TRANSPORATION LAW OUTLINE SUMMARY

• Common Carriers – Long distance trade is said to be both a symptom and motor of change. It
started with the invention of wheel, then the use of water transport which is the most used during
Spanish Colonial Period. From rapid modern mishap, various transportation were invented like
jeepneys, bus, trains, sea ship, aircraft, plane and likes.

• CONTRACT OF TRANSPORTATION/CARRIAGE – A contract whereby a person, natural or juridical,

obligates to transport persons, goods, or both, from one place to another, by land, air or water, for a
price or compensation.
• PARTIES OF PASSENGER – PASSENGER is defined as one who travels in a public conveyance by
virtue of contract, express or implied, with the CARRIER as to the payment of fare or that which
is accepted as an equivalent thereof.
• PARTIES OF GOODS – The CONSIGNEE is the person to whom the goods are to be delivered.
The consignee may be the SHIPPER himself as in the case where the goods will be delivered to
one of the branch offices of the shipper. However, the consignee may be a third person who is
not actually a party to the contract. CARRIER is the one carrying the goods of the consignee.

1. Baliwag v. CA | GR No. 116110 | May 15, 1996

FACTS:

George, a paying passenger on Baliwag bus, suffered multiple serious physical injuries when he was
thrown off the said bus in a careless and negligent manner by Leonardo Cruz, the bus driver, along Brgy.
Patubig, Marilao, Bulacan, on December 17, 1984; resulting to his confinement in a hospital which
incurred medical expenses of about P200,000 and another incidental fee of P10,000. George’s parents
then filed a complaint for damages arising from breach of contract of carriage on April 10 1985.

Baliwag Transit filed an answer on April 26, 1985, alleging that he caused the injuries sustained with his
sole attribute of voluntary act, without warning or provocation, that he suddenly stood up from his seat
and headed for the door of the bus as if in daze, opened it and jumped off while the bus is still in
motion; in spite of the protestation and without the knowledge of the conductor. Baliwag then filed a
Third-Party complaint against Fortune Insurance & Surety Company, Inc. on its third-party liability
insurance in the amount of P50,000. Fortune Insurance claimed limited liability, the coverage being
subject to a schedule of indemnities forming the part of the insurance policy.

On November 14 and 18 1985, respectively, Fortune and Baliwag each filed a Motion to Dismiss on the
grounds that George, in consideration of the sum of P8,020.50 had executed a “Release of Claims” dated
on May 16, 1985. This motion was denied by the Trial Court in an order dated on January 13, 1986 as
they were filed beyond the time for pleading and answers were already filed.

George’s father opposed the motion to dismiss; he testified that he is the father of George, that at the
time he was still a student, that he is still living and dependent on his parents for support, that his
hospitalization were shouldered by his parents; and that they did not signed the “Realease of Claims”.
RTC ruled on August 29, 1986 that since the contract of carriage is between Baliwag and George, of legal
age, had the exclusive right to execute the Release of Claims despite being dependent on his parents,
making the execution by George of the Release of Claims discharges both Baliwag and Fortune
Insurance.
Aggrieved with this, the parents of George appealed to the CA. On October 2, 1987, Ca rendered a
decision setting aside appealed order and holding that “Release of Claims” cannot operate as valid
ground for the dismissal of the case because it does not have conformity of all the parties, particularly
George’s parents who paid the hospital bills of George, has substantial interest to the case, that the
Release of Claim between George and Fortune for a consideration of P8,020.50 as full and final
settlement to release them from their liability is a breach of contract. The CA also ordered to remand
the case to lower court for trial on the mertis and asked George to return the amount of P8,020.50 to
Fortune Insurance. Baliwag assailed the decision of judgement by filing a Petition for Review on
Certiorari.
ISSUE:

WON the release of claims executed by George has the legal effect to discharge Baliwag and Fortune
Insurance from all liability?

Ruling:

Yes, George is of legal age, a graduating student of Agricultural Engineering, and had the capacity to do
acts with legal effect including to sue and be sued even without assistance of his parents. The suit is of
breach of contract of carriage and the Release of Claims executed by him, as the injured party,
discharging Baliwag and Fortune from any liability is valid.

A real party-in-interest-plaintiff is one who has legal right while a real party-in-interest -defendant is the
one who has correlative obligation whose act or omission violates the right of the former. Absence of
contract between Baliwag and George’s parents, the latter are not real parties-in-interest in an action of
breach of contract.

The phraseology "any and all claims or causes of action" is broad enough to include all damages that
may accrue to the injured party arising from the unfortunate accident. The Release of Claims had the
effect of a compromise agreement since it was entered into for the purpose of making a full and final
compromise adjustment and settlement of the cause of action involved. Cappuccino

• Perfection of Contract

• Contract of Carriage of Passengers

• Contract to carry – agreement to carry the passenger at some future date which is perfected
by mere consent.
• Contract of carriage of common carriage – a real contract and perfected until the facilities of
the carrier are actually used can the carrier be said to have already assumed the obligation of
the carrier

• Aircraft
• there is a perfected contract to carry passengers even if no tickets have been issued to said
passengers as long as there was already a meeting of minds with respect to the subject
matter and the consideration.
• there is a perfected contract of carriage between a passenger and an airline if it can be
established that the passenger had checked in at the departure counter, passed through
 customs and immigration, boarded the shuttle bus and proceeded to the ramp of the
aircraft and that his baggage had already been loaded in the aircraft to be flown with the
passenger to his destination.

• Buses, Jeepney and other street cars. – SC states that once a public utility bus or jeepney stops,
it is in effect making a continuous offer to riders. It is the duty of the drivers to stop their
conveyances for a reasonable length of time to afford passenger to board and enter, and they are
liable for injuries suffered by boarding passenger resulting from sudden starting up carrier.
Liability of carrier is already based on the contract. It follows that the passenger is deemed to be
accepting the offer if he is already attempting to board and it is perfected from that point.

• Trains – Perfected when passenger had a bona fide intention to use the facilities of the carrier,
possess sufficient fare with which to pay for his passage and present to the carrier for
transportation in the place and manner provided. If he does not do so, he will not be considered
a passenger.

• Contract of Carriage of Goods – A consensual contract to carry goods whereby the carrier agrees
to accept and transport goods at some future date, contract is perfected upon their receipt by
the carrier for transportation.

• Common Carrier – 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. (ART 1732, NCC)

Test for determining whether a party is a common carrier of goods:

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

Common Carrier Characteristics. The concept of common carriers contemplated under Article 1732 of
the Civil Code and the feet that the said concept corresponds to the concept of "public service" under
the Public Service Act results in the application of the following rules or principles:
• Article 1732 makes no distinction between one whose principal business activity is the carrying of
persons or goods or both, and one who docs 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.
• Article 1732 does not distinguish between a carrier offering its services to the general public; i.e.,
the general community or population, and one v.1 ho offers services or solicits business only from a
narrow segment of the general population.
• A person or entity id a common carrier and has the obligations of the common carrier under the Civil
Code even if he did not secure a Certificate of Public Conveyance.
• The Civil Code makes no distinction as to the means of transporting, as long as it is by land, water or
air."
• The Civil Code does not provide that the transportation should be by motor vehicle.
• A person or entity may be a common carrier even if he has no fixed and publicly known route,
maintains no terminals, and issues no tickets."
• A person or entity need not be engaged in the business of public transportation for the provisions of
the Civil Code on common carriers to apply to them.

