Transportation Law

8. OPTIONAL: You can provide a simple list of the other

issues discussed by the SC in case someone’s interested to
read the full text.
Thursday 5:30 to 7:30pm, Atty. Fe Bangoy
Case Digest Pool Members:
1. Eunice
Guidelines for Digests. Each digest must at least contain the 2. Kaye L.
3. Dave
following:
4. Gretchen
1. Deadline: Every wednesday evening, or before thursday 5. Vina
6. Vienna
afternoon. 7. Terry
2. Format: Use Arial, Size 10, Single spacing. Start each 8. Kareen

digest on the next page. The format of this document uses For more details on the topic, please refer to the syllabus. Thank s!
two columns. Font size of additional notes may be adjusted.
1. Definitions and Concept
3. Citation. Case name, GR No., Date. 1.1. Baliwag Transit Corporation v CA 169 SCRA 849, GR 80447
4. Doctrine/Topic. Just a short summary on the main point of 1.2. Everett Steaming Corp v CA et al GR 122494 EUNICE
1.3. MOF Co. Inc v. Shin Yang Brokerage Corp GR 172822
the case or the issue resolved. 1.4. Korean Airlines Col LTD v. CA GR 114061 KAYE L.
1.5. British Airways v. CA, 218 SCRA 699
5. Relevant Facts only. Do not focus on the
1.6. Mauro Ganzon v. CA 161 SCRA 646 DAVE
remedial/procedural issues. Petitioner’s contentions and 1.7. Dangwa Transportation Inc. v CA GR 95582
1.8. Jesusa vda De Nueca v. Manila Railroad company GR
arguments + legal basis. 31731 GRETCHEN
6. Relevant Issues only. No remedial/procedural issues
2. Carrier (Tests)
unless somehow related with Transportation Laws. 2.1. LRT v. Navidad, GR 145804
7. Ruling. Provide a legal basis. Cite the article cited by the 2.2. De Guzman v. CA, 168 SCRA 612 (include the requisite
certificate of public convenience) VINA
Supreme Court, or the previous jurisprudence. You may 2.3. First Philippine Industrial Corp v. CA, 300 SCRA 66
2.4. National Steel Corp v. CA, 283 SCRA 45, 61 (include
underline/bold it if you want to emphasize it.
discussion on a contract of private carriage) VIENNA
2.5. Bascos v. CA, 221 SCRA 318
2.6. Spouses Cruz v. Sun Holidays, GR 183612 TERRY
 2.7. Westwind Shipping Corp v. UCPB General Insurance GR 7. Nature of Business
Nos, 20089, 200314 7.1. Fisher v. Yangco Steamship Co, GR 8095 EUNICE
2.8. VIrgines Calvo v. UCPB, GR 148496 KAREEN 7.2. KMU Labor Center v Hon. Jesus Garcia, 239 SCRA 386
3. Carrier (Characteristics) 7.3. Spouses Cruz v. Sun Holidays, GR 183612 KAYE L.
3.1. Philippine American General Insurance v. VPKS Shipping
Co, GR 149038 8. Registered Owner Rule
3.2. Asia Literage and Shipping Inc v. CA, GR 147246 EUNICE 8.1. Gaudioso Erezo v. Aguedo Jepte, GR L-9605
3.3. Luzon Stevedoring v. Public Service Commission, 16 SCRA 8.2. Equitable Leasing Corp v. Suyon, GR 143360 DAVE
612 8.3. BA Finance v. CA, 215 SCRA 715
3.4. First Philippine Industrial Corp v. CA 300 SCRA 661 KAYE 8.4. Duavit v. CA, 173 SCRA 490, 496 GRETCHEN
L. 9. Kabit System
3.5. Caltex Phils v. Sulpicio Lines, 315 SCRA 709 9.1. Abelardo v. CA, GR 125817
3.6. Coastwise Literrage v. CA, 24 SCRA 797 DAVE 9.2. Lita Enterprises v. IAC, 129 SCRA 79 KAREEN
3.7. Planters Products Inc. v CA, 226 SCRA 476 9.3. Teja Marketing v. IAC, 148 SCRA 347 TERRY
10. Duty to Deliver the Goods
4. Distinguish from private carrier 10.1. Saludo v. CA 207 SCRA 499, 526 VINA
4.1. Luzon Brokerage v. Public Service Commission GR L-5458 10.2. Maersk Line v. CA 222 SCRA 108 VIENNA
GRETCHEN 11. Consequences of Delay
4.2. Fabre v. CA, GR 111127 11.1. Magellan Mktg v. CA 201 SCRA 102, 123 EUNICE
4.3. Crisostomo v. CA, GR 138334 VINA 11.2. Trans-asia Shipping Lines v. CA, et al KAYE
4.4. Delgado Bro Inc. v Home Insurance Inc, 1 SCRA 854 12. Presumption of Negligence
4.5. Cebu Arrastre Services v. CIR, GR No. L-7444 VIENNA 12.1. Belgian Overseas Chartering and Shipping v. Phil FirstIns
Co. GR 143133 DAVE
5. Governing Laws 13. Defenses of Common Carriers
5.1. Eastern Shipping Lines Inc. v the Nisshin Fire and Marine 13.1. Calalas v. CA, GR No 1220036 GRETCHEN
Insurance Co, 150 SCRA 465, 603 13.2. Necesito v. Paras GR No. L-10605 TERRY
5.2. National Development Co v. CA, 164 SCRA 593 TERRY Fortuitous Eventsl
5.3. Alitalia v. IAC, 192 SCRA 9 13.3. Lasam v. Smith GR No 19495 KAREEN
13.4. Asia Lighterage and Shipping Inc. v CA VINA
6. Carriage from Philippine Ports to Foreign ports 13.5. Philam Gen. Insurance Co v. PKS Shipping Co GR 147246
6.1. NDC v. CA,164 SCRA 593 KAREEN VIENNA
6.2. Alitalia v. IAC, 192 SCRA 9 Participation of the Carrier
13.6. Tan Chiong Sian v. Inchausti GR 6092 EUNICE
Fire
13.7. Edgar Cakaliong Shipping Lines Inc. v. UCPB General
Midterm Cases Insurance Co GR 146018 KAYE
 Mechanical Defects
13.8. Son v. Cebu Autobus Co 94 Phil 892 (1954) DAVE
13.9. Vergara v. CA (1987) GRETCHEN
13.10. Coca-Cola Bottlers Phil v. CA TERRY
Other invalid defenses
13.11. Southern Lines Inc v. CA GR L-16629 KAREEN

Definition and Concept: (Digested by Eunice)
● Baliwag Transit v. CA,169 SCRA 849, GR 80447
● Everett Steaming Corp v CA et al GR 122494
G.R. No. 80447. January 31, 1989
acquits and forever discharges Fortune Insurance and Baliwag Transit for any
liability accrued or to accrue in connection with the cause of action which he
has for personal injuries, damage to property etc. George’s parents contend
that George is a student, living with his parents and totally dependent on
them for support. Thus, the Release of Claims signed by George has no legal
effect.

BALIWAG TRANSIT, INC. petitioner,

Issue: Whether the “Release of Claims” signed by George has the effect of
vs.
dismissing the case
HON. COURT OF APPEALS and SPS. SOTERO CAILIPAN, JR. and
ZENAIDA LOPEZ and GEORGE L. CAILIPAN, respondents.
Held: Yes. the release of claims executed by the injured party discharging the
insurance and transportation companies from any and all liability is valid.
Doctrine:
● The real parties in interest in a contract of carriage are the parties to The contract of carriage was actually between George, as the paying
the contract itself; In the absence of any contract of carriage between
passenger, and Baliwag Transit, as the common carrier. As a common
the transportation company and the parents of the injured party, the
carrier, Baliwag was bound to carry its passengers safely as far as human
parents are not real parties in interest in an action for breach of that
care and foresight could provide, and is liable for injuries to such passengers
contract.
through the negligence or willful acts of its employees (Articles 1755 and
● Since the suit is one for breach of contract of carriage, the release of
1759, Civil Code). Thus, George had the right to be safely brought to his
claims executed by the injured party discharging the insurance and
destination and Baliwag had the correlative obligation to do so.
transportation companies from any and all liability is valid especially
when the injured party has the capacity to do acts with legal effects.
Since a contract may be violated only by the parties thereto, as against each
other, in an action upon that contract, the real parties in interest must be
Facts:
parties to said contract. In the absence of any contract of carriage between
On December 1984, George Calilipan was thrown off a bus driven in a
Baliwag and George’s parents, the latter are not real parties-in-interest in an
careless and negligent manner by Leonardo Cruz, the authorized driver of the
action for breach of that contract.
bus owned by Baliwag Transit. Due to this, George suffered multiple serious
physical injuries and was confined in the hospital.
Therefore, the release of claims executed by the injured party discharging the
insurance and transportation company from any and all liability is valid
Baliwag Transit alleged that the injuries suffered by George are due to his
especially when the injured party has the capacity to do acts with legal
own voluntary act when he, without warning and provocation, suddenly stood
effects.
up from his seat and headed for the door of the bus as if in a daze, opened it
and jumped off while said bus was in motion, despite the protests by the
driver and without the knowledge of the conductor.

During the pendency of the case, George signed a Release of Claims in favor
of Baliwag Transit which stated that for a consideration of P8,020.50, he
G.R. No. 122494. October 8, 1998 Held:
(1) Yes. A stipulation in the bill of lading limiting the common carrier’s
EVERETT STEAMSHIP CORPORATION, petitioner, liability for loss or destruction of a cargo to a certain sum, unless the shipper
vs. or owner declares a greater value, is sanctioned by law, particularly Articles
COURT OF APPEALS and HERNANDEZ TRADING CO., INC., 1749 and 1750 of the Civil Code which provide:
respondents. “ART. 1749. A stipulation that the common carrier’s liab ility is limited to the value of
the goods appearing in the b ill of lading, unless the shipper or owner declares a
Doctrine: greater value, is b inding.”
“ART. 1750. A contract fixing the sum that may b e recovered b y the owner or ship p e r
● A stipulation in the bill of lading limiting the common carrier’s liability
for the loss, destruction, or deterioration of the goods is valid, if it is reasonab le and
for loss or destruction of goods is valid and binding if it is reasonable
just under the circumstances, and has b een freely and fairly agreed upon.”
and just under the circumstances and has been freely and fairly
agreed upon. In this case, it was provided that the carrier made it clear in the bill of lading
● A contract of adhesion is one in which one of the contracting parties that its liability would only be up to One Hundred Thousand (¥100,000.00)
imposes a ready-made form of contract which the other party may Yen. However, the shipper, Maruman Trading, had the option to declare a
accept or reject, but cannot modify. higher valuation if the value of its cargo was higher than the limited liability of
Facts: the carrier. Considering that the shipper did not declare a higher valuation, it
Hernandez Trading Co., Inc imported three crates of bus spare parts marked had itself to blame for not complying with the stipulations.
as MARCO C/No. 12, 13 and 14, from its supplier, Maruman Trading
Company, Ltd. - a foreign corporation based in Japan. The crates were A contract of adhesion is one in which one of the contracting parties imposes
shipped from Nagoya, Japan to Manila on board “ADELFAEVERETTE,” a a ready-made form of contract which the other party may accept or reject, but
vessel owned by Everett Steamship’s principal, Everett Orient Lines. The said cannot modify. These contracts are not invalid per se and in numerous cases
crates were covered by Bill of Lading No. NGO53MN. their binding effects had been upheld.

Upon arrival its arrival at Manila, it was discovered that the crate marked (2) Yes. In Sea-Land Service, Inc. vs. IAC, the Supreme Court held that
MARCO C/No. 14 was missing. Hernandez Trading made a formal claim for even if the consignee was not a signatory to the contract of carriage between
the value of the lost cargo amounting to One Million Five Hundred Fifty Two the shipper and the carrier, the consignee can still be bound by the contract.
Thousand Five Hundred (¥1,552,500.00) Yen – the amount shown in the Moreover, when Hernadez Trading formally claimed reimbursement for the
invoice. However, Everett Steamship only offered to pay only One Hundred missing goods from Everett Steamship and subsequently filed a case against
Thousand (¥100,000.00) Yen, which was the maximum amount stipulated in the latter based on the very same bill of lading, it had accepted the provisions
the bill of lading which limits the liability of Everett Steamship. of the contract and thereby made itself a party thereto, or at least has come to
court to enforce it. Thus, Hernandez Trading cannot now reject or disregard
Issue: the carrier’s limited liability stipulation in the bill of lading. They are bound by
(1) Whether the limited liability clause in the bill of lading is valid the whole stipulations in the bill of lading and must respect the same.
(2) Whether Hernandez Trading, who is not a signatory to the bill of
lading is bound by the stipulations thereof

Definition and Concept: (Digested by Kaye L.)
● MOF Co. Inc v. Shin Yang Brokerage Corp GR 172822
● Korean Airlines Col LTD v. CA GR 114061
G.R. NO. 172822 : December18, 2009
MOF COMPANY, INC., Petitioner,
v.
SHIN YANG BROKERAGE CORPORATION Respondent.
Doctrine:
A consignee, although not a signatory of the contract of carriage
between the shipper and the carrier, becomes a party to the contract by
reason either (a) the relationship of agency between the consignee and the
shipper/consignor; b) the unequivocal acceptance of the bill of lading
delivered to the consignee, with full knowledge of its contents or c) availment
of the stipulated pur autrui.
Facts:
On October 25, 2001, Halla Trading Co., a company based in Korea,
shipped to Manila secondhand cars and other articles on board the vessel
Hanjin Busan. The bill of lading covering the shipment, which was prepared
by the carrier Hanjin Shipping Co., Ltd. (Hanjin), named respondent Shin
Yang Brokerage Corp. as the consignee and indicated that payment was on a
"Freight Collect" basis.
The shipment arrived in Manila on October 29, 2001. Thereafter,
petitioner MOF Company, Inc. (MOF), Hanjin's exclusive general agent in the
Philippines, demanded the payment of ocean freight, documentation fee and
terminal handling charges from Shin Yang. The latter refused to pay
contending that it did not cause the importation of the goods, that it is only the
Consolidator of the said shipment. MOF argued that Shin Yang, as the
named consignee in the bill of lading, entered itself as a party to the contract
and bound itself to the "Freight Collect" arrangement.
Claiming that it is merely a consolidator/forwarder, Shin Yang denied
any involvement in shipping the goods or in promising to shoulder the
freightage. It asserted that it never authorized Halla Trading Co. to ship the
articles or to have its name included in the bill of lading.
Issue:
Whether or not the consignee Shin Yang can be bound by
stipulations of bill of lading
Held:
No. While the bill of lading is oftentimes drawn up by the shipper/
consignor and the carrier without the intervention of the consignee, however,
the latter can be bound by the stipulations of the bill of lading, only when:
“A consignee, although not a signatory to the contract of carriage
between the shipper and the carrier, becomes a party to the contract by
reason of either: a) the relationship of agency between the consignee and the
shipper/ consignor; b) the unequivocal acceptance of the bill of lading
delivered to the consignee, with full k nowledge 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 consignees favor, specifically the delivery of the
goods/cargoes shipped.
However, in the instant case, MOF failed to meet the required
quantum of proof. Other than presenting the bill of lading, which, at most,
proves that the carrier acknowledged receipt of the subject cargo from the
shipper and that the consignee named is to shoulder the freightage, MOF has
not adduced any other credible evidence to strengthen its cause of action. It
did not even present any witness in support of its allegation that it was Shin
Yang which furnished all the details indicated in the bill of lading and that Shin
Yang consented to shoulder the shipment costs. There is also nothing in the
records which would indicate that Shin Yang was an agent of Halla Trading
Co. or that it exercised any act that would bind it as a named consignee.
WHEREFORE, the petition is DENIED.

G.R. No. 114061. August 3, 1994.
KOREAN AIRLINES CO., LTD., petitioner,
vs.
COURT OF APPEALS and JUANITO C. LAPUZ, respondents.
Doctrine:
There is a perfected contract of carriage between a passenger and
an airline if it can be established that the passenger had checked in at the
departure counter, passed through customs and immigration, boarded the
shuttle bus and proceeded to the ramp of the aircraft and that his baggage
had already been loaded in the aircraft to be flown with the passenger to his
destination.
Facts:
In 1980, Juanito C. Lapuz, an automotive electrician, was contracted
for employment in Jeddah, Saudi Arabia. Lapuz was supposed to leave on
November 8, 1980, via Korean Airlines. Initially, he was “wait-listed.” When
two of such passengers did not appear, Lapuz and another person by the
name of Perico were given the two unclaimed seats. Lapuz was allowed
to check in. He passed through the customs and immigration sections for
routine check-up and was cleared for departure. Together with the other
passengers, he rode in the shuttle bus and proceeded to the ramp of the KAL
aircraft for boarding. However, when he was at the third or fourth rung of the
stairs, a KAL officer pointed to him and shouted “Down! Down!” He was thus
barred from taking the flight. When he later asked for another booking, his
ticket was canceled by KAL. Consequently, he was unable to report for his
work in Saudi Arabia within the stipulated 2-week period and so lost his
employment.
KAL argued that “the evidence of confirmation of a chance passenger
status is not through the entry of the name of a chance passenger in the
passenger manifest nor the clearance from the Commission on Immigration
and Deportation, because they are merely means of facilitating the boarding
of a chance passenger in case his status is confirmed.”
Issue:
Whether or not the contract of air carriage has already been
perfected
Held:
Yes. The evidence presented by Lapuz shows that he had indeed
checked in at the departure counter, passed through customs and
immigration, boarded the shuttle bus and proceeded to the ramp of KAL’s
aircraft. In fact, his baggage had already been loaded in KAL’s aircraft, to be
flown with him to Jeddah. The contract of air carriage between him and
KAL had already been perfected when he was summarily and insolently
prevented from boarding the aircraft.
The Supreme Court has held that a contract to transport passengers
is different in kind and degree from any other contractual relation. The
business of the carrier is mainly with the traveling public. It invites people to
avail themselves of the comforts and advantages it offers. The contract of
air carriage generates a relation attended with a public duty. Passengers
have the right to be treated by the carrier’s employees with kindness, respect,
courtesy and due consideration. They are entitled to be protected against
personal misconduct, injurious language, indignities and abuses from such
employees.
So in this case, it is that any discourteous conduct on the part of
these employees toward a passenger gives the latter an action for damages
against the carrier. The breach of contract was aggravated in this case when,
instead of courteously informing Lapuz of his being a “wait-listed” passenger,
a KAL officer rudely shouted “Down! Down!” while pointing at him, thus
causing him embarrassment and public humiliation.
 the BA but only 16 seats were confirmed and booked on its June 9, 1981
Definition and Concept: (Digested by Dave)
● British Airways v. CA, 218 SCRA 699 flight. Unfortunately, only 9 workers were able to board said flight while the
● Mauro Ganzon v. CA 161 SCRA 646 remaining 7 workers were rebooked to:

Again, there was an incident where BA cancelled the flights booked by First
G.R. No. 92288 February 9, 1993
Int’l. 13 workers were again cancelled and rebooked to July.

BRITISH AIRWAYS, INC., petitioner,

First Int'l paid the travel tax of the workers as required by BA but when the
vs.
receipt of the tax payments was submitted, only 12 seats were confirmed for
THE HON. COURT OF APPEALS, Twelfth Division, and FIRST
July flight, which was then cancelled without any prior notice.
INTERNATIONAL TRADING AND GENERAL SERVICES, respondents.

The 12 workers were finally able to leave for Jeddah after First Int'l had
Doctrine: Nature of a contract of carriage discussed. See Ruling. Digested
bought tickets from the other airlines. ROLACO also cancelled the hiring of
by Dave Alano
the remaining workers due to the delay in transporting the workers.

Facts: First International Trading and General Services Co. (First Int'l), a duly
As a result of these incidents, First Int'l sent a letter to BA demanding
licensed domestic recruitment and placement agency, received a telex
compensation for the damages it had incurred by the repeated failure to
message from its principal ROLACO Engineering and Contracting Services
transport its contract workers despite confirmed bookings and payment of the
(ROLACO) in Jeddah, Saudi Arabia to recruit Filipino contract workers in its
corresponding travel taxes.
behalf.

Summary of the Facts [By Dave]: Basically there were multiple instances
ROLACO paid British Airways, Inc. (BA) Jeddah branch the airfare tickets for
wherein flights were cancelled without prior notice, or even rebooked. This
93 contract workers with specific instruction to transport the workers to
happened to the prejudice of First International Trading who was obliged to
Jeddah. As soon as BA received a prepaid ticket advice from its Jeddah
send the workers to Jeddah in a limited time of thirty days. Hence, this claim
branch informed First Int'l. Thereafter, First Int'l instructed ADB Travel and
for damages.
Tours. Inc. (its travel agent) to book the 93 workers with BA but the latter
failed to fly said workers.
RTC awarded the damages, and subsequently affirmed by the Court of
Appeals, hence this petition. British Airways argue that there is no cause of
This had compelled First Int'l had to borrow P304,416.00 for the purchase of
action because there was no perfected contract of carriage, and there was no
airline tickets from the other airlines for the 93 workers who must leave
ticket issued to the workers.
immediately since the visas are valid only for 45 days and the Bureau of
Employment Services mandates that contract workers must be sent to the job
Issue: Whether or not there was a contract of carriage between the petitioner
site within a period of 30 days.
and private respondent?

First Int'l was again informed by BA that it had received a prepaid ticket
advice from its Jeddah branch for the transportation of 27 contract workers.
Immediately, First Int'l instructed its ADB to book the 27 contract workers with
Held: Yes. The Supreme Court held that petitioner's repeated failures to
transport private respondent's workers in its flight despite confirmed booking
of said workers clearly constitutes breach of contract and bad faith on its part.

In this case, the nature of a contract of carriage was discussed, citing Paras:

In dealing with the contract of common carriage of passengers for

purpose of accuracy, there are two (2) aspects of the same, namely:

● (a) the contract "to carry (at some future time)," which
contract is consensual and is necessarily perfected by mere
consent - applicable in this case
● (b) the contract "of carriage" or "of common carriage" itself
which should be considered as a real contract for not until the
carrier is actually used can the carrier be said to have
already assumed the obligation of a carrier

In the instant case, the contract "to carry" is the one involved which is
consensual and is perfected by the mere consent of the parties.

There is no dispute as to the appellee's consent to the said contract "to carry"
its contract workers from Manila to Jeddah. The appellant's consent thereto,
on the other hand, was manifested by its acceptance of the PTA or prepaid
ticket advice that ROLACO Engineering has prepaid the airfares of the
appellee's contract workers advising the appellant that it must transport the
contract workers

Even if a PTA is merely an advice from the sponsors that an airline is

authorized to issue a ticket and thus no ticket was yet issued, the fact
remains that the passage had already been paid for by the principal of the
respondent, and the BA had indeed accepted such payment.
G.R. No. L-48757 May 30, 1988
MAURO GANZON, petitioner,
vs.
COURT OF APPEALS and GELACIO E. TUMAMBING, respondents.
Digested by: Dave Alano
Facts: On November 28, 1956, Gelacio Tumambing contracted the services
of Mauro B. Ganzon to haul 305 tons of scrap iron from Mariveles, Bataan, to
the port of Manila on board the lighter LCT "Batman. Pursuant to that
agreement, Mauro B. Ganzon sent his lighter "Batman" to Mariveles where it
docked in three feet of water.
Gelacio Tumambing delivered the scrap iron to defendant Filomeno Niza,
captain of the lighter, for loading which was actually begun on the same date
by the crew of the lighter under the captain's supervision. When about half of
the scrap iron was already loaded, Mayor Jose Advincula of Mariveles,
Bataan, arrived and demanded P5,000.00 from Gelacio Tumambing. The
latter resisted the shakedown and after a heated argument between them,
Mayor Jose Advincula drew his gun and fired at Gelacio Tumambing who
sustained injuries.
After sometime, the loading of the scrap iron was resumed. But on December
4, 1956, Acting Mayor Basilio Rub, accompanied by three policemen, ordered
captain Filomeno Niza and his crew to dump the scrap iron where the lighter
was docked. The rest was brought to the compound of NASSCO. Later on
Acting Mayor Rub issued a receipt stating that the Municipality of Mariveles
had taken custody of the scrap iron.
Tumabing sued Ganzon; the latter alleged that the goods have not been
unconditionally placed under his custody and control to make him liable. The
trial court dismissed the case but on appeal, respondent Court rendered a
decision reversing the decision of the trial court and ordering Ganzon to pay
damages.
Issue: Whether or not there has been a breach of a contract of carriage?
Held: Yes. By the said act of delivery, the scraps were unconditionally placed
in the possession and control of the common carrier, and upon their receipt
by the carrier for transportation, the contract of carriage was deemed
perfected. Consequently, the petitioner-carrier's extraordinary responsibility
for the loss, destruction or deterioration of the goods commenced
Issue (2): Whether or not Ganzon is liable for the loss of the scrap iron?
Held (2): Yes. The petitioner alleges that the he should be absolved of liability
due to a fortuitous event caused by the intervention of the public authority.
However, he has failed to show that the loss of the scraps was due to any of
the following cause enumerated in Article 1734 of the Civil Code, namely:
(5) Order or act of competent public authority.
The authority of the questioned public officer to give the order was not duly
established. Hence, the petitioner was not duty bound to obey the illegal
order to dump into the sea the scrap iron. Moreover, there is absence of
sufficient proof that the issuance of the same order was attended with such
force or intimidation as to completely overpower the will of the petitioner's
employees.
Hence, the petitioner is presumed to have been at fault or to have acted
negligently. By reason of this presumption, the court is not even required to
make an express finding of fault or negligence before it could hold the
petitioner answerable for the breach of the contract of carriage.

