Transpo Digest Revised

COMMERCIAL LAW REVIEW || Transportation Law 1
Cases 1-39(missing 3,4,5,6,7,8,13,14,37 and 38)
1. MALAYAN INSURANCE v. PHILIPPINES FIRST signed a Special Risk Insurance Policy (SR Policy) with
INSURANCE CO., INC. G.R. NO. 184300 July 11, 2012 petitioner Malayan for the amount of P1,000,000.00.
A common carrier becomes a private carrier when it undertakes During the effectivity of the Marine Policy and SR Policy,
to carry a special cargo or chartered to a special person only. Reputable received from Wyeth 1,000 boxes of Promil infant
The extent of a private carrier’s obligation is dictated by the formula worth P2,357,582.70 to be delivered by Reputable to
stipulations of a contract it entered into, provided its stipulations, Mercury Drug in Libis, Quezon City. Unfortunately, the truck
clauses, terms and conditions are not contrary to law, morals, carrying Wyeth s products was hijacked by about 10 armed
good customs, public order, or public policy. men. The hijacked truck was recovered two weeks later without
its cargo.
Facts:
Philippines First, pursuant to the Marine Policy, paid Wyeth
P2,133,257.00 as indemnity. Philippines First then demanded
Wyeth Philippines and respondent Reputable Forwarder
reimbursement from Reputable, having been subrogated to the
Services, Inc. (Reputable) had been executing a contract of
rights of Wyeth by virtue of the payment. The latter, however,
carriage, whereby the latter undertook to transport and deliver
ignored the demand. Philippines First instituted an action for
the former’s products to its customers, dealers or salesmen.
sum of money against Reputable and alleged that Reputable is
a “private corporation engaged in the business of a common
Wyeth procured a Marine Policy from respondent Philippines carrier.”
First Insurance Co., Inc. Philippines First insured Wyeth’s
nutritional, pharmaceutical and other products usual or
In its answer, Reputable claimed that it is a private carrier. The
incidental to the insured’s business while the same were being
RTC rendered its Decision finding Reputable liable to
transported or shipped in the Philippines.
Philippines First for the amount of indemnity it paid to Wyeth,
among others. In turn, Malayan was found to be liable to
Under the contract, Reputable undertook to answer for “all risks Reputable to the extent of the policy coverage.
with respect to the goods and shall be liable to Wyeth, for the
Dissatisfied, both Reputable and Malayan filed their respective
loss, destruction, or damage of the goods/products due to any
appeals.
and all causes whatsoever, including theft, robbery, flood,
storm, earthquakes, lightning, and other force majeure while the
goods/products are in transit and until actual delivery to the The CA sustained the ruling of the RTC. Malayan’s MR was
customers, salesmen, and dealers of Wyeth”. Reputable denied by the CA. Hence, this petition.
carrier is not acting as such but as a private carrier. Public policy

Issue: governing common carriers has no force where the public at
large is not involved.”
Whether or not Reputable is a common carrier?
Ruling: 2. NATIONAL STEEL CORPORATION v. COURT OF

APPEALS
G.R. No. 112287 December 12, 1997
The Court agrees with the RTC and CA that Reputable is a
private carrier.
The stringent provisions of the Civil Code on common carriers
Under Article 1732 of the Civil Code, common carriers are protecting the general public cannot justifiably be applied to a
persons, corporations, firms, or associations engaged in the private carrier.
business of carrying or transporting passenger or goods, or both
by land, water or air for compensation, offering their services to
the public. Facts:
Plaintiff National Steel Corporation (NSC) as Charterer and

On the other hand, a private carrier is one wherein the carriage defendant Vlasons Shipping, Inc. (VSI) as Owner, entered into
is generally undertaken by special agreement and it does not a Contract of Voyage Charter Hire whereby NSC hired VSI’s
hold itself out to carry goods for the general public. vessel, the MV Vlasons I to make one voyage to load steel
products at Iligan City and discharge them at North Harbor,
Manila. The handling, loading and unloading of the cargoes
A common carrier becomes a private carrier when it undertakes were the responsibility of the Charterer.
to carry a special cargo or chartered to a special person only.
For all intents and purposes, therefore, Reputable operated as The skids of tinplates and hot rolled sheets shipped were
a private/special carrier with regard to its contract of carriage allegedly found to be wet and rusty. Plaintiff, alleging
with Wyeth. negligence, filed a claim for damages against the defendant
The extent of a private carrier’s obligation is dictated by the who denied liability claiming that the MV Vlasons I was
seaworthy in all respects for the carriage of plaintiff’s cargo; that
stipulations of a contract it entered into, provided its stipulations,
said vessel was not a “common carrier” inasmuch as she was
clauses, terms and conditions are not contrary to law, morals, under voyage charter contract with the plaintiff as charterer
good customs, public order, or public policy. “The Civil Code
provisions on common carriers should not be applied where the
under the charter party; that in the course its voyage, the vessel the Code of Commerce and not by the Civil Code which, as a
encountered very rough seas. general rule, places the prima facie presumption of negligence
on a common carrier.
Issue: 9. LRTA V. NAVIDAD

GR NO 145804, 6 FEBRUARY 2003
Whether or not the provisions of the Civil Code on common
carriers pursuant to which there exists a presumption of
negligence against the common carrier in case of loss or The law requires common carriers to carry passengers safely
damage to the cargo are applicable to a private carrier? using the utmost diligence of very cautious persons with due
regard for all circumstances. Such duty of a common carrier to
provide safety to its passengers so obligates it not only during
Ruling: the course of the trip but for so long as the passengers are within
its premises and where they ought to be in pursuance to the
No. In a contract of private carriage, the parties may freely contract of carriage.
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. Facts:
Hence, the stringent provisions of the Civil Code on common
carriers protecting the general public cannot justifiably be On 14 October 1993, about half an hour past seven o’clock in
applied to a ship transporting commercial goods as a private
the evening, Nicanor Navidad, then drunk, entered the EDSA
carrier.
LRT station after purchasing a "token" (representing payment of
the fare). While Navidad was standing on the platform near the
It has been held that the true test of a common carrier is the
LRT tracks, Junelito Escartin, the security guard assigned to the
carriage of passengers or goods, provided it has space, for all
who opt to avail themselves of its transportation service for a area approached Navidad. A misunderstanding or an
fee [Mendoza vs. Philippine Airlines, Inc., 90 Phil. 836, 842-843 altercation between the two apparently ensued that led to a fist
(1952)]. A carrier which does not qualify under the above test is fight. No evidence, however, was adduced to indicate how the
deemed a private carrier. “Generally, private carriage is fight started or who, between the two, delivered the first blow or
undertaken by special agreement and the carrier does not hold how Navidad later fell on the LRT tracks. At the exact moment
himself out to carry goods for the general public. that Navidad fell, an LRT train, operated by petitioner Rodolfo
Roman, was coming in. Navidad was struck by the moving train,
Because the MV Vlasons I was a private carrier, the ship and he was killed instantaneously.
owner’s obligations are governed by the foregoing provisions of
"Article 1755. A common carrier is bound to carry the

On 08 December 1994, the widow of Nicanor, herein passengers safely as far as human care and foresight can
respondent Marjorie Navidad, along with her children, filed a provide, using the utmost diligence of very cautious persons,
complaint for damages against Junelito Escartin, Rodolfo with a due regard for all the circumstances.
Roman, the LRTA, the Metro Transit Organization, Inc. (Metro
Transit), and Prudent for the death of her husband. LRTA and "Article 1756. In case of death of or injuries to passengers,
Roman filed a counterclaim against Navidad and a cross-claim common carriers are presumed to have been at fault or to have
against Escartin and Prudent. Prudent, in its answer, denied acted negligently, unless they prove that they observed
liability and averred that it had exercised due diligence in the extraordinary diligence as prescribed in articles 1733 and
selection and supervision of its security guards. 1755."
RTC ruled in favor of Navidad against Prudent Security and "Article 1759. Common carriers are liable for the death of or
Escartin. CA modified RTC, exonerated Prudent Security and injuries to passengers through the negligence or willful acts of
Escartin and held LRTA and Roman liable to Navidad. the former’s employees, although such employees may have
acted beyond the scope of their authority or in violation of the
orders of the common carriers.
Issue:
Should LRTA be held liable? "This liability of the common carriers does not cease upon proof
that they exercised all the diligence of a good father of a family
in the selection and supervision of their employees."
Ruling:
"Article 1763. A common carrier is responsible for injuries
suffered by a passenger on account of the willful acts or
Law and jurisprudence dictate that a common carrier, both from negligence of other passengers or of strangers, if the common
the nature of its business and for reasons of public policy, is carrier’s employees through the exercise of the diligence of a
burdened with the duty of exercising utmost diligence in good father of a family could have prevented or stopped the act
ensuring the safety of passengers. The Civil Code, governing or omission."
the liability of a common carrier for death of or injury to its
passengers, provides:
The law requires common carriers to carry passengers safely
using the utmost diligence of very cautious persons with due
regard for all circumstances. Such duty of a common carrier to

provide safety to its passengers so obligates it not only during Xxx
the course of the trip but for so long as the passengers are within
its premises and where they ought to be in pursuance to the
There being, similarly, no showing that petitioner Rodolfo
contract of carriage. The statutory provisions render a common
Roman himself is guilty of any culpable act or omission, he must
carrier liable for death of or injury to passengers (a) through the
also be absolved from liability. Needless to say, the contractual
negligence or wilful acts of its employees or b) on account of
tie between the LRT and Navidad is not itself a juridical relation
wilful acts or negligence of other passengers or of strangers if
between the latter and Roman; thus, Roman can be made liable
the common carrier’s employees through the exercise of due
only for his own fault or negligence.
diligence could have prevented or stopped the act or omission.
In case of such death or injury, a carrier is presumed to have
been at fault or been negligent, and by simple proof of injury,
the passenger is relieved of the duty to still establish the fault or
negligence of the carrier or of its employees and the burden
shifts upon the carrier to prove that the injury is due to an
unforeseen event or to force majeure. In the absence of
satisfactory explanation by the carrier on how the accident
occurred, which petitioners, according to the appellate court,
have failed to show, the presumption would be that it has been 10. G.V. Florida Transport, Inc. v. Heirs of Romeo Battung,
at fault, an exception from the general rule that negligence must Jr.
be proved. GR No 208802, 14 October 2015
The foundation of LRTA’s liability is the contract of carriage and Article 1756 of the Civil Code provides that "[i]n case of death
its obligation to indemnify the victim arises from the breach of of or injuries to passengers, common carriers are presumed to
that contract by reason of its failure to exercise the high have been at fault or to have acted negligently, unless they
diligence required of the common carrier. In the discharge of its prove that they observed extraordinary diligence as prescribed
commitment to ensure the safety of passengers, a carrier may in Articles 1733 and 1755." This disputable presumption may
choose to hire its own employees or avail itself of the services also be overcome by a showing that the accident was caused
of an outsider or an independent firm to undertake the task. In by a fortuitous event.
either case, the common carrier is not relieved of its
responsibilities under the contract of carriage.
Facts: the payment of their counterclaims for damages and attorney’s

Respondents alleged that in the evening of March 22, 2003, fees.
Romeo L. Battung, Jr. (Battung) boarded petitioner’s bus with
body number 037 and plate number BVJ-525 in Delfin Albano, RTC ruled in favor the heirs. CA affirmed the RTC ruling.
Isabela, bound for Manila. Battung was seated at the first row
behind the driver and slept during the ride. When the bus
reached the Philippine Carabao Center in Muñoz, Nueva Ecija,
the bus driver, Duplio, stopped the bus and alighted to check Issue:
the tires. At this point, a man who was seated at the fourth row Should Florida be held liable?
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 Ruling:
the latter was pronounced dead on arrival. Hence, respondents
filed a complaint on July 15, 2008 for damages in the aggregate
amount of ₱1,826,000.00 based on a breach of contract of The law exacts from common carriers (i.e., those persons,
carriage against petitioner, Duplio, and Baraoay (petitioner, et corporations, firms, or associations engaged in the business of
al.) before the RTC, docketed as Civil Case No. 22-1103. carrying or transporting passengers or goods or both, by land,
Respondents contended that as a common carrier, petitioner water, or air, for compensation, offering their services to the
and its employees are bound to observe extraordinary diligence public) the highest degree of diligence (i.e., extraordinary
in ensuring the safety of passengers; and in case of injuries diligence) in ensuring the safety of its passengers. Articles 1733
and/or death on the part of a passenger, they are presumed to and 1755 of the Civil Code state:
be at fault and, thus, responsible therefor. As such, petitioner,
et al. should be held civilly liable for Battung’s death. Art. 1733. Common carriers, from the nature of their business
and for reasons of public policy, are bound to observe
In their defense, petitioner, et al. maintained that they had extraordinary diligence in the vigilance over the goods and for
exercised the extraordinary diligence required by law from the safety of the passengers transported by them, according to
common carriers. In this relation, they claimed that a common all the circumstances of each case.
carrier is not an absolute insurer of its passengers and that
Battung’s death should be properly deemed a fortuitous event. Art. 1755. A common carrier is bound to carry the passengers
Thus, they prayed for the dismissal of the complaint, as well as safely as far as human care and foresight can provide, using the
utmost diligence of very cautious persons, with a due regard for being, from introducing evidence to fasten the negligence on the
all the circumstances. former, because the presumption stands in the place of
evidence. Being a mere presumption, however, the same is
In this relation, Article 1756 of the Civil Code provides that "[i]n rebuttable by proof that the common carrier had exercised
case of death of or injuries to passengers, common carriers are extraordinary diligence as required by law in the performance of
presumed to have been at fault or to have acted negligently, its contractual obligation, or that the injury suffered by the
unless they prove that they observed extraordinary diligence as passenger was solely due to a fortuitous event.
prescribed in Articles 1733 and 1755." This disputable
presumption may also be overcome by a showing that the In fine, we can only infer from the law the intention of the Code
accident was caused by a fortuitous event. The foregoing Commission and Congress to curb the recklessness of drivers
provisions notwithstanding, it should be pointed out that the law and operators of common carriers in the conduct of their
does not make the common carrier an insurer of the absolute business.
safety of its passengers. In Mariano, Jr. v. Callejas, the Court
explained that: Thus, it is clear that neither the law nor the nature of the
business of a transportation company makes it an insurer of the
"While the law requires the highest degree of diligence from passenger’s safety, but that its liability for personal injuries
common carriers in the safe transport of their passengers and sustained by its passenger rests upon its negligence, its failure
creates a presumption of negligence against them, it does not, to exercise the degree of diligence that the law requires."
however, make the carrier an insurer of the absolute safety of (Emphases and underscoring supplied)
its passengers.
Therefore, it is imperative for a party claiming against a common
Article 1755 of the Civil Code qualifies the duty of extraordinary carrier under the above-said provisions to show that the injury
care, vigilance[,] and precaution in the carriage of passengers or death to the passenger/s arose from the negligence of the
by common carriers to only such as human care and foresight common carrier and/or its employees in providing safe transport
can provide. What constitutes compliance with said duty is to its passengers.
adjudged with due regard to all the circumstances.
In this case, Battung’s death was neither caused by any defect
Article 1756 of the Civil Code, in creating a presumption of fault in the means of transport or in the method of transporting, or to
or negligence on the part of the common carrier when its the negligent or willful acts of petitioner’s employees, namely,
passenger is injured, merely relieves the latter, for the time that of Duplio and Daraoay, in their capacities as driver and
conductor, respectively. Instead, the case involves the death of would have used in the same situation? If not, then he is guilty
Battung wholly caused by the surreptitious act of a copassenger of negligence."
who, after consummating such crime, hurriedly alighted from
the vehicle.25 Thus, there is no proper issue on petitioner’s duty Xxx
to observe extraordinary diligence in ensuring the safety of the
passengers transported by it, and the presumption of
fault/negligence against petitioner under Article 1756 in relation In this case, records reveal that when the bus stopped at San
to Articles 1733 and 1755 of the Civil Code should not apply. Jose City to let four (4) men ride petitioner's bus (two [2] of which
turned out to be Battung's murderers), the bus driver, Duplio,
saw them get on the bus and even took note of what they were
Xxx wearing. Moreover, Duplio made the bus conductor, Daraoay,
approach these men and have them pay the corresponding fare,
On the other hand, since Battung’s death was caused by a which Daraoay did. During the foregoing, both Duplio and
copassenger, the applicable provision is Article 1763 of the Civil Daraoay observed nothing which would rouse their suspicion
Code, which states that "a common carrier is responsible for that the men were armed or were to carry out an unlawful
injuries suffered by a passenger on account of the willful acts or activity. With no such indication, there was no need for them to
negligence of other passengers or of strangers, if the common conduct a more stringent search (i.e., bodily search) on the
carrier’s employees through the exercise of the diligence of a aforesaid men. By all accounts, therefore, it cannot be
good father of a family could have prevented or stopped the act concluded that petitioner or any of its employees failed to
or omission." Notably, for this obligation, the law provides a employ the diligence of a good father of a family in relation to its
lesser degree of diligence, i.e., diligence of a good father of a responsibility under Article 1763 of the Civil Code. As such,
family, in assessing the existence of any culpability on the petitioner cannot altogether be held civilly liable.
common carrier’s part.
Case law states that the concept of diligence of a good father of 11. DANGWA TRANSPORTATION CO., INC. VS. COURT
a family "connotes reasonable care consistent with that which OF APPEALS GR. NO. 95582, OCTOBER 07, 1991
an ordinarily prudent person would have observed when
confronted with a similar situation. The test to determine The victim in the case at bar, by stepping and standing on the
whether negligence attended the performance of an obligation platform of the bus, is already considered a passenger and is
is: did the defendant in doing the alleged negligent act use that entitled to all the rights and protection pertaining to such a
reasonable care and caution which an ordinarily prudent person contractual relation.
supposedly not manifested his intention to board the same,

