whether or not a pipeline business is included in the term common
carrier so as to entitle the petitioner to the exemption.
Held: YES
Article 1732 of the Civil Code defines a "common carrier" as "any
person, corporation, firm or association engaged in the business of
carrying or transporting passengers or goods or both, by land, water,
or air, for compensation, offering their services to the public."
The test for determining whether a party is a common carrier of
goods is:
(1) He must be engaged in the business of carrying goods for others
as a public employment, and must hold himself out as ready to
engage in the transportation of goods for person generally as a
business and not as a casual occupation;
(2) He must undertake to carry goods of the kind to which his
business is confined;
(3) He must undertake to carry by the method by which his business
is conducted and over his established roads; and

(4) The transportation must be for hire.


Based on the above definitions and requirements, there is no doubt
that petitioner is a common carrier. It is engaged in the business of
transporting or carrying goods, i.e. petroleum products, for hire as a
public employment. It undertakes to carry for all persons
indifferently, that is, to all persons who choose to employ its services,
and transports the goods by land and for compensation. The fact that
petitioner has a limited clientele does not exclude it from the
definition of a common carrier.
FPIC is considered a common carrier under Art. 86 of the Petroleum
Act of the Philippines (RA 387), which provides that: Art. 86. Pipe
line concessionaire as common carrier. A pipe line shall have the
preferential
right
to
utilize
installations
for
the
transportation of petroleum owned by him, but is obligated to
utilize the remaining transportation capacity pro rata for the
transportation of such other petroleum as may be offered
by others for transport, and to charge without discrimination
such rates as may have been approved by the Secretary
of Agriculture and Natural Resources.
FPI C is also a public utility pursuant to Art. 7 of RA 387
which states that everything relating to the exploration for and
exploitation of petroleum . . . and everything relating to the
manufacture, refining, storage, or transportation by special methods
of petroleum, is hereby declared to be a public utility.
From the foregoing disquisition, there is no doubt that petitioner is a
common carrier and, therefore, exempt from the business tax as
provided for in Section 133(j), of the Local Government Code. The
legislative intent in excluding from the taxing power of the local
government unit the imposition of business tax against common
carrier is to prevent a duplication of the so-called common carriers
tax. The Petitioner is already paying 3% common carriers tax on its
gross earnings under the National Internal Revenue Code.
The SC granted the petition and reversed the decision of the CA.

9. G.R. No. 102316

June 30, 1997

VALENZUELA HARDWOOD AND INDUSTRIAL SUPPLY INC.,


petitioner,
vs.
COURT OF APPEALS AND SEVEN BROTHERS SHIPPING
CORPORATION, respondents.
PANGANIBAN, J.:
On January 16, 1984 plaintiff Valenzuela Hardwood and Industrial
Supply Inc. entered into an agreement with the defendant Seven
Brothers whereby the latter undertook to load on board its vessel the
formers lavan round logs. On January 20, 1984 plaintiff insured the
loss and/or damages with defendant South Sea Surety and insured
company for 2 million pesos on January 24, 1984, plaintiff gave the
check in payment of the premium on the insurance policy. In the
meantime, the said vessel sank on January 25, 1984 resulting in the
loss of the plaintiffs insured logs. Plaintiff demanded payment of the
proceeds and lost claim for the value of the lost logs to insurance
company and Seven Brothers Shipping Corporation respectively to
which both of them denied liability.
After due hearing, the RTC rendered judgment in favor of plaintiff.
Both defendants appealed. The CA affirmed in part the RTC judgment

by sustaining liability of South Sea Surety but modified it by holding


that the Seven Brothers was not liable for the lost of the cargo. The
CA held that the stipulation in the character party that the ship owner
would be exempted from liability in case of loss or even for
negligence of its agent is valid.
ISSUE:
Is a stipulation in a charter party that the owners shall not be
responsible for loss, split, short-landing, breakages and any kind of
damages
to
the
cargo
valid?
HELD:
Yes. It is undisputed that private respondent had acted as a private
carrier in transporting petitioners lauan logs. Thus, Article 1745 and
other Civil Code provisions on common carriers which were cited by
petitioner may not be applied unless expressly stipulated by the
parties
in
their
charter
party.
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
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.
The general public enters into a contract of transportation with
common carriers without a hand or a voice in the preparation thereof.
The riding public merely adheres to the contract; even if the public