2. British Airways v CA G.R. No. 92288 February 9, 1993

3. Korean Airlines v CA G.R. No. 114061 August 3, 1994

RTC: The RTC of Manila adjudged Korean Airlines liable for damages disposing as followed – Sentencing
the defendant Korean Airlines to pay Juanito C. Lapuz the following:
• P272,160 as actual damages, with legal interest from the date of the filing of the complaint until
fully paid.

CA:
• The RTC decision was modified by the CA.
• The appealed judgment is hereby affirmed.
• KAL (Korean Airlines Co., Ltd) assails the decision of the appellate court on the following grounds:
• That the CA erred in concluding that petitioner committed a breach of contract of carriage
notwithstanding lack of proper competent and sufficient evidence of the existence of such
contract.

SC: The Appealed judgment is AFFIRMED, but with the modification that the legal interest on the
damages awarded to private respondent should commence from the date of the decision of the RTC.
The parties shall bear their own cost.

4. Sps. Fabre v CA, G.R. No. 111127 July 26, 1996

RTC: Amyline Antonio, who was seriously injured, brought this case in the RTC of Makati, Metro Manila.
As a result of the accident, she is now suffering from paraplegia and is permanently paralyze from the
waist down.

RTC Decision: The Court hereby renders judgement against defendants Sps. Fabre and Porfirio Cabil y
Jamid pursuant to Arts. 2176 and 2180 for the Civil Code of the Philippines and said defendants are
ordered to pay jointly / severally to the plaintiffs.

CA Decision: The CA sustained the RTC's finding that petitioner Cabil failed to exercise due care and
precaution in the operation of the vehicle considering the time and the place of the accident. CA held
that the Fabres were themselves presumptively negligent.
SC: This is a petition for review on certiorari of the decision of the CA which affirmed with modification
the decision of the RTC of Makati ordering petitioners jointly / severally to pay damages to private
respondent Amyline Airlines and its resolution which denied petitioner's motion for reconsideration for
lack of merit.

SC Decision: The decision of the CA is AFFIREMED with modification as to award of damages. Petitioners
(Sps. Fabres and Cabil) are ordered to pay Amyline.

5. De Guzman v CA G.R. No. L-47822 December 22, 1988

RTC: On Jan 6, 1971, petitioner commenced action against private respondent in the CFI of Pangasinan,
demanding payment of P22,150, the claimed value of the lost merchandise, plus damages and
attorney's fees. Petitioner argued that petitioner, being a common carrier, and having failed to exercise
the extraordinary diligence required of him by the law.

RTC Decision: On Dec 10, 1975, RTC rendered a decision finding petitioner to be a common carrier and
holding him liable for the value of the undelivered goods (P22,150) as well as for P4,000 as damages and
P2,000 as attorney's fees.

CA Decision: The CA reversed the judgement of the RTC and held that respondent had been engaged in
transporting return loads of freight "as a casual occupation – a sideline to his scrap business" and not as
common carrier.

6. First Phil Industrial Corp. v CA G.R. No. 125948

December 29, 1998

RTC: On June 15, 1994, a complaint for tax refund with prayer for writ of preliminary injunction was filed
on RTC of Batangas against respondents City of Batangas and Adoracion Arellano in her capacity as City
Treasurer.

RTC Decision: RTC rendered a decision dismissing the complaint, ruling: "..Plaintiff is either a contractor
or other independent contractor." ..the exemption to tax claimed by the plaintiff has become unclear.
Exemption may only be granted by clear and unequivocal provisions of law.

CA Decisions: On Nov. 29, 1885, the CA rendered a decision affirming the RTC's dismissal of petitioner's
complaint.

SC: Petitioner moved for a reconsideration which was granted by this Court in a Resolution of Jan 25,
1999. Thus, the petition was reinstated. Petitioner claims that the CA erred in holding that (1) the
petitioner is not a common carrier or a transportation contractor, and (2) the exception sought for by
petitioner is not a clear under the law.

SC Decision: The petition is hereby GRANTED. The decision of the CA dated Nov 29, 1995 is REVERSED
and SET ASIDE.
 7. Asia Lighterage & Shipping v CA G.R. No. 147246
August 19, 2003

RTC: On July 3, 1991, the petitioner filed a complaint against the respondent for recovery of the amount
of indemnity, attorney's fees and cost of suit.

RTC Decision: The RTC ruled in favor of the petitioner. Judgement is hereby rendered ordering
defendant AL&S, Inc. liable to pay plaintiff Prudential Guarantee & Assurance the sum of P4,104,654.22
with interest from the date complaint until fully satisfied plus 10% of the amount awarded as and for
attorney's fees.

CA Decision: The appellate Court affirmed the decision of the RTC with modification. The decision
appealed from is hereby AFFIRMED with modification in the sense that the salvage value of P201,379.75
shall be deducted from the amount of P4,104,654.22.

SC: Petitioner's Motion for Reconsideration dated June 3, 2000 was likewise denied by the appellate
court in a Resolution promulgated on Feb 21, 2001. Hence, this petition. Petitioner submits the
following errors allegedly committed by the Appellate Court. The issues to be resolved are (1) Whether
the petitioner is a common carrier, (2) assuming the petitioner is a common carrier, whether it exercised
extraordinary diligence in its care and custody of the consignee's cargo.

SC Decision: The petition is DENIED. The decision of the CA dated May 11, 2000 and its Resolution Dated
Feb. 21, 2001 are hereby AFFIRMED. Costs against petitioner.

9. Sps. Perena v. Sps. Nicolas, Gr No. 157917, August 29,

2012

FACTS: Perenas were engaged in the business of transporting students to Don Bosco. The Zarates
engaged Perenas services to transport their son, Aaron, to school. While on the way to school, the van’s
air-conditioned unit was turned on and the stereo playing loudly. The driver took a detour because they
were running late due to the traffic in SLEX. The detour was through a narrow path underneath the
Magallanes Interchange used as short cut into Makati. When the van was to traverse the PNR railroad
crossing, the van was tailing a large passenger bus so the driver’s view of the oncoming train was
blocked. The train hit the van at the rear end and the impact threw 9 students 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. The Zarates filed for damages against Alfaro, Perenas, PNR, and the train driver. The cause of
action against Perena was for contract of carriage while for PNR, quasi delict. Perena posited the
defense of diligence of a good father in the selection and supervision of their driver

ISSUE: WON Perenas and PNR jointly and severally liable for damages? Is the petitioner a common
carrier?

