BOT Law. In view whereof, Sec.
Drilon, the DOTC, and private respondent re-
1. Francisco Tatad, John Osmena and Rodolfo Biazon, vs. Jesus
Garcia, and EDSA LRT CORPORATION, LTD
GR NO. 114222 April 6, 1995
Quiason, J.,
FACTS:
Petitioners Francisco Tatad, John Osmena, and Rodolfo Biazon are members of
the Philippine Senate and are suing in their capacities as Senators and as
taxpayers. Respondent Jesus Garcia was then Secretary of the DOTC, while
private respondent EDSA LRT CORPORATION, Ltd. is a private corporation
organized under the laws of Hongkong. DOTC planned to construct a light
railway transit line along EDSA, which shall traverse the cities of Pasay, Quezon,
Mandaluyong, and Makati. Then DOTC Secretary Oscar Orbos, acting upon a
proposal to construct the EDSA LRT III on a Build-Operate-Transfer (BOT) basis,
had invited Elijahu Levin from the Eli Levin Enterprises, Inc to send a technical
team to discuss the project with the DOTC.
Subsequently, RA No. 6957 referred to as the Build-Operate-Transfer (BOT) was
signed by then President Corazon Aquino which Act provides for two schemes
for the financing, construction and operation of government projects through
private initiative and investment: BOT or Build-Transfer (BT). In accordance with
the provisions of RA 6957 and to set the EDSA LRT III project underway, the
Prequalification Bids and Awards Committee and the Technical Committee were
formed.
Of the 5 applicants, only the EDSA LRT Consortium “met the requirements of
garnering at least 21 points per criteria, except for Legal aspects, and obtaining
an overall passing mark of at least 82 points.” The Legal aspects referred to
provided that the BOT/BT contractor-applicant meet the requirements specified in
the Constitution and other pertinent laws. Sec. Orbos was appointed Executive
Secretary to the President of the Philippines and was replaced by Nicomedes
Prado. The latter recommended the award of the EDSA LRT III project to the
sole complying bidder, the EDSA LRT Consortium, and requested for authority to
negotiate with the said firm for the contract pursuant to the BOT Law. Authority
was granted to proceed with the negotiations.
DOTC and EDSA LRT Corporation, Ltd., in substitution of the EDSA LRT
Consortium, entered into an “An Agreement to Build, Lease and Transfer a Light
Rail Transit System for EDSA” under the terms of the BOT Law. Secretary
Prado, thereafter, requested presidential approval of the contract. The request
cannot, however, be granted for failure to comply with the requirements of the
negotiated the agreement. Thereafter, the parties entered into a “Revised and
Restated Agreement to Build, Lease and Transfer and Light Rail Transit System
for EDSA. DOTC, represented by Sec. Jesus Garcia, Sec. Prado and private
respondent also entered into a Supplemental Agreement to the April Revised
Agreement so as to clarify their respective rights and responsibilities. The two
agreements were approved by President Fidel Ramos. According to the
agreements, the EDSA LRT III will use light rail vehicles from the Czech and
Slovak Federal Republics.
Petitioners argued that the agreement, as amended by the Supplemental
Agreement, in so far as it grants EDSA LRT CORPORATION, LTD., a foreign
corporation, the ownership of EDSA LRT III, a public utility, violates the
constitution, and hence, is unconstitutional. They contend that the EDSA LRT III
is a public utility, and the ownership and operation thereof is limited by the
Constitution to Filipino citizens and domestic corporations, not foreign
corporations like private respondent.
ISSUE:
Can respondent EDSA LRT Corporation, Ltd., a foreign corporation own EDSA
LRT III; a public utility?
HELD:
YES. What private respondent owns are the rail tracks, rolling stocks like the
coaches, rail stations, terminals and the power plant, not a public utility. While a
franchise is needed to operate these facilities to serve the public, they do not by
themselves constitute a public utility. What constitutes a public utility is not their
ownership but their use to serve the public.
The right to operate a public utility may exist independently and separately from
the ownership of the facilities thereof. One can own said facilities without
operating them as a public utility, or conversely, one may operate a public utility
without owning the facilities used to serve the public. The devotion of property to
serve the public may be done by the owner or by the person in control thereof
who may not necessarily be the owner thereof.
While private respondent is the owner of the facilities necessary to operate the
EDSA LRT III, it admits that it is not enfranchised to operate a public utility as per
requirement of Section 11 of Article XII of the Constitution. In view of this
incapacity, private respondent and DOTC agreed that on the completion date,
the private respondent will immediately deliver possession of the LRT system by
of lease for 25 years, during which period DOTC shall operate the same as a
common carrier and private respondent shall provide technical maintenance and
repair services to DOTC.
Since DOTC shall operate the EDSA LRT III, it shall assume all the obligations
and liabilities of a common carrier. For this purpose, DOTC shall indemnify and
hold harmless private respondent from any losses, damages, injuries or death
which may be claimed in the operation or implementation of the system, except
losses, damages, injury or death due to defects in the EDSA LRT III on account
of the defective condition of equipment or facilities or the defective maintenance
of such equipment facilities.
2. LOADSTAR SHIPPING VS. PIONEER ASIA, GR NO. 157481
Facts:
- June 6, 1984 - Petitioner Loadstar Shipping Co., Inc. (LOADSTAR), registered
owner and operator of the vessel M/V Weasel, entered into a voyage-charter with
Northern Mindanao Transport Company, Inc. for the carriage of 65,000 bags of
cement fromIligan City to Manila. The shipper was Iligan Cement Corporation,
while the consignee in Manila was Market Developers, Inc. (MARKET)
- June 24, 1984 - 67,500 bags of cement were loaded on board M/V Weasel and
stowed in the cargo holds for delivery to the consignee. The shipment was
covered bypetitioner’s Bill of Lading dated June 23, 1984.