wants to, it cannot submit its own stipulations for the approval of the
common carrier. Thus, the law on common carriers extends its
protective mantle against one-sided stipulations inserted in tickets,
invoices or other documents over which the riding public has no
understanding or, worse, no choice. Compared to the general public,
a charterer in a contract of private carriage is not similarly situated.
It can -- and in fact it usually does -- enter into a free and voluntary
agreement. In practice, the parties in a contract of private carriage
can stipulate the carriers obligations and liabilities over the
shipments which, in turn, determine the price or consideration of the
charter. Thus, a charterer, in exchange for convenience and economy,
may opt to set aside the protection of the law on common carriers.
When the charterer decides to exercise this option, he takes a normal
business risk.

10. GV Florida Transport, Inc. v Battung (2015)


GV Florida Transport, Inc., Petitioner v Heirs of Romeo L. Battung GR
No. 208802, October 14, 2015
FACTS: Romeo Battung boarded the bus of petitioner in Delfin
Albano, Isabela, bound for Manila. He was seated at the first row
behind the driver and slept during the ride. Battung was seated at
the first row behind the driver and slept during the ride. When the
bus reached the Philippine Carabao Center in Muoz, Nueva Ecija, the
bus driver, Duplio, stopped the bus and alighted to check the tires. At
this point, a man who was seated at the fourth row of the bus stood
up, shot Battung at his head, and then left with a companion. The
bus conductor, Daraoay, notified Duplio of the incident and thereafter,
brought Romeo to the hospital, but the latter was pronounced dead
on arrival. Hence, respondents filed a complaint on July 15, 2008 for
damages in the aggregate amount of P1,826,000.00 based on a
breach of contract of carriage against petitioner, Duplio, and Baraoay
(petitioner, et al.) before the RTC, docketed as Civil Case No. 221103.
ISSUE: Whether petitioner is liable for damages arising from culpa
contractual
RULING: No.

Where, as in the instant case, the injury sustained by the petitioner


was in no way due to any defect in the means of transport or in the
method of transporting or to the negligent or wilful acts of [the
common carrier'sl employees, and therefore involving no issue of
negligence in its duty to provide safe and suitable [care] as well as
competent employees, with the injury arising wholly from causes
created by strangers over which the carrier had no control or even
knowledge or could not have prevented, the presumption is rebutted
and the carrier is not and ought not to be held liable. To rule
otherwise would make the common carrier the insurer of the absolute
safety of its passengers which is not the intention of the lawmakers.
(Emphasis and underscoring supplied)
The case involves the death of Battung wholly caused by the
surreptitious act of a co-passenger who, after consummating such
crime, hurriedly alighted from the vehicle.
The law exacts from common carriers (i.e., those persons,
corporations, firms, or associations engaged in the business of
carrying or transporting passengers or goods or both, by land, water,
or air, for compensation, offering their services to the public) the
highest degree of diligence (i.e., extraordinary diligence) in ensuring
the safety of its passengers.
Articles 1733 and 1755 of the Civil Code state:
Art. 1733. Common carriers, from the nature of their business and
for reasons of public policy, are bound to observe extraordinary
diligence in the vigilance over the goods and for the safety of the
passengers transported by them, according to all the circumstances
of each case.
Art. 1755. A common carrier is bound to carry the passengers safely
as far as human care and foresight can provide, using the utmost
diligence of very cautious persons, with a due regard for all the
circumstances.
In this relation, Article 1756 of the Civil Code provides that "[i]n case
of death of or injuries to passengers, common carriers are presumed
to have been at fault or to have acted negligently, unless they prove
that they observed extraordinary diligence as prescribed in Articles
1733 and 1755." This disputable presumption may also be overcome
by a showing that the accident was caused by a fortuitous event.