GRETCHEN’S DIGEST
1.7 Dangwa Transportation Inc. v CA GR 95582
1.8 Jesusa vda De Nueca v. Manila Railroad company GR 31731
G.R. No. 95582 October 7, 1991
DANGWA TRANSPORTATION CO., INC. and THEODORE LARDIZABAL y
MALECDAN, petitioners, vs.
COURT OF APPEALS, INOCENCIA CUDIAMAT, EMILIA CUDIAMAT
BANDOY, FERNANDO CUDLAMAT, MARRIETA CUDIAMAT, NORMA
CUDIAMAT, DANTE CUDIAMAT, SAMUEL CUDIAMAT and LIGAYA
CUDIAMAT, all Heirs of the late Pedrito Cudiamat represented by
Inocencia Cudiamat, respondents.
DOCTRINE/SUMMARY
Common carriers, from the nature of their b usiness and reasons of pub lic policy,
are b ound to ob serve extraordinary diligence for the safety of the p assengers
transported b y the according to all the circumstances of each case. A common
carrier is b ound to carry the passengers safely as far as human care and foresight
can provide, using the utmost diligence very cautious persons, with a due re g a rd
for all the circumstances.
It is not negligence per se, or as a matter of law, for one attempt to board a
train or streetcar which is moving slowly. An ordinarily prudent person would
have made the attempt b oard the moving conveyance under the same or si m i l a r
circumstances. The fact that passengers b oard and alight from slowly moving
vehicle is a matter of common experience b oth the driver and conductor in this
case could not have b een unaware of such an ordinary practice.
A public utility bus, once it stops, is in effect making a continuous offer to b us
riders. Hence, it b ecomes the duty of the driver and the conductor, every time th e
b us stops, to do no act that would have the effect of increasing the peril to a
passenger while he was attempting to b oard the same. The premature
acceleration of the b us in this case was a b reach of such duty
FACTS:
On May 13, 1985, private respondents filed a complaint for damages against
petitioners for the death of Pedrito Cudiamat as a result of a vehicular
accident which occurred on March 25, 1985 at Marivic, Sapid, Mankayan,
Benguet. On the said date, while petitioner Theodore M. 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 and property, it ran over its passenger, Pedrito Cudiamat.
However, instead of bringing Pedrito immediately to the nearest hospital, the
said driver, in utter bad faith and without regard to the welfare of the victim,
first brought his other passengers and cargo to their respective destinations
before bringing said victim to the Lepanto Hospital where he expired.
On the other hand, petitioners alleged that they had observed and continued
to observe the extraordinary diligence required in the operation of the
transportation company and the supervision of the employees however they
alleged that it was the victim's own carelessness and negligence which gave
rise to the subject incident.
ISSUE:
Whether or not petitioners are negligent and liable for the damages claimed
HELD:
Yes petitioners are negligent and should be held liable for damages.
Common carriers, from the nature of their business and reasons of public
policy, are bound to observe extraordinary diligence for the safety of the
passengers transported by the according to all the circumstances of each
case. A common carrier is bound to carry the passengers safely as far as
human care and foresight can provide, using the utmost diligenc e very
cautious persons, with a due regard for all the circumstances.
It has also been repeatedly held that in an action based on a contract of
carriage, the court need not make an express finding of fault or negligence on
the part of the carrier in order to hold it responsible to pay the damages
sought by the passenger. By contract of carriage, the carrier assumes the
express obligation to transport the passenger to his destination safely and
observe extraordinary diligence with a due regard for all the circumstances,
and any injury that might be suffered by the passenger is right away
attributable to the fault or negligence of the carrier. This is an exception to the
general rule that negligence must be proved, and it is therefore incumbent
upon the carrier to prove that it has exercised extraordinary diligence as
prescribed in Articles 1733 and 1755 of the Civil Code .
VDA. DE NUECA v. MANILA RAILROAD CO.
SUMMARY/DOCTRINE:
A passenger is one who travels in a public conveyance by virtue of a
contract, express or implied, with the carrier as to the payment of the fare, or
that which is accepted as an equivalent. The relation of passenger and carrier
commences when one puts himself in the care of the carrier, or directly under
its control, with the bona fide intention of becoming a passenger, and is
accepted as such by the carrier – as where he mak es a contract for
transportation and presents himself at the proper place and in a proper
manner to be transported.
FACTS:
At 3 p.m. on Dec. 22, 1958, Fermin Nueca brought 7 sacks of palay to Manila
Railroad Co. (MRC) at its station in Barrio del Rosario, Camarines Sur, to be
shipped to the municipality of Libmanan of the same province. He paid P 0.70
as freight charge and was issued Way Bill No. 56515.
The cargo was loaded on the freight wagon of Train 537. Passengers
boarded the train and shunting operations started to hook a wagon thereto.
Before the train reached the turnoff switch, its passenger coach fell on its side
some 40 m from the station. The wagon pinned Nueca, killing him instantly.
Nueca’s widow and children bring this claim for damages, alleging that Nueca
was a passenger and his death was caused by MRC’s negligence.
MRC disclaimed liability stating: (1) it exercised due care in safeguarding the
passengers during the shunting operation, (2) Nueca was not a passenger
but a trespasser, (3) even if Nueca were a passenger, he illegally boarded the
train without permission by not paying the fare, (4) the mishap was not
attributable to any defect in MRC equipment, (5) that the accident happened
due to force majeur.
MRC presented evidence showing there was no mechanical defect, but it did
not explain why the accident occurred or show that force majeur caused the
mishap. The lower court absolved MRC of liability and held that Nueca was a
trespasser since he did not buy any ticket, and in any case, was not in a
proper place for passengers.
ISSUES:
1. W/N Nueca was a passenger?
2. W/N MRC is liable?
3. Was the accident due to MRC’s negligence or force majeur?
4. Is Nueca liable for contributory negligence?
HELD:
Issue 1
No, Nueca was not a passenger thus, MRC did not owe him extraordinary
diligence.
A passenger is one who travels in a public conveyance by virtue of a
contract, express or implied, with the carrier as to the payment of the fare, or
that which is accepted as an equivalent. The relation of passenger and carrier
commences when one puts himself in the care of the carrier, or directly under
its control, with the bona fide intention of becoming a passenger, and is
accepted as such by the carrier – as where he makes a contract for
transportation and presents himself at the proper place and in a proper
manner to be transported.
Even disregarding the matter of tickets, and assuming Nueca intended to be
a passenger, he was never accepted as such by MRC as he did not present
himself at the proper place and in a proper manner to be transported.
Issue 2
Yes, the liability of railroad companies to persons upon the premises is
determined by the general rules of negligence relating to duties of
owners/occupiers of property. While railroad companies are not bound to the
same degree of care in regard to strangers who are unlawfully upon the
premises of its passengers, it may still be liable to such strangers for
negligent or tortious acts.

Here, Nueca was not on the track, but either unlawfully inside the baggage
car or beside the track.
It is normal for people to walk on the track or roadbed when there is no
oncoming train and to walk beside the track when a train passes. This
practice is tolerated by MRC. Generally, MRC’s stations are not enclosed,
and is easily accessible to the public.

Issue 3

MRC is negligent; doctrine of res ipsa loquitur applied.

The train was under the complete control of the railroad company at the time
of the accident. The baggage car would not have been derailed if the train
had been properly operated.
Res ipsa loquitur is a rule of evidence peculiar to the law of negligence which
recognizes that prima facie negligence may be established without direct
proof and furnishes a substitute for specific proof of negligence.

Issue 4

No. An invitation to stay in the premises is implied from the lack of prohibition
to outsiders to keep off the premises, hence, a stranger who is injured by a
derailed train while staying beside a railroad track is not guilty of contributory
negligence.

Note: Our law on common carriers is lifted from Anglo-American statutes.

Carrier (Tests)
LIGHT RAIL TRANSIT AUTHORITY & RODOLFO ROMAN vs. MARJORIE
NAVIDAD, Heirs of the Late NICANOR NAVIDAD & PRUDENT SECURITY
AGENCY
G.R. No. 145804. February 6, 2003
VITUG, J.
Digested by: Vina Cagampang
Doctrine:
Such duty of a common carrier to provide safety to its passengers so
obligates it not only during 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 contract of carriage.
The statutory provisions render a common carrier liable for death of or injury
to passengers (a) through the negligence or wilful acts of its employees or b)
on account of wilful acts or negligence of other passengers or of strangers if
the common carriers employees through the exercise of due 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
Facts:
On 14 October 1993, about half an hour past seven oc’lock in the evening,
Nicanor Navidad, then drunk, entered the EDSA LRT station. While Navidad
was standing on the platform near the LRT tracks, Junelito Escartin, the
security guard assigned to the area approached Navidad. A
misunderstanding or an altercation between the two apparently ensued that
led to a fist fight. No evidence, however, was adduced to indicate how the
fight started or who, between the two, delivered the first blow or how Navidad
later fell on the LRT tracks. At the exact moment that Navidad fell, an LRT
train, operated by petitioner Rodolfo Roman, was coming in. Navidad was
struck by the moving train, and he was killed instantaneously. On 08
December 1994, the widow of Nicanor, herein respondent Marjorie Navidad,
along with her children, filed a complaint for damages against Junelito
Escartin, Rodolfo Roman, the LRTA, the Metro Transit Organization, Inc.
(Metro Transit), and Prudent for the death of her husband. LRTA and Roman
filed a counterclaim against Navidad and a cross-claim against Escartin and
Prudent. Prudent, in its answer, denied liability and averred that it had
exercised due diligence in the selection and supervision of its security guards
Petitioners insisted that Escartin’s assault upon Navidad, which caused the
latter to fall on the tracks, was an act of a stranger that could not have been
foreseen or prevented. Respondents contended that a contract of carriage
was deemed created from the moment Navidad paid the fare at the LRT
station and entered the premises of the latter, entitling Navidad to all the
rights and protection under a contractual relation, and that LRTA and Roman
liable for the death of Navidad in failing to exercise extraordinary diligence
imposed upon a common carrier.
Issue:
Whether LRTA and Roman are liable for the death of Nicanor Navidad Jr?
Ruling:
Yes. Law and jurisprudence dictate that a common carrier, both from the
nature of its business and for reasons of public policy, is burdened with the
duty of exercising utmost diligence in ensuring the safety of passengers. The
Civil Code, governing the liability of a common carrier for death of or injury to
its passengers, provides:
Article 1755. A common carrier is bound to carry the passengers safely as far as
human care and foresight can provide, using the utmost diligence of very cautious
persons, w ith a due regard for all the circumstances.
Article 1756. In case of death of or injuries to passengers, common carriers are
presumed to have been at fault or to have acted negligently, unless they prove that
they observed extraordinary diligence as prescribed in articles 1733 and 1755.

Article 1759. Common carriers are liable for the death of or injuries to passengers
through the negligence or w illful 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 does not cease upon proof that they exercis ed all
the diligence of a good father of a family in the selection and supervision of their
employees.
Article 1763. A common carrier is responsible for injuries suffered by a pas s enger on
account of the w illful acts or negligence of other passengers or of strangers, if the
common carriers employees through the exercise of the diligence of a good father of a
family could have prevented or stopped the act or omission.
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 s afety to its
passengers so obligates it not only during 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 contract of carriage. The statutory provisions render a
common carrier liable for death of or injury to passengers (a) through the
negligence or wilful acts of its employees or b) on account of wilful acts or
negligence of other passengers or of strangers if the common carriers
employees through the exercise of due 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 at fault, an
exception from the general rule that negligence must be proved.
The foundation of LRTA’s liability is the contract of carriage and its obligation
to indemnify the victim arises from the breach of that contract by reason of its
failure to exercise the high diligence required of the common carrier. In the
discharge of its commitment to ensure the safety of passengers, a carrier
may choose to hire its own employees or avail itself of the services of an
outsider or an independent firm to undertake the task. In either case, the
common carrier is not relieved of its responsibilities under the contract of
carriage.
There being, similarly, no showing that petitioner Rodolfo Roman himself is
guilty of any culpable act or omission, he must also be absolved from liability.
Needless to say, the contractual tie between the LRTA and Navidad is not
itself a juridical relation between the latter and Roman; thus, Roman can be
made liable only for his own fault or negligence.
Others:
Issue: Should Prudent be made likewise liable?
Ruling:
No. Prudent is not liable.
If at all, that liability could only be for tort under the provisions of Article 2176
and related provisions, in conjunction with Article 2180, of the Civil Code. The
premise, however, for the employer’s liability is negligence or fault on the part
of the employee. Once such fault is established, the employer can then be
made liable on the basis of the presumption juris tantum that the employer
failed to exercise diligentissimi patris families in the selection and supervision
of its employees. The liability is primary and can only be negated by showing
due diligence in the selection and supervision of the employee, a factual
matter that has not been shown. Absent such a showing, one might ask
further, how then must the liability of the common carrier, on the one hand,
and an independent contractor, on the other hand, be described? It would be
solidary. A contractual obligation can be breached by tort and when the same
act or omission causes the injury, one resulting in culpa contractual and the
other in culpa aquiliana, Article 2194 of the Civil Code can well apply. In fine,
a liability for tort may arise even under a contract, where tort is that which
breaches the contract.Stated differently, when an act which constitutes a
breach of contract would have itself constituted the source of a quasi-delictual
liability had no contract existed between the parties, the contract can be said
to have been breached by tort, thereby allowing the rules on tort to apply.
Regrettably for LRT, as well as perhaps the surviving spouse and heirs of the
late Nicanor Navidad, this Court is concluded by the factual finding of the CA
that there is nothing to link (Prudent) to the death of Nicanor (Navidad), for
the reason that the negligence of its employee, Escartin, has not been duly
proven
 PEDRO DE GUZMAN vs. COURT OF APPEALS and ERNESTO
CENDAÑA
No. L-47822. December 22, 1988.
FELICIANO, J.
Digested by: Vina Cagampang
Doctrines:
· 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 mak es 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 mak ing any distinction between a
person or enterprise offering transportation service on a regular or scheduled
basis and one offering such service on an occasional, episodic or
unscheduled basis. Neither does Article 1732 distinguish between a carrier
offering its services to the “general public,” i.e., the general community or
population, and one who offers services or solicits business only from a
narrow segment of the general population. We think that Article 1733
deliberately refrained from mak ing such distinctions.
· The concept of “common carrier” under Art. 1732 coincides with the
notion of “Public Service” under the Public Service Act (CA No. 1416).
· A certificate of public convenience is not a requisite for the incurring of
liability under the Civil Code provisions governing common carriers
· Case at bar: 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 risk s 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.
Facts:
Ernesto Cendaña, a junk dealer, was engaged in buying and reselling of used
bottles and scrap, in Pangasinan. 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. He charges
freight rates which were commonly lower than regular commercial rates.
Pedro de Guzman contracted with Cendaña for the hauling of 750 cartons of
Liberty filled milk from a warehouse of General Milk in Makati, Rizal, to his
establishment in Urdaneta on or before 4 December 1970. Accordingly, on 1
December 1970, 150 cartons were loaded on a truck driven by Cendaña
himself; while 600 cartons were placed on board the other truck which was
driven by Manuel Estrada, respondent’s driver and employee. 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 by armed men who took with them the truck, its driver,
his helper and the cargo.
Petitioner filed a case against Cendaña demanding payment 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. Petitioner argues that in the circumstances of this case,
private respondent should have hired a security guard presumably to ride with
the truck carrying the 600 cartons of Liberty filled milk. Cedaña 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.
ssue:
1. Whether the respondent is a common carrier
2. Is the respondent liable for the value of the undelivered cargo?
Ruling:
1. Yes. The respondent is a common carrier. 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, w ater, or air for compensation, offering their services to the public.”
The above article makes no distinction between one whose principal business
activity is the carrying of persons or goods or both, and one who does such
carrying only as an ancillary activity (in local idiom, as “a sideline”). Article
1732 also carefully avoids making any distinction between a person or
enterprise offering transportation service on a regular or scheduled basis and
one offering such service on an occasional, episodic or unscheduled basis.
Neither does Article 1732 distinguish between a carrier offering its services to
the “general public,” i.e., the general community or population, and one who
offers services or solicits business only from a narrow segment of the general
population. We think that Article 1733 deliberately refrained from making such
distinctions.
So understood, the concept of “common carrier” under Article 1732 may be
seen to coincide neatly with the notion of “public service,” under the Public
Service Act (Commonwealth Act No. 1416, as amended) which at least
partially supplements the law on common carriers set forth in the Civil Code.
Under Section 13, paragraph (b) of the Public Service Act, “public service”
includes:
“x x x every person that now or hereafter may own, operate, manage, or control in the
Philippines, for hire or compensation, with general or limited clientele, whether
permanent, occasional or accidental, and done for general business purposes, any
common carrier, railroad, street railway, traction railway, subway motor vehicle, either
for freight or passenger, or both, w ith or w ithout fixed route and w hatever may be its
classification, freight or carrier service of any class, express service, steamboat, or
steamship line, pontines, ferries and w ater craft, engaged in the transportation of
passengers or freight or both, shipyard, marine repair shop, w harf or dock, ice plant,
ice-refrigeration plant, canal, irrigation system, gas, electric light, heat and pow er,
w ater supply and pow er petroleum, sew erage system, w ire or w ireless
communications systems, w ire or w ireless broadcasting stations and other similar
public services. x x x.” (Italics supplied)
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 backhauling 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 that fee frequently fell below
commercial freight rates is not relevant here.
2. No. He is not liable for the value of the undelivered goods.
Common carriers, “by the nature of their business and for reasons of public
policy,” 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. he character of the goods or defects in the packing or in the
containers; and
5. Order or act of competent public authority
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 pr ec edi ng
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.” (Italics 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. As noted earlier, the duty of
extraordinary diligence in the vigilance over goods is, under Article 1733,
given additional specification not only by Articles 1734 and 1735 but also by
Article 1745, numbers 4, 5 and 6, Article 1745 provides in relevant part:
“Any of the follow ing or similar stipulations shall be considered unreasonable, unjust
and contrary to public policy:
(5) that the common carrier shall not be responsible for the acts or omissions of his or
its employees;
(6) that the common carrier’s liability for acts committed by thieves, or of robber s w ho
do not act w ith grave or irresistible threat, violence or force, is dispensed w ith or
diminished; and
(7) that the common carrier shall not responsible for the loss, destruction or
deterioration of goods on account of the defective condition of the car, vehicle, ship,
airplane or other equipment used in the contract of carriage.” (Italics supplied)
Under Article 1745 (6), 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 the instant case, armed men held up the second truck owned by private
respondent which carried petitioner’s cargo. The record shows that an
information for robbery in band was filed in court where the decision was that
the accused acted with grave, if not irresistible, threat, violence or force.
Three (3) of the five (5) hold-uppers were armed with firearms. The robbers
not only took away the truck and its cargo but also kidnapped the driver and
his helper, detaining them for several days and later releas ing them in
another province (in Zambales). The hijacked truck was subsequently found
by the police in Quezon City. The Court of First Instance convicted all the
accused of robbery, though not of robbery in band.
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.
Other issues:
Is a certificate of public convenience a requisite for the incurring of liability
under the Civil Code provisions governing common carriers?
Ruling:
No. 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. To
exempt private respondent from the liabilities of a common carrier because
he has not secured the necessary certificate of public convenience, would be
offensive to sound public policy; that would be to reward private respondent
precisely for failing to comply with applicable statutory requirements. The
business of a common carrier impinges directly and intimately upon the safety
and wellbeing and property of those members of the general community who
happen to deal with such carrier. 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.
-First Philippine Industrial Corp v. CA, 300 SCRA 66 VIENNA
 FIRST PHILIPPINE INDUSTRIAL CORPORATION vs. COURT OF
APPEALS, HONORABLE PATERNO V. TAC-AN, BATANGAS CITY and
ADORACION C. ARELLANO, in her official capacity as City Treasurer of
Batangas
FACTS:
Petitioner is a grantee of a pipeline concession under Republic Act
No. 387, as amended, to contract, install and operate oil pipelines. It is
engaged in the business of transporting petroleum products from the
Batangas refineries, via pipeline, to Sucat and JTF Pandacan Terminals.
Sometime in January 1995, petitioner applied for mayor’s permit in Batangas.
However, the Treasurer required petitioner to pay a local tax based on gross
receipts amounting to P956,076.04. FPIC claims that they are exempted from
paying local tax since it is engaged in transportation business under Section
133 of the Local Government Code. The respondent City Treasurer denied
the protest contending that petitioner cannot be considered engaged in
transportation business. In order not to hamper its operations, petitioner paid
the tax under protest then filed a complaint before the Regional Trial Court for
tax refund. Respondents assert that pipelines are not included in the term
“common carrier” which refers solely to ordinary carriers or motor vehicles.
The trial court dismissed the complaint, and such was affirmed by the Court
of Appeals.
ISSUE:
Whether a pipeline business is included in the term “common carrier” so as to
entitle the petitioner to the exemption.
RULING:
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.
Article 1732 of the Civil Code defines a "common carrier" as " any
person, corporation, firm or association engaged in the business of carrying
or transporting passengers or goods or both, by land, water, or air, for
compensation, offering their services to the public."
The test for determining whether a party is a common carrier of
goods is:
1. He must be engaged in the business of carrying goods for
others as a public employment, and must hold himself out as ready to
engage in the transportation of goods for person generally as a
business and not as a casual occupation;
2. He must undertake to carry goods of the kind to which his
business is confined;
3. He must undertake to carry by the method by which his
business is conducted and over his established roads; and
4. The transportation must be for hire.
Based on the above definitions and requirements, there is no doubt
that petitioner is a common carrier. It is engaged in the business of
transporting or carrying goods, i.e. petroleum products, for hire as a
public employment. It undertakes to carry for all persons indifferently, that
is, to all persons who choose to employ its services, and transports the goods
by land and for compensation. Also under the Petroleum Act of the
Philippines (Republic Act 387), petitioner is considered a "common carrier"
and public utility.
Therefore, FPIC is exempt from the business tax as provided for in
Section 133 (j), of the Local Government Code.
-National Steel Corp v. CA, 283 SCRA 45, 61 (include discussion on a
contract of private carriage) VIENNA
NATIONAL STEEL CORPORATION, petitioner, vs. COURT OF APPEALS
AND VLASONS SHIPPING, INC., respondents.
G.R. No. 112287. December 12, 1997
VLASONS SHIPPING, INC., petitioner, vs. COURT OF APPEALS AND
NATIONAL STEEL CORPORATION, respondents
G.R. No. 112350. December 12, 1997
Doctrine:
The stringent provisions of the Civil Code on common carriers protecting the
general public cannot justifiably be applied to a private carrier.
FACTS:
The MV Vlasons I is a vessel which renders tramping service and, as such,
does not transport cargo or shipment for the general public. Its services are
available only to specific persons who enter into a special contract of charter
party with its owner. The ship is a private carrier, and it is in this capacity that
its owner, Vlasons Shipping, Inc. (VSA), entered into a contract of
affreightment or contract of voyage charter hire with National Steel
Corporation (NSC) on 17 July 1974, whereby NSC hired VSI’s vessel, the MV
‘VLASONS I’ to make 1 voyage to load steel products at Iligan City and
discharge them at North Harbor, Manila
The shipment was placed in the 3 hatches of the ship which arrived with the
cargo at Pier 12, North Harbor, Manila, on 12 August 1974. The following
day, when the vessel’s 3 hatches containing the shipment were opened by
NSC’s agents, nearly all the skids of tinplates and hot rolled sheets were
allegedly found to be wet and rusty. The cargo was discharged and unloaded
by stevedores hired by the Charterer.
On 6 September 1974 NSC filed with VSI its claim for damages suffered due
to the downgrading of the damaged tinplates in the amount of P941,145.18.
Then on 3 October 1974, NSC formally demanded payment of said claim but
VSI refused and failed to pay .
On appeal, and on 12 August 1993, the Court of Appeals modified the
decision of the trial court by reducing the demurrage from P88,000.00 to
P44,000.00 and deleting the award of attorneys fees and expenses of
litigation. NSC and VSI filed separate motions for reconsideration. The CA
denied both motions. NSC and VSI filed their respective petitions for review
before the Supreme Court.
ISSUE:
1) Whether or not VSI contracted with NSC as a common carrier or a
private carrier.
2) Was M/V Vlasons I seaworthy?
RULING:
1.) The MV Vlasons I was not a common but a private carrier.
Consequently, the rights and obligations of VSI and NSC, including
their respective liability for damage to the cargo, are determined
primarily by stipulations in their contract of private carriage or charter
party.
It is undisputed that VSI did not offer its services to the general public
and it carried passengers or goods only for those it chose under a special
contract of charter party.
Article 1732 of the Civil Code defines a common carrier as persons,
corporations, firms or associations engaged in the business of carrying or
transporting passengers or goods or both, by land, water, or air, for
compensation, offering their services to the public. It has been held that the
true test of a common carrier is the carriage of passengers or goods,
provided it has space, for all who opt to avail themselves of its transportation
service for a fee.
A carrier which does not qualify under the above test is deemed a
private carrier. Generally, private carriage is undertaken by special
agreement and the carrier does not hold himself out to carry goods for the
general public. The most typical, although not the only form of private
carriage, is the charter party, a maritime contract by which the charterer, a
party other than the shipowner, obtains the use and service of all or some
part of a ship for a period of time or a voyage or voyages.

2.) Yes. Records reveal that VSI exercised due diligence to make the ship
seaworthy and fit for the carriage of NSCs cargo of steel and tinplates. This is
shown by the fact that it was drydocked and inspected by the Philippine
Coast Guard before it proceeded to Iligan City for its voyage to Manila under
the contract of voyage charter hire. The vessels voyage from Iligan to Manila
was the vessels first voyage after drydocking. The Philippine Coast Guard
Station in Cebu cleared it as seaworthy, fitted and equipped; it met all
requirements for trading as cargo vessel.
 G.R. No. 101089. April 7, 1993. this case, petitioner herself has made the admission that she was in the
ESTRELLITA M. BASCOS, petitioners, trucking business, offering her trucks to those with cargo to move.
vs.
COURT OF APPEALS and RODOLFO A. CIPRIANO, respondents. "The above article makes no distinction between one whose principal
CAMPOS, JR., J 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").
Digested by: Terry Louise P. Boligor Article 1732 also carefully avoids making any distinction between a person or
enterprise offering transportation service on a regular or scheduled basis and
Facts: Rodolfo A. Cipriano representing Cipriano Trading Enterprise one offering such service on an occasional, episodic or unscheduled basis.
(CIPTRADE for short) entered into a hauling contract 2 with Jibfair Shipping Neither does Article 1732 distinguish between a carrier offering its services to
Agency Corporation whereby the former bound itself to haul the latter's 2,000 the "general public," i.e., the general community or population, and one who
m/tons of soya bean meal from Magallanes Drive, Del Pan, Manila to the offers services or solicits business only from a narrow segment of the general
warehouse of Purefoods Corporation in Calamba, Laguna. To carry out its population. We think that Article 1732 deliberately refrained from making such
obligation, CIPTRADE, through Rodolfo Cipriano, subcontracted with distinctions."
Estrellita Bascos (petitioner) to transport and to deliver 400 sacks of soya
bean meal worth P156,404.00 from the Manila Port Area to Calamba, Laguna
at the rate of P50.00 per metric ton. Petitioner failed to deliver the said cargo.
As a consequence of that failure, Cipriano paid Jibfair Shipping Agency the
amount of the lost goods in accordance with the contract. Cipriano asked for
reimbursement but his demands went unheeded. Bascos claims that there
was only a contract of lease of the truck and not a contract of carriage and
that her party immediately contacted the police upon knowledge of the
hijacking, carnapping and robbery.

Issue: Is Bascos considered a common carrier?

Ruling: Yes.

Article 1732 of the Civil Code defines a common carrier as "(a) person,
corporation or 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 to determine a
common carrier is "whether the given undertaking is a part of the business
engaged in by the carrier which he has held out to the general public as his
occupation rather than the quantity or extent of the business transacted." In
 G.R. No. 186312 June 29, 2010
SPOUSES DANTE CRUZ and LEONORA CRUZ, Petitioners,
vs.
SUN HOLIDAYS, INC., Respondent.
CARPIO MORALES, J.:
Digested by: Terry Louise P. Boligor
Facts: Spouses Dante and Leonora Cruz lodged a Complaint on January 25,
20011 against Sun Holidays, Inc. with the RTC of Pasig City for damages
arising from the death of their son Ruelito C. Cruz (Ruelito) who perished with
his wife on September 11, 2000 on board the boat M/B Coco Beach III that
capsized en route to Batangas from Puerto Galera, Oriental Mindoro where
the couple had stayed at Coco Beach Island Resort owned and operated by
respondent. The newly weds were enjoying a tour package when they
perished after their boat capsized on their way back to the city. The events
were narrated by a diver who was also a passenger when the accident
happened. Petitioners demanded that respondent pay them 4,000,000.00
since their son worked in Saudi earning 900 dollars a month.
include the ferry services, may be availed of by anyone who can afford to pay
the same. These services are thus available to the public.
Under the Civil Code, common carriers, from the nature of their business and
for reasons of public policy, are bound to observe extraordinary diligence for
the safety of the passengers transported by them, according to all the
circumstances of each case. They are bound to carry the passengers safely
as far as human care and foresight can provide, using the utmost diligence of
very cautious persons, with due regard for all the circumstances. When a
passenger dies or is injured in the discharge of a contract of carriage, it is
presumed that the common carrier is at fault or negligent. In fact, there is
even no need for the court to 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.
Hence, the respondent is a common carrier guilty of negligence.

Issue: Is respondent a common carrier guilty of negligence?

Ruling: Yes, respondent is a common carrier.

Article 1732. Common carriers are persons, corporations, firms or

associations engaged in the business of carrying or transporting pas sengers
or goods or both, by land, water, or air for compensation, offering their
services to the public.