- Prior to the voyage, the consignee insured the shipment of cement with
respondentPioneer Asia Insurance Corporation (PIONEER) for P1,400,000, for
which it issuedMarine Open Policy No. MOP-006 dated September 17, 1980,
covering all shipmentsmade on or after September 30, 1980
- June 25, 1984 - Captain Montera of M/V Weasel ordered the vessel to be
forced aground which rendered the entire shipment of cement as good as gone
due to exposure to sea water. LOASTAR thus failed to deliver the goods to
MARKET in manila.
- MARKET demanded from LOADSTAR full reimbursement of the cost of the lost
shipment. LOADSTAR refused to reimburse the MARKET despite repeated
demands.
- March 11, 1985 – PIONEER paid the MARKET P1,400,000 plus an additional
amount ofP500,000, the value of the lost shipment of cement. In return, the
MARKET executed a Loss and Subrogation Receipt in favor of PIONEER
concerning the latter’ssubrogation rights against LOADSTAR.
- October 15, 1986 – PIONEER filed a complaint against LOADSTAR with the
RTCManila alleging that: (1) the M/V Weasel was not seaworthy at the
commencement of the voyage; (2) the weather and sea conditions then
prevailing were usual and expected for that time of the year and as such, was an
ordinary peril of the voyage for which the M/V Weasel should have been normally
able to cope with; and (3)LOADSTAR was negligent in the selection and
supervision of its agents and employees then manning the M/V Weasel.
- LOADSTAR alleged that no fault nor negligence could be attributed to it
because it exercised due diligence to make the ship seaworthy, as well as
properly manned and equipped and failure to deliver was due to force majeure.
- February 15, 1993 - RTC decided in favor of PIONEER and that LOADSTAR ,
as a common carrier, bears the burden of proving that it exercised extraordinary
diligence in its vigilance over the goods it transported. The trial court explained
that in case of loss or destruction of the goods, a statutory presumption arises
that the common carrier was negligent unless it could prove that it had observed
extraordinary diligence. LOADSTAR’S defense of force majeure was found bereft
of factual basis asa PAG-ASA report that at the time of the incident, tropical
storm “Asiang” had moved away from the Philippines was presented.
- October 15, 2002 – CA affirmed RTC Decision with modification
Issues:
1. WON LOADSTAR is a common carrier under Article 1732 CC
2. Assuming it is a common carrier, WON proximate cause of the loss of cargo
was not a fortuitous event but was allegedly due to the failure of petitioner to
exercise extraordinary diligence
Ruling:
1. YES
- A1732 CC defines a “common carrier” as follows: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.
- LOADSTAR is a corporation engaged in the business of transporting cargo by
water and for compensation, offering its services indiscriminately to the public.
Thus,without doubt, it is a common carrier. Even if it entered into a voyage-
charter agreement with Northern Mindanao Transport Company, Inc, it did not in
any way convert the common carrier into a private carrier.
> Planters Products, Inc. v. CA - public carrier shall remain as
such,notwithstanding the charter of the whole or portion of a vessel by one or
more persons, provided the charter is limited to the ship only, as in the case of a
timecharteror voyage-charter. It is only when the charter includes both the vessel
and its crew, as in a bareboat or demise that a common carrier becomes private,
at least insofar as the particular voyage covering the charter-party is concerned.
2. YES
- As a common carrier, LOADSTAR is required to observe extraordinary
diligence in the vigilance over the goods it transports. When the goods placed in
its care are lost,LOADSTAR is presumed to have been at fault or to have acted
negligently. Loadstar has the burden of proving that it observed extraordinary
diligence in order to avoid responsibility for the lost cargo.
- Compania Maritima V CA - It requires common carriers to render service with
the greatest skill and foresight and “to use all reasonable means to ascertain the
nature and characteristics of goods tendered for shipment, and to exercise due
care in the handling and stowage, including such methods as their nature
requires.
- A1734 CC enumerates the instances when a carrier might be exempt from
liability for the loss of the goods.
(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
- LOADSTAR claims that the loss of the goods was due to a fortuitous event
underparagraph 1. Yet, its claim is not substantiated. It is supported by evidence
that theloss of the entire shipment of cement was due to the gross negligence of
LOADSTAR
- Records show that in the evening of June 24, 1984, the sea and weather
conditions in the vicinity of Negros Occidental were calm. The records reveal that
Loadstar took a shortcut route, instead of the usual route, which exposed the
voyage to unexpected hazard. LOADSTAR has only itself to blame for its
misjudgment.
Disposition. Petition is DENIED.
3. Cruz vs. Sun Holidays
622 SCRA 389
Facts:
In 2000 newly weds Ruelito and his wife brought a package tour
contract from Sun Holidays. The tour was scheduled from September 9-
11, 2016 inclusive of transportation to and from the resort. On the last day,
due to heavy rains the day before and heavy winds, the couple along with
other guests trekked to the other side of the beach where they boarded
M/B Coco Beach III. Shortly after the boat sailed, it started to rain and
when the reached the open seas the wind got stronger causing the boat to
tilt from side to side and eventually capsized putting all passengers
underwater. Ruelito and his wife perished from the accident which,
prompted his parents to filed a complaint for damages against Sun
Holidays alleging that the latter failed to observed extraordinary diligence
as common carrier in allowing the boat to sail despite a storm warning.