Facts: does not merit consideration.
The Private respondents filed a complaint for damages against Issue:

petitioners for the death of Pedrito Cudiamat as a result of a
vehicular accident on March 25, 1985 at Mankayan, Benguet. it Whether or not the petitioners are negligent and liable for the
was alleged that on said date, while petitioner Theodore M. damages claimed.
Lardizabal was driving a passenger bus belonging to petitioner
corporation in a reckless and imprudent manner and without
due regard to traffic rules and regulations and safety to persons Ruling:
and property, it ran over its passenger, Pedrito Cudiamat.
Petitioners alleged that they had observed and continued to Yes. The victim herein, by stepping and standing on the platform
observe the extraordinary diligence required in the operation of of the bus, is already considered a passenger and is entitled to
the transportation company and the supervision of the all the rights and protection pertaining to such a contractual
employees, even as they add that they are not absolute insurers relation. Hence, it has been held that the duty which the carrier
of the safety of the public at large. Further, it was alleged that it of passengers owes to its patrons extends to persons boarding
was the victim's own carelessness and negligence which gave the cars as well as to those alighting therefrom. Common
rise to the subject incident. carriers, from the nature of their business and for reasons of
The trial court rendered a decision, effectively in favor of public policy, are bound to observe extraordinary diligence for
petitioners, that Pedrito Cudiamat was negligent, which the safety of the passengers transported by them, according to
negligence was the proximate cause of his death. On appeal to all the circumstances of each case. A common carrier is bound
CA, the CA set aside the decision of the lower court, and to carry the passengers safely as far as human care and
ordered petitioners to pay private respondents. The declares foresight can provide, using the utmost diligence of very
that, Evidently, the incident took place due to the gross cautious persons, with a due regard for all the circumstances.
negligence of the appellee-driver in prematurely stepping on the
accelerator and in not waiting for the passenger to first secure
his seat especially so when we take into account that the
platform of the bus was at the time slippery and wet because of 12. ABOITIZ SHIPPING CORPORATION VS. COURT OF
a drizzle. The defendants-appellees utterly failed to observe APPEALS, 179 SCRA 95, NOVEMBER 06, 1989
their duty and obligation as common carrier to the end that they
should observe extra-ordinary diligence in the vigilance over the
goods and for the safety of the passengers transported by them Carrier-passenger relationship continues until the passenger
according to the circumstances of each case. The petitioners has been landed at the port of destination and has left the
contends that the driver and the conductor had no knowledge vessel-owner’s premises.
that the victim would ride on the bus, since the latter had
Facts: The trial court, Aboitiz was ordered to pay the Vianas for
damages incurred, and Pioneer was ordered to reimburse
On May 11, 1975, Anacleto Viana boarded the vessel M/V Aboitiz for whatever amount the latter paid the Vianas. On MR,
Antonia, owned by defendant, at the port at San Jose, the trial court absolved Pioneer from liability for failure of the
Occidental Mindoro, bound for Manila. On May 12, 1975, said Vianas and Aboitiz to preponderantly establish a case of
vessel arrived at Pier 4, North Harbor, Manila, and the negligence against the crane operator. Aboitiz appealed the
passengers therein disembarked, a gangplank having been same to Court of Appeals which affirmed the findings of the trial
provided connecting the side of the vessel to the pier. Instead court. Petitioner contends that since one (1) hour had already
of using said gangplank Anacleto Viana disembarked on the elapsed from the time Anacleto Viana disembarked from the
third deck which was on the level with the pier. A crane owned vessel and that he was given more than ample opportunity to
by the third-party defendant, Pioneer Stevedoring Corporation. unload his cargoes prior to the operation of the crane, his
Pioneer Stevedoring Corporation has the exclusive control of presence on the vessel was no longer reasonable e and he
the cargoes loaded on said vessel pursuant to the consequently ceased to be a passenger.
Memorandum of Agreement between the third-party defendant Issue:
and defendant Aboitiz Shipping Corporation. The crane was
operated by its crane operator Alejo Figueroa was placed Whether or not Aboitiz can still be held liable?
alongside the vessel and one (1) hour after the passengers of
said vessel had disembarked, it started operation by unloading Ruling:
the cargoes from said vessel. While the crane was being
operated, Anacleto Viana who had already disembarked from Yes. The rule is that the relation of carrier and passenger
said vessel remembered that some of his cargoes were still continues until the passenger has been landed at the port of
loaded in the vessel, went back to the vessel, and it was while destination and has left the vessel owner’s dock or premises.
he was pointing to the crew of the said vessel to the place where Once created, the relationship will not ordinarily terminate until
his cargoes were loaded that the crane hit him, pinning him the passenger has, after reaching his destination, safely
between the side of the vessel and the crane. He was thereafter alighted from the carrier’s conveyance or had a reasonable
brought to the hospital where he later expired three (3) days opportunity to leave the carrier’s premises. All persons who
thereafter. Private respondents Vianas filed a complaint 3 for remain on the premises a reasonable time after leaving the
damages against petitioner corporation (Aboitiz, for brevity) for conveyance are to be deemed passengers, and what is a
breach of contract of carriage. Aboitiz denied responsibility reasonable time or a reasonable delay within this rule is to be
contending that at the time of the accident, the vessel was determined from all the circumstances, and includes a
completely under the control of respondent Pioneer. Pioneer reasonable time to see after his baggage and prepare for his
raised the defenses that Aboitiz had no cause of action against departure. The carrier-passenger relationship is not terminated
Pioneer considering that Aboitiz is being sued by the Vianas for merely by the fact that the person transported has been carried
breach of contract of carriage to which Pioneer is not a party. to his destination if, for example, such person remains in the
carrier’s premises to claim his baggage. It is not definitely shown
that one (1) hour prior to the incident, the victim had already
disembarked from the vessel. Petitioner failed to prove this. driven by Rodolfo L. Mercelita. By then, PNR Train No. T-71,
What is clear to us is that at the time the victim was taking his driven by Alfonso Reyes, was on its way to Tutuban, Metro
cargoes, the vessel had already docked an hour earlier. In Manila.
consonance with common shipping procedure as to the
minimum time of one (1) hour allowed for the passengers to Rhonda Brunty, Garcia and Mercelita were already approaching
disembark, it may be presumed that the victim had just gotten the railroad crossing at Barangay Rizal, Moncada, Tarlac.
off the vessel when he went to retrieve his baggage. Yet, even Mercelita, driving at approximately 70 km/hr, drove past a
if he had already disembarked an hour earlier, his presence in vehicle, unaware of the railroad track up ahead and that they
petitioner's premises was not without cause. The victim had to were about to collide with PNR Train No. T-71. Mercelita was
claim his baggage which was possible only one (1) hour after instantly killed when the Mercedes Benz smashed into the train;
the vessel arrived since it was admittedly standard procedure in the two other passengers suffered serious physical injuries.
the case of petitioner's vessels that the unloading operations Rhonda Brunty was brought to the Central Luzon Doctor’s
shall start only after that time. Consequently, under the Hospital in Tarlac, where she was pronounced dead after ten
foregoing circumstances, the victim Anacleto Viana is still minutes from arrival. Garcia, who had suffered severe head
deemed a passenger of said carrier at the time of his tragic injuries, was brought via ambulance to the same hospital.
death.
Ethel Brunty sent a demand letter to the PNR demanding
payment damages, as a result of her daughter’s death. When
PNR did not respond, Ethel Brunty and Garcia, filed a complaint
15. PNR VS BRUNTY for damages against the PNR before the RTC of Manila. They
GR NO. 169891 alleged that the death of Mercelita and Rhonda Brunty, as well
as the physical injuries suffered by Garcia, were the direct and
The doctrine of last clear chance states that where both parties proximate result of the gross and reckless negligence of PNR in
are negligent but the negligent act of one is appreciably later not providing the necessary equipment at the railroad crossing
than that of the other, or where it is impossible to determine in Barangay Rizal, Municipality of Moncada, Tarlac. They
whose fault or negligence caused the loss, the one who had the pointed out that there was no flagbar or red light signal to warn
last clear opportunity to avoid the loss but failed to do so, is motorists who were about to cross the railroad track, and that
chargeable with the loss. the flagman or switchman was only equipped with a hand
flashlight. They prayed for the payment of damages.
Facts: In its Answer, by way of special and affirmative defense, it

stressed that it had the right of way on the railroad crossing in
Daughter of respondent Ethel Brunty and an American citizen, question, and that it has no legal duty to put up a bar or red light
Rhonda Brunty, came to the Philippines for a visit. Rhonda signal in any such crossing. It insisted that there were adequate,
Brunty, together with her Filipino host Juan Manuel M. Garcia, visible, and clear warning signs strategically posted on the sides
traveled to Baguio City on board a Mercedes Benz sedan, of the road before the railroad crossing. It countered that the
immediate and proximate cause of the accident was Mercelita’s having been established to be the negligence of petitioner, we
negligence, and that he had the last clear chance to avoid the hold that the above doctrine finds no application in the instant
accident. The driver disregarded the warning signs, the whistle case.
blasts of the oncoming train and the flashlight signals to stop
given by the guard. As counterclaim, it prayed that it be awarded
actual and compensatory damages, and litigation expenses. 16. SEALOADER SHIPPING CORP. VS GRAND CEMENT
MFG CORP
After trial on the merits, the RTC rendered its Decision in favor GR NO. 167363
of plaintiffs Ethel Brunty and Juan Manuel M. Garcia and against
the defendant Philippine National Railways directing the latter
to pay the former. Contributory Negligence is conduct on the part of the injured
Aggrieved, the PNR appealed the case to the CA which affirmed party, contributing as a legal cause to the harm he has suffered,
the ruling of the RTC. which falls below the standard to which he is required to
conform for his own protection.
Issue: Facts:
Did the Court of Appeals erred in not applying the doctrine of Sealoader Shipping Corporation (Sealoader) is a domestic
last clear chance in the instant case? corporation engaged in the business of shipping and hauling
cargo from one point to another using sea-going inter-island
barges. Grand Cement Manufacturing Corporation (now
Ruling: Taiheiyo Cement Philippines, Inc.), on the other hand, is a
domestic corporation engaged in the business of manufacturing
No. As to whether or not the doctrine of last clear chance is and selling cement through its authorized distributors and, for
applicable, the Supreme Court ruled in the negative. The which purposes, it maintains its own private wharf in San
doctrine of last clear chance states that where both parties are Fernando, Cebu, Philippines. Sealoader executed a Time
negligent but the negligent act of one is appreciably later than Charter Party Agreement with Joyce Launch for the chartering
that of the other, or where it is impossible to determine whose of MT Viper in order to tow its unpropelled barges for a minimum
fault or negligence caused the loss, the one who had the last of 15 days.
clear opportunity to avoid the loss but failed to do so, is
chargeable with the loss. Stated differently, the antecedent Sealoder entered into a contract with Grand Cement for the
negligence of plaintiff does not preclude him from recovering loading of cement clinkers and the delivery thereof to Manila.
damages caused by the supervening negligence of defendant, Sealoder’s barge arrived at the wharf of Grand Cement tugged
who had the last fair chance to prevent the impending harm by by MT Viper. It was not immediately loaded as the employees
the exercise of due diligence. The proximate cause of the injury
of Grand Cement were loaded another vessel.

Whether or not Grand Cement is guilty of contributory
Typhoon Bising struck Cebu area. The barge was still docked negligence
at the wharf of Grand Cement. As it became stronger, MT Viper
tried to tow the barge away but it was unsuccessful because the Ruling:
towing line connecting the vessels snapped since the mooring
lines were not cast off, which is the ultimate cause. Hence, the No. The court found that it was not guilty thereof. Article 2179 of
barge rammed the wharf causing significant damage. the Civil Code defines the concept of contributory negligence as
follows:
Grand Cement filed a complaint for damages (P2.4M) since
Sealoader ignored its demands. They allege that Sealoader Art. 2179. When the plaintiff’s own negligence was the
was negligent when it ignored its employee’s advice to move immediate and proximate cause of his injury, he cannot recover
the vessels after it had received weather updates. Sealoader damages. But if his negligence was only contributory, the
filed a motion to dismiss on the ground that Joyce Launch is the immediate and proximate cause of the injury being the
one liable since it was the owner of MT Viper, who’s employees defendant’s lack of due care, the plaintiff may recover damages,
were manning the vessel. Joyce maintains that the damages but the courts shall mitigate the damages to be awarded.
were due to force majeure and faulted Grand Cement’s Contributory negligence is conduct on the part of the injured
employees for abandoning the wharf leaving them helpless and party, contributing as a legal cause to the harm he has suffered,
for not warning them early on. which falls below the standard to which he is required to
conform for his own protection.
Upon testimonies, the RTC rendered judgment in favor of Grand Grand Cement was not guilty of negligent acts, which
Cement holding the two companies liable since there was contributed to the damage that was incurred on its wharf. It had
complete disregard of the storm signal, the captain of the vessel timely informed the barge of the impending typhoon and
was not present and the vessel was not equipped with a radio directed the vessels to move to a safer place. Sealoader had
or any navigational facility, which is mandatory. Joyce launch the responsibility to inform itself of the prevailing weather
did not appeal. conditions in the areas where its vessel was to sail. It cannot
merely rely on other vessels for weather updates and warnings
On appeal, the CA affirmed the decision but on MR, it partly on approaching storms. For to do so would be to gamble with
reversed its decision finding Grand Cement to be guilty of the safety of its own vessel, putting the lives of its crew under
contributory negligence since it was found that it was still the mercy of the sea, as well as running the rick of causing
loading the other vessel at the last minute just before the storm damage to property of third parties for which it would necessarily
hit, hence Sealoder’s vessel did not move. Damages were be liable.
reduced to 50%. Hence, petition for review to SC.
Therefore Sealoader is liable for its negligence.