The foregoing provisions notwithstanding, it should be pointed out


that the law does not make the common carrier an insurer of the
absolute safety of its passengers.
While the law requires the highest degree of diligence from common
carriers in the safe transport of their passengers and creates a
presumption of negligence against them, it does not, however, make
the carrier an insurer of the absolute safety of its passengers.
Article 1755 of the Civil Code qualifies the duty of extraordinary care,
vigilance[,] and precaution in the carriage of passengers by common
carriers to only such as human care and foresight can provide. What
constitutes compliance with said duty is adjudged with due regard to
all the circumstances.
Article 1756 of the Civil Code, in creating a presumption of fault or
negligence on the part of the common carrier when its passenger is
injured, merely relieves the latter, for the time being, from
introducing evidence to fasten the negligence on the former, because
the presumption stands in the place of evidence. Being a mere
presumption, however, the same is rebuttable by proof that the
common carrier had exercised extraordinary diligence as required by
law in the performance of its contractual obligation, or that the injury
suffered by the passenger was solely due to a fortuitous event.
In fine, we can only infer from the law the intention of the Code
Commission and Congress to curb the recklessness of drivers and
operators of common carriers in the conduct of their business.
Thus, it is clear that neither the law nor the nature of the business of
a transportation company makes it an insurer of the passenger's
safety, but that its liability for personal injuries sustained by its
passenger rests upon its negligence, its failure to exercise the degree
of diligence that the law requires.
Therefore, it is imperative for a party claiming against a common
carrier under the above-said provisions to show that the injury or
death to the passenger/s arose from the negligence of the common
carrier and/or its employees in providing safe transport to its
passengers.
In Pilapil v. CA, the Court clarified that where the injury sustained by
the passenger was in no way due

(1) to any defect in the means of transport or in the method of


transporting, or (2) to the negligent or willful acts of the common
carrier's employees with respect to the foregoing
such as when the injury arises wholly from causes created by
strangers which the carrier had no control of or prior knowledge to
prevent there would be no issue regarding the common carrier's
negligence in its duty to provide safe and suitable care, as well as
competent employees in relation to its transport business; as such,
the presumption of fault/negligence foisted under Article 1756 of the
Civil Code should not apply:
First, as stated earlier, the presumption of fault or negligence against
the carrier is only a disputable presumption.[The presumption] gives
in where contrary facts are established proving either that the carrier
had exercised the degree of diligence required by law or the injury
suffered by the passenger was due to a fortuitous event.
Since Battung's death was caused by a co-passenger, the applicable
provision is Article 1763 of the Civil Code, which states that:
"a common carrier is responsible for injuries suffered by a passenger
on account of the willful acts or negligence of other passengers or of
strangers, if the common carrier's employees through the exercise of
the diligence of a good father of a family could have prevented or
stopped the act or omission."
Notably, for this obligation, the law provides a lesser degree of
diligence, i.e., diligence of a good father of a family, in assessing the
existence of any culpability on the common carrier's part.
Case law states that the concept of diligence of a good father of a
family "connotes reasonable care consistent with that which an
ordinarily prudent person would have observed when confronted with
a similar situation.

of its buses, as to impel petitioner or its employees to implement


heightened security measures to ensure the safety of its passengers.
There was also no showing that during the course of the trip,
Battung's killer made suspicious actions which would have
forewarned petitioner's employees of the need to conduct thorough
checks on him or any of the passengers.
Relevantly, the Court, in Nocum v. Laguna Tayabas Bus Company, has
held that common carriers should be given sufficient leeway in
assuming that the passengers they take in will not bring anything
that would prove dangerous to himself, as well as his co-passengers,
unless there is something that will indicate that a more stringent
inspection should be made. Not to be lightly considered must be the
right to privacy to which each passenger is entitled. He cannot be
subjected to any unusual search, when he protests the
innocuousness of his baggage and nothing appears to indicate the
contrary, as in the case at bar.
in compelling the passenger to submit to more rigid inspection, after
the passenger had already declared that the box contained mere
clothes and other miscellaneous, could not have justified invasion of
a constitutionally protected domain.

11. G.R. No. 185891, June 26, 2013


CATHAY PACIFIC AIRWAYS, Petitioner, v. JUANITA REYES,
WILFI EDO REYES, MICHAEL ROY REYES, SIXTA LAPUZ, AND
SAMPAGUITA TRAVEL CORP., Respondents.
TOPIC: Diligence of a good father of a family
FACTS

Did the defendant in doing the alleged negligent act use that
reasonable care and caution which an ordinarily prudent person
would have used in the same situation? If not, then he is guilty of
negligence."