Sun Holidays denied responsibility claiming that they are not a common
carrier hence they are only required to observe ordinary diligence and the
accident was due to a fortuitous event.
Issue:
W/N Sun Holidays is a common carrier within the ambit of the law
hence liable for damages.
Ruling:
YES. Article 1732 of the Civil Code defining “common carriers” has
deliberately refrained from making distinctions on whether the carrying of
persons or goods is the carrier’s principal business, whether it is offered
on a regular basis, or whether it is offered to the general public. The intent
of the law is thus to not consider such distinctions. Otherwise, there is no
telling how many other distinctions may be concocted by unscrupulous
businessmen engaged in the carrying of persons or goods in order to
avoid the legal obligations and liabilities of common carriers.
The evidence shows that PAGASA issued 24-hour public weather
forecasts and tropical cyclone warnings for shipping on September 10 and
11, 2000 advising of tropical depressions in Northern Luzon, which would
also affect the province of Mindoro. By the testimony of Dr. Frisco Nilo,
supervising weather specialist of PAGASA, squalls are to be expected
under such weather condition.
4. A.F. SANCHEZ BROKERAGE VS. COURT OF APPEALS, GR NO.
147079
Facts:
AF Sanchez is engaged in a broker business wherein its main job is to calculate
customs duty, fees and charges as well as storage fees for the cargoes. Part
also of the services being given by AF Sanchez is the delivery of the shipment to
the consignee upon the instruction of the shipper.
Wyett engaged the services of AF Sanchez where the latter delivered the
shipment to Hizon Laboratories upon instruction of Wyett. Upon inspection, it was
found out that at least 44 cartons containing contraceptives were in bad
condition. Wyett claimed insurance from FGU. FGU exercising its right of
subrogation claims damages against AF Sanchez who delivered the damaged
goods. AF Sanchez contended that it is not a common carrier but a brokerage
firm.
Issue:
Is AF Sanchez a common carrier?
Ruling:
SC held that Art 1732 of the Civil Code in defining common carrier does not
distinguish whether the activity is undertaken as a principal activity or merely as
an ancillary activity. In this case, while it is true that AF Sanchez is principally
engaged as a broker, it cannot be denied from the evidence presented that part
of the services it offers to its customers is the delivery of the goods to their
respective consignees.
Note:
AF Sanchez claimed that the proximate cause of the damage is improper
packing. Under the CC, improper packing of the goods is an exonerating
circumstance. But in this case, the SC held that though the goods were
improperly packed, since AF Sanchez knew of the condition and yet it accepted
the shipment without protest or reservation, the defense is deemed waived.
5. SCHMITZ TRANSPORT AND BROKERAGE VS. TRANSPORT
VENTURE, INC., GR NO. 150255
Facts:
On September 25, 1991, SYTCO Pte Ltd. Singapore shipped from the port of
Ilyichevsk, Russia on board M/V “Alexander Saveliev” 545 hot rolled steel sheets
in coil weighing 6,992,450 metric tons. The cargoes, which were to be
discharged at the port of Manila in favor of the consignee, Little Giant Steel Pipe
Corporation (Little Giant), were insured against all risks with Industrial Insurance
Company Ltd. (Industrial Insurance) under Marine Policy No. M-91-3747-TIS.
The vessel arrived at the port of Manila and the Philippine Ports Authority (PPA)
assigned it a place of berth at the outside breakwater at the Manila South Harbor.
Schmitz Transport, whose services the consignee engaged to secure the
requisite clearances, to receive the cargoes from the shipside, and to deliver
them to its (the consignee’s) warehouse at Cainta, Rizal, in turn engaged the
services of TVI to send a barge and tugboat at shipside. TVI’s tugboat “Lailani”
towed the barge “Erika V” to shipside. The tugboat, after positioning the barge
alongside the vessel, left and returned to the port terminal. Arrastre operator
Ocean Terminal Services Inc. commenced to unload 37 of the 545 coils from the
vessel unto the barge. By 12:30 a.m. of October 27, 1991 during which the
weather condition had become inclement due to an approaching storm, the
unloading unto the barge of the 37 coils was accomplished. No tugboat pulled
the barge back to the pier, however. At around 5:30 a.m. of October 27, 1991,
due to strong waves, the crew of the barge abandoned it and transferred to the
vessel. The barge pitched and rolled with the waves and eventually capsized,
washing the 37 coils into the sea.
Little Giant thus filed a formal claim against Industrial Insurance which paid it the
amount of P5,246,113.11. Little Giant thereupon executed a subrogation receipt
in favor of Industrial Insurance. Industrial Insurance later filed a complaint
against Schmitz Transport, TVI, and Black Sea through its representative
Inchcape (the defendants) before the RTC of Manila, they faulted the defendants
for undertaking the unloading of the cargoes while typhoon signal No. 1 was
raised. The RTC held all the defendants negligent. Defendants Schmitz
Transport and TVI filed a joint motion for reconsideration assailing the finding that
they are common carriers. RTC denied the motion for reconsideration. CA
affirmed the RTC decision in toto, finding that all the defendants were common
carriers — Black Sea and TVI for engaging in the transport of goods and cargoes
over the seas as a regular business and not as an isolated transaction, and
Schmitz Transport for entering into a contract with Little Giant to transport the
cargoes from ship to port for a fee.
