Preliminary considerations the mere formation of the corporation such revelation was not essential, and the

Corporation Law does not require it. Defendant was, therefore, under no obligation
G.R. No. L-6055 June 12, 1953 to make it. Defendant quasha was acquitted.

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. WILLIAM H. Additional notes: :

QUASHA, defendant-appellant. REYES, J.:
Facts: William H. Quasha, a member of the Philippine bar, was charged with the
crime of falsification of a public and commercial document in that, having been
entrusted with the preparation and registration of the article of incorporation of the
Pacific Airways Corporation, a domestic corporation engaged in common carrier
business caused it to appear in said article of incorporation that one Arsenio Baylon,
a Filipino citizen, had subscribed to and was the owner of 60.005 per cent of the
subscribed capital stock when in reality, the owner of the portion of the capital
stock subscribed to by Baylon and the money paid thereon were American citizen
whose name did not appear in the article of incorporation. He was accused of
violating art. 171 and 172 of the RPC. Lower Court ruled against Quasha. hence,
this case.
Issue: WON the accused is guilty for falsification.
Ruling: NO. the SC ruled that a perversion of truth in the narration of facts must be
made with the wrongful intent of injuring a third person to constitute falsification. In
the case, the falsification imputed in the accused consists in not disclosing in the
articles of incorporation that Baylon was a mere trustee ( or dummy as the
prosecution chooses to call him) of his American co-incorporators to circumvent
art 8, sec 14 of the constitution (60% nationality requirement).
ART. 171. Falsification by public officer, employee, or notary or ecclesiastic
minister. — The penalty of prision mayor and a fine not to exceed 5,000
pesos shall be imposed upon any public officer, employee, or notary who,
taking advantage of his official position, shall falsify a document by
committing any of the following acts:
xxx xxx xxx
4. Making untruthful statements in a narration of facts.
ART. 172. Falsification by private individuals and use of falsified documents.
— The penalty of prision correccional in its medium and maximum period
and a fine of not more than 5,000 pesos shall be imposed upon:
xxx xxx xxx
1. Any private individual who shall commit any of the falsifications
enumerated in the next preceding article in any public or official
document or letter of exchange or any other kind of commercial
document.

Contrary to the lower court's assumption, the Constitution does not prohibit
section 8, Article XIV of the Constitution, which provides that " no franchise,
the mere formation of a public utility corporation without the required formation of
certificate, or any other form of authorization for the operation of a public utility
Filipino capital. What it does prohibit is the granting of a franchise or other form of shall be granted except to citizens of the Philippines or to corporation or other
authorization for the operation of a public utility to a corporation already in entities organized under the law of the Philippines, sixty per centum of the capital
existence but without the requisite proportion of Filipino capital. If the Constitution of which is owned by citizens of the Philippines . . . .
does not prohibit the mere formation of a public utility corporation with the alien
capital, then how can the accused be charged with having wrongfully intended
to circumvent that fundamental law by not revealing in the articles of incorporation
that Baylon was a mere trustee of his American co-incorporation and that for that
reason the subscribed capital stock of the corporation was wholly American? For