RULING: YES. A school bus operator is a common carrier. Perena’s defense of diligence of a good father
in the selection and supervision of their driver is unavailable for breach of contract of carriage. Perenas
operated as a common carrier; and their standard of care was extraordinary diligence, not only diligence
of a good father. A carrier is a person or corporation who undertakes to transport or convey goods from
one place to another, gratuitously or for hire. They may be private or common Private carrier is one
who, 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 gratutitously or for hire. The diligence required of a private carrier is
only ordinary

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. Diligence required is to observe extraordinary diligence, and is presumed to be at
fault or to have acted negligently in case of the loss of effects of passengers, or death or injuries to
passengers. The true test for a common carrier is not the quantity or extent of business actually
transacted, or the number of conveyances, BUT WHETHER the undertaking is a part of the activity that
he has held out to the general public as his business or occupation.

The Perenas 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. Perena, being a
common carrier, was already presumed to be negligent at the time of the accident because death
occurred to their passenger. The omissions of care on the part of the driver constituted negligence.

10. Sps. Cruz v. Sun Holidays, GR No. 186312, 6/29/2010

FACTS: Spouses Cruz files a complaint for damages against Sun Holidays arising from the death of their
son who perished with his wife on board the boat M/B Coco Beach III that capsized en route Batangas
from Puerto Galera where the couple had stayed at Coco Beach Island Resort owned and operated by
respondent. Their stay 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. Eight of the passengers,
including petitioners’ son and his wife, died during the accident. Sun denied any responsibility for the
incident which it considered to be a fortuitous event. Petitioners allege that as a common carrier, Sun
was negligent in allowing the boat to sail despite the storm warning bulletins issued by PAGASA.
Respondent denied being a common carrier, alleging that its boats are not available to the public but are
only used as ferry resort carrier. It also claimed to have exercised the utmost diligence in ensuring the
safety of its passengers, and that contrary to petitioners’ allegation, there was no storm as the Coast
Guard in fact cleared the voyage. M/B Coco Beach III was not filled to capacity and had sufficient life
jackets for its passengers. RTC dismissed the complaint. CA denied the appeal holding that Sun is a
private carrier which is only required to observe ordinary diligence and that the proximate cause of the
incident was a fortuitous event.

ISSUE: WON M/B Coco Beach III breached a contract of carriage

RULING: Respondent is a common carrier. Its ferry services are so intertwined with its 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. In the De Guzman case, Article 1732 of the Civil Code defining “common
carriers” has deliberately refrained from making distinctions on whether the carrying of persons or
goods is the carrier’s principal business, whether it is offered on a regular basis, or whether it is offered
to the general public. Under the Civil Code, common carriers, from the nature of their business and for
reasons of public policy, are bound to observe extraordinary diligence for the safety of the passengers
transported by them, according to all the circumstances of each case. They are bound to carry the
passengers safely as far as human care and foresight can provide, using the utmost diligence of very
cautious persons, with due regard for all the circumstances. When a passenger dies or is injured in the
discharge of a contract of carriage, it is presumed that the common carrier is at fault or negligent. In
fact, there is even no need for the court to make an express finding of fault or negligence on the part of
the common carrier. This statutory presumption may only be overcome by evidence that the carrier
exercised extraordinary diligence.

11. National Steel v. CA, Gr No. Gr No. 112287, 12/71997

FACTS: The MV Vlasons I is a vessel which renders tramping service and, as such, does not transport
cargo or shipment for the general public. Its services are available only to specific persons who enter
into a special contract of charter party with its owner. The ship is a private carrier, and it is in this
capacity that its owner, Vlasons Shipping, Inc. (VSA), entered into a contract of affreightment or contract
of voyage charter hire with National Steel Corporation (NSC) on 17 July 1974, whereby NSC hired VSI’s
vessel, the MV ‘VLASONS I’ to make 1 voyage to load steel products at Iligan City and discharge them at
North Harbor, Manila The shipment was placed in the 3 hatches of the ship which arrived with the cargo
at Pier 12, North Harbor, Manila, on 12 August 1974. The following day, when the vessel’s 3 hatches
containing the shipment were opened by NSC’s agents, nearly all the skids of tinplates and hot rolled
sheets were allegedly found to be wet and rusty. The cargo was discharged and unloaded by stevedores
hired by the Charterer. On 6 September 1974 NSC filed with VSI its claim for damages suffered due to
the downgrading of the damaged tinplates in the amount of P941,145.18. Then on 3 October 1974, NSC
formally demanded payment of said claim but VSI refused and failed to pay. On appeal, and on 12
August 1993, the Court of Appeals modified the decision of the trial court by reducing the demurrage
from P88,000.00 to P44,000.00 and deleting the award of attorney’s fees and expenses of litigation. NSC
and VSI filed separate motions for reconsideration. The CA denied both motions. NSC and VSI filed their
respective petitions for review before the Supreme Court.

ISSUE: WON VSI contracted with NSC as a common carrier or a private carrier.

RULING: Article 1732 of the Civil Code defines a common carrier as “persons, corporations, firms or
associations engaged in the business of carrying or transporting passengers or goods or both, by land,
water, or air, for compensation, offering their services to the public.” It has been held that the true test
of a common carrier is the carriage of passengers or goods, provided it has space, for all who opt to avail
themselves of its transportation service for a fee.

A carrier which does not qualify under the test of a common carrier is deemed a private carrier.
“Generally, private carriage is undertaken by special agreement and the carrier does not hold himself
out to carry goods for the general public. The most typical, although not the only form of private
carriage, is the charter party, a maritime contract by which the charterer, a party other than the
shipowner, obtains the use and service of all or some part of a ship for a period of time or a voyage or
voyages. ”Herein, VSI did not offer its services to the general public. It carried passengers or goods only
for those it chose under a “special contract of charter party.” The MV Vlasons I “was not a common but
a private carrier.” Consequently, the rights and obligations of VSI and NSC, including their respective
liability for damage to the cargo, are determined primarily by stipulations in their contract of private
carriage or charter party.
In Valenzuela Hardwood and Industrial Supply, Inc., vs. Court of Appeals and Seven Brothers Shipping
Corporation, the Court ruled that “in a contract of private carriage, the parties may freely stipulate their
duties and obligations which perforce would be binding on them. Unlike in a contract involving a
common carrier, private carriage does not involve the general public. Hence, the stringent provisions of
the Civil Code on common carriers protecting the general public cannot justifiably be applied to a ship
transporting commercial goods as a private carrier. Consequently, the public policy embodied therein is
not contravened by stipulations in a charter party that lessen or remove the protection given by law in
contracts involving common carriers.”

From the parties’ Contract of Voyage Charter Hire, dated 17 July 1974, VSI “shall not be responsible for
losses except on proven willful negligence of the officers of the vessel.” The NANYOZAI Charter Party,
which was incorporated in the parties’ contract of transportation further provided that the shipowner
shall not be liable for loss of or damage to the cargo arising or resulting from unseaworthiness, unless
the same was caused by its lack of due diligence to make the vessel seaworthy or to ensure that the
same was “properly manned, equipped and supplied,” and to “make the holds and all other parts of the
vessel in which cargo was carried, fit and safe for its reception, carriage and preservation.” The
NANYOZAI Charter Party also provided that “owners shall not be responsible for split, chafing and/or
any damage unless caused by the negligence or default of the master or crew.”