Respondent is a common carrier. Its contention that it only ferry its customers
and not the public does not stand. Its ferry services are so intertwined with its
main business as to be properly considered ancillary thereto. The constancy
of respondent’s ferry services in its resort operations is underscored by its
having its own Coco Beach boats. And the tour packages it offers, which

Tests: Common carrier.
Kareen’s digests:
- Westwind Shipping Corp v. UCPB General Insurance
- VIrgines Calvo v. UCPB,
G.R. No. 200289 November 25, 2013
WESTWIND SHIPPING CORPORATION vs. UCPB GENERAL
INSURANCE CO., INC. and ASIAN TERMINALS INC.
x- ------- ------- ------- -x
G.R. No. 200314
ORIENT FREIGHT INTERNATIONAL INC. vs. UCPB GENERAL
INSURANCE CO., INC. and ASIAN TERMINALS INC.
Doctrine: 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 of whether it owns the vehicle to be used or has to
actually hire one.
FACTS: Kinsho-Mataichi Corporation shipped from the port of
Kobe, Japan, 197 metal containers/skids of tin-free steel for delivery to the
consignee, San Miguel Corporation. The shipment was loaded and received
on board on board M/V Golden Harvest Voyage No. 66, a vessel owned and
operated by Westwind Shipping Corporation. SMC insured the cargoes
against all risks with UCPB General Insurance Co., Inc. The shipment
arrived in Manila, Philippines and was discharged in the custody of the
arrastre operator, Asian Terminals, Inc. (ATI). During the unloading
operation, however, six containers/skids sustained dents and punctures from
the forklift used by the stevedores of Ocean Terminal Services, Inc. (OTSI) in
centering and shuttling the containers/skids. Orient Freight International,
Inc. (OFII), the customs broker of SMC, withdrew from ATI the 197
containers/skids, including the six in damaged condition, and delivered the
same at SMC’s warehouse through J.B. Limcaoco Trucking (JBL). It was
discovered upon discharge that additional nine containers/skids were also
damaged due to the forklift operations; thus, making the total number of 15
containers/skids in bad order.
Almost a year after, SMC filed a claim against UCPB, Westwind, ATI,
and OFII to recover the amount corresponding to the damaged 15
containers/skids. When UCPB paid the amount of damage, SMC signed the
subrogation receipt. Thereafter, in the exercise of its right of subrogation,
UCPB instituted on a complaint for damages against Westwind, ATI, and
OFII. RTC dismissed UCPB’s complaint. On appeal, CA reversed the ruling of
RTC and ruled that Westwind is responsible for the six damaged
containers/skids at the time of its unloading. In its rationale, it concluded that
the common carrier, not the arrastre operator, is responsible during the
unloading of the cargoes from the vessel and that it is not relieved from
liability and is still bound to exercise extraordinary diligence at the time in
order to see to it that the cargoes under its possession remain in good order
and condition. The CA also considered that OFII is liable for the additional
nine damaged containers/skids, agreeing with UCPB’s contention that OFII is
a common carrier bound to observe extraordinary diligence and is presumed
to be at fault or have acted negligently for such damage.
Westwind now argues that it no longer had actual or constructive
custody of the containers/skids at the time they were damaged by ATI’s
forklift operator during the unloading operations. In accordance with Article
1736 of the NCC, it contends that its responsibility already ceased from the
moment the cargoes were delivered to ATI, which is reckoned from the
moment the goods were taken into the latter’s custody. As for OFII, it
maintains that it is not a common carrier, but only a customs broker whose
participation is limited to facilitating withdrawal of the shipment in the custody
of ATI by overseeing and documenting the turnover and counterchecking if
the quantity of the shipments were in tally with the shipping documents at
hand, but without participating in the physical withdrawal and loading of the
shipments into the delivery trucks of JBL.
ISSUES: 1.) Is Orient Freight International, Inc. a common
carrier?
2.) Is Westwind liable for the six damaged
containers/skids at the time of its unloading?
RULING: 1.) Yes, Orient Freight International, Inc. a common
carrier. A customs broker has been regarded as a common carrier because
transportation of goods is an integral part of its business. Article 1732 does
not distinguish between one whose principal business activity is the carrying
of goods and one who does such carrying only as an ancillary activity. The
contention, therefore, of petitioner that it is not a common carrier but a
customs broker whose principal function is to prepare the correct customs
declaration and proper shipping documents as required by law is bereft of
merit. It suffices that petitioner undertakes to deliver the goods for pecuniary
consideration. As the transportation of goods is an integral part of a customs
broker, the customs broker is also a common carrier.

That OFII is a common carrier is buttressed by the testimony of its

own witness that part of the services it offers to clients is cargo forwarding,
which includes the delivery of the shipment to the consignee. Thus, for
undertaking the transport of cargoes from ATI to SMC’s warehouse, OFII is
considered a common carrier. 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 of whether it owns the vehicle to be
used or has to actually hire one.

2.) Yes, Westwind is liable for the damaged containers. It is settled in

maritime law jurisprudence that cargoes while being unloaded generally
remain under the custody of the carrier. Cargoes, while being unloaded,
generally remain under the custody of the carrier. The extraordinary
responsibility of the common carrier lasts until the time the goods are actually
or constructively delivered by the carrier to the consignee or to the person
who has a right to receive them. There is actual delivery in contracts for the
transport of goods when possession has been turned over to the consignee
or to his duly authorized agent and a reasonable time is given him to remove
the goods. In this case, since the discharging of the containers/skids, which
were covered by only one bill of lading, had not yet been completed at the
time the damage occurred, there is no reason to imply that there was already G.R. No. 148496 March 19, 2002
delivery, actual or constructive, of the cargoes to ATI. VIRGINES CALVO doing business under the name and style
TRANSORIENT CONTAINER TERMINAL SERVICES, INC., vs. UCPB
 GENERAL INSURANCE CO., INC. (formerly Allied Guarantee Ins. Co.,
Inc.)
Doctrine: Customs brokers have been regarded as common carrier
because transportation of goods is an integral goods is an integral part of
their business.
FACTS: Petitioner Virgines Calvo is the owner of Transorient
Container Terminal Services, Inc. (TCTSI), a sole proprietorship customs
broker. Petitioner entered into a contract with San Miguel Corporation (SMC)
for the transfer of 114 reels of semi-chemical fluting paper and 124 reels of
kraft liner board from the Port Area in Manila to SMC's warehouse. The cargo
was insured by respondent UCPB General Insurance Co., Inc.
Petitioner, pursuant to her contract with SMC, withdrew the cargo
from the arrastre operator and delivered it to SMC's warehouse. When the
goods were inspected, it was found out that 15 reels of the semi-chemical
fluting paper were "wet/stained/torn" and 3 reels of kraft liner board were
likewise torn.
SMC collected payment from respondent UCPB under its insurance
contract for the amount of the damage. In turn, respondent, as subrogee of
SMC, brought suit against petitioner in the Regional Trial Court, which
rendered judgment finding petitioner liable to respondent for the damage to
the shipment. Said decision was affirmed by the Court of Appeals.
Petitioner contends, she is not a common carrier but a private carrier
because, as a customs broker and warehouseman, she does not
indiscriminately hold her services out to the public but only offers the same to
select parties with whom she may contract in the conduct of her business.
ISSUE: Is petitioner a common carrier?
RULING: Yes, petitioner is a common carrier. 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 . . . 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 1732 deliberately refrained from making such distinctions.
So understood, the concept of "common carrier" under Article 1732
may be seen to coincide neatly with the notion of "public service," under the
Public Service Act (Commonwealth Act No. 1416, as amended) which at least
partially supplements the law on common carriers set forth in the Civil Code.
Under Section 13, paragraph (b) of the Public Service Act, "public service"
includes:
" x x x every person that now or hereafter may own, operate,
manage, or control in the Philippines, for hire or compensation, with general
or limited clientele, whether permanent, occasional or accidental, and done
for general business purposes, any common carrier, railroad, street railway,
traction railway, subway motor vehicle, either for freight or passenger, or
both, with or without fixed route and whatever may be its classification, freight
or carrier service of any class, express service, steamboat, or steamship line,
pontines, ferries and water craft, engaged in the transportation of passengers
or freight or both, shipyard, marine repair shop, wharf or dock, ice plant, ice-
refrigeration plant, canal, irrigation system, gas, electric light, heat and power,
water supply and power petroleum, sewerage system, wire or wireless
communications systems, wire or wireless broadcasting stations and other
similar public services. x x x"
There is greater reason for holding petitioner to be a common carrier
because the transportation of goods is an integral part of her business. To
uphold petitioner's contention would be to deprive those with whom she
contracts the protection which the law affords them notwithstanding the fact
that the obligation to carry goods for her customers, as already noted, is part
and parcel of petitioner's business. As a common carrier, she is bound to
observe extraordinary diligence in transporting the goods and is presumed
negligent when she failed to deliver the same.

Note: From the Survey Report, it is clear that the shipment was
discharged from the vessel to the arrastre, Marina Port Services Inc., in good
order and condition as evidenced by clean Equipment Interchange Reports
(EIRs). Had there been any damage to the shipment, there would have been
a report to that effect made by the arrastre operator. The cargoes were
withdrawn by petitioner from the arrastre still in good order and condition as
the same were received by the former without exception, that is, without any
report of damage or loss. Surely, if the container vans were deformed,
cracked, distorted or dented, the petitioner would report it immediately to the
consignee or make an exception on the delivery receipt or note the same in
the Warehouse Entry Slip (WES). None of these took place. To put it simply,
the petitioner received the shipment in good order and condition and
delivered the same to the consignee damaged. Therefore, the damages to
the cargo occurred while it was in the possession of the petitioner. Whenever
the thing is lost (or damaged) in the possession of the debtor (or obligor), it
shall be presumed that the loss (or damage) was due to his fault, unless there
is proof to the contrary. No proof was proffered to rebut this legal presumption
and the presumption of negligence attached to a common carrier in case of
loss or damage to the goods.
 DUMC filed a formal claim with Philamgen for the full amount of the
insurance. Philamgen promptly made payment; it then sought reimbursement
Carrier (Characteristics) - Eunice
● Phil. American Gen. Insurance v. VPKS Shipping Co, GR 149038 from PKS Shipping of the sum paid to DUMC but the shipping company
● Asia Literage and Shipping Inc v. CA, GR 147246 refused to pay.

Issue:
G.R. No. 149038. April 9, 2003
Whether Philamgen is a common carrier and is thus liable for the loss of the
cargo
PHILIPPINE AMERICAN GENERAL INSURANCE COMPANY, petitioner,
vs.
Ruling:
PKS SHIPPING COMPANY, respondent.
Yes. The Civil Code defines “common carriers” in the following terms:
“Article 1732. Common carriers are persons, corporations, firms or associations
Doctrine: engaged in the business of carrying or transporting passengers or good s o r b o th , b y
Much of the distinction between a public common carrier and a private or land, water, or air for compensation, offering their services to the public.”
special carrier lies in the character of the business. The former’s principal
activity is the carrying of persons or goods or both and such holds himself out Complementary to the codal definition, Section 13(b) of the Public Service Act
to carry goods for the general public, while the latter does such carrying only defines “public service” as:
as an ancillary activity (in local idiom, as ‘a sideline’).
“x x x every person that now or hereafter may own, operate, manage, or
The concept of a common carrier does not change merely because individual control in the Philippines, for hire or compensation, with general or limited
contracts are executed or entered into with patrons of the carrier—such clientele, whether permanent, occasional or accidental, and done for general
restrictive interpretation would make it easy for a common carrier to escape business purposes, any common carrier… xxx
liability by the simple expedient of entering into those distinct agreements with
clients. In De Guzman vs. CA, it was held that much of the distinction between a
public common carrier and a private or special carrier is said to lie in the
Facts: character of the business. The former’s principal activity is the carrying of
Davao Union Marketing Corporation (DUMC) contracted the services of PKS persons or goods or both, and while the latter who does such carrying only as
Shipping Company (PKS Shipping) for the shipment to Tacloban City of an ancillary activity (in local idiom, as ‘a sideline’). However, Art 1732 of the
seventy-five thousand (75,000) bags of cement worth P3,375,000.00. DUMC Civil Code makes no such distinction.The concept of common carrier in the
insured the goods for its full value with Philippine American General Civil Code may be seen to coincide with the notion of ‘public service’ under
Insurance Company (Philamgen). The goods were loaded aboard the barge the Public Service Act.
owned by PKS Shipping.
If the undertaking is an isolated transaction, not a part of the business or
On December 22, 1993, while the barge was being towed, it sank a couple of occupation, and the carrier does not hold itself out to carry the goods for the
miles off the coast of Dumagasa Point, in Zamboanga del Sur, bringing down general public or to a limited clientele, although involving the carriage of
with it the entire cargo of 75,000 bags of cement. goods for a fee, the person or corporation providing such service could very
well be just a private carrier.
Here, factual findings indicate that PKS Shipping has engaged itself in the
business of carrying goods for others, although for a limited clientele,
undertaking to carry such goods for a fee. The regularity of its activities in this
area indicates more than just a casual activity on its part. Neither can the
concept of a common carrier change merely because individual contracts are
executed or entered into with patrons of the carrier. Such restrictive
interpretation would make it easy for a common carrier to escape liability by
the simple expedient of entering into those distinct agreements with clients.

Pursuant to Art. 1733 of the Civil Code, common carriers are required to
observe extraordinary diligence in the vigilance over the goods they carry.
In case of loss, destruction or deterioration of goods, common carriers are
presumed to have been at fault or to have acted negligently, and the
burden of proving otherwise rests on them.

The appellate court ruled, based on the testimonies and sworn marine
protests of the respective vessel masters, that there was no way by which the
barge’s or the tugboat’s crew could have prevented the sinking of the barge.
The vessel was suddenly tossed by waves of extraordinary height of six (6) to
eight (8) feet and buffeted by strong winds of 1.5 knots resulting in the entry
of water into the barge’s hatches.

Thus, the Supreme Court ruled that PKS Shipping should indeed be absolved
from liability for the loss of the DUMC cargo.
G.R. No. 147246. August 19, 2003
ASIA LIGHTERAGE AND SHIPPING, INC., petitioner,
vs.
COURT OF APPEALS and PRUDENTIAL GUARANTEE AND
ASSURANCE, INC., respondents.
Doctrine:
● Common carriers carry with them presumption of negligence in case
of loss, destruction or deterioration of the goods as provided by
Article 1732.
● Article 1734 of the Civil Code, however, enumerates instances when
the presumption of negligence does not attach.
Facts:
On June 13, 1990, a shipment of 3,150 metric tons of Better Western White
Wheat in bulk, valued at US$423,192,354 by Marubeni American Corporation
of Portland, Oregon on board the vessel M/V NEO CYMBIDIUM V-26 for
delivery to the consignee, General Milling Corporation in Manila. The
shipment was insured by Prudential Guarantee and Assurance, Inc. against
loss or damage for P14,621,771.75.
On July 25, 1990, the carrying vessel arrived in Manila and the cargo was
transferred to the custody of the Asia Lighterage and Shipping to which it was
contracted by the consignee as carrier to deliver the cargo to consignee’s
warehouse at Bo. Ugong, Pasig City.
On August 15, 1990, 900 metric tons of the shipment was loaded on a barge
for delivery to consignee however, the cargo did not reach its destination. It
appeared that the transport was suspended due to a warning of an incoming
typhoon.
On August 22, 1990, Asia Lighterage proceeded to pull the barge to
Engineering Island off Baseco to seek shelter from the approaching typhoon.
The barge containing the cargo was tied down to other barges while
weathering out the storm that night. A few days after, the barge developed a
list because of a hole it sustained after hitting an unseen protuberance
underneath the water. Asia Lighterage secured the services of Gaspar
Salvaging Corporation which refloated the barge by patching the hole with
clay and cement.
The barge was then towed to ISLOFF terminal before it finally headed
towards the consignee’s wharf on September 5, 1990. Upon reaching the Sta.
Mesa spillways, the barge again ran aground due to strong current, a portion
of the goods was transferred to three other barges.
The next day, September 6, 1990, the towing bits of the barge broke.It sank
completely, resulting in the total loss of the remaining cargo.
Issue: Whether Asia Lighterage is a common carrier
Ruling: Yes. Asia Lighterage is a common carrier.
Article 1732 of the Civil Code defines common carriers as persons,
corporations, firms or associations engaged in the business of carrying or
transporting passengers or goods or both, by land, water, or air, for
compensation, offering their services to the public.
This definition, however, makes no distinction as to one carrying persons or
goods as a principal activity and one who does the said activity only as an
ancilliary activity.
In De Guzman vs. Court of Appeals, the Supreme Court considered the
private respondent as a common carrier even if his principal occupation was
not the carriage of goods for others, but that of buying used bottles and scrap
metal in Pangasinan and selling these items in Manila.
In the case at bar, the principal business of the petitioner is that of lighterage
and drayage and it offers its barges to the public for carrying or transporting
goods by water for compensation. Thus, Asia Lighterage is clearly a common
carrier, even though its carrying of goods is done on an irregular manner and
with only limited clientele. A common carrier need not have fixed and publicly
known routes. Neither does it have to maintain terminals or issue tickets.

As held in Bascos vs. Court of Appeals, the test to determine if one is a

common carrier is whether the given undertaking is a part of the business
engaged in by the carrier which he has held out to the general public as his
occupation rather than the quantity or extent of the business transact ed. In
this case, the Asia Lighterage admitted that it is engaged in the business of
shipping and lighterage,offering its barges to the public, despite its limited
clientele for carrying or transporting goods by water for compensation.

Common carriers carry with them the presumption of negligence in case of

loss, destruction, or deterioration of goods. To overcome such, the common
carrier must prove that it exercised extraordinary diligence and such
exemption falls under Article 1734 of the Civil Code, which provides:

Art. 1734. Common carriers are responsible for the loss, destruction, or deterio ra ti o n
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.

Here, Asia Lighterage failed to prove that the typhoon was the proximate
cause of the loss of goods and that it exercised extraordinary diligence
before, during and after the occurrence of the typhoon to prevent or minimize
the loss. Moreover, the employees of Asia Lighterage themselves have
admitted that when the towing bits of the vessel broke that caused its sinking
and the total loss of the cargo upon reaching the Pasig River, it was no longer
affected by the typhoon. The typhoon then is not the proximate cause of the
loss of the cargo; a human factor, i.e., negligence had intervened.

2. Carrier - Limited Clientele & Means of Transportation (Digested by
Kaye L.)
● Luzon Stevedoring v. Public Service Commission, 16 SCRA 612
● First Philippine Industrial Corp v. CA 300 SCRA 661
G.R. No. L-5458. September 16, 1953
LUZON STEVEDORING CO., INC., and VISAYAN STEVEDORE
TRANSPORTATION CO., Petitioners,
v.
THE PUBLIC SERVICE COMMISSION and THE PHILIPPINE
SHIPOWNERS ASSOCIATION, Respondents.
Doctrine:
A public utility may not evade control and supervision of its operation
by the government by selecting its customers under the guise of private
transactions.
Facts:
Respondents Luzon Stevedoring Company, Inc., and Visayan
Stevedore Transportation Co., are regularly engaged in the hauling business
serving a limited portion of the public. Respondent Luzon Stevedoring
Company, Inc., which has among its regular customers the San Miguel,
PRATRA, among others, charged PRATRA at the rate of P0.60 per picul or
bag of sugar, and for the transportation of fertilizer, this respondent charged
P12 per metric ton. While respondent Visayan Stevedore Transportation
Co., has among its regular customers the Insular Lumber, Kim Kee Chua Yu
& Co. During practically the same period, respondent Visayan Stevedore
Transportation Company transported in its barges and towed by its tugboats
sugar for Kim Kee Chua Yu & Company, charging them for freightage P0.60
per picul or bag.
Philippine Shipowners’ Association complained to Public Service
Commission that the respondents were engaged in the transportation of
cargo in the Philippines for hire or compensation without authority or approval
of the Commission, and collected freight charges at the rate of P0.60 per bag
or picul, which said rates resulted in ruinous competition with complainant.
Issue:
Whether or not respondents, who only cater limited clientele, are
considered public service that are subjects to regulation of Public Service
Commission
Held:
Yes. Section 13 (b) of the Public Service Law (Commonwealth Act No.
146) defines public service:
"The term ’public service’ includes every person that now
or hereafter may own, operate, manage, or control in the Philippines,
for hire or compensation, with general or limited clientele, whether
permanent, occasional or accidental, and done for general business
purposes any common carrier, railroad, street railway, traction
railway, subway, motor vehicle, either for freight or passenger, or
both, with or without fixed route and whatever may be its
classification, freight or carrier service of any class, express
service, steamboat, or steamship line, pontines, ferries, and small
water craft, engaged in the transportation of passengers and
freight, shipyard, marine railway, marine repair shop, warehouse,
wharf or dock, ice plant, ice-refrigeretion plant, canal, irrigation
system, sewerage, gas, electric light, heat and power, water supply
and power, petroleum, sewerage system, telephone, wire or wireless
telegraph system and broadcasting radio stations." It is not
necessary, under this definition, that one holds himself out as serving
or willing to serve the public in order to be considered public service.
In this case, the transportation service, which was the subject of
complaint was not casual or incidental. It had been carried on regularly for
years at almost uniform rates of charges. Although the number of the
petitioners’ customers was limited, the value of goods transported was not
inconsiderable. Petitioners did not have the same customers all the time
embraced in the complaint, and there was no reason to believe that they
would not accept, and there was nothing to prevent them from accepting, new
customers that might be willing to avail of their service to the extent of their
capacity.

Therefore, the appealed order of the Public Service Commission was

affirmed by the Court citing, “the determination of the legislature that a
particular business is subject to the regulatory power, because the public
welfare is dependent upon its proper conduct and regulation, will not lightly
be disregarded by the court. A public utility may not evade control and
supervision of its operation by the government by selecting its
customers under the guise of private transactions.
G.R. No. 125948. December 29, 1998
FIRST PHILIPPINE INDUSTRIAL CORPORATION, petitioner,
vs.
COURT OF APPEALS, HONORABLE PATERNO V. TAC-AN, BATANGAS
CITY et. al, respondents.
Doctrine:
It has been held that the true test of a common carrier is the carriage
of passengers or goods, provided it has space, for all who opt to avail
themselves, its transportation service for a fee. (National Steel Corporation
vs. Court of Appeals, 283 SCRA 45[1997])
Facts:
First Philippine Industrial Corporation (FPIC) is a pipeline operator
with a government concession granted under the Petroleum Act (Republic Act
387) to contract, install and operate oil pipelines. It is engaged in the business
of transporting petroleum products from the Batangas refineries, via pipeline,
to Sucat and JTF Pandacan Terminals.
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. The respondent City Treasurer assessed a
business tax on the petitioner amounting to P956,076.04
Petitioner contended that since its business is engaged in
transporting petroleum products, it is exempt from paying tax on gross
receipts under Section 133 of the Local Government Code of 1991.
Issue:
Whether or not the FPIC is a common carrier
Held:
Yes. 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.
Under the Petroleum Act of the Philippines (Republic Act 387),
petitioner is considered a “common carrier.” Thus, Article 86 thereof provides
that:
“Art. 86. Pipe line concessionaire as common carrier.—A pipe line
shall have the preferential right to utilize installations for the transportation of
petroleum owned by him, but is obligated to utilize the remaining
transportation capacity pro rata for the transportation of such other petroleum
as may be offered by others for transport, and to charge without
discrimination such rates as may have been approved by the Secretary of
Agriculture and Natural Resources.”
Republic Act 387 also regards petroleum operation as a public utility.
Pertinent portion of Article 7 thereof provides:
“that everything relating to the exploration for and exploitation of
petroleum x x x and everything relating to the manufacture, refining,
storage, or transportation by special methods of petroleum, is hereby
declared to be a public utility.” (Italics Supplied)
The Bureau of Internal Revenue likewise considers the petitioner a
“common carrier.” In BIR Ruling No. 069-83, it declared:
“x x x since [petitioner] is a pipeline concessionaire that is engaged only
in transporting petroleum products, it is considered a common carrier
under Republic Act No. 387 x x x. Such being the case, it is not subject to
withholding tax prescribed by Revenue Regulations No. 13-78, as amended.”
From the foregoing disquisition, there is no doubt that petitioner is a
“common carrier.”

3. Carrier - Characteristics (Digested by Dave)
● Caltex Phils v. Sulpicio Lines, 315 SCRA 709
● Coastwise Literrage v. CA, 24 SCRA 797
G.R. No. 131166 September 30, 1999
CALTEX (PHILIPPINES), INC., petitioner,
vs.
SULPICIO LINES, INC., et. al
Doctrines: See Ruling
● Different charters were discussed in this case: Charter party; contract
of affreightment; demise or bareboat charter. In the case of Caltex,
he is a party to a contract of affreightment for
Facts: On December 20, 1987, motor tanker MV Vector, carrying petroleum
products of Caltex, collided in the open sea with passenger ship MV Doña
Paz, causing the death of all but 25 of the latter’s passengers. MV Doña Paz
carried an estimated 4,000 passengers most were not in the passenger
manifest.
The Board of Marine Inquiry in BMI Case No. 653-87 after investigation found
that the MT Vector, its registered operator Francisco Soriano, and its owner
and actual operator Vector Shipping Corporation, were at fault and
responsible for its collision with MV Doña Paz
Among those who died were Sebastian Canezal and his daughter Corazon
Canezal. On March 22, 1988, the board of marine inquiry found that Vector
Shipping Corporation was at fault. On February 13, 1989, Teresita Cañezal
and Sotera E. Cañezal, Sebastian Cañezal’s wife and mother respectively,
filed with the Regional Trial Court of Manila a complaint for damages arising
from breach of contract of carriage against Sulpicio Lines.
Sulpicio filed a third-party complaint against Vector and Caltex. Sulpicio
alleged that Caltex chartered MT Vector with gross and evident bad faith
knowing fully well that MT Vector was improperly manned, ill-equipped,
unseaworthy and a hazard to safe navigation; as a result, it rammed against
MV Doña Paz in the open sea setting MT Vector's highly flammable cargo
ablaze.
The trial court dismissed the complaint against Caltex, but the Court of
Appeals included the same in the liability. Hence, Caltex filed this petition.
Issue (1): Whether or not the charterer Caltex is liable?
Held (1): No. Petitioner Caltex and Vector entered into a contract of
affreightment, also known as a voyage charter.
A charter party is a contract by which an entire ship, or some
principal part thereof, is let by the owner to another person for a specified
time or use. It may be a time charter, voyage charter, or demise/bareboat
charter.
A contract of affreightment is one by which the owner of a ship or
other vessel lets the whole or part of her to a merchant or other person for
the conveyance of goods, on a particular voyage, in consideration of the
payment of freight. It may be either time charter, wherein the leased vessel
is leased to the charterer for a fixed period of time, or voyage charter,
wherein the ship is leased for a single voyage. In both cases, the charter -
party provides for the hire of the vessel only, either for a determinate period
of time or for a single or consecutive voyage, the ship owner to supply the
ship's store, pay for the wages of the master of the crew, and defray the
expenses for the maintenance of the ship.
Under a demise or bareboat charter on the other hand, the
charterer mans the vessel with his own people and becomes, in effect, the
owner for the voyage or s ervice stipulated, subject to liability for damages
caused by negligence.
Issue (2): Whether or not MV Vector is a common carrier
Held (2): Yes. In this case, the charter party agreement did not convert the
common carrier into a private carrier. The parties entered into a voyage
charter, which retains the character of the vessel as a common carrier. It
is imperative that a 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 time-charter or
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.
Indubitably, a ship-owner in a time or voyage charter retains possession and
control of the ship, although her holds may, for the moment, be the property
of the charterer.