Page 1 of 11
G.R. No. 114222 April 6, 1995
FRANCISCO S. TATAD, JOHN H. OSMENA and RODOLFO G. BIAZON, petitioners, vs.HON.
JESUS B. GARCIA, JR., in his capacity as the Secretary of the Department of
Transportation and Communications, and EDSA LRT CORPORATION, LTD., respondents.
QUIASON, J.:
This is a petition under Rule 65 of the Revised Rules of Court to prohibit respondents from
implementing and enforcing the "Revised and Restated Agreement to Build, Lease and
Transfer a Light Rail Transit System for EDSA"
Facts:
DOTC planned to construct a light railway transit line along EDSA (EDSA LRT III). Republic
Act No. 6957 entitled "An Act Authorizing the Financing, Construction, Operation and
Maintenance of Infrastructure Projects by the Private Sector, and For Other Purposes,"
was signed by President Corazon C. Aquino. Referred to as the Build-Operate-Transfer
(BOT) Law, it took effect on October 9, 1990. Such law provides for two schemes for the
financing, construction and operation of government projects through private initiative
and investment: Build-Operate-Transfer (BOT) or Build-Transfer (BT).
In accordance with the provisions of R.A. No. 6957 and to set the EDSA LRT III project
underway, DOTC, issued Department Orders respectively creating the Prequalification
Bids and Awards Committee (PBAC) and the Technical Committee.
After evaluating the prequalification, bids, the PBAC issued a Resolution declaring that
of the five applicants, only the EDSA LRT Consortium "met the requirements of garnering
at least 21 points per criteria. The Legal Aspects referred to provided that the BOT/BT
contractor-applicant meet the requirements specified in the Constitution and other
pertinent laws (Rollo, p. 114).
The exec sec recommended the award of the EDSA LRT III project to the sole complying
bidder, the EDSA LRT Consortium.
In a letter dated March 13, 1992, Executive Secretary Franklin Drilon, who replaced
Executive Secretary Orbos, informed Secretary Prado that the President could not grant
the requested approval for the following reasons: (1) that DOTC failed to conduct
actual public bidding in compliance with Section 5 of the BOT Law; (2) that the law
authorized public bidding as the only mode to award BOT projects, and the
prequalification proceedings was not the public bidding contemplated under the law;
(3) that Item 14 of the Implementing Rules and Regulations of the BOT Law which
authorized negotiated award of contract in addition to public bidding was of doubtful
legality; and (4) that congressional approval of the list of priority projects under the BOT
or BT Scheme provided in the law had not yet been granted at the time the contract
was awarded.
the DOTC and private respondents re-negotiated the agreement and entered into a
"Revised and Restated Agreement to Build, Lease and Transfer a Light Rail Transit System
for EDSA"
According to the agreements, the EDSA LRT III will use light rail. R.A. No. 7718, an "Act
Amending Certain Sections of Republic Act No. 6957, Entitled "An Act Authorizing the
Financing, Construction, Operation and Maintenance of Infrastructure Projects by the
Private Sector, and for Other Purposes" was signed into law by the PresidentThe law
expressly recognizes BLT scheme and allows direct negotiation of BLT contracts.
In the main, petitioners asserted that the Revised and Restated Agreement of April 22,
1992 and the Supplemental Agreement of May 6, 1993 are unconstitutional and invalid
for the following reasons:
(1) the EDSA LRT III is a public utility, and the ownership and operation
thereof is limited by the Constitution to Filipino citizens and domestic
corporations, not foreign corporations like private respondent;
(2) the Build-Lease-Transfer (BLT) scheme provided in the agreements is
not the BOT or BT Scheme under the law;
(3) the contract to construct the EDSA LRT III was awarded to private
respondent not through public bidding which is the only mode of
awarding infrastructure projects under the BOT law; and
(4) the agreements are grossly disadvantageous to the government.
Hence, this case.
Issue:
Page 2 of 11
 Can respondent EDSA LRT Corporation, Ltd., a foreign corporation own
EDSA LRT III; a public utility? (Rollo, p. 17).
Ruling:
Yes. The SC ruled that What private respondent owns are the rail tracks, rolling stocks like
the coaches, rail stations, terminals and the power plant, not a public utility. What
constitutes a public utility is not their ownership but their use to serve the public
The Constitution requires a franchise for the operation of a public utility. However, it does
not require a franchise before one can own the facilities needed to operate a public
utility so long as it does not operate them to serve the public.
(Section 11 of Article XII of the Constitution provides:
No franchise, certificate or any other form of authorization for
the operation of a public utility shall be granted except to citizens of
the Philippines or to corporations or associations organized under the
laws of the Philippines at least sixty per centum of whose capital is
owned by such citizens, nor shall such franchise, certificate or
authorization be exclusive character or for a longer period than fifty
years . . . (Emphasis supplied).
In law, there is a clear distinction between the "operation" of a public utility and the
ownership of the facilities and equipment used to serve the public.
Ownership is defined as a relation in law by virtue of which a thing pertaining to one
