G.R. No.

157917 August 29, 2012

SPOUSES TEODORO1 and NANETTE PERENA, Petitioners,

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

Facts: The Pereñas were engaged in the business of transporting students from their respective
residences in Parañaque City to Don Bosco in Pasong Tamo, Makati City, and back. They employed
Clemente Alfaro (Alfaro) as driver of the van. In June 1996, the Zarates contracted the Pereñas to
transport Aaron to and from Don Bosco. The van, with its air-conditioning unit turned on and the stereo
playing loudly, ultimately carried all the 14 student riders on their way to Don Bosco. Alfaro took the van
to an alternate route at about 6:45 a.m. by traversing the narrow path underneath the Magallanes
Interchange that was then commonly used by Makati-bound vehicles as a short cut into Makati. At the
time, the narrow path was marked by piles of construction materials and parked passenger jeepneys,
and the railroad crossing in the narrow path had no railroad warning signs, or watchmen, or other
responsible persons manning the crossing. In fact, the bamboo barandilla was up, leaving the railroad
crossing open to traversing motorists.

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

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

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

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

Issue:

1. Whether or not the school bus is a common carrier.

2. Whether or not Perenas is liable.

Ruling:

I.

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

"Public use" is the same as "use by the public". The essential feature of the public use is not confined to
privileged individuals, but is open to the indefinite public. It is this indefinite or unrestricted quality that
gives it its public character. In determining whether a use is public, we must look not only to the
character of the business to be done, but also to the proposed mode of doing it. If the use is merely
optional with the owners, or the public benefit is merely incidental, it is not a public use, authorizing the
exercise of the jurisdiction of the public utility commission. There must be, in general, a right which the
law compels the owner to give to the general public. It is not enough that the general prosperity of the
public is promoted. Public use is not synonymous with public interest. The true criterion by which to
judge the character of the use is whether the public may enjoy it by right or only by permission.

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

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

II.

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

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

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

The Pereñas were liable for the death of Aaron despite the fact that their driver might have acted
beyond the scope of his authority or even in violation of the orders of the common carrier.27 In this
connection, the records showed their driver’s actual negligence. There was a showing, to begin with,
that their driver traversed the railroad tracks at a point at which the PNR did not permit motorists going
into the Makati area to cross the railroad tracks. Although that point had been used by motorists as a
shortcut into the Makati area, that fact alone did not excuse their driver into taking that route. On the
other hand, with his familiarity with that shortcut, their driver was fully aware of the risks to his
passengers but he still disregarded the risks. Compounding his lack of care was that loud music was
playing inside the air-conditioned van at the time of the accident. The loudness most probably reduced
his ability to hear the warning horns of the oncoming train to allow him to correctly appreciate the
lurking dangers on the railroad tracks. Also, he sought to overtake a passenger bus on the left side as
both vehicles traversed the railroad tracks. In so doing, he lost his view of the train that was then coming
from the opposite side of the passenger bus, leading him to miscalculate his chances of beating the bus
in their race, and of getting clear of the train. As a result, the bus avoided a collision with the train but
the van got slammed at its rear, causing the fatality. Lastly, he did not slow down or go to a full stop
before traversing the railroad tracks despite knowing that his slackening of speed and going to a full stop
were in observance of the right of way at railroad tracks as defined by the traffic laws and regulations.28
He thereby violated a specific traffic regulation on right of way, by virtue of which he was immediately
presumed to be negligent.29

The omissions of care on the part of the van driver constituted negligence,30 which, according to
Layugan v. Intermediate Appellate Court,31 is "the omission to do something which a reasonable man,
guided by those considerations which ordinarily regulate the conduct of human affairs, would do, or the
doing of something which a prudent and reasonable man would not do,32 or as Judge Cooley defines it,
‘(t)he failure to observe for the protection of the interests of another person, that degree of care,
precaution, and vigilance which the circumstances justly demand, whereby such other person suffers
injury.’"33

The test by which to determine the existence of negligence in a particular case has been aptly stated in
the leading case of Picart v. Smith,34 thuswise:

The test by which to determine the existence of negligence in a particular case may be stated as follows:
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.
G.R. No. 170071 March 9, 2011

HEIRS OF JOSE MARCIAL K. OCHOA namely: RUBY B. OCHOA, MICAELA B. OCHOA and JOMAR B.
OCHOA, Petitioners,
vs.
G & S TRANSPORT CORPORATION, Respondent.

Facts: In the evening of March 10, 1995, at the Manila Domestic Airport, the late Jose Marcial K. Ochoa
boarded and rode a taxicab with Plate No. PKR-534, a passenger vehicle for hire owned and operated by
defendant corporation under the business name "Avis Coupon Taxi" (Avis) and driven by its employee
and authorized driver Bibiano Padilla, Jr. on his way home to Teacher’s Village, Diliman, Quezon City.

At about 11:00 p.m., the taxicab was cruising along Epifanio delos Santos Avenue [EDSA], in front of
Camp Aguinaldo in Quezon City at high speed. While going up the Boni Serrano (Santolan) fly-over, it
overtook another cab driven by Pablo Clave and tried to pass another vehicle, a ten-wheeler cargo truck.
Because of the narrow space between the left side railing of the fly-over and the ten-wheeler truck, the
Avis cab was unable to pass and because of its speed, its driver (Padilla) was unable to control it. To
avoid colliding with the truck, Padilla turned the wheel to the left causing his taxicab to ram the railing
throwing itself off the fly-over and fell on the middle surface of EDSA below. The forceful drop of the
vehicle on the floor of the road broke and split it into two parts. Both driver Padilla and passenger Jose
Marcial K. Ochoa were injured and rushed to the hospital. At the East Avenue Medical Center, Ochoa
was not as lucky as Padilla who was alive. He was declared dead on arrival from the accident.

The heirs, through counsel, sent G & S a letter4 demanding that the latter indemnify them for Jose
Marcial’s death, his loss of earning capacity, and funeral expenses in the total amount of
₱15,000,000.00. As G & S failed to heed the same, the heirs filed a Complaint5 for Damages before the
Regional Trial Court.

Issue:

Whether or not there was a contract of carriage

whether the CA gravely erred in not taking note of the fact that Padilla has already been acquitted of the
crime of reckless imprudence resulting in homicide

Ruling:

There is a contract of carriage between G & S and Jose Marcial

Clear from the records is that there existed a contract of carriage between G & S, as the owner and
operator of the Avis taxicab, and Jose Marcial, as the passenger of said vehicle. As a common carrier, G
& S "is bound to carry [Jose Marcial] 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."37 However, Jose
Marcial was not able to reach his destination safely as he died during the course of the travel. "In a
contract of carriage, it is presumed that the common carrier is at fault or is negligent when a passenger
dies or is injured. 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."38 Unfortunately, G & S miserably failed to
overcome this presumption. Both the trial court and the CA found that the accident which led to Jose
Marcial’s death was due to the reckless driving and gross negligence of G & S’ driver, Padilla, thereby
holding G & S liable to the heirs of Jose Marcial for breach of contract of carriage.
The acquittal of Padilla in the criminal case is immaterial to the instant case for breach of contract

Article 31 of the Civil Code provides, viz:

When the civil action is based on an obligation not arising from the act or omission complained of as a
felony, such civil action may proceed independently of the criminal proceedings and regardless of the
result of the latter.

In the instant case, it must be stressed that the action filed by petitioner is an independent civil action,
which remains separate and distinct from any criminal prosecution based on the same act. Not being
deemed instituted in the criminal action based on culpa criminal, a ruling on the culpability of the
offender will have no bearing on said independent civil action based on an entirely different cause of
action, i.e., culpa contractual."

The action filed by the heirs is primarily for the recovery of damages arising from breach of contract of
carriage allegedly committed by G & S. Clearly, it is an independent civil action arising from contract
which is separate and distinct from the criminal action for reckless imprudence resulting in homicide
filed by the heirs against Padilla by reason of the same incident.
[G.R. NO. 172822 : December18, 2009]

MOF COMPANY, INC., Petitioner, v. SHIN YANG BROKERAGE CORPORATION Respondent.

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 0238W. The bill of lading covering
the shipment, i.e., Bill of Lading No. HJSCPUSI14168303,2 which was prepared by the carrier Hanjin
Shipping Co., Ltd. (Hanjin), named respondent Shin Yang Brokerage Corp. (Shin Yang) as the consignee
and indicated that payment was on a "Freight Collect" basis, i.e., that the consignee/receiver of the
goods would be the one to pay for the freight and other charges in the total amount of P57,646.00.

The shipment arrived in Manila on October 29, 2001. Thereafter, petitioner MOF Company, Inc. (MOF),
Hanjin's exclusive general agent in the Philippines, repeatedly demanded the payment of ocean freight,
documentation fee and terminal handling charges from Shin Yang. The latter, however, failed and
refused to pay contending that it did not cause the importation of the goods, that it is only the
Consolidator of the said shipment, that the ultimate consignee did not endorse in its favor the original
bill of lading and that the bill of lading was prepared without its consent. 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.

Issue:

whether a consignee, who is not a signatory to the bill of lading, is bound by the stipulations thereof

whether respondent who was not an agent of the shipper and who did not make any demand for the
fulfillment of the stipulations of the bill of lading drawn in its favor is liable to pay the corresponding
freight and handling charges.

Ruling:

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
when a) there is a relation of agency between the shipper or consignor and the consignee or b) when
the consignee demands fulfillment of the stipulation of the bill of lading which was drawn up in its favor.

In Keng Hua Paper Products Co., Inc. v. Court of Appeals,13 we held that once the bill of lading is received
by the consignee who does not object to any terms or stipulations contained therein, it constitutes as an
acceptance of the contract and of all of its terms and conditions, of which the acceptor has actual or
constructive notice.

In Mendoza v. Philippine Air Lines, Inc., [Mendoza made himself a party to the contract of transportaion
when he appeared at the Pili Air Port armed with the copy of the Air Way Bill (Exh. 1) demanding the
delivery of the shipment to him.] The right of the shipper to countermand the shipment terminates
when the consignee or legitimate holder of the bill of lading appears with such bill of lading before the
carrier and makes himself a party to the contract. Prior to that time he is a stranger to the contract.

Art. 1311, second paragraph 'Should the contract contain any stipulation in favor of a third person, he
may demand its fulfillment provided he has given notice of his acceptance to the person bound before
the stipulation has been revoked.'

Here, the contract of carriage between the LVN Pictures Inc. and the defendant carrier contains the
stipulations of delivery to Mendoza as consignee. His demand for the delivery of the can of film to him
at the Pili Air Port may be regarded as a notice of his acceptance of the stipulation of the delivery in
his favor contained in the contract of carriage and delivery. In this case he also made himself a party
to the contract, or at least has come to court to enforce it. His cause of action must necessarily be
founded on its breach.

In sum, 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 knowledge of its contents or c) availment of the stipulation pour autrui, i.e.,
when the consignee, a third person, demands before the carrier the fulfillment of the stipulation made
by the consignor/shipper in the consignee's favor, specifically the delivery of the goods/cargoes shipped.

In the instant case, Shin Yang consistently denied in all of its pleadings that it authorized Halla Trading,
Co. to ship the goods on its behalf; or that it got hold of the bill of lading covering the shipment or that it
demanded the release of the cargo. Basic is the rule in evidence that the burden of proof lies upon him
who asserts it, not upon him who denies, since, by the nature of things, he who denies a fact cannot
produce any proof of it.17 Thus, MOF has the burden to controvert all these denials, it being insistent
that Shin Yang asserted itself as the consignee and the one that caused the shipment of the goods to the
Philippines.

In civil cases, the party having the burden of proof must establish his case by preponderance of
evidence,18 which means evidence which is of greater weight, or more convincing than that which is
offered in opposition to it.19 Here, MOF failed to meet the required quantum of proof.
G.R. No. 186312 June 29, 2010

SPOUSES DANTE CRUZ and LEONORA CRUZ, Petitioners,

vs.
SUN HOLIDAYS, INC., Respondent.

Facts: The stay of the newly wed Ruelito and his wife at the Resort from September 9 to 11, 2000 was by
virtue of a tour package-contract with respondent that included transportation to and from the Resort
and the point of departure in Batangas.

Matute and 25 other Resort guests including petitioners’ son and his wife trekked to the other side of
the Coco Beach mountain that was sheltered from the wind where they boarded M/B Coco Beach III,
which was to ferry them to Batangas.

Shortly after the boat sailed, it started to rain. As it moved farther away from Puerto Galera and into the
open seas, the rain and wind got stronger, causing the boat to tilt from side to side and the captain to
step forward to the front, leaving the wheel to one of the crew members.

The waves got more unwieldy. After getting hit by two big waves which came one after the other, M/B
Coco Beach III capsized putting all passengers underwater.

Eight passengers, including petitioners’ son and his wife, died during the incident.

Petitioners, by letter of October 26, 2000,4 demanded indemnification from respondent for the death of
their son in the amount of at least ₱4,000,000.

Replying, respondent, by letter dated November 7, 2000,5 denied any responsibility for the incident
which it considered to be a fortuitous event.

Respondent denied being a common carrier, alleging that its boats are not available to the general
public as they only ferry Resort guests and crew members.

Issue:

Whether or not respondent is a common carrier

Whether or not they respondent is liable

Ruling:

I.

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

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

So understood, the concept of "common carrier" under Article 1732 may be seen to coincide neatly with
the notion of "public service," under the Public Service Act (Commonwealth Act No. 1416, as amended)
which at least partially supplements the law on common carriers set forth in the Civil Code. Under
Section 13, paragraph (b) of the Public Service Act, "public service" includes:

. . . every person that now or hereafter may own, operate, manage, or control in the Philippines, for hire
or compensation, with general or limited clientele, whether permanent, occasional or accidental, and
done for general business purposes, any common carrier, railroad, street railway, traction railway,
subway motor vehicle, either for freight or passenger, or both, with or without fixed route and whatever
may be its classification, freight or carrier service of any class, express service, steamboat, or steamship
line, pontines, ferries and water craft, engaged in the transportation of passengers or freight or both,
shipyard, marine repair shop, wharf or dock, ice plant, ice-refrigeration plant, canal, irrigation system,
gas, electric light, heat and power, water supply and power petroleum, sewerage system, wire or
wireless communications systems, wire or wireless broadcasting stations and other similar public
services .