Wilfredo made a travel reservation with Sampaguita Travel for his


familys trip to Adelaide, Australia. Upon confirmation of their
flight schedule, Wilfredo paid for the airfare and was issued 4
Cathay Pacific roundtrip airplane tickets for Manila-Hong KongAdelaide-Hong Kong-Manila. One week before they were
scheduled to fly back home, Wilfredo re-confirmed his familys
return flight with the Cathay Pacific office in Adelaide. They were
advised that the reservation was still okay as scheduled.

At bar, no danger i.e. intelligent reports from law enforcement agents


that certain lawless elements were planning to hijack and burn some

On the day of their scheduled departure from Adelaide,


Wilfredo and his family arrived at the airport on time. When the

The test to determine whether negligence attended the performance


of an obligation is:

airport check-in opened, Wilfredo was informed by a staff from


Cathay Pacific that Wilfredos family did not have confirmed
reservations, and only Sixtas flight booking was confirmed.
Although, they were allowed to board the flight to Hong Kong,
not all of them were allowed to board the flight to Manila as it
was fully booked. Only Wilfredos mother-in-law, Sixta, was
allowed to proceed to Manila from Hong Kong. On the following
day, the Reyeses were finally allowed to board the next flight
bound for Manila.
Upon arriving in the Philippines, Wilfredo went Sampaguita Travel
to report the incident. He was informed by Sampaguita Travel
that it was actually Cathay Pacific which cancelled their bookings.

Pacific even asserted that Sampaguita Travel made two fictitious


bookings for Juanita and Michael.
The negligence of Sampaguita Travel renders it also liable for
damages.

ISSUE:
Whether Cathay Pacific breached its contract of carriage with the
Wilfredos family? Yes
Whether Sampaguita breached its contract of services with Wilfredos
family? Yes
HELD:
Cathay Pacific breached its contract of carriage with the Reyeses
when it disallowed them to board the plane in Hong Kong going
to Manila on the date reflected on their tickets. Thus, Cathay
Pacific opened itself to claims for compensatory, actual, moral
and exemplary damages, attorneys fees and costs of suit.
In contrast, the contractual relation between Sampaguita Travel
and respondents is a contract for services. The object of the
contract is arranging and facilitating the latters booking and
ticketing. It was even Sampaguita Travel which issued the
tickets.
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 the Civil Code. This
connotes reasonable care consistent with that which an ordinarily
prudent person would have observed when confronted with a
similar situation. The test to determine whether negligence
attended the performance of an obligation is: did the defendant
in doing the alleged negligent act use that reasonable care and
caution which an ordinarily prudent person would have used in
the same situation? If not, then he is guilty of negligence.
There was indeed failure on the part of Sampaguita Travel to
exercise due diligence in performing its obligations under the
contract of services. It was established by Cathay Pacific, through
the generation of the PNRs, that Sampaguita Travel failed to
input the correct ticket number for Wilfredos ticket. Cathay

12. G.R. No. 131621 September 28, 1999


LOADSTAR SHIPPING CO., INC., vs. CA and THE MANILA
INSURANCE CO., INC.,
DAVIDE, JR., C.J.:
FACTS: On 19 November 1984, LOADSTAR received on board its M/V
"Cherokee" lawanit hardwood and other articles for shipment. The
goods were insured with MIC. The vessel, in turn, was insured by
Prudential Guarantee & Assurance, Inc. (PGAI)
On 20 November 1984, on its way to Manila from the port of Nasipit,
Agusan del Norte, the vessel, along with its cargo, 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, and
the latter executed a subrogation receipt therefor.
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. The latter denied any liability for the

loss of the shipper's goods and claimed that sinking of its vessel was
due to force majeure.
RTC:
in favor of MIC
CA: affirmed RTCs decision in toto.
ISSUES:
(1)

Is the vessel a private or a common carrier?