person is completely subjected to his will in everything not prohibited by law or the
concurrence with the rights of another.
The exercise of the rights encompassed in ownership is limited by law so that a property
cannot be operated and used to serve the public as a public utility unless the operator
has a franchise. The operation of a rail system as a public utility includes the
transportation of passengers from one point to another point, their loading and
unloading at designated places and the movement of the trains at pre-scheduled times
The right to operate a public utility may exist independently and separately from the
ownership of the facilities thereof. One can own said facilities without operating them
as a public utility, or conversely, one may operate a public utility without owning the
facilities used to serve the public.
Since DOTC shall operate the EDSA LRT III, it shall assume all the obligations and liabilities
of a common carrier.
In sum, private respondent will not run the light rail vehicles and collect fees from the
riding public. It will have no dealings with the public and the public will have no right to
demand any services from it.
Indeed, a mere owner and lessor of the facilities used by a public utility is not a public
utility
Even the mere formation of a public utility corporation does not ipso facto characterize
the corporation as one operating a public utility. The moment for determining the
requisite Filipino nationality is when the entity applies for a franchise, certificate or any
other form of authorization for that purpose
(as to recognition of BLT and BOT)
The BOT scheme is expressly defined as one where the contractor undertakes the
construction and financing in infrastructure facility, and operates and maintains the
same. The contractor operates the facility for a fixed period during which it may recover
its expenses and investment in the project plus a reasonable rate of return thereon. After
the expiration of the agreed term, the contractor transfers the ownership and operation
of the project to the government.
In the BT scheme, the contractor undertakes the construction and financing of the
facility, but after completion, the ownership and operation thereof are turned over to
the government. The government, in turn, shall pay the contractor its total investment
on the project in addition to a reasonable rate of return. If payment is to be effected
through amortization payments by the government infrastructure agency or local
government unit concerned, this shall be made in accordance with a scheme
proposed in the bid and incorporated in the contract (R.A. No. 6957, Sec. 6).
Page 3 of 11
Emphasis must be made that under the BOT scheme, the owner of the infrastructure
facility must comply with the citizenship requirement of the Constitution on the operation
of a public utility. No such a requirement is imposed in the BT scheme.
As a matter of fact, the burden on the government in raising funds to pay for the project
is made lighter by allowing it to amortize payments out of the income from the operation
of the LRT System.
In form and substance, the challenged agreements provide that rentals are to be paid
on a monthly basis according to a schedule of rates At the end of 25 years and when
full payment shall have been made to and received by private respondent, it shall
transfer to DOTC, free from any lien or encumbrances, all its title to, rights and interest in,
the project for only U.S. $1.00 (Revised and Restated Agreement, Sec. 11.1;
Supplemental Agreemen
(on bidding)
The records show that only one applicant passed the prequalification process. Since
only one was left, to conduct a public bidding in accordance with Section 5 of the BOT
Law for that lone participant will be an absurb and pointless .
Republic Act No. 7718 is a curative statute. It is intended to provide financial incentives
and "a climate of minimum government regulations and procedures and specific
government undertakings in support of the private sector" (Sec. 1). A curative statute
makes valid that which before enactment of the statute was invalid. Thus, whatever
doubts and alleged procedural lapses private respondent and DOTC may have
engendered and committed in entering into the questioned contracts, these have now
been cured by R.A. No. 7718
The terms of the agreements were arrived at after a painstaking study by DOTC. The
determination by the proper administrative agencies and officials who have acquired
expertise, specialized skills and knowledge in the performance of their functions should
be accorded respect absent any showing of grave abuse of discretion
Government officials are presumed to perform their functions with regularity and strong
evidence is necessary to rebut this presumption. Petitioners have not presented
evidence on the reasonable rentals to be paid by the parties to each other.
The SC dismissed the petition.
Separate opinion:
DAVIDE, JR., J., dissenting:
For justice davide, the challenged contract is void because: (a) it is an-ultra-vires act of
the Department of Transportation and Communications (DOTC) since under R.A. 6957
the DOTC has no authority to enter into a Build-Lease-and-Transfer (BLT) contract; and
(b) the contract was entered into without complying with the mandatory requirement
of public bidding.
Public bidding is mandatory in R.A. No. 6957
The requirement of public bidding is not an idle ceremony. It has been aptly said that in