Indeed, respondent is a common carrier. 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.

That respondent does not charge a separate fee or fare for its ferry services is of no moment. It would
be imprudent to suppose that it provides said services at a loss. The Court is aware of the practice of
beach resort operators offering tour packages to factor the transportation fee in arriving at the tour
package price. That guests who opt not to avail of respondent’s ferry services pay the same amount is
likewise inconsequential. These guests may only be deemed to have overpaid.

II.

The evidence shows that PAGASA issued 24-hour public weather forecasts and tropical cyclone warnings
for shipping on September 10 and 11, 2000 advising of tropical depressions in Northern Luzon which
would also affect the province of Mindoro.22 By the testimony of Dr. Frisco Nilo, supervising weather
specialist of PAGASA, squalls are to be expected under such weather condition.23

A very cautious person exercising the utmost diligence would thus not brave such stormy weather and
put other people’s lives at risk. The extraordinary diligence required of common carriers demands that
they take care of the goods or lives entrusted to their hands as if they were their own. This respondent
failed to do.

The elements of a "fortuitous event" are: (a) the cause of the unforeseen and unexpected occurrence, or
the failure of the debtors to comply with their obligations, must have been independent of human will;
(b) the event that constituted the caso fortuito must have been impossible to foresee or, if foreseeable,
impossible to avoid; (c) the occurrence must have been such as to render it impossible for the debtors to
fulfill their obligation in a normal manner; and (d) the obligor must have been free from any
participation in the aggravation of the resulting injury to the creditor.24

To fully free a common carrier from any liability, the fortuitous event must have been the proximate and
only cause of the loss. And it should have exercised due diligence to prevent or minimize the loss before,
during and after the occurrence of the fortuitous event.25

Respondent cites the squall that occurred during the voyage as the fortuitous event that overturned
M/B Coco Beach III. As reflected above, however, the occurrence of squalls was expected under the
weather condition of September 11, 2000. Moreover, evidence shows that M/B Coco Beach III suffered
engine trouble before it capsized and sank.26 The incident was, therefore, not completely free from
human intervention.
[G.R. NO. 144274 : September 20, 2004]

NOSTRADAMUS VILLANUEVA, Petitioner, v. PRISCILLA R. DOMINGO and LEANDRO LUIS R. DOMINGO,

Respondents.

Facts: [Respondent] Priscilla R. Domingo is the registered owner of a silver Mitsubishi Lancer Car model
1980 bearing plate No. NDW 781 '91 with [co-respondent] Leandro Luis R. Domingo as authorized
driver. [Petitioner] Nostradamus Villanueva was then the registered "owner" of a green Mitsubishi
Lancer bearing Plate No. PHK 201 '91.

On 22 October 1991 at about 9:45 in the evening, following a green traffic light, [respondent] Priscilla
Domingo's silver Lancer car with Plate No. NDW 781 '91 then driven by [co-respondent] Leandro Luis R.
Domingo was cruising along the middle lane of South Superhighway at moderate speed from north to
south. Suddenly, a green Mitsubishi Lancer with plate No. PHK 201 '91 driven by Renato Dela Cruz
Ocfemia darted from Vito Cruz Street towards the South Superhighway directly into the path of NDW
781 '91 thereby hitting and bumping its left front portion. As a result of the impact, NDW 781 '91 hit two
(2) parked vehicles at the roadside, the second hitting another parked car in front of it.

[Petitioner] Nostradamus Villanueva claimed that he was no longer the owner of the car at the time of
the mishap because it was swapped with a Pajero owned by Albert Jaucian/Auto Palace Car Exchange.
Albert Jaucian claimed it could not be held subsidiary liable as employer of Ocfemia because the latter
was off-duty as utility employee at the time of the incident.

Issue: MAY THE REGISTERED OWNER OF A MOTOR VEHICLE BE HELD LIABLE FOR DAMAGES ARISING
FROM A VEHICULAR ACCIDENT INVOLVING HIS MOTOR VEHICLE WHILE BEING OPERATED BY THE
EMPLOYEE OF ITS BUYER WITHOUT THE LATTER'S CONSENT AND KNOWLEDGE?

Ruling: YES. The registered owner of any vehicle is directly and primarily responsible to the public and
third persons while it is being operated. The principle upon which this doctrine is based is that in dealing
with vehicles registered under the Public Service Law, the public has the right to assume or presume
that the registered owner is the actual owner thereof, for it would be difficult for the public to enforce
the actions that they may have for injuries caused to them by the vehicles being negligently operated if
the public should be required to prove who the actual owner is. We do not imply by his doctrine,
however, that the registered owner may not recover whatever amount he had paid by virtue of his
liability to third persons from the person to whom he had actually sold, assigned or conveyed the
vehicle.

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 vehicle on the public highways, responsibility therefore can
be fixed on a definite individual, the registered owner.

One of the principal purposes of motor vehicles legislation is identification of the vehicle and of the
operator, in case of accident; and another is that the knowledge that means of detection are always
available may act as a deterrent from lax observance of the law and of the rules of conservative and safe
operation. Whatever purpose there may be in these statutes, it is subordinate at the last to the primary
purpose of rendering it certain that the violator of the law or of the rules of safety shall not escape
because of lack of means to discover him.

Should not the registered owner be allowed at the trial to prove who the actual and real owner is, and in
accordance with such proof escape or evade responsibility by and lay the same on the person actually
owning the vehicle?

NO. 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.

Whether the driver is authorized or not by the actual owner is irrelevant to determining the liability of
the registered owner who the law holds primarily and directly responsible for any accident, injury or
death caused by the operation of the vehicle in the streets and highways. To require the driver of the
vehicle to be authorized by the actual owner before the registered owner can be held accountable is to
defeat the very purpose why motor vehicle legislations are enacted in the first place.

The case of Duavit v CA is inapplicable. Duavit is inapplicable since the vehicle there was not transferred
to another; the registered and the actual owner was one and the same person. Besides, in Duavit, the
defense of the registered owner, Gilberto Duavit, was that the vehicle was practically stolen from his
garage by Oscar Sabiano, as affirmed by the latter:

Defendant Sabiano, in his testimony, categorically admitted that he took the jeep from the garage of
defendant Duavit without the consent and authority of the latter. He testified further that Duavit even
filed charges against him for the theft of the jeep but which Duavit did not push through as his
(Sabiano's) parents apologized to Duavit on his behalf.12

As correctly pointed out by the CA, the Duavit ruling is not applicable to petitioner's case since the
circumstance of unauthorized use was not present. He in fact voluntarily delivered his car to Albert
Jaucian as part of the downpayment for a vehicle he purchased from Jaucian. Thus, he could not claim
that the vehicle was stolen from him since he voluntarily ceded possession thereof to Jaucian. It was the
latter, as the new (actual) owner, who could have raised the defense of theft to prove that he was not
liable for the acts of his employee Ocfemia. Thus, there is no reason to apply the Duavit ruling to this
case.
 G.R. No. 209969, September 27, 2017

JOSE SANICO AND VICENTE CASTRO, Petitioners, v. WERHERLINA P. COLIPANO, Respondent.

Facts: Colipano filed a complaint on January 7, 1997 for breach of contract of carriage and damages against
Sanico and Castro.4 In her complaint, Colipano claimed that at 4:00 P.M. more or less of December 25,
1993, Christmas Day, she and her daughter were; paying passengers in the jeepney operated by Sanico,
which was driven by Castro.5 Colipano claimed she was made to sit on an empty beer case at the edge of
the rear entrance/exit of the jeepney with her sleeping child on her lap.6 And, at an uphill incline in the road
to Natimao-an, Carmen, Cebu, the jeepney slid backwards because it did not have the power to reach the
top.7 Colipano pushed both her feet against the step board to prevent herself and her child from being
thrown out of the exit, but because the step board was wet, her left foot slipped and got crushed between
the step board and a coconut tree which the jeepney bumped, causing the jeepney to stop its backward
movement.8 Colipano's leg was badly injured and was eventually amputated.9 Colipano prayed for actual
damages, loss of income, moral damages, exemplary damages, and attorney's fees.

Issue: Whether or not Castro the driver is also liable for breach of contract. Whether or not Sanico is
liable. Whether or not the quitclaim is a valid waiver.

Ruling:

Only Sanico breached the contract of carriage.

It is beyond dispute that Colipano was injured while she was a passenger in the jeepney owned and
operated by Sanico that was being driven by Castro. Both the CA and RTC found Sanico and Castro jointly
and severally liable. This, however, is erroneous because only Sanico was the party to the contract of
carriage with Colipano.

Since the cause of action is based on a breach of a contract of carriage, the liability of Sanico is direct as the
contract is between him and Colipano. Castro, being merely the driver of Sanico's jeepney, cannot be made
liable as he is not a party to the contract of carriage.

Court ruled that a complaint for breach of a contract of carriage is dismissible as against the employee who
was driving the bus because the parties to the contract of carriage are only the passenger, the bus owner,
and the operator.

The obligation to carry Colipano safely to her destination was with Sanico. In fact, the elements of a contract
of carriage existeid between Colipano and Sanico: consent, as shown when Castro, as employee of Sanico,
accepted Colipano as a passenger when he allowed Colipano to board the jeepney, and as to Colipano, when
she boarded the jeepney; cause or consideration, when Colipano, for her part, paid her fare; and, object,
the transportation of Colipano from the place of departure to the place of destination.

Sanico is liable as operator and owner of a common carrier.

The Civil Code requires common carriers to observe extraordinary diligence in safely transporting their
passengers.

ART. 1733. Common carriers, fijpm the nature of their business and for reasons of public policy, are bbund
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
1745, Nos. 5, 6, and 7, while the extraordinary diligence for the safety of the passengers is further set forth
in Articles 1755 and 1756.

This extraordinary diligence, following Article 1755 of the Civil Code, means that common carriers have the
obligation to carry 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.

In case of death of or injury to their passengers, Article 1756 of the Civil Code provides that common
carriers are presumed to have been at fault or negligent, and this presumption can be overcome only by
proof of the extraordinary diligence.

Sanico failed to rebut the presumption of fault or negligence under the Civil Code. More than this, the
evidence indubitably established Sanico's negligence when Castro made Colipano sit on an empty beer case
at the edge of the rear entrance/exit of the jeepney with her sleeping child on her lap, which put her and her
child in greater peril than the other passengers.

The CA also correctly held that the!defense of engine failure, instead of exonerating Sanico, only aggravated
his already precarious position.26 The engine failure "hinted lack of regular check and maintenance to ensure
that the engine is at its best, considering that the jeepney regularly passes through a mountainous area."

Common carriers may also be liable for damages when they contravene the tenor of their obligations. Article
1170 of the Civil Code states:

ART. 1170. Those who in the performance of their obligations are guilty of fraud, negligence, or delay, and
those who in any manner contravene the tenor thereof, are liable for damages.

In Magat v. Medialdea,28 the Court ruled: "The phrase 'in any manner contravene the tenor' of the obligation
includes any illicit act or omission which impairs the strict and faithful fulfillment of the obligation and every
kind of defective performance."29 There is no question here that making Colipano sit on the empty beer case
was a clear showing of how Sanico contravened the tenor of his obligation to safely transport Colipano from
the place of departure to the place of destination as far as human care and foresight can provide, using the
utmost diligence of very cautious persons, and with due regard for all the circumstances.

ART. 1759. Common carriers are liable for the death of or injuries to passengers through the negligence or
willful 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 exercised all the diligence of a
good father of a family in the selection and supervision of their employees.
The only defenses available to common carriers are (1) proof that they observed extraordinary diligence as
prescribed in Article 1756,31 and (2) following Article 1174 of the Civil Code, proof that the injury or death
was brought about by an event which "could not be foreseen, or which, though foreseen, were inevitable,"
or a fortuitous event.

The Affidavit of Desistance and Release of Claim is void.

For there to be a valid waiver, the following requisites are essential:

(1) that the person making the waiver possesses the right, (2) that he has the capacity and power to
dispose of the right, (3) that the waiver must be clear and unequivocal although it may be made expressly
or impliedly, and (4) that the waiver is not contrary to law, public policy, public order, morals, good customs
or prejudicial to a third person with a right recognized by law.

While the first two requirements can be said to exist in this case, the third and fourth requirements are,
however, lacking.

For the waiver to be clear and unequivocal, the person waiving the right should understand what she is
waiving and the effect of such waiver. Both the CA and RTC made the factual deitermination that Colipano
was not able to understand English and that there was no proof that the documents and their contents and
effects were explained to her.

The fourth requirement for a valid waiver is also lacking as the waiver, based on the attendant facts, can
only be construed as contrary to public policy.

Because what is involved here is the liability of a common carrier for injuries sustained by passengers in
respect of whose safety a common carrier must exercise extraordinary diligence, we must construe any such
purported waiver most strictly against the common carrier.

To uphold waivers taken from injured passengers who have no knowledge of their entitlement under the law
and the extent of liability of common carriers would indeed dilute the extraordinary diligence required from
common carriers, and contravene a public policy reflected in the Civil Code.
G.R. No. 162267 July 4, 2008

PCI LEASING AND FINANCE, INC., petitioner,

vs.
UCPB GENERAL INSURANCE CO., INC., respondent.