Issue:
Whether or not Black Sea and TVI are common carriers
Ruling:
Contrary to petitioner’s insistence, this Court, as did the appellate court, finds that
petitioner is a common carrier. For it undertook to transport the cargoes from the
shipside of “M/V Alexander Saveliev” to the consignee’s warehouse at Cainta,
Rizal. As the appellate court put it, “as long as a person or corporation holds
[itself] to the public for the purpose of transporting goods as [a] business, [it] is
already considered a common carrier regardless if [it] owns the vehicle to be
used or has to hire one.” That petitioner is a common carrier, the testimony of its
own Vice-President and General Manager Noel Aro that part of the services it
offers to its clients as a brokerage firm includes the transportation of cargoes
reflects so.
It is settled that under a given set of facts, a customs broker may be regarded as
a common carrier. Thus, this Court, in A.F. Sanchez Brokerage, Inc. v. The
Honorable Court of Appeals,[44] held:
The appellate court did not err in finding petitioner, a customs broker, to be also a
common carrier, as defined under Article 1732 of the Civil Code, to wit,
Art. 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.
xxx
Article 1732 does not distinguish between one whose principal business activity
is the carrying of goods and one who does such carrying only as an ancillary
activity. The contention, therefore, of petitioner that it is not a common carrier but
a customs broker whose principal function is to prepare the correct customs
declaration and proper shipping documents as required by law is bereft of merit.
It suffices that petitioner undertakes to deliver the goods for pecuniary
consideration.
And in Calvo v. UCPB General Insurance Co. Inc.,[46] this Court held that as the
transportation of goods is an integral part of a customs broker, the customs
broker is also a common carrier. For to declare otherwise “would be to deprive
those with whom [it] contracts the protection which the law affords them
notwithstanding the fact that the obligation to carry goods for [its] customers, is
part and parcel of petitioner’s business.”
6. LEA MER INDUSTRIES VS. MALAYAN INSURANCE CO. INC., GR NO.
161745
Facts:
Ilian Silica Mining entered into a contract of carriage with the petitioner, Lea Mer
Industries Inc. for the shipment of 900 metric tons of silica sand worth P565,000.
The cargo was consigned to Vulcan Industrial and Mining Corporation and was to
be shipped from Palawan to Manila. The silica sand was boarded to Judy VII, the
vessel leased by Lea Mer. However, during the course of its voyage, the vessel
sank which led to the loss of the cargo.
Consequently, the respondent, as the insurer, paid Vulcan the value of the lost
cargo. Malayan Insurance Co., Inc. then collected from the petitioner the amount
it paid to Vulcan as reimbursement and as its exercise on the right of
subrogation. Lea Mer refused to pay which led Malayan to institute a complaint
with the RTC. The RTC dismissed the complaint stating that the loss was due to
a fortuitous event, Typhoon Trining. Petitioner did not know that a typhoon was
coming and that it has been cleared by the Philippine Coast Guard to travel from
Palawan to Manila. The CA reversed the ruling of the trial court for the reason
that said vessel was not seaworthy when it sailed to Manila.
Issue:
Whether or not the petitioner is liable for the loss of the cargo.
Ruling:
CA reversed. 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 — when this service is offered to the public for
compensation. Petitioner is clearly a common carrier, because it offers to the
public its business of transporting goods through its vessels. Thus, the Court
corrects the trial court's finding that petitioner became a private carrier when
Vulcan chartered it. Charter parties are classified as contracts of demise (or
bareboat) and affreightment, which are distinguished as follows:
"Under the demise or bareboat charter of the vessel, the charterer will generally
be considered as owner for the voyage or service stipulated. The charterer mans
the vessel with his own people and becomes, in effect, the owner pro hac vice,
subject to liability to others for damages caused by negligence. To create a
demise, the owner of a vessel must completely and exclusively relinquish
possession, command and navigation thereof to the charterer; anything short of
such a complete transfer is a contract of affreightment (time or voyage charter
party) or not a charter party at all."
The distinction is significant, because a demise or bareboat charter indicates a
business undertaking that is private in character. Consequently, the rights and
obligations of the parties to a contract of private carriage are governed principally
by their stipulations, not by the law on common carriers. The Contract in the
present case was one of affreightment, as shown by the fact that it was
petitioner's crew that manned the tugboat M/V Ayalit and controlled the barge
Judy VII.
Common carriers are bound to observe extraordinary diligence in their vigilance
over the goods and the safety of the passengers they transport, as required by
the nature of their business and for reasons of public policy. Extraordinary
diligence requires rendering service with the greatest skill and foresight to avoid
damage and destruction to the goods entrusted for carriage and delivery.
Common carriers are presumed to have been at fault or to have acted negligently
for loss or damage to the goods that they have transported. This presumption
can be rebutted only by proof that they observed extraordinary diligence, or that
the loss or damage was occasioned by any of the following causes:
"(1) Flood, storm, earthquake, lightning, or other natural disaster or calamity;
"(2) Act of the public enemy in war, whether international or civil;
"(3) Act or omission of the shipper or owner of the goods;
"(4) The character of the goods or defects in the packing or in the containers;
"(5) Order or act of competent public authority."
Jurisprudence defines the elements of a "fortuitous event" as follows: (a) the
cause of the unforeseen and unexpected occurrence, or the failure of the debtors
to comply with their obligations, must have been independent of human will; (b)
the event that constituted the caso fortuito must have been impossible to foresee
or, if foreseeable, impossible to avoid; (c) the occurrence must have been such
as to render it impossible for the debtors to fulfill their obligation in a normal
manner; and (d) the obligor must have been free from any participation in the
aggravation of the resulting injury to the creditor. To excuse the common carrier
fully of any liability, the fortuitous event must have been the proximate and only
cause of the loss. Moreover, it should have exercised due diligence to prevent or
minimize the loss before, during and after the occurrence of the fortuitous event.
As required by the pertinent law, it was not enough for the common carrier to
show that there was an unforeseen or unexpected occurrence. It had to show
that it was free from any fault — a fact it miserably failed to prove.
7. Baliwag Transit vs. CA
(GR 116110, 15 May 1996)
FACTS:
On 31 July 1980, Leticia Garcia, and her 5-year old son, Allan Garcia, boarded
Baliwag Transit Bus 2036 bound for Cabanatuan City driven by Jaime Santiago.
They took the seat behind the driver.
At about 7:30 p.m., in Malimba, Gapan, Nueva Ecija, the bus passengers saw a
cargo truck, owned by A & J Trading, parked at the shoulder of the national
highway. Its left rear portion jutted to the outer lane, as the shoulder of the road
was too narrow to accommodate the whole truck. A kerosene lamp appeared at
the edge of the road obviously to serve as a warning device. The truck driver,
and his helper were then replacing a flat tire.
Bus driver Santiago was driving at an inordinately fast speed and failed to notice
the truck and the kerosene lamp at the edge of the road. Santiago’s passengers
urged him to slow down but he paid them no heed. Santiago even carried
animated conversations with his co-employees while driving. When the danger of
collision became imminent, the bus passengers shouted “Babangga tayo!”.
Santiago stepped on the brake, but it was too late. His bus rammed into the
stalled cargo truck killing him instantly and the truck’s helper, and injury to
several others among them herein respondents.
Thus, a suit was filed against Baliwag Transit, Inc., A & J Trading and Julio
Recontique for damages in the RTC of Bulacan. After trial, it found Baliwag
Transit, Inc. liable for having failed to deliver Garcia and her son to their point of
destination safely in violation of Garcia’s and Baliwag Transit’s contractual
relation; and likewise found A & J and its truck driver liable for failure to provide
its cargo truck with an early warning device in violation of the Motor Vehicle Law.
All were ordered to pay solidarily the Garcia spouses.
On appeal, the CA modified the trial court’s Decision by absolving A & J Trading
from liability.
ISSUE:
Whether or not Baliwag should be held solely liable for the injuries.
HELD:
Yes.
As a common carrier, Baliwag breached its contract of carriage when it failed to
deliver its passengers, Leticia and Allan Garcia to their destination safe and
sound. A common carrier is bound to carry its passengers safely as far as human
care and foresight can provide, using the utmost diligence of a very cautious
person, with due regard for all the circumstances. In a contract of carriage, it is
presumed that the common carrier was at fault or was negligent when a
passenger dies or is injured. Unless the presumption is rebutted, the court need
not even make an express finding of fault or negligence on the part of the
common carrier. This statutory presumption may only be overcome by evidence
that the carrier exercised extraordinary diligence as prescribed in Articles 1733
and 1755 of the Civil Code.
Article 1759 of the Civil Code provides that “Common carriers are liable for the
death of or injuries to passengers through the negligence or willfull acts of the
former’s employees, although such employees may have acted beyond the
scope of their authority or in violation of the orders of the common carriers. This
liability of the common carriers do not cease upon proof that they exercised all
the diligence of a good father of a family in the selection or supervision of their
employees.”
Section 34 (g) of the Land Transportation and Traffic Code provides “Lights and
reflector when parked or disabled. — Appropriate parking lights or flares visible
one hundred meters away shall be displayed at the corner of the vehicle
whenever such vehicle is parked on highways or in places that are not well-
lighted or, is placed in such manner as to endanger passing traffic. Furthermore,
every motor vehicle shall be provided at all times with built-in reflectors or other
similar warning devices either pasted, painted or attached at its front and back
which shall likewise be visible at night at least one hundred meters away. No
vehicle not provided with any of the requirements mentioned in this subsection
shall be registered. ”
x x x However, the evidence shows that Recontique and Ecala placed a
kerosene lamp or torch at the edge of the road, near the rear portion of the truck
to serve as an early warning device. This substantially complies with Section 34
(g) of the Land Transportation and Traffic Code. The law clearly allows the use
not only of an early warning device of the triangular reflectorized plates variety
but also parking lights or flares visible 100 meters away. Indeed, Col. dela Cruz
himself admitted that a kerosene lamp is an acceptable substitute for the
reflectorized plates. No negligence, therefore, may be imputed to A & J Trading
and its driver, Recontique.
The Supreme Court affirmed the Decision of the Court of Appeals (CA-GR CV-
31246) with the modification reducing the actual damages for hospitalization and
medical fees to P5,017.74; without costs.
8. CARAVAN TRAVEL v. ERMILINDA R. ABEJAR, GR No. 170631, 2016-
02-10
Facts:
On July 13, 2000, Jesmariane R. Reyes (Reyes) was walking along the west-
bound lane of Sampaguita Street, United Parañaque Subdivision IV, Parañaque
City.[11] A Mitsubishi L-300 van with plate number PKM 195[12] was travelling
along the east-bound lane, opposite Reyes.[13] To avoid an incoming vehicle,
the van swerved to its left and hit Reyes.[14] Alex Espinosa (Espinosa), a
witness to the accident, went to her aid and loaded her in the back of the van.[15]
Espinosa told the driver of the van, Jimmy Bautista (Bautista), to bring Reyes to
the hospital.[16] Instead of doing so, Bautista appeared to have left the van
parked inside a nearby subdivision with Reyes still in the van.[17] Fortunately for
Reyes, an unidentified civilian came to help and drove Reyes to the hospital.[18]
Upon investigation, it was found that the registered owner of the van was
Caravan.[19] Caravan is a corporation engaged in the business of organizing
travels and tours.[20] Bautista was Caravan's employee assigned to drive the
van as its service driver.[21]
Caravan shouldered the hospitalization expenses of Reyes.[22] Despite medical
attendance, Reyes died two (2) days after the accident.[23]
Issues:
First, whether respondent Ermilinda R. Abejar is a real party in interest who may
bring an action for damages against petitioner Caravan Travel and Tours
International, Inc. on account of Jesmariane R. Reyes' death
Second, whether petitioner should be held liable as an employer, pursuant to
Article 2180 of the Civil Code.
Ruling:
IHaving exercised substitute parental authority, respondent suffered actual loss
and is, thus, a real party in interest in this case.
It is particularly noticeable that Article 1902 stresses the passive subject of the
obligation to pay damages caused by his fault or negligence. The article does not
limit or specify the active subjects, much less the relation that must exist between
the victim of the culpa aquiliana and the person who may recover damages, thus
warranting the inference that, in principle, anybody who suffers any damage from
culpa aquiliana, whether a relative or not of the victim, may recover damages
from the person responsible therefor
II
Respondent's Complaint is anchored on an employer's liability for quasi-delict
provided in Article 2180, in relation to Article 2176 of the Civil Code.
Employers shall be liable for the damages caused by their employees and
household helpers acting within the scope of their assigned tasks, even though
the former are not engaged in any business or industry.
The resolution of this case must consider two (2) rules. First, Article 2180's
specification that "[e]mployers shall be liable for the damages caused by their
employees . . . acting within the scope of their assigned tasks[.]
Second, the operation of the registered-owner rule that registered owners are
liable for death or injuries caused by the operation of their vehicles.
These rules appear to be in conflict when it comes to cases in which the
employer is also the registered owner of a vehicle. Article 2180 requires proof of
two things: first, an employment relationship between the driver and the owner;
and second, that the driver acted within the scope of his or her assigned tasks.
On the other hand, applying the registered-owner rule only requires the plaintiff to
prove that the defendant-employer is the registered owner of the vehicle.
Thus, it is imperative to apply the registered-owner rule in a manner that
harmonizes it with Articles 2176 and 2180 of the Civil Code.
In light of this, the words used in Del Carmen are particularly notable. There, this
court stated that Article 2180 "should defer to"[104] the registered-owner rule. It
never stated that Article 2180 should be totally abandoned.
Therefore, the appropriate approach is that in cases where both the registered-
owner rule and Article 2180 apply, the plaintiff must first establish that the
employer is the registered owner of the vehicle in question. Once the plaintiff
successfully proves ownership, there arises a disputable presumption that the
requirements of Article 2180 have been proven. As a consequence, the burden
of proof shifts to the defendant to show that no liability under Article 2180 has
arisen.
This disputable presumption, insofar as the registered owner of the vehicle in
relation to the actual driver is concerned, recognizes that between the owner and
the victim, it is the former that should carry the costs of moving forward with the
evidence.
The registration of the vehicle, on the other hand, is accessible to the public.
Here, respondent presented a copy of the Certificate of Registration[105] of the
van that hit Reyes.[106] The Certificate attests to petitioner's ownership of the
van.
Petitioner itself did not dispute its ownership of the van.
Consistent with the rule we have just stated, a presumption that the requirements
of Article 2180 have been satisfied arises.
It is now up to petitioner to establish that it incurred no liability under Article 2180.
This it can do by presenting proof of any of the following: first, that it had no
employment relationship with Bautista; second, that Bautista acted outside the
scope of his assigned tasks; or third, that it exercised the diligence of a good
father of a family in the selection and supervision of Bautista.
On the first, petitioner admitted that Bautista was its employee at the time of the
accident.
On the second, petitioner was unable to prove that Bautista was not acting within
the scope of his assigned tasks at the time of the accident.
On the third, petitioner likewise failed to prove that it exercised the requisite
diligence in the selection and supervision of Bautista.
Employing a person holding a non-professional driver's license to operate
another's motor vehicle violates Section 24 of the Land Transportation and Traffic
Code
Evidently, petitioner did not only fail to exercise due diligence when it selected
Bautista as service driver; it also committed an actual violation of law.
III
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.
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 Bautista, should have been dropped, petitioner (as a co-defendant insisting
that the action must proceed with Bautista as party) could have opted to file a
cross-claim against Bautista as its remedy.
IV
The Court of Appeals committed no reversible error when it awarded actual
damages to respondent.
Respondent had personal knowledge of the facts sought to be proved by the
Certificate, i.e. that she spent P35,000.00 for the funeral expenses of Reyes.
Thus, the Certificate that she identified and testified to is not hearsay.
Both the Court of Appeals and the Regional Trial Court found Bautista grossly
negligent in driving the van and concluded that Bautista's gross negligence was
the proximate cause of Reyes' death.
As such, petitioner must pay the exemplary damages arising from the negligence
of its driver.
For the same reasons, the award of P50,000.00 by way of civil indemnity is
justified.
WHEREFORE, the Decision of the Court of Appeals dated October 3, 2005 is
AFFIRMED with the following MODIFICATIONS
Principles:
These rules appear to be in conflict when it comes to cases in which the
employer is also the registered owner of a vehicle. Article 2180 requires proof of
two things: first, an employment relationship between the driver and the owner;
and second, that the driver acted within the scope of his or her assigned tasks.
On the other hand, applying the registered-owner rule only requires the plaintiff to
prove that the defendant-employer is the registered owner of the vehicle.
Therefore, the appropriate approach is that in cases where both the registered-
owner rule and Article 2180 apply, the plaintiff must first establish that the
employer is the registered owner of the vehicle in question. Once the plaintiff
successfully proves ownership, there arises a disputable presumption that the
requirements of Article 2180 have been proven. As a consequence, the burden
of proof shifts to the defendant to show that no liability under Article 2180 has
arisen.
This disputable presumption, insofar as the registered owner of the vehicle in
relation to the actual driver is concerned, recognizes that between the owner and
the victim, it is the former that should carry the costs of moving forward with the
evidence.
The victim is, in many cases, a hapless pedestrian or motorist with hardly any
means to uncover the employment relationship of the owner and the driver, or
any act that the owner may have done in relation to that employment.
9. DELSAN TRANSPORT LINES, INC vs. AMERICAN
HOME ASSURANCE CORPORATION
G.R. No. 149019, August 15, 2006
FACTS:
Delsan is a domestic corporation which owns and operates the vessel MT
Larusan. On the other hand, respondent American Home Assurance Corporation
(AHAC for brevity) is a foreign insurance company duly. It is engaged, among
others, in insuring cargoes for transportation within the Philippines.
Unloading operations commenced, discharging of the diesel oil. The discharging
had to be stopped on account of the discovery that the port bow mooring of the
vessel was intentionally cut or stolen by unknown persons. Because there was
nothing holding it, the vessel drifted westward, ultimately caused the diesel oil to
spill into the sea.
As a result of spillage and backflow of diesel oil, Caltex sought recovery of the
loss from Delsan, but the latter refused to pay. As insurer, AHAC paid Caltex.
AHAC, as Caltex’s subrogee, instituted Civil Case against Delsan caused by the
spillage. It likewise prayed that it be indemnified for damages suffered.
Delsan insists that the rule on contributory negligence against Caltex, the
shipper-owner of the cargo, and thediesel oil was already completely delivered to
Caltex.
ISSUE:
W.O.N. Delsan is liable based on Article 1734 of the NCC and W.O.N. the rule on
contributory negligence should be applied against Caltex.
HELD:
Petition is DENIED. CA is affirmed.
Art. 1734. Common carriers are responsible for the loss, destruction, or
deterioration of the goods, unless the same is due to any of the following causes
only:
1) Flood storm, earthquake, lightning, or other natural disaster or calamity;
2) Act of the public enemy in war, whether international or civil;
3) Act or omission of the shipper or owner of the goods;
4) The character of the goods or defects in the packing or in the containers;
5) Order or act of competent public authority.
Delsan failed to prove its claim that there was a contributory negligence on the
part of the owner of the goods – Caltex. Dlesan, as the owner of the vessel, was
obliged to prove that the loss was caused by one of the excepted causes if it
were to seek exemption from responsibility. Unfortunately, it miserably failed to
discharge this burden by the required quantum of proof.
Delsan’s argument that it should not be held liable for the loss of diesel oil due to
backflow because the same had already been actually and legally delivered to
Caltex at the time it entered the shore tank holds no water. It had been settled
that the subject cargo was
still in the custody of Delsan because the discharging thereof has not yet been
finished.
10. Japan Airlines V. Asuncion (G.R No. 161730, January 28,2005) 449
SCRA 544
FACTS:
This petition for review seeks to reverse and set aside the October 9, 2002
decision of the Court of Appeals and its January 12, 2004 resolution, which
affirmed in toto the June 10, 1997 decision of the Regional Trial Court of Makati
City, Branch 61 in Civil Case No. 92-3635.
On March 27, 1992, respondents Michael and Jeanette Asuncion left Manila on
board Japan Airlines’ (JAL) Flight 742 bound for Los Angeles. Their itinerary
included a stop-over in Narita and an overnight stay at Hotel Nikko Narita. Upon
arrival at Narita, Mrs. Noriko Etou-Higuchi of JAL endorsed their applications for
shore pass and directed them to the Japanese immigration official. A shore pass
is required of a foreigner aboard a vessel or aircraft who desires to stay in the
neighborhood of the port of call for not more than 72 hours.
During their interview, the Japanese immigration official noted that Michael
appeared shorter than his height as indicated in his passport. Because of this
inconsistency, respondents were denied shore pass entries and were brought
instead to the Narita Airport Rest House where they were billeted overnight.
Mr. Atsushi Takemoto of the International Service Center (ISC), the agency
tasked by Japan’s Immigration Department to handle passengers who were
denied shore pass entries, brought respondents to the Narita Airport Rest House
where they stayed overnight until their departure the following day for Los
Angeles. Respondents were charged US$400.00 each for their accommodation,
security service and meals.
On December 12, 1992, respondents filed a complaint for damages claiming that
JAL did not fully apprise them of their travel requirements and that they were
rudely and forcibly detained at Narita Airport.
Issue: Whether or not JAL is liable of breach of contract of carriage.
Side Issues:
· Whether or not JAL is liable for moral, exemplary damages,
· Whether or not the plaintiff is liable for attorney’s fee and cost of suit incurred
(JAL counterclaim)
Ruling:
The court finds that JAL did not breach its contract of carriage with respondents.
It may be true that JAL has the duty to inspect whether its passengers have the
necessary travel documents, however, such duty does not extend to checking
the veracity of every entry in these documents. JAL could not vouch for the
authenticity of a passport and the correctness of the entries therein. The power to
admit or not an alien into the country is a sovereign act which cannot be
interfered with even by JAL. This is not within the ambit of the contract of
carriage entered into by JAL and herein respondents. As such, JAL should not be
faulted for the denial of respondents’ shore pass applications.
In the Respondents claim that petitioner breached its contract of carriage when it
failed to explain to the immigration authorities that they had overnight vouchers at
the Hotel Nikko Narita. They imputed that JAL did not exhaust all means to
prevent the denial of their shore pass entry applications. JAL or any of its
representatives have no authority to interfere with or influence the immigration
authorities. The most that could be expected of JAL is to endorse respondents’
applications, which Mrs. Higuchi did immediately upon their arrival in Narita.
Moral damages may be recovered in cases where one willfully causes injury to
property, or in cases of breach of contract where the other party acts fraudulently
or in bad faith. Exemplary damages are imposed by way of example or correction
for the public good, when the party to a contract acts in wanton, fraudulent,
oppressive or malevolent manner. Attorney’s fees are allowed when exemplary
damages are awarded and when the party to a suit is compelled to incur
expenses to protect his interest.[17] There being no breach of contract nor proof
that JAL acted in wanton, fraudulent or malevolent manner, there is no basis for
the award of any form of damages.
Neither should JAL be held liable to reimburse respondents the amount of
US$800.00. It has been sufficiently proven that the amount pertained to ISC, an
agency separate and distinct from JAL, in payment for the accommodations
provided to respondents. The payments did not in any manner accrue to the
benefit of JAL.
However, we find that the Court of Appeals correctly dismissed JAL’s
counterclaim for litigation expenses, exemplary damages and attorney’s fees.
The action was filed by respondents in utmost good faith and not manifestly
frivolous. Respondents honestly believed that JAL breached its contract. A
person’s right to litigate should not be penalized by holding him liable for
damages. This is especially true when the filing of the case is to enforce what he
believes to be his rightful claim against another although found to be erroneous.[
WHEREFORE, in view of the foregoing, the instant petition is PARTLY
GRANTED. The October 9, 2002 decision of the Court of Appeals and its
January 12, 2004 resolution in CA-G.R. CV No. 57440, are REVERSED and SET
ASIDE insofar as the finding of breach on the part of petitioner and the award of
damages, attorney’s fees and costs of the suit in favor of respondents is
concerned. Accordingly, there being no breach of contract on the part of
petitioner, the award of actual, moral and exemplary damages, as well as
attorney’s fees and costs of the suit in favor of respondents Michael and Jeanette
Asuncion, is DELETED for lack of basis. However, the dismissal for lack of merit
of petitioner’s counterclaim for litigation expenses, exemplary damages and
attorney’s fees, is SUSTAINED. No pronouncement as to costs.
11. FGU Insurance Corp. v. CA
Facts:
On April 21, 1987, a car owned by private respondent FILCAR Transport Inc.,
rented to and driven by Dahl-Jensen, a Danish tourist, swerved into the right and
hit the car owned by Lydia Soriano and driven by Benjamin Jacildone. Dahl-
Jensen did not possess a Philippine driver’s license. Petitioner, as the insurer of
Soriano’s car, paid the latter P25,382.20 and, by way of subrogation, sued
FILCAR, Dahl-Jensen, and Fortune Insurance Corporation, FILCAR’s insurer, for
quasi-delict. The trial court dismissed the petition for failure to substantiate the
claim for subrogation. The Court of Appeals affirmed the decision, but on the
ground that only Dahl-Jensen’s negligence was proven, not that of FILCAR.
Hence, this instant petition.
Issues:
(1) Whether an action based on quasi-delict will prosper against a rent-a-car
company and, consequently, its insurer for fault or negligence of the car lessee in
driving the rented vehicle
(2) Whether the ruling in MYC-Agro-Industrial Corporation v. Vda. de Caldo is
applicable in the case at bar
Held:
(1) We find no reversible error committed by respondent court in upholding the
dismissal of petitioner's complaint. The pertinent provision is Art. 2176 of the Civil
Code which states: "Whoever by act or omission causes damage to another,
there being fault or negligence, is obliged to pay for the damage done. Such fault
or negligence, if there is no pre-existing contractual relation between the parties,
is called a quasi-delict . . . . ". To sustain a claim based thereon, the following
requisites must concur: (a) damage suffered by the plaintiff; (b) fault or
negligence of the defendant; and, (c) connection of cause and effect between the
fault or negligence of the defendant and the damage incurred by the plaintiff. We
agree with respondent court that petitioner failed to prove the existence of the
second requisite, i.e., fault or negligence of defendant FILCAR, because only the
fault or negligence of Dahl-Jensen was sufficiently established, not that of
FILCAR. It should be noted that the damage caused on the vehicle of Soriano
was brought about by the circumstance that Dahl-Jensen swerved to the right
while the vehicle that he was driving was at the center lane. It is plain that the
negligence was solely attributable to Dahl-Jensen thus making the damage
suffered by the other vehicle his personal liability. Respondent FILCAR did not
have any participation therein. Respondent FILCAR being engaged in a rent-a-
car business was only the owner of the car leased to Dahl-Jensen. As such,
there was no vinculum juris between them as employer and employee.
Respondent FILCAR cannot in any way be responsible for the negligent act of
Dahl-Jensen, the former not being an employer of the latter.

(2) Petitioner's insistence on MYC-Agro-Industrial Corporation is rooted in a

misapprehension of our ruling therein. In that case, the negligent and reckless
operation of the truck owned by petitioner corporation caused injuries to several
persons and damage to property. Intending to exculpate itself from liability, the
corporation raised the defense that at the time of the collision it had no more
control over the vehicle as it was leased to another; and, that the driver was not
its employee but of the lessee. The trial court was not persuaded as it found that
the true nature of the alleged lease contract was nothing more than a disguise
effected by the corporation to relieve itself of the burdens and responsibilities of
an employer. We upheld this finding and affirmed the declaration of joint and
several liability of the corporation with its driver.