COMMON CARRIER

Loadstars contention: The vessel was a private carrier because it


was not issued certificate of public convenience, 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.
SC: The vessel is a common carrier. It is not necessary that the
carrier be issued a certificate of public convenience, and this public
character is not altered by the fact that the carriage of the goods in
question was periodic, occasional, episodic or unscheduled. 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 to a private
carrier, especially where, as in this case, it was shown that the vessel
was also carrying passengers.
Art. 1732 of the CC makes no distinction between one whose
principal business activity is the carrying of persons or goods or both,
and one who does such carrying only as ancillary activity. Article
1732 also carefully avoids making any distinction between a person
or enterprise offering transportation service on a regular or
scheduled basis and one offering such service on an occasional,
episodic or unscheduled basis. Neither does Article 1732 distinguish
between a carrier offering its services to the "general public," i.e., the
general community or population, and one who offers services or
solicits business only from a narrow segment of the general
population.
A certificate of public convenience is not a requisite for the incurring
of liability under the Civil Code provisions governing common
carriers. 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

WON LOADSTAR observed diligence required by law -

M/V "Cherokee" was not seaworthy when it embarked on its voyage


on 19 November 1984. The vessel was not even sufficiently manned
at the time. "For a vessel to be seaworthy, it must be adequately
equipped for the voyage and manned with a sufficient number of
competent officers and crew. The failure of a common carrier to
maintain in seaworthy condition its vessel involved in a contract of
carriage is a clear breach of its duty prescribed in Article 1755 of the
Civil Code.
The "limited liability" theory should NOT be applied in this case. The
doctrine of limited liability does not apply where there was negligence
on the part of the vessel owner or agent. LOADSTAR was at fault or
negligent in not maintaining a seaworthy vessel and in having
allowed its vessel to sail despite knowledge of an approaching
typhoon. In any event, it did not sink because of any storm that may
be deemed as force majeure, inasmuch as the wind condition in the
performance of its duties, LOADSTAR cannot hide behind the "limited
liability" doctrine to escape responsibility for the loss of the vessel
and its cargo.

13. Eastern Shipping Lines Vs. The Nisshin Fire and Marine
Insurance Co. And Dowa Fire & Marine Insurance Co. Ltd.
G.R. No. L- 71478

May 29, 1987

Melenchio-Herrera, J:

FACTS:
On June 1977, M/S Asiatica, a vessel operated by Eastern
Shipping Lines, loaded at Kobe, Japan calorized lance pipes in 28
packages for transportation to Manila and were insured by
Development Insurance and Surety Corp.
During the same period, the same vessel took on board 128
cartons of garment fabrics and accessories, in 2 containers,
consigned to Mariveles Apparel Corp. and 2 cases of surveying

instruments consigned to Aman Enterprises and Gen. Merchandise


and are insured by The Nisshin Fire and Marine Insurance Co. and
Dowa Fire & Marine Insurance Co., respectively.

2.

Enroute for Kobe, Japan, to Manila, the vessel caught fire and
sank, resulting in the total loss of ship and cargo. The respective
Insurers paid the corresponding marine insurance values to the
consignees concerned and were thus subrogated unto the rights of
the latter as the insured. Said insurers filed a suit for the recovery of
the amount they paid before the CFI of Manila. The trial court ruled
in favor of the insurers. The CA affirmed the same on appeal. Eastern
Shipping Lines filed a petition for review on certiorari before the
Supreme Court.

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.

ISSUES:
1.
2.
3.

Article 1680 of the Civil Code, which considers fire as an


extraordinary fortuitous event refers to leases of rural lands
where a reduction of the rent is allowed when more than
one-half of the fruits have been lost due to such event,
considering that the law adopts a protection policy towards
agriculture. As the peril of the fire is not comprehended
within the exception in Article 1734, , 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.

What law governs the instant case?


Whether or not the loss of a vessel by fire exempts the
common carrier from liability.
Whether or not there was negligence on the part of Eastern
Shipping Lines.

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 Eastern Shipping Lines 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.

No. 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 flood, storm, earthquake, lightning or other natural
disaster or calamity only.

3.

Yes. In this case, both the Trial Court and the CA, 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

Eastern Shipping Lines or its servants were negligent in


connection therewith. Consequently, the complete defense
afforded by the COGSA when loss results from fire is
unavailing to the said carrier.