our jurisdiction "public bidding is the policy and medium adhered to in Government
procurement and construction contracts under existing laws and regulations.
It should also be pointed out that under Presidential Decree No. 1594, projects may be
undertaken "by administration or force account or by negotiated contract only "
(1) in exceptional cases where time is of the essence; or
(2) where there is lack of bidders or contractors; or
(3) where there is a conclusive evidence that greater economy and
efficiency would be achieved through these arrangements, and in
accordance with provision[s] of laws and acts on the matter.
Additional notes:
Section 2 of the BOT Law defines the BOT and BT schemes as follows:
(a) Build-operate-and-transfer scheme — A contractual arrangement
whereby the contractor undertakes the construction including
financing, of a given infrastructure facility, and the operation and
maintenance thereof. The contractor operates the facility over a fixed
term during which it is allowed to charge facility users appropriate tolls,
fees, rentals and charges sufficient to enable the contractor to recover
Page 4 of 11
its operating and maintenance expenses and its investment in the
project plus a reasonable rate of return thereon. The contractor
transfers the facility to the government agency or local government
unit concerned at the end of the fixed term which shall not exceed fifty
(50) years. For the construction stage, the contractor may obtain
financing from foreign and/or domestic sources and/or engage the
services of a foreign and/or Filipino constructor [sic]: Provided, That the
ownership structure of the contractor of an infrastructure facility whose
operation requires a public utility franchise must be in accordance with
the Constitution: Provided, however, That in the case of corporate
investors in the build-operate-and-transfer corporation, the citizenship
of each stockholder in the corporate investors shall be the basis for the
computation of Filipino equity in the said corporation: Provided, further,
That, in the case of foreign constructors [sic], Filipino labor shall be
employed or hired in the different phases of the construction where
Filipino skills are available: Provided, furthermore, that the financing of
a foreign or foreign-controlled contractor from Philippine government
financing institutions shall not exceed twenty percent (20%) of the total
cost of the infrastructure facility or project: Provided, finally, That
financing from foreign sources shall not require a guarantee by the
Government or by government-owned or controlled corporations. The
build-operate-and-transfer scheme shall include a supply-and-operate
situation which is a contractual agreement whereby the supplier of
equipment and machinery for a given infrastructure facility, if the
interest of the Government so requires, operates the facility providing
in the process technology transfer and training to Filipino nationals.
(b) Build-and-transfer scheme — "A contractual arrangement whereby
the contractor undertakes the construction including financing, of a
given infrastructure facility, and its turnover after completion to the
government agency or local government unit concerned which shall
pay the contractor its total investment expended on the project, plus
a reasonable rate of return thereon. This arrangement may be
employed in the construction of any infrastructure project including
critical facilities which for security or strategic reasons, must be
operated directly by the government (Emphasis supplied).
THE ILOILO ICE AND COLD STORAGE COMPANY, petitioner, vs. PUBLIC UTILITY BOARD, respondent.
MALCOLM, J.: G.R. No. L-19857 March 2, 1923
Facts: Francisco Villanueva, Jr., secretary of the Public Utility Commission, investigated the
operation of ice plants in Iloilo He reported to the Public Utility Commissioner that the Iloilo Ice and
Cold Storage Company should be considered a public utility. the Public Utility Commissioner
agreed. And directed the Iloilo Ice and Cold Storage Company to show cause why it should not
be considered a public utility provided in Act No. 2307, as amended by Act No. 2694. To this order,
John Bordman, treasurer of the Iloilo Ice and Cold Storage Company answered that it always has
been operated as a private enterprise, being a small production producing about 3 tons per
day.The Public Utility Commissioner rendered a decision holding that the Iloilo Ice and Cold Storage
Company was a public utility. This decision was affirmed on appeal to the Public Utility Board.
Hence, this case. Issue: whether or not the Iloilo Ice and Cold Storage Company is a public utility,
as that term is defined by section 9 of Act No. 2694.
Ruling: Yes. The SC ruled that The original public utility law, Act No. 2307, in its section 14, 1n speaking
of the jurisdiction of the Board of Public Utility Commissioner, and in defining the term "public utility,"
failed to include ice, refrigeration, and cold storage plants. This deficiency was, however, remedied
by Act No. 2694, enacted in 1917, which amended section 14 of Act No. 2307, to read as follows:*
* * The term "public utility" is hereby defined to include every individual, copartnership, association,
corporation or joint stock company, whether domestic or foreign, their lessee, trustees or receivers
appointed by any court whatsoever, or any municipality, province or other department of the
Government of the Philippine Islands, that now or hereafter may own, operate, manage or control