Issue:
amputated. Police report showed that there were 10 more who

were injured by the accident.
17. LARRY ESTACION vs NOE BERNARDO, ET AL. On February 18, 1993, Bernardo, and his guardian ad litem Arlie
G.R. No. 144723, February 27, 2006 Bernardo, filed with the Regional Trial Court of Dumaguete a
complaint for damages arising from quasi-delict against
petitioner as owner of the truck and his driver. RTC ruled that
For an employer to have exercised the diligence of a Gerosano was negligent and it was the direct and proximate
good father of a family, he should not be satisfied with the cause of the incident. It also held petitioner liable as employer.
applicant’s mere possession of a professional driver’s license; CA affirmed in toto the RTC.
he must also carefully examine the applicant for employment as
to his qualifications, his experience and record of service.
Petitioner failed to present convincing proof that she went to this Issue:
extent of verifying Venturina’s qualifications, safety record, and
driving history. The presumption juris tantum that there was Whether or not petitioner is liable and whether or not Bernardo
negligence in the selection of her bus driver, thus, remains was guilty of contributory negligence
unrebutted.
Ruling:
Facts:
YES.
On October 16, 1982 in the afternoon, respondent Noe
Bernardo was going home to Dumaguete from Cebu. He For an employer to have exercised the diligence of a good father
boarded a Ford Fiera jeepney driven by Quinquillera and owned of a family, he should not be satisfied with the applicant’s mere
by Bandoquillo. He was seated on the extension seat at the possession of a professional driver’s license; he must also
center of the Fiera. From San Jose, an old woman wanted to carefully examine the applicant for employment as to his
ride so Noe offered his seat and hung/stood on the left rear qualifications, his experience and record of service. Petitioner
carrier of the vehicle. The Fiera slowed down and stopped to failed to present convincing proof that she went to this extent of
pick up more passengers. verifying Venturina’s qualifications, safety record, and driving
history. The presumption juris tantum that there was negligence
Suddenly, an Isuzu cargo truck owned by the petitioner Larry in the selection of her bus driver, thus, remains unrebutted.
Estacion and driven by Gerosano, which was travelling in the
same direction, hit the rear portion of the jeepney. The Fiera From the way the truck reacted to the application of the brakes,
crushed Bernardo’s legs and feet, and he was brought to it can be shown that Gerosano was driving at a fast speed
Silliman University Medical Center where his lower left leg was because the brakes skidded a lengthy 48 ft. as shown in the
sketch of the police. There was also only one tire mark which
meant that the brakes of the truck were not aligned properly, 18. TRAVEL & TOURS ADVISERS, INC. V. ALBERTO
otherwise, there would have been 2 tire marks. It is the negligent CRUZ, SR.
act of the petitioner’s driver of driving the cargo truck at a fast G.R. NO. 199282 March 14, 2016
speed coupled with faulty brakes which was the proximate
cause of the respondent Bernardo’s injury. As employer of
Gerosano, petitioner is primarily and solitarily liable for the Article 2180, in relation to Article 2176, of the Civil Code
quasi-delict committed by the former. He is presumed to be provides that the employer of a negligent employee is liable for
negligent in the selection of his employee which petitioner failed the damages caused by the latter. When an injury is caused by
to overcome. He failed to show that he examined driver the negligence of an employee there instantly arises a
Gerosano as to his qualifications, experience and records. presumption of the law that there was negligence on the part of
the employer either in the selection of his employee or in the
Bernardo is guilty of contributory negligence by standing at the supervision over him after such selection. The presumption,
rear portion of the jeep. Contributory Negligence is conduct on however, may be rebutted by a clear showing on the part of the
the part of the injured party, contributing as a legal cause to the employer that it had exercised the care and diligence of a good
harm he has suffered, which falls below the standard to which father of a family in the selection and supervision of his
he is required to conform for his own protection. Bernardo’s act employee. Hence, to escape solidary liability for quasi-delict
of standing on the left rear portion showed his lack of ordinary committed by an employee, the employer must adduce
care and foresight that such act could cause him harm or put sufficient proof that it exercised such degree of care.
his life in danger. To hold a person as having contributed to his
injuries, it must be shown that he performed an act that brought
about his injuries in disregard of warning or signs of an Facts:
impending danger to health and body. Quinquillera (jeepney
driver) was also negligent because there was overloading which Respondent Edgar Hernandez was driving an Isuzu Passenger
is in violation of traffic rules and regulations. He also allowed Jitney (jeepney) that he owns along Angeles-Magalang Road,
Bernardo to stand on the left rear of his jeep. There is also a Barangay San Francisco, Magalang, Pampanga, on January 9,
presumption of negligence on the part of the owner of the jeep, 1998, around 7:50 p.m. Meanwhile,. a Daewoo passenger bus
Bandoquillo, to which she did not rebut. (RCJ Bus Lines) owned by petitioner Travel and Tours Advisers,
Inc. and driven by Edgar Calaycay travelled in the same
direction as that of respondent Edgar Hernandez vehicle.
Thereafter, the bus bumped the rear portion of the jeepney
causing it to ram into an acacia tree which resulted in the death
of Alberto Cruz, Jr. and the serious physical injuries of Virginia
Muñoz.
Thus, respondents Edgar Hernandez, Virginia Muñoz and

Alberto Cruz, Sr., father of the deceased Alberto Cruz, Jr., filed
a complaint for damages, docketed as Civil Case No. 9006 presumption of the law that there was negligence on the part of
before the RTC claiming that the collision was due to the the employer either in the selection of his employee or in the
reckless, negligent and imprudent manner by which Edgar supervision over him after such selection. The presumption,
Calaycay was driving the bus, in complete disregard to existing however, may be rebutted by a clear showing on the part of the
traffic laws, rules and regulations, and praying that judgment be employer that it had exercised the care and diligence of a good
rendered ordering Edgar Calaycay and petitioner Travel & father of a family in the selection and supervision of his
Tours Advisers, Inc. to pay them. employee. Hence, to escape solidary liability for quasi-delict
committed by an employee, the employer must adduce
For its defense, the petitioner claimed that it exercised the sufficient proof that it exercised such degree of care.
diligence of a good father of a family in the selection and
supervision of its employee Edgar Calaycay and further argued At the time of the vehicular accident, the jeepney was in
that it was Edgar Hernandez who was driving his passenger violation of its allowed route as found by the RTC and the CA,
jeepney in a reckless and imprudent manner by suddenly hence, the owner and driver of the jeepney likewise, are guilty
entering the lane of the petitioner's bus without seeing to it that of negligence as defined under Article 2179 of the Civil Code,
the road was clear for him to enter said lane. In addition, which reads as follows:When the plaintiffs negligence was the
petitioner alleged that at the time of the incident, Edgar immediate and proximate cause of his injury, he cannot recover
Hernandez violated his franchise by travelling along an damages. But if his negligence was only contributory, the
unauthorized line/route and that the jeepney was overloaded immediate and proximate cause of the injury being the
with passengers, and the deceased Alberto Cruz, Jr. was defendant's lack of due care, the plaintiff may recover damages,
clinging at the back thereof. but the courts shall mitigate the damages to be awarded.
The petitioner and its driver, therefore, are not solely liable for
Issue: the damages caused to the victims. The petitioner must thus be
held liable only for the damages actually caused by his
Whether the contributory negligence of the jeepney driver will negligence.21 It is, therefore, proper to mitigate the liability of the
still make him entitled to damages? petitioner and its driver. The determination of the mitigation of
the defendant's liability varies depending on the circumstances
of each case.
Ruling:
In the present case, it has been established that the proximate
YES. But petitioner’s liability is mitigated. cause of the death of Alberto Cruz, Jr. is the negligence of
petitioner's bus driver, with the contributory negligence of
Article 2180, in relation to Article 2176, of the Civil Code respondent Edgar Hernandez, the driver and owner of the
provides that the employer of a negligent employee is liable for jeepney, hence, the heirs of Alberto Cruz, Jr. shall recover
the damages caused by the latter. When an injury is caused by damages of only 50% of the award from petitioner and its driver.
the negligence of an employee there instantly arises a
Necessarily, 50% shall be bourne by respondent Edgar owned responsibility for the accident, explaining that while he
Hernandez. was traveling towards Manila the truck suddenly lost its brakes.
To avoid colliding with another vehicle, he swerved to the left
until he reached the center island. However, as the center island
19. ABELARDO LIM and ESMADITO GUNNABAN VS. eventually came to an end, he veered farther to the left until he
COURT OF APPEALS and DONATO H. GONZALES G.R. smashed into a Ferroza automobile, and later, into private
No. 125817, January 16, 2002 respondent's passenger jeepney driven by one Virgilio
Gonzales.
The kabit system is an arrangement whereby a person who has Petitioner Lim shouldered the costs for hospitalization of the
been granted a certificate of public convenience allows other wounded. He also negotiated with private respondent and
persons who own motor vehicles to operate them under his offered to have the passenger jeepney repaired at his shop.
license, sometimes for a fee or percentage of the earnings. Private respondent did not accept the offer so Lim offered him
Although the parties to such an agreement are not outrightly ₱20,000.00, the assessment of the damage as estimated by his
penalized by law, the kabit system is invariably recognized as chief mechanic. Again, petitioner Lim's proposition was
being contrary to public policy and therefore void and inexistent rejected; instead, private respondent demanded a brand-new
under Art. 1409 of the Civil Code. jeep or the amount of ₱236,000.00.
In his answer Lim denied liability by contending that he

Facts: exercised due diligence in the selection and supervision of his
employees. He further asserted that as the jeepney was
Sometime in 1982 private respondent Donato Gonzales registered in Vallarta’s name, it was Vallarta and not private
purchased an Isuzu passenger jeepney from Gomercino respondent who was the real party in interest.
Vallarta, holder of a certificate of public convenience for the
operation of public utility vehicles plying the Monumento- Trial court upheld private respondent's claim and awarded him
Bulacan route. While private respondent Gonzales continued ₱236,000.00 with legal interest. In support of its decision, the
offering the jeepney for public transport services he did not have trial court ratiocinated that as vendee and current owner of the
the registration of the vehicle transferred in his name nor did he passenger jeepney private respondent stood for all intents and
secure for himself a certificate of public convenience for its purposes as the real party in interest.
operation. Thus Vallarta remained on record as its registered
owner and operator. CA affirmed the decision of the trial court. In upholding the
decision of the court a quo the appeals court concluded that
While the jeepney was running northbound along the North while an operator under the kabit system could not sue without
Diversion Road somewhere in Meycauayan, Bulacan, it collided joining the registered owner of the vehicle as his principal,
with a ten-wheeler-truck owned by petitioner Abelardo Lim and equity demanded that the present case be made an exception.
driven by his co-petitioner Esmadito Gunnaban. Gunnaban Hence this petition.
owner of the vehicle is not allowed to prove that another person

has become the owner so that he may be thereby relieved of
Issue: responsibility. Subsequent cases affirm such basic doctrine.0
Does the new owner have any legal personality to bring the It would seem then that the thrust of the law in enjoining the
action, or is he the real party in interest in the suit, despite the kabit system is not so much as to penalize the parties but to
fact that he is not the registered owner under the certificate of identify the person upon whom responsibility may be fixed in
public convenience? case of an accident with the end view of protecting the riding
public. The policy therefore loses its force if the public at large
is not deceived, much less involved.
Ruling:
In the present case it is at once apparent that the evil sought to
The kabit system is an arrangement whereby a person who has be prevented in enjoining the kabit system does not exist. First,
been granted a certificate of public convenience allows other neither of the parties to the pernicious kabit system is being held
persons who own motor vehicles to operate them under his liable for damages. Second, the case arose from the negligence
license, sometimes for a fee or percentage of the earnings. of another vehicle in using the public road to whom no
Although the parties to such an agreement are not outrightly representation, or misrepresentation, as regards the ownership
penalized by law, the kabit system is invariably recognized as and operation of the passenger jeepney was made and to whom
being contrary to public policy and therefore void and inexistent no such representation, or misrepresentation, was necessary.
under Art. 1409 of the Civil Code. Thus it cannot be said that private respondent Gonzales and the
registered owner of the jeepney were in estoppel for leading the
In the early case of Dizon v. Octavio, the Court explained that public to believe that the jeepney belonged to the registered
one of the primary factors considered in the granting of a owner. Third, the riding public was not bothered nor
certificate of public convenience for the business of public inconvenienced at the very least by the illegal arrangement. On
transportation is the financial capacity of the holder of the the contrary, it was private respondent himself who had been
license, so that liabilities arising from accidents may be duly wronged and was seeking compensation for the damage done
compensated. The kabit system renders illusory such purpose to him. Certainly, it would be the height of inequity to deny him
and, worse, may still be availed of by the grantee to escape civil his right.
liability caused by a negligent use of a vehicle owned by another 20. BALIWAG TRANSIT, INC. VS. COURT OF APPEALS
and operated under his license. If a registered owner is allowed and ROMAN MARTINEZ
to escape liability by proving who the supposed owner of the G.R. No. L-5749, January 7, 1987
vehicle is, it would be easy for him to transfer the subject vehicle
to another who possesses no property with which to respond
financially for the damage done. Thus, for the safety of The “Kabit System” has been defined by the Supreme Court as
passengers and the public who may have been wronged and an arrangement whereby a person who has been granted a
deceived through the baneful kabit system, the registered
certificate of convenience allows another person who owns

motor vehicles to operate under such franchise for a fee. NO. The “Kabit System” has been defined by the Supreme
Court as an arrangement whereby a person who has been
granted a certificate of convenience allows another person
Facts: who owns motor vehicles to operate under such franchise
for a fee.
Two passenger bus lines with similar buses and similar routes
were being operated by firm names "Baliwag Transit" and The determining factor, therefore, is the possession of a
"Baliwag Transit, Inc." (BTI) the herein petitioner. franchise to operate which negates the existence of the “Kabit
System” and not the issuance of one SSS ID Number for
Respondent Martinez, claiming to be an employee of two bus both bus lines from which the existence of said system was
lines operating under different grants of franchise but were inferred.
issued only one ID Number (Martinez) filed a petition with the
Social Security Commission to compel BTI to remit his premium Thus, it is evident that both bus lines operated under their own
contributions to SSS. franchises but opted to retain the firm name “Baliwag Transit”
with slight modification, by the inclusion of the word “Inc.” in the
BTI denied ever employing Martinez, and alleges that he was in case of herein petitioner, obviously to take advantage of the
fact employed by Tuason who operated a separate and distinct goodwill such firm name enjoys with the riding public.
bus line from BTI.
Conversely, the conclusion of the Court of Appeals that the late
The Social Security Commission granted Martinez’s petition. Pascual Tuazon, during the time material to this case operated
his buses under the “Kabit System” on the ground that while he
On appeal, the CA reversed the decision of the commission, was actually the owner and operator, his buses were not
finding that Tuason was operating under the kabit system; that registered with the Public Service Commission (now the Bureau
while Tuason was the owner and operator, his buses were not of Land Transportation) in his own name, is not supported by
registered with the Public Service Commission in his own name; the records.
and thus ordered BTI to remit Martinez’ premiums to SSS.
Thus, the employer-employee relationship between the late
Issue: Pascual Tuazon and herein private respondent, having been
established, the remittance of SSS contributions of the latter, is
Whether or not the issuance by SSS of one ID Number to the the responsibility of his employer Tuazon, regardless of the
two bus lines necessarily indicates that one of them is operating existence or non-existence of the "Kabit System."
under the kabit system.
Moreover, private respondent having allowed seventeen (17)
years to elapse before filing his petition with the Social Security
Ruling: System, has undoubtedly slept on his rights and his cause of
action has already prescribed under Article 1144(2) of the Civil