Herein, NSC must prove that the damage to its shipment was caused by VSI’s willful negligence or failure
to exercise due diligence in making MV Vlasons I seaworthy and fit for holding, carrying and safekeeping
the cargo. Ineluctably, the burden of proof was placed on NSC by the parties’ agreement. Article 361 of
the Code of Commerce provides that “Merchandise shall be transported at the risk and venture of the
shipper, if the contrary has not been expressly stipulated. Therefore, the damage and impairment
suffered by the goods during the transportation, due to fortuitous event, force majeure, or the nature
and inherent defect of the things, shall be for the account and risk of the shipper. The burden of proof of
these accidents is on the carrier.”
Article 362 of the Code of Commerce provides that “The carrier, however, shall be liable for damages
arising from the cause mentioned in the preceding article if proofs against him show that they occurred
on account of his negligence or his omission to take the precautions usually adopted by careful persons,
unless the shipper committed fraud in the bill of lading, making him to believe that the goods were of a
class or quality different from what they really were.”

As the MV Vlasons I was a private carrier, the shipowner’s obligations are governed by the foregoing
provisions of the Code of Commerce and not by the Civil Code which, as a general rule, places the prima
facie presumption of negligence on a common carrier.

The Supreme Court denied the consolidated petitions; and affirmed the questioned Decision of the
Court of Appeals with the modification that the demurrage awarded to VSI is deleted. No
pronouncement as to costs.

Charter-Party is defined as a contract by which an entire ship or some principal part thereof, is let by the
owner to another person for a specified time or use.
• Contract of affreightment which involves the use of shipping space on vessels leased by the
owner in part or as a whole, to carry goods for others
 • Charter by demise or bareboat charter, by the terms of which the whole vessel is let to the
charterer with a transfer to him of its entire command and possession and consequent control
over its navigation, including the master and the crew, who are his servants.

Private Carrier involving the carriage of the goods for a fee, the person or corporation offering such
service is a private carrier.

The distinction between a "common or public carrier" and a "private or special carrier" lies in the
character of the business, such that if the undertaking is a single transaction, not a part of a general
business or occupation.

n towage, one vessel is hired to bring another vessel to another place. Thus, a tugboat may be hired by a
common carrier to bring a barge to a port. In this case, the operator of the tugboat cannot be
considered a common carrier. In maritime law, it refers to a service rendered to a vessel by towing for
the mere purpose of expediting her voyage without reference to any circumstances of danger. It is
usually confined to vessels that have received no injury or damages.

12. Filcar Transport v Espinas G.R. No. 174156 June 20,

2012

FACTS: Espinas, while driving, was hit by another car. The other car escaped from the scene of the
incident, but Espinas was able to get its plate number. After verifying with the Land Transportation
Office, Espinas learned that the owner of the other car, with plate number UCF-545, is Filcar. After
sending several letters to Filcar and to its President and General Manager Carmen Flor, demanding
payment for the damages sustained by his car without response, Espinas filed a complaint for damages
against Filcar and Carmen Flor demanding the amount of P97,910.00, representing actual damages
sustained by his car on MeTC Manila. Filcar argued that while it is the registered owner of the car that
hit and bumped Espinas’ car, the car was assigned to its Corporate Secretary Atty. Candido Flor, the
husband of Carmen Flor. Filcar further stated that when the incident happened, the car was being driven
by Atty. Flor’s personal driver, Timoteo Floresca. Filcar denied any liability to Espinas’ and claimed that
the incident was not due to its fault or negligence since Floresca was not its employee but that of Atty.
Flor. Filcar and Carmen Flor.

~MeTC Decision: Ruled in favor of Espinas, ordered Filcar and Carmen Flor, joinly and severally, to pay P
97,000 (actual damages for repair 6% yearly interest from the date which the complaint was filed), P
50,000 (moral damages), P 20 000 (exemplary damages); and P 20,000 (attorney’s fees). It is ruled that
Filcar, as the registered owner of the vehicle, is primarily responsible for damages resulting from the
vehicle’s operation.

~RTC Decision: It ruled that Filcar failed to prove that Floresca was not one of its employees and there’s
no proof that Atty. Flor hired Floresca. Only recourse is to determine the owner, through the vehicle’s
registration, and to hold him responsible for the damages.

~CA Decision: CA modified RTC decision by ruling that Carmen Flor cannot be personally liable to
Espinas. CA pointed that the liability of a corporation is not the liability of its corporate officers because
a corporate entity has a separate and distinct personality from its officers and shareholders. However,
CA still affirmed the liability of Filcar to pay Espinas damages. Filcar filed a motion for reconsideration.
ISSUE: WON Filcar, as registered owner of the motor vehicle which figured in an accident, may be held
liable for the damages caused to Espinas.

RULING: Yes. Filcar, as registered owner, is deemed the employer of the driver, Floresca, and is thus
vicariously liable under Article 2176 in relation with Article 2180 of the Civil Code As a general rule, one
is only responsible for his own act or omission.

Thus, a person will generally be held liable only for the torts committed by himself and not by another.
The law, however, provides for exceptions that an employer is made vicariously liable for the tort
committed by his employee. Article 2180 of the Civil Code states:

Article 2180. The obligation imposed by Article 2176 is demandable not only for one’s own acts or
omissions, but also for those of persons for whom one is responsible. Employers shall be liable for the
damages caused by their employees and household helpers acting within the scope of their assigned
tasks, even though the former are not engaged in any business or industry.

Under Article 2176, in relation with Article 2180, of the Civil Code, an action predicated on an
employee’s act or omission may be instituted against the employer who is held liable for the negligent
act or omission committed by his employee. It is well settled that in case of motor vehicle mishaps, the
registered owner of the motor vehicle is considered as the employer of the tortfeasor-driver, and is
made primarily liable for the tort committed by the latter under Article 2176, in relation with Article
2180, of the Civil Code.

Filcar is not be permitted to evade its liability for damages by conveniently passing on the blame to
another party; in this case, its Corporate Secretary, Atty. Flor and his alleged driver, Floresca.

WHEREFORE, the petition is DENIED. The decision the Court of Appeals are AFFIRMED. Costs against
petitioner Filcar Transport Services.

13. Duavit v. CA, Gr No. 82318, 5/18/1989

FACTS: Private respondents were on board a jeep when they met an accident with another jeep driven
by Oscar Sabiniano. This accident caused casualties to the vehicle and injuries to private respondents;
thus, they filed a case for damages against driver Salbiniano and owner of the jeep Gualberto Duavit.
Duavit admits ownership of the jeep but contends that he should not be held liable since Salbiniano is
not his employee and that the jeep was taken by Salbiniano without his (Duavit) consent.