A common carrier is a person or corporation whose regular business is to

carry passengers or property for all persons who may choose to employ and
to remunerate him. MT Vector fits the definition of a common carrier under
Article 1732 of the Civil Code. In Guzman vs. Court of Appeals, we ruled:

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

Art. 1732. Common carriers are persons, corporations, firms or

associations engaged in the business of carrying or transporting passenge rs
for 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 betw e e n a

person or enterprise offering transportation service on a regular or scheduled
basis and one offering such services on an occasional, episod ic or
unscheduled basis.
Coastwise Lighterage Corporation v. CA
Facts: Pag-asa Sales Inc. entered into a contract to transport
molasses from the province of Negros to Manila with Coastwise
Lighterage Corporation (Coastwise for brevity), using the latter's dumb
barges. The barges were towed in tandem by the tugboat MT Marica,
which is likewise owned by Coastwise. Upon reaching Manila Bay, one
of the barges, "Coastwise 9", struck an unknown sunken object. The
forward buoyancy compartment was damaged, and water gushed in
through a hole "two inches wide and twenty-two inches long". As a
consequence, the molasses at the cargo tanks were contaminated.
Pag-asa filed a claim against Philippine General Insurance Company,
the insurer of its cargo. Philgen paid P700,000 for the value of the
molasses lost.
Philgen then filed an action against Coastwise to recover the money it
paid, claiming to be subrogated to the claims which the consignee may
have against the carrier. Both the trial court and the Court of Appeals
ruled against Coastwise.
Issues:
(1) Whether Coastwise was transformed into a private carrier
by virtue of the contract it entered into with Pag-asa, and whether it
exercised the required degree of diligence
(2) Whether Philgen was subrogated into the rights of the
consignee against the carrier
Held:
(1) Pag-asa Sales, Inc. only leased three of petitioner's vessels, in
order to carry cargo from one point to another, but the possession,
command mid navigation of the vessels remained with petitioner
Coastwise Lighterage. Coastwise Lighterage, by the contract of
affreightment, was not converted into a private carrier, but remained a
common carrier and was still liable as such. The law and jurisprudence
on common carriers both hold that the mere proof of delivery of goods
in good order to a carrier and the subsequent arrival of the same
goods at the place of destination in bad order makes for a prima facie
case against the carrier. It follows then that the presumption of
negligence that attaches to common carriers, once the goods it is
sports are lost, destroyed or deteriorated, applies to the petitioner.
This presumption, which is overcome only by proof of the exercise of
extraordinary diligence, remained unrebutted in this case. Jesus R.
Constantino, the patron of the vessel "Coastwise 9" admitted that he
was not licensed.
Coastwise Lighterage cannot safely claim to have exercised
extraordinary diligence, by placing a person whose navigational skills
are questionable, at the helm of the vessel which eventually met the
fateful accident. It may also logically, follow that a person without
license to navigate, lacks not just the skill to do so, but also the utmost
familiarity with the usual and safe routes taken by seasoned and
legally authorized ones. Had the patron been licensed he could be
presumed to have both the skill and the knowledge that would have
prevented the vessel's hitting the sunken derelict ship that lay on their
way to Pier 18. As a common carrier, petitioner is liable for breach of
the contract of carriage, having failed to overcome the presumption of
negligence with the loss and destruction of goods it transported, by
proof of its exercise of extraordinary diligence.
(2) Article 2207 of the Civil Code is founded on the well-settled
principle of subrogation. If the insured property is destroyed or
damaged through the fault or negligence of a party other than the
assured, then the insurer, upon payment to the assured will be
subrogated to the rights of the assured to recover from the wrongdoer
to the extent that the insurer has been obligated to pay. Payment by
the insurer to the assured operated as an equitable assignment to the
former of all remedies which the latter may have against the third party
whose negligence or wrongful act caused the loss. The right of
subrogation is not dependent upon, nor does it grow out of, any
private of contract or upon written assignment of, claim. It accrues
simply upon payment of the insurance claim by the insurer.

GRETCHEN’S DIGESTS
3.7 Planters Products Inc. v. CA, 226 SCRA 476
4.1 Luzon Brokerage v. Public Service Commission GR L-5458
G.R. No. 101503 September 15, 1993
PLANTERS PRODUCTS, INC., petitioner,
vs.
COURT OF APPEALS, SORIAMONT STEAMSHIP AGENCIES
AND KYOSEI KISEN KABUSHIKI KAISHA, respondents.
FACTS:
Planters Products, Inc. (PPI), purchased from Mitsubishi International
Corporation (MITSUBISHI) of New York, U.S.A., 9,329.7069 metric
tons (M/T) of Urea 46% fertilizer which the latter shipped in bulk on
16 June 1974 aboard the cargo vessel M/V "Sun Plum" owned by
private respondent Kyosei Kisen Kabushiki Kaisha (KKKK) from
Kenai, Alaska, U.S.A., to Poro Point, San Fernando, La Union,
Philippines, as evidenced by Bill of Lading No. KP-1 signed by the
master of the vessel and issued on the date of departure.
On 17 May 1974, or prior to its voyage, a time charter-party on the
vessel M/V "Sun Plum" pursuant to the Uniform General Charter was
entered into between Mitsubishi as shipper/charterer and KKKK as
shipowner, in Tokyo, Japan. Before loading the fertilizer aboard the
vessel, four (4) of her holds were all presumably inspected by the
charterer's representative and found fit to take a load of urea in bulk.
After the Urea fertilizer was loaded in bulk by stevedores hired by and
under the supervision of the shipper, the steel hatches were closed
with heavy iron lids, covered with three (3) layers of tarpaulin, then
tied with steel bonds. The hatches remained closed and tightly sealed
throughout the entire voyage.
Upon arrival of the vessel at her port of call on 3 July 1974, the steel
pontoon hatches were opened with the use of the vessel's boom.
Petitioner unloaded the cargo from the holds into its steel-bodied
dump trucks which were parked alongside the berth, using metal
scoops attached to the ship, pursuant to the terms and conditions of
the charter-partly.
It took eleven (11) days for PPI to unload the cargo. A private marine
and cargo surveyor, Cargo Superintendents Company Inc. (CSCI),
was hired by PPI to determine the "outturn" of the cargo shipped. The
survey report submitted by CSCI to the consignee (PPI) dated 19
July 1974 revealed a shortage in the cargo of 106.726 M/T and that a
portion of the Urea fertilizer approximating 18 M/T was contaminated
with dirt. The same results were contained in a Certificate of
Shortage/Damaged Cargo dated 18 July 1974 prepared by PPI which
showed that the cargo delivered was indeed short of 94.839 M/T and
about 23 M/T were rendered unfit for commerce, having been
polluted with sand, rust anddirt. Consequently, PPI sent a claim letter
dated 18 December 1974 to Soriamont Steamship Agencies (SSA),
the resident agent of the carrier, KKKK, for P245,969.31 representing
the cost of the alleged shortage in the goods shipped and the
diminution in value of that portion said to have been contaminated
with dirt.
Respondent SSA explained that they were not able to respond to the
consignee's claim for payment because, according to them, what they
received was just a request for short-landed certificate and not a
formal claim, and that this "request" was denied by them because
they "had nothing to do with the discharge of the shipment." Hence,
on 18 July 1975, PPI filed an action for damages with the Court of
First Instance of Manila. The defendant carrier argued that the strict
public policy governing common carriers does not apply to them
because they have become private carriers by reason of the
provisions of the charter-party.
ISSUE:
Whether a common carrier becomes a private carrier by reason of a
charter-party
HELD:
No. A common or public carrier is defined in Article 1732 of the Civil
Code. The definition extends to carriers either by land, air or water
which hold themselves out as ready to engage in carrying goods or
transporting passengers or both for compensation as a public
employment and not as a casual occupation. The distinction
between a "common or public carrier" and a "private or special
carrier" lies in the character of the business, such that if the
undertaking is a single transaction, not a part of the general business
or occupation, although involving the carriage of goods for a fee, the
person or corporation offering such service is a private carrier.
It is therefore imperative that a 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 time-charter or 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. Indubitably, a shipowner in a time or voyage charter
retains possession and control of the ship, although her holds may,
for the moment, be the property of the charterer.
OTHER ISSUES:
Is the carrier responsible for loss?
Article 1734 of the New Civil Code provides that common carriers are
not responsible for the loss, destruction or deterioration of the goods
if caused by the charterer of the goods or defects in the packaging or
in the containers. The Code of Commerce also provides that all
losses and deterioration which the goods may suffer during the
transportation by reason of fortuitous event, force majeure, or the
inherent defect of the goods, shall be for the account and risk of the
shipper, and that proof of these accidents is incumbent upon the
carrier. The carrier, nonetheless, shall be liable for the loss and
damage resulting from the preceding causes if it is proved, as against
him, that they arose through his negligence or by reason of his
having failed to take the precautions which usage has established
among careful persons.
What kind of diligence is required?
Article 1733 of the New Civil Code mandates that common carriers,
by reason of the nature of their business, should observe
extraordinary diligence in the vigilance over the goods they carry.
In the case of private carriers, however, the exercise of ordinary
diligence in the carriage of goods will suffice. Moreover, in the case
of loss, destruction or deterioration of the goods, common carriers
are presumed to have been at fault or to have acted negligently, and
the burden of proving otherwise rests on them. On the contrary, no
such presumption applies to private carriers, for whosoever alleges
damage to or deterioration of the goods carried has the onus of
proving that the cause was the negligence of the carrier.
G.R. No. L-37661 November 16, 1932
LUZON BROKERAGE CO., INC., petitioner,
vs.
THE PUBLIC SERVICE COMMISSION and A. D. WILLIAMS,
Director of the Bureau of Public Works,respondents.
FACTS:
For approximately twenty years last past, the petitioner has been and
still is conducting the business of customs broker and that in
connection therewith, the petitioner conducts business of receiving,
storing, forwarding and delivering cargoes of all kinds. It has been
and is maintaining and operating a fleet of trucks designed and
utilized exclusively for the carriage of goods or cargo of its particular
customers, which from time to time are landed and received from
vessels and delivered to the consignees or owners thereof, or are
forwarded and delivered to such vessels for shipment.
Petitioner does not solicit nor accept nor hold itself out as ready or
willing to accept from the public indiscriminately goods or cargo for
transportation on its aforesaid trucks, and has no intention of doing
so; and that all the transporting, carrying, and delivering business
conducted by the petitioner is limited and confined to the articles,
goods, and wares of its patrons as customs broker. For brokerage
services, it makes and collect charges, the amount of which is
determined in each instance upon the basis of previous or existing
special contract had with the particular patron or customer for whom
such services are rendered, petitioner receives compensation for its
transportation and delivery services in addition to its customary
customs brokerage fees.
All of petitioner’s trucks used in connection therewith were duly
registered and licensed in the Bureau of Public Works under the so-
called TH denomination, paying therefor the corresponding annual
registration and license fees, in accordance with the requirements of
said bureau. For the past twenty years, it was not required directly,
except in the instance hereinafter adverted to, by the Public Service
Commission or the predecessors thereof to secure a certificate of
public convenience for the operation of its trucks, or otherwise to
submit this incidental aspect of its business to the jurisdiction,
regulation and control of said commission.
However, a few months after his latest registration, it received from
the Honorable R. A. Cruz, then Acting Commissioner of the Public
Service Commission, a letter requiring the petitioner to file with the
commission within a period convenience for the operation of said
trucks for the alleged reason that said trucks were devoted to the
transportation of cargo for compensation as provided in section 13
of the Public Service Law (Act No. 3316). The petitioner through its
attorney made reply under date of June 3, 1932, wherein the Public
Service Commission was informed, among other things, that the
petitioner is not a "public service" or "public utility" in contemplation of
law in view of the facts and circumstances.
ISSUE:
Did Section 6 of Act No, 3316 convert petitioner as a common
carrier?
HELD:
No. The law in question (section 6 of Act No. 3316) does not convert
it (the petitioner) into a common carrier. It simply declares the
operation and maintenance of its fleet of trucks a public service and
as such it merely requires it to secure a certificate of public
convenience and pay the corresponding fee."
This means that under the new law it is not necessary that the
petitioner herein maintains and operates its trucks 'for public use' in
order that the respondent Public Service Commission can assume
jurisdiction and control over them. It is enough that it maintains and
operates them "for hire or compensation" in whatever manner or
form. Public use or use by the public is no longer a requisite under
the new law. "Hire or compensation" is all that is necessary. That, we
submit, is the intention of the Legislature by amending section 13 of
Act No. 3108 by section 6 of Act No. 3316.

The mere omission from section 13 of the phrase "for public use" in
the definition of a public service does not seem to warrant the
inference that the Legislature meant to extend the jurisdiction of the
Public Service Commission to private enterprises not devoted to
public use. The idea of public use is implicit in the term "public
service". A public service is a service for public use. The insertion of
the phrase "for hire or compensation" throws no light on whether the
Legislature intended to include private businesses in the definition of
a public service. This is a stock phrase found in most definitions of a
common carrier and a public utility.
 MR. & MRS. ENGRACIO FABRE, JR. ** and PORFIRIO CABIL vs. COURT
OF APPEALS, and THE WORD FOR THE WORLD CHRISTIAN
FELLOWSHIP, INC et. al
G.R. No. 111127. July 26, 1996.
MENDOZA, J.
Digested by: Vina Cagampang
Facts:
Petitioners Engracio Fabre, Jr. and his wife were owners of a minibus which
they are using in their bus service business. The couple had a driver, Porfirio
J. Cabil, whom they hired in 1981, after trying him out for two weeks. His job
was to take school children to and from the St. Scholastica’s College in
Malate, Manila. On November 2, 1984 private respondent Word for the World
Christian Fellowship Inc. (WWCF) arranged with petitioners for the
transportation of 33 members of its Young Adults Ministry from Manila to La
Union and back. The group was scheduled to leave on November 2, 1984, at
5:00 o’clock in the afternoon but the bus only left by 8:00 o’clock in the
evening. Petitioner Porfirio Cabil drove the minibus. At 11:30 that night,
petitioner Cabil came upon a sharp curve on the highway. The road was
slippery because it was raining, causing the bus, which was running at the
speed of 50 km per hour, to skid to the left road shoulder. The bus hit the left
traffic steel brace and sign along the road and rammed the fence of one
Jesus Escano, then turned over and landed on its left side, coming to a full
stop only after a series of impacts. A coconut tree which it had hit fell on it
and smashed its front portion. Several passengers were injured. Private
respondent Amyline Antonio was thrown on the floor of the bus and pinned
down by a wooden seat which came off after being unscrewed. Cabil, claimed
he did not see the curve until it was too late. He said he was not familiar with
the area and he could not have seen the curve despite the care he took in
driving the bus, because it was dark and there was no sign on the road. He
said that he saw the curve when he was already within 15 to 30 meters of it.
He allegedly slowed down to 30 kilometers per hour, but it was too late.
Amyline Antonio, who was seriously injured, brought this case. As a result of
the accident, she is now suffering from paraplegia and is permanently
paralyzed from the waist down.
Issue:
1. Whether the bus driver, petitioner Porfirio Cabil, was negligent.
2. Whether there was negligence on the part of Sps. Fabre
Ruling:
1. Yes. The bus driver was negligent. The finding that Cabil drove his bus
negligently, while his employer, the Fabres, who owned the bus, failed to
exercise the diligence of a good father of the family in the selection and
supervision of their employee is fully supported by the evidence on record.
Indeed, it was admitted by Cabil that on the night in question, it was raining,
and, as a consequence, the road was slippery, and it was dark. He averred
these facts to justify his failure to see that there lay a sharp curve ahead.
However, it is undisputed that Cabil drove his bus at the speed of 50
kilometers per hour and only slowed down when he noticed the curve some
15 to 30 meters ahead. By then it was too late for him to avoid falling off the
road. Given the conditions of the road and considering that the trip was
Cabil’s first one outside of Manila, Cabil should have driven his vehicle at a
moderate speed. There is testimony that the vehicles passing on that portion
of the road should only be running 20 km per hour, so that at 50 kilometers
per hour, Cabil was running at a very high speed. Considering the foregoing
the fact that it was raining and the road was slippery, that it was dark, that he
drove his bus at 50 km an hour when even on a good day the normal speed
was only 20 km an hour, and that he was unfamiliar with the terrain, Cabil
was grossly negligent and should be held liable for the injuries suffered by
private respondent Amyline Antonio.
2. Yes. There was negligence on the part of Sps. Fabre. Pursuant to Arts.
2176 and 2180 of the Civil Code his negligence gave rise to the presumption
that his employers, the Fabres, were themselves negligent in the selection
and supervision of their employee. Due diligence in selection of employees is
not satisfied by finding that the applicant possessed a professional driver’s
license. The employer should also examine the applicant for his
qualifications, experience and record of service. Due diligence in supervision,
on the other hand, requires the formulation of rules and regulations for the
guidance of employees and the issuance of proper instructions as well as
actual implementation and monitoring of consistent compliance with the rules.
In the case at bar, the Fabres, in allowing Cabil to drive the bus to La Union,
apparently did not consider the fact that Cabil had been driving for school
children only, from their homes to the St. Scholasticas College in Metro
Manila. They had hired him only after a two-week apprenticeship. They had
tested him for certain matters, such as whether he could remember the
names of the children he would be taking to school, which were irrelevant to
his qualification to drive on a long distance travel, especially considering that
the trip to La Union was his first. The existence of hiring procedures and
supervisory policies cannot be casually invoked to overturn the presumption
of negligence on the part of an employer.
a good father of the family in the selection and supervision of their employee.
As Art. 1759 of the Code provides:
Common carriers are liable for the death of or injuries to passengers through the
negligence or w ilful acts of the formers 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 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.

As already stated, this case actually involves a contract of carriage.

Petitioners, the Fabres, did not have to be engaged in the business of public
transportation for the provisions of the Civil Code on common carriers to
apply to them. As this Court has held:

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, w ater,
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 1732 deliberately refrained from making such
distinctions.

As common carriers, the Fabres were bound to exercise extraordinary

diligence for the safe transportation of the passengers to their destination.
This duty of care is not excused by proof that they exercised the diligence of
 ESTELA L. CRISOSTOMO vs. CA and CARAVAN TRAVEL & TOURS
INTERNATIONAL, INC.
GR NO. 138334, August 25, 2005
YNARES-SANTIAGO, J.:
Digested by: Vina Cagampang
Doctrines:
A contract of carriage or transportation is one whereby a c ertain person or
association of persons obligate themselves to transport persons, things, or
news from one place to another for a fixed price. Such person or association
of persons are regarded as carriers and are classified as private or special
carriers and common or public carriers. A common carrier is defined under
Article 1732 of the Civil Code as persons, corporations, firms or associations
engaged in the business of carrying or transporting passengers or goods or
both, by lane, water or air, for compensation, offering their services to the
public.
The negligence of the obligor in the performance of the obligation renders him
liable for damages for the resulting loss suffered by the obligee. Fault or
negligence of the obligor consists in his failure to exercise due care and
prudence in the performance of the obligation as the nature of the obligation
so demands. There is no fixed standard of diligence applicable to each and
every contractual obligation and each case must be determined upon its
particular facts. The degree of diligence required depends on the
circumstances of the specific obligation and whether one has been negligent
is a question of fact that is to be determined after tak ing into account the
particulars of each case.
Facts:
In May 1991, Estela L. Crisostomo contracted the services of Caravan Travel
and Tours International, Inc., through her niece, Meriam Menor, respondent
company’s ticketing manager, to arrange and facilitate her booking, ticketing
and accommodation in a tour, Jewels of Europe. On June 12, 1991, her travel
documents and plane tickets were delivered to her by Menor. Menor then told
her to be at the NAIA on Saturday, two hours before her flight. Without
checking her travel documents, petitioner went to NAIA on Saturday, June
15, 1991, to take the flight. To her dismay, she discovered that the flight she
was supposed to take had already departed the previous day. She learned
that her plane ticket was for the flight scheduled on June 14, 1991. She thus
called up Menor to complain. Subsequently, Menor prevailed upon petitioner
to take another tour the British Pageant. For this tour package, petitioner was
asked anew to pay US$785.00 or P20,881.00 (at the then prevailing
exchange rate of P26.60). She gave respondent US$300 or P7,980.00 as
partial payment and commenced the trip in July 1991. Upon petitioner’s return
from Europe, she demanded from respondent the reimbursement of
P61,421.70, representing the difference between the sum she paid for Jewels
of Europe and the amount she owed respondent for the British Pageant tour.
Respondent company refused to reimburse the amount, contending that the
same was non-refundable. Petitioner filed a complaint against respondent for
breach of contract of carriage and damages. Petitioner alleged that her failure
to join Jewels of Europe was due to respondent’s fault since it did not clearly
indicate the departure date on the plane ticket. Respondent was also
negligent in informing her of the wrong flight schedule through its employee
Menor. She insisted that the British Pageant was merely a s ubstitute for the
Jewels of Europe tour, such that the cost of the former should be properly
set-off against the sum paid for the latter.
Respondent company, Concepcion Chipeco, denied responsibility for
petitioner’s failure to join the first tour. Chipeco insisted that petitioner was
informed of the correct departure date, which was clearly and legibly printed
on the plane ticket. The travel documents were given to petitioner two days
ahead of the scheduled trip. Petitioner had only herself to blame for missing
the flight, as she did not bother to read or confirm her flight schedule as
printed on the ticket. Respondent explained that it can no longer reimburse
the amount paid for Jewels of Europe, considering that the same had already
been remitted to its principal in Singapore, Lotus Travel Ltd., which had
already billed the same even if petitioner did not join the tour. Lastly,
respondent maintained that the British Pageant was not a substitute for the
package tour that petitioner missed. This tour was independently procured by
petitioner after realizing that she made a mistake in missing her flight for
Jewels of Europe. Petitioner was allowed to make a partial payment of only
US$300.00 for the second tour because her niece was then an employee of
the travel agency. Consequently, respondent prayed that petitioner be
ordered to pay the balance of P12,901.00 for the British Pageant package
tour.
Issue:
1. Whether the travel agency liable for breach of contract of carriage
2. Whether the travel agency is negligent in performing its duty thus
committed contractual breach
Ruling:
1. No. The travel agency is not liable for breach of contract of carriage. A
contract of carriage or transportation is one whereby a certain person or
association of persons obligate themselves to transport persons, things, or
news from one place to another for a fixed price. Such person or association
of persons are regarded as carriers and are classified as private or special
carriers and common or public carriers. A common carrier is defined under
Article 1732 of the Civil Code as persons, corporations, firms or associations
engaged in the business of carrying or transporting passengers or goods or
both, by land, water or air, for compensation, offering their services to the
public. From said definition, respondent is not an entity engaged in the
business of transporting either passengers or goods and is therefore, neither
a private nor a common carrier. Respondent did not undertake to transport
petitioner from one place to another since its covenant with its customers is
simply to make travel arrangements in their behalf. Respondent’s services as
a travel agency include procuring tickets and facilitating travel permits or
visas as well as booking customers for tours.
While petitioner concededly bought her plane ticket through the efforts of
respondent company, this does not mean that the latter ipso facto is a
common carrier. At most, respondent acted merely as an agent of the airline,
with whom petitioner ultimately contracted for her carriage to Europe.
Respondent’s obligation to petitioner in this regard was simply to see to it that
petitioner was properly booked with the airline for the appointed date and
time. Her transport to the place of destination, meanwhile, pertained directly
to the airline.
2. No. Respondent company performed its duty diligently and did not
commit any contractual breach.
In the case at bar, the evidence on record shows that respondent company
performed its duty diligently and did not commit any contractual breach.
Hence, petitioner cannot recover and must bear her own damage. The object
of petitioner’s contractual relation with respondent is the latter’s service of
arranging and facilitating petitioners booking, ticketing and accommodation
in the package tour. In contrast, the object of a contract of carriage is the
transportation of passengers or goods. It is in this sense that the contract
between the parties in this case was an ordinary one for services and not one
of carriage. Since the contract between the parties is an ordinary one for
services, the standard of care required of respondent is that of a good father
of a family under Article 1173 of the Civil Code. This connotes reasonable
care consistent with that which an ordinarily prudent person would have
observed when confronted with a similar situation. The test to determine
whether negligence attended the performance of an obligation is: did the
defendant in doing the alleged negligent act use that reasonable care and
caution which an ordinarily prudent person would have used in the same
situation? If not, then he is guilty of negligence.
The evidence on record shows that respondent exercised due diligence in
performing its obligations under the contract and followed standard procedure
in rendering its services to petitioner. The plane ticket issued to petitioner
clearly reflected the departure date and time, contrary to petitioner’s
contention. The travel documents, consisting of the tour itinerary, vouchers
and instructions, were likewise delivered to petitioner two days prior to the
trip. Respondent also properly booked petitioner for the tour, prepared the
necessary documents and procured the plane tickets. It arranged petitioner’s
hotel accommodation as well as food, land transfers and sightseeing
excursions, in accordance with its avowed undertaking. Therefore, it is clear
that respondent performed its prestation under the contract as well as
everything else that was essential to book petitioner for the tour. Had
petitioner exercised due diligence in the conduct of her affairs, there would
have been no reason for her to miss the flight. Needless to say, after the
travel papers were delivered to petitioner, it became incumbent upon her to
take ordinary care of her concerns. This undoubtedly would require that she
at least read the documents in order to assure herself of the important details
regarding the trip.

The negligence of the obligor in the performance of the obligation renders him liable for damages
for the resulting loss suffered by the obligee. Fault or negligence of the obligor consists in his
failure to exercise due care and prudence in the performance of the obligation as the nature of
the obligation so demands. There is no fixed standard of diligence applicable to each and every
contractual obligation and each case must be determined upon its particular facts. The degree of
diligence required depends on the circumstances of the specific obligation and w hether one has
been negligent is a question of fact that is to be determined after taking into account the
particulars of each case.
 Distinguish from private carriers
Delgado Bro Inc. v Home Insurance Inc, 1 SCRA 854
DELGADO BROTHERS, INC. vs. HOME INSURANCE COMPANY and CA
G.R. No. L-16567 March 27, 1961
FACTS:
On March 7, 1956, respondent Home Insurance Company filed a
complaint against petitioner Delgado Brothers, Inc. alleging that Victor Bijou &
Co. of New York, U.S.A., shipped for Manila aboard S.S. Leoville and
consigned to the Judy Philippines, Inc. of Manila, a shipment of 1 case Linen
Handkerchiefs and 2 cases cotton piece goods, for which, the Barber
Steamship Lines, Inc., issued Bill of Lading No. 119 and insured with Home
Insurance Co. by the shipper and/or consignee. That said vessel arrived at
the Port of Manila and was unloaded complete and in good order from said
vessel by petitioner, but the latter delivered the same to the consignee with 1
case of Linen Handkerchiefs in bad order, with a shortage of 503 yards of
Linen Print Handkerchiefs, to the prejudice, loss and damage of shipper and
or consignee so they filed a claim with the Insurance. Home Insurance Inc.
filed against contractor Delgado Brothers Inc. RTC dismissed the case and
absolving petitioner from liability.
as to record or check all merchandise which may be delivered to said port at
shipside, and in general, (3) to furnish light and water services and other
incidental services in order to undertake its arrastre service.
Note that there is nothing in those functions which relate to the trade
and business of navigation nor to the use or operation of vessels.
Both as to the nature of the functions and the place of their performance
(upon wharves and piers shipside), petitioner's services are clearly not
maritime.
As we held in the Macondray case, they are no different from those of
a depositary or warehouseman. Granting, arguendo, that petitioner's arrastre
service depends on, assists, or furthers maritime transportation, it may be
deemed merely incidental to its aforementioned functions as arrastre operator
and does not, thereby, make petitioner's arrastre service maritime in
character.
To give admiralty jurisdiction over a contract as maritime, such
contract must relate to the trade and business of the sea; it must be
essentially and fully maritime in its character; it must provide for maritime
services, maritime transactions, or maritime casualties.

ISSUE:
Is petitioner’s function related to the trade and business of navigation or to the
trade and business of navigation or to the use and operation of vessels?

RULING:
Delgado Brothers, Inc. has nothing to do with the loading or
unloading of cargoes to and from the ships. Its operation on and its
responsibility for the merchandise and goods begins from the time they are
placed upon the wharves or piers or delivered along sides of ships

Petitioner's functions as arrastre operator are (1) to receive, handle,

care for, and deliver all merchandise imported and exported, upon or passing
over Government-owned wharves and piers in the Port of Manila, (2) as well
 Cebu Arrastre Services v. CIR, GR No. L-7444 VIENNA
CEBU ARRASTRE SERVICE vs. COLLECTOR OF INTERNAL REVENUE
G.R. No. L-7444. May 30, 1956
FACTS:
In 1952 the Cebu Arrastre, an association of persons engaged in the
handling of cargoes carried by coastwise vessels stopping at the port of
Cebu, thru its counsel Atty. Jose Muaña petitioned the Collector of Internal
Revenue for the exemption and the refund based on the following grounds:
(1) That they were a group of laborers who had recently organized
themselves into an arrastre service association.
(2) That the work of the men of the said arrastre group is under the
direct supervision and control of the officers of the ships.
(3) That the Cebu Arrastre Service is engaged solely in the
loading and unloading of cargoes to and from the boats and is not
engaged in the transportation business.”
The Collector(CIR) referred the matter to his agent in Cebu for
investigation. Mr. Ignacio Quijano, the Assistant Agent, conducted the
investigation and filed his report, that:
“6. The ‘Cebu Arrastre Service Co., Inc.’ is not engaged in the
transportation of the cargoes from the wharf to the bodegas of the
shippers. The shippers have their own trucks or provide for the
transportation of their cargoes from the wharf to their bodegas.
“7. The laborers of the ‘Cebu Arrastre Service Co., Inc.’ help
only in the loading of the cargoes from the wharf to the shippers’
trucks, for the shippers’ trucks are provided with their own ‘journales’.”
On the basis of said report the Collector denied the petition, holding
that inasmuch as the Cebu Arrastre was engaged in the loading and
unloading of vessels in port, it may be considered a stevedore within the
meaning of section 191 of the Tax Code.
ISSUE:
What is the exact nature of the work of the laborers working under the
contracts entered into by the Cebu Arrastre Co. Inc. with Cebu shipowners.
RULING:
The nature of work is stevedoring. Though it is noteworthy that
in the agreement entered into by the shipowners and the corporation
mention is twice made of the ‘arrastre service on the vessels’ (but never
on the piers) to be done by the la borers of the Cebu Arrastre Service
Inc. Another circumstance which may help in obtaining a clear picture
of the situation is that nowhere in these papers is it contended that the
stevedores actually performing the stowing work belong to an
organization not related to the Petitioner.
Cebu Arrastre admittedly engaged in the work of loading and
unloading coastwise vessels calling at the port of Cebu, should be regarded
as a stevedore and therefore subject to the percentage tax under section 191
of the Tax Code. But even if we applied the narrower and more specific
concept of stevedore used by the Tax Board, namely, that a stevedore is one
who places cargoes in the holds of ships in such a way that the boat would
maintain an even keel, and that even with the movement of the boat,
especially in rough weather, the cargoes would not be displaced from their
original position, still, under the finding of fact made by the Tax Board that the
Cebu Arrastre is engaged in this work of towing cargo either in the hold or
even on the deck, Appellant would be subject to the tax.
Definitions of Stevedores (as quoted in the case from different sources
and jurisprudence):
Stevedores is “one who works at, or one who is responsible for, the
unloading and loading of a vessel in port.
A stevedore is a person employed in loading and unloading a vessel.
Stevedores are class of laborers at the ports whose business it is to
load and unload vessels.
“Stevedore” is defined as “one whose occupation is to load and
unload vessels in port”; other words, a contractor or a jobber for special
business ready to be employed by anybody at his line of work.
 “Stevedore” and “longshoreman”, are synonymous terms when
interpreted in the light of the work they perform, namely loading and
unloading of vessels.

G.R. No. L-69044 May 29, 1987
EASTERN SHIPPING LINES, INC., petitioner,
vs.
INTERMEDIATE APPELLATE COURT and DEVELOPMENT INSURANCE
& SURETY CORPORATION, respondents.
No. 71478 May 29, 1987
EASTERN SHIPPING LINES, INC., petitioner,
vs.
THE NISSHIN FIRE AND MARINE INSURANCE CO., and DOWA FIRE &
MARINE INSURANCE CO., LTD., respondents.
MELENCIO-HERRERA, J.:
Digested by: Terry Louise P. Boligor
Facts: In G.R. No. 69044, sometime in or prior to June, 1977, the M/S
ASIATICA, a vessel operated by petitioner Eastern Shipping Lines, Inc.,
(referred to hereinafter as Petitioner Carrier) loaded at Kobe, Japan for
transportation to Manila, 5,000 pieces of calorized lance pipes in 28 packages
valued at P256,039.00 consigned to Philippine Blooming Mills Co., Inc., and 7
cases of spare parts valued at P92,361.75, consigned to Central Textile Mills,
Inc. Both sets of goods were insured against marine risk for their stated value
with respondent Development Insurance and Surety Corporation.
In G.R. No. 71478, during the same period, the same vessel took on board
128 cartons of garment fabrics and accessories, in two (2) containers,
consigned to Mariveles Apparel Corporation, and two cases of surveying
instruments consigned to Aman Enterprises and General Merchandise. The
128 cartons were insured for their stated value by respondent Nisshin Fire &
Marine Insurance Co., for US $46,583.00, and the 2 cases by respondent
Dowa Fire & Marine Insurance Co., Ltd., for US $11,385.00.
Enroute for Kobe, Japan, to Manila, the vessel caught fire and sank, resulting
in the total loss of ship and cargo. The respective respondent Insurers paid
the corresponding marine insurance values to the consignees concerned and
were thus subrogated unto the rights of the latter as the insured. In this case,
Development Insurance filed suit to recover the amounts they paid to the
insured. The carrier denied liability invoking fortuitous event. Then Nisshin
and Dowa also filed for recovery of amounts from the carrier. They cont end
that the carrier was sea unworthy and that there was no diligence in the
carriage of goods.
Issue: Which law should govern, Philippines or Japan?
Ruling: The laws on the Philippines apply.
The law of the country to which the goods are to be transported governs the
liability of the common carrier in case of their loss, destruction or
deterioration. As the cargoes in question were transported from Japan to the
Philippines, the liability of Petitioner Carrier is governed primarily by the Civil
Code. However, in all matters not regulated by said Code, the rights and
obligations of common carrier shall be governed by the Code of Commerce
and by special laws. Thus, the Carriage of Goods by Sea Act, a special law,
is suppletory to the provisions of the Civil Code.
 G.R. No. L-49407 August 19, 1988
NATIONAL DEVELOPMENT COMPANY, petitioner-appellant,
vs.
THE COURT OF APPEALS and DEVELOPMENT INSURANCE & SURETY
CORPORATION, respondents-appellees.
No. L-49469 August 19, 1988
MARITIME COMPANY OF THE PHILIPPINES, petitioner-appellant,
vs.
THE COURT OF APPEALS and DEVELOPMENT INSURANCE & SURETY
CORPORATION, respondents-
Digested by: Terry Louise P. Boligor
Facts: E. Phillip Company of California loaded on a Phillipine vessel “Dona
Nati” raw cotton consigned for Manila Banking Corp and PBTC. It also loaded
sodium sulfate and aluminum foil in Japan where it collided with “Yasushima
Maru” resulting to the loss and damage of the cargo raw cotton. The total loss
was P19,938.00 which the plaintiff as insurer paid to Guilcon as holder of the
duly endorsed bill of lading. Thus, the plaintiff had paid as insurer the total
amount of P364,915.86 to the consignees or their successors-in-interest, for
the said lost or damaged cargoes. Hence, plaintiff filed this complaint to
recover said amount from the defendants- National Development Company
and Maritime Company of the Phil. as owner and ship agent respectively, of
the said 'Dofia Nati' vessel.
Issue: Which laws govern loss or destruction of goods due to collision of
vessels outside Philippine waters, and the extent of liability as well as the
rules of prescription provided thereunder.
Ruling: The laws of the Philippines will apply, and it is immaterial that the
collision actually occurred in foreign waters, such as Ise Bay, Japan.
Under Article 1733 of the Civil Code, common carriers from the nature of their
business and for reasons of public policy are bound to observe extraordinary
diligence in the vigilance over the goods and for the safety of the passengers
transported by them according to all circumstances of each case.
Accordingly, under Article 1735 of the same Code, in all other than those
mentioned is Article 1734 thereof, the common carrier shall be presumed to
have been at fault or to have acted negligently, unless it proves that it has
observed the extraordinary diligence required by law.
It appears, however, that collision falls among matters not specifically
regulated by the Civil Code, so that no reversible error can be found in
respondent courses application to the case at bar of Articles 826 to 839, Book
Three of the Code of Commerce, which deal exclusively with collision of
vessels.
More specifically, Article 826 of the Code of Commerce provides that where
collision is imputable to the personnel of a vessel, the owner of the vessel at
fault, shall indemnify the losses and damages incurred after an expert
appraisal. But more in point to the instant case is Article 827 of the same
Code, which provides that if the collision is imputable to both vessels, each
one shall suffer its own damages and both shall be solidarily responsible for
the losses and damages suffered by their cargoes.
Significantly, under the provisions of the Code of Commerce, particularly
Articles 826 to 839, the shipowner or carrier, is not exempt from liability for
damages arising from collision due to the fault or negligence of the captain.
Primary liability is imposed on the shipowner or carrier in recognition of the
universally accepted doctrine that the shipmaster or captain is merely the
representative of the owner who has the actual or constructive control over
the conduct of the voyage.
 Kareen’s digests:
Governing Laws
Alitalia v. IAC, 192 SCRA 9
Carriage from Philippine Ports to Foreign ports
NDC v. CA,164 SCRA 593
G.R. No. 71929 : December 4, 1990
ALITALIA vs. INTERMEDIATE APPELLATE COURT and FELIPA E.
PABLO
FACTS: Dr. Felipa Pablo is an associate professor in the
University of the Philippines, and a research grantee of the Philippine Atomic
Energy Agency. She was invited to take part at a meeting of the Department
of Research and Isotopes of the Joint FAO-IAEA Division of Atomic Energy in
Food and Agriculture of the United Nations in Ispra, Italy. She would be the
second speaker on the first day of the meeting. She booked passage on
petitioner airline, ALITALIA. She arrived in Milan on the day before the
meeting. However, she was told by the ALITALIA personnel there at Milan
that her luggage was delayed. When the other flights arrived from Rome, they
did not have the baggage of Dr. Pablo on board. Dr. Pablo then went to
Rome to try to locate her bags herself. However, her baggage could not be
found. As a result, she returned to Manila without attending the meeting in
Ispra, Italy because her scientific papers, slides and other research material
were in her bags.
Dr. Pablo demanded that ALITALIA make reparation for the damages
she suffered. She then commenced an action against ALITALIA. It turned out
that Dr. Pablo’s suitcases were located and forwarded to Ispra , Italy, but only
on the day after her scheduled appearance and participation at the U.N.
meeting. She was no longer there to accept delivery as she was already on
her way home to Manila. The suitcases were not actually restored to Prof.
Pablo by ALITALIA until eleven (11) months later, and four (4) months after
institution of her action. The Court of First Instance rendered judgment in Dr.
Pablo's favor, and was affirmed by the Court of Appeals. The petitioner now
contends that the Warsaw Convention should have been applied to limit
ALITALIA'S liability.
ISSUE: Is the Warsaw Convention applicable in this case?
RULING: Under the Under the Warsaw Convention, an air carrier is
made liable for damages for:
1) the death, wounding or other bodily injury of a passenger if the accident
causing it took place on board the aircraft or in the course of its operations of
embarking or disembarking; 2) the destruction or loss of, or damage to,
any registered luggage or goods, if the occurrence causing it took place
during the carriage by air;" and 3) delay in the transportation by air of
passengers, luggage or goods.
The convention however denies to the carrier availment of the
provisions which exclude or limit his liability, if the damage is caused by his
willful misconduct, or by such default on his part as is considered to be
equivalent to willful misconduct. The Convention does not thus operate as an
exclusive enumeration of the instances of an airline's liability, or as an
absolute limit of the extent of that liability. It should be deemed a limit of
liability only in those cases where the cause of the death or injury to person,
or destruction, loss or damage to property or delay in its transport is not
attributable to or attended by any willful misconduct, bad faith, recklessness,
or otherwise improper conduct on the part of any official or employee for
which the carrier is responsible, and there is otherwise no special or
extraordinary form of resulting injury. The Hague Protocol amended the
Warsaw Convention by removing the provision that if the airline took all
necessary steps to avoid the damage, it could exculpate itself completely,
and declaring the stated limits of liability not applicable "if it is proved that the
damage resulted from an act or omission of the carrier, its servants or agents,
done with intent to cause damage or recklessly and with knowledge that
damage would probably result." The same deletion was effected by the
Montreal Agreement of 1966, with the result that a passenger could recover
unlimited damages upon proof of willful misconduct.
The Convention does not thus operate as an exclusive enumeration
of the instances of an airline's liability, or as an absolute limit of the extent of
that liability. It should be deemed a limit of liability only in those cases where
the cause of the death or injury to person, or destruction, loss or damage to
property or delay in its transport is not attributable to or attended by any willful
misconduct, bad faith, recklessness, or otherwise improper conduct on the
part of any official or employee for which the carrier is responsible, and there
is otherwise no special or extraordinary form of resulting injury. On the other
hand, the Warsaw Convention has invariably been held inapplicable, or as
not restrictive of the carrier's liability, where there was satisfactory evidence
of malice or bad faith attributable to its officers and employees.
In the case at bar, no bad faith or otherwise improper conduct may be
ascribed to the employees of petitioner airline. The luggage of Dr. Pablo was
eventually returned to her, although belatedly, but without appreciable
damage. However, the compensation for the injury suffered by Dr. Pablo
cannot under the circumstances be restricted to that prescribed by the
Warsaw Convention for delay in the transport of baggage.
 G.R. No. L-49407 August 19, 1988
NATIONAL DEVELOPMENT COMPANY vs. THE COURT OF APPEALS
and DEVELOPMENT INSURANCE & SURETY CORPORATION
Doctrine:
● The law of the country to which the goods are to be transported
governs the liability of the common carrier in case of their loss,
destruction or deterioration.
● The Carriage of Goods by Sea Act, a special law, is merely
suppletory to the provision of the Civil Code.
FACTS: The National Development Company (NDC) appointed
Maritime Company of the Philippines (MPC) as its agent to manage and
operate one of its vessel known as the Dona Nati for and in its behalf and
account. The E. Philipp Corporation of New York loaded on board the vessel
"Dona Nati" at San Francisco, California, a total of 1,200 bales of American
raw cotton. Also loaded on the same vessel at Tokyo, Japan, were the cargo
of Kyokuto Boekui, Kaisa, Ltd. consisting of 200 cartons of sodium lauryl
sulfate and 10 cases of aluminum foil. En route to Manila the vessel Dofia
Nati figured in a collision at Ise Bay, Japan with a Japanese vessel 'SS
Yasushima Maru'. As a result of the incident, most of the goods were lost and
damaged. The Development Insurance & Surety Corporation, as insurer, paid
for the damages. Hence, Development Insurance filed a complaint to recover
said amount from NDC and MCP as owner and ship agent respectively, of the
said 'Dofia Nati' vessel.
ISSUE: Which laws govern loss or destruction of goods due to
collision of vessels outside Philippine waters?
HELD: The law of the country to which the goods are to be
transported governs the liability of the common carrier in case of their loss,
destruction or deterioration" (Article 1753, Civil Code). Thus, the rule was
specifically laid down that for cargoes transported from Japan to the
Philippines, the liability of the carrier is governed primarily by the Civil Code
and in all matters not regulated by said Code, the rights and obligations of
common carrier shall be governed by the Code of commerce and by laws
(Article 1766, Civil Code). Hence, the Carriage of Goods by Sea Act, a
special law, is merely suppletory to the provision of the Civil Code.
In the case at bar, it has been established that the goods in question
are transported from San Francisco, California and Tokyo, Japan to the
Philippines and that they were lost or due to a collision which was found to
have been caused by the negligence or fault of both captains of the colliding
vessels. Under the above ruling, it is evident that the laws of the Philippines
will apply, and it is immaterial that the collision actually occurred in foreign
waters, such as Ise Bay, Japan.

The trial court rendered a decision ordering MCP and NDC to pay
Development Insurance. The Court of Appeals affirmed said decision. The
main contention of NDC is that the Carriage of Goods by Sea Act should
apply to the case at bar and not the Civil Code or the Code of Commerce.
Under Section 4 (2) of said Act, the carrier is not responsible for the loss or
damage resulting from the "act, neglect or default of the master, mariner, pilot
or the servants of the carrier in the navigation or in the management of the
ship." Thus, NDC insists that based on the findings of both courts, both pilots
of the colliding vessels were at fault and negligent, NDC would have been
relieved of liability under the Carriage of Goods by Sea Act. Digested by Eunice
 returned to Manila without attending the meeting in Ispra, Italy. Upon her
The Warsaw Convention
● Alitalia v. IAC G.R. No. 71929 return, she demanded that Alitalia should make reparation for the damages
The Nature of Business she had suffered.
● Fisher v. Yangco Steamship Co. GR
The suitcases were actually forwarded to Ispra, Italy but only after the day of
her scheduled appearance and participation at the U.N. Meeting.
G.R. No. 71929. December 4, 1990

Issue:
ALITALIA, petitioner,
Whether the Warsaw Convention should be applied to limit Alitalia’s liability
vs.
INTERMEDIATE APPELLATE COURT and FELIPA E. PABLO,
Ruling: No.
respondents.

Doctrine: Under the Warsaw Convention, an air carrier is made liable for damages for:
1) the death, wounding or other bodily injury of a passenger if the
The Warsaw Convention does not operate as an absolute limit of the extent
accident causing it took place on board the aircraft or in the course of its
of an airline's liability; it does not regulate or exclude liability for other
operations of embarking or disembarking;
breaches of contract by the carrier, or misconduct of its employees, or for
2) the destruction or loss of, or damage to, any registered luggage or
some particular or exceptional type of damage.
goods, if the occurrence causing it took place during the carriage by air;" and
3) delay in the transportation by air of passengers, luggage or goods.
Facts:
Dr. Felipa Pablo—an associate professor in the University of the Philippines,
and a research grantee of the Philippine Atomic Energy Agency—was invited The Warsaw Convention however denies to the carrier availment "of the
provisions which exclude or limit his liability, if the damage is caused by his
to take part at a meeting of the Department of Research and Isotopes of the
wilful misconduct or by such default on his part as, in accordance with the law
Joint FAO-IAEA Division of Atomic Energy in Food and Agriculture of the
United Nations in Ispra, Italy. She was programmed as the second speaker of the court seized of the case, is considered to be equivalent to wilful
misconduct," or "if the damage is (similarly) caused x x by any agent of the
on the first day of the meeting. She booked passage at Alitalia Airlines.
carrier acting within the scope of his employment."
She arrived in Milan on the day before the meeting, however, she was told by
The Supreme Court has pointed out that the Convention does not operate
the Alitalia personnel at Milan that her luggage was "delayed inasmuch as the
same in one of the succeeding flights from Rome to Milan." Among the items as an exclusive enumeration of the instances of an airline's liability, or
as an absolute limit of the extent of that liability. The provisions do not
in her luggage was her scientific papers, slides and other research materials.
regulate or exclude liability for other breaches of contract by the carrier or
But the other flights arriving from Rome did not have her baggage on board.
misconduct of its officers and employees, or for some particular or
exceptional type of damage. Otherwise, an air carrier would be exempt from
Desperate, she went to Rome to tried to locate her bags herself, inquired
any liability for damages in the event of its absolute refusal, in bad faith, to
about her suitcases in the "domestic and international airports, and filled out
comply with a contract of carriage, which is absurd. Nor may it for a moment
the forms prescribed by Alitalia for people in her predicament. However, her
be supposed that if a member of the aircraft complement should inflict some
baggage could not be found. Completely distraught and discouraged, she
physical injury on a passenger, or maliciously destroy or damage the latter's
property, the Convention might successfully be pleaded as the sole gauge to
determine the carrier's liability to the passenger. Neither may the Convention
be invoked to justify the disregard of some extraordinary sort of damage
resulting to a passenger and preclude recovery therefor beyond the limits set
by said Convention.

In the case at bar, no bad faith or improper conduct may be ascribed to the
employees of Alitalia and Dr. Pablo's luggage was eventually returned to her.
However, an injury was caused to Dr. Pablo because Alitalia misplaced her
baggage and failed to deliver it to her at the time appointed—a breach of its
contract of carriage — with the result that she was unable to read the paper
and make the scientific presentation that she had painstakingly labored over,
at the prestigious international conference, to attend which she had traveled
hundreds of miles, to her chagrin and embarrassment and the disappointment
and annoyance of the organizers. Further, as the invitation to participate in
the conference was an honor not only to her, but to the University of the
Philippines and the country as well – the opportunity to claim this honor or
distinction was irretrievably lost to her because of Alitalia's breach of its
contract.

Thus, the compensation for the injury suffered by Dr. Pablo cannot under the
circumstances be restricted to that prescribed by the Warsaw Convention for
delay in the transport of baggage.
G.R. No. 8095. November 5, 1914, and March 31, 1915
F C. FISHER, plaintiff,
vs.
YANGCO STEAMSHIP COMPANY, J. S. STANLEY, as Acting Collector of
Customs of the Philippine Islands, IGNACIO VILLAMOR, as Attorney
General of the Philippine Islands, and W. H. BISHOP, as prosecuting
attorney of the city of Manila, respondents.
Doctrine:
● Common carriers in the Philippines cannot lawfully decline to accept
a particular class of goods for carriage to the prejudice of the traffic in
those goods unless there is a sufficient, reasonable and necessary
reason to do so. Mere prejudice or whim will not suffice.
● The nature of the business of a common carrier as a public
employment is such that it is clearly within the power of the state to
impose just and reasonable regulations thereon in the interest of the
public.
Facts:
FC Fisher is a stockholder in the Yangco Steamship Company, the owner of
a large number of steam vessels, duly licensed to engage in the coastwise
trade of the Philippine Islands.
The company adopted a resolution which expressly declaring and providing
that the classes of merchandise to be carried by the company in its business
as a common carrier do not include dynamite, powder or other explosives,
and expressly prohibiting the officers, agents and servants of the company
from offering to carry, accepting for carriage or carrying said items.
JS Stanley, the Acting Collector of Customs demanded and required of the
company the acceptance and carriage of such explosives. Stanley refused
and suspended the issuance of the necessary clearance documents of the
vessels of the company unless and until the company consents to accept
such explosives for carriage.
The Attorney-General of the Philippine Islands and the prosecuting attorney
of the City of Manila intend to institute proceedings against the company, its
managers, agents and servants, to enforce the requirements of the Acting
Collector of Customs as to the acceptance of such explosives for carriage.
Issue:
Whether the refusal of the owners and officers of a steam vessel to accept for
carriage dynamite, powder and other explosives is valid
Ruling: No.
While the statute provides a person liberty in engaging and managing his
business, this does not preclude the state from exercising control on its
conduct of its business by imposing just and reasonable regulations thereon.
The self-imposed limitations by the carrier upon his business, do not involve
unreasonable or unnecessary discrimination that the statute would not control
his action in any manner. It operates only in cases involving such
unreasonable or unnecessary preferences or discriminations.
In a like manner, a common carrier of passengers, would not be permitted to
absolve himself from liability for a refusal to carry a Chinaman, a Spaniard, an
American, a Filipino, or a mestizo by proof that from "mere whim or caprice or
personal scruple," or to suit his own convenience, or in the hope of increasing
his business and thus making larger profits, he had publicly announced his
intention not to carry one or other of these classes of passengers.
Common carriers exercise a sort of public office, and have duties to perform
in which the public is interested. Their business is, therefore, affected with a
public interest, and is subject of public regulation.
The right to enter the public employment as a common carrier and to offer
one's services to the public for hire does not carry with it the right to conduct
that business as one pleases, without regard to the interests of the public and
free from such reasonable and just regulations as may be prescribed for the
protection of the public from the reckless or careless indifference of the merchandise as to render such refusal a due or a necessary or a reasonable
carrier as to the public welfare and for the prevention of unjust and exercise of prudence and discretion on the part of the shipowner.
unreasonable discrimination of any kind whatsoever in the performance of the
carrier's duties as a servant of the public.

In the present case, the refusal of the steamship company to receive for
carriage any explosives would subject the traffic of such to a manifest
prejudice and discrimination. However, the question is whether such
prejudice or discrimination is undue, unnecessary or unreasonable. The
findings of fact alleged in the complaint, however, are not sufficient to sustain
a finding in favor of the contentions of FC Fisher.

Fisher’s complaint failed to allege that "dynamite, gunpowder and other

explosives" can in no event be transported with reasonable safety on board
steam vessels engaged in the business of common carriers. It is not alleged
that all that any of the steamship company's vessels are unsuited for the
carriage of such explosives.

As construed in the Philippine statute, the mere fact that violent and
destructive explosions can be obtained by the use of dynamite under certain
conditions would not be sufficient in itself to justify the refusal of a vessel, duly
licensed as a common carrier of merchandise, to accept it for carriage, if it
can be proven that in the condition in which it is offered for carriage there is
no real danger to the carrier, nor reasonable ground to fear that his vessel or
those on board his vessel will be exposed to unnecessary and unreasonable
risk in transporting it, having in mind the nature of his business as a common
carrier engaged in the coastwise trade in the Philippine Islands, and his duty
as a servant of the public engaged in a public employment.

Therefore, the refusal by a particular vessel, engaged as a common carrier of

merchandise in the coastwise trade of the Philippine Islands, to accept any or
all of these explosives for carriage would constitute a violation of the
prohibitions against discriminations penalized under the statute, unless it can
be shown by affirmative evidence that there is real and substantial danger of
disaster necessarily involved in the carriage of any or all of these articles of

Nature of Business- KAYE L.
KMU Labor Center v Hon. Jesus Garcia, 239 SCRA 386
Spouses Cruz v. Sun Holidays, GR 183612
7.2 KILUSANG MAYO UNO LABOR CENTER, petitioner,
vs.
HON. JESUS B. GARCIA, JR., the LAND TRANSPORTATION
FRANCHISING AND REGULATORY BOARD, and the PROVINCIAL BUS
OPERATORS ASSOCIATION OF THE PHILIPPINES, respondents.
G.R. No. 115381. December 23, 1994
Doctrine:
Potestas delegata non delegari potest. What has been delegated cannot be
delegated. This doctrine is based on the ethical principle that such a
delegated power constitutes not only a right but a duty to be performed by the
delegate through the instrumentality of his own judgment and not through the
intervening mind of another. A further delegation of such power would indeed
constitute a negation of the duty in violation of the trust reposed in the
delegate mandated to discharge it directly.
Facts:
Kilusang Mayo Uno Labor Center filed a petition for certiorari assailing the
constitutionality and validity of certain memoranda, circulars and/or orders of
the Department of Transportation and Communications (DOTC) and the Land
Transportation Franchising and Regulatory Board (LTFRB) which, among
others:
(a) authorize provincial bus and jeepney operators to increase or decrease
the prescribed transportation fares without application therefor with the
LTFRB and without hearing and approval thereof by said agency in violation
of Sec. 16(c) of Commonwealth Act No. 146. LTFRB gave authority to
provincial bus operators to set a fare range of plus or minus fifteen (15%)
percent, later increased to plus twenty (20%) and minus twenty -five (-25%)
percent, over and above the existing authorized fare without having to file a
petition for the purpose, and
(b) the establishment of a presumption of public need in favor of an applicant
for a proposed transport service without having to prove public necessity, is
illegal for being violative of the Public Service Act and the Rules of Court..
The offending provisions contained in the questioned issuances pointed out
by petitioner, have resulted in the introduction into our highways and
thoroughfares thousands of old and smoke-belching buses, many of which
are right-hand driven, and have exposed our consumers to the burden of
spiraling costs of public transportation without hearing and due process.
Issue:
(1) Whether or not LTFRB can give provincial bus operators the authority
to set fare range over and above authorized existing fare
(2) Whether or not the issuance of Certificate of Public Convenience
(CPC) can be determined by mere public need
Ruling:
(1) No. The authority given by the LTFRB to the provincial bus operators
to set a fare range over and above the authorized existing fare, is
illegal and invalid as it is tantamount to an undue delegation of
legislative authority.
Potestas delegata non delegari potest. What has been delegated cannot be
delegated. This doctrine is based on the ethical principle that such a
delegated power constitutes not only a right but a duty to be performed by the
delegate through the instrumentality of his own judgment and not through the
intervening mind of another. A further delegation of such power would indeed
constitute a negation of the duty in violation of the trust reposed in the
delegate mandated to discharge it directly. The policy of allowing the
provincial bus operators to change and increase their fares at will would result
not only to a chaotic situation but to an anarchic state of affairs. This would
leave the riding public at the mercy of transport operators who may increase
fares every hour, every day, every month or every year, whenever it pleases
them or whenever they deem it “necessary” to do so.
One veritable consequence of the deregulation of transport fares is a corporation or co-partnership, association or joint-stock company constituted
compounded fare. If transport operators will be authorized to impose and and organized under the laws of the Philippines, at least 60 per centum of its
collect an additional amount equivalent to 20% over and above the authorized stock or paid-up capital must belong entirely to citizens of the Philippines; (ii)
fare over a period of time, this will unduly prejudice a commuter who will be the applicant must be financially capable of undertaking the proposed service
made to pay a fare that has been computed in a manner similar to those of and meeting the responsibilities incident to its operation; and (iii) the applicant
compounded bank interest rates. must prove that the operation of the public service proposed and the
authorization to do business will promote the public interest in a proper and
(2) No. By its terms, public convenience or necessity generally means suitable manner. It is understood that there must be proper notice and
something fitting or suited to the public need. As one of the basic hearing before the PSC can exercise its power to issue a CPC.
requirements for the grant of a Certificate of public convenience (CPC), public
convenience and necessity exists when the proposed facility or service meets
a reasonable want of the public and supply a need which the existing facilities
do not adequately supply. The existence or nonexistence of public
convenience and necessity is therefore a question of fact that must be
established by evidence, real and/or testimonial; empirical data; statistics and
such other means necessary, in a public hearing conducted for that purpose.
The object and purpose of such procedure, among other things, is to look out
for, and protect, the interests of both the public and the existing transport
operators.

The LTFRB Memorandum Circular No. 92-009, Part IV, provides for yet
incongruous and contradictory policy guideline; it is entirely incompatible and
inconsistent with Section 16(c)(iii) of the Public Service Act which
requires that before a CPC will be issued, the applicant must prove by
proper notice and hearing that the operation of the public service
proposed will promote public interest in a proper and suitable manner.
On the contrary, the policy guideline states that the presumption of public
need for a public service shall be deemed in favor of the applicant. In case of
conflict between a statute and an administrative order, the former must
prevail.

Note: A certificate of public convenience (CPC) is an authorization granted by

the LTFRB for the operation of land transportation services for public use as
required by law. Pursuant to Section 16(a) of the Public Service Act, as
amended, the following requirements must be met before a CPC may be
granted, to wit: (i) the applicant must be a citizen of the Philippines, or a
7.3
SPOUSES DANTE CRUZ and LEONORA CRUZ, Petitioners,
- versus -
SUN HOLIDAYS, INC., Respondent
G.R. No. 186312 June 29, 2010
Doctrine
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.
Facts:
The newlywed, Ruelito C. Cruz and his wife, stayed at Coco Beach
Island Resort from September 9 to 11, 2000 by a tour package contract given
by Sun Holidays, Inc. which includes transportation to and from the resort and
the point of departure in Batangas.
On the last day, September 11, 26 resort guests including Ruelito
and his wife boarded M/B Coco Beach III, a ferry that will lead them to
Batangas. After they sailed, it started to rain; as they went farther, the rain
and wind got stronger which caused the boat to tilt from side to side and later
on overturned the boat putting all passengers underwater. Help came after 45
minutes when two boats owned by Asia Divers passed by the overturned M/B
Coco Beach III. Unfortunately, 8 passengers died during the incident
including Ruelito and his wife.
Spouses Dante Cruz and Leonora Cruz, thereafter, filed a complaint
against Sun Holidays, Inc. before the Regional Trial Court of Pasig City. The
petitioners demanded indemnification from respondent for the death of their
son Ruelito C. Cruz in the amount of at least P4,000,000. They claimed that
the respondent, as a common carrier, was guilty of negligence in allowing
M/B Coco Beach III to sail notwithstanding storm warning bulletins issued by
PAGASA as early as 5:00 a.m. of September 11, 2000.
Issue:
Whether or not the Resort’s ferry services is merely ancillary to its
business thus it is not liable to any damages
Ruling:
No. Its ferry services are so intertwined with its main business as to be
properly considered ancillary thereto. The constancy of respondent’s ferry
services in its resort operations is underscored by its having its own Coco
Beach boats. And the tour packages it offers, which include the ferry services,
may be availed of by anyone who can afford to pay the same. These services
are thus available to the public.
Under the Civil Code, common carriers, from the nature of their business
and for reasons of public policy, are bound to observe extraordinary diligence
for the safety of the passengers transported by them, according to all the
circumstances of each case. They are bound to carry the passengers safely
as far as human care and foresight can provide, using the utmost diligence of
very cautious persons, with due regard for all the circumstances.
When a passenger dies or is injured in the discharge of a contract of
carriage, it is presumed that the common carrier is at fault or negligent. In
fact, there is even no need for the court to 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.
G.R. No. L-9605 September 30, 1957
GAUDIOSO EREZO, ET AL., plaintiff-appellee,
vs.
AGUEDO JEPTE, defendant-appellant.
Digested by: Dave Alano
Facts: Defendant-appellant is the registered owner of a six by six truck
bearing. On August, 9, 1949, while the same was being driven by Rodolfo
Espino y Garcia, it collided with a taxicab at the intersection of San Andres
and Dakota Streets, Manila. As the truck went off the street, it hit Ernesto
Erezo and another, and the former suffered injuries, as a result of which he
died.
The driver was prosecuted for homicide through reckless negligence. The
accused pleaded guilty and was sentenced to suffer imprisonment and to pay
the heirs of Ernesto Erezo the sum of P3,000. As the amount of the judgment
could not be enforced against him, plaintiff brought this action against the
registered owner of the truck, the defendant-appellant.
The defendant does not deny at the time of the fatal accident the cargo truck
driven by Rodolfo Espino y Garcia was registered in his name. He, however,
claims that the vehicle belonged to the Port Brokerage, of which he was the
broker at the time of the accident. He explained, and his explanation was
corroborated by Policarpio Franco, the manager of the corporation, that the
trucks of the corporation were registered in his name as a convenient
arrangement so as to enable the corporation to pay the registration fee with
his backpay as a pre-war government employee. Franco, however, admitted
that the arrangement was not known to the Motor Vehicle Office.
The trial court held that as the defendant-appellant represented himself to be
the owner of the truck and the Motor Vehicle Office, relying on his
representation, registered the vehicles in his name, the Government and all
persons affected by the representation had the right to rely on his declaration
of ownership and registration. It, therefore, held that the defendant-appellant
is liable because he cannot be permitted to repudiate his own declaration
Issue: Whether or not Jepte should be held liable?
Held: Yes. The registered owner, the defendant-appellant herein, is primarily
responsible for the damage caused to the vehicle of the plaintiff-appellee, but
he (defendant-appellant) has a right to be indemnified by the real or actual
owner of the amount that he may be required to pay as damage for the injury
caused to the plaintiff-appellant.
The Revised Motor Vehicle Law provides that no vehicle may be used or
operated upon any public highway unless the same is properly registered.
Not only are vehicles to be registered and that no motor vehicles are to be
used or operated without being properly registered for the current year, but
that dealers in motor vehicles shall furnish the Motor Vehicles Office a report
showing the name and address of each purchaser of motor vehicle during the
previous month and the manufacturer's serial number and motor number.
Registration is required not to make said registration the operative act by
which ownership in vehicles is transferred, as in land registration cases,
because the administrative proceeding of registration does not bear any
essential relation to the contract of sale between the parties, but to permit the
use and operation of the vehicle upon any public
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
on the public highways, responsibility therefore can be fixed on a definite
individual, the registered owner.
A registered owner who has already sold or transferred a vehicle has the
recourse to a third-party complaint, in the same action brought against him to
recover for the damage or injury done, against the vendee or transferee of the
vehicle.
[G.R. No. 143360. September 5, 2002]
EQUITABLE LEASING CORPORATION, petitioner, vs. LUCITA SUYOM,
MARISSA ENANO, MYRNA TAMAYO and FELIX OLEDAN, respondents.
Facts: On July 17, 1994, a Fuso Road Tractor driven by Raul Tutor rammed
into the house cum store of Myrna Tamayo in Tondo, Manila. A portion of the
house was destroyed which caused death and injury. Tutor was charged with
and later convicted of reckless imprudence resulting in multiple homicide and
multiple physical injuries.
Petitioner is liable for the deaths and the injuries complained of, because it
was the registered owner of the tractor at the time of the accident. The Court
has consistently ruled that, regardless of sales made of a motor vehicle, the
registered owner is the lawful operator insofar as the public and third persons
are concerned.
Since Equitable remained the registered owner of the tractor, it could not
escape primary liability for the deaths and the injuries arising from the
negligence of the driver.

Upon verification with the Land Transportation Office, it was known that the
registered owner of the tractor was Equitable Leasing Corporation/leased to
Edwin Lim. On April 15, 1995, respondents filed against Raul Tutor, Ecatine
Corporation (Ecatine) and Equitable Leasing Corporation (Equitable) a
Complaint for damages.

The petitioner alleged that the vehicle had already been sold to Ecatine and
that the former was no longer in possession and control thereof at the time of
the incident. It also claimed that Tutor was an employee, not of Equitable, but
of Ecatine.

Issue: Whether or not the petitioner was liable for damages based on quasi
delict for the negligent acts.

Held:
The Lease Agreement between petitioner and Edwin Lim stipulated that it is
the intention of the parties to enter into a finance lease agreement.
Ownership of the subject tractor was to be registered in the name of
petitioner, until the value of the vehicle has been fully paid by Edwin Lim.

Lim completed the payments to cover the full price of the tractor. Thus, a
Deed of Sale over the tractor was executed by petitioner in favor of Ecatine
represented by Edwin Lim. However, the Deed was not registered with the
LTO.
 the accident, apart from the fact that the Isuzu truck was in the physical
possession of Rock Component Philippines by virtue of the lease agreement.
GRETCHEN’S DIGEST

8.3 BA Finance v. CA 215 SCRA 715 ISSUE:

8.4 Duavit v. CA 173 SCRA 490, 496
Whether petitioner can be held responsible to the victim albeit the truck was
leased to Rock Component Philippines when the incident occurred
G.R. No. 98275 November 13, 1992
BA FINANCE CORPORATION, petitioner, vs.
HON. COURT OF APPEALS, REGIONAL TRIAL COURT OF ANGELES
CITY, BRANCH LVI, CARLOS OCAMPO, INOCENCIO TURLA, SPOUSES HELD:
MOISES AGAPITO and SOCORRO M. AGAPITO and NICOLAS CRUZ,
Yes. As held in the Perez and Erezo cases the Supreme Court held that the
respondents.
registered owner of a certificate of public convenience is liable to the public
for the injuries or damages suffered by passengers or third persons caused
FACTS:
by the operation of said vehicle, even though the same had been transferred
to a third person.
On March 6, 1983, an accident occurred involving petitioner's Isuzu ten-
wheeler truck then driven by an employee of Lino Castro. After due trial,
The principle upon which this doctrine is based is that in dealing with vehicles
Rogelio Villar y Amare, the driver of the Isuzu truck, was at fault when the
registered under the Public Service Law, the public has the right to assume or
mishap occurred in as much as he was found guilty beyond reasonable doubt
presumed that the registered owner is the actual owner thereof, for it would
of reckless imprudence resulting in triple homicide with multiple physical
injuries with damage to property. Petitioner was adjudged liable for damages be difficult with the public to enforce the actions that they may have for
injuries caused to them by the vehicles being negligently operated if the
in as much as the truck was registered in its name during the incident in
public should be required to prove who actual the owner is. How would the
question. In the same breadth, Rock Component Philippines, Inc. was
ordered to reimburse petitioner for any amount that the latter may be public or third persons know against whom to enforce their rights in case of
subsequent transfer of the vehicles? The court does not imply by this
adjudged liable to pay herein private respondents as expressly stipulated in
doctrine, however, that the registered owner may not recover whatever
the contract of lease between petitioner and Rock Component Philippines,
amount he had paid by virtue of his liability to third persons from the person to
Inc.
whom he had actually sold, assigned or conveyed the vehicle.
Moreover, the trial court applied Article 2194 of the new Civil Code on
Moreover, under the same principle the registered owner of any vehicle, even
solidary accountability of join tortfeasors insofar as the liability of the driver,
if not used for a public service, should primarily responsible to the public or to
herein petitioner and Rock Component Philippines was concerned. Petitioner
asseverates that it should not have been hailed to court and ordered to the third persons for injuries caused the latter while the vehicle is being driven
on the highways or streets. Thus, if the foregoing words of wisdom were
respond for the damage in the manner arrived at by both the trial and
applied in solving the circumstance whereof the vehicle had been alienated or
appellate courts since paragraph 5 of the complaint lodged by the plaintiffs
sold to another, there certainly can be no serious exception against utilizing
below would indicate that petitioner was not the employer of the negligent
the same rationale to the antecedents of this case where the subject vehicle
driver who was under the control and supervision of Lino Castro at the time of
was merely leased by petitioner to Rock Component Philippines, Inc., with
petitioner retaining ownership over the vehicle.

Will the registered owner be allowed to prove real ownership?

No. The law does not allow him to do so; the law, with its aim and policy in
mind, does not relieve him directly of the responsibility that the law fixes and
places upon him as an incident or consequence of registration. Were a
registered owner allowed to evade responsibility by proving who the
supposed transferee or owner is, it would be easy for him, by collusion with
others or otherwise, to escape said responsibility and transfer the same to an
indefinite person, or to one who possesses no property with which to respond
financially for the damage or injury done.

A victim of recklessness on the public highways is usually without means to

discover or identify the person actually causing the injury or damage. He has
no means other than by recourse to the registration in the Motor Vehicles
Office to determine who the owner is. The protection that the law aims to
extend to him would become illusory were the registered owner given the
opportunity to escape liability by disproving his ownership. If the policy of the
law is to be enforced and carried out, the registered owner should not be
allowed to prove the contrary to the prejudice of the person injured, that is, to
prove that a third person or another has become the owner, so that he may
thereby be relieved of the responsibility to the injured person.
G.R. No. 82318 May 18, 1989
GILBERTO M. DUAVIT, petitioner, vs.
THE HON. COURT OF APPEALS, Acting through the Third Division, as
Public Respondent, and ANTONIO SARMIENTO, SR. & VIRGILIO
CATUAR respondents.
FACTS:
On July 28, 1971 plaintiffs Antonio Sarmiento, Sr. and Virgilio Catuar were
aboard a jeep driven by Ruperto Catuar. While approaching Roosevelt
Avenue, another jeep with plate number 99-97-F-J Manila 1971 driven by
defendant Oscar Sabiniano hit and bumped Catuar’s jeep on the portion near
the left rear wheel. As a result of the impact plaintiff's jeep fell on its right and
skidded by about 30 yards. The jeep was damaged, particularly the
windshield, the differential, the part near the left rear wheel and the top cover
of the jeep. Moreover, Virgilio Catuar was thrown to the middle of the road
and his wrist was broken. He likewise sustained contusions on the head while
Antonio Sarmiento, Sr. was trapped inside the fallen jeep, and one of his legs
was fractured.
The plaintiffs have filed this case both against Oscar Sabiniano as driver, and
against Gualberto Duavit as owner of the jeep. Defendant Gualberto Duavit,
while admitting ownership of the other jeep, denied that the other defendant
(Oscar Sabiniano) was his employee. Duavit claimed that he has not been an
employer of defendant Oscar Sabiniano at any time up to the present. On the
other hand documentary and testimonial evidence show that defendant Oscar
Sabiniano was an employee of the Board of Liquidators.
Defendant Sabiniano, in his testimony, categorically admitted that he took the
jeep from the garage of defendant Duavit without the consent or authority of
the latter. He testified that Duavit even filed charges against him for theft of
the jeep, but which Duavit did not push through as his (Sabiniano's) parents
apologized to Duavit on his behalf.
ISSUE:
Whether or not the owner of a private vehicle which figured in an accident can
be held liable under Article 2180 of the Civil Code when the said vehicle was
neither driven by an employee of the owner nor taken with the consent of the
latter
HELD:
No. While the trial court found Oscar Sabiniano negligent in driving the
vehicle but found no employer-employee relationship between him and the
petitioner because the latter was then a government employee and he took
the vehicle without the authority and consent of the owner. The petitioner
was, thus, absolved from liability under Article 2180 of the Civil Code.
As early as in 1939, we have ruled that an owner of a vehicle cannot be held
liable for an accident involving the said vehicle if the same was driven without
his consent or knowledge and by a person not employed by him. Thus, in
Duquillo v. Bayot (67 Phil. 131-133-134) [1939] we said:
Under the facts established, the defendant cannot be held liable for anything.
At the time of the accident, James McGurk was driving the truck, and he was
not an employee of the defendant, nor did he have anything to do with the
latter's business; neither the defendant nor Father Ayson, who was in charge
of her business, consented to have any of her trucks driven on the day of the
accident, as it was a holy day, and much less by a chauffeur who was not i n
charge of driving it; the use of the defendant's truck in the circumstances
indicated was done without her consent or knowledge; it may, therefor e, b e
said, that there was not the remotest contractual relation between the
deceased Pio Duquillo and the defendant. It necessarily follows from all thi s
that articles 1101 and following of the Civil Code, cited by the appellant,
have no application in this case, and, therefore, the errors attributed to the
inferior court are without basis.
The Court upholds the above ruling as still relevant and better applicable to
present day circumstances.
Kareen’s digests:

Kabit system:
- Abelardo v. CA, GR 125817
- Lita Enterprises v. IAC, 129 SCRA 79
G.R. No. 125817 January 16, 2002
ABELARDO LIM and ESMADITO GUNNABAN, petitioners, vs. COURT OF
APPEALS and DONATO H. GONZALES, respondents.
Doctrines:
· The k abit system is an arrangement whereby a person who has
been granted a certificate of public convenience allows other
persons who own motor vehicles to operate them under his
license, sometimes for a fee or percentage of the earnings.
Although the parties to such an agreement are not outrightly
penalized by law, the k abit system is invariably recognized as
being contrary to public policy and therefore void and inexistent
under Art. 1409 of the Civil Code.
· The thrust of the law in enjoining the k abit system is not so much
as to penalize the parties but to identify the person upon
whom responsibility may be fixed in case of an accident with
the end view of protecting the riding public.
FACTS: Private respondent Donato Gonzales purchased an Isuzu
passenger jeepney from Gomercino Vallarta, holder of a certificate of public
convenience for the operation of public utility vehicles plying the Monumento-
Bulacan route. While private respondent Gonzales continued offering the
jeepney for public transport services, he did not have the registration of the
vehicle transferred in his name nor did he secure for himself a certificate of
public convenience for its operation. Thus, Vallarta remained on record as its
registered owner and operator. Years later, the jeepney collided with a ten-
wheeler-truck owned by petitioner Abelardo Lim and driven by his co-
petitioner Esmadito Gunnaban. Gunnaban owned responsibility for the
accident, explaining that the truck suddenly lost its brakes. The impact
caused severe damage to the passenger jeepney and left one passenger
dead and many others wounded. Petitioner Lim negotiated with private
respondent and offered to have the passenger jeepney repaired at his shop.
Private respondent however did not accept the offer and demanded instead a
brand-new jeep or the amount of ₱236,000.00. The parties did not reach an
agreement. Hence, the filing of the complaint for damages by private
respondent against petitioners. Lim asserted that as the jeepney was
registered in Vallarta’s name, it was Vallarta and not private respondent who
was the real party in interest.
The trial court ruled in favor of private respondent. The Court of
Appeals affirmed the decision of the trial court and concluded that while an
operator under the k abit system could not sue without joining the registered
owner of the vehicle as his principal, equity demanded that the present case
be made an exception. Petitioners contend that an operator of a vehicle
continues to be its operator as long as he remains the operator of record.
According to petitioners, to recognize an operator under the kabit system as
the real party in interest and to countenance his claim for damages is utterly
subversive of public policy.
ISSUE: Does private respondent have the right to proceed against
petitioners for the damage caused on his passenger jeepney?
RULING: Yes, private respondent has the right to proceed against
petitioners for the damage caused on his passenger jeepney as well as on his
business.
The k abit system is an arrangement whereby a person who has been
granted a certificate of public convenience allows other persons who own
motor vehicles to operate them under his license, sometimes for a fee or
percentage of the earnings. Although the parties to such an agreement are
not outrightly penalized by law, the k abit system is invariably recognized as
being contrary to public policy and therefore void and inexistent under Art.
1409 of the Civil Code.
In the early case of Dizon v. Octavio the Court explained that one of
the primary factors considered in the granting of a certificate of public
convenience for the business of public transportation is the financial capacity
of the holder of the license, so that liabilities arising from accidents may be
duly compensated. The k abit system renders illusory such purpose and,
worse, may still be availed of by the grantee to escape civil liability caused by
a negligent use of a vehicle owned by another and operated under his
license. If a registered owner is allowed to escape liability by proving who the
supposed owner of the 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 passengers and the
public who may have been wronged and deceived through the baneful k abit
system, the registered owner of the vehicle is not allowed to prove that
another person has become the owner so that he may be thereby relieved of
responsibility. Subsequent cases affirm such basic doctrine.

It would seem then that the thrust of the law in enjoining the k abit
system is not so much as to penalize the parties but to identify the person
upon whom responsibility may be fixed in 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.

In the present case it is at once apparent that the evil sought to be

prevented in enjoining the k abit system does not exist. First, neither of the
parties to the pernicious k abit system is being held liable for damages.
Second, the case arose from the negligence of another vehicle in using the
public road to whom no representation, or misrepresentation, as regards the
ownership and operation of the passenger jeepney was made and to whom
no such representation, or misrepresentation, was necessary. Thus it cannot
be said that private respondent Gonzales and the registered owner of the
jeepney were in estoppel for leading the public to believe that the jeepney
belonged to the registered owner. Third, the riding public was not bothered
nor inconvenienced at the very least by the illegal arrangement. On the
contrary, it was private respondent himself who had been wronged and was
seeking compensation for the damage done to him. Certainly, it would be the
height of inequity to deny him his right.

In light of the foregoing, it is evident that private respondent has the

right to proceed against petitioners for the damage caused on his passenger
jeepney as well as on his business. Any effort then to frustrate his claim of
damages by the ingenuity with which petitioners framed the issue should be
discouraged, if not repelled.
 G.R. No. L-64693 April 27, 1984
LITA ENTERPRISES, INC. vs. SECOND CIVIL CASES DIVISION,
INTERMEDIATE APPELLATE COURT, NICASIO M. OCAMPO and
FRANCISCA P. GARCIA
Doctrines:
· "Ex pacto illicito non oritur actio" [No action arises out of an illicit
bargain] is the tune-honored maxim that must be applied to the
parties in the case at bar. Having entered into an illegal contract,
neither can seek relief from the courts, and each must bear the
consequences of his acts.
· 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.
FACTS: The spouses Nicasio M. Ocampo and Francisca Garcia,
herein private respondents, purchased five (5) Toyota Corona Standard cars
to be used as taxicabs. Since they had no franchise to operate taxicabs, they
contracted with petitioner Lita Enterprises, Inc. for the use of the latter's
certificate of public convenience in consideration of an initial payment of
P1,000.00 and a monthly rental of P200.00 per taxicab unit. The aforesaid
cars were registered in the name of petitioner Lita Enterprises, Inc,
Possession, however, remained with the spouses Ocampo who operated and
maintained the same under the name Acme Taxi, petitioner's trade name.
About a year later, one of said taxicabs collided with a motorcycle whose
driver died from the head injuries sustained therefrom. A civil case for
damages was instituted by the heir of the victim against Lita Enterprises, Inc.,
as registered owner of the taxicab. Petitioner Lita Enterprises, Inc. was
adjudged liable for damages. As a result, a writ of execution was issued and
two of the vehicles of respondent spouses were levied upon and sold at
public auction.
Thereafter, respondent Nicasio Ocampo decided to register his
taxicabs in his name. He requested the manager of petitioner Lita
Enterprises, Inc. to turn over the registration papers to him, but the latter
allegedly refused. Hence, he and his wife filed a complaint against Lita
Enterprises, Inc. The trial court ruled in favor of respondent spouses and
ordered petitioner Lita Enterprises, Inc. to to transfer the registration
certificate of the three Toyota cars not levied upon by executing a deed of
conveyance in favor of the private respondent. Such decision was affirmed by
the Court of Appeals. Petitioner now wants respondents to pay whatever
amount the former has paid to the heir of the victim who died as a result of
the gross negligence of private respondents' driver while driving one of their
taxicabs.
ISSUE: Can petitioner recover from private respondent the amount it
paid to the heir of the deceased victim, knowing they are in an arrangement
known as “kabit system”
RULING: No. Unquestionably, the parties herein operated under an
arrangement, commonly known as the "kabit system", whereby a person who
has been granted a certificate of convenience allows another person who
owns motors vehicles to operate under such franchise for a fee. A certificate
of public convenience is a special privilege conferred by the government.
Abuse of this privilege by the grantees thereof cannot be countenanced. The
"kabit system" has been Identified as one of the root causes of the
prevalence of graft and corruption in the government transportation offices.
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 court will not aid either party to enforce an
illegal contract, but will leave them both where it finds them. Upon this
premise, it was flagrant error on the part of both the trial and appellate courts
to have accorded the parties relief from their predicament. Article 1412 of the
Civil Code denies them such aid. It provides:
ART. 1412. if the act in which the unlawful or forbidden cause
consists does not constitute a criminal offense, the following rules shall be
observed;
(1) when the fault, is on the part of both contracting parties, neither
may recover what he has given by virtue of the contract, or demand the
performance of the other's undertaking.
 The defect of inexistence of a contract is permanent and incurable,
and cannot be cured by ratification or by prescription. The mere lapse of time
cannot give efficacy to contracts that are null void."

Under the principle of in pari delicto, no action arises, in equity or at

law, from an illegal contract; no suit can be maintained for its specific
performance, or to recover the property agreed to be sold or delivered, or
damages for its property agreed to be sold or delivered, or damages for its
violation. Where the parties are in pari delicto, no affirmative relief of any kind
will be given to one against the other."

G.R. No. L-65510 March 9, 1987
TEJA MARKETING AND/OR ANGEL JAUCIAN, petitioner,
vs.
HONORABLE INTERMEDIATE APPELLATE COURT * AND PEDRO N.
NALE, respondents.
PARAS, J.:
Digested by: Terry Louise P. Boligor
Facts: On May 9, 1975 Pedro Nale bought a motorcycle for his transportation
business for 8,000 php. A chattel mortgage was constituted on the motorcycle
in favor of Teja Marketing and/or Angel Jaucian. The registration papers were
not given to Nale. He only paid 1,700 php as partial and stopped paying on
January 1976 urging plaintiff to file a case for the collection of sum of money.
Defendant had no franchise of his own and he attached the unit to Teja. The
agreement also of the parties here was for the plaintiff to undertake the yearly
registration of the motorcycle with the Land Transportation Commission.
Pursuant to this agreement the defendant on February 22, 1976 gave the
plaintiff P90.00, the P8.00 would be for the mortgage fee and the P82.00 for
the registration fee of 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 insurance premiums and
the bringing of the motorcycle to the LTC for stenciling, the plaintiff saying
that the defendant was hiding the motorcycle from him. Lastly, the plaintiff
explained also that though the ownership of the motorcycle was already
transferred to the defendant the vehicle was still mortgaged with the consent
of the defendant to the Rural Bank of Camaligan for the reason that all
motorcycle purchased from the plaintiff on credit was rediscounted with the
bank. But Nale claims that he was not hiding the vehicle but was using it for
his transportation business.
The City court and the CFI of Camarines Norte favored the plaintiff.
Issue: Who is the rightful owner of the vehicle?
Ruling: Nale is the owner of the vehicle.
As the purchase of the motorcycle for operation as a trimobile under the
franchise of the private respondent Jaucian, pursuant to what is commonly
known as the "kabit system", without the prior approval of the Board of
Transportation (formerly the Public Service Commission) was an illegal
transaction involving the fictitious registration of the motor vehicle in the
name of the private respondent so that he may traffic with the privileges of his
franchise, or certificate of public convenience, to operate a tricycle service,
the parties being in pari delicto, neither of them may bring an action against
the other to enforce their illegal contract provided in Art. 1412 (a), Civil
Code.
Unquestionably, the parties herein operated under an arrangement,
commonly known as the "kabit system" whereby a person who has been
granted a certificate of public convenience allows another person who owns
motor vehicles to operate under such franchise for a fee. A certificate of
public convenience is a special privilege conferred by the government. Abuse
of this privilege by the grantees thereof cannot be countenanced. The "kabit
system" has been Identified as one of the root causes of the prevalence of
graft and corruption in the government transportation offices.
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 court will not aid either party to enforce an illegal contract,
but will leave both where it finds then. Upon this premise it would be error to
accord the parties relief from their predicament.
SALUDO vs. COURT OF APPEALS
G.R. No. 95536 March 23, 1992
REGALADO, J.
Digested by: Vina Cagampang
Doctrine:
In the absence of a special contract, a carrier is not an insurer against delay
in transportation of goods. When a common carrier undertak es to convey
goods, the law implies a contract that they shall be delivered at destination
within a reasonable time, in the absence, of any agreement as to the time of
delivery. But where a carrier has made an express contract to transport and
deliver property within a specified time, it is bound to fulfill its contract and is
liable for any delay, no matter from what cause it may have arisen
Facts:
Pomierski and Son Funeral Home of Chicago, made the necessary
preparations and arrangements for the shipment to the Philippines, of the
remains of Crispina Saludo, mother of the petitioners. Pomierski brought the
remains to Continental Mortuary Air Services (CMAS) which made the
necessary arrangements such as flights, transfers, etc. CMAS booked the
shipment with PAL thru Air Care International. PAL Airway Bill Ordinary was
issued wherein the requested routing was from Chicago to San Francisco on
board Trans World Airline (TWA) and from San Francisco to Manila on board
PAL.
Salvacion went to the TWA to inquire about her mother’s remains. But she
was told they did not know anything about it. It was found out that the remains
were on a plane to Mexico City, that there were two bodies at the terminal,
and somehow they were switched. Petitioners filed a complaint against TWA
and PAL for the misshipment and delay of the cargo containing the remains
of her late mother. Petitioners alleged that private respondents received the
casketed remains of Crispina on October 26, 1976, as evidenced by the
issuance of PAL Airway Bill by Air Care and from said date, private
respondents were charged with the responsibility to exercise extraordinary
diligence so much so that the alleged switching of the caskets on October 27,
1976, or one day after the private respondents received the cargo, the latter
must necessarily be liable. Petitioners averred that when TWA undertook to
ship the remains on its Flight 603, ten hours earlier than scheduled, it violated
the express agreement embodied in the airway bill. TWA countered that
having duly delivered or transferred the cargo to its PAL on October 27, 1976
at 2:00 P.M.,it faithfully complied with its obligation under the airway bill. Said
faithful compliance was not affected by the fact that the remains were shipped
on an earlier flight as there was no fixed time for completion of carriage
stipulated on. Moreover, the carrier did not undertake to carry the cargo
aboard any specified aircraft, in view of the condition on the back of the
airway bill which provides:
CONDITIONS OF CONTRACT
xxx xxx xxx
It is agreed that no time is fixed for the completion of carriage
hereunder and that Carrier may without notice substitute alternate
carriers or aircraft. Carrier assumes no obligation to carry the goods
by any specified aircraft or over any particular route or routes or to
make connection at any point according to any particular schedule,
and Carrier is hereby authorized to select, or deviate from the route
or routes of shipment, notwithstanding that the same may be stated
on the face hereof. The shipper guarantees payment of all charges
and advances.
Issue: Whether or not the delay in the delivery of the casketed remains of
petitioners’ mother was due to the fault of thet airline companies
Ruling:
No. The delay in the delivery of the casketed remains was not due to the fault
of the respondent airline companies.
When respondent TWA shipped the body on earlier flight and on a different
aircraft, it was acting well within its rights. The oft-repeated rule regarding a
carrier's liability for delay is that in the absence of a special contract, a carrier
is not an insurer against delay in transportation of goods. When a common
carrier undertakes to convey goods, the law implies a contract that they
shall be delivered at destination within a reasonable time, in the
absence, of any agreement as to the time of delive ry. But where a carrier
has made an express contract to transport and deliver property within a
specified time, it is bound to fulfill its contract and is liable for any delay, no
matter from what cause it may have arisen. This result logically follows from
the well-settled rule that where the law creates a duty or charge, and the
party is disabled from performing it without any default in himself, and has no
remedy over, then the law will excuse him, but where the party by his own
contract creates a duty or charge upon himself, he is bound to make it good
notwithstanding any accident or delay by inevitable necessity because he
might have provided against it by contract. Whether or not there has been
such an undertaking on the part of the carrier to be determined from the
circumstances surrounding the case and by application of the ordinary rules
for the interpretation of contracts.

A common carrier undertaking to transport property has the implicit duty to

carry and deliver it within reasonable time, absent any particular stipulation
regarding time of delivery, and to guard against delay. In case of any
unreasonable delay, the carrier shall be liable for damages immediately and
proximately resulting from such neglect of duty. As found by the trial court,
the delay in the delivery of the remains of Crispina Saludo, undeniable and
regrettable as it was, cannot be attributed to the fault, negligence or malice of
private respondents, a conclusion concurred in by respondent court and
which we are not inclined to disturb.
MAERSK LINE vs. CA
G.R. No. 94761, May 17, 1993
FACTS: Petitioner Maersk Line is engaged in the transportation of goods by
sea, doing business in the Philippines through its general agent, Compania
de Tabacos de Filipinas, while private respondent Efren Castillo is the
proprietor of Ethegal Laboratories, a firm engaged in the manufacture of
pharmaceutical products.
On Nov. 12, 1976, Castillo ordered from Eli Lilly, Inc. of Puerto Rico 600,000
empty gelatin capsules for the manufacture of his pharmaceutical products.
The capsules were placed in 6 drums of 100,000 capsules each valued at
US$1,668.71. Shipper Eli Lilly,Inc. advised Castillo through a Memorandum
of Shipment that the products were already shipped on board MV “Anders
Maerskline” for shipment to the Philippines via Oakland, California. In said
Memorandum, shipper Eli Lilly, Inc. specified the date of arrival to be April 3,
1977.
However, for unknown reasons, said cargoes of capsules were mis -shipped
and diverted to Richmond, Virginia, USA and then transported back to
Oakland, California, USA and with the goods finally arriving in the Philippines
on June 10, 1977 or after two (2) months from the date specified in the
memorandum. Consignee Castillo refused to take delivery of the goods on
account of its failure to arrive on time, and filed an action for rescission of
contract with damages against Maersk Line and Eli Lilly alleging gross
negligence and undue delay.
Denying that it committed breach of contract, petitioner alleged in its ans wer
that the subject shipment was transported in accordance with the provisions
of the NCC covering bill of lading and that its liability under the law on
transportation of good attaches only in case of loss, destruction or
deterioration of the goods as provided for in Article 1734 of Civil Code. For its
part, Eli Lilly in its cross claim argued that the delay was due solely to the
negligence of Maersk Line.
ISSUE: Whether Castillo is entitled to damages resulting from delay in the
delivery of the shipment?
RULING:
Yes. Petitioner Markers Line being an original party defendant upon whom
the delayed shipment is imputed cannot claim that the dismissal of the
complaint against Eli Lilly inured to its benefit. It is not disputed that the
foretasted provision at the back of the bill of lading, in fine print, is a contract
of adhesion.
Generally, contracts of adhesion are considered void since almost all the
provisions of these types of contracts are prepared and drafted only by one
party, usually the carrier. The only participation left of the other party in such
a contract is the affixing of his signature thereto, hence the term “Adhesion”.
Nonetheless, settled is the rule that bills of lading are contracts not entirely
prohibited. One who adheres to the contract is in reality free to reject it in its
entirety; if he adheres, he gives his consent (Magellan Manufacturing
Marketing Corporation v. Court of Appeals, et al. , 201 SACRA 102 [1991]).
In Magellan, (supra), we ruled: “It is a long standing Jurisprudential rule that a
bill of lading operates both as a receipt and as contract to transport and
deliver the same a therein stipulated. As a contract, it names the parties,
which includes the consignee, fixes the route, destination, and freight rates or
charges, and stipulates the rights and obligations assumed by the parties.
Being a contract, it is the law between the parties who are bound by its terms
and conditions provided that these are not contrary to law, morals, good
customs, public order and public policy. A bill of lading usually becomes
effective upon its delivery to and acceptance by the shipper. It is presumed
that the stipulations of the bill were, in the absence of fraud, concealment or
improper induct, known to the shipper, and he is generally bound by his
acceptance whether he reads the bill or not. However, the foretasted ruling
applies only if such contracts will not create an absurd situation as in the case
at bar.
The questioned provision in the subject bill of lading has the effect of
practically leaving the date of arrival of the subject shipment on the sole
determination and will of the carrier. Petitioner contends as well that it cannot
be held liable because there was no special contract under which the carrier
undertook to deliver the shipment on or before a pacific date and that the Bill
of Lading provides that “The Carrier does not undertake that the Goods shall
arrive at port of discharge or the place of delivery at any particular time… “.

While it is true that common carriers are not obligated by law to carry and to
deliver merchandise, and persons are not vested with the right to prompt
delivery, unless such common carriers previously assume the obligation to
deliver at a given date or time, delivery of shipment or cargo should at least
be made within a reasonable time. While there was no special contract
entered into by the parties indicating the date of arrival of the subject
shipment, petitioner nevertheless, was very well aware of the specific date
when the goods were expected to arrive as indicated in the bill of lading itself.

In this regard, there arises no need to execute another contract for the
purpose as it would be a mere superfluity. In the case before us, we find that
a delay in the beyond the realm of reasonableness. This Court held Markers
Line liable for delay in the delivery of goods. An examination of the subject bill
of lading that the subject shipment was estimated to arrive in Manila on April
3, 1977.

While there was no special contract entered into by the parties indicating the
date of arrival, petitioner nevertheless, was very well aware of the specific
date when the goods expected to arrives as indicated in the bill lading. There
was delay in the delivery of the goods, spanning a period of 2 months and 7
days falls way beyond the realm of reasonableness. Petitioner never even
bothered to explain the cause for delay of more than 2 months in the delivery
of the goods. Therefore, Markers Line is liable for breach of contract carriage
amounting to bad faith.
G.R. No. 95529. August 22, 1991.
MAGELLAN MANUFACTURING MARKETING CORPORATION, Petitioner,
v.
COURT OF APPEALS, ORIENT OVERSEAS CONTAINER LINES and F.E.
ZUELLIG, INC. respondents.
Doctrine:
A bill of lading operates both as a receipt and as a contract. It is a receipt for
the goods shipped and a contract to transport and deliver the same as therein
stipulated.
Facts:
Magellan Manufacturers Marketing Corp. (MMMC) entered into a contract
with Choju Co. of Yokohama, Japan to export 136,000 anahaw fans. As
payment, the buyer issued a letter of credit to MMMC. MMMC contracted F.E.
Zuellig, a shipping agent, to ship the anahaw fans through Orient Overseas
Container Lines, Inc., (OOCL) specifying that he needed an on-board bill of
lading and that transshipment is not allowed under the letter of credit.
MMMC paid freight charges to F.E. Zuellig and secured a copy of the bill of
lading which was presented to Allied Bank. The bank credited the amount
covered by the letter of credit to MMMC’s account. However, MMMC was
informed that payment was refused by the buyer allegedly because there was
no on-board bill of lading, and there was transshipment of goods. As a result,
MMMC requested F.E. Zuellig and OOCL to ship the anahaw fans back to
Manila, for which, the carriers demanded MMMC for payment. MMMC
abandoned the whole cargo and asked the carriers for damages.
Issues:
Whether MMMC should be held liable for freight charges and demurrage
incurred, with legal interest, when it exercised its option of abandonment.
Ruling:
No. Ordinarily, the shipper is liable for freightage due to the fact that the
shipment was made for its benefit or under its direction and, correspondingly,
the carrier is entitled to collect charges for its shipping services. This is
particularly true in this case where the reshipment of the goods was made at
the instance of MMMC.
However, in a letter, private respondents belatedly informed MMMC of the
arrival of its goods from Japan. Additionally, in such letter, private
respondents unequivocally offered MMMC the option of paying the shipping
and demurrage charges in order to take delivery of the goods or of
abandoning the same so that private respondents could sell them at public
auction and thereafter apply the proceeds in payment of the shipping and
other charges.
MMMC communicated its decision to abandon to the goods in favor of private
respondents with the specific instruction that any excess of the proceeds over
the legal costs and charges be turned over to MMMC. But despite the
exercise of the option to abandon, private respondents sent a demand letter
to MMMC insisting that MMMC should pay the entire amount and that they
will not accept the abandonment of the goods and demanded that the
outstanding account be settled.
Here, it was established that private respondents expressly and by their own
acts granted MMMC an option with respect to the satisfaction of freightage
and demurrage charges – to which MMMC accepted. Thus, private
respondents are estopped from reneging thereon. To allow either of them to
unilaterally back out on the offer and on the exercise of the option would be to
countenance abuse of rights and a violation to the long entrenched principle
of mutuality of contracts.
It will be remembered that in overland transportation, an unreasonable delay
in the delivery of transported goods is sufficient ground for the abandonment
of goods. By analogy, this can also apply to maritime transportation. Further,
with much more reason can petitioner in the instant case properly abandon
the goods, not only because of the unreasonable delay in its delivery but
because of the option which was categorically granted to and exercised by it
as a means of settling its liability for the cost and expenses of reshipment.
And, said choice having been duly communicated, the same is binding upon
the parties on legal and equitable considerations of estoppel.
Other topics discussed:
Transshipment
Transshipment, in maritime law, is defined as "the act of taking cargo out of
one ship and loading it in another," or "the transfer of goods from the vessel
stipulated in the contract of affreightment to another vessel before the place
of destination named in the contract has been reached," or "the transfer for
further transportation from one ship or conveyance to another."

The fact of transhipment is not dependent upon the ownership of the

transporting ships or conveyances or in the change of camera but rather on
the fact of actual physical transfer of cargo from one vessel to another.

Bill of Lading
It is a long standing jurisprudential rule that a bill of lading operates both as a
receipt and as a contract. It is a receipt for the goods shipped and a contract
to transport and deliver the same as therein stipulated. As a contract, it
names the parties, which includes the consignee, fixes the route, destination,
and freight rates or charges, and stipulates the rights and obligations
assumed by the parties. Being a contract, it is the law between the parties
who are bound by its terms and conditions provided that these are not
contrary to law, morals, good customs, public order and public policy. 16 A bill
of lading usually becomes effective upon its delivery to and acceptance by
the shipper. It is presumed that the stipulations of the bill were, in the
absence of fraud, concealment or improper conduct, known to the shipper,
and he is generally bound by his acceptance whether he reads the bill or not.
11.2 Consequence of Delay
G.R. No. 118126. March 4, 1996
TRANSASIA SHIPPING LINES, INC., petitioner,
vs.
COURT OF APPEALS and ATTY. RENATO T. ARROYO, respondents.
Digested by: Kathleen Kaye M. Laurente
Doctrine:
Where the common carrier fails to observe extraordinary diligence resulting in
delay or interruption of the voyage, it shall be liable for any pecuniary loss or
loss of profits which the passengers may suffer by reason thereof. For the
private respondent, such would be the loss of income if unable to report to his
office on the day he was supposed to arrive were it not for the delay.
Facts:
Herein private respondent Atty. Renato Arroyo, a public attorney, bought a
ticket from herein petitioner TRANSASIA SHIPPING LINES, INC, a
corporation engaged in inter-island shipping, for the voyage of M/V Asia
Thailand vessel to Cagayan de Oro City from Cebu City. At around 5:30 in
the evening of November 12, 1991, plaintiff boarded the M/V Asia Thailand
vessel. At that instance, plaintiff noticed that some repair works were being
undertaken on the engine of the vessel. The vessel departed at around 11:00
in the evening with only one (1) engine running. After an hour of slow voyage,
the vessel stopped near Kawit Island and dropped its anchor thereat. After
half an hour of stillness, some passengers demanded that they should be
allowed to return to Cebu City. The captain acceded to their request.
On account of this failure of TransAsia to transport Arroyo to the place of
destination on November 12, 1991, he filed before the trial court a complaint
for damages against defendant. He further alleged that by reason of the
petitioner’s wanton, reckless, and willful acts, he was unnecessarily exposed
to danger and, having been stranded in Cebu City for a day, incurred
additional expenses and loss of income. He then prayed that he be awarded
P1,100.00, P50,000.00, and P25,000.00 as compensatory, moral and
exemplary damages, respectively.
Issue:
In case of interruption of a vessel’s voyage and the consequent delay in that
vessel’s arrival at its port of destination, is the right of a passenger affected
thereby to be determined and governed by the Civil Code provision on
common carriers or by Art. 698 of the Code of Commerce.
Held:
Where the delay in a contracted voyage is incurred after the commencement
of such voyage, Art. 698 of the Code of Commerce, not Art. 1169 of the Civil
Code , applies. Article 698 provides:
“In case a voyage already begun should be interrupted, the
passengers shall be obliged to pay the fare in proportion to the
distance covered, without right to recover for losses and damages if
the interruption is due to fortuitous event or force majeure, but with a
right to indemnity if the interruption should have been caused by the
captain exclusively. If the interruption should be caused by the
disability of the vessel and a passenger should agree to await the
repairs, he may not be required to pay any increased price of
passage, but his living expenses during the stay shall be for his own
account.”
The Court did not grant the private respondent actual or compensatory
damages because no delay was incurred since there was no demand, as
required by Art. 1169 of the Civil Code. This Article finds no application in this
case because as found by the Court, there was no delay in the
commencement of such voyage, more specifically, when the voyage was
subsequently interrupted when the vessel had to stop near Kawit Island after
the only functioning engine conked out. As to the rights and duties of the
parties strictly arising out of such delay, the Civil Code is silent.
Where the common carrier fails to observe extraordinary diligence
resulting in delay or interruption of the voyage, it shall be liable for any
pecuniary loss or loss of profits which the passengers may suffer by
reason thereof. For the private respondent, such would be the loss of
income if unable to report to his office on the day he was supposed to
arrive were it not for the delay.

The Court also agrees with the CA’s decision that the petitioner is liable for
moral and exemplary damages. In allowing its unseaworthy M/V Asia
Thailand to leave the port of origin and undertake the contracted voyage, with
full awareness that it was exposed to perils of the sea, it deliberately
disregarded its solemn duty to exercise extraordinary diligence and obviously
acted with bad faith and in a wanton and reckless manner.

For a vessel to be seaworthy, it must be adequately equipped for the voyage

and manned with a sufficient number of competent officers and crew. Failure
of a common carrier to maintain in seaworthy condition its vessel
involved in a contract of carriage is a clear breach of its duty prescribed
in Art. 1755 of the Civil Code.

Petitioner asserts that the safety of the vessel and passengers was never at
stake because the sea was calm in the vicinity where it stopped as faithfully
recorded in the vessel’s log book. Hence, petitioner concludes, the private
respondent was merely overreacting to the situation obtaining then. Court
hold that the petitioner’s defense cannot exculpate nor mitigate its liability.
Petitioner should not expect its passengers to act in the manner it desired.
Becoming alarmed, anxious, or frightened at the stoppage of a vessel at sea
in an unfamiliar zone at nighttime is not the sole prerogative of the faint -
hearted.
G.R. No. 143133 June 5, 2002

BELGIAN OVERSEAS CHARTERING AND SHIPPING N.V. and JARDINE

DAVIES TRANSPORT SERVICES, INC., petitioners,
vs.
PHILIPPINE FIRST INSURANCE CO., INC., respondents.

Digested by: Dave Alano

Facts: On June 13, 1990, CMC Trading A.G. shipped on board the M/V
'Anangel Sky' at Hamburg, Germany 242 coils of various Prime Cold Rolled
Steel sheets for transportation to Manila consigned to the Philippine Steel
Trading Corporation. M/V Anangel Sky arrived at the port of Manila and,
within the subsequent days, discharged the subject cargo. Four (4) coils were
found to be in bad order Finding the four (4) coils in their damaged state to be
unfit for the intended purpose, the consignee Philippine Steel Trading
Corporation declared the same as total loss.

Despite receipt of a formal demand, defendants-appellees refused to submit

to the consignee's claim. Consequently, plaintiff-appellant paid the consignee
five hundred six thousand eighty six & 50/100 pesos (P506,086.50), and was
subrogated to the latter's rights and causes of action against defendants -
appellees. Subsequently, plaintiff-appellant instituted this complaint for
recovery of the amount paid by them, to the consignee as insured.

Impugning the propriety of the suit against them, defendants-appellees

imputed that the damage and/or loss was due to pre-shipment damage, to the
inherent nature, vice or defect of the goods, or to perils, danger and accidents
of the sea, or to insufficiency of packing thereof, or to the act or omission of
the shipper of the goods or their representatives. In addition thereto,
defendants-appellees argued that their liability, if there be any, should not
exceed the limitations of liability provided for in the bill of lading and other
pertinent laws. Finally, defendants-appellees averred that, in any event, they
exercised due diligence and foresight required by law to prevent any
damage/loss to said shipment."
13. DEFENSES OF COMMON CARRIERS
Digested by: Gretchen B. Canedo
[G.R. No. 122039. May 31, 2000]
VICENTE CALALAS, petitioner, vs. COURT OF APPEALS, ELIZA
JUJEURCHE SUNGA and FRANCISCO SALVA, respondents.
D E C I S I ON
MENDOZA, J.:
FACTS:
Respondent Eliza Jujeurche G. Sunga took a passenger jeepney owned and
operated by petitioner Vicente Calalas. As the jeepney was filled to capacity
of about 24 passengers, Sunga was given by the conductor an "extension
seat," a wooden stool at the back of the door at the rear end of the vehicle.
On the way to Poblacion Sibulan, Negros Occidental, the jeepney stopped to
let a passenger off. As she was seated at the rear of the vehicle, Sunga gave
way to the outgoing passenger. Just as she was doing so, an Isuzu truck
driven by Iglecerio Verena and owned by Francisco Salva bumped the left
rear portion of the jeepney. As a result, Sunga was injured. Her attending
physician, Dr. Danilo V. Oligario, an orthopedic surgeon, certified she would
remain on a cast for a period of three months and would have to ambulate in
crutches during said period.
On October 9, 1989, Sunga filed a complaint for damages against Calalas,
alleging violation of the contract of carriage by the former in failing to exercise
the diligence required of him as a common carrier. Calalas, on the other
hand, filed a third-party complaint against Francisco Salva, the owner of the
Isuzu truck.
The lower court rendered judgment against Salva as third-party defendant
and absolved Calalas of liability, holding that it was the driver of the Isuzu
truck who was responsible for the accident. It took cognizance of another
case (Civil Case No. 3490), filed by Calalas against Salva and Verena, for
quasi-delict, in which Branch 37 of the same court held Salva and his driver
Verena jointly liable to Calalas for the damage to his jeepney.
On appeal, the ruling of the lower court was reversed on the ground that
Sungas cause of action was based on a contract of carriage, not quasi-delict,
and that the common carrier failed to exercise the diligence required under
the Civil Code. The appellate court dismissed the third-party complaint
against Salva and adjudged Calalas liable for damages to Sunga.
Petitioner contends that the ruling in Civil Case No. 3490 that the negligence
of Verena was the proximate cause of the accident negates his liability and
that to rule otherwise would be to make the common carrier an insurer of the
safety of its passengers. He contends that the bumping of the jeepney by the
truck owned by Salva was a caso fortuito. Petitioner further assails the award
of moral damages to Sunga on the ground that it is not supported by
evidence.
ISSUE:
Is Calalas exempt from liability?
HELD:
No. The argument that Sunga is bound by the ruling in Civil Case No. 3490
finding the driver and the owner of the truck liable for quasi-delict ignores the
fact that she was never a party to that case and, therefore, the principle of res
judicata does not apply.
In quasi-delict, the negligence or fault should be clearly established because it is the
basis of the action, w hereas in breach of contract, the action can be prosecuted merely
by proving the existence of the contract and the fact that the obligor, in this case the
common carrier, failed to transport his passenger safely to his destination. In case of
death or injuries to passengers, Art. 1756 of the Civil Code provides that common
carriers are presumed to have been at fault or to have acted negligently unless they
prove that they observed extraordinary diligence as defined in Arts. 1733 and 1755 of
the Code. This provision necessarily shifts to the common carrier the burden of proof.
There is, thus, no basis for the contention that the ruling in Civil Case No. 3490, finding
Salva and his driver Verena liable for the damage to petitioners jeepney, should be
binding on Sunga. It is immaterial that the proximate cause of the collision betw een the
jeepney and the truck w as the negligence of the truck driver. The doctrine of proximate
 cause is applicable only in actions for quasi-delict, not in actions involving breach of
contract. The doctrine is a device for imputing liability to a person w here there is no
relation betw een him and another party. In such a case, the obligation is created by
law itself. But, w here there is a pre-existing contractual relation between the parties, it
is the parties themselves w ho create the obligation, and the function of the law is
merely to regulate the relation thus created. Insofar as contracts of carriage are
concerned, some aspects regulated by the Civil Code are those respecting the
diligence required of common carriers with regard to the safety of passengers as well
as the presumption of negligence in cases of death or injury to passengers. It provides:
Art. 1733. Common carriers, from the nature of their business and for
reasons of public policy, are bound to observe extraordinary diligence in the
vigilance over the goods and for the safety of the passengers transported by
them, according to all the circumstances of each case.
Such extraordinary diligence in the vigilance over the goods is further
expressed in articles 1734, 1735, and 1746, Nos. 5,6, and 7, while the
extraordinary diligence for the safety of the passengers is further set forth in
articles 1755 and 1756.
Art. 1755. A common carrier is bound to carry the passengers safely as far
as human care and foresight can provide, using the utmost diligence of very
cautious persons, with due regard for all the circumstances.
Art. 1756. In case of death of or injuries to passengers, common carriers are
presumed to have been at fault or to have acted negligently, unless they
prove that they observed extraordinary diligence as prescribed by articles
1733 and 1755.
In the case at bar, upon the happening of the accident, the presumption of
negligence at once arose, and it became the duty of petitioner to prove that
he had to observe extraordinary diligence in the care of his passengers.
Moreover, several factors militate against petitioners contention.
First, as found by the Court of Appeals, the jeepney was not properly parked,
its rear portion being exposed about two meters from the broad shoulders of
the highway, and facing the middle of the highway in a diagonal angle. This is
a violation of the R.A. No. 4136, as amended, or the Land Transportation and
Traffic Code, which provides:
Sec. 54. Obstruction of Traffic. - No person shall drive his motor vehicle in
such a manner as to obstruct or impede the passage of any vehicle, nor,
while discharging or taking on passengers or loading or unloading freight,
obstruct the free passage of other vehicles on the highway.
Second, it is undisputed that petitioners driver took in more passengers than
the allowed seating capacity of the jeepney, a violation of 32(a) of the same
law. It provides:
Exceeding registered capacity. - No person operating any motor vehicle
shall allow more passengers or more freight or cargo in his vehicle than its
registered capacity.
The fact that Sunga was seated in an "extension seat" placed her in a peril
greater than that to which the other passengers were exposed. Therefore, not
only was petitioner unable to overcome the presumption of negligence
imposed on him for the injury sustained by Sunga, but also, the evidence
shows he was actually negligent in transporting passengers.
The court found it hard to give serious thought to petitioners contention that
Sungas taking an "extension seat" amounted to an implied assumption of
risk. It is akin to arguing that the injuries to the many victims of the tragedies
in our seas should not be compensated merely because those passengers
assumed a greater risk of drowning by boarding an overloaded ferry. This is
also true of petitioners contention that the jeepney being bumped while it was
improperly parked constitutes caso fortuito.
A caso fortuito is an event which could not be foreseen, or which, though
foreseen, was inevitable. This requires that the following requirements be
present: (a) the cause of the breach is independent of the debtors will; (b) the
event is unforeseeable or unavoidable; (c) the event is such as to render it
impossible for the debtor to fulfill his obligation in a normal manner, and (d)
the debtor did not take part in causing the injury to the creditor. Petitioner
should have foreseen the danger of parking his jeepney with its body
protruding two meters into the highway.
13. DEFENSES OF COMMON CARRIERS
13.2 G.R. No. L-10605 June 30, 1958
PRECILLANO NECESITO, ETC., plaintiff-appellant,
vs.
NATIVIDAD PARAS, ET AL., defendants-appellees.
REYES, J.B.L.
Digested by: Terry Louise P. Boligor
FACTS: In the morning of January 28, 1964, Severina Garces and her one-
year old son, Precillano Necesito, carrying vegetables, boarded passenger
auto truck or bus No. 199 of the Philippine Rabbit Bus Lines at Agno,
Pangasinan. The passenger truck, driven by Francisco Bandonell, then
proceeded on its regular run from Agno to Manila. After passing Mangatarem,
Pangasinan truck No. 199 entered a wooden bridge, but the front wheels
swerved to the right; the driver lost control, and after wrecking the bridge's
wooden rails, the truck fell on its right side into a creek where water was
breast deep. The mother, Severina Garces, was drowned while the son,
Precillano Necesito, was injured, suffering abrasions and fracture of the left
femur. He was brought to the Provincial Hospital at Dagupan, where the
fracture was set but with fragments one centimeter out of line. The money,
wrist watch and cargo of vegetables were lost.
Two actions for damages and attorney's fees totalling over P85,000 having
been filed in the Court of First Instance of Tarlac against the carrier. The latter
pleaded that the accident was due to "engine or mechanical trouble"
independent or beyond the control of the defendants or of the driver
Bandonell.
After joint trial, the Court of First Instance found that the bus was proceeding
slowly due to the bad condition of the road; that the accident was caused by
the fracture of the right steering knuckle, which was defective in that its center
or core was not compact but "bubbled and cellulous", a condition that could
not be known or ascertained by the carrier despite the fact that regular thirty -
day inspections were made of the steering knuckle, since the steel exterior
was smooth and shiny to the depth of 3/16 of an inch all around; that the
knuckles are designed and manufactured for heavy duty and may last up to
ten years; that the knuckle of bus No. 199 that broke on January 28, 1954,
was last inspected on January 5, 1954, and was due to be inspected again on
February 5th. Hence, the trial court, holding that the accident was
exclusively due to fortuitous event, dismissed both actions. Plaintiffs
appealed directly to this Court in view of the amount in controversy.
ISSUE: Was the common carrier exempt from liability due to the
manufacturing defect of the steering knuckle?
RULING: No. The Common carrier is liable and cannot pass the blame on
another’s shoulders such as the manufacturer of the vehicle parts.
Article 1755 provides: A common carrier is bound to carry the passengers
safely as far as human care and foresight can provide, using the utmost
diligence of very cautious persons, with a due regard for the all the
circumstances.
It is clear that the carrier is not an insurer of the passengers' safety. His
liability rests upon negligence, his failure to exercise the "utmost" degree of
diligence that the law requires, and by Art. 1756, in case of a passenger's
death or injury the carrier bears the burden of satisfying the court that he has
duly discharged the duty of prudence required. In the American law, where
the carrier is held to the same degree of diligence as under the new Civil
Code, the rule on the liability of carriers for defects of equipment is thus
expressed: "The preponderance of authority is in favor of the doctrine that a
passenger is entitled to recover damages from a carrier for an injury resulting
from a defect in an appliance purchased from a manufacturer, whenever it
appears that the defect would have been discovered by the carrier if it had
exercised the degree of care which under the circumstances was incumbent
upon it, with regard to inspection and application of the necessary tests. For
the purposes of this doctrine, the manufacturer is considered as being in law
the agent or servant of the carrier, as far as regards the work of constructing
the appliance. According to this theory, the good repute of the manufacturer
will not relieve the carrier from liability.
The rationale of the carrier's liability is the fact that the passenger has neither
choice nor control over the carrier in the selection and use of the equipment
and appliances in use by the carrier. Having no privity whatever with the
manufacturer or vendor of the defective equipment, the passenger has no
remedy against him, while the carrier usually has. It is but logical, therefore,
that the carrier, while not an insurer of the safety of his passengers, should
nevertheless be held to answer for the flaws of his equipment if such flaws
were at all discoverable.

In the case now before us, the record is to the effect that the only test applied
to the steering knuckle in question was a purely visual inspection every thirty
days, to see if any cracks developed. It nowhere appears that either the
manufacturer or the carrier at any time tested the steering knuckle to
ascertain whether its strength was up to standard, or that it had no hidden
flaws would impair that strength. And yet the carrier must have been aware of
the critical importance of the knuckle's resistance; that its failure or breakage
would result in loss of balance and steering control of the bus, with disastrous
effects upon the passengers. No argument is required to establish that a
visual inspection could not directly determine whether the resistance of this
critically important part was not impaired. Nor has it been shown that the
weakening of the knuckle was impossible to detect by any known test; on the
contrary, there is testimony that it could be detected. We are satisfied that the
periodical visual inspection of the steering knuckle as practiced by the
carrier's agents did not measure up to the required legal standard of "utmost
diligence of very cautious persons" — "as far as human care and foresight
can provide", and therefore that the knuckle's failure can not be considered a
fortuitous event that exempts the carrier from responsibility (Lasam vs. Smith,
45 Phil. 657; Son vs. Cebu Autobus Co., 94 Phil., 892.)
Fortuitous Events
13.3
G.R. No. L-19495 February 2, 1924
HONORIO LASAM, ET AL., plaintiffs-appellants, vs. FRANK SMITH, JR.,
defendant-appellant.
FACTS: Respondent Frank Smith, Jr. was engaged in the business of
carrying passengers for hire. He undertook to convey the petitioners from San
Fernando to Currimao, Ilocos Norte. On leaving San Fernando, the
automobile was operated by a licensed driver, but after having reached the
town of San Juan, the driver allowed his assistant, Remigio Bueno, to drive
the car. Bueno held no driver's license. After the crossing of the Abra River in
Tagudin, defects developed in the steering gear so as to make accurate
steering impossible, and after zigzagging for a distance of about half a
kilometer, the car left the road and went down a steep embankment. The
automobile was overturned and the petitioners pinned down under it. The
petitioners filed a complaint against respondent for damages. The trial court
found that the breach of the contract was not due to fortuitous events and
that, therefore, the defendant was liable in damages. Respondent now
contends that the accident was due to a fortuitous event.
A caso fortuito presents the following essential characteristics/requisites:
(1) The cause of the unforeseen and unexpected occurrence, or of
the failure of the debtor to comply with his obligation, must be
independent of the human will.
(2) It must be impossible to foresee the event which constitutes the
caso fortuito, or if it can be foreseen, it must be impossible to avoid.
(3) The occurrence must be such as to render it impossible for the
debtor to fulfill his obligation in a normal manner; and
(4) the obligor (debtor) must be free from any participation in the
aggravation of the injury resulting to the creditor."
The essential element of a caso fortuito is that the extraordinary circumstance
is independent of the will of the obligor, or of his employees. In this case, the
said essential element is lacking. It is not sugges ted that the accident in
question was due to an act of God or to adverse road conditions which could
not have been foreseen. As far as the records shows, the accident was
caused either by defects in the automobile or else through the negligence of
its driver. That is not a caso fortuito.

ISSUE: Whether the accident was due to a fortuitous event.

RULING: No, the accident in question was not due to a fortuitous

event.
Caso fortuito or fortuitous event is an event that takes place by
accident and could not have been foreseen. Examples of this are destruction
of houses, unexpected fire, shipwreck, violence of robbers.

Escriche defines caso fortuito as "an unexpected event or act of God

which could either be foreseen nor resisted, such as floods, torrents,
shipwrecks, conflagrations, lightning, compulsion, insurrections, destructions,
destruction of buildings by unforeseen accidents and other occurrences of a
similar nature."
13.4 ASIA LIGHTERAGE AND SHIPPING, INC. vs. COURT OF APPEALS
and PRUDENTIAL GUARANTEE AND ASSURANCE, INC.
G.R. No. 147246. August 19, 2003
PUNO, J
Digested by: Vina Cagampang
Doctrine:
Facts: A cargo was shipped on board a vessel for delivery to the consignee,
General Milling Corporation in Manila. The shipment was insured by
Prudential Guarantee and Assurance, Inc. against loss or damage. The
carrying vessel arrived in Manila and the cargo was transferred to the custody
of the Asia Lighterage and Shipping, Inc. The latter was contracted by the
consignee as carrier to deliver the cargo to consignee's warehouse at Pasig
City however, the cargo did not reach its destination. It was found out that the
transport of said cargo was suspended due to a warning of an incoming
typhoon. When Asia Lighterage sought shelter from the approaching typhoon,
the barge developed a list because of a hole it sustained after hitting an
unseen protuberance underneath the water. The hole was patched with only
clay and cement. Upon reaching the Sta. Mesa spillways, the barge again ran
aground due to strong current. To avoid the complete sinking of the barge, a
portion of the goods was transferred to three other barges. The next day, the
towing bits of the barge broke. It sank completely, resulting in the total loss of
the remaining cargo. Private respondent indemnified the consignee.
Thereafter, as subrogee, it sought recovery of said amount from the
petitioner, but to no avail. Petitioner claims that this was caused by a typhoon,
hence, it should not be held liable for the loss of the cargo.
Issue: Whether petitioner can invoke the occurrence of the typhoon as force
majeure to escape liability for the loss sustained by the private respondent
cargo.
Ruling: No. Asia Lighterage cannot invoke the occurrence of typhoon as
force majeure to escape liability for the loss sustained by Prudential.
To overcome the presumption of negligence in the case of loss, destruction or
deterioration of the goods, the common carrier must prove that it exercised
extraordinary diligence. There are, however, exceptions to this rule. Article
1734 of the Civil Code enumerates the instances when the presumption of
negligence does not attach:
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.
Petitioner failed to prove that the typhoon is the proximate and only cause of
the loss of the goods, and that it has exercised due diligence before, during
and after the occurrence of the typhoon to prevent or minimize the loss. The
evidence show that, even before the towing bits of the barge broke, it had
already previously sustained damage when it hit a sunken object while
docked at the Engineering Island. It even suffered a hole. Clearly, this could
not be solely attributed to the typhoon. The partly-submerged vessel was
refloated but its hole was patched with only clay and cement. The patch work
was merely a provisional remedy, not enough for the barge to sail safely.
Thus, when petitioner persisted to proceed with the voyage, it recklessly
exposed the cargo to further damage. This is not all. Petitioner still headed to
the consignees wharf despite knowledge of an incoming typhoon. During the
time that the barge was heading towards the consignee's wharf on
September 5, 1990, typhoon Loleng has already entered the Philippine area
of responsibility.
Accordingly, the petitioner cannot invoke the occurrence of the typhoon as
force majeure to escape liability for the loss sustained by the private
respondent. Surely, meeting a typhoon head-on falls short of due diligence
required from a common carrier. More importantly, the officers/employees
themselves of petitioner admitted that when the towing bits of the vessel
broke that caused its sinking and the total loss of the cargo upon reaching the
Pasig River, it was no longer affected by the typhoon. The typhoon then is not
the proximate cause of the loss of the cargo; a human factor, i.e., negligence
had intervened.
G.R. No. 6092. March 8, 1912. Ruling: No. Inchausti & Co. is not liable for the loss of the goods since it was
TAN CHIONG SIAN, Plaintiff-Appellee, due to a fortuitous event and there was no negligence or lack of care or
v. diligence on the part of the respondent and its agents.
INCHAUSTI & Co., Defendant-Appellant.
The Civil Code provides:
Doctrine:
Loss of a ship and of its cargo, in a wreck due to accident or force majeure Art. 1601. "Carriers of goods by land or by water shall be subject with regard
must, as a general rule, fall upon their respective owners, except in cases to the keeping and preservation of the things entrusted to them, to the same
where the wrecking or stranding of the vessel occurred through malice, obligations as determined for innkeepers by articles 1783 and 1784.”
carelessness or lack of skill on the part of the captain and in the remaining
cases indicated in article 841 of the Code of Commerce. Art. 1602. "Carriers are also liable for the loss of and damage to the things
which they receive, unless they prove that the loss or damage arose from a
Facts: fortuitous event or force majeure."
On November 25, 1908, Tan Chiong Sian, plaintiff, delivered to Inchausti &
Co, defendant, 205 cases of general merchandise which belonged to Sian. Article 361 of the Code of Commerce states: "Merchandise shall be
These merchandise was to be delivered to a Chinaman, Ong Bieng Sip in transported at the risk and venture of the shipper, unless the contrary was
Catarman, Samar. expressly stipulated.

The said merchandise was put on board the steamer Sorsogon and was "Therefore, all damages and impairment suffered by the goods in
carried to the port of Gubat, Sorsogon. Upon its arrival at the said port, it transportation, by reason of accident, force majeure, or by virtue of the nature
should have been transshipped to Samar through “Lorcha Pilar.” But since or defect of the articles, shall be for the account and risk of the shipper.
Lorcha Pilar was not yet at the port in Gubat when the steamer arrived, the
goods were unloaded and stored at the defendant’s warehouse. The proof of these accidents is incumbent on the carrier.”

After several days, Lorcha Pilar arrived and the merchandise were
accordingly loaded. However, before such vessel could leave, strong winds
began to blow heavily, and the Lorcha Pilar was dragged and driven, by the
force of the storm, to the shore despite the means employed by the crew to
avoid the accident. The craft was completely wrecked and destroyed,
including the 205 cases of merchandise.
Issue:
Whether the defendant is liable for the loss of the merchandise and for failure
to deliver the same at the place of destination
Moreover, the plaintiff admitted that Lorcha Pilar was stranded and wrecked
on the coast of Gubat as a result of the violent storm , and, consequent ly, it is
a proven fact that the loss or damage of the goods shipped on the said lorcha
was due to the force majeure which caused the wreck of the said craft.
In the treatment of shipwrecks, article 840 of the Code of Commerce
prescribes: "The losses and damages suffered by a vessel and he cargo by
reason of shipwreck or stranding shall be individually for the account of the
owners, the part of the wreck which may be saved belonging to them in the
same proportion."

The general rule established is that the loss of the vessel and of its cargo, as
the result of shipwreck, shall fall upon the respective owners thereof, save for
the exceptions specified in the second of the said articles.

These legal provisions are in harmony with those of articles 361 and 362 of
the Code of Commerce, and are applicable whenever it is proved that the
loss of, or damage to, the goods was the result of a fortuitous event or of
force majeure; but the carrier shall be liable for the loss or the damage arising
from the causes aforementioned, if it shall have been proven that they
occurred through his own fault or negligence or by his failure to take the same
precautions usually adopted by diligent and careful persons.

According to article 361 of the Code of Commerce, merchandise shall be

transported at the risk and venture of the shipper, unless the contrary be
expressly stipulated. No such stipulation appears of record, therefore, all
damages and impairment suffered by the goods in transportation, by reason
of accident, force majeure, or by virtue of the nature or defect of the articles,
are for the account and risk of the shipper.

The burden of proof on the accidents is upon the shipper. Here, the plaintiff
himself admitted that a heavy storm occurred, therefore, the defendant is
exempt from the obligation imposed by the law to prove the occurrence of the
said storm in the port of Gubat, and, therefore, if the said goods were lost or
damaged and could not be delivered in Catarman, it was due to a fortuitous
event and a superior, irresistible natural force, or force majeure, which
completely disabled the Lorcha intended for their transportation to the said
port of the Island of Samar.

Moreover, subsequent to the wreck, the defendant company’s agent took all
the requisite measures for the salvage of such of the goods as could be
recovered after the accident, which he did with the knowledge of the shipper,
Ong Bieng Sip, and, in effecting their sale, he endeavored to secure all
possible advantage to the Chinese shipper; in all these proceedings, as
shown by the record, he acted in obedience to the law.
13.7 Participation of the Carrier: Fire
G.R. No. 146018. June 25, 2003
EDGAR COKALIONG SHIPPING LINES, INC., petitioner,
vs.
UCPB GENERAL INSURANCE COMPANY, INC., respondent.
Digested by: Kathleen Kaye M. Laurente
Doctrine:
In Aboitiz Shipping Corporation v. Court of Appeals, the description of the
nature and the value of the goods shipped were declared and reflected in the
bill of lading, like in the present case. The Court therein considered this
declaration as the basis of the carrier’s liability and ordered payment based
on such amount.
Facts:
On December 11, 1991, Nestor Angelia delivered to the Edgar Cokaliong
ShippingLines, Inc. [petitioner], cargo consisting of one (1) carton of
Christmas decor and two (2) sacks of plastic toys, to be transported on board
the M/V Tandag on its Voyage scheduled to depart from Cebu City for
Tandag, Surigao del Sur. [Petitioner] issued Bill of Lading No. 58, freight
prepaid, covering the cargo. Nestor Angelia was both the shipper and
consignee of the cargo valued, on the face thereof, in the amount of
P6,500.00.
Zosimo Mercado likewise delivered cargo to [petitioner], consisting of two (2)
cartons of plastic toys and Christmas decor, one (1) roll of floor mat and one
(1) bundle of various or assorted goods for transportation thereof from Cebu
City to Tandag, Surigao del Sur, on board the said vessel, and said voyage.
[Petitioner] issued Bill of Lading No. 59 covering the cargo which, on the face
thereof, was valued in the amount of P14,000.00. Under the Bill of Lading,
Zosimo Mercado was both the shipper and consignee of the cargo.
The cargo covered by Bill of Lading No. 59 was insured with the UCPB
General Insurance Co., Inc., [respondent] for brevity, for the amount of
P100,000.00 “against all risks,’ as well as the cargo covered by Bill of Lading
No. 58, was insured with [respondent], for the amount of P50,000.00.
When the vessel left port, fire ensued in the engine room, and, despite
earnest efforts of the officers and crew of the vessel, the fire engulfed and
destroyed the entire vessel resulting in the loss of the vessel and the cargoes
therein.
Issue:
(1) Is petitioner liable for the loss of the goods?
(2) If it is liable, what is the extent of its liability?
Held:
1. Yes. The law provides that a common carrier is presumed to
have been negligent if it fails to prove that it exercised extraordinary vigilance
over the goods it transported. Ensuring the seaworthiness of the vessel is the
first step in exercising the required vigilance. Petitioner did not present
sufficient evidence showing what measures or acts it had undertaken to
ensure the seaworthiness of the vessel. It failed to show when the last
inspection and care of the auxiliary engine fuel oil service tank was made,
what the normal practice was for its maintenance, or some other evidence to
establish that it had exercised extraordinary diligence. It merely stated that
constant inspection and care were not possible, and that the last time the
vessel was dry-docked was in November 1990. Necessarily, in accordance
with Article 1735 of the Civil Code, we hold petitioner responsible for the loss
of the goods covered by Bills of Lading Nos. 58 and 59.
(2) Petitioner’s liability should be limited to the value declared by the
shipper/consignee in the Bill of Lading, and not based on the actual insured
value of the goods, subject of this case.
The records show that the Bills of Lading covering the lost goods contain the
stipulation that in case of claim for loss or for damage to the shipped
merchandise or property, “[t]he liability of the common carrier x x x shall not
exceed the value of the goods as appearing in the bill of lading.”
A stipulation that limits liability is valid as long as it is not against public policy.
In Everett Steamship Corporation v. Court of Appeals, the Court stated:
 “A stipulation in the bill of lading limiting the common carrier’s liability
for loss or destruction of a cargo to a certain sum, unless the shipper
or owner declares a greater value, is sanctioned by law, particularly
Articles 1749 and 1750 of the Civil Code which provides:
‘Art. 1749. A stipulation that the common carrier’s liability is limited to
the value of the goods appearing in the bill of lading, unless the
shipper or owner declares a greater value, is binding.’
‘Art. 1750. A contract fixing the sum that may be recovered by the
owner or shipper for the loss, destruction, or deterioration of the
goods is valid, if it is reasonable and just under the circumstances,
and has been freely and fairly agreed upon.’

In Aboitiz Shipping Corporation v. Court of Appeals, the description of the

nature and the value of the goods shipped were declared and reflected in the
bill of lading, like in the present case. The Court therein considered this
declaration as the basis of the carrier’s liability and ordered payment based
on such amount. Following this ruling, petitioner should not be held liable for
more than what was declared by the shippers/consignees as the value of the
goods in the bills of lading.
G.R. No. L-6155 April 30, 1954 event. In essence, the trial court held that the drag-link spring of the truck in
JOSE SON, plaintiff-appellee, question was defective.
vs. The conclusion of the trial court with respect to the amount of damages
CEBU AUTOBUS COMPANY, defendant-appellant. sustained by and award in favor of the plaintiff, is being factual, conclusive.

Digested by: Dave Alano With Regards to the Issue of Damages due to Death of the Hogs

Facts: A truck of the Cebu Autobus Company left for Cebu at about 10m
bound for Maya, a municipality of Cebu Province, and arrived at about 5pm. It
left Maya on its return trip the following day at 4am, without having been
inspected or examined by the mechanic. Plaintiff Jose Son boarded the truck
and loaded with it seven hogs, and paid fare and freight. During the trip, the
truck fell into a canal and pinned plaintiff down, causing him to lose
consciousness for some time. Due to the accident, he suffered complete
fractures on his pelvic bones.
After trial the court rendered a decision, sentencing the defendant to pay to
the plaintiff the sum of P2,000 as moral damages, and the sum of P286.80 as
plaintiff's actual expenses, together with his loss and unrealized profit in
connection with the seven hogs loaded by the plaintiff in defendant's truck.
From this decision the defendant has appealed.

Furthermore, two of plaintiff’s hogs fell into a canal and died during the
accident. Hence, plaintiff instituted with the Court of First Instance a suit for
damages due to the injuries he suffered and for the hogs which were killed.

The CFI ruled in favor of Jose Son. Defendant Cebu Autobus Company
appealed the decision to the Supreme Court.

Issue: Whether or not the decision of the CFI in favor of Jose Son was proper

Held: Yes. The Supreme Court affirmed the decision of the Court of First
Instance, holding that there indeed has been a breach of contract of carriage,
which should be properly distinguished with a culpa acquiliana.

Defendant corporation’s argument that the cause of the accident was from an
unforeseen or inevitable event must fail. The evidence submitted to the trial
court show that the drag-link spring of the truck in questio was defective.

In our opinion, the trial court was correct. Its express finding as to the cause
of the accident in effect blames the defendant for it and logically rejects the
defendant's theory that the cause emanated from an unforeseen or inevitable
MECHANICAL DEFECTS
Digested by: Gretchen Canedo
G.R. No. 77679 September 30, 1987
VICENTE VERGARA, petitioner,
vs.
THE COURT OF APPEALS and AMADEO AZARCON, respondents.
FACTS:
An action for damages based on quasi-delict (Art. 2176 of the Civil Code) was
filed by private respondent against petitioner. The action arose from a
vehicular accident that occurred on 5 August 1979 in Gapan, Nueva Ecija,
when Martin Belmonte, while driving a cargo truck belonging to petitioner,
rammed "head-on" the store-residence of the private respondent, causing
damages thereto which were inventoried and assessed at P53,024.22.
In his answer to the complaint, the petitioner alleged principally: "that his
driver Martin Belmonte operated said cargo truck in a very diligent (and)
careful manner; that the steering wheel refused to respond to his effort and as
a result of a blown-out tire and despite application of his brakes, the said
cargo truck hit the store-residence of plaintiff (private respondent) and that
the said accident was an act of God for which he cannot be held liable."
The trial court rendered judgment in favor of private respondent. Upon appeal
to the Court of Appeals, the latter court affirmed in toto the decision of the trial
court, which ordered Petitioner to pay, jointly and severally with Travellers
Insurance and Surety Corporation, to the private
Petitioner's contention that the respondent court erred in finding him guilty of
fault or negligence is not tenable. It was established by competent evidence
that the requisites of a quasi-delict are present in the case at bar. These
requisites are: (1) damages to the plaintiff; (2) negligence, by act or omission,
of which defendant, or some person for whose acts he must respond, was
guilty; and (3) the connection of cause and effect between such negligence
and the damages.
ISSUE:
Whether or not petitioner is guilty of fault or negligence
HELD:
It is undisputed that private respondent suffered damages as a result of an
act or omission of petitioner. The issue of whether or not this act or omission
can be considered as a "negligent" act or omission was passed upon by the
trial court. The findings of said court, affirmed by the respondent court, which
we are not prepared to now disturb, show that the fact of occurrence of the
"vehicular accident" was sufficiently established by the policy report and the
testimony of Patrolman Masiclat. And the fact of negligence may be deduced
from the surrounding circumstances thereof. According to the police report,
"the cargo truck was travelling on the right side of the road going to Manila
and then it crossed to the center line and went to the left side of the highway;
it then bumped a tricycle; and then another bicycle; and then said cargo truck
rammed the store warehouse of the plaintiff."
According to the driver of the cargo truck, he applied the brakes but the latter
did not work due to mechanical defect. Contrary to the claim of the petitioner,
a mishap caused by defective brakes can not be consideration as fortuitous in
character. Certainly, the defects were curable and the accident preventable.
Furthermore, the petitioner failed to adduce any evidence to overcome the
disputable presumption of negligence on his part in the selection and
supervision of his driver.
MECHANICAL DEFECTS action by one against the other for quasi-delict arising from negligence in the
performance of a contract. Hence, this petition.
13.10
ISSUE: Whether or not the action for damages by the proprietess against the
G.R. No. 110295 October 18, 1993 soft drinks manufacturer should be treated as one for breach of implied
COCA-COLA BOTTLERS PHILIPPINES, INC., vs. warranty against hidden defects, which must be filed within six months from
THE HONORABLE COURT OF APPEALS (Fifth Division) and MS. LYDIA the delivery of the thing sold, or one for quasi-delict, which can be filed within
GERONIMO, respondents. four years pursuant to Article 1146 of the Civil Code.
DAVIDE, JR., J.:
RULING: The action in based on quasi-delict, therefore, it prescribes in four
Digested by: Terry Louise P. Boligor years. The allegations in the complaint makes a reference to the reckless and
negligent manufacture of “adulterated food items intended to be sold for
WARNING: Murag SALES najud ni. Walay mechanical defects related to public consumption.” The vendee’s remedies are not limited to those
transpo sa full text. prescribed in Article 1567 of the Civil Code. The vendor could be liable for
quasi-delict under Article 2176, and an action based thereon may be brought
FACTS: Lydia Geronimo was the proprietess of Kindergarten Wonderland by the vendee.
Canteen, engaged in the sale of soft drinks and other goods to the students
of Kindergarten Wonderland and to the public. On August 12, 1989, some The existence of a contract between the parties does not bar the commission
parents of the students complained that the Coke and Sprite soft drinks of a tort by the one against the other and the consequent recovery of
contained fiber-like matter and other foreign substances. She discovered the damages therefore. Liability for quasi-delict may still exist despite the
presence of some fiber-like substances in the contents of some unopened presence of contractual relations.
Coke bottles and a plastic matter in the contents of an unopened Sprite
bottle. The samples sent to the lab informed her that the drinks were
adulterated. Her sales of soft drinks plummeted from 10 cases sold per day to
2-3 cases sold per day, and not long after that, she had to close shop. She
became jobless and destitute. She demanded from the petitioner the payment
of damages. She then filed a complaint before the RTC of Dagupan City,
which granted the motion to dismiss filed by petitioner, on the ground that the
complaint is based on contract, and not on quasi-delict, as there exists pre-
existing contractual relation between the parties. Thus, on the basis of Article
1571, in relation to Article 1562, the complaint should have been filed within
six months from the delivery of the thing sold. The CA reversed the RTC
decision and held that Geronimo’s complaint is one for quasi-delict because
of petitioner’s act of negligently manufacturing adulterated food items
intended to be sold for public consumption; and that the existence of
contractual relations between the parties does not absolutely preclude an
Other invalid defenses were spilled inside the hull of the boat, and that the personnel of the boat
13.11 collected no less than 26 sacks of rice which they had distributed among
themselves." This finding shows that the shortage resulted from the
G.R. No. L-16629 January 31, 1962 negligence of petitioner.

SOUTHERN LINES, INC., petitioner, vs. COURT OF APPEALS and CITY

OF ILOILO, respondents.

FACTS: The City of Iloilo requisitioned for rice from the National Rice
and Corn Corporation (NARIC) in Manila. NARIC, pursuant to the order,
shipped 1,726 sacks of rice consigned to the City of Iloilo on board the SS
"General Wright" belonging to the Southern Lines, Inc. Each sack of rice
weighed 75 kilos and the entire shipment had a total weight of 129,450 kilos.
When the City of Iloilo received the shipment, the bill of lading indicated that
there was a shortage of 41 sacks of rice with a net weight of 13,319 kilos.

Thereafter, the City of Iloilo filed a complaint in the Court of First

Instance of Iloilo against NARIC and the Southern Lines, Inc. for the recovery
of the amount of the value of the shortage of the shipment of rice. After trial,
the lower court absolved NARIC from the complaint, but sentenced the
Southern Lines, Inc. to pay the said amount. Petitioner claims exemption from
liability by contending that the shortage in the shipment of rice was due to
such factors as the shrinkage, leakage or spillage of the rice on account of
the bad condition of the sacks at the time it received the same and the
negligence of the agents of respondent City of Iloilo in receiving the shipment.

ISSUE: Whether or not the herein petitioner is liable for the loss or
shortage of the rice shipped.

RULING: Yes, petitioner is liable for the loss or shortage of the rice
shipped. It is a well-settled rule that if the fact of improper packing is known to
the carrier or his servants, or apparent upon ordinary observation, but it
accepts the goods notwithstanding such condition, it is not relieved of liability
for loss or injury resulting therefrom. Furthermore, according to the Court of
Appeals, "appellant (petitioner) itself frankly admitted that the strings that tied
the bags of rice were broken; some bags were with holes and plenty of rice