Code (Central Azucarrera del Davao v. Court of Appeals, 137 In this particular transaction a chattel mortgage was constituted
SCRA 296 [1985]; applied by analogy). as a security for the payment of the balance of the purchase
price. It has been the practice of financing firms that whenever
there is a balance of the purchase price the registration papers
21. Teja Marketing vs IAC of the motor vehicle subject of the sale are not given to the
G.R. No. L-65510 March 9, 1987 buyer. The records of the LTC show that the motorcycle sold to
the defendant was first mortgaged to the Teja Marketing by
Unquestionably, the parties herein operated under an Angel Jaucian though the Teja Marketing and Angel Jaucian are
arrangement, commonly known as the "kabit system" whereby one and the same, because it was made to appear that way only
a person who has been granted a certificate of public as the defendant had no franchise of his own and he attached
convenience allows another person who owns motor vehicles to the unit to the plaintiff's MCH Line. The agreement also of the
operate under such franchise for a fee. A certificate of public parties here was for the plaintiff to undertake the yearly
convenience is a special privilege conferred by the government. registration of the motorcycle with the Land Transportation
Abuse of this privilege by the grantees thereof cannot be Commission. Pursuant to this agreement the defendant on
countenanced. The "kabit system" has been Identified as one of February 22, 1976 gave the plaintiff P90.00, the P8.00 would be
the root causes of the prevalence of graft and corruption in the for the mortgage fee and the P82.00 for the registration fee of
government transportation offices. the motorcycle. The plaintiff, however failed to register the
motorcycle on that year on the ground that the defendant failed
to comply with some requirements such as the payment of the
Facts: insurance premiums and the bringing of the motorcycle to the
LTC for stenciling, the plaintiff saying that the defendant was
Defendant bought from the plaintiff a motorcycle with complete hiding the motorcycle from him. Lastly, the plaintiff explained
accessories and a sidecar in the total consideration of also that though the ownership of the motorcycle was already
P8,000.00). Out of the total purchase price the defendant gave transferred to the defendant the vehicle was still mortgaged with
a downpayment of P1,700.00 with a promise that he would pay the consent of the defendant to the Rural Bank of Camaligan for
plaintiff the balance within sixty days. The defendant, however, the reason that all motorcycle purchased from the plaintiff on
failed to comply with his promise and so upon his own request, credit was rediscounted with the bank.
the period of paying the balance was extended to one year in
monthly installments until January 1976 when he stopped
paying anymore. The plaintiff made demands but just the same The defendant disputed the claim of the plaintiff that he was
the defendant failed to comply with the same thus forcing the hiding from the plaintiff the motorcycle resulting in its not being
plaintiff to consult a lawyer and file this action for his damage in registered. The truth being that the motorcycle was being used
the amount of P546.21 for attorney's fees and P100.00 for for transporting passengers and it kept on travelling from one
expenses of litigation. place to another. The motor vehicle sold to him was mortgaged
by the plaintiff with the Rural Bank of Camaligan without his
consent and knowledge and the defendant was not even given policy and, therefore, void and in existent under Article 1409 of
a copy of the mortgage deed. The defendant claims that it is not the Civil Code. It is a fundamental principle that the court will not
true that the motorcycle was mortgaged because of re- aid either party to enforce an illegal contract, but will leave both
discounting for rediscounting is only true with Rural Banks and where it finds then. Upon this premise it would be error to accord
the Central Bank. The defendant puts the blame on the plaintiff the parties relief from their predicament. Article 1412 of the Civil
for not registering the motorcycle with the LTC and for not giving Code denies them such aid. The defect of in existence of a
him the registration papers inspite of demands made. Court so contract is permanent and cannot be cured by ratification or by
finds that defendant purchased the motorcycle in question, prescription. The mere lapse of time cannot give efficacy to
particularly for the purpose of engaging and using the same in contracts that are null and void.
the transportation business and for this purpose said trimobile
unit was attached to the plaintiffs transportation line who had
the franchise, so much so that in the registration certificate, the
plaintiff appears to be the owner of the unit. Furthermore, it
appears to have been agreed, further between the plaintiff and
the defendant, that plaintiff would undertake the yearly
registration of the unit in question with the LTC. Thus, for the
registration of the unit for the year 1976, per agreement, the
defendant gave to the plaintiff the amount of P82.00 for its
registration, as well as the insurance coverage of the unit.
The lower court and CFI ruled in favor of Teja Marketing.

However the same was reversed by the IAC ruling that neither
can enforce their claim against each other. Hence, the petition.
22. Lite Enterprises vs IAC
Issue: G.R. No. L-64693 April 27, 1984
Whether or not the contract is one of Kabit System? Although not outrightly penalized as a criminal offense, the
"kabit system" is invariably recognized as being contrary to
public policy and, therefore, void and inexistent under Article
1409 of the Civil Code, It is a fundamental principle that the
Ruling: court will not aid either party to enforce an illegal contract, but
will leave them both where it finds them. Upon this premise, it
Yes, the contract is one of kabit system. was flagrant error on the part of both the trial and appellate
courts to have accorded the parties relief from their
Although not outrightly penalized as a criminal offense, the kabit predicament.
system is invariably recognized as being contrary to public
Facts: Thereafter, in March 1973, respondent Nicasio Ocampo

decided to register his taxicabs in his name. He requested the
The spouses Nicasio M. Ocampo and Francisca Garcia, herein manager of petitioner Lita Enterprises, Inc. to turn over the
private respondents, purchased in installment from the Delta registration papers to him, but the latter allegedly refused.
Motor Sales Corporation five (5) Toyota Corona Standard cars Hence, he and his wife filed a complaint against Lita
to be used as taxicabs. Since they had no franchise to operate Enterprises, Inc., Rosita Sebastian Vda. de Galvez, Visayan
taxicabs, they contracted with petitioner Lita Enterprises, Inc., Surety & Insurance Co. and the Sheriff of Manila for
through its representative, Manuel Concordia, for the use of the reconveyance of motor vehicles with damagesmotor vehicles
latter's certificate of public convenience in consideration of an with damages, docketed as Civil Case No. 90988 of the Court
initial payment of P1,000.00 and a monthly rental of P200.00 of First Instance of Manila. The CFI ruled against petitioner. On
per taxicab unit. To effectuate Id agreement, the aforesaid cars appeal to the IAC, it ruled that petitioner pay the fair market
were registered in the name of petitioner Lita Enterprises, Inc, value of the 3 remaining cars. Hence, the petition.
Possession, however, remained with spouses Ocampo who
operated and maintained the same under the name Acme Taxi,
petitioner's trade name. Issue:
Whether or not there is Kabit System?

On March 18, 1967, one of said taxicabs driven by their
employee, Emeterio Martin, collided with a motorcycle whose
driver, one Florante Galvez, died from the head injuries
sustained therefrom. A criminal case was eventually filed Ruling:
against the driver Emeterio Martin, while a civil case for
damages was instituted by Rosita Sebastian Vda. de Galvez, Yes, there is Kabit system.
heir of the victim, against Lita Enterprises, Inc., as registered
owner of the taxicab in the latter case, Civil Case No. 72067 of Unquestionably, the parties herein operated under an
the Court of First Instance of Manila, petitioner Lita Enterprises, arrangement, comonly known as the "kabit system", whereby a
Inc. was adjudged liable for damages in the amount of person who has been granted a certificate of convenience
P25,000.00 and P7,000.00 for attorney's fees. This decision allows another person who owns motors vehicles to operate
having become final, a writ of execution was issued. One of the under such franchise for a fee. A certificate of public
vehicles of respondent spouses with Engine No. 2R-914472 convenience is a special privilege conferred by the government
was levied upon and sold at public auction for 12,150.00 to one . Abuse of this privilege by the grantees thereof cannot be
Sonnie Cortez, the highest bidder. Another car with Engine No. countenanced. The "kabit system" has been Identified as one of
2R-915036 was likewise levied upon and sold at public auction the root causes of the prevalence of graft and corruption in the
for P8,000.00 to a certain Mr. Lopez. government transportation offices.
The defect of inexistence of a contract is permanent and retained only nine, four of which operated by employing drivers
incurable, and cannot be cured by ratification or by prescription. on a “boundary basis.” One of those drivers was respondent
As this Court said in Eugenio v. Perdido, "the mere lapse of time Bustamante. Bustamante remitted 450 a day to Villamaria as
cannot give efficacy to contracts that are null void.” The principle boundary and kept the residue of his daily earnings as
of in pari delicto is well known not only in this jurisdiction but compensation for driving the vehicle. In August 1997, Villamaria
also in the United States where common law prevails. Under verbally agreed to sell the jeepney to Bustamante under a
American jurisdiction, the doctrine is stated thus: "The “boundary-hulog scheme”, where Bustamante would remit to
proposition is universal that no action arises, in equity or at law, Villamaria P500 a day for a period of four years; Bustamante
from an illegal contract; no suit can be maintained for its specific would then become the owner of the owner of the vehicle and
performance, or to recover the property agreed to be sold or continue to drive the same under Villamaria’s franchise, but with
delivered, or damages for its property agreed to be sold or P10,000 down payment. On August 7, 1997, Villamaria
delivered, or damages for its violation. The rule has sometimes executed a contract entitled “Kasunduan ng Bilihan ng
been laid down as though it was equally universal, that where Sasakyan sa Pamamagitan ng Boundary Hulog”. The parties
the parties are in pari delicto, no affirmative relief of any kind will agreed that if Bustamante failed to pay the boundary-hulog for
be given to one against the other.” 3 days, Villamaria Motors would hold on to the vehicle until
Bustamante paid his arrears, including a penalty of 50 a day; in
case Bustamante failed to remit the daily boundary-hulog for a
period of one week, the kasunduan would cease to have a legal
effect and Bustamante would have to return the vehicle to
Villamaria Motors.
23. OSCAR VILLAMARIA, JR. vs. COURT OF APPEAL
Gr no. 165881, April 19, 2006 In 1999, Bustamante and other drivers who also had the same
arrangement failed to pay their respective boundary-hulog. This
prompted Villamaria to serve a “Paalala”. Villamaria took back
Under the Boundary-Hulog scheme, a dual judicial relationship the jeepney driven by Bustamante. Bustamante filed a
is created; that of employer-employee and vendor-vendee. The complaint for illegal dismissal.
“Kasunduan” did not extinguish the employer employee
relationship of the parties existing before the execution of the
said deed.
Issue:
Facts:
Whether or not the existence of a Boundary-Hulog
Oscar Villamaria Jr. was the owner of Villamaria Motors, a sole Agreement negated the employer-employee relationship
proprietorship engaged in assembling passenger jeepneys with between the vendor and the vendee?
a public utility franchise to operate along the Baclaran-Sucat
route. By 1995, Villamaria stopped assembling jeepneys and
Ruling: c. The obligation is not novated by an instrument that

expressly recognizes the old one, changes only the
No, Under the Boundary-Hulog scheme, a dual judicial terms of payment and adds other obligations not
relationship is created; that of employer-employee and vendor- incompatible with the old provisions or where the
vendee. The “Kasunduan” did not extinguish the employer contract merely supplements the previous one.
employee relationship of the parties existing before the
execution of the said deed.
Under this system, d. The existence of an employment relation is not

dependent on how the worker is paid but on the
a. the owner/operator exercises control and supervision presence or absence of control over the means and
over the driver. It is unlike in lease of chattel where the method of the work. The amount earned in excess of the
lessor loses complete control over the chattel leased but “boundary hulog” is equivalent to wages and the fact that
the lessee is still ultimately responsible for the the power of dismissal was not mentioned in the
consequences of its use. The management of the Kasunduan did not mean that private respondent never
business is still in the hands of the owner/operator, who, exercised such power, or could not exercise such
being the holder of the certificate of public convenience, power.
must see to it that the driver follows the route prescribed
by the franchising and regulatory authority, and the rules
promulgated with regard to the business operations.
24. SPOUSES HERNANDEZ vs. SPOUSES DOLOR
Gr. No. 160286. JULY 30, 2004
b. The driver performs activities which are usually Article 2194 categorically states that the responsibility of two or
necessary or desirable in the usual business or trade of more persons who are liable for quasi-delict is solidary.
the owner/operator. Under the Kasunduan, respondent
was required to remit Php 550 daily to petitioner, an Facts:
amount which represent the boundary of petitioner.
Thus, the daily remittance also had a dual purpose: that Lorenzo Menard "Boyet" Dolor, Jr. was driving an
of petitioner’s boundary and respondent’s boundary and owner-type jeepney owned by her mother, Margarita, towards
respondent’s partial payment (hulog) for the vehicle. Anilao, Batangas. As he was traversing the road at Barangay
Anilao East, Mabini, Batangas, his vehicle collided with a
passenger jeepney driven by petitioner Juan Gonzales and
owned by his co-petitioner Francisco Hernandez, which was
travelling towards Batangas City. Boyet and his passenger died.
Passengers also on board the owner-type jeep, which was Ruling:

totally wrecked suffered physical injuries. The collision also
damaged the passenger jeepney of Francisco Hernandez and Yes. They are still answerable under several provision
caused physical injuries to its passengers, namely, Virgie of the civil code namely Article 2180 and Article 2176.
Cadavida, Fiscal Artemio Reyes and Francisca Corona.
Respondents commenced an action for damages against

petitioners alleging that driver Juan Gonzales was guilty of Article 2180 provides:
negligence and lack of care and that the Hernandez spouses
were guilty of negligence in the selection and supervision of ARTICLE 2180. The obligation imposed by article 2176 is
their employees. demandable not only for one's own acts or omissions, but also
for those of persons for whom one is responsible.
Petitioners countered that the proximate cause of the death and
injuries sustained by the passengers of both vehicles was the The father and, in case of his death or incapacity, the mother,
recklessness of Boyet Dolor, the driver of the owner-type are responsible for the damages caused by the minor children
jeepney, who was driving in a zigzagging manner under the who live in their company.
influence of alcohol. Petitioners also alleged that Gonzales was
not the driver-employee of the Hernandez spouses as the Guardians are liable for damages caused by the minors or
former only leased the passenger jeepney on a daily basis. The incapacitated persons who are under their authority and live in
Hernandez spouses further claimed that even if an employer- their company.
employee relationship is found to exist between them, they
cannot be held liable because as employers they exercised due
The owners and managers of an establishment or enterprise are
care in the selection and supervision of their employee. The
likewise responsible for damages caused by their employees in
Trial court rendered a decision in favor of respondents. CA
the service of the branches in which the latter are employed or
affirmed with modifications. Hence the present petition.
on the occasion of their functions.
Employers shall be liable for the damages caused by their

employees and household helpers acting within the scope of
Issue:
their assigned tasks, even though the former are not engaged
in any business or industry.
Whether or not Hernandez spouses are solidarily liable with
Juan Gonzalez, although it is of record that they were not in the The State is responsible in like manner when it acts through a
passenger jeepney when the accident occurred? special agent; but not when the damage has been caused by
the official to whom the task done properly pertains, in which
case what is provided in article 2176 shall be applicable.
Lastly, teachers or heads of establishments of arts and trades

shall be liable for damages caused by their pupils and students
or apprentices, so long as they remain in their custody.
The responsibility treated of in this article shall cease when the

persons herein mentioned prove that they observed all the 25. PRIMO E. CAONG, JR., ALEXANDER J. TRESQUIO,
diligence of a good father of a family to prevent damage. AND LORIANO D. DALUYON, PETITIONERS, VS. AVELINO
REGUALOS, G.R. No. 179428, January 26, 2011
Article 2176 provides:
It is already settled that the relationship between jeepney
Whoever by act or omission causes damage to another, owners/operators and jeepney drivers under the boundary
there being fault or negligence, is obliged to pay for the damage system is that of employer-employee and not of lessor-lessee.
done. Such fault or negligence, if there is no pre-existing The fact that the drivers do not receive fixed wages but only get
contractual relation between the parties, is called a quasi-delict the amount in excess of the so-called "boundary" that they pay
and is governed by the provisions of this Chapter. to the owner/operator is not sufficient to negate the relationship
between them as employer and employee.
While the above provisions of law do not expressly provide for
solidary liability, the same can be inferred from the wordings of Facts: Petitioners Primo E. Caong, Jr., Alexander J. Tresquio,
the first paragraph of Article 2180 – one can be liable for the and Loriano D. Daluyon were employed by respondent Avelino
acts or omission of another whom he is responsible for, Regualos under a boundary agreement, as drivers of his
meaning that an employer is accountable for the actions of his jeepneys. They filed separate complaints for illegal dismissal
employees. against respondent who barred them from driving the vehicles
due to deficiencies in their boundary payments. The controversy
arose when the three aforementioned drivers were assigned a
Article 2194 categorically states that the responsibility of two or
brand new jeepney each and failed to remit the full amount of
more persons who are liable for quasi-delict is solidary. The
their boundary fees to the respondent. As a result, all of them
Hernandez spouses maintained that Julian Gonzales is not
were suspended and were barred from driving the jeepneys of
their employee because the latter pays them daily for the use of
the respondent. In his Position Paper, respondent alleged that
the jeepney . They argue that they are practicing a lease
petitioners were lessees of his vehicles and not his employees;
agreement using "boundary system.” The Supreme Court held
hence, the Labor Arbiter had no jurisdiction. He claimed that he
that an employer-employee relationship exists between the
noticed that some of his lessees, including petitioners, were not
Hernandez spouses and Julian Gonzales because by agreeing
fully paying the daily rental of his jeepneys. Respondent
whith spouses Hernandez, there would be a violation of the
stressed that, he would renew his lease with petitioners if they
Public Service Law and the riding public is placed at the mercy
would pay the arrears they incurred during the the prescribed
of reckless and irresponsible drivers because most drivers are
period.
in no position to pay for damages when accident occur.
his drivers were getting lax in remitting their boundary payments

and, in fact, herein petitioners had already incurred a
considerable amount of arrears. He had to put a stop to it as he
also relied on these boundary payments to raise the full amount
Issue: of his monthly amortizations on the jeepneys. Demonstrating
their obstinacy, petitioners, on the days immediately following
Whether or not there is employer-employee relationship the implementation of the policy, incurred deficiencies in their
between the petitioners and the respondent under the boundary boundary remittances. Petitioners argue that the policy is
system. unsound as it does not consider the times when passengers are
scarce and the drivers are not able to raise the amount of the
boundary.
Ruling: In the present case, petitioners merely alleged that there
were only few passengers during the days that they did not pat
Yes. It is already settled that the relationship between jeepney their boundary fees. Such excuse is not acceptable without any
owners/operators and jeepney drivers under the boundary proof or, at least, an explanation as to why passengers were
system is that of employer-employee and not of lessor-lessee. scarce at that time. It is simply a bare allegation, not worthy of
The fact that the drivers do not receive fixed wages but only get belief. The Court also found the excuse unbelievable
the amount in excess of the so-called "boundary" that they pay considering that petitioners incurred the shortages on separate
to the owner/operator is not sufficient to negate the relationship days, and it appears that only petitioners failed to remit the full
between them as employer and employee. Indeed, petitioners' boundary payment on said dates.
suspension cannot be categorized as dismissal, considering
that there was no intent on the part of respondent to sever the Under a boundary scheme, the driver remits the
employer-employee relationship between him and petitioners. "boundary," which is a fixed amount, to the owner/operator and
In fact, it was made clear that petitioners could put an end to the gets to earn the amount in excess thereof. Thus, on a day when
suspension if they only pay their recent arrears. As it was, the there are many passengers along the route, it is the driver who
suspension dragged on for years because of petitioners' actually benefits from it. It would be unfair then if, during the
stubborn refusal to pay. It would have been different if times when passengers are scarce, the owner/operator will be
petitioners complied with the condition and respondent still made to suffer by not getting the full amount of the boundary.
refused to readmit them to work. Then there would have been a Unless clearly shown or explained by an event that irregularly
clear act of dismissal. But such was not the case. Instead of and negatively affected the usual number of passengers within
paying, petitioners even filed a complaint for illegal dismissal the route, the scarcity of passengers should not excuse the
against respondent. driver from paying the full amount of the boundary.
Respondent's policy of suspending drivers who fail to remit Therefore, the petitioners were not illegally dismissed but
the full amount of the boundary was fair and reasonable under merely suspended until full payment of their arrears.
the circumstances. Respondent explained that he noticed that
to her destination. Respondents denied liability for the death of

Dr. Mariano. They claimed that the proximate cause of the
26. HERMINIO MARIANO, JR., PETITIONER, VS. accident was the recklessness of the driver of the trailer truck
ILDEFONSO C. CALLEJAS AND EDGAR DE BORJA, G.R. which bumped their bus while allegedly at a halt on the shoulder
No. 166640, July 31, 2009 of the road in its rightful lane. Thus, respondent Callejas filed a
third-party complaint against Liong Chio Chang, doing business
under the name and style of La Perla Sugar Supply, the owner
While the law requires the highest degree of diligence from of the trailer truck, for indemnity in the event that he would be
common carriers in the safe transport of their passengers and held liable for damages to petitioner.
creates a presumption of negligence against them, it does not,
however, make the carrier an insurer of the absolute safety of
its passengers (Pilapil vs. Court of Appeals). Issue:
Whether or not a common carrier is presumed to be at fault or

Facts: negligent for failure to deliver safely their passengers in their
place of destination.
Petitioner Herminio Mariano, Jr. is the surviving spouse of Dr.
Frelinda Mariano who was a passenger of a Celyrosa Express
bus bound for Tagaytay when she met her death. Respondent Ruling:
Ildefonso C. Callejas is the registered owner of Celyrosa
Express, while respondent Edgar de Borja was the driver of the Yes, that is the general rule. The following are the provisions
bus on which the deceased was a passenger. The incident of the Civil Code pertinent to the case at bar:
happened in the early evening along Aguinaldo Highway, San
Agustin, Dasmariñas, Cavite, when the Celyrosa Express bus, ART. 1733. Common carriers, from the nature of their
carrying Dr. Mariano as its passenger, collided with an Isuzu business and for reasons of public policy, are bound to observe
trailer truck. The passenger bus was bound for Tagaytay while extraordinary diligence in the vigilance over the goods and for
the trailer truck came from the opposite direction, bound for the safety of the passengers transported by them, according to
Manila. The trailer truck bumped the passenger bus on its left all the circumstances of each case.
middle portion. Due to the impact, the passenger bus fell on its ART. 1755. A common carrier is bound to carry the
right side on the right shoulder of the highway and caused the passengers safely as far as human care and foresight can
death of Dr. Mariano and physical injuries to four other provide, using the utmost diligence of very cautious persons,
passengers. Dr. Mariano was 36 years old at the time of her with a due regard for all the circumstances.
death. She left behind three minor children, aged four, three and ART. 1756. In case of death of or injuries to passengers,
two years. Petitioner filed a complaint for breach of contract of common carriers are presumed to have been at fault or to have
carriage and damages against respondents for their failure to acted negligently, unless they prove that they observed
transport his wife and mother of his three minor children safely extraordinary diligence as prescribed in articles 1733 and 1755.
performance of its contractual obligation, or that the injury

In accord with the above provisions, Celyrosa Express, a suffered by the passenger was solely due to a fortuitous
common carrier, through its driver, respondent De Borja, and its event.
registered owner, respondent Callejas, has the express
obligation "to carry the passengers safely as far as human care Thus, it is clear that neither the law nor the nature of
and foresight can provide, using the utmost diligence of very the business of a transportation company makes it an
cautious persons, with a due regard for all the insurer of the passenger's safety, but that its liability for
circumstances,"and to observe extraordinary diligence in the personal injuries sustained by its passenger rests upon its
discharge of its duty. The death of the wife of the petitioner in negligence, its failure to exercise the degree of diligence that
the course of transporting her to her destination gave rise to the the law requires.
presumption of negligence of the carrier. To overcome the
presumption, respondents have to show that they observed In the case at bar, petitioner cannot succeed in his
extraordinary diligence in the discharge of their duty, or that the contention that respondents failed to overcome the presumption
accident was caused by a fortuitous event. of negligence against them. The totality of evidence shows that
the death of petitioner's spouse was caused by the reckless
The Court interpreted the above quoted provisions in negligence of the driver of the Isuzu trailer truck which lost its
Pilapil v. Court of Appeals. It elucidated: brakes and bumped the Celyrosa Express bus, owned and
“While the law requires the highest degree of diligence from operated by respondents.
common carriers in the safe transport of their passengers and In fine, the evidence shows that before the collision, the
creates a presumption of negligence against them, it does not, passenger bus was cruising on its rightful lane along the
however, make the carrier an insurer of the absolute safety Aguinaldo Highway when the trailer truck coming from the
of its passengers.” opposite direction, on full speed, suddenly swerved and
encroached on its lane, and bumped the passenger bus on its
Article 1755 of the Civil Code qualifies the duty of left middle portion. Respondent driver De Borja had every right
extraordinary care, vigilance and precaution in the carriage of to expect that the trailer truck coming from the opposite direction
passengers by common carriers to only such as human care would stay on its proper lane. He was not expected to know that
and foresight can provide. What constitutes compliance with the trailer truck had lost its brakes. The swerving of the trailer
said duty is adjudged with due regard to all the circumstances. truck was abrupt and it was running on a fast speed as it was
Article 1756 of the Civil Code, in creating a presumption of found 500 meters away from the point of collision. Secondly,
fault or negligence on the part of the common carrier when its any doubt as to the culpability of the driver of the trailer truck
passenger is injured, merely relieves the latter, for the time ought to vanish when he pleaded guilty to the charge of reckless
being, from introducing evidence to fasten the negligence on the imprudence resulting to multiple slight physical injuries and
former, because the presumption stands in the place of damage to property in a criminal case, involving the same
evidence. Being a mere presumption, however, the same is incident.
rebuttable by proof that the common carrier had exercised Therefore, the respondents were absolved from liability in
extraordinary diligence as required by law in the the absence of fault or negligence on their part.
broken bumper of the bus. According to Cortel, Lim was wearing

a black jacket and was riding without a helmet at the time of the
27. CORTEL VS. GEPAYA-LIM accident.
G.R. NO. 218014. DECEMBER 7, 2016
Felix Larang (Larang), the bus conductor, alighted from the bus
to aid Lim. Larang gave instructions to Cortel to move back to
While negligence is not ordinarily inferred or presumed, and release Lim and the motorcycle from the front bumper of the
while the mere happening of an accident or injury will not bus. Two bystanders proceeded to the scene to assist Lim. After
generally give rise to an inference or presumption that it was reversing the bus and freeing Lim and the motorcycle, Cortel
due to negligence on defendant’s part, under the doctrine of res drove the bus away and went to a nearby bus station where he
ipsa loquitur, which means, literally, the thing or transaction surrendered to authorities. Cortel claimed that he left the scene
speaks for itself, or in one jurisdiction, that the thing or of the incident because he feared for his life.
instrumentality speaks for itself, the facts or circumstances
accompanying an injury may be such as to raise a presumption, Respondent Cecile Gepaya-Lim, Lim’s widow, filed a complaint
or at least permit an inference of negligence on the part of the for damages against petitioners.
defendant, or some other person who is charged with
negligence. The trial court found that the bus was running fast when it
bumped the motorcycle ridden by Lim. The trial court ruled that
the accident is the proximate cause of Lim’s death. The trial
court also ruled that Yellow Bus Line failed to present sufficient
Facts: evidence to prove that it exercised due diligence in the selection
and supervision of Cortel.
On 29 October 2004, Cortel was driving a bus, operated by
Yellow Bus Line, which was on its way from Marbel, Koronadal The Court of Appeals ruled that Lim died because of the
to Davao City. At around 9:45 in the evening, as the bus was collision between the bus driven by Cortel and the motorcycle
traversing Crossing Rubber in the Municipality of Tupi, South Lim was riding. The Court of Appeals ruled that both vehicles
Cotabato, Cortel noticed two trucks with glaring headlights were driving in the same lane and were headed towards the
coming from the opposite direction. Cortel stated that he was same direction. The Court of Appeals noted that upon impact,
driving at a speed of 40 to 50 kilometers per hour. He claimed Lim’s body was thrown upward, indicating that Cortel was
that upon noticing the trucks, he reduced his speed to 20 driving at high speed. The damages to the motorcycle and the
kilometers per hour. However, the bus hit a black motorcycle bus also disproved Cortel’s allegation that he was only driving
which allegedly had no tail light reflectors. The impact dragged at the speed of 20 kilometers per hour.
the motorcycle at a distance of three meters before it came to a
full stop. Lim, who was riding the motorcycle, was thrown
upward and then slammed into the bus, hitting the base of its
right windshield wiper. The motorcycle got entangled with the
The Court of Appeals ruled that Yellow Bus Line failed to the accident must not have been due to any voluntary action or
exercise the care and diligence of a good father of a family in its contribution on the part of the person injured.
selection and supervision of its employees.
The rule is when an employee causes damage due to his own
negligence while performing his own duties, there arises a
presumption that his employer is negligent. This presumption
Issue: can be rebutted only by proof of observance by the employer of
the diligence of a good father of a family in the selection and
Whether or not the doctrine of res ipsa loquitur is applicable in supervision of its employees. In this case, we agree with the trial
this case? court and the Court of Appeals that Yellow Bus Line failed to
prove that it exercised due diligence of a good father of a family
in the selection and supervision of its employees. Cortel’s
certificates of attendance to seminars, which Yellow Bus Line
Ruling: did not even present as evidence in the trial court, are not
enough to prove otherwise.
Yes. We agree that res ipsa loquitur applies in this case. The
Court explained this doctrine as follows: While negligence is not
ordinarily inferred or presumed, and while the mere happening
of an accident or injury will not generally give rise to an inference
or presumption that it was due to negligence on defendant’s
part, under the doctrine of res ipsa loquitur, which means,
literally, the thing or transaction speaks for itself, or in one
jurisdiction, that the thing or instrumentality speaks for itself, the
facts or circumstances accompanying an injury may be such as
to raise a presumption, or at least permit an inference of
negligence on the part of the defendant, or some other person
who is charged with negligence.
The elements of res ipsa loquitur are: (1) the accident is of such 28. Caravan Travel and Tours International, Inc. vs. Abejar
character as to warrant an inference that it would not have G.R. No. 170631. February 10, 2016
happened except for the defendant’s negligence; (2) the
accident must have been caused by an agency or
instrumentality within the exclusive management or control of
the person charged with the negligence complained of; and (3)
The liability imposed on the registered owner is direct and Respondent Ermilinda R. Abejar (Abejar), Reyes’ paternal aunt
primary. It does not depend on the inclusion of the negligent and the person who raised her since she was nine (9) years old,
driver in the action. filed before the Regional Trial Court of Parañaque a Complaint
for damages against Bautista and Caravan.
In her Complaint, Abejar alleged that Bautista was an employee

Facts: of Caravan and that Caravan is the registered owner of the van
that hit Reyes.
On July 13, 2000, Jesmariane R. Reyes (Reyes) was walking
along the west-bound lane of Sampaguita Street, United Summons could not be served on Bautista. Thus, Abejar moved
Parañaque Subdivision IV, Parañaque City. A Mitsubishi L-300 to drop Bautista as a defendant. The Regional Trial Court
van travelling along the east-bound lane, opposite Reyes. To granted her Motion.
avoid an incoming vehicle, the van swerved to its left and hit
Reyes. After trial, the Regional Trial Court found that Bautista was
grossly negligent in driving the vehicle.
Caravan then filed a petition arguing that Abejar has no

Alex Espinosa (Espinosa), a witness to the accident, went to her personality to bring this suit because she is not a real party-in-
aid and loaded her in the back of the van. Espinosa told the interest. According to Caravan, Abejar does not exercise legal
driver of the van, Jimmy Bautista (Bautista), to bring Reyes to or substitute parental authority. According to Caravan, only the
the hospital. Instead of doing so, Bautista appeared to have left victim herself or her heirs can enforce an action based on culpa
the van parked inside a nearby subdivision with Reyes still in aquiliana such as Abejar’s action for damages.
the van. Fortunately for Reyes, an unidentified civilian came to
help and drove Reyes to the hospital. Caravan also argues that “it exercised the diligence of a good
father of a family in the selection and supervision of its
Upon investigation, it was found that the registered owner of the employees.”
van was Caravan. Caravan is a corporation engaged in the
business of organizing travels and tours. Bautista was Lastly, Caravan argues that it should not be held solidarily liable
Caravan’s employee assigned to drive the van as its service with Bautista since Bautista was already dropped as a party.
driver.
Caravan shouldered the hospitalization expenses of Reyes.

Despite medical attendance, Reyes died two (2) days after the Issue’s:
accident.
1) Whether or not respondent Abejar is a real party-in-interest as party) could have opted to file a cross-claim against Bautista
who may bring an action for damages against petitioner as its remedy. The 1997 Rules of Civil Procedure spell out the
Caravan on account of Reyes’ death? rules on joinder of indispensable and necessary parties. These
are intended to afford “a complete determination of all possible
2) Whether or not Caravan, the registered owner of the car is issues, not only between the parties themselves but also as
liable? regards to other persons who may be affected by the judgment.”
Ruling:
1) Yes. Having exercised substitute parental authority,

respondent suffered actual loss and is, thus, a real party- in-
interest in this case.
2) Yes. Contrary to petitioner’s position, it was not fatal to

respondent’s cause that she herself did not adduce proof that
Bautista acted within the scope of his authority. It was sufficient
that Abejar proved that petitioner was the registered owner of
the van that hit Reyes.
Petitioner’s argument that it should be excused from liability

because Bautista was already dropped as a party is equally
unmeritorious. The liability imposed on the registered owner is
direct and primary. It does not depend on the inclusion of the
negligent driver in the action. Agreeing to petitioner’s assertion 29. MARIANO C. MENDOZA AND ELVIRA LIM v SPOUSES
would render impotent the rationale of the motor registration law LEONORA J. GOMEZ AND GABRIEL V. GOMEZ
in fixing liability on a definite person. Bautista, the driver, was G.R. No. 160110, June 18, 2014
not an indispensable party under Rule 3, Section 7 of the 1997
Rules of Civil Procedure. Rather, he was a necessary party
under Rule 3, Section 8. Instead of insisting that Bautista – who
was nothing more than a necessary party – should not have
been dropped as a defendant, or that petitioner, along with Under the doctrine of vicarious liability, a person who has not
Bautista, should have been dropped, petitioner (as a co- committed the act or omission which caused damage or injury
defendant insisting that the action must proceed with Bautista to another may nevertheless be held civilly liable to the latter
either directly or subsidiarily under certain circumstances
Whether or not Lim, as the registered owner, can be held liable

under the Civil Code provision on vicarious liability?
Facts:
Leonora is engaged in the business of buying plastic scraps and

delivering them to recycling plants. On 7 March 1997, at around Ruling:
5:00 AM, the Isuzu truck owned by Leonora was travelling along
the downward portion of Boni Serrano Avenue when, upon YES.
reaching the corner of Riviera Street, fronting St. Ignatius
Village, its left front portion was hit by the Mayamy bus. The Mendoza's employer may also be held liable under the doctrine
Mayamy bus, while traversing the opposite lane, intruded on the of vicarious liability or imputed negligence. Under such doctrine,
lane occupied by the Isuzu truck. As a result of the incident, a person who has not committed the act or omission which
Perez, as well as the helpers on board the Isuzu truck, caused damage or injury to another may nevertheless be held
sustained injuries necessitating medical treatment which civilly liable to the latter either directly or subsidiarily under
amount was shouldered by Leonora. Moreover, the Isuzu truck certain circumstances. In our jurisdiction, vicarious liability or
sustained extensive damages on its cowl, chassis, lights and imputed negligence is embodied in Article 2180 of the Civil
steering wheel, amounting to P142,757.40.. Code and the basis for damages in the action under said article
is the direct and primary negligence of the employer in the
selection or supervision, or both, of his employee.
An Information for reckless imprudence resulting in damage to The registered owner is deemed the employer of the negligent
property and multiple physical injuries was filed against driver, and is thus vicariously liable under Article 2176, in
Mendoza. Mendoza, however, eluded arrest, thus, Leonora filed relation to Article 2180, of the Civil Code. In so far as third
a separate complaint for damages against Mendoza and Lim, persons are concerned, the registered owner of the motor
seeking actual damages, compensation for lost income, moral vehicle is the employer of the negligent driver, and the actual
damages, exemplary damages, attorney's fees and costs of the employer is considered merely as an agent of such owner.
suit. Lim, et al. capitalized on the issue of ownership of the bus Thus, whether there is an employer-employee relationship
in question. They argued that although the registered owner between the registered owner and the driver is irrelevant in
was Lim, the actual owner of the bus was SPO1 Enriquez who determining the liability of the registered owner who the law
had the bus attached with Mayamy Transport under the “kabit holds primarily and directly responsible for any accident, injury
system”. or death caused by the operation of the vehicle in the streets
and highways. Moreover, the main aim of motor vehicle
registration is to identify the owner so that if any accident
happens, or that any damage or injury is caused by the vehicles
Issue: on the public highways, responsibility therefore can be fixed on
a definite individual, the registered owner.
Generally, when an injury is caused by the negligence of a time of the mishap, he was violating any traffic regulation. In the
servant or employee, there instantly arises a presumption of law case at bar, Mendoza's violation of traffic laws was the
that there was negligence on the part of the master or employer proximate cause of the harm.
either in the selection of the servant or employee (culpa in
eligiendo) or in the supervision over him after the selection
(culpa vigilando), or both. The presumption is juris tantum and
not juris et de jure; consequently, it may be rebutted.
Accordingly, the general rule is that if the employer shows to the
satisfaction of the court that in the selection and supervision of
his employee he has exercised the care and diligence of a good
father of a family, the presumption is overcome and he is
relieved of liability. However, with the enactment of the motor
vehicle registration law, the defenses available under Article
2180 of the Civil Code - that the employee acts beyond the
scope of his assigned task or that it exercised the due diligence
of a good father of a family to prevent damage are no longer
available to the registered owner of the motor vehicle, because
the motor vehicle registration law, to a certain extent, modified 30. ACE NAVIGATION CO. v. FGU INSURANCE
Article 2180. As such, there can be no other conclusion but to CORPORATION AND GABRIEL V. GOMEZ
hold Lim vicariously liable with Mendoza. G.R. No. 171591, June 18, 2014
This does not mean, however, that Lim is left without any
recourse against Enriquez and Mendoza. Under the civil law Facts:
principle of unjust enrichment, the registered owner of the motor
vehicle has a right to be indemnified by the actual employer of CARDIA hipped on board the vessel M/V Pakarti Tiga at
the driver; and under Article 2181 of the Civil Code, whoever Shanghai Port China, 8,260 metric tons or 165,200 bags of Grey
pays for the damage caused by his dependents or employees Portland Cement to be discharged at the Port of Manila and
may recover from the latter what he has paid or delivered in delivered to its consignee Heindrich. The subject shipment was
satisfaction of the claim. insured with FGU and Pioneer.
Note: Mendoza’s negligence was duly proven. At the time of the The vessel is owned by Pakarti and chartered by Shinwa.
collision, the bus intruded on the lane intended for the Isuzu Representing itself as owner of the vessel, Shinwa entered into
truck. Having encroached on the opposite lane, Mendoza was a charter party contract with Sky an agent of Kee Yeh which
clearly in violation of traffic laws. Article 2185 of the Civil Code further chartered it to Regency. Thus, it was Regency that
provides that unless there is proof to the contrary, it is presumed directly dealt with consignee Heindrich, and accordingly, issued
that a person driving a motor vehicle has been negligent if at the Clean Bill of Lading.
The vessel arrived at the Port of Manila and the shipment was Ruling:
discharged. However, upon inspection of Heindrich and
Acenav, agent of Cardia, it was found that out of the 165,200 NO.
bags of cement, 43,905 bags were in bad order and condition.
Unable to collect the sustained damages in the amount of A bill of lading is defined as "an instrument in writing, signed by
P1,423,454.60 from the shipper, Cardia, and the charterer, a carrier or his agent, describing the freight so as to identify it,
Regency, the respondents, as co-insurers of the cargo, each stating the name of the consignor, the terms of the contract for
paid the consignee, Heindrich, the amounts of P427,036.40 and carriage, and agreeing or directing that the freight to be
P284,690.94, respectively, and consequently became delivered to the order or assigns of a specified person at a
subrogated to all the rights and causes of action accruing to specified place.” It operates both as a receipt and as a contract.
Heindrich. As a receipt, it recites the date and place of shipment, describes
the goods as to quantity, weight, dimensions, identification
marks and condition, quality, and value. As a contract, it names
the contracting parties, which include the consignee, fixes the
FGU filed a complaint for damages against the following route, destination, and freight rates or charges, and stipulates
defendants: "REGENCY EXPRESS LINES, S.A./ UNKNOWN the rights and obligations assumed by the parties. As such, it
CHARTERER OF THE VESSEL 'PAKARTI TIGA'/ UNKNOWN shall only be binding upon the parties who make them, their
OWNER and/or DEMIFE (sic) CHARTERER OF THE VESSEL assigns and heirs.
'PAKARTI TIGA', SKY INTERNATIONAL, INC. and/or ACE
NAVIGATION COMPANY, INC." In this case, the original parties to the bill of lading are:
ACENAV claimed that, not being privy to the bill of lading, it was (a) the shipper CARDIA;
not a real party-in-interest from whom the respondents can
demand compensation. It further denied being the local ship (b) the carrier PAKARTI; and
agent of the vessel or REGENCY and claimed to be the agent
of the shipper, CARDIA. (c) the consignee HEINDRICH.
However, by virtue of their relationship with PAKARTI under

separate charter arrangements, SHINWA, KEE YEH and its
Issue: agent SKY likewise became parties to the bill of lading. In the
same vein, ACENAV, as admitted agent of CARDIA, also
Whether or not ACENAV, not being a party in the Bill of Lading, became a party to the said contract of carriage.
may be held liable for the loss?
The respondents, however, maintain that ACENAV is a ship
agent and not a mere agent of CARDIA, as found by both the
CA and the RTC. The Court disagrees. Records show that the
obligation of ACENAV was limited to informing the consignee
HEINDRICH of the arrival of the vessel in order for the latter to
immediately take possession of the goods. No evidence was
offered to establish that ACENAV had a hand in the provisioning
of the vessel or that it represented the carrier, its charterers, or
the vessel at any time during the unloading of the goods.
Clearly, ACENAV's participation was simply to assume
responsibility over the cargo when they were unloaded from the
vessel. Hence, no reversible error was committed by the courts
a quo in holding that ACENAV was not a ship agent within the
31. MOF COMPANY VS. SHIN YANG
meaning and context of Article 586 of the Code of Commerce,
but a mere agent of CARDIA, the shipper.
A bill of lading serves two (2) functions: first, it is a receipt for
Corollarily, Article 1897 of the same Code provides that an the goods shipped; second, it is a contract by which three
agent is not personally liable to the party with whom he parties, namely, the shipper, the carrier and the consignee who
contracts, unless he expressly binds himself or exceeds the undertake specific responsibilities and assume stipulated
limits of his authority without giving such party sufficient notice obligations.
of his powers.
The bill of lading is oftentimes drawn up by the
Both exceptions do not obtain in this case. Records are bereft shipper/consignor and the carrier without the intervention of the
of any showing that ACENAV exceeded its authority in the consignee. However, the latter can be bound by the stipulations
discharge of its duties as a mere agent of CARDIA. Neither was of the bill of lading when a) there is a relation of agency between
it alleged, much less proved, that ACENAV's limited obligation the shipper or consignor and the consignee or b) when the
as agent of the shipper, CARDIA, was not known to consignee demands fulfillment of the stipulation of the bill of
HEINDRICH. lading which was drawn up in its favor.
Furthermore, since CARDIA was not impleaded as a party in A consignee, although not a signatory to the contract of carriage
the instant suit, the liability attributed upon it by the CA on the between the shipper and the carrier, becomes a party to the
basis of its finding that the damage sustained by the cargo was contract by reason of either a) the relationship of agency
due to improper packing cannot be borne by ACENAV. As mere between the consignee and the shipper/ consignor; b) the
agent, ACENAV cannot be made responsible or held unequivocal acceptance of the bill of lading delivered to the
accountable for the damage supposedly caused by its principal. consignee, with full knowledge of its contents or c) availment of
the stipulation pour autrui, i.e., when the consignee, a third
person, demands before the carrier the fulfillment of the
stipulation made by the consignor/shipper in the consignee’s Issue:

favor, specifically the delivery of the goods/cargoes shipped.
1. Whether a consignee, who is not a signatory to the bill of
lading, is bound by the stipulations thereof?
Facts: 2. Whether Shin Yang, who was not an agent of the shipper and
who did not make any demand for the fulfillment of the
Halla shipped to Manila secondhand cars and other articles on stipulations of the bill of lading drawn in its favor, is liable to pay
board the vessel Hanjin Busan. the corresponding freight and handling charges?
The bill of lading was prepared by the carrier Hanjin where Shin Ruling:
Yang was named as the consignee and indicated that payment
was on a "Freight Collect" basis (meaning the 1.While it is true that a bill of lading serves two (2) functions:
consignee/receiver of the goods would be the one to pay for the first, it is a receipt for the goods shipped; second, it is a contract
freight and other charges). by which three parties, namely, the shipper, the carrier and the
consignee who undertake specific responsibilities and assume
When the shipment arrived in Manila MOF, Hanjin’s exclusive stipulated obligations.
general agent in the Philippines, demanded the payment from
Shin Yang. The bill of lading is oftentimes drawn up by the
shipper/consignor and the carrier without the intervention of the
Shin Yang refused to pay the freight and other charges. Shin consignee. However, the latter can be bound by the stipulations
Yang is saying that it is not the ultimate consignee but merely of the bill of lading when a) there is a relation of agency between
the consolidator/forwarder. the shipper or consignor and the consignee or b) when the
consignee demands fulfillment of the stipulation of the bill of
Shin Yang contends that the fact that its name was mentioned lading which was drawn up in its favor.
as the consignee of the cargoes did not make it automatically
liable for the freightage because it never benefited from the 2. In sum, a consignee, although not a signatory to the contract
shipment. of carriage between the shipper and the carrier, becomes a
party to the contract by reason of either a) the relationship of
It never claimed or accepted the goods, it was not the shipper’s agency between the consignee and the shipper/ consignor; b)
agent, it was not aware of its designation as consignee and the the unequivocal acceptance of the bill of lading delivered to the
original bill of lading was never endorsed to it. consignee, with full knowledge of its contents or c) availment of
the stipulation pour autrui, i.e., when the consignee, a third
person, demands before the carrier the fulfillment of the
stipulation made by the consignor/shipper in the consignee’s 32. DESIGNER BASKETS, INC VS. AIR SEA TRANSPORT
favor, specifically the delivery of the goods/cargoes shipped.
In the instant case, Shin Yang consistently denied in all of its

pleadings that it authorized Halla Trading, Co. to ship the goods The general rule is that upon receipt of the goods, the consignee
on its behalf; or that it got hold of the bill of lading covering the surrenders the bill of lading to the carrier and their respective
shipment or that it demanded the release of the cargo. Basic is obligations are considered canceled. The law, however, provides two
the rule in evidence that the burden of proof lies upon him who exceptions where the goods may be released without the surrender of
asserts it, not upon him who denies, since, by the nature of the bill of lading because the consignee can no longer return it. These
things, he who denies a fact cannot produce any proof of
exceptions are when the bill of lading gets lost or for other cause. In
it. Thus, MOF has the burden to controvert all these denials, it
being insistent that Shin Yang asserted itself as the consignee either case, the consignee must issue a receipt to the carrier upon the
and the one that caused the shipment of the goods to the release of the goods. Such receipt shall produce the same effect as the
Philippines. surrender of the bill of lading.
In civil cases, the party having the burden of proof must We have already ruled that the non-surrender of the original bill of
establish his case by preponderance of evidence, which means lading does not violate the carrier’s duty of extraordinary diligence
evidence which is of greater weight, or more convincing than over the goods (Republic v. Lorenzo Shipping Corporation). Thus, we
that which is offered in opposition to it. Here, MOF failed to meet held that the surrender of the original bill of lading is not a condition
the required quantum of proof. Other than presenting the bill of precedent for a common carrier to be discharged of its contractual
lading, which, at most, proves that the carrier acknowledged
obligation.
receipt of the subject cargo from the shipper and that the
consignee named is to shoulder the freightage, MOF has not
Clearly, law and jurisprudence is settled that the surrender of the
adduced any other credible evidence to strengthen its cause of
action. It did not even present any witness in support of its original bill of lading is not absolute; that in case of loss or any other
allegation that it was Shin Yang which furnished all the details cause, a common carrier may release the goods to the consignee even
indicated in the bill of lading and that Shin Yang consented to without it.
shoulder the shipment costs. There is also nothing in the
records which would indicate that Shin Yang was an agent of The applicable provision instead is Article 353 of the Code of
Halla Trading Co. or that it exercised any act that would bind it Commerce, the Article allows the release of the goods to the consignee
as a named consignee. Thus, the CA correctly dismissed the even without his surrender of the original bill of lading. In such case,
suit for failure of petitioner to establish its cause against the duty of the carrier to exercise extraordinary diligence is not
respondent
violated. Nothing, therefore, prevented the consignee and the carrier
to enter into an indemnity agreement of the same nature as the one
they entered here. No law or public policy is contravened upon its DBI then made several demands to Ambiente for the payment of the
execution. shipment, but to no avail. Thus, on October 7, 1996, DBI filed the
Original Complaint against ASTI, ACCLI and ACCLI’s
incorporators-stockholders
Facts: DBI claimed that under Bill of Lading is “to release and deliver the
DBI is a domestic corporation engaged in the production of cargo/shipment to the consignee, x x x, only after the original copy or
housewares and handicraft items for export. In October 1995, copies of [the] Bill of Lading is or are surrendered to them; otherwise,
Ambiente, a foreign-based company, ordered from DBI 223 cartons they become liable to the shipper for the value of the shipment.” DBI
of assorted wooden items. also averred that ACCLI should be jointly and severally liable with its
codefendants because ACCLI failed to register ASTI as a foreign
Ambiente designated ACCLI as the forwarding agent that will ship out corporation doing business in the Philippines. In addition, ACCLI
its order from the Philippines to the United States. ACCLI is a failed to secure a license to act as agent of ASTI.
domestic corporation acting as agent of ASTI, a US based corporation
engaged in carrier transport business, in the Philippines.
On January 7, 1996, DBI delivered the shipment to ACCLI for sea Issue:
transport from Manila and delivery to Ambiente. To acknowledge Whether or not ASTI, ACCLI, and Ambiente are solidarily liable to
receipt and to serve as the contract of sea carriage, ACCLI issued to DBI for the value of the shipment?
DBI triplicate copies of ASTI Bill of Lading. DBI retained possession
of the originals of the bills of lading pending the payment of the goods
by Ambiente.
Ruling:
On January 23, 1996, Ambiente and ASTI entered into an Indemnity
Agreement. Under the Agreement, Ambiente obligated ASTI to Petition Denied.
deliver the shipment to it or to its order “without the surrender of the
1) A common carrier may release the goods to the consignee
relevant bill(s) of lading due to the non-arrival or loss thereof.” In even without the surrender of the bill of lading.
exchange, Ambiente undertook to indemnify and hold ASTI and its
agent free from any liability as a result of the release of the shipment. The general rule is that upon receipt of the goods, the consignee
Thereafter, ASTI released the shipment to Ambiente without the surrenders the bill of lading to the carrier and their respective
knowledge of DBI, and without it receiving payment for the total cost obligations are considered canceled. The law, however, provides two
of the shipment. exceptions where the goods may be released without the surrender of
the bill of lading because the consignee can no longer return it. These
exceptions are when the bill of lading gets lost or for other cause. In 3) Article 1503 of the Civil Code does not apply to contracts
either case, the consignee must issue a receipt to the carrier upon the for carriage of goods.
release of the goods. Such receipt shall produce the same effect as the
Articles 1523 and 1503, , refer to a contract of sale between a seller
surrender of the bill of lading.
and a buyer. In particular, they refer to who between the seller and the
We have already ruled that the non-surrender of the original bill of buyer has the right of possession or ownership over the goods subject
lading does not violate the carrier’s duty of extraordinary diligence of the sale. Articles 1523 and 1503 do not apply to a contract of
over the goods (Republic v. Lorenzo Shipping Corporation). Thus, we carriage between the shipper and the common carrier.
held that the surrender of the original bill of lading is not a condition
33. PHIL-NIPPON KYOEI, CORP., Petitioner, vs. ROSALIA
precedent for a common carrier to be discharged of its contractual T. GUDELOSAO, on her behalf and in behalf of minor
obligation. children CHRISTY MAE T. GUDELOSAO and ROSE ELDEN
T. GUDELOSAO, CARMEN TANCONTIAN, on her behalf
Clearly, law and jurisprudence is settled that the surrender of the and in behalf of the children CAMELA B. TANCONTIAN,
original bill of lading is not absolute; that in case of loss or any other BEVERLY B. TANCONTIAN, and ACE B. TANCONTIAN,
cause, a common carrier may release the goods to the consignee even Respondents. G.R. No. 181375, July 13, 2016
without it.
2) Articles 1733, 1734, and 1735 of the Civil Code are not
applicable. “x x x the limited liability rule is not absolute and is without
exceptions. It does not apply in cases: (1) where the injury or
Articles 1733, 1734, and 1735 speak of the common carrier's death to a passenger is due either to the fault of the shipowner,
responsibility over the goods. They refer to the general liability of or to the concurring negligence of the shipowner and the
common carriers in case of loss, destruction or deterioration of goods captain; (2) where the vessel is insured; and (3) in workmen's
and the presumption of negligence against them. compensation claims.”
The applicable provision instead is Article 353 of the Code of

Commerce, the Article allows the release of the goods to the
consignee even without his surrender of the original bill of lading. In Facts:
such case, the duty of the carrier to exercise extraordinary diligence is
not violated. Nothing, therefore, prevented the consignee and the Petitioner Phil-Nippon Kyoei, Corp. Purchased M/V Mahlia for a
one-month conduction voyage from Japan to the Philippines
carrier to enter into an indemnity agreement of the same nature as the
with Top Ever Marin Management Maritime Co., Ltd. (TMCL) as
one they entered here. No law or public policy is contravened upon its foreign principal, and hired Edwin Gudelasao, Virgilio
execution. Tancontian, and six other crew members through Top Ever
Marine Management Philippine Corporation (TEMMPC) and its Whether or not the limited liability rule is compatible with the
president and general manager, Capt. Oscar Orbeta. Petitioner claim under the POEA-SEC?
secured a marine insurance policy from South Sea Surety &
Insurance Co., Inc. (SSSICI) against loss, damage, or third-
party liability. The policy included personal accident policies for
the eight crew members.
The vessel sank while still in Japan due to extreme bad weather, Ruling:
causing the death of Gudelasao, Tancontian, and five other
crew members. Respondents, heirs and beneficiaries of the No, the limited liability rule is not compatible with the claim under
deceased Gudelasao and Tancontian filed their separate the POEA-SEC.
complaints for death benefits against petitioner, SSSCI,
TEMMPC, Capt. Orbeta, and TMCL. The LA found petitioner, The limited liability rule is embodied in Articles 587, 590 and 837
TEMMPC, Capt. Orbeta, and TMCL solidarily liable and SSSICI under Book III of the Code of Commerce, viz:
liable for the proceeds of the personal accident policies, but
ruling that petitioner’s liability will only be extinguished upon
Art. 587. The ship agent shall also be civilly liable for the
SSSICIs payment of the insurance proceeds.
indemnities in favor of third persons which arise from the
conduct of the captain in the care of the goods which the vessel
On appeal, the NLRC absolved petitioner, TEMMPC, Capt. carried; but he may exempt himself therefrom by abandoning
Orbeta, and TMCL from any liability based on the limited liability the vessel with all her equipment and the freightage he may
doctrine but maintained SSSICIs liability after finding that the have earned during the voyage.
personal accident policies answer for the death benefit claims
under the Philippine Overseas Employment Administration-
Art. 590. The co-owners of a vessel shall be civilly liable, in the
Standard Emplyment Contract (POEA-SEC). On appeal, the CA
proportion of their contribution to the common fund, for the
reinstated the LA decision, holding that the limited liability
results of the acts of the captain, referred to in Art. 587.
doctrine cannot apply in claims under the POEA-SEC because
such liability is distinct from the liability of the shipowner.
Petitioner claims that the limited liability rule applies and any Each part-owner may exempt himself from this liability by the
claims against petitioner is only limited to the proceeds of the abandonment before a notary of the part of the vessel belonging
insurance obtained from SSSICI. to him.
Art. 837. The civil liability incurred by the shipowners in the

cases prescribed in this section, shall be understood as limited
to the value of the vessel with all its appurtenances and
Issue:
freightage earned during the voyage.
or the heirs and dependents of such laborers and employees in

the event of death caused by their employment.
Article 837 applies the limited liability rule in cases of collision.
Meanwhile, Articles 587 and 590 embody the universal principle
of limited liability in all cases wherein the shipowner or agent
may be properly held liable for the negligent or illicit acts of the The pertinent provisions of said Act are now found in the Labor
captain. These articles precisely intend to limit the liability of the Code. Akin to the death benefits under the Labor Code, these
shipowner or agent to the value of the vessel, its appurtenances benefits under the POEA-SEC are given when the employee
and freightage earned in the voyage, provided that the owner or dies due to a work-related cause during the term of his contract.
agent abandons the vessel. When the vessel is totally lost, in The liability of the shipowner or agent under the POEA-SEC has
which case abandonment is not required because there is no likewise nothing to do with the provisions of the Code of
vessel to abandon, the liability of the shipowner or agent for Commerce regarding maritime commerce. Therefore, the
damages is extinguished. Nonetheless, the limited liability rule limited liability rule does not apply to petitioner's liability under
is not absolute and is without exceptions. It does not apply in the POEA-SEC.
cases: (1) where the injury or death to a passenger is due either
to the fault of the shipowner, or to the concurring negligence of
the shipowner and the captain; (2) where the vessel is insured;
and (3) in workmen's compensation claims. 34. PHILAM INSURANCE COMPANY, INC. (now CHARTIS
PHILIPPINES INSURANCE, INC.), Petitioner, vs. HEUNG-A
SHIPPING CORPORATION and WALLEM PHILIPPINES
SHIPPING, INC., Respondents. G.R. No. 187701, July 23,
The limited liability rule found in the Code of Commerce is 2014
inapplicable in a liability created by statute to compensate
employees and laborers, or the heirs and dependents, in cases
of injury received by or inflicted upon them while engaged in the
performance of their work or employment. Said rule has no “Neither the carrier nor the ship shall in any event be or become
room in the application of the Workmen’s Compensation Act liable for any loss or damage to or in connection with the
which seeks to improve, and aims the amelioration of, the transportation of goods in an amount exceeding $500 per
condition of laborers and employees. It is not the liability for the package lawful money of the United States, or in case of goods
damage or loss of the cargo or injury to, or death of, a passenger not shipped in packages, per customary freight unit, or the
by or through the misconduct of the captain or master of the equivalent of that sum in other currency, unless the nature and
ship; nor the liability for the loss of the ship as a result of value of such goods have been declared by the shipper before
collision; nor the responsibility for wages of the crew, but a shipment and inserted in the bill of lading.”
liability created by a statute to compensate employees and
laborers in cases of injury received by or inflicted upon them, Facts:
while engaged in the performance of their work or employment,
Novartis Consumer Health Philippines, Inc. (Novartis) imported Heung-A argued that it was not a carrier in so far as Novartis
19 pallets of Ovaltine Power 18 Laminated plastic packaging was concerned as its only obligation was to provide Dongnama
material from Jinsuk Trading Co., Ltd. (Jinsuk) in South Korea. a space on board its vessel.
To ship the goods to the Philippines, Jinsuk engaged the
services of Protop Shipping Corporation (Protop), a freight
forwarder in South Korea, to forward the goods to Novartis.
Protop issued a bill of lading in favor of Novartis which states The RTC held that Heung-A is a common carrier despite of the
that the cargo is on “shipper’s load and count” which means that slot charter agreement since it was still obliged to transport the
the “container was packed with cargo by one shipper (herein cargo from South Korea to the Philippines. As a common
Jinsuk) where the quantity, description and condition of the carrier, Heung-A failed to adduce evidence that it exercised
cargo is the sole responsibility of the shipper.” Protop shipped extraordinary diligence in ensuring the safety of the shipment
the cargo through Dongnama Shipping Co. Ltd. (Dongnama) and is therefore liable to the loss and damage of the cargo.
which in turn loaded the same on M/V Heung-A Bangkok V-019 Wallem is liable as the shipping agent of Heung-A. Protop is
owned and operated by Heung-A Shipping Corporation (Heung- liable because the damage of the shipment was due to the bad
A) pursuant to a slot charter agreement whereby space in the condition of the cargo van and that the bill of lading it issued
latter’s vessel was reserved for the exclusive use of Dongnama. provides that it shall be liable for such loss and damage. The
Wallem Philippines Shipping, Inc. (Wallem) is the ship agent of CA affirmed the RTC decision, but limited the liability to $8,500
Heung-A in the Philippines. Novartis insured the cargo with pursuant to the liability limitation under the COGSA.
Philam Insurance Company, Inc. (Philam).
Issue:
When the cargo arrived in the Philippines and later delivered to
Norvartis, it was discovered that the boxes of the shipment were Whether or not the liability of Wallem, Hueng-A, and Protop
wet and damp, damaging the goods. Since the damaged should be limited pursuant to the COGSA?
packing materials might contaminate the product they were
meant to hold, Novartis rejected the entire shipment. Aggrieved,
Novartis demanded indemnification for the damaged shipment
from Protop, Wallem, and Heung-A, to no avail. Philam,
Ruling:
pursuant to the marine insurance policy, paid the claim of
Novartis. A complaint for damages was filed by Philam against
Protop, Wallem, and Heung-A. The defendants denied liability. Yes, their liability should be limited pursuant to the COGSA.
Wallem averred that the loss is Jinsuk’s liability as the cargo
was taken on board on a “shipper’s load and count” and if it had First, the Court affirmed the liability of Heung-A as a common
any liability, it is only limited to $8,500 pursuant to the limited carrier because a contract of affreightment does not release the
liability rule on the Carriage of Goods by Sea Act (COGSA). shipowner or captain liable for loss or damage to passengers or
cargo as the command and possession of the vessel remains PHILAM INSURANCE CO., INC. (now Chartis Philippines
with the shipowner or captain, as opposed to a charter by Insurance, Inc.), . G.R. No. 181262
demise or bareboat charter wherein the command and G.R. No. 181319, July 24, 2013
possession of the vessel is transferred to the charterer and
hence, he is liable for damages or loss sustained by the goods
transported. A common carrier is presumed to be at fault or
negligent if the goods they transported deteriorated or got lost Section 3 of the COGSA provides that among the carrier’s
or destroyed while in transit. Heung-A failed to rebut this responsibilities are to properly load, handle, stow, carry, keep,
presumption. Protop is liable because it breached the bill of care for and discharge the goods carried. It is settled in maritime
lading it contracted with Novartis when it failed to deliver the law jurisprudence that cargoes while being unloaded generally
goods in the same quantity, quality and description as stated in remain under the custody of the carrier. Since the damage to
the bill of lading. Wallem is also liable as the agent of Heung-A. the cargo was incurred during the discharge of the shipment and
while under the supervision of the ATI, the latter is liable for the
damage caused to the cargo.
Pursuant to Sec. 372 of the Code of Commerce, the value of Facts:

the goods which the carrier must pay in case of loss or
misplacement shall be determined in accordance with that Nichimen Corporation shipped to Universal Motors Corporation
declared in the bill of lading. In the absence of such declaration, 219 packages containing 120 units of brand new Nissan Pickup
Par. 5, Sec. 4 of the COGSA provides that the liability shall be Truck on board the vessel S/S "Calayan Iris" from Japan to
limited to $500 per package. Hence, when the loss or damage Manila. The shipment was insured with Philam against all risks.
to goods covered by contracts of carriage from a foreign port to The shipment was unloaded by the staff of ATI, it was found that
a Philippine port, and in the absence of shipper’s declaration of the package was in bad order. The shipment was withdrawn by
the value of the goods in the bill of lading, the foregoing R.F. Revilla Customs Brokerage, Inc., the authorized broker of
provision of the COGSA will apply. Since the value of the goods Universal Motors, and delivered to the latter’s warehouse in
were not declared in the bill of lading, the limited liability rule of Mandaluyong City. Upon the request of Universal Motors, a bad
the COGSA will apply. order survey was conducted on the cargoes. Owing to the
extent of the damage to said cargoes, Universal Motors
declared them a total loss.
Philam, as subrogee of Universal Motors, filed a Complaint for

damages against Westwind, ATI and R.F. Revilla Customs
Brokerage, Inc. before the RTC of Makati. On appeal, the CA
affirmed with modification the ruling of the RTC. The appellate
35. ASIAN TERMINALS, INC., Petitioner, court directed Westwind and ATI to pay Philam jointly and
vs. severally.
to delivery thereof under the contract of carriage,

such removal shall be prima facie evidence of
Issue: the delivery by the carrier of the goods as
described in the bill of lading. If the loss or
Whether or not Westwind and ATI are liable to pay Philam? damage is not apparent, the notice must be
given within three days of the delivery. In any
event the carrier and the ship shall be discharged
from all liability in respect of loss or damage
Ruling: unless suit is brought within one year after
delivery of the goods or the date when the goods
should have been delivered: Provided, That if a
The Court holds that petitioner Philam has adequately
notice of loss or damage, either apparent or
established the basis of its claim against petitioners ATI and
concealed, is not given as provided for in this
Westwind. Philam, as insurer, was subrogated to the rights of
section, that fact shall not affect or prejudice the
the consignee, Universal Motors Corporation, pursuant to the
right of the shipper to bring suit within one year
Subrogation Receipt executed by the latter in favor of the
after the delivery of the goods or the date when
former. The right of subrogation accrues simply upon payment
the goods should have been delivered.
by the insurance company of the insurance claim.
paragraph (6), Section 3 of the COGSA clearly states that failure
Neither do we find support in petitioner Westwind’s contention
to comply with the notice requirement shall not affect or
that Philam’s right of action has prescribed.
prejudice the right of the shipper to bring suit within one year
after delivery of the goods. Petitioner Philam, as subrogee of
The Carriage of Goods by Sea Act (COGSA) or Public Act No. Universal Motors, filed the Complaint for damages against
521 was accepted to be made applicable to all contracts for the petitioners Westwind and ATI within reasonable time.
carriage of goods by sea to and from Philippine ports in foreign
trade by virtue of C.A. No. 65.
Upon a careful review of the records, the Court finds no reason
to deviate from the finding that petitioners Westwind and ATI are
The prescriptive period for filing an action for the loss or damage concurrently accountable for the damages. Section 3 of the
of the goods under the COGSA is found in paragraph (6), COGSA provides that among the carrier’s responsibilities are to
Section 3, thus: properly load, handle, stow, carry, keep, care for and discharge
the goods carried. It is settled in maritime law jurisprudence that
(6) Unless notice of loss or damage and the cargoes while being unloaded generally remain under the
general nature of such loss or damage be given custody of the carrier.
in writing to the carrier or his agent at the port of
discharge before or at the time of the removal of
the goods into the custody of the person entitled
36. EDNA DIAGO LHUILLIER, Petitioner, vs. apology. However, the latter declared that the flight stewards
BRITISH AIRWAYS, Respondent. were "only doing their job." Thus, petitioner filed the complaint
G.R. No. 171092, March 15, 2010 for damages.
respondent, by way of special appearance through counsel,

Since the Warsaw Convention applies in the instant case, then filed a Motion to Dismiss on grounds of lack of jurisdiction over
the jurisdiction over the subject matter of the action is governed the case and over the person of the respondent.
by the provisions of the Warsaw Convention.
Under Article 28(1) of the Warsaw Convention, the plaintiff may
bring the action for damages before – 1. the court where the
carrier is domiciled; 2. the court where the carrier has its Issue:
principal place of business; 3. the court where the carrier has
an establishment by which the contract has been made; or 4. W/N the trial court has jurisdiction over the case?
the court of the place of destination.
Facts:
Ruling:
Petitioner Edna Diago Lhuillier filed a Complaint for damages
The petition is without merit.
against respondent British Airways before the RTC of Makati
City. She alleged that on February 28, 2005, she took
respondent’s flight 548 from London, United Kingdom to Rome, In Santos III v. Northwest Orient Airlines, we held that:
Italy. Once on board, she allegedly requested Julian Halliday
(Halliday), one of the respondent’s flight attendants, to assist The Republic of the Philippines is a party to the Convention for
her in placing her hand-carried luggage in the overhead bin. the Unification of Certain Rules Relating to International
However, Halliday allegedly refused to help and assist her, and Transportation by Air, otherwise known as the Warsaw
even sarcastically remarked that "If I were to help all 300 Convention. The Convention is a treaty commitment voluntarily
passengers in this flight, I would have a broken back!" Petitioner assumed by the Philippine government and, as such, has the
further alleged that when the plane was about to land in Rome, force and effect of law in this country.
Italy, another flight attendant, Nickolas Kerrigan (Kerrigan),
singled her out from among all the passengers in the business Since the Warsaw Convention applies in the instant case, then
class section to lecture on plane safety. Allegedly, Kerrigan the jurisdiction over the subject matter of the action is governed
made her appear to the other passengers to be ignorant, by the provisions of the Warsaw Convention.
uneducated, stupid, and in need of lecturing on the safety rules Under Article 28(1) of the Warsaw Convention, the plaintiff may
and regulations of the plane. Upon arrival in Rome, petitioner bring the action for damages before –
complained to respondent’s ground manager and demanded an 1. the court where the carrier is domiciled;
2. the court where the carrier has its principal place of

business;
3. the court where the carrier has an establishment by 39.CATHAY PACIFIC AIRWAYS, LTD. vs. SPOUSES DANIE
which the contract has been made; or L VAZQUEZ &
4. the court of the place of destination. MARIA LUISA MADRIGAL VAZQUEZ
G.R. No. 150843. March 14, 2003
In this case, it is not disputed that respondent is a British
corporation domiciled in London, United Kingdom with London
as its principal place of business. Hence, under the first and Breach of contract is defined as the "failure without legal
second jurisdictional rules, the petitioner may bring her case reason to comply with the terms of a contract." It is also defined
before the courts of London in the United Kingdom. In the as the "failure, without legal excuse, to perform any promise
passenger ticket and baggage check presented by both the which forms the whole or part of the contract."
petitioner and respondent, it appears that the ticket was issued
in Rome, Italy. Consequently, under the third jurisdictional rule,
the petitioner has the option to bring her case before the courts
of Rome in Italy. Finally, both the petitioner and respondent aver Facts:
that the place of destination is Rome, Italy, which is properly
designated given the routing presented in the said passenger Cathay is a common carrier engaged in the business of
ticket and baggage check. Accordingly, petitioner may bring her transporting passengers and goods by air. Among the many
action before the courts of Rome, Italy. We thus find that the routes it services is the Manila-Hongkong-Manila course. As
RTC of Makati correctly ruled that it does not have jurisdiction
part of its marketing strategy, Cathay accords its frequent flyers
over the case filed by the petitioner.
membership in its Marco Polo Club. The members enjoy several
In this case, the special appearance of the counsel of privileges, such as priority for upgrading of booking without any
respondent in filing the Motion to Dismiss and other pleadings extra charge whenever an opportunity arises. Thus, a frequent
before the trial court cannot be deemed to be voluntary flyer booked in the Business Class has priority for upgrading to
submission to the jurisdiction of the said trial court. We hence First Class if the Business Class Section is fully booked.
disagree with the contention of the petitioner and rule that there
was no voluntary appearance before the trial court that could
constitute estoppel or a waiver of respondent’s objection to
jurisdiction over its person. Respondents-spouses are frequent flyers of Cathay and are
Gold Card members of its Marco Polo Club. The Vazquezes,
WHEREFORE, the petition is DENIED. The Order of the RTC together with their maid and two friends, Pacita Cruz and
of Makati City dismissing the complaint for lack of jurisdiction, is Josefina Vergel de Dios, went to Hongkong for pleasure and
AFFIRMED.
business. For their return flight to Manila, they were booked
on Cathay's Flight CX-905 Business Class Section. When Issue:

boarding time was announced, a ground attendant approached
Dr. Vazquez and told him that the Vazquezes' accommodations Whether or not the petitioner breached the contract of carriage
were upgraded to First Class. Dr. Vazquez refused the by upgrading the seat accommodation of the Vazquezes from
upgrade, reasoning that it would not look nice for them as hosts Business Class to First Class Cathay
to travel in First Class and their guests, in the Business Class;
and moreover, they were going to discuss business matters
during the flight. Dr. Vazquez continued to refuse, so the ground Ruling:
stewardess told them that if they would not avail themselves of
the privilege, they would not be allowed to take the flight. YES. A contract is a meeting of minds between two persons
Eventually, after talking to his two friends, Dr. Vazquez gave in. whereby one agrees to
Upon their return to Manila, the Vazquezes instituted before the
give something or render some service to another for a
RTC of Makati City an action for damages against Cathay.
consideration. There is no contract unless the following
requisites concur: (1) consent of the contracting parties; (2) an
object certain which is the subject of the contract; and (3) the
In its answer, Cathay alleged that it is a practice among cause of the obligation which is established. Undoubtedly, a
commercial airlines to upgrade passengers to the next better contract of carriage existed between Cathay and the
class of accommodation, whenever an opportunity arises, such Vazquezes. They voluntarily and freely gave their consent to an
as when a certain section is fully booked. Priority in upgrading agreement whose object was the transportation of the
is given to its frequent flyers, who are considered favored Vazquezes from Manila to Hong Kong and back to Manila, with
passengers, like the Vazquezes. Thus, when the Business seats in the Business Class Section of the aircraft, and whose
Class Section was fully booked, Cathay's computer sorted out cause or consideration was the fare paid by the Vazquezes
the names of favored passengers for involuntary upgrading to to Cathay.
First Class.
Breach of contract is defined as the "failure without legal

The trial court found for the Vazquezes and awarded them reason to comply with the terms of a contract." It is also defined
damages. CA affirmed. as the "[f]ailure, without legal excuse, to perform any promise
which forms the whole or part of the contract."
The contract between the parties was for Cathay to transport The Court, however, was not convinced that the upgrading or
the Vazquezes to Manila on a Business Class accommodation the breach of contract was attended by fraud or bad faith. The
in Flight CX-905. After checking-in their luggage at the Kai Tak Vazquezes were not induced to agree to the upgrading through
Airport in Hong Kong, the Vazquezes were given boarding cards insidious words or deceitful machination or through willful
indicating their seat assignments in the Business Class Section. concealment of material facts. The attendant was honest in
However, during the boarding time, when the Vazquezes telling them that their seats were already given to other
presented their boarding passes, they were informed that they passengers and the Business Class Section was fully booked.
had a seat change from Business Class to First Class. It turned The attendant might have failed to consider the remedy of
out that the Business Class was overbooked in that there were offering the First. Class seats to other passengers. But, the
more passengers than the number of seats. Thus, the seat Court found no bad faith in her failure to do so, even if that
assignments of the Vazquezes were given to waitlisted amounted to an exercise of poor judgment. The Court set aside
passengers, and the Vazquezes, being members of the Marco and deleted the award of moral damages and attorney's fees
Polo Club, were upgraded from Business Class to First Class. and reduced the award for nominal damages to P5,000.00.
According to the Court, the Vazquezes should have been

consulted first whether they wanted to avail themselves of the
privilege or would consent to a change of seat accommodation
before their seat assignments were given to other passengers.
Normally, one would appreciate and accept an upgrading, for it
would mean a better accommodation. But, whatever their
reason was and however odd it might be, the Vazquezes had
every right to decline the upgrade and insist on the Business
Class accommodation they had booked for and which was
designated in their boarding passes. They clearly waived their
priority or preference when they asked that other passengers
be given the upgrade. It should not have been imposed on them
over their vehement objection. By insisting on the
upgrade, Cathay breached its contract of carriage with the
Vazquezes.

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COMMERCIAL LAW REVIEW || Transportation Law 1

Cases 1-39(missing 3,4,5,6,7,8,13,14,37 and 38)

carrier is not acting as such but as a private carrier. Public policy

Ruling: 2. NATIONAL STEEL CORPORATION v. COURT OF

Plaintiff National Steel Corporation (NSC) as Charterer and

Issue: 9. LRTA V. NAVIDAD

"Article 1755. A common carrier is bound to carry the

regard for all circumstances. Such duty of a common carrier to

Facts: the payment of their counterclaims for damages and attorney’s

supposedly not manifested his intention to board the same,

The Private respondents filed a complaint for damages against Issue:

Facts: In its Answer, by way of special and affirmative defense, it

of Grand Cement were loaded another vessel.

Therefore Sealoader is liable for its negligence.

amputated. Police report showed that there were 10 more who

Thus, respondents Edgar Hernandez, Virginia Muñoz and

In his answer Lim denied liability by contending that he

owner of the vehicle is not allowed to prove that another person

certificate of convenience allows another person who owns

action has already prescribed under Article 1144(2) of the Civil

The lower court and CFI ruled in favor of Teja Marketing.

Facts: Thereafter, in March 1973, respondent Nicasio Ocampo

Whether or not there is Kabit System?

Ruling: c. The obligation is not novated by an instrument that

Under this system, d. The existence of an employment relation is not

Passengers also on board the owner-type jeep, which was Ruling:

Respondents commenced an action for damages against

Employers shall be liable for the damages caused by their

Lastly, teachers or heads of establishments of arts and trades

The responsibility treated of in this article shall cease when the

his drivers were getting lax in remitting their boundary payments

to her destination. Respondents denied liability for the death of

Whether or not a common carrier is presumed to be at fault or

performance of its contractual obligation, or that the injury

broken bumper of the bus. According to Cortel, Lim was wearing

In her Complaint, Abejar alleged that Bautista was an employee

Caravan then filed a petition arguing that Abejar has no

Caravan shouldered the hospitalization expenses of Reyes.

1) Yes. Having exercised substitute parental authority,

2) Yes. Contrary to petitioner’s position, it was not fatal to

Petitioner’s argument that it should be excused from liability

Whether or not Lim, as the registered owner, can be held liable

Leonora is engaged in the business of buying plastic scraps and

However, by virtue of their relationship with PAKARTI under

stipulation made by the consignor/shipper in the consignee’s Issue:

In the instant case, Shin Yang consistently denied in all of its

The applicable provision instead is Article 353 of the Code of

Art. 837. The civil liability incurred by the shipowners in the

or the heirs and dependents of such laborers and employees in

Pursuant to Sec. 372 of the Code of Commerce, the value of Facts:

Philam, as subrogee of Universal Motors, filed a Complaint for

to delivery thereof under the contract of carriage,

respondent, by way of special appearance through counsel,

2. the court where the carrier has its principal place of

on Cathay's Flight CX-905 Business Class Section. When Issue:

Breach of contract is defined as the "failure without legal

According to the Court, the Vazquezes should have been

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