Facts: On October 19, 1990 at about 10:30 p.m., a Mitsubishi Lancer car with Plate Number PHD-
206 owned by United Coconut Planters Bank was traversing the Laurel Highway, Barangay
Balintawak, Lipa City. The car was insured with plantiff-appellee [UCPB General Insurance Inc.],
then driven by Flaviano Isaac with Conrado Geronimo, the Asst. Manager of said bank, was hit and
bumped by an 18-wheeler Fuso Tanker Truck with Plate No. PJE-737 and Trailer Plate No. NVM-
133, owned by defendants-appellants PCI Leasing & Finance, Inc. allegedly leased to and operated
by defendant-appellant Superior Gas & Equitable Co., Inc. (SUGECO) and driven by its employee,
defendant appellant Renato Gonzaga.

The impact caused heavy damage to the Mitsubishi Lancer car resulting in an explosion of the rear
part of the car. The driver and passenger suffered physical injuries. As the 18-wheeler truck is
registered under the name of PCI Leasing, repeated demands were made by plaintiff-appellee for
the payment of the aforesaid amounts. However, no payment was made. Thus, plaintiff-appellee
filed the instant case

Issue: Whether petitioner, as registered owner of a motor vehicle that figured in a quasi-delict may be
held liable, jointly and severally, with the driver thereof, for the damages caused to third parties.

Whether petitioner, as a financing company, is absolved from liability by the enactment of Republic
Act (R.A.) No. 8556, or the Financing Company Act of 1998.

Ruling:

I.

The registered owner of the vehicle driven by a negligent driver may still be held liable under
applicable jurisprudence involving laws on compulsory motor vehicle registration and the liabilities of
employers for quasi-delicts under the Civil Code. Erezo v. Jepte,12 with Justice Labrador
as ponente, wisely explained the reason behind this principle,

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 vehicle on the public highways, responsibility therefor can
be fixed on a definite individual, the registered owner.

The question that defendant-appellant poses is: should not the registered owner be allowed at the
trial to prove who the actual and real owner is, and in accordance with such proof escape or evade
responsibility and lay the same on the person actually owning the vehicle?

NO. 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. 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.

For damage or injuries arising out of negligence in the operation of a motor vehicle, the registered
owner may be held civilly liable with the negligent driver either 1) subsidiarily, if the aggrieved party
seeks relief based on a delict or crime under Articles 100 and 103 of the Revised Penal Code; or
2) solidarily, if the complainant seeks relief based on a quasi-delict under Articles 2176 and 2180 of
the Civil Code. It is the option of the plaintiff whether to waive completely the filing of the civil action,
or institute it with the criminal action, or file it separately or independently of a criminal action;15 his
only limitation is that he cannot recover damages twice for the same act or omission of the
defendant.

In case a separate civil action is filed, the long-standing principle is that the registered owner of a
motor vehicle is primarily and directly responsible for the consequences of its operation, including
the negligence of the driver, with respect to the public and all third persons.17 In contemplation of
law, the registered owner of a motor vehicle is the employer of its driver, with the actual operator and
employer, such as a lessee, being considered as merely the owner's agent.

In the case now before the Court, there is not even a sale of the vehicle involved, but a mere lease,
which remained unregistered up to the time of the occurrence of the quasi-delict that gave rise to the
case. Since a lease, unlike a sale, does not even involve a transfer of title or ownership, but the
mere use or enjoyment of property, there is more reason, therefore, in this instance to uphold the
policy behind the law, which is to protect the unwitting public and provide it with a definite person to
make accountable for losses or injuries suffered in vehicular accidents.

II.

Republic Act (R.A.) No. 8556,28 which provides:

Section 12. Liability of lessors. - Financing companies shall not be liable for loss, damage or
injury caused by a motor vehicle, aircraft, vessel, equipment, machinery or other property
leased to a third person or entity except when the motor vehicle, aircraft, vessel, equipment
or other property is operated by the financing company, its employees or agents at the time
of the loss, damage or injury.

The new law, R.A. No. 8556, notwithstanding developments in foreign jurisdictions, do not
supersede or repeal the law on compulsory motor vehicle registration. No part of the law expressly
repeals Section 5(a) and (e) of R.A. No. 4136, as amended, otherwise known as the Land
Transportation and Traffic Code, to wit:

Sec. 5. Compulsory registration of motor vehicles. - (a) All motor vehicles and trailer of
any type used or operated on or upon any highway of the Philippines must be registered with
the Bureau of Land Transportation (now the Land Transportation Office, per Executive Order
No. 125, January 30, 1987, and Executive Order No. 125-A, April 13, 1987) for the current
year in accordance with the provisions of this Act.

xxxx

(e) Encumbrances of motor vehicles. - Mortgages, attachments, and other encumbrances of

motor vehicles, in order to be valid against third parties must be recorded in the Bureau
(now the Land Transportation Office). Voluntary transactions or voluntary encumbrances
shall likewise be properly recorded on the face of all outstanding copies of the certificates of
registration of the vehicle concerned.

Cancellation or foreclosure of such mortgages, attachments, and other encumbrances shall

likewise be recorded, and in the absence of such cancellation, no certificate of registration
shall be issued without the corresponding notation of mortgage, attachment and/or other
encumbrances.

Thus, the rule remains the same: a sale, lease, or financial lease, for that matter, that is not
registered with the Land Transportation Office, still does not bind third persons who are aggrieved in
tortious incidents, for the latter need only to rely on the public registration of a motor vehicle as
conclusive evidence of ownership.30 A lease such as the one involved in the instant case is an
encumbrance in contemplation of law, which needs to be registered in order for it to bind third
parties.
G.R. No. 142305 December 10, 2003

SINGAPORE AIRLINES LIMITED, petitioner,

vs.
ANDION FERNANDEZ, respondent.

Facts: Respondent Andion Fernandez is an acclaimed soprano here in the Philippines and abroad.
She was invited to sing before the King and Queen of Malaysia on February 3 and 4, 1991. For this
singing engagement, an airline passage ticket was purchased from petitioner Singapore Airlines
which would transport her to Manila from Frankfurt, Germany on January 28, 1991. From Manila,
she would proceed to Malaysia on the next day.

The petitioner issued the respondent a Singapore Airlines ticket for Flight No. SQ 27, leaving
Frankfurt, Germany on January 27, 1991 bound for Singapore with onward connections from
Singapore to Manila. Flight No. SQ 27 was scheduled to leave Frankfurt at 1:45 in the afternoon of
January 27, 1991, arriving at Singapore at 8:50 in the morning of January 28, 1991. The connecting
flight from Singapore to Manila, Flight No. SQ 72, was leaving Singapore at 11:00 in the morning of
January 28, 1991, arriving in Manila at 2:20 in the afternoon of the same day.5

On January 27, 1991, Flight No. SQ 27 left Frankfurt but arrived in Singapore two hours late or at
about 11:00 in the morning of January 28, 1991. By then, the aircraft bound for Manila had left as
scheduled, leaving the respondent and about 25 other passengers stranded in the Changi Airport in
Singapore.

Upon disembarkation at Singapore, the respondent approached the transit counter who referred her
to the nightstop counter and told the lady employee thereat that it was important for her to reach
Manila on that day, January 28, 1991. The lady employee told her that there were no more flights to
Manila for that day and that respondent had no choice but to stay in Singapore. Upon respondent’s
persistence, she was told that she can actually fly to Hong Kong going to Manila but since her ticket
was non-transferable, she would have to pay for the ticket. The respondent could not accept the
offer because she had no money to pay for it.7 Her pleas for the respondent to make arrangements to
transport her to Manila were unheeded.8

The respondent then requested the lady employee to use their phone to make a call to Manila. Over
the employees’ reluctance, the respondent telephoned her mother to inform the latter that she
missed the connecting flight. The respondent was able to contact a family friend who picked her up
from the airport for her overnight stay in Singapore.9

The next day, after being brought back to the airport, the respondent proceeded to petitioner’s
counter which says: "Immediate Attention To Passengers with Immediate Booking." There were four
or five passengers in line. The respondent approached petitioner’s male employee at the counter to
make arrangements for immediate booking only to be told: "Can’t you see I am doing something."
She explained her predicament but the male employee uncaringly retorted: "It’s your problem, not
ours."10

The respondent never made it to Manila and was forced to take a direct flight from Singapore to
Malaysia on January 29, 1991, through the efforts of her mother and travel agency in Manila.

Issue: Whether or not there was breach of contract of carriage

Ruling: When an airline issues a ticket to a passenger, confirmed for a particular flight on a certain
date, a contract of carriage arises. The passenger then has every right to expect that he be
transported on that flight and on that date. If he does not, then the carrier opens itself to a suit for a
breach of contract of carriage.

It is undisputed that the respondent carried a confirmed ticket for the two-legged trip from Frankfurt
to Manila: 1) Frankfurt-Singapore; and 2) Singapore-Manila. In her contract of carriage with the
petitioner, the respondent certainly expected that she would fly to Manila on Flight No. SQ 72 on
January 28, 1991. Since the petitioner did not transport the respondent as covenanted by it on said
terms, the petitioner clearly breached its contract of carriage with the respondent. The respondent
had every right to sue the petitioner for this breach. The defense that the delay was due to fortuitous
events and beyond petitioner’s control is unavailing.

In the instant case, petitioner was not without recourse to enable it to fulfill its obligation to transport
the respondent safely as scheduled as far as human care and foresight can provide to her
destination. Tagged as a premiere airline as it claims to be and with the complexities of air travel, it
was certainly well-equipped to be able to foresee and deal with such situation.

The petitioner’s indifference and negligence by its absence and insensitivity was exposed by the trial
court, thus:

(a) Under Section 9.1 of its Traffic Manual (Exhibit 4) "…flights can be delayed to await the
uplift of connecting cargo and passengers arriving on a late in-bound flight…" As adverted to
by the trial court,…"Flight SQ-27/28 maybe delayed for about half an hour to transfer plaintiff
to her connecting flight. As pointed out above, delay is normal in commercial air
transportation" (RTC Decision, p. 22); or

(b) Petitioner airlines could have carried her on one of its flights bound for Hongkong and
arranged for a connecting flight from Hongkong to Manila all on the same date. But then the
airline personnel who informed her of such possibility told her that she has to pay for that
flight. Regrettably, respondent did not have sufficient funds to pay for it. (TSN, 30 March
1992, pp.8-9; RTC Decision, pp. 22-23) Knowing the predicament of the respondent,
petitioner did not offer to shoulder the cost of the ticket for that flight; or

(c) As noted by the trial court from the account of petitioner’s witness, Bob Khkimyong, that
"a passenger such as the plaintiff could have been accommodated in another international
airline such as Lufthansa to bring the plaintiff to Singapore early enough from Frankfurt
provided that there was prior communication from that station to enable her to catch the
connecting flight to Manila because of the urgency of her business in Manila…

It maybe that delay in the take off and arrival of commercial aircraft could not be avoided and may be
caused by diverse factors such as those testified to by defendant’s pilot. However, knowing fully well
that even before the plaintiff boarded defendant’s Jumbo aircraft in Frankfurt bound for Singapore, it
has already incurred a delay of two hours. Nevertheless, defendant did not take the trouble of
informing plaintiff, among its other passengers of such a delay and that in such a case, the usual
practice of defendant airline will be that they have to stay overnight at their connecting airport; and
much less did it inquire from the plaintiff and the other 25 passengers bound for Manila whether they
are amenable to stay overnight in Singapore and to take the connecting flight to Manila the next day.
Such information should have been given and inquiries made in Frankfurt because even the
defendant airline’s manual provides that in case of urgency to reach his or her destination on the
same date, the head office of defendant in Singapore must be informed by telephone or telefax so
as the latter may make certain arrangements with other airlines in Frankfurt to bring such a
passenger with urgent business to Singapore in such a manner that the latter can catch up with her
connecting flight such as S-27/28 without spending the night in Singapore…23

The respondent was not remiss in conveying her apprehension about the delay of the flight when
she was still in Frankfurt. Upon the assurance of petitioner’s personnel in Frankfurt that she will be
transported to Manila on the same date, she had every right to expect that obligation fulfilled.

When a passenger contracts for a specific flight, he has a purpose in making that choice which must
be respected. This choice, once exercised, must not be impaired by a breach on the part of the
airline without the latter incurring any liability.25 For petitioner’s failure to bring the respondent to her
destination, as scheduled, we find the petitioner clearly liable for the breach of its contract of carriage
with the respondent.

We are convinced that the petitioner acted in bad faith. Bad faith means a breach of known duty
1âwphi1

through some motive of interest or ill will. Self-enrichment or fraternal interest, and not personal ill
will, may well have been the motive; but it is malice nevertheless.26 Bad faith was imputed by the trial
court when it found that the petitioner’s employees at the Singapore airport did not accord the
respondent the attention and treatment allegedly warranted under the circumstances. The lady
employee at the counter was unkind and of no help to her. The respondent further alleged that
without her threats of suing the company, she was not allowed to use the company’s phone to make
long distance calls to her mother in Manila. The male employee at the counter where it says:
"Immediate Attention to Passengers with Immediate Booking" was rude to her when he curtly
retorted that he was busy attending to other passengers in line. The trial court concluded that this
inattentiveness and rudeness of petitioner’s personnel to respondent’s plight was gross enough
amounting to bad faith. This is a finding that is generally binding upon the Court which we find no
reason to disturb.
 [G.R. NO. 161730 : January 28, 2005]

JAPAN AIRLINES, Petitioner, v. MICHAEL ASUNCION and JEANETTE ASUNCION, Respondents.

Facts: On March 27, 1992, respondents Michael and Jeanette Asuncion left Manila on board Japan Airlines'
(JAL) Flight 742 bound for Los Angeles. Their itinerary included a stop-over in Narita and an overnight stay
at Hotel Nikko Narita. Upon arrival at Narita, Mrs. Noriko Etou-Higuchi of JAL endorsed their applications for
shore pass and directed them to the Japanese immigration official.4 A shore pass is required of a foreigner
aboard a vessel or aircraft who desires to stay in the neighborhood of the port of call for not more than 72
hours.

During their interview, the Japanese immigration official noted that Michael appeared shorter than his height
as indicated in his passport. Because of this inconsistency, respondents were denied shore pass entries and
were brought instead to the Narita Airport Rest House where they were billeted overnight.

The immigration official also handed Mrs. Higuchi a Notice5 where it was stated that respondents were to be
"watched so as not to escape".

Mr. Atsushi Takemoto of the International Service Center (ISC), the agency tasked by Japan's Immigration
Department to handle passengers who were denied shore pass entries, brought respondents to the Narita
Airport Rest House where they stayed overnight until their departure the following day for Los Angeles.
Respondents were charged US$400.00 each for their accommodation, security service and meals.

On December 12, 1992, respondents filed a complaint for damages6 claiming that JAL did not fully apprise
them of their travel requirements and that they were rudely and forcibly detained at Narita Airport.

Issue: whether JAL is guilty of breach of contract.

Ruling: We find that JAL did not breach its contract of carriage with respondents.

Under Article 1755 of the Civil Code, a common carrier such as JAL is bound to carry its 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 an airline issues a ticket to a passenger, confirmed for a particular
flight on a certain date, a contract of carriage arises. The passenger has every right to expect that he be
transported on that flight and on that date and it becomes the carrier's obligation to carry him and his
luggage safely to the agreed destination.10 If the passenger is not so transported or if in the process of
transporting he dies or is injured, the carrier may be held liable for a breach of contract of carriage.

It may be true that JAL has the duty to inspect whether its passengers have the necessary travel
documents, however, such duty does not extend to checking the veracity of every entry in these documents.
JAL could not vouch for the authenticity of a passport and the correctness of the entries therein. The power
to admit or not an alien into the country is a sovereign act which cannot be interfered with even by JAL. This
is not within the ambit of the contract of carriage entered into by JAL and herein respondents. As such, JAL
should not be faulted for the denial of respondents' shore pass applications.

JAL or any of its representatives have no authority to interfere with or influence the immigration authorities.
The most that could be expected of JAL is to endorse respondents' applications, which Mrs. Higuchi did
immediately upon their arrival in Narita.

More importantly, nowhere in respondent Michael's testimony did he state categorically that Mrs. Higuchi or
any other employee of JAL treated them rudely or exhibited improper behavior throughout their stay. We
therefore find JAL not remiss in its obligations as a common carrier.
G.R. No. L-22272 June 26, 1967

ANTONIA MARANAN, plaintiff-appellant,

vs.
PASCUAL PEREZ, ET AL., defendants.
PASCUAL PEREZ, defendant appellant.

Facts: Rogelio Corachea, on October 18, 1960, was a passenger in a taxicab owned and operated
by Pascual Perez when he was stabbed and killed by the driver, Simeon Valenzuela.

Valenzuela was prosecuted for homicide in the Court of First Instance of Batangas. Found guilty, he
was sentenced to suffer imprisonment and to indemnify the heirs of the deceased in the sum of
P6,000. Appeal from said conviction was taken to the Court of Appeals.

Issue: Whether or not the carrier is liable for assaults committed by employees.

Ruling: Unlike the old Civil Code, the new Civil Code of the Philippines expressly makes the
common carrier liable for intentional assaults committed by its employees upon its passengers, by
the wording of Art. 1759 which categorically states that

Common carriers are liable for the death of or injuries to passengers through the negligence
or willful 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.

The basis of the carrier's liability for assaults on passengers committed by its drivers rests either on
(1) the doctrine of respondeat superior or (2) the principle that it is the carrier's implied duty to
transport the passenger safely.

Under the first, which is the minority view, the carrier is liable only when the act of the employee is
within the scope of his authority and duty. It is not sufficient that the act be within the course of
employment only.4

Under the second view, upheld by the majority and also by the later cases, it is enough that the
assault happens within the course of the employee's duty. It is no defense for the carrier that the act
was done in excess of authority or in disobedience of the carrier's orders.5 The carrier's liability here
is absolute in the sense that it practically secures the passengers from assaults committed by its
own employees.6

As can be gleaned from Art. 1759, the Civil Code of the Philippines evidently follows the rule based
on the second view. (1) the special undertaking of the carrier requires that it furnish its passenger
that full measure of protection afforded by the exercise of the high degree of care prescribed by the
law, inter alia from violence and insults at the hands of strangers and other passengers, but above
all, from the acts of the carrier's own servants charged with the passenger's safety; (2) said liability of
the carrier for the servant's violation of duty to passengers, is the result of the formers confiding in
the servant's hands the performance of his contract to safely transport the passenger, delegating
therewith the duty of protecting the passenger with the utmost care prescribed by law; and (3) as
between the carrier and the passenger, the former must bear the risk of wrongful acts or negligence
of the carrier's employees against passengers, since it, and not the passengers, has power to select
and remove them.

Accordingly, it is the carrier's strict obligation to select its drivers and similar employees with due
regard not only to their technical competence and physical ability, but also, no less important, to their
total personality, including their patterns of behavior, moral fibers, and social attitude.

Applying this stringent norm to the facts in this case, therefore, the lower court rightly adjudged the
defendant carrier liable pursuant to Art. 1759 of the Civil Code. The dismissal of the claim against
the defendant driver was also correct. Plaintiff's action was predicated on breach of contract of
carriage7 and the cab driver was not a party thereto. His civil liability is covered in the criminal case
wherein he was convicted by final judgment.
G.R. No. L-31379 August 29, 1988

COMPAÑIA MARITIMA, petitioner,

vs.
COURT OF APPEALS and VICENTE CONCEPCION, respondents.

Facts: Vicente E. Concepcion had to ship his construction equipment to Cagayan de Oro City. Having
shipped some of his equipment through petitioner and having settled the balance of P2,628.77 with
respect to said shipment, Concepcion negotiated anew with petitioner, thru its collector, Pacifico
Fernandez, on August 28, 1964 for the shipment to Cagayan de Oro City of one (1) unit payloader, four
(4) units 6x6 Reo trucks and two (2) pieces of water tanks. He was issued Bill of Lading 113 on the same
date upon delivery of the equipment at the Manila North Harbor. 2

These equipment were loaded aboard the MV Cebu in its Voyage No. 316, which left Manila on August
30, 1964 and arrived at Cagayan de Oro City in the afternoon of September 1, 1964. The Reo trucks and
water tanks were safely unloaded within a few hours after arrival, but while the payloader was about two
(2) meters above the pier in the course of unloading, the swivel pin of the heel block of the port block of
Hatch No. 2 gave way, causing the payloader to fall. 3 The payloader was damaged and was thereafter
taken to petitioner's compound in Cagayan de Oro City.

On September 7, 1964, Consolidated Construction, thru Vicente E. Concepcion, wrote Compañia

Maritima to demand a replacement of the payloader which it was considering as a complete loss because
of the extent of damage. Finding that the payloader weighed 7.5 tons and not 2.5 tons as declared in the
B-111 of Lading, petitioner denied the claim for damages

Issue: whether or not the act of private respondent Vicente E. Concepcion in furnishing petitioner
Compañia Maritima with an inaccurate weight of 2.5 tons instead of the payloader's actual weight of 7.5
tons was the proximate and only cause of the damage on the Oliver Payloader OC-12 when it fell while
being unloaded by petitioner's crew, as would absolutely exempt petitioner from liability for damages
under paragraph 3 of Article 1734 of the Civil Code, which provides:

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:

xxx xxx xxx

(3) Act or omission of the shipper or owner of the goods.

Ruling: In the instant case, We are not persuaded by the proferred explanation of petitioner alleged to
be the proximate cause of the fall of the payloader while it was being unloaded at the Cagayan de Oro
City pier. Petitioner seems to have overlooked the extraordinary diligence required of common carriers
in the vigilance over the goods transported by them by virtue of the nature of their business, which is
impressed with a special public duty.

Thus, Article 1733 of the Civil Code provides:

Art. 1733. Common carriers, from the nature of their business and for reason 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 1745, Nos. 5, 6 and 7, ...

The extraordinary diligence in the vigilance over the goods tendered for shipment requires the common
carrier to know and to follow the required precaution for avoiding damage to, or destruction of the goods
entrusted to it for safe carriage and delivery. It requires common carriers to render service with the
greatest skill and foresight and "to use all reasonable means to ascertain the nature and characteristic of
goods tendered for shipment, and to exercise due care in the handling and stowage including such
methods as their nature requires."11 Under Article 1736 of the Civil Code, the responsibility to observe
extraordinary diligence commences and lasts from the time the goods are unconditionally placed in the
possession of, and received by the carrier for transportation until the same are delivered, actually or
constructively, by the carrier to the consignee, or to the person who has the right to receive them without
prejudice to the provisions of Article 1738.

Petitioner, upon the testimonies of its own crew, failed to take the necessary and adequate precautions for
avoiding damage to, or destruction of, the payloader entrusted to it for safe carriage and delivery to
Cagayan de Oro City, it cannot be reasonably concluded that the damage caused to the payloader was due
to the alleged misrepresentation of private respondent Concepcion as to the correct and accurate weight of
the payloader. As found by the respondent Court of Appeals, the fact is that petitioner used a 5-ton
capacity lifting apparatus to lift and unload a visibly heavy cargo like a payloader. Private respondent has,
likewise, sufficiently established the laxity and carelessness of petitioner's crew in their methods of
ascertaining the weight of heavy cargoes offered for shipment before loading and unloading them, as is
customary among careful persons.

The weights stated in a bill of lading are prima facie evidence of the amount received and the fact that the
weighing was done by another will not relieve the common carrier where it accepted such weight and
entered it on the bill of lading. 16 Besides, common carriers can protect themselves against mistakes in
the bill of lading as to weight by exercising diligence before issuing the same. 17

While petitioner has proven that private respondent Concepcion did furnish it with an inaccurate weight
of the payloader, petitioner is nonetheless liable, for the damage caused to the machinery could have been
avoided by the exercise of reasonable skill and attention on its part in overseeing the unloading of such a
heavy equipment. And circumstances clearly show that the fall of the payloader could have been avoided
by petitioner's crew. Evidence on record sufficiently show that the crew of petitioner had been negligent
in the performance of its obligation by reason of their having failed to take the necessary precaution under
the circumstances which usage has established among careful persons, more particularly its Chief Officer,
Mr. Felix Pisang, who is tasked with the over-all supervision of loading and unloading heavy cargoes and
upon whom rests the burden of deciding as to what particular winch the unloading of the payloader
should be undertaken. 18 While it was his duty to determine the weight of heavy cargoes before accepting
them. Mr. Felix Pisang took the bill of lading on its face value and presumed the same to be correct by
merely "seeing" it. 19 Acknowledging that there was a "jumbo" in the MV Cebu which has the capacity
of lifting 20 to 25 ton cargoes, Mr. Felix Pisang chose not to use it, because according to him, since the
ordinary boom has a capacity of 5 tons while the payloader was only 2.5 tons, he did not bother to use the
"jumbo" anymore. 20

In that sense, therefore, private respondent's act of furnishing petitioner with an inaccurate weight of the
payloader upon being asked by petitioner's collector, cannot be used by said petitioner as an excuse to
avoid liability for the damage caused, as the same could have been avoided had petitioner utilized the
"jumbo" lifting apparatus which has a capacity of lifting 20 to 25 tons of heavy cargoes.

While the act of private respondent in furnishing petitioner with an inaccurate weight of the payloader
cannot successfully be used as an excuse by petitioner to avoid liability to the damage thus caused, said
act constitutes a contributory circumstance to the damage caused on the payloader, which mitigates the
liability for damages of petitioner in accordance with Article 1741 of the Civil Code, to wit:

Art. 1741. If the shipper or owner merely contributed to the loss, destruction or deterioration of the goods,
the proximate cause thereof being the negligence of the common carrier, the latter shall be liable in
damages, which however, shall be equitably reduced.
G.R. No. 157009 March 17, 2010

SULPICIO LINES, INC., Petitioner,

vs.
DOMINGO E. CURSO, LUCIA E. CURSO, MELECIO E. CURSO, SEGUNDO E. CURSO,
VIRGILIO E. CURSO, DIOSDADA E. CURSO, and CECILIA E. CURSO, Respondents.

Facts: On October 23, 1988, Dr. Curso boarded at the port of Manila the MV Doña Marilyn, an inter-
island vessel owned and operated by petitioner Sulpicio Lines, Inc., bound for Tacloban City.
Unfortunately, the MV Doña Marilyn sank in the afternoon of October 24, 1988 while at sea due to the
inclement sea and weather conditions brought about by Typhoon Unsang. The body of Dr. Curso was not
recovered, along with hundreds of other passengers of the ill-fated vessel. On January 21, 1993, the
respondents, allegedly the surviving brothers and sisters of Dr. Curso, sued the petitioner in the RTC in
Naval, Biliran to claim damages based on breach of contract of carriage by sea, averring that the
petitioner had acted negligently in transporting Dr. Curso and the other passengers. They stated, among
others, that their parents had predeceased Dr. Curso, who died single and without issue; and that, as such,
they were Dr. Curso’s surviving heirs and successors in interest entitled to recover moral and other
damages.

Issue: ARE THE BROTHERS AND SISTERS OF A DECEASED PASSENGER IN A CASE OF

BREACH OF CONTRACT OF CARRIAGE ENTITLED TO AN AWARD OF MORAL DAMAGES
AGAINST THE CARRIER?

Ruling: NO. General rule, moral damages are not recoverable in actions for damages predicated on a
breach of contract, unless there is fraud or bad faith.8 As an exception, moral damages may be awarded
in case of breach of contract of carriage that results in the death of a passenger,9 in accordance with
Article 1764, in relation to Article 2206 (3), of the Civil Code, which provide:

Article 1764. Damages in cases comprised in this Section shall be awarded in accordance with Title
XVIII of this Book, concerning Damages. Article 2206 shall also apply to the death of a passenger caused
by the breach of contract by a common carrier.

Article 2206. The amount of damages for death caused by a crime or quasi-delict shall be at least three
thousand pesos, even though there may have been mitigating circumstances. In addition:

(1) The defendant shall be liable for the loss of the earning capacity of the deceased, and the indemnity
shall be paid to the heirs of the latter; such indemnity shall in every case be assessed and awarded by the
court, unless the deceased on account of permanent physical disability not caused by the defendant, had
no earning capacity at the time of his death;

(2) If the deceased was obliged to give support according to the provisions of article 291, the recipient
who is not an heir called to the decedent's inheritance by the law of testate or intestate succession, may
demand support from the person causing the death, for a period not exceeding five years, the exact
duration to be fixed by the court;

(3) The spouse, legitimate and illegitimate descendants and ascendants of the deceased may demand
moral damages for mental anguish by reason of the death of the deceased.

The foregoing legal provisions set forth the persons entitled to moral damages. The omission from Article
2206 (3) of the brothers and sisters of the deceased passenger reveals the legislative intent to exclude
them from the recovery of moral damages for mental anguish by reason of the death of the deceased.
Inclusio unius est exclusio alterius.

According to Villanueva v. Salvador,13 the conditions for awarding moral damages are: (a) there must be
an injury, whether physical, mental, or psychological, clearly substantiated by the claimant; (b) there must
be a culpable act or omission factually established; (c) the wrongful act or omission of the defendant must
be the proximate cause of the injury sustained by the claimant; and (d) the award of damages is predicated
on any of the cases stated in Article 2219 of the Civil Code.

To be entitled to moral damages, the respondents must have a right based upon law. It is true that under
Article 100314 of the Civil Code they succeeded to the entire estate of the late Dr. Curso in the absence of
the latter’s descendants, ascendants, illegitimate children, and surviving spouse. However, they were not
included among the persons entitled to recover moral damages, as enumerated in Article 2219 of the Civil
Code, viz:

Article 2219. Moral damages may be recovered in the following and analogous cases:

(1) A criminal offense resulting in physical injuries;

(2) Quasi-delicts causing physical injuries;

(3) Seduction, abduction, rape or other lascivious acts;

(4) Adultery or concubinage;

(5) Illegal or arbitrary detention or arrest;

(6) Illegal search;

(7) Libel, slander or any other form of defamation;

(8) Malicious prosecution;

(9) Acts mentioned in article 309;

(10) Acts and actions referred to in articles 21, 26, 27, 28, 29, 30, 32, 34 and 35.

In fine, moral damages may be recovered in an action upon breach of contract of carriage only when: (a)
where death of a passenger results, or (b) it is proved that the carrier was guilty of fraud and bad faith,
even if death does not result.16 Article 2206 of the Civil Code entitles the descendants, ascendants,
illegitimate children, and surviving spouse of the deceased passenger to demand moral damages for
mental anguish by reason of the death of the deceased.
G.R. No. 171092 March 15, 2010

EDNA DIAGO LHUILLIER, Petitioner,

vs.
BRITISH AIRWAYS, Respondent.

Facts: On April 28, 2005, petitioner Edna Diago Lhuillier filed a Complaint2 for damages against
respondent British Airways before the Regional Trial Court (RTC) of Makati City. She alleged that on
February 28, 2005, she took respondent’s flight 548 from London, United Kingdom to Rome, Italy. Once
on board, she allegedly requested Julian Halliday (Halliday), one of the respondent’s flight attendants, to
assist her in placing her hand-carried luggage in the overhead bin. However, Halliday allegedly refused
to help and assist her, and even sarcastically remarked that "If I were to help all 300 passengers in this
flight, I would have a broken back!"

Petitioner further alleged that when the plane was about to land in Rome, Italy, another flight attendant,
Nickolas Kerrigan (Kerrigan), singled her out from among all the passengers in the business class section
to lecture on plane safety.

Thus, petitioner filed the complaint for damages. Respondent, by way of special appearance through
counsel, filed a Motion to Dismiss4 on grounds of lack of jurisdiction over the case and over the person of
the respondent. Respondent alleged that only the courts of London, United Kingdom or Rome, Italy, have
jurisdiction over the complaint for damages pursuant to the Warsaw Convention.

Issue: WHETHER X X X PHILIPPINE COURTs HAVE JURISDICTION OVER A TORTIOUS

CONDUCT COMMITTED AGAINST A FILIPINO CITIZEN AND RESIDENT BY AIRLINE
PERSONNEL OF A FOREIGN CARRIER TRAVELLING BEYOND THE TERRITORIAL LIMIT OF
ANY FOREIGN COUNTRY; AND THUS IS OUTSIDE THE AMBIT OF THE WARSAW
CONVENTION.

Ruling: It is settled that the Warsaw Convention has the force and effect of law in this country. In
Santos III v. Northwest Orient Airlines,12 we held that:

The Republic of the Philippines is a party to the Convention for the Unification of Certain Rules Relating
to International Transportation by Air, otherwise known as the Warsaw Convention. It took effect on
February 13, 1933. The Convention was concurred in by the Senate, through its Resolution No. 19, on
May 16, 1950. The Convention became applicable to the Philippines on February 9, 1951. On September
23, 1955, President Ramon Magsaysay issued Proclamation No. 201, declaring our formal adherence
thereto, "to the end that the same and every article and clause thereof may be observed and fulfilled in
good faith by the Republic of the Philippines and the citizens thereof."

The Warsaw Convention applies because the air travel, where the alleged tortious conduct occurred, was
between the United Kingdom and Italy, which are both signatories to the Warsaw Convention.

Article 1 of the Warsaw Convention provides:

1. This Convention applies to all international carriage of persons, luggage or goods performed by aircraft
for reward. It applies equally to gratuitous carriage by aircraft performed by an air transport undertaking.

2. For the purposes of this Convention the expression "international carriage" means any carriage in
which, according to the contract made by the parties, the place of departure and the place of destination,
whether or not there be a break in the carriage or a transhipment, are situated either within the territories
of two High Contracting Parties, or within the territory of a single High Contracting Party, if there is an
agreed stopping place within a territory subject to the sovereignty, suzerainty, mandate or authority of
another Power, even though that Power is not a party to this Convention. A carriage without such an
agreed stopping place between territories subject to the sovereignty, suzerainty, mandate or authority of
the same High Contracting Party is not deemed to be international for the purposes of this Convention.
When the place of departure and the place of destination in a contract of carriage are situated within the
territories of two High Contracting Parties, said carriage is deemed an "international carriage".

Since the Warsaw Convention applies in the instant case, then the jurisdiction over the subject matter of
the action is governed by the provisions of the Warsaw Convention.

Under Article 28(1) of the Warsaw Convention, the plaintiff may bring the action for damages before –

1. the court where the carrier is domiciled;

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

3. the court where the carrier has an establishment by which the contract has been made; or

4. the court of the place of destination.

In this case, it is not disputed that respondent is a British corporation domiciled in London, United
Kingdom with London as its principal place of business. Hence, under the first and second jurisdictional
rules, the petitioner may bring her case before the courts of London in the United Kingdom. In the
passenger ticket and baggage check presented by both the petitioner and respondent, it appears that the
ticket was issued in Rome, Italy. Consequently, under the third jurisdictional rule, the petitioner has the
option to bring her case before the courts of Rome in Italy. Finally, both the petitioner and respondent
aver that the place of destination is Rome, Italy, which is properly designated given the routing presented
in the said passenger ticket and baggage check. Accordingly, petitioner may bring her action before the
courts of Rome, Italy. We thus find that the RTC of Makati correctly ruled that it does not have
jurisdiction over the case.

Article 28(1) of the Warsaw Convention is jurisdictional in character. Thus:

A number of reasons tends to support the characterization of Article 28(1) as a jurisdiction and not a
venue provision. First, the wording of Article 32, which indicates the places where the action for damages
"must" be brought, underscores the mandatory nature of Article 28(1). Second, this characterization is
consistent with one of the objectives of the Convention, which is to "regulate in a uniform manner the
conditions of international transportation by air." Third, the Convention does not contain any provision
prescribing rules of jurisdiction other than Article 28(1), which means that the phrase "rules as to
jurisdiction" used in Article 32 must refer only to Article 28(1). In fact, the last sentence of Article 32
specifically deals with the exclusive enumeration in Article 28(1) as "jurisdictions,"

Tortious conduct as ground for the petitioner’s complaint is within the purview of the Warsaw
Convention.
G.R. No. 213418, September 21, 2016

ALFREDO S.RAMOS, CONCHITA S. RAMOS, BENJAMIN B. RAMOS, NELSON T. RAMOS

AND ROBINSON T. RAMOS, Petitioners, v. CHINA SOUTHERN AIRLINES CO. LTD.,
Respondent.

Facts: On 7 August 2003, petitioners purchased five China Southern Airlines roundtrip plane tickets from
Active Travel Agency for $985.00.6 It is provided in their itineraries that petitioners will be leaving
Manila on 8 August 2003 at 0900H and will be leaving Xiamen on 12 August 2003 at 1920H.7 Nothing
eventful happened during petitioners' flight going to Xiamen as they were able to successfully board the
plane which carried them to Xiamen International Airport. On their way back to the Manila, however,
petitioners were prevented from taking their designated flight despite the fact that earlier that day an agent
from Active Tours informed them that their bookings for China Southern Airlines 1920H flight are
confirmed.8 The refusal came after petitioners already checked in all their baggages and were given the
corresponding claim stubs and after they had paid the terminal fees. According to the airlines' agent with
whom they spoke at the airport, petitioners were merely chance passengers but they may be allowed to
join the flight if they are willing to pay an additional 500 Renminbi (RMB) per person.

Issue: Whether or not passengers who were ‘bumped off’ their flight are entitled to moral damages.

Ruling: A contract of carriage, in this case, air transport, is intended to serve the traveling public and
thus, imbued with public interest.22 The law governing common carriers consequently imposes an
exacting standard of conduct,23viz:ChanRoblesVirtualawlibrary

"1755 of the New Civil Code. A common carrier is bound to carry 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 an airline issues a ticket to a passenger confirmed on a particular flight, on a certain date, a contract
of carriage arises, and the passenger has every right to expect that he would fly on that flight and on that
date. If that does not happen, then the carrier opens itself to a suit for breach of contract of carriage. 24 In
an action based on a breach of contract of carriage, the aggrieved party does not have to prove that the
common carrier was at fault or was negligent.25cralawred All he has to prove is the existence of the
contract and the fact of its non-performance by the carrier, through the latter's failure to carry the
passenger to its destination.

It is beyond question in the case at bar that petitioners had an existing contract of air carriage with China
Southern Airlines as evidenced by the airline tickets issued by Active Travel. When they showed up at the
airport and after they went through the routine security check including the checking in of their luggage
and the payment of the corresponding terminal fees, petitioners were not allowed by China Southern
Airlines to board on the plane. The airlines' claim that petitioners do not have confirmed reservations
cannot be given credence by the Court. The petitioners were issued two-way tickets with itineraries
indicating the date and time of their return flight to Manila. These are binding contracts of carriage.27
China Southern Airlines allowed petitioners to check in their luggage and issued the necessary claim
stubs showing that they were part of the flight. It was only after petitioners went through all the required
check-in procedures that they were informed by the airlines that they were merely chance passengers.
Airlines companies do not, as a practice, accept pieces of luggage from passengers without confirmed
reservations. Quite tellingly, all the foregoing circumstances lead us to the inevitable conclusion that
petitioners indeed were bumped off from the flight.

With respect to moral damages, the following provision of the New Civil Code is
instructive:ChanRoblesVirtualawlibrary

Article 2220. Willful injury to property may be a legal ground for awarding moral damages if the court
should find that, under the circumstances, such damages are justly due. The same rule applies to breaches
of contract where the defendant acted fraudulently or in bad faith.
We find that the airline company acted in bad faith in insolently bumping petitioners off the flight after
they have completed all the pre-departure routine. Bad faith is evident when the ground personnel of the
airline company unjustly and unreasonably refused to board petitioners to the plane which compelled
them to rent a car and take the train to the nearest airport where they bought new sets of plane tickets
from another airline that could fly them home. Petitioners have every reason to expect that they would be
transported to their intended destination after they had checked in their luggage and had gone through all
the security checks. Instead, China Southern Airlines offered to allow them to join the flight if they are
willing to pay additional cost; this amount is on top of the purchase price of the plane tickets. The
requirement to pay an additional fare was insult upon injury. It is an aggravation of the breach of contract.
G.R. No. 172682, July 27, 2016

SULPICIO LINES, INC., Petitioner, v. NAPOLEON SESANTE, NOW SUBSTITUTED BY

MARIBEL ATILANO, KRISTEN MARIE, CHRISTIAN IONE, KENNETH KERRN AND
KARISNA KATE, ALL SURNAMED SESANTE, Respondent.

Facts: On September 18, 1998, at around 12:55 p.m., the M/V Princess of the Orient, a passenger vessel
owned and operated by the petitioner, sank near Fortune Island in Batangas. Of the 388 recorded
passengers, 150 were lost.3 Napoleon Sesante, then a member of the Philippine National Police (PNP) and
a lawyer, was one of the passengers who survived the sinking. He sued the petitioner for breach of
contract and damages.4chanrobleslaw

Sesante alleged in his complaint that the M/V Princess of the Orient left the Port of Manila while Metro
Manila was experiencing stormy weather; that at around 11:00 p.m., he had noticed the vessel listing
starboard, so he had gone to the uppermost deck where he witnessed the strong winds and big waves
pounding the vessel; that at the same time, he had seen how the passengers had been panicking, crying for
help and frantically scrambling for life jackets. Big waves had rocked the vessel, tossing him to the floor
where he was pinned by a long steel bar; that he had freed himself only after another wave had hit the
vessel;5 that he had managed to stay afloat after the vessel had sunk, and had been carried by the waves to
the coastline of Cavite and Batangas until he had been rescued; that he had suffered tremendous hunger,
thirst, pain, fear, shock, serious anxiety and mental anguish; that he had sustained injuries,6 and had lost
money, jewelry, important documents, police uniforms and the .45 caliber pistol issued to him by the
PNP; and that because it had committed bad faith in allowing the vessel to sail despite the storm signal,
the petitioner should pay him actual and moral damages of P500,000.00 and P1,000,000.00, respectively.

It was pending the appeal in the CA when Sesante passed away. He was substituted by his heirs.

Issue: Whether the action for breach of contract of carriage survives death; Whether petitioner is liable

Ruling:

An action for breach of contract of carriage survives the death of the plaintiff

The petitioner urges that Sesante's complaint for damages was purely personal and cannot be transferred
to his heirs upon his death.

Section 16, Rule 3 of the Rules of Court lays down the proper procedure in the event of the death of a
litigant, viz.:

Section 16. Death of party; duty of counsel. - Whenever a party to a pending action dies, and the
claim is not thereby extinguished, it shall be the duty of his counsel to inform the court within thirty
(30) days after such death of the fact thereof, and to give the name and address of his legal representative
or representatives. Failure of counsel to comply with his duty shall be a ground for disciplinary action.

The heirs of the deceased may be allowed to be substituted for the deceased, without requiring the
appointment of an executor or administrator and the court may appoint a guardian ad litem for the minor
heirs.

Substitution by the heirs is not a matter of jurisdiction, but a requirement of due process.17 It protects the
right of due process belonging to any party, that in the event of death the deceased litigant continues to be
protected and properly represented in the suit through the duly appointed legal representative of his
estate.18chanrobleslaw

The application of the rule on substitution depends on whether or not the action survives the death of the
litigant. Section 1, Rule 87 of the Rules of Court enumerates the following actions that survive the death
of a party, namely: (1) recovery of real or personal property, or an interest from the estate; (2)
enforcement of liens on the estate; and (3) recovery of damages for an injury to person or property. On the
one hand, Section 5, Rule 86 of the Rules of Court lists the actions abated by death as including: (1)
claims for funeral expenses and those for the last sickness of the decedent; (2) judgments for money; and
(3) all claims for money against the deceased, arising from contract, express or implied.

A contract of carriage generates a relation attended with public duty, neglect or malfeasance of the
carrier's employees and gives ground for an action for damages.19 Sesante's claim against the petitioner
involved his personal injury caused by the breach of the contract of carriage. Pursuant to the aforecited
rules, the complaint survived his death, and could be continued by his heirs following the rule on
substitution.

II

The petitioner is liable for breach of contract of carriage

Article 1759 of the Civil Code does not establish a presumption of negligence because it explicitly makes
the common carrier liable in the event of death or injury to passengers due to the negligence or fault of the
common carrier's employees. It reads:ChanRoblesVirtualawlibrary

Article 1759. Common carriers are liable for the death or injuries to passengers through the
negligence or willful 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 exercised all the diligence of a
good father of a family in the selection and supervision of their employees.

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.

Clearly, the trial court is not required to make an express finding of the common carrier's fault or
negligence.21 Even the mere proof of injury relieves the passengers from establishing the fault or
negligence of the carrier or its employees.22 The presumption of negligence applies so long as there is
evidence showing that: (a) a contract exists between the passenger and the common carrier; and (b) the
injury or death took place during the existence of such contract.23 In such event, the burden shifts to the
common carrier to prove its observance of extraordinary diligence, and that an unforeseen event or force
majeure had caused the injury.

In order to be considered a fortuitous event, however, (1) the cause of the unforeseen and unexpected
occurrence, or the failure of the debtor to comply with his obligation, must be independent of human will;
(2) it must be impossible to foresee the event which constitute 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 any manner; and (4) the obligor must be free from any participation in the
aggravation of the injury resulting to the creditor.

The Captain's erroneous maneuvers of the M/V Princess of the Orient minutes before she sunk [sic] had
caused the accident. While the ship continuously listed to her portside and was battered by big waves,
strong southwesterly winds, prudent judgement [sic] would dictate that the Captain should have
considerably reduced the ship's speed. He could have immediately ordered the Chief Engineer to slacken
down the speed.
 G.R. No. 194121, July 11, 2016

TORRES-MADRID BROKERAGE, INC., Petitioner, v. FEB MITSUI MARINE INSURANCE CO., INC. AND
BENJAMIN P. MANALASTAS, DOING BUSINESS UNDER THE NAME OF BMT TRUCKING
SERVICES, Respondents.

Facts: On October 7, 2000, a shipment of various electronic goods from Thailand and Malaysia arrived at the
Port of Manila for Sony Philippines, Inc. (Sony). Previous to the arrival, Sony had engaged the services of
TMBI to facilitate, process, withdraw, and deliver the shipment from the port to its warehouse in Binan,
Laguna.2 chanrobles law

TMBI - who did not own any delivery trucks - subcontracted the services of Benjamin Manalastas' company,
BMT Trucking Services (BMT), to transport the shipment from the port to the Binan
warehouse.3 Incidentally, TMBI notified Sony who had no objections to the arrangement.

BMT later failed to deliver the goods due to an alleged ‘hijacking’ of the trucks. Mitsui sent TMBI a demand
letter dated August 30, 2001 for payment of the lost goods. TMBI refused to pay Mitsui's claim. As a result,
Mitsui filed a complaint against TMBI on November 6, 2001. TMBI claimed that it is not a common carrier
but a mere customs broker.

Issue: Whether or not a brokerage is a common carrier.

Ruling:

A brokerage may be considered a common

carrier if it also undertakes to deliver the
goods for its customers

Common carriers are persons, corporations, firms or associations engaged in the business of transporting
passengers or goods or both, by land, water, or air, for compensation, offering their services to the
public.32 By the nature of their business and for reasons of public policy, they are bound to observe
extraordinary diligence in the vigilance over the goods and in the safety of their passengers.33 chan roble slaw

In A.F. Sanchez Brokerage Inc. v. Court of Appeals,34we held that a customs broker - whose principal
business is the preparation of the correct customs declaration and the proper shipping documents - is still
considered a common carrier if it also undertakes to deliver the goods for its customers. The law does not
distinguish between one whose principal business activity is the carrying of goods and one who undertakes
this task only as an ancillary activity.

Despite TMBI's present denials, we find that the delivery of the goods is an integral, albeit ancillary, part of
its brokerage services. TMBI admitted that it was contracted to facilitate, process, and clear the shipments
from the customs authorities, withdraw them from the pier, then transport and deliver them to Sony's
warehouse in Laguna.

That TMBI does not own trucks and has to subcontract the delivery of its clients' goods, is immaterial. As
long as an entity holds itself to the public for the transport of goods as a business, it is considered a
common carrier regardless of whether it owns the vehicle used or has to actually hire one.

Lastly, TMBI's customs brokerage services - including the transport/delivery of the cargo - are available to
anyone willing to pay its fees. Given these circumstances, we find it undeniable that TMBI is a common
carrier.

Consequently, TMBI should be held responsible for the loss, destruction, or deterioration of the goods it
transports unless it results from:
chanRoble svirtual Lawlib ra ry

(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 of 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

For all other cases - such as theft or robbery - a common carrier is presumed to have been at fault or to
have acted negligently, unless it can prove that it observed extraordinary diligence.
A common carrier may absolve itself of liability for a resulting loss: (1) if it proves that it
exercised extraordinary diligence in transporting and safekeeping the goods;44 or (2) if it stipulated with the
shipper/owner of the goods to limit its liability for the loss, destruction, or deterioration of the goods to a
degree less than extraordinary diligence.

A stipulation diminishing or dispensing with the common carrier's liability for acts committed by thieves or
robbers who do not act with grave or irresistible threat, violence, or force is void under Article 1745 of the
Civil Code for being contrary to public policy. 46Jurisprudence, too, has expanded Article 1734's five
exemptions. De Guzman v. Court of Appeals47 interpreted Article 1745 to mean that a robbery attended by
"grave or irresistible threat, violence or force" is a fortuitous event that absolves the common carrier from
liability.

In the present case, the shipper, Sony, engaged the services of TMBI, a common carrier, to facilitate the
release of its shipment and deliver the goods to its warehouse. In turn, TMBI subcontracted a portion of its
obligation - the delivery of the cargo - to another common carrier, BMT.

Despite the subcontract, TMBI remained responsible for the cargo. Under Article 1736, a common carrier's
extraordinary responsibility over the shipper's goods lasts from the time these goods are unconditionally
placed in the possession of, and received by, the carrier for transportation, until they are delivered,
actually or constructively, by the carrier to the consignee. 48 chanroble slaw

That the cargo disappeared during transit while under the custody of BMT - TMBI's subcontractor - did not
diminish nor terminate TMBFs responsibility over the cargo. Article 1735 of the Civil Code presumes that it
was at fault.

TMBI and BMT are not solidarity liable

to Mitsui

We disagree with the lower courts" ruling that TMBI and BMT are solidarity liable to Mitsui for the loss as
joint tortfeasors. The ruling was based on Article 2194 of the Civil Code:
chanRoble svirtual Lawlib ra ry

Art. 2194. The responsibility of two or more persons who are liable for quasi-delict is solidary.

Notably, TMBI's liability to Mitsui does not stem from a quasi-delict (culpa aquiliana) but from its breach of
contract (culpa contractual). The tie that binds TMBI with Mitsui is contractual, albeit one that passed on to
Mitsui as a result of TMBI's contract of carriage with Sony to which Mitsui had been subrogated as an insurer
who had paid Sony's insurance claim. The legal reality that results from this contractual tie precludes the
application of quasi-delict based Article 2194.

BMT is liable to TMBI for breach

of their contract of carriage

We do not hereby say that TMBI must absorb the loss. By subcontracting the cargo delivery to BMT, TMBI
entered into its own contract of carriage with a fellow common carrier.

The cargo was lost after its transfer to BMT's custody based on its contract of carriage with TMBI. Following
Article 1735, BMT is presumed to be at fault. Since BMT failed to prove that it
observed extraordinary diligence in the performance of its obligation to TMBI, it is liable to TMBI for breach
of their contract of carriage.

In these lights, TMBI is liable to Sony (subrogated by Mitsui) for breaching the contract of carriage. In turn,
TMBI is entitled to reimbursement from BMT due to the latter's own breach of its contract of carriage with
TMBI.
G.R. No. 213088

LAND TRANSPORTATION FRANCHISING AND REGULATORY BOARD (LTFRB), Petitioner

vs.
G.V. FLORIDA TRANSPORT, INC., Respondent

Facts: Around 7:20 in the morning of February 7, 2014, a vehicular accident occurred at Sitio
Paggang, Barangay Talubin, Bontoc, Mountain Province involving a public utility bus coming from
Sampaloc, Manila, bound for Poblacion Bontoc and bearing a "G.V. Florida" body mark with License
Plate No. TXT-872. The mishap claimed the lives of fifteen (15) passengers and injured thirty-two
(32) others.

An initial investigation report, which came from the Department of Transportation and
Communications of the Cordillera Administrative Region (DOTC-CAR), showed that based on the
records of the Land Transportation Office (LTO) and herein petitioner, License Plate No. TXT-872
actually belongs to a different bus owned by and registered under the name of a certain Norberto
Cue, Sr. (Cue) under Certificate of Public Convenience (CPC) Case No. 2007-0407 and bears
engine and chassis numbers LX004564 and KN2EAM12PK004452, respectively; and that the bus
involved in the accident is not duly authorized to operate as a public transportation.

Thus, on the same day of the accident, herein petitioner, pursuant to its regulatory powers,
immediately issued an Order2 preventively suspending, for a period not exceeding thirty (30) days,
the operations of ten (10) buses of Cue under its CPC Case No. 2007-0407, as well as respondent's
entire fleet of buses, consisting of two hundred and twenty-eight (228) units, under its twenty-eight
(28) CPCs.

Issue: DOES THE LTFRB HAVE THE POWER TO SUSPEND THE FLEET OF A PUBLIC UTILITY
THAT VIOLATES THE LAW, TO THE DAMAGE OF THE PUBLIC?

Ruling: YES. Petitioner contends that it is vested by law with jurisdiction to regulate the operation of
public utilities; that under Section 5(b) of Executive Order No. 202 (E. 0. 202),9 it is authorized "[t]o
issue, amend, revise, suspend or cancel Certificates of Public Convenience or permits authorizing
the operation of public land transportation services provided by motorized vehicles, and to prescribe
the appropriate terms and conditions therefor;" and that petitioner's authority to impose the penalty
of suspension of CPCs of bus companies found to have committed violations of the law is broad and
is consistent with its mandate and regulatory capability.

The Court rules in favor of petitioner.

Section 5(b) of E.O. 202 states:

Sec. 5. Powers and Functions of the Land Transportation Franchising and Regulatory Board. The
Board shall have the following powers and functions:

Also, Section 5(b) of E.O. 202 states:

Sec. 5. Powers and Functions of the Land Transportation Franchising and Regulatory Board. The
Board shall have the following powers and functions:

b. To issue, amend, revise, suspend or cancel Certificates of Public Convenience or permits

authorizing the operation of public land transportation services provided by motorized vehicles, and
to prescribe the appropriate terms and conditions therefor;

In the present case, respondent is guilty of several violations of the law, to wit: lack of petitioner's
approval of the sale and transfer of the CPC which respondent bought from Cue; operating the ill-
fated bus under its name when the same is registered under the name of Dagupan Bus Co., Inc.;
attaching a vehicle license plate to the ill-fated bus when such plate belongs to a different bus owned
by Cue; and operating the subject bus under the authority of a different CPC. What makes matters
worse is that respondent knowingly and blatantly committed these violations.
Indeed, the law gives to the LTFRB (previously known, among others, as Public Service
Commission or Board of Transportation) ample power and discretion to decree or refuse the
cancellation of a certificate of public convenience issued to an operator as long as there is evidence
to support its action.

A grant of a certificate of public convenience confers no property rights but is a mere license or
privilege, and such privilege is forfeited when the grantee fails to comply with his commitments
behind which lies the paramount interest of the public, for public necessity cannot be made to wait,
nor sacrificed for private convenience.

The holder of such certificate does not acquire a property right in the route covered thereby. Nor
does it confer upon the holder any proprietary right or interest of franchise in the public highways.
Revocation of this certificate deprives him of no vested right. Little reflection is necessary to show
that the certificate of public convenience is granted with so many strings attached. New and
additional burdens, alteration of the certificate, and even revocation or annulment thereof is reserved
to the State.
 G.R. No. 181375, July 13, 2016

PHIL-NIPPON KYOEI, CORP., Petitioner, v. ROSALIA T. GUDELOSAO, ON HER BEHALF AND IN

BEHALF OF MINOR CHILDREN CHRISTY MAE T. GUDELOSAO AND ROSE ELDEN T. GUDELOSAO,
CARMEN TANCONTIAN, ON HER BEHALF AND IN BEHALF OF THE CHILDREN CAMELA B.
TANCONTIAN, BEVERLY B. TANCONTIAN, AND ACE B. TANCONTIAN, Respondents.

Facts: Petitioner, a domestic shipping corporation, purchased a "Ro-Ro" passenger/cargo vessel "MV Mahlia"
in Japan in February 2003.6 For the vessel's one month conduction voyage from Japan to the Philippines,
petitioner, as local principal, and Top Ever Marine Management Maritime Co., Ltd. (TMCL), as foreign
principal, hired Edwin C. Gudelosao, Virgilio A. Tancontian, and six other crewmembers. They were hired
through the local manning agency of TMCL, Top Ever Marine Management Philippine Corporation (TEMMPC).
TEMMPC, through their president and general manager, Capt. Oscar Orbeta (Capt. Orbeta), and the eight
crewmembers signed separate contracts of employment. Petitioner secured a Marine Insurance Policy
(Maritime Policy No. 00001) from SSSICI over the vessel for P10,800,000.00 against loss, damage, and
third party liability or expense, arising from the occurrence of the perils of the sea for the voyage of the
vessel from Onomichi, Japan to Batangas, Philippines. This Marine Insurance Policy included Personal
Accident Policies for the eight crewmembers for P3,240,000.00 each in case of accidental death or injury.7 chanro bles law

On February 24, 2003, while still within Japanese waters, the vessel sank due to extreme bad weather
condition. Only Chief Engineer Nilo Macasling survived the incident while the rest of the crewmembers,
including Gudelosao and Tancontian, perished.8 chanro bleslaw

Respondents, as heirs and beneficiaries of Gudelosao and Tancontian, filed separate complaints for death
benefits and other damages against petitioner, TEMMPC, Capt. Orbeta, TMCL, and SSSICI, with the
Arbitration Branch of the National Labor Relations Commission (NLRC).

The NLRC absolved petitioner, TEMMPC and TMCL and Capt. Orbeta from any liability based on the limited
liability rule.

The CA found that the NLRC erred when it ruled that the obligation of petitioner, TEMMPC and TMCL for the
payment of death benefits under the POEA-SEC was ipso facto transferred to SSSICI upon the death of the
seafarers. TEMMPC and TMCL cannot raise the defense of the total loss of the ship because its liability under
POEA-SEC is separate and distinct from the liability of the shipowner.19 To disregard the contract, which has
the force of law between the parties, would defeat the purpose of the Labor Code and the rules and
regulations issued by the Department of Labor and Employment (DOLE) in setting the minimum terms and
conditions of employment for the protection of Filipino seamen.20 The CA noted that the benefits being
claimed are not dependent upon whether there is total loss of the vessel, because the liability attaches even
if the vessel did not sink.21 Thus, it was error for the NLRC to absolve TEMMPC and TMCL on the basis of the
limited liability rule.

Issue: Whether the doctrine of real and hypothecary nature of maritime law (also known as the limited
liability rule) applies in favor of petitioner.

Ruling: Doctrine of limited liability is not applicable to claims under POEA-SEC.

In this jurisdiction, the limited liability rule is embodied in Articles 587, 590 and 837 under Book III of the
Code of Commerce, viz: ChanRoblesVirt ualawli bra ry

Art. 587. The ship agent shall also be civilly liable for the indemnities in favor of third persons which arise
from the conduct of the captain in the care of the goods which the vessel carried; but he may exempt
himself therefrom by abandoning the vessel with all her equipment and the freightage he may have earned
during the voyage.

Art. 590. The co-owners of a vessel shall be civilly liable, in the proportion of their contribution to the
common fund, for the results of the acts of the captain, referred to in Art. 587.

Each part-owner may exempt himself from this liability by the abandonment before a notary of the part of
the vessel belonging to him.

Art. 837. The civil liability incurred by the shipowners in the cases prescribed in this section, shall be
understood as limited to the value of the vessel with all its appurtenances and freightage earned during the
voyage.
Article 837 applies the limited liability rule in cases of collision. Meanwhile, Articles 587 and 590 embody the
universal principle of limited liability in all cases wherein the shipowner or agent may be properly held liable
for the negligent or illicit acts of the captain. These articles precisely intend to limit the liability of the
shipowner or agent to the value of the vessel, its appurtenances and freightage earned in the voyage,
provided that the owner or agent abandons the vessel.39 When the vessel is totally lost, in which case
abandonment is not required because there is no vessel to abandon, the liability of the shipowner or agent
for damages is extinguished.40 Nonetheless, the limited liability rule is not absolute and is without
exceptions. It does not apply in cases: (1) where the injury or death to a passenger is due either to the fault
of the shipowner, or to the concurring negligence of the shipowner and the captain; (2) where the vessel is
insured; and (3) in workmen's compensation claims.

The real and hypothecary nature of the liability of the shipowner or agent embodied in the provisions of the
Maritime Law, Book III, Code of Commerce, had its origin in the prevailing conditions of the maritime trade
and sea voyages during the medieval ages, attended by innumerable hazards and perils. To offset against
these adverse conditions and to encourage shipbuilding and maritime commerce, it was deemed necessary
to confine the liability of the owner or agent arising from the operation of a ship to the vessel, equipment,
and freight, or insurance, if any, so that if the shipowner or agent abandoned the ship, equipment, and
freight, his liability was extinguished.

But the provisions of the Code of Commerce invoked by appellant have no room in the application of the
Workmen's Compensation Act which seeks to improve, and aims at the amelioration of, the condition of
laborers and employees. It is not the liability for the damage or loss of the cargo or injury to, or death of, a
passenger by or through the misconduct of the captain or master of the ship; nor the liability for the loss of
the ship as a result of collision; nor the responsibility for wages of the crew, but a liability created by a
statute to compensate employees and laborers in cases of injury received by or inflicted upon them, while
engaged in the performance of their work or employment, or the heirs and dependents of such laborers and
employees in the event of death caused by their employment. Such compensation has nothing to do with
the provisions of the Code of Commerce regarding maritime commerce. It is an item in the cost of
production which must be included in the budget of any well-managed industry.

Akin to the death benefits under the Labor Code, these benefits under the POEA-SEC are given when the
employee dies due to a work-related cause during the term of his contract.48 The liability of the shipowner
or agent under the POEA-SEC has likewise nothing to do with the provisions of the Code of Commerce
regarding maritime commerce. The death benefits granted under the POEA-SEC is not due to the death of a
passenger by or through the misconduct of the captain or master of the ship; nor is it the liability for the
loss of the ship as result of collision; nor the liability for wages of the crew. It is a liability created by
contract between the seafarers and their employers, but secured through the State's intervention as a
matter of constitutional and statutory duty.

Thus, the claim for death benefits under the POEA-SEC is the same species as the workmen's compensation
claims under the Labor Code - both of which belong to a different realm from that of Maritime Law.
Therefore, the limited liability rule does not apply to petitioner's liability under the POEA-SEC.

Nevertheless, the Release and Quitclaim benefit petitioner as a solidary debtor.

All the same, the Release and Quitclaim executed between TEMMPC, TMCL and Capt. Oscar Orbeta, and
respondents redounded to the benefit of petitioner as a solidary debtor.

Petitioner is solidarity liable with TEMMPC and TMCL for the death benefits under the POEA-SEC. The basis of
the solidary liability of the principal with the local manning agent is found in the second paragraph of Section
10 of the Migrant Workers and Overseas Filipino Act of 1995,55 which, in part, provides: "[t]he liability of
the principal/employer and the recruitment/placement agency for any and all claims under this section shall
be joint and several."

Thus, the rule is that the release of one solidary debtor redounds to the benefit of the others.61Considering
that petitioner is solidarily liable with TEMMPC and TMCL, we hold that the Release and Quitclaim executed
by respondents in favor of TEMMPC and TMCL redounded to petitioner's benefit. Accordingly, the liabilities of
petitioner under Section 20(A)(l) and (4)(c) of the POEA-SEC to respondents are now deemed extinguished.
We emphasize, however, that this pronouncement does not foreclose the right of reimbursement of the
solidary debtors who paid (i.e., TEMMPC and TMCL) from petitioner as their co-debtor.
 G.R. No. 226345, August 02, 2017

PIONEER INSURANCE AND SURETY CORPORATION, Petitioner, v. APL CO. PTE. LTD., Respondent

Facts: On January 13, 2012, the shipper, Chillies Export House Limited, turned over to respondent APL Co.
Pte. Ltd. (APL) 250 bags of chili pepper for transport from the port of Chennai, India, to Manila. The
shipment, with a total declared value of $12,272.50, was loaded on board M/V Wan Hai 262. In turn, BSFIL
Technologies, Inc. (BSFIL), as consignee, insured the cargo with petitioner Pioneer Insurance and Surety
Corporation (Pioneer Insurance).5

On February 2, 2012, the shipment arrived at the port of Manila and was temporarily stored at North
Harbor, Manila. On February 6, 2012, the bags of chili were withdrawn and delivered to BSFIL. Upon receipt
thereof, it discovered that 76 bags were wet and heavily infested with molds. The shipment was declared
unfit for human consumption and was eventually declared as a total loss.6

As a result, BSFIL made a formal claim against APL and Pioneer Insurance. The latter hired an independent
insurance adjuster, which found that the shipment was wet because of the water which seeped inside the
container van APL provided. Pioneer Insurance paid BSFIL P195,505.65 after evaluating the claim.7

Having been subrogated to all the rights and cause of action of BSFIL, Pioneer Insurance sought payment
from APL, but the latter refused.

In its May 26, 2016 decision, the CA reversed the decisions of the trial courts and ruled that the present
action was barred by prescription. The appellate court noted that under Clause 8 of the Bill of Lading, the
carrier shall be absolved from any liability unless a case is filed within nine (9) months after the delivery of
the goods.

Issue: WHETHER THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED WHEN IT RULED THAT
PETITIONER'S CLAIM AGAINST THE RESPONDENT IS ALREADY BARRED BY PRESCRIPTION; AND

Ruling: It is elementary that a contract is the law between the parties and the obligations it carries must be
complied with in good faith.15 In Norton Resources and Development Corporation v. All Asia Bank
Corporation,16 the Court reiterated that when the terms of the contract are clear, its literal meaning shall
control, to wit:
chanRob lesvi rtual Lawli bra ry

The cardinal rule in the interpretation of contracts is embodied in the first paragraph of Article
1370 of the Civil Code: "[i]f the terms of a contract are clear and leave no doubt upon the
intention of the contracting parties, the literal meaning of its stipulations shall control."

A contract provision is ambiguous if it is susceptible of two reasonable alternative interpretations. Where

the written terms of the contract are not ambiguous and can only be read one way, the court will
interpret the contract as a matter of law.

After a closer persual of the the Bill of Lading, the Court finds that its provisions are clear and unequivocal
leaving no room for interpretation.

In the Bill of Lading, it was categorically stated that the carrier shall in any event be discharged from all
liability whatsoever in respect of the goods, unless suit is brought in the proper forum within nine (9)
months after delivery of the goods or the date when they should have been delivered. The same, however,
is qualified in that when the said nine-month period is contrary to any law compulsory applicable, the period
prescribed by the said law shall apply.

The present case involves lost or damaged cargo. It has long been settled that in case of loss or damage of
cargoes, the one-year prescriptive period under the COGSA applies.18 It is at this juncture where the parties
are at odds, with Pioneer Insurance claiming that the one-year prescriptive period under the COGSA
governs; whereas APL insists that the nine-month prescriptive period under the Bill of Lading applies.

A reading of the Bill of Lading between the parties reveals that the nine-month prescriptive period is not
applicable in all actions or claims. As an exception, the nine-month period is inapplicable when there is a
different period provided by a law for a particular claim or action—unlike in Philippine American where the
Bill of Lading stipulated a prescriptive period for actions without exceptions. Thus, it is readily apparent that
the exception under the Bill of Lading became operative because there was a compulsory law applicable
which provides for a different prescriptive period. Hence, strictly applying the terms of the Bill of Lading, the
one-year prescriptive period under the COGSA should govern because the present case involves loss of
goods or cargo.
G.R. No. 171591 25 June 2012

ACE NAVIGATION CO., INC., petitioner,

vs.
FGU INSURANCE CORPORATION and PIONEER INSURANCE AND SURETY
CORPORATION, Respondents.

Facts: On July 19, 1990, Cardia Limited (CARDIA) shipped on board the vessel M/V Pakarti Tiga at
Shanghai Port China, 8,260 metric tons or 165,200 bags of Grey Portland Cement to be discharged
at the Port of Manila and delivered to its consignee, Heindrich Trading Corp. (HEINDRICH). The
subject shipment was insured with respondents, FGU Insurance Corp. (FGU) and Pioneer Insurance
and Surety Corp. (PIONEER), against all risks under Marine Open Policy No. 062890275 for the
amount of P18,048,421.00. 3

The subject vessel is owned by P.T. Pakarti Tata (PAKARTI) which it chartered to Shinwa Kaiun
Kaisha Ltd. (SHINWA). 4 Representing itself as owner of the vessel, SHINWA entered into a charter
party contract with Sky International, Inc. (SKY), an agent of Kee Yeh Maritime Co. (KEE
YEH), 5 which further chartered it to Regency Express Lines S.A. (REGENCY). Thus, it was
REGENCY that directly dealt with consignee HEINDRICH, and accordingly, issued Clean Bill of
Lading No. SM-1. 6

On July 23, 1990, the vessel arrived at the Port of Manila and the shipment was discharged.
However, upon inspection of HEINDRICH and petitioner Ace Navigation Co., Inc. (ACENAV), agent
of CARDIA, it was found that out of the 165,200 bags of cement, 43,905 bags were in bad order and
condition. Unable to collect the sustained damages in the amount of P1,423,454.60 from the
shipper, CARDIA, and the charterer, REGENCY, the respondents, as co-insurers of the cargo, each
paid the consignee, HEINDRICH, the amounts of P427,036.40 and P284,690.94, respectively, 7 and
consequently became subrogated to all the rights and causes of action accruing to HEINDRICH.

Thus, on August 8, 1991, respondents filed a complaint for damages against the following
defendants: "REGENCY EXPRESS LINES, S.A./ UNKNOWN CHARTERER OF THE VESSEL
'PAKARTI TIGA'/ UNKNOWN OWNER and/or DEMIFE (sic) CHARTERER OF THE VESSEL
'PAKARTI TIGA', SKY INTERNATIONAL, INC. and/or ACE NAVIGATION COMPANY, INC
(ACENAV)."

Issue: Only the petition of ACENAV remained for the Court's resolution, with the lone issue of
whether or not it may be held liable to the respondents for 30% of their claim.

Ruling: A bill of lading is defined as "an instrument in writing, signed by a carrier or his agent,
describing the freight so as to identify it, stating the name of the consignor, the terms of the contract
for carriage, and agreeing or directing that the freight to be delivered to the order or assigns of a
specified person at a specified place." 21

It operates both as a receipt and as a contract. As a receipt, it recites the date and place of
shipment, describes the goods as to quantity, weight, dimensions, identification marks and condition,
quality, and value. As a contract, it names the contracting parties, which include the consignee, fixes
the route, destination, and freight rates or charges, and stipulates the rights and obligations
assumed by the parties. 22 As such, it shall only be binding upon the parties who make them, their
assigns and heirs. 23

In this case, the original parties to the bill of lading are: (a) the shipper CARDIA; (b) the carrier
PAKARTI; and (c) the consignee HEINDRICH. However, by virtue of their relationship with PAKARTI
under separate charter arrangements, SHINWA, KEE YEH and its agent SKY likewise became
parties to the bill of lading. In the same vein, ACENAV, as admitted agent of CARDIA, also became
a party to the said contract of carriage.

The respondents, however, maintain 24 that ACENAV is a ship agent and not a mere agent of
CARDIA, as found by both the CA 25 and the RTC. 26
The Court disagrees.

Article 586 of the Code of Commerce provides:

ART. 586. The shipowner and the ship agent shall be civilly liable for the acts of the captain and for
the obligations contracted by the latter to repair, equip, and provision the vessel, provided the
creditor proves that the amount claimed was invested therein.

By ship agent is understood the person entrusted with the provisioning of a vessel, or who
represents her in the port in which she may be found. (Emphasis supplied)

Records show that the obligation of ACENAV was limited to informing the consignee HEINDRICH of
the arrival of the vessel in order for the latter to immediately take possession of the goods. No
evidence was offered to establish that ACENAV had a hand in the provisioning of the vessel or that it
represented the carrier, its charterers, or the vessel at any time during the unloading of the goods.
Clearly, ACENAV's participation was simply to assume responsibility over the cargo when they were
unloaded from the vessel. Hence, no reversible error was committed by the courts a quo in holding
that ACENAV was not a ship agent within the meaning and context of Article 586 of the Code of
Commerce, but a mere agent of CARDIA, the shipper.

On this score, Article 1868 of the Civil Code states:

ART. 1868. By the contract of agency, a person binds himself to render some service or to do
something in representation or on behalf of another, with the consent or authority of the latter.

Corollarily, Article 1897 of the same Code provides that an agent is not personally liable to the party
with whom he contracts, unless he expressly binds himself or exceeds the limits of his authority
without giving such party sufficient notice of his powers.

Both exceptions do not obtain in this case. Records are bereft of any showing that ACENAV
exceeded its authority in the discharge of its duties as a mere agent of CARDIA. Neither was it
alleged, much less proved, that ACENAV's limited obligation as agent of the shipper, CARDIA, was
not known to HEINDRICH.

Furthermore, since CARDIA was not impleaded as a party in the instant suit, the liability attributed
upon it by the CA 27 on the basis of its finding that the damage sustained by the cargo was due to
improper packing cannot be borne by ACENAV. As mere agent, ACENAV cannot be made
responsible or held accountable for the damage supposedly caused by its principal. 28

Accordingly, the Court finds that theCA erred in ordering ACENAV jointly and severally liable with
CARDIA
 G.R. No. 210621, April 04, 2016

ALFREDO MANAY, JR., FIDELINO SAN LUIS, ADRIAN SAN LUIS, ANNALEE SAN LUIS, MARK
ANDREW JOSE, MELISSA JOSE, CHARLOTTE JOSE, DAN JOHN DE GUZMAN, PAUL MARK BALUYOT,
AND CARLOS S. JOSE, Petitioners, v. CEBU AIR,INC, Respondent.

Doctrine: The Air Passenger Bill of Rights1 mandates that the airline must inform the passenger in
writing of all the conditions and restrictions in the contract of carriage.2 Purchase of the contract of
carriage binds the passenger and imposes reciprocal obligations on both the airline and the passenger.
The airline must exercise extraordinary diligence in the fulfillment of the terms and conditions of the
contract of carriage. The passenger, however, has the correlative obligation to exercise ordinary
diligence in the conduct of his or her affairs.

Facts: On June 13, 2008, Carlos S. Jose (Jose) purchased 20 Cebu Pacific round-trip tickets from
Manila to Palawan for himself and on behalf of his relatives and friends.8 He made the purchase at
Cebu Pacific's branch office in Robinsons Galleria.9

Jose alleged that he specified to "Alou," the Cebu Pacific ticketing agent, that his preferred date and
time of departure from Manila to Palawan should be on July 20, 2008 at 0820 (or 8:20 a.m.) and that
his preferred date and time for their flight back to Manila should be on July 22, 2008 at 1615 (or 4:15
p.m.).10 He paid a total amount of P42,957.00 using his credit card.11 He alleged that after paying for
the tickets, Alou printed the tickets,12 which consisted of three (3) pages, and recapped only the first
page to him.13 Since the first page contained the details he specified to Alou, he no longer read the
other pages of the flight information.14

On July 20, 2008, Jose and his 19 companions boarded the 0820 Cebu Pacific flight to Palawan and
had an enjoyable stay.15

On the afternoon of July 22, 2008, the group proceeded to the airport for their flight back to
Manila.16 During the processing of their boarding passes, they were informed by Cebu Pacific personnel
that nine (9)17 of them could not be admitted because their tickets were for the 1005 (or 10:05
a.m.)18 flight earlier that day.19 Jose informed the ground personnel that he personally purchased the
tickets and specifically instructed the ticketing agent that all 20 of them should be on the 4:15 p.m.
flight to Manila.20

Upon checking the tickets, they learned that only the first two (2) pages had the schedule Jose
specified.21 They were left with no other option but to rebook their tickets.

Issue: Whether respondent Cebu Air, Inc. is liable to petitioners for damages for the issuance of a
plane ticket with an allegedly erroneous flight schedule.

Ruling: NO. Common carriers are required to exercise extraordinary diligence in the performance of
its obligations under the contract of carriage. This extraordinary diligence must be observed not only
in the transportation of goods and services but also in the issuance of the contract of carriage,
including its ticketing operations.

Article 1732 of the Civil Code defines a common carrier as "persons, corporations or 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." Articles 1733, 1755, and 1756 of
the Civil Code outline the degree of diligence required of common carriers:
....
ARTICLE 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.

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, with 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.

Respondent, as one of the four domestic airlines in the country,90 is a common carrier required by law
to exercise extraordinary diligence.
When a common carrier, through its ticketing agent, has not yet issued a ticket to the prospective
passenger, the transaction between them is still that of a seller and a buyer. The obligation of the
airline to exercise extraordinary diligence commences upon the issuance of the contract of
carriage.92 Ticketing, as the act of issuing the contract of carriage, is necessarily included in the
exercise of extraordinary diligence.

A contract of carriage is defined as "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."93 In Cathay Pacific Airways v. Reyes:94

[W]hen an airline issues a ticket to a passenger confirmed on a particular flight, on a certain date, a
contract of carriage arises, and the passenger has every right to expect that he would fly on that flight
and on that date. If he does not, then the carrier opens itself to a suit for breach of contract of
carriage.

Once a plane ticket is issued, the common carrier binds itself to deliver the passenger safely on the
date and time stated in the ticket. The contractual obligation of the common carrier to the passenger
is governed principally by what is written on the contract of carriage.

In this case, both parties stipulated96 that the flight schedule stated on the nine (9) disputed tickets
was the 10:05 a.m. flight of July 22, 2008. According to the contract of carriage, respondent's
obligation as a common carrier was to transport nine (9) of the petitioners safely on the 10:05 a.m.
flight of July 22, 2008.

Petitioners, however, argue that respondent was negligent in the issuance of the contract of carriage
since the contract did not embody their intention. They insist that the nine (9) disputed tickets should
have been scheduled for the 4:15 p.m. flight of July 22, 2008. Respondent, on the other hand, denies
this and states that petitioner Jose was fully informed of the schedules of the purchased tickets and
petitioners were negligent when they failed to correct their ticket schedule.

The common carrier's obligation to exercise extraordinary diligence in the issuance of the contract of
carriage is fulfilled by requiring a full review of the flight schedules to be given to a prospective
passenger before payment. Based on the information stated on the contract of carriage, all three (3)
pages were recapped to petitioner Jose.

The only evidence petitioners have in order to prove their true intent of having the entire group on the
4:15 p.m. flight is petitioner Jose's self-serving testimony that the airline failed to recap the last page
of the tickets to him. They have neither shown nor introduced any other evidence before the
Metropolitan Trial Court, Regional Trial Court, Court of Appeals, or this Court.

Even assuming that the ticketing agent encoded the incorrect flight information, it is incumbent upon
the purchaser of the tickets to at least check if all the information is correct before making the
purchase. Once the ticket is paid for and printed, the purchaser is presumed to have agreed to all its
terms and conditions.

Petitioners' flight information was not written in fine print. It was clearly stated on the left portion of
the ticket above the passengers' names. If petitioners had exercised even the slightest bit of
prudence, they would have been able to remedy any erroneous booking.

Most of the petitioners were balikbayans.116 It is reasonable to presume that they were adequately
versed with the procedures of air travel, including familiarizing themselves with the itinerary before
departure. Moreover, the tickets were issued 37 days before their departure from Manila and 39 days
from their departure from Palawan. There was more than enough time to correct any alleged mistake
in the flight schedule.

Petitioners, in failing to exercise the necessary care in the conduct of their affairs, were without a
doubt negligent. Thus, they are not entitled to damages.

Department of Transportation and Communications-Department of Trade and Industry Joint

Administrative Order No. 1, Series of 2012, otherwise known as the Air Passenger Bill of Rights.

Section 4 of the Joint Administrative Order requires airlines to provide the passenger with accurate
information before the purchase of the ticket:

Section 4. Right to Full, Fair, and Clear Disclosure of the Service Offered and All the Terms
and Conditions of the Contract of Carriage. Every passenger shall, before purchasing any ticket
for a contract of carriage by the air carrier or its agents, be entitled to the full, fair, and clear
disclosure of all the terms and conditions of the contract of carriage about to be purchased. The
disclosure shall include, among others, documents required to be presented at check-in, provisions on
check-in deadlines, refund and rebooking policies, and procedures and responsibility for delayed
and/or cancelled flights. These terms and conditions may include liability limitations, claim-filing
deadlines, and other crucial conditions.

4.1 An air carrier shall cause the disclosure under this Section to be printed on or attached to the
passenger ticket and/or boarding pass, or the incorporation of such terms and conditions of carriage
by reference. Incorporation by reference means that the ticket and/or boarding pass shall clearly state
that the complete terms and conditions of carriage are available for perusal and/or review on the air
carrier's website, or in some other document that may be sent to or delivered by post or electronic
mail to the passenger upon his/her request.
....

4.3 Aside from the printing and/or publication of the above disclosures, the same shall likewise be
verbally explained to the passenger by the air carrier and/or its agent/s in English and Filipino, or in a
language that is easily understood by the purchaser, placing emphasis on the limitations and/or
restrictions attached to the ticket.
.....

4.5 Any violation of the afore-stated provisions shall be a ground for the denial of subsequent
applications for approval of promotional fare, or for the suspension or recall of the approval made on
the advertised fare/rate. (Emphasis in the original)

The Air Passenger Bill of Rights recognizes that a contract of carriage is a contract of adhesion, and
thus, all conditions and restrictions must be fully explained to the passenger before the purchase of
the ticket:

Section 4.4 of the Air Passenger Bill of Rights requires that "all rebooking, refunding, baggage
allowance and check-in policies" must be stated in the tickets.

The Air Passenger Bill of Rights acknowledges that "while a passenger has the option to buy or not to
buy the service, the decision of the passenger to buy the ticket binds such passenger[.]"133 Thus, the
airline is mandated to place in writing all the conditions it will impose on the passenger.

However, the duty of an airline to disclose all the necessary information in the contract of carriage
does not remove the correlative obligation of the passenger to exercise ordinary diligence in the
conduct of his or her affairs. The passenger is still expected to read through the flight information in
the contract of carriage before making his or her purchase. If he or she fails to exercise the ordinary
diligence expected of passengers, any resulting damage should be borne by the passenger.