001 De Guzman vs CA and Ernesto Cendana

G.R. No. L-47822 December 22, 1988

Respondent Ernesto Cendana, a junk dealer, was engaged in buying up used bottles and scrap metal in Pangasinan. Upon gathering sufficient
quantities of such scrap material, respondent would bring such material to Manila for resale. He utilized two (2) six-wheeler trucks which he owned
for hauling the material to Manila. On the return trip to Pangasinan, respondent would load his vehicles with cargo which various merchants wanted
delivered to differing establishments in Pangasinan. For that service, respondent charged freight rates which were commonly lower than regular
commercial rates.

Sometime in November 1970, petitioner Pedro de Guzman a merchant and authorized dealer of General Milk Company (Philippines), Inc. in
Urdaneta, Pangasinan, contracted with respondent for the hauling of 750 cartons of Liberty filled milk from a warehouse of General Milk in Makati,
Rizal, to petitioner's establishment in Urdaneta on or before 4 December 1970. Accordingly, on 1 December 1970, respondent loaded in Makati the
merchandise on to his trucks.

Only 150 boxes of Liberty filled milk were delivered to petitioner. The other 600 boxes never reached petitioner, since the truck which carried these
boxes was hijacked somewhere along the MacArthur Highway in Paniqui, Tarlac, by armed men who took with them the truck, its driver, his helper
and the cargo.

On 6 January 1971, petitioner commenced action against private respondent in the Court of First Instance of Pangasinan, demanding payment of P
22,150.00, the claimed value of the lost merchandise, plus damages and attorney's fees. Petitioner argued that private respondent, being a common
carrier, and having failed to exercise the extraordinary diligence required of him by the law, should be held liable for the value of the undelivered
goods.

In his Answer, private respondent denied that he was a common carrier and argued that he could not be held responsible for the value of the lost
goods, such loss having been due to force majeure.

On 10 December 1975, the trial court rendered a Decision 1 finding private respondent to be a common carrier and holding him liable for the value of
the undelivered goods. The Court of Appeals reversed the judgment of the trial court and held that respondent had been engaged in transporting
return loads of freight "as a casual occupation — a sideline to his scrap iron business" and not as a common carrier. Petitioner came to this Court by
way of a Petition for Review.

Issue: whether or not private respondent Ernesto Cendana may, under the facts earlier set forth, be properly characterized as a common carrier.

Held: Yes.

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

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

The above article makes no distinction between one whose principal business activity is the carrying of persons or goods or both, and one who does
such carrying only as an ancillary activity (in local Idiom as "a sideline"). Article 1732 also carefully avoids making any distinction between a person
or enterprise offering transportation service on a regular or scheduled basis and one offering such service on an occasional, episodic or unscheduled
basis. Neither does Article 1732 distinguish between a carrier offering its services to the "general public," i.e., the general community or population,
and one who offers services or solicits business only from a narrow segment of the general population. We think that Article 1733 deliberaom making
such distinctions.

So understood, the concept of "common carrier" under Article 1732 may be seen to coincide neatly with the notion of "public service," under the
Public Service Act (Commonwealth Act No. 1416, as amended) which at least partially supplements the law on common carriers set forth in the Civil
Code.

It appears to the Court that private respondent is properly characterized as a common carrier even though he merely "back-hauled" goods for other
merchants from Manila to Pangasinan, although such back-hauling was done on a periodic or occasional rather than regular or scheduled manner,
and even though private respondent's principal occupation was not the carriage of goods for others. There is no dispute that private respondent
charged his customers a fee for hauling their goods; that fee frequently fell below commercial freight rates is not relevant here.

A certificate of public convenience is not a requisite for the incurring of liability under the Civil Code provisions governing common carriers. That
liability arises the moment a person or firm acts as a common carrier, without regard to whether or not such carrier has also complied with the
requirements of the applicable regulatory statute and implementing regulations and has been granted a certificate of public convenience or other
franchise.
The law imposes duties and liabilities upon common carriers for the safety and protection of those who utilize their services and the law cannot allow
a common carrier to render such duties and liabilities merely facultative by simply failing to obtain the necessary permits and authorizations.

Issue: Whether Cendana is liable?

Held: No.
Common carriers, "by the nature of their business and for reasons of public policy" 2 are held to a very high degree of care and diligence
("extraordinary diligence") in the carriage of goods as well as of passengers.

Article 1734 establishes the general rule that common carriers are responsible for the loss, destruction or deterioration of the goods which they carry,
"unless the same is due to any of the following causes only:

(1) Flood, storm, earthquake, lightning or other natural disaster or calamity;

(2) Act of the public enemy in war, whether international or civil;
(3) Act or omission of the shipper or owner of the goods;
(4) The character-of the goods or defects in the packing or-in the containers; and
(5) Order or act of competent public authority.

It is important to point out that the above list of causes of loss, destruction or deterioration which exempt the common carrier for responsibility
therefor, is a closed list. Causes falling outside the foregoing list, even if they appear to constitute a species of force majeure fall within the scope of
Article 1735, which provides as follows:

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

Applying the above-quoted Articles 1734 and 1735, we note firstly that the specific cause alleged in the instant case — the hijacking of the carrier's
truck — does not fall within any of the five (5) categories of exempting causes listed in Article 1734. It would follow, therefore, that the hijacking of the
carrier's vehicle must be dealt with under the provisions of Article 1735, in other words, that the private respondent as common carrier is presumed
to have been at fault or to have acted negligently. This presumption, however, may be overthrown by proof of extraordinary diligence on the part of
private respondent.

We do not believe, however, that in the instant case, the standard of extraordinary diligence required private respondent to retain a security guard to
ride with the truck and to engage brigands in a firelight at the risk of his own life and the lives of the driver and his helper.

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

In these circumstances, we hold that the occurrence of the loss must reasonably be regarded as quite beyond the control of the common carrier and
properly regarded as a fortuitous event. It is necessary to recall that even common carriers are not made absolute insurers against all risks of travel
and of transport of goods, and are not held liable for acts or events which cannot be foreseen or are inevitable, provided that they shall have
complied with the rigorous standard of extraordinary diligence.

002 First Philippine Industrial Corporation vs CA and Paterno Tac an

G.R. No. 125948 December 29, 1998

FIRST PHILIPPINE INDUSTRIAL CORPORATION, petitioner,

vs.
COURT OF APPEALS, HONORABLE PATERNO V. TAC-AN, BATANGAS CITY and ADORACION C. ARELLANO, in her official capacity as City
Treasurer of Batangas, respondents.

Petitioner is a grantee of a pipeline concession under Republic Act No. 387, as amended, to contract, install and operate oil pipelines. The original
pipeline concession was granted in 1967 1and renewed by the Energy Regulatory Board in 1992. 2
Sometime in January 1995, petitioner applied for a mayor's permit with the Office of the Mayor of Batangas City. However, before the mayor's permit
could be issued, the respondent City Treasurer required petitioner to pay a local tax based on its gross receipts for the fiscal year 1993 pursuant to
the Local Government Code .

On January 20, 1994, petitioner filed a letter-protest addressed to the respondent City Treasurer. On March 8, 1994, the respondent City Treasurer
denied the protest contending that petitioner cannot be considered engaged in transportation business, thus it cannot claim exemption under Section
133 (j) of the Local Government Code. 5

On June 15, 1994, petitioner filed with the Regional Trial Court of Batangas City a complaint 6 for tax refund with prayer for writ of preliminary
injunction against respondents City of Batangas and Adoracion Arellano in her capacity as City Treasurer.

Traversing the complaint, the respondents argued that petitioner cannot be exempt from taxes under Section 133 (j) of the Local Government Code
as said exemption applies only to "transportation contractors and persons engaged in the transportation by hire and common carriers by air, land and
water." Respondents assert that pipelines are not included in the term "common carrier" which refers solely to ordinary carriers such as trucks, trains,
ships and the like. Respondents further posit that the term "common carrier" under the said code pertains to the mode or manner by which a product
is delivered to its destination. 8

On October 3, 1994, the trial court rendered a decision dismissing the complaint. Petitioner assailed the aforesaid decision before this Court via a
petition for review. On February 27, 1995, we referred the case to the respondent Court of Appeals for consideration and adjudication. 10 On
November 29, 1995, the respondent court rendered a decision 11 affirming the trial court's dismissal of petitioner's complaint. Petitioner's motion for
reconsideration was denied on July 18, 1996. 12

Hence, this petition.

Issue: Whether FIRST PHILIPPINE INDUSTRIAL CORPORATION can be considered as a common carrier therefore exempt under Section 133(j) of
LGC?

Held: Yes.

A "common carrier" may be defined, broadly, as one who holds himself out to the public as engaged in the business of transporting persons or
property from place to place, for compensation, offering his services to the public generally.

Art. 1732 of the Civil Code defines a "common carrier" as "any person, corporation, firm or association engaged in the business of carrying or
transporting passengers or goods or both, by land, water, or air, for compensation, offering their services to the public."

The test for determining whether a party is a common carrier of goods is:

1. He must be engaged in the business of carrying goods for others as a public employment, and must hold himself out as ready to
engage in the transportation of goods for person generally as a business and not as a casual occupation;
2. He must undertake to carry goods of the kind to which his business is confined;
3. He must undertake to carry by the method by which his business is conducted and over his established roads; and
4. The transportation must be for hire. 15

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

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

As correctly pointed out by petitioner, the definition of "common carriers" in the Civil Code makes no distinction as to the means of transporting, as
long as it is by land, water or air. It does not provide that the transportation of the passengers or goods should be by motor vehicle. In fact, in the
United States, oil pipe line operators are considered common carriers. 17

Under the Petroleum Act of the Philippines (Republic Act 387), petitioner is considered a "common carrier." In BIR Ruling No. 069-83, the Bureau of
Internal Revenue likewise considers the petitioner a "common carrier." From the foregoing disquisition, there is no doubt that petitioner is a
"common carrier" and, therefore, exempt from the business tax as provided for in Section 133 (j), of the Local Government Code.
003 Sps Pereña vs Sps Zarate

G.R. No. 157917 August 29, 2012

SPOUSES TEODORO1 and NANETTE PERENA, Petitioners,

vs.
SPOUSES TERESITA PHILIPPINE NICOLAS and L. ZARATE, NATIONAL RAILWAYS, and the COURT OF APPEALS Respondents.

The Pereñas were engaged in the business of transporting students from their respective residences in Parañaque City to Don Bosco in Pasong
Tamo, Makati City, and back. In their business, the Pereñas used a KIA Ceres Van (van) with Plate No. PYA 896, which had the capacity to
transport 14 students at a time, two of whom would be seated in the front beside the driver, and the others in the rear, with six students on either
side. They employed Clemente Alfaro (Alfaro) as driver of the van.

In June 1996, the Zarates contracted the Pereñas to transport Aaron to and from Don Bosco. On August 22, 1996, as on previous school days, the
van picked Aaron up around 6:00 a.m. from the Zarates’ residence. Aaron took his place on the left side of the van near the rear door. The van, with
its air-conditioning unit turned on and the stereo playing loudly, ultimately carried all the 14 student riders on their way to Don Bosco. Considering
that the students were due at Don Bosco by 7:15 a.m., and that they were already running late because of the heavy vehicular traffic on the South
Superhighway, Alfaro took the van to an alternate route at about 6:45 a.m. by traversing the narrow path underneath the Magallanes Interchange
that was then commonly used by Makati-bound vehicles as a short cut into Makati. At the time, the narrow path was marked by piles of construction
materials and parked passenger jeepneys, and the railroad crossing in the narrow path had no railroad warning signs, or watchmen, or other
responsible persons manning the crossing. In fact, the bamboo barandilla was up, leaving the railroad crossing open to traversing motorists.

At about the time the van was to traverse the railroad crossing, PNR Commuter No. 302 (train), operated by Jhonny Alano (Alano), was in the vicinity
of the Magallanes Interchange travelling northbound. As the train neared the railroad crossing, Alfaro drove the van eastward across the railroad
tracks, closely tailing a large passenger bus. His view of the oncoming train was blocked because he overtook the passenger bus on its left side. The
train blew its horn to warn motorists of its approach. When the train was about 50 meters away from the passenger bus and the van, Alano applied
the ordinary brakes of the train. He applied the emergency brakes only when he saw that a collision was imminent. The passenger bus successfully
crossed the railroad tracks, but the van driven by Alfaro did not. The train hit the rear end of the van, and the impact threw nine of the 12 students in
the rear, including Aaron, out of the van. Aaron landed in the path of the train, which dragged his body and severed his head, instantaneously killing
him. Alano fled the scene on board the train, and did not wait for the police investigator to arrive.

Devastated by the early and unexpected death of Aaron, the Zarates commenced this action for damages against Alfaro, the Pereñas, PNR and
Alano. The Pereñas and PNR filed their respective answers, with cross-claims against each other, but Alfaro could not be served with summons.

The Zarates’ claim against the Pereñas was upon breach of the contract of carriage for the safe transport of Aaron; but that against PNR was based
on quasi-delict under Article 2176, Civil Code.

In their defense, the Pereñas adduced evidence to show that they had exercised the diligence of a good father of the family in the selection and
supervision of Alfaro, by making sure that Alfaro had been issued a driver’s license and had not been involved in any vehicular accident prior to the
collision; that their own son had taken the van daily; and that Teodoro Pereña had sometimes accompanied Alfaro in the van’s trips transporting the
students to school.

For its part, PNR tended to show that the proximate cause of the collision had been the reckless crossing of the van whose driver had not first
stopped, looked and listened; and that the narrow path traversed by the van had not been intended to be a railroad crossing for motorists.

On December 3, 1999, the RTC rendered its decision in favor of the Zarates. On June 29, 2000, the RTC denied the Pereñas’ motion for
reconsideration,4 reiterating that the cooperative gross negligence of the Pereñas and PNR had caused the collision that led to the death of Aaron;
and that the damages awarded to the Zarates were not excessive, but based on the established circumstances.

On November 13, 2002, the CA promulgated its decision, affirming the findings of the RTC, but limited the moral damages to P 2,500,000.00; and
deleted the attorney’s fees because the RTC did not state the factual and legal bases. The CA upheld the award for the loss of Aaron’s earning
capacity, taking cognizance of the ruling in Cariaga v. Laguna Tayabas Bus Company and Manila Railroad Company, 7 wherein the Court gave the
heirs of Cariaga a sum representing the loss of the deceased’s earning capacity despite Cariaga being only a medical student at the time of the fatal
incident.
In this appeal, the Pereñas list the following as the errors committed by the CA, to wit:

I. The lower court erred when it upheld the trial court’s decision holding the petitioners jointly and severally liable to pay damages with
Philippine National Railways and dismissing their cross-claim against the latter.

II. The lower court erred in affirming the trial court’s decision awarding damages for loss of earning capacity of a minor who was only a high
school student at the time of his death in the absence of sufficient basis for such an award.

III. The lower court erred in not reducing further the amount of damages awarded, assuming petitioners are liable at all.

Issue 1: Whether the lower court erred when it upheld the trial court’s decision holding the petitioners jointly and severally liable to pay damages with
Philippine National Railways and dismissing their cross-claim against the latter?

Held: No. The lower court did not err when it upheld the trial court’s decision holding the petitioners jointly and severally liable to pay damages with
Philippine National Railways and dismissing their cross-claim against the latter.

Under the circumstances, the Pereñas can be considered as a common carrier.

A carrier is a person or corporation who undertakes to transport or convey goods or persons from one place to another, gratuitously or for hire. The
carrier is classified either as a private/special carrier or as a common/public carrier.10 A private carrier is one who, without making the activity a
vocation, or without holding himself or itself out to the public as ready to act for all who may desire his or its services, undertakes, by special
agreement in a particular instance only, to transport goods or persons from one place to another either gratuitously or for hire.11 The provisions on
ordinary contracts of the Civil Code govern the contract of private carriage.The diligence required of a private carrier is only ordinary, that is, the
diligence of a good father of the family. In contrast, a common carrier is a person, corporation, firm or association engaged in the business of
carrying or transporting passengers or goods or both, by land, water, or air, for compensation, offering such services to the public.12 Contracts of
common carriage are governed by the provisions on common carriers of the Civil Code, the Public Service Act, 13 and other special laws relating to
transportation. A common carrier is required to observe extraordinary diligence, and is presumed to be at fault or to have acted negligently in case of
the loss of the effects of passengers, or the death or injuries to passengers.14

The true test for a common carrier is not the quantity or extent of the business actually transacted, or the number and character of the conveyances
used in the activity, but whether the undertaking is a part of the activity engaged in by the carrier that he has held out to the general public
as his business or occupation. If the undertaking is a single transaction, not a part of the general business or occupation engaged in, as
advertised and held out to the general public, the individual or the entity rendering such service is a private, not a common, carrier. The
question must be determined by the character of the business actually carried on by the carrier, not by any secret intention or mental reservation it
may entertain or assert when charged with the duties and obligations that the law imposes.21

Applying these considerations to the case before us, there is no question that the Pereñas as the operators of a school bus service were: (a)
engaged in transporting passengers generally as a business, not just as a casual occupation; (b) undertaking to carry passengers over established
roads by the method by which the business was conducted; and (c) transporting students for a fee. Despite catering to a limited clientèle, the
Pereñas operated as a common carrier because they held themselves out as a ready transportation indiscriminately to the students of a particular
school living within or near where they operated the service and for a fee.

As a common carrier, the Pereñas is bound to "to observe extraordinary diligence in the vigilance over the goods and for the safety of the
passengers transported by them, according to all the circumstances of each case." 22 Article 1755 of the Civil Code specifies that the common carrier
should "carry the passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with a due
regard for all the circumstances." To successfully fend off liability in an action upon the death or injury to a passenger, the common carrier must
prove his or its observance of that extraordinary diligence; otherwise, the legal presumption that he or it was at fault or acted negligently would
stand.23 No device, whether by stipulation, posting of notices, statements on tickets, or otherwise, may dispense with or lessen the responsibility of
the common carrier as defined under Article 1755 of the Civil Code.

As earlier stated, the Pereñas, acting as a common carrier, were already presumed to be negligent at the time of the accident because death had
occurred to their passenger.25 The presumption of negligence, being a presumption of law, laid the burden of evidence on their shoulders to establish
that they had not been negligent.26 It was the law no less that required them to prove their observance of extraordinary diligence in seeing to the safe
and secure carriage of the passengers to their destination. Until they did so in a credible manner, they stood to be held legally responsible for the
death of Aaron and thus to be held liable for all the natural consequences of such death.

There is no question that the Pereñas did not overturn the presumption of their negligence by credible evidence. Their defense of having observed
the diligence of a good father of a family in the selection and supervision of their driver was not legally sufficient. According to Article 1759 of the Civil
Code, their liability as a common carrier did not cease upon proof that they exercised all the diligence of a good father of a family in the selection and
supervision of their employee.

The Pereñas were liable for the death of Aaron despite the fact that their driver might have acted beyond the scope of his authority or even in
violation of the orders of the common carrier.27 In this connection, the records showed their driver’s actual negligence. Pursuant to the Picart v.
Smith test of negligence, the Pereñas’ driver was entirely negligent when he traversed the railroad tracks at a point not allowed for a motorist’s
crossing despite being fully aware of the grave harm to be thereby caused to his passengers; and when he disregarded the foresight of harm to his
passengers by overtaking the bus on the left side as to leave himself blind to the approach of the oncoming train that he knew was on the opposite
side of the bus.

Issue 2: Was the indemnity for loss ofAaron’s earning capacity proper?

Held: Yes. It is proper.

Our law itself states that the loss of the earning capacity of the deceased shall be the liability of the guilty party in favor of the heirs of the
deceased, and shall in every case be assessed and awarded by the court "unless the deceased on account of permanent physical
disability not caused by the defendant, had no earning capacity at the time of his death."38 Accordingly, we emphatically hold in favor of the
indemnification for Aaron’s loss of earning capacity despite him having been unemployed, because compensation of this nature is awarded not for
loss of time or earnings but for loss of the deceased’s power or ability to earn money.

Issue 3: Were the amounts of damages excessive?

Held: No.

The moral damages of P 2,500,000.00 were really just and reasonable under the established circumstances of this case because they were intended
by the law to assuage the Zarates’ deep mental anguish over their son’s unexpected and violent death, and their moral shock over the senseless
accident. That amount would not be too much, considering that it would help the Zarates obtain the means, diversions or amusements that would
alleviate their suffering for the loss of their child. At any rate, reducing the amount as excessive might prove to be an injustice, given the passage of a
long time from when their mental anguish was inflicted on them on August 22, 1996.

Anent the P 1,000,000.00 allowed as exemplary damages, we should not reduce the amount if only to render effective the desired example for the
public good. As a common carrier, the Pereñas needed to be vigorously reminded to observe their duty to exercise extraordinary diligence to prevent
a similarly senseless accident from happening again. Only by an award of exemplary damages in that amount would suffice to instill in them and
others similarly situated like them the ever-present need for greater and constant vigilance in the conduct of a business imbued with public interest.