within the Philippine Islands any common carrier, railroad, street railway, traction railway,
steamboat or steamship line, small water craft, such as bancas, virais, lorchas, and others,
engaged in the transportation of passengers and cargo, line of freight and passenger automobiles,
shipyard, marine railway, marine repair shop, ferry, freight or any other car services, public
warehouse, public wharf or dock not under the jurisdiction of the Insular Collector of Customs, ice,
refrigeration, cold storage, canal, irrigation, express, subway, pipe line, gas, electric light, heat,
power, water, oil sewer, telephone, wire or wireless telegraph system, plant or equipment, for public
use: Provided, That the Commission or Commissioner shall have no jurisdiction over ice plants, cold
storage plants, or any other kind of public utilities operated by the Federal Government exclusively
for its own and not for public use.It will thus be noted that the term "public utility," in this jurisdiction,
includes every individual, copartnership, association, corporation, or joint stock company that now
or hereafter may own, operate, manage, or control, within the Philippine Islands, any ice,
refrigeration, cold storage system, plant, or equipment, for public use. Particular attention is invited
to the last phrase, "for public use."In the case of United States vs. Tan Piaco ([1920], 40 Phil., 853),
Public use" means the same as "use by the public." The essential feature of the public use is that it
is not confined to privileged individuals, but is open to the indefinite public. It is this indefinite or
unrestricted quality that gives it its public character. In determining whether a use is public, we must
look not only to the character of the business to be done, but also to the proposed mode of doing
it. If the use is merely optional with the owners, or the public benefit is merely incidental, it is not a
public use, authorizing the exercise of the jurisdiction of the public utility commission. Therefore, the
SC ruled that the Iloilo Ice and Cold Storage Company, is a public utility subject to the control and
jurisdiction of the Public Utility Commissioner.
Page 5 of 11
Common carriers
FIRST PHILIPPINE INDUSTRIAL CORPORATION, petitioner, vs. COURT OF APPEALS,
HONORABLE PATERNO V. TAC-AN, BATANGAS CITY and ADORACION C. ARELLANO, in
her official capacity as City Treasurer of Batangas, respondents. [G.R. No.
125948. December 29, 1998] MARTINEZ, J.:
Facts:
Petitioner is a grantee of a pipeline concession and applied for a mayor's permit with
the Office of the Mayor of Batangas City. However, before the mayor's permit could be
issued, the respondent City Treasurer required petitioner to pay a local tax based on its
gross receipts.
petitioner filed a letter-protest arguing that ther Company (FPIC) is a pipeline operator
with a government concession granted under the Petroleum Act and thus exempt from
paying tax on gross receipts under Section 133 of the Local Government Code of 1991
respondent City Treasurer denied the protest contending that petitioner cannot be
considered engaged in transportation business. petitioner filed with the RTC a claim for
tax refund. The RTC denied the same. On appeal, the CA affirmed, hence, this case.
Issue: WON petitioner is a common carrier entitiled to tax exemption
Ruling:
Yes. The SC ruled that A "common carrier" may be defined, broadly, as one who holds
himself out to the public as engaged in the business of transporting persons or property
from place to place, for compensation, offering his services to the public generally.
Article 1732 of the Civil Code defines a "common carrier" as "any person, corporation,
firm or association engaged in the business of carrying or transporting passengers or
goods or both, by land, water, or air, for compensation, offering their services to the
public."
The test for determining whether a party is a common carrier of goods is:
1. He must be engaged in the business of carrying goods for others as a public
employment, and must hold himself out as ready to engage in the transportation of
goods for person generally as a business and not as a casual occupation;
2. He must undertake to carry goods of the kind to which his business is confined;
3. He must undertake to carry by the method by which his business is conducted and
over his established roads; and
4. The transportation must be for hire.[15]
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 above article (Art. 1732, Civil Code) makes no distinction between one whose
principal business activity is the carrying of persons or goods or both, and one who does
such carrying only as an ancillary activity (in local idiom, as a 'sideline'). Article 1732 x x
x 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 1877 deliberately refrained from making such
distinctions.
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
(Commonwealth Act No. 1416, as amended) which at least partially supplements the
law on common carriers set forth in the Civil Code. Under Section 13, paragraph (b) of
the Public Service Act, 'public service' includes:
'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, traction 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 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 communications
systems, wire or wireless broadcasting stations and other similar public services.'
Further, Under the Petroleum Act of the Philippines (Republic Act 387), petitioner is