~RTC Decision: It found Salbiniano was negligent in driving the vehicle but found no liability over Duavit
because there exists employee-employer relationship between them. It was also found out that Salbiano
was a government employee and he took the vehicle without the consent from Duavit. Private
respondents appealed for the case.

~CA Decision: Appellate court denied the motion for reconsideration of the petitioner. Appellate court
renedered the question decision holding the petitioner jointly and severally liabile with Sabiano. They
partly ruled that in Vargas vs. Langcay, that 'We must hold and consider such owner-operator of record
(registered owner) as the employer in contemplation of law, of the driver' it cannot be construed other
than that the registered owner Duavit is the employer of the driver in CONTEMPLATION of law. Duavit
petitioned the case further to the SC.
ISSUE: WON the owner of a private vehicle which figured in an accident can be held liable as an
employer when the said vehicle was neither driven by an employee of the owner nor taken with his
consent.

RULING: No, an owner of a vehicle cannot be held liable for an accident involving the said vehicle if the
same was driven without his consent or knowledge and by a person not employed by him.

To hold the petitioner liable for the accident caused by the negligence of Sabiniano who was neither his
driver nor employee would be absurd as it would be like holding liable the owner of a stolen vehicle for
an accident caused by the person who stole such vehicle. Petitioned is GRANTED, decision and
resolution from appeal are ANULLED and SET ASIDE. Decision of the RTC is REINSTATED.

14. PCI Leasing v UCPB G.R. No. 162267 July 4, 2008

FACTS: On October 19, 1990 at about 10:30 p.m., a Mitsubishi Lancer car owned by United Coconut
Platers Bank (UCPB) was traversing the Laurel Highway, Barangay Balintawak, Lipa City. The car was
insured with plantiff-appellee [UCPB General Insurance Inc.] that was driven by Flaviano Isaac together
with UCPB Assistant Manager Conrado Geronimo, was hit and bumped by an 18-wheeler Fuso Tanker
Truck which was 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 Isaac and Geronimo suffered physical injuries. However, the 18-wheeler truck driver
Gonzaga continued on its way to its destination and did not bother to bring his victims to the hospital.

UCPB General Insurance Inc. paid the assured Mitsubishi Lancer of UCPB the amount of P 244,500.00
representing the insurance coverage of the damaged car.

As the 18-wheeler truck is registered under the name of PCI Leasing, repeated demands were made by
UCPB General Insurance Inc. for the payment of the aforesaid amounts. However, no payment was
made. Thus, UCPB General Insurance Inc. filed the instant case on March 13, 1991.

PCI Leasing and Finance, Inc., interposed the defense that it could not be held liable for the collision,
since the driver of the truck, Gonzaga, was not its employee, but that of its co-defendant Superior Gas &
Equitable Co., Inc. (SUGECO). In fact, it was SUGECO, and not PCI, that was the actual operator of the
truck, pursuant to a Contract of Lease signed by petitioner and SUGECO. PCI, however, admitted that it
was the owner of the truck in question.

~RTC Decision: Judgement is ruled in favor of plaintiff UCPB General Insurance Inc., ordering PCI Leasing
and Finance, Inc. and Gonzaga to pay the former, jointly and severally, the amounts: (1) P 244,500 as
principal amount with 12% annual interest from the filled complaint, (2) P 50,000 as attorney fees; and
(3) P 20,000 as cost of suit. Aggrieved by the decision, petitioner appealed to the CA.

~CA Decision: CA affirmed RTC’s decision with modification of deleting attorney fees and changing the
annual interest of 6% from 12%. Petitioner filed a Motion for Reconsideration, hence, this petition for
review.
ISSUE: Whether petitioner, as a financing company, is absolved from liability by the enactment of RA No.
8556, or the Financing Company Act of 1998.

RULING: 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.

Petitioner’s argument that the enactment of R.A. No. 8556, especially its addition of the new Sec. 12 to
the old law, is deemed to have absolved petitioner from liability, fails to convince the Court.

These developments, indeed, point to a seeming emancipation of financing companies from the
obligation to compensate claimants for losses suffered from the operation of vehicles covered by their
lease. Such, however, are not applicable to petitioner and do not exonerate it from liability in the
present case.

The new law, R.A. No. 8556, notwithstanding developments in foreign jurisdictions, does 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
The non-registration of the lease contract between petitioner and its lessee precludes the former from
enjoying the benefits under Section 12 of R.A. No. 8556.

This ruling may appear too severe and unpalatable to leasing and financing companies, but the Court
believes that petitioner and other companies so situated are not entirely left without recourse. They
may resort to third-party complaints against their lessees or whoever are the actual operators of their
vehicles. In the case at bar, there is, in fact, a provision in the lease contract between petitioner and
SUGECO to the effect that the latter shall indemnify and hold the former free and harmless from any
“liabilities, damages, suits, claims or judgments” arising from the latter's use of the motor vehicle.
Petition is DENIED, decision and resolution of the CA is AFFIRMED.

15. Teja Maketing v. IAC, GR No. L-65510, 3/9/1987

FACTS: Pedro Nale bought from Teja Marketing a motorcycle with complete accessories and a sidecar. A
chattel mortgage was constituted as a security for the payment of the balance of the purchase price.
The records of the Land Transportation Commission show that the motorcycle sold to the defendant
was first mortgaged to the Teja Marketing by Angel Jaucian though the Teja Marketing and Angel
Jaucian are one and the same, because it was made to appear that way only as the defendant had no
franchise of his own and he attached the unit to the plaintiff’s MCH Line. The agreement also of the
parties here was for the plaintiff to undertake the yearly registration of the motorcycle with the Land
Transportation Commission. The plaintiff, however failed to register the motorcycle on that year on the
ground that the defendant failed to comply with some requirements such as the payment of the
insurance premiums and the bringing of the motorcycle to the LTC for stenciling, the plaintiff said that
the defendant was hiding the motorcycle from him. Lastly, the plaintiff also explained that though the
ownership of the motorcycle was already transferred to the defendant, the vehicle was still mortgaged
with the consent of the defendant to the Rural Bank of Camaligan for the reason that all motorcycle
purchased from the plaintiff on credit was rediscounted with the bank.
Teja Marketing made demands for the payment of the motorcycle but just the same Nale failed to
comply, thus forcing Teja Marketing to consult a lawyer and file an action for damage before the City
Court of Naga in the amount of P546.21 for attorney’s fees and P100.00 for expenses of litigation. Teja
Marketing also claimed that as of 20 February 1978, the total account of Nale was already P2, 731, 05 as
shown in a statement of account; includes not only the balance of P1, 700.00 but an additional 12%
interest per annum on the said balance from 26 January 1976 to 27 February 1978; a 2% service charge;
and P546.21 representing attorney’s fees. On his part, Nale did not dispute the sale and the outstanding
balance of P1,700.00 still payable to Teja Marketing; but contends that because of this failure of Teja
Marketing to comply with his obligation to register the motorcycle, Nale suffered damages when he
failed to claim any insurance indemnity which would amount to no less than P15,000.00 for the more
than 2 times that the motorcycle figured in accidents aside from the loss of the daily income of P15.00
as boundary fee beginning October 1976 when the motorcycle was impounded by the LTC for not being
registered.