considered a "common carrier." Thus, Article 86 thereof provides that:
"Art. 86. Pipe line concessionaire as a 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."
Republic Act 387 also regards petroleum operation as a public utility. Pertinent portion
of Article 7 thereof provides:
"that everything relating to the exploration for and exploitation of petroleum x x and
everything relating to the manufacture, refining, storage, or transportation by special
methods of petroleum, is hereby declared to be a public utility." (Underscoring
Supplied)The SC granted the petition.
Page 6 of 11
NATIONAL STEEL CORPORATION, petitioner, vs. COURT OF APPEALS AND VLASONS
SHIPPING, INC., respondents. [G.R. No. 112287. December 12, 1997 and VLASONS
SHIPPING, INC., petitioner, vs. COURT OF APPEALS AND NATIONAL STEEL
CORPORATION, respondents. [G.R. No. 112350. December 12, 1997]
PANGANIBAN, J.:Facts: These are consolidated cases filed by National Steel
Corporation (NSC) and Vlasons Shipping, Inc. (VSI) assailing the decision of the CA.
The MV Vlasons I is a vessel which renders tramping service and, as such, does not
transport cargo or shipment for the general public. Its services are available only to
specific persons who enter into a special contract of charter party with its owner. the
MV VLASONS I loaded at plaintiffs pier at Iligan City, the NSCs shipment of tinplates and
hot rolled sheets. plaintiff filed with the defendant its claim for damages suffered due
to the downgrading of the damaged tinplates. defendant denied liability for the
alleged damage claiming that the MV VLASONS I was seaworthy in all respects for the
carriage of plaintiffs cargo. The trial court denied the petition. On appeal, the Court of
Appeals affirmed but reduced demurrage and deleting the award of attorneys fees
and expenses of litigation. NSC and VSI filed separate motions for reconsideration but
was denied, hence, this case.
Issue: 1. WON VSI is a private carrier or a common carrier (it is a private carrier)
Ruling: 1.The SC ruled that respondent VSI is a private carrier. Article 1732 of the Civil
Code defines a common carrier as persons, corporations, firms or associations engaged
in the business of carrying or transporting passengers or goods or both, by land, water,
or air, for compensation, offering their services to the public. It has been held that the
true test of a common carrier is the carriage of passengers or goods, provided it has
space, for all who opt to avail themselves of its transportation service for a fee. A carrier
which does not qualify under the above test is deemed a private carrier. private
carriage is undertaken by special agreement and the carrier does not hold himself out
to carry goods for the general public. The most typical, although not the only form of
private carriage, is the charter party, a maritime contract by which the charterer, a
party other than the shipowner, obtains the use and service of all or some part of a ship
for a period of time or a voyage or voyages. In the instant case, it is undisputed that VSI
did not offer its services to the general public. Consequently, the rights and obligations
of VSI and NSC, including their respective liability for damage to the cargo, are
determined primarily by stipulations in their contract of private carriage or charter
party. SC denied the petition
VIRGINES CALVO doing business under the name and style TRANSORIENT CONTAINER
TERMINAL SERVICES, INC., petitioner, vs. UCPB GENERAL INSURANCE CO., INC. (formerly
Allied Guarantee Ins. Co., Inc.) respondent. [G.R. No. 148496. March 19,
2002]MENDOZA, J
Facts: Petitioner is the owner of Transorient Container Terminal Services, Inc. (TCTSI), a
sole proprietorship customs broker. petitioner entered into a contract with San Miguel
Corporation (SMC) for the transfer of reels of semi-chemical fluting paper and reels of
kraft liner board. the goods were inspected by Marine Cargo Surveyors, who found that
15 reels of the semi-chemical fluting paper were wet/stained/torn and 3 reels of kraft
liner board were likewise torn. SMC collected payment from respondent UCPB under its
insurance contract for the aforementioned amount. In turn, respondent, as subrogee of
SMC, brought suit against petitioner in the RTC. The trial court ruled that petitioner is liable
for the damages. On appeal, th CA affirmed, hence, this case.
Issue: WON the petitioner is a common carrier or a private carrier
Ruling: The SC ruled that the petitioner is a common carrier. 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 . . . 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. 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 (Commonwealth Act No. 1416, as
amended). There is greater reason for holding petitioner to be a common carrier
because the transportation of goods is an integral part of her business. The extraordinary
diligence in the vigilance over the goods tendered for shipment requires the common
carrier to know and to follow the required precaution for avoiding damage to, or
destruction of the goods entrusted to it for sale, carriage and delivery. It requires
common carriers to render service with the greatest skill and foresight and to use all
reasonable means to ascertain the nature and characteristic of goods tendered for
shipment, and to exercise due care in the handling and stowage, including such
methods as their nature requires. In the case at bar, petitioner denies liability for the
damage to the cargo. The SC denied the petition.
Page 7 of 11

PHILIPPINE AMERICAN GENERAL INSURANCE COMPANY, petitioner, vs. PKS SHIPPING
COMPANY, respondent. [G.R. No. 149038. April 9, 2003]
VITUG, J.:
Davao Union Marketing Corporation (DUMC) contracted the services of
respondent PKS Shipping Company (PKS Shipping) for the shipment of bags of
cement worth (P3,375,000.00). DUMC insured the goods for its full value with
petitioner Philippine American General Insurance Company
(Philamgen). while Limar I was being towed by respondents 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. The RTC dismissed the complaint after finding that the total loss of the
cargo could have been caused either by a fortuitous event, in which case the ship
owner was not liable, or through the negligence of the captain and crew of the
vessel and that, under Article 587 of the Code of Commerce adopting the Limited
Liability Rule, the ship owner could free itself of liability by abandoning, as it
apparently so did, the vessel with all her equipment and earned freightage.on
appeal, the Court of Appeals affirmed in toto the decision of the trial
court. Petitioner’s argument: Philamgen contends that the appellate court has
committed a patent error in ruling that PKS Shipping is not a common carrier and
that it is not liable for the loss of the subject cargo. petitioner argues that
respondent, being a common carrier , the only way by which such carrier can be
held exempt for the loss of the cargo would be if the loss were caused by natural
disaster or calamity. Petitioner avers that typhoon "APIANG" has not entered the
Philippine area of responsibility and that, even if it did, respondent would not be
exempt from liability because its employees, particularly the tugmaster, have failed
to exercise due diligence to prevent or minimize the loss.
Issue: WON PKS Shipping is a common carrier or a private carrier
Ruling:
the SC ruled that PKS is a private carrier.
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 to the codal definition is Section 13, paragraph (b), of the Public
Service Act; it defines 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. x x x. (Underscoring supplied).
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.
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
(Commonwealth Act No. 1416, as amended) which at least partially supplements
the law on common carriers set forth in the Civil Code.
The provisions of Article 1733, notwithstanding, common carriers are exempt
from liability for loss, destruction, or deterioration of the goods due to any of the
following causes: (1) Flood, storm, earthquake, lightning, or other natural disaster or
calamity; (2) Act of the public enemy in war, whether international or civil; (3) Act
or omission of the shipper or owner of the goods; (4) The character of the goods or
defects in the packing or in the containers; and (5) Order or act of competent
public authority.[8]The SC denied the petition.
Page 8 of 11
ASIA LIGHTERAGE AND SHIPPING, INC., petitioner, vs. COURT OF APPEALS and in its care and custody of the consignees goods.Common carriers are bound to
PRUDENTIAL GUARANTEE AND ASSURANCE, INC., respondents. observe extraordinary diligence in the vigilance over the goods transported by
them. To overcome the presumption of negligence in the case of loss, destruction
G.R. No. 147246. August 19, 2003] PUNO, J.: or deterioration of the goods, the common carrier must prove that it exercised
Facts: Metric tons of Better Western White Wheat in bulk, valued at aound 400K US extraordinary diligence. There are, however, exceptions to this rule. Article 1734 of
dollars was shipped by Marubeni American Corporation on board for delivery to the Civil Code enumerates the instances when the presumption of negligence
the consignee, General Milling Corporation in Manila. The shipment was insured by does not attach:
the private respondent Prudential Guarantee and Assurance, Inc. against loss or
damage . the transport of said cargo was suspended due to a warning of an Art. 1734. Common carriers are responsible for the loss, destruction, or deterioration
incoming typhoon. A few days after, the barge developed a list because of a hole of the goods, unless the same is due to any of the following causes only:
it sustained after hitting an unseen protuberance underneath the water. The
petitioner filed a Marine Protest. a bidding was conducted to dispose of the (1) Flood, storm, earthquake, lightning, or other natural disaster or
damaged wheat retrieved and loaded on the three other barges. consignee sent calamity;
a claim letter to the petitioner, and another letter to the private respondent for the
value of the lost cargo.the private respondent indemnified the consignee in the (2) Act of the public enemy in war, whether international or civil;
amount of P4,104,654.22.[15] Thereafter, as subrogee, it sought recovery of said
amount from the petitioner, but to no avail.the private respondent filed a complaint
(3) Act or omission of the shipper or owner of the goods;
against the petitioner for recovery of the amount of indemnity. The RTCruled in favor
of the private respondent. On appeal, the CA affirmed the decision of the RTC with
modification as to costs. (4) The character of the goods or defects in the packing or in the
containers;
Issue: WON the petitioner is a common carrier
(5) Order or act of competent public authority.
Ruling: Yes. The SC ruled that Article 1732 of the Civil Code defines common
carriers as persons, corporations, firms or associations engaged in the business of In the case at bar, the barge completely sank after its towing bits broke, resulting in
carrying or transporting passengers or goods or both, by land, water, or air, for the total loss of its cargo. petitioner failed to prove that the typhoon is the
compensation, offering their services to the public. that the definition of common proximate and only cause of the loss of the goods. The evidence show that, even
carriers in Article 1732 of the Civil Code makes no distinction between one whose before the towing bits of the barge broke, it had already previously sustained
principal business activity is the carrying of persons or goods or both, and one who damage when it hit a sunken object while docked at the Engineering Island. It even
does such carrying only as an ancillary activity. We also did not distinguish between suffered a hole.The SC denied the petition.
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.In the case at bar, the principal business of the petitioner is that of lighterage
and drayage[22] and it offers its barges to the public for carrying or transporting
goods by water for compensation. Petitioner is clearly a common carrier. We
therefore hold that 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.On issue of
diligence, the SC ruled that the petitioner failed to exercise extraordinary diligence

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Sps cruz vs sun holidays PERENA VS. ZARATE G.R. NO. 157917 August 29, 2012 Bersamin, J.

FACTS: Perenas were engaged in the business of transporting students to Don Bosco.
The Zarates engaged Perenas services to transport their son, Aaron, to school.While on
the way to school, the van’s air-conditioned unit was turned on and the stereo playing
loudly. The driver took a detour because they were running late due to the traffic in
SLEX. The detour was through a narrow path underneath the Magallanes Interchange
used as short cut into Makati. When the van was to traverse the PNR railroad crossing,
the van was tailing a large passenger bus so the driver’s view of the oncoming train was
blocked. The train hit the van at the rear end and the impact threw 9 students including
Aaron out of the van. Aaron landed in the path of the train which dragged his body
and severed his head, instantaneously killing him.The Zarates filed for damages against
Alfaro, Perenas, PNR, and the train driver. The cause of action against Perena was for
contract of carriage while for PNR, quasi delict. Perena posited the defense of diligence
of a good father in the selection and supervision of their driver

ISSUE/S: Were Perenas and PNR jointly and severally liable for damages? Is the petitioner
a common carrier?

RULING:YES. A school bus operator is a common carrier.Perena’s defense of diligence

of a good father in the selection and supervision of their driver is unavailable for breach
of contract of carriage. Perenas operated as a common carrier; and their standard of
care was extraordinary diligence, not only diligence of a good father.A carrier is a
person or corporation who undertakes to transport or convey goods from one place to
another, gratuitously or for hire. They may be private or common. Private carrier is one
who, 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 gratutitously or for
hire. The diligence required of a private carrier is only ordinary. 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. Diligence required is to observe extraordinary
diligence, and is presumed to be at fault or to have acted negligently in case of the loss
of effects of passengers, or death or injuries to passengers. The true test for a common
carrier is not the quantity or extent of business actually transacted, or the number of
conveyances, BUT WHETHER the undertaking is a part of the activity that he has held out
to the general public as his business or occupation. The Perenas 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. Perena, being a common
carrier, was already presumed to be negligent at the time of the accident because
death occurred to their passenger. The omissions of care on the part of the driver
constituted negligence.

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Torres madrid vs feb Philippine Airlines vs Civil Aeronautics Board Case Digest
Philippine Airlines, Inc. vs. Civil Aeronautics Board
(270 SCRA 538)

Facts: Grand Air applied for a Certificate of Public Convenience and Necessity with
the Civil Aeronautics Board (CAB). The Chief Hearing Officer issued a notice of
hearing directing Grand Air to serve a copy of the application and notice to all
scheduled Philippine Domestic operators. Grand Air filed its compliance and
requested for a Temporary Operating Permit (TOP). PAL filed an opposition to the
application on the ground that the CAB had no jurisdiction to hear the application
until Grand Air first obtains a franchise to operate from Congress. The Chief Hearing
Officer denied the opposition and the CAB approved the issuance of the TOP for a
period of 3 months. The opposition for the TOP was likewise denied. The CAB justified
its assumption of jurisdiction over Grand Air’s application on the basis of Republic
Act 776 which gives it the specific power to issue any TOP or Certificate of Public
Convenience and Necessity.

Issue: Whether or not the CAB can issue a Certificate of Public Convenience and
Necessity or TOP even though the prospective operator does not have a legislative
franchise?

Held: Yes, as mentioned by the CAB, it is duly authorized to do so under Republic

Act 776 and a legislative franchise is not necessary before it may do so, since
Congress has delegated the authority to authorize the operation of domestic air
transport services to the CAB, an administrative agency. The delegation of such
authority is not without limits since Congress had set specific standard and
limitations on how such authority should be exercised.

Public convenience and necessity exists when the proposed facility will meet a
reasonable want of the public and supply a need which the existing facilities do
not adequately afford.

Thus, the Board should be allowed to continue hearing the application, since it has
jurisdiction over it provided that the applicant meets all the requirements of the law.

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