~RTC Decision: The City Court rendered judgment in favor of Teja Marketing, dismissing the
counterclaim, and ordered Nale to pay Teja Marketing

~CA Decision: On appeal to the Court of First Instance of Camarines Sur, the decision was affirmed in
toto. Nale filed a petition for review with the Intermediate Appellate Court. On 18 July 1983, the
appellate court set aside the decision under review on the basis of doctrine of “pari delicto,” and
accordingly, dismissed the complaint of Teja Marketing, as well as the counterclaim of Nale; without
pronouncements as to costs. Hence, the petition for review was filed by Teja Marketing and/or Angel
Jaucian.

ISSUE: WON respondent court erred in applying the doctrine of “pari delicto”?

RULING: No. Kabit system is contrary to public policy and, therefore, void and in existent under Article
1409 of the Civil Code; the court will not aid either party to enforce an illegal contract, but will leave
both where it finds then

Art. 1412: “If the act in which the unlawful or forbidden cause consists does not constitute a criminal
offense, the following rules shall be observed: 1. When the fault is on the part of both contracting
parties, neither may recover that he has given by virtue of the contract, or demand, the performance of
the other’s undertaking.” Petition is DISMISSED for lack of merit, decision in Intermediate Appellate
Court is AFFIRMED.

16. Lita Enterprises v IAC G.R. No. L-64693 April 27, 1984

FACTS: Sometime in 1966, the spouses Nicasio M. Ocampo and Francisca Garcia, herein private
respondents, purchased in installment from the Delta Motor Sales Corporation five (5) Toyota Corona
Standard cars to be used as taxicabs. Since they had no franchise to operate taxicabs, they contracted
with petitioner Lita Enterprises, Inc., through its representative, Manuel Concordia, for the use of the
latter's certificate of public convenience in consideration of an initial payment of P1,000.00 and a
monthly rental of P200.00 per taxicab unit. To effectuate Id agreement, the aforesaid cars were
registered in the name of petitioner Lita Enterprises, Inc, Possession, however, remained with tile
spouses Ocampo who operated and maintained the same under the name Acme Taxi, petitioner's trade
name.
About a year later one of said taxicabs driven by their employee, Emeterio Martin, collided with a
motorcycle whose driver, one Florante Galvez, died from the head injuries sustained therefrom. A
criminal case was eventually filed against the driver Emeterio Martin, while a civil case for damages was
instituted by Rosita Sebastian Vda. de Galvez, heir of the victim, against Lita Enterprises, Inc., as
registered owner of the taxicab in the latter case. Petitioner Lita Enterprises, Inc. was adjudged liable for
damages by the CFI.
This decision having become final, a writ of execution was issued. Two of the vehicles of respondent
spouses were levied upon and sold at public auction.

Thereafter, Nicasio Ocampo decided to register his taxicabs in his name. He requested the manager of
petitioner Lita Enterprises, Inc. to turn over the registration papers to him, but the latter allegedly
refused. Hence, he and his wife filed a complaint against Lita Enterprises, Inc., Mrs. de Galvez and the
Sheriff of Manila for reconveyance of motor vehicles with damages.

~RTC Decision: Complaint is dismissed. Defendant Lita Enterprises, Inc. is ordered to transfer the
registration certificate of the three Toyota cars not levied upon by executing a deed of conveyance in
favor of the plaintiff. Plaintiff is ordered to pay Lita Enterprices, Inc., the rentals in arrears for the
certificate of convenience from March to May 1973 at rate of P 200 a month per unit for the three cars.

~CA Decision: Upon appeal by petitioner, the Intermediate Appellate Court modified the decision of the
event the condition of three Toyota rears will no longer serve the purpose of the deed of conveyance
because of their deterioration, or because they are no longer serviceable, or because they are no longer
available, then Lita Enterprices Inc., is ordered to pay the plaintiffs their fair market value as of July 22,
1975. Petitioner prayed for the additional paragraph added by respondent to the decision of lower
courts (CFI) be deleted and that private respondent be declared liable for whatever amount the latter
has paid in CFI.

ISSUE: Whether or not petitioner can recover from private respondent, knowing they are in an
arrangement known as “kabit system”.

RULING: No. Unquestionably, the parties herein operated under an arrangement, commonly known as
the "kabit system", whereby a person who has been granted a certificate of convenience allows another
person who owns motors vehicles to operate under such franchise for a fee. A certificate of public
convenience is a special privilege conferred by the government. Abuse of this privilege by the grantees
thereof cannot be countenanced. The "kabit system" has been Identified as one of the root causes of
the prevalence of graft and corruption in the government transportation offices. In the words of Chief
Justice Makalintal, "this is a pernicious system that cannot be too severely condemned. It constitutes an
imposition upon the good faith of the government. Proceedings between Sps Ocampo and Garcia vs. Lita
Enterprises Inc., is ANNULLED and SET ASIDE.

17. Abelardo Lim v CA, G.R. No. 125817 January 16, 2002

Facts: Private respondent Gonzales purchased an Isuzu passenger jeepney from Gomercino Vallarta, a
holder of a certificate of public convenience for the operation of a public utility vehicle for Monumento-
Bulacan route.
Gonzales continued to operate the public transport business without transferring the registration of the
vehicle to his name, making the original owner remained to be the registered owner and operator of the
vehicle.

Unfortunately, the vehicle got involved in a road mishap which caused it severe damage. The ten-
wheeler-truck which caused the accident was owned by petitioner Lim and was driven by co-petitioner
Gunnaban. Gunnaban admitted responsibility for the accident, so that petitioner Lim shouldered the
costs of hospitalization of those wounded, compensation for the heirs of the deceased passenger and
the restoration of the other vehicle involved.

He also negotiated for the repair of the private respondent's jeepney but the latter refused so Lim
offered, 20,000 pesos as estimated sum for the repair from his mechanic. The private respondent
refused and insisted for a brand new jeepney amounting P 236,000. With this, Lim negotiated again and
raised the amount for P 40,000 but still the respondent was unyielding. Under the circumstances,
negotiations had to be abandoned. Hence, private respondent filed a complaint for damages against
petitioners. Meanwhile, the jeepney was left by the roadside to corrode and decay.

~RTC Decision: The trial court decided in favor of private respondent and awarded him his claim of P
236,000 as compensatory damges and P 30,000 for attorney fees.

~CA Decision: On appeal, the Court of Appeals affirmed the decision of the trial court from upholding
the decision of the court a quo the appeals court concluded that while an operator under the kabit
system could not sue without joining the registered owner of the vehicle as his principal, equity
demanded that the present case be made an exception. Hence, petitioner filed this petition. Petitioner
further contend that the jeepney was bought at the price of P 30,000 and granting the P 236,000 would
be unjust enrichment.

ISSUE: WON the new owner of a passenger jeepney who continued to operate the same under the so-
called kabit system and in the course thereof met an accident has the legal personality to bring the
action for damages against the erring vehicle.

RULING: Yes. According to the Court, the thrust of the law in enjoining the kabit system is not much as
to penalize the parties but to identify the person upon whom responsibility may be fixed in case of an
accident with the end view of protecting the riding public. In the present case, it is once apparent that
the evil sought to be prevented in enjoining the kabit system does not exist.

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

Hence, the private respondent has the right to proceed against petitioners for the damage caused on his
passenger jeepney as well as on his business. Although the jeepney was bought for P 30,000 in 1982,
petitioners are reminded by the court that indemnification for damages comprehends not only the value
of the loss suffered but also that of the profits which the obligee failed to obtain. In other words,
indemnification for damages is not limited to damnum emergens or actual loss but extends to lucrum
cessans or the amount of profit lost.

Decision of CA is modified with including a 6% annual interest of compensatory damages til the finality
of this decision. If adjuged principal remain paid thereafter, it will be raised to 12%.

18. Trans-Asia Shipping Lines, Inc. vs. CA; GR No.

118126; March 4, 1996

FACTS: Atty. Renato Arroyo, a public attorney, bought a ticket [from] TRANS-ASIA SHIPPING LINES, for
the voyage of M/V Asia Thailand vessel to Cagayan de Oro City from Cebu City. At around 5:30 in the
evening of November 12, 1991, Atty. Renato boarded the M/V Asia Thailand vessel. At that instance, he
noticed that some repair works were being undertaken on the engine of the vessel. The vessel departed
at around 11:00 in the evening with only one (1) engine running. After an hour of slow voyage, the
vessel stopped near Kawit Island and dropped its anchor. After half an hour of stillness, some passengers
demanded that they should be allowed to return to Cebu City for they were no longer willing to
continue their voyage to, Cagayan de Oro City. The captain agreed to their request and thus the vessel
headed back to Cebu City.

At Cebu City, Atty. Renato together with the other passengers who requested to be brought back to
Cebu City, were allowed to disembark. Thereafter, the vessel proceeded to Cagayan de Oro City. Atty.
Renato, the next day, boarded the M/V Asia Japan for its voyage to Cagayan de Oro City.

On account of this failure of Trans Asia to transport him to the place of destination on November 12,
1991, Atty. Renato filed before the trial court a complaint for damages against Trans Asia.

~RTC Decision: It ruled that the action was only for breach of contract, with Articles 1170, 1172, and
1173 of the Civil Code as applicable law — not Article 2180 of the same Code.

It was of the opinion that Article 1170 made a person liable for damages if, in the performance of his
obligation, he was guilty of fraud, negligence, or delay, or in any manner contravened the tenor thereof;

moreover, pursuant to Article 2201 of the same Code, to be entitled to damages, the non-performance
of the obligation must have been tainted not only by fraud, negligence, or delay, but also bad faith,
malice, and wanton attitude.

the complaint is DISMISSED.

~CA Decision: The CA reversed the RTC’s decision by applying Article 1755 in relation to Articles 2201,
2208, 2217, and 2232 of the Civil Code and, accordingly, awarded compensatory, moral, and exemplary
damages. Ordering defendant-appellee to pay Atty. Renato.

Atty. Renato should not be faulted why he chose to disembark from the vessel with the other
passengers when it returned back to Cebu City. Defendant-appellee may call him a very "panicky
passenger" or a "nervous person", but this will not relieve defendant-appellee from the liability it
incurred for its failure to exercise utmost diligence.
ISSUE:

• WON there was a breach of contract of a common carrier.

• WON private respondent entitled for damages.

RULING:

• Yes. Undoubtedly, there was, between the petitioner and the private respondent, a contract of
common carriage. Under Article 1733 of the Civil Code, Trans Asia was bound to observe
extraordinary diligence in ensuring the safety of the private respondent. That meant that the
petitioner was, pursuant to Article 1755 of the said Code, bound to carry the private respondent
safely as far as human care and foresight could provide, using the utmost diligence of very
cautious persons, with due regard for all the circumstances. In this case, we are in full accord
with the Court of Appeals that the petitioner failed to discharge this obligation.

• No. Article 1764 of the Civil Code expressly provides:

Art. 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 common carrier.

The damages comprised in Title XVIII of the Civil Code are actual or compensatory, moral,
nominal, temperate or moderate, liquidated, and exemplary. Under Article 2208 of the Civil
Code, these are recoverable only in the concept of actual damages, not as moral damages nor
judicial costs.

WHEREFORE, the instant petition is DENIED and the challenged decision of the Court of Appeals
in CA-G.R. CV No. 39901 is AFFIRMED subject to the modification as to the award for attorney's
fees which is hereby SET ASIDE. Costs against the petitioner

19. Delsan Transport v American Home; GR No. 149019;

August 15, 2006

FACTS: Delsan is a domestic corporation which owns and operates the vessel MT Larusan. On the other
hand, respondent American Home Assurance Corporation (AHAC) is a foreign insurance company. On
August 5, 1984, Delsan received on board MT Larusan a shipment consisting of 1,986.627 k/l Automotive
Diesel Oil (diesel oil) at the Bataan Refinery Corporation for transportation and delivery to the bulk
depot in Bacolod City of Caltex Phils., Inc. (Caltex), pursuant to a Contract of Affreightment. The
shipment was insured by respondent AHAC against all risks.
On August 7, 1984, the shipment arrived in Bacolod City. Immediately, unloading operations
commenced. The discharging had to be stopped on account of the discovery that the port bow mooring
of the vessel was intentionally cut or stolen by unknown persons. Because there was nothing holding it,
the vessel drifted westward, dragged and stretched the flexible rubber hose attached to the riser, broke
the elbow into pieces, severed completely the rubber hose connected to the tanker from the main
delivery line at sea bed level and ultimately caused the diesel oil to spill into the sea. The loss of diesel
oil due to spillage was placed at 113.788 k/l while some 435,081 k/l thereof backflowed from the shore
tank.
As a result of spillage and backflow of diesel oil, Caltex sought recovery of the loss from Delsan, but the
latter refused to pay. As insurer, AHAC paid Caltex the sum of P479,262.57 for spillage, pursuant to
Marine Risk Note No. 34-5093-6, and P1,939,575.37 for backflow of the diesel oil pursuant to Inland
Floater Policy No. AH-1F64-1011549P.
AHAC, as Caltex’s subrogee, instituted Civil Case No. 85-29357 against Delsan before the Manila RTC,
Branch 9, for loss caused by the spillage. It likewise prayed that it be indemnified for damages suffered
in the amount of P652,432.57 plus legal interest.
~RTC RULING: The trial court rendered its decision in favor of AHAC holding Delsan liable for the loss of
the cargo for its negligence in its duty as a common carrier. In time, Delsan appealed to the CA whereat
its recourse was docketed as CA-G.R. CV No. 40951.

~CA RULING: The CA affirmed the findings of the trial court. In so ruling, the CA declared that Delsan
failed to exercise the extraordinary diligence of a good father of a family in the handling of its cargo.
Applying Article 1736 of the Civil Code, the CA ruled that since the discharging of the diesel oil into
Caltex bulk depot had not been completed at the time the losses occurred, there was no reason to imply
that there was actual delivery of the cargo to Caltex, the consignee. We quote the fallo of the CA
decision: WHEREFORE, premises considered, the appealed Decision of the Regional Trial Court of
Manila, Branch 09 in Civil Case Nos. 85-29357 and 85-30559 is hereby AFFIRMED with a modification
that attorney’s fees awarded in Civil Case Nos. 85-29357 and 85-30559 are hereby DELETED. Delsan is
now before the Court raising substantially the same issues proffered before the CA.

ISSUE: WON Delsan failed to prove its claim that there was a contributory negligence on the part of the
owner of the goods – Caltex.

RULING: Yes. Article 1734 of the Civil Code enumerates the instances when the presumption of
negligence does not attach:

Art. 1734. Common carriers are responsible for the loss, destruction, or deterioration of the goods,
unless the same is due to any of the following causes only:

• Flood storm, earthquake, lightning, or other natural disaster or calamity;

• Act of the public enemy in war, whether international or civil;
 • Act or omission of the shipper or owner of the goods;
• The character of the goods or defects in the packing or in the containers;
• Order or act of competent public authority.
It had been settled that the subject cargo was still in the custody of Delsan because the discharging
thereof has not yet been finished when the backflow occurred. Since the discharging of the cargo into
the depot has not yet been completed at the time of the spillage when the backflow occurred, there is
no reason to imply that there was actual delivery of the cargo to the consignee.
Delsan, being a common carrier, should have exercised extraordinary diligence in the performance of its
duties. Consequently, it is obliged to prove that the damage to its cargo was caused by one of the
excepted causes if it were to seek exemption from responsibility. Having failed to do so, Delsan must
bear the consequences. petition is DENIED assailed decision of the CA is AFFIRMED Cost against
petitioner.
20. La Mallorca v CA; GR No. L-20761; July 27, 1966

FACTS: At about noontime, plaintiffs, husband and wife, together with their minor daughters, namely,
Milagros, 13 years old, Raquel, about 4½ years old, and Fe, over 2 years old, boarded the Pambusco Bus
No. 352, bearing plate TPU No. 757 (1953 Pampanga), owned and operated by the defendant, at San
Fernando, Pampanga, bound for Anao, Mexico, Pampanga.

After about an hour's trip, the bus reached Anao whereat it stopped to allow the passengers bound
therefor, among whom were the plaintiffs and their children to get off. Afterwards, he returned to the
bus in controversy to get his other bayong, which he had left behind, but in so doing, his daughter
Raquel followed him, unnoticed by her father. While said Mariano Beltran was on the running board of
the bus waiting for the conductor to hand him his bayong which he left under one of its seats near the
door, the bus, whose motor was not shut off while unloading, suddenly started moving forward,
evidently to resume its trip, notwithstanding the fact that the conductor has not given the driver the
customary signal to start, since said conductor was still attending to the baggage left behind by Mariano
Beltran. Incidentally, when the bus was again placed into a complete stop, it had travelled about ten
meters from the point where the plaintiffs had gotten off.
Sensing that the bus was again in motion, Mariano Beltran immediately jumped from the running board
without getting his bayong from the conductor. He landed on the side of the road almost in front of the
shaded place where he left his wife and children. At that precise time, he saw people beginning to
gather around the body of a child lying prostrate on the ground, her skull crushed, and without life. The
child was none other than his daughter Raquel, who was run over by the bus in which she rode earlier
together with her parents.
For the death of their said child, the plaintiffs commenced the present suit against the defendant
seeking to recover from the latter an aggregate amount of P16,000 to cover moral damages and actual
damages sustained as a result thereof and attorney's fees. After trial on the merits, the court below
rendered the judgment in question.
~RTC DECISION: The trial court found defendant liable for breach of contract of carriage and sentenced
it to pay P3,000.00 for the death of the child and P400.00 as compensatory damages representing burial
expenses and costs.
~CA DECISION: The Court of Appeals did not only find the petitioner liable, but increased the damages
awarded the plaintiffs-appellees to P6,000.00, instead of P3,000.00 granted by the trial court.

ISSUE: WON the child, who was already led by the father to a place about 5 meters away from the bus,
the liability of the carrier for her safety under the contract of carriage.

RULING: It has been recognized as a rule that the relation of carrier and passenger does not cease at the
moment the passenger from the carrier's vehicle at a place selected by the carrier at the point of
destination, but continues until the passenger has had a reasonable time or a reasonable opportunity to
leave the carrier's premises. And, what is a reasonable time or a reasonable delay within this rule is to
be determined from all the circumstances. Thus, a person who, after alighting from a train, walks along
the station platform is considered still a passenger. In the circumstances, it cannot be claimed that the
carrier's agent had exercised the "utmost diligence" of a "very cautions person" required by Article 1755
of the Civil Code to be observed by a common carrier in the discharge of its obligation to transport safely
its passengers. The presence of said passengers near the bus was not unreasonable and they are,
therefore, to be considered still as passengers of the carrier, entitled to the protection under their
contract of carriage.

The decision of the Court of Appeals is hereby modified by sentencing, the petitioner to pay to the
respondents Mariano Beltran, et al., the sum of P3,000.00 for the death of the child, Raquel Beltran, and
the amount of P400.00 as actual damages. No costs in this instance. So ordered.

21. Kapalaran v Coronado; GR No. 85331; Aug 25, 1989

FACTS: The accident happened on the National Highway at 10:30 A.M. on August 2, 1982. The jeepney
driven by Lope Grajera was then corning from Pila, Laguna on its way towards the direction of Sta. Cruz,
traversing the old highway. As it reached the intersection where there is a traffic sign 'yield,' it stopped
and cautiously treated the intersection as a "Thru Stop' street, which it is not. The KBL bus was on its
way from Sta. Cruz, Laguna, driven by its regular driver Virgilio Llamoso, on its way towards Manila. The
regular itinerary of the KBL bus is through the town proper of Pila, Laguna, but at times it avoids this if a
bus is already fully loaded with passengers and can no longer accommodate additional passengers. As
the KBL bus neared the intersection, Virgilio Llamoso inquired from his conductor if they could still
accommodate passengers and learning that they were already full, he decided to bypass Pila and
instead, to proceed along the national highway. Virgilio Llamoso admitted that there was another motor
vehicle ahead of him.

The general rule is that the vehicle on the national highway has the right-of-way as against a feeder
road. Another general rule is that the vehicle coming from the right has the right-of-way over the vehicle
coming from the left. The general rules on right-of-way may be invoked only if both vehicles approach
the intersection at almost the same time. In the case at bar, both roads are national roads. Also, the KBL
bus was still far from the intersection when the jeepney reached the same. As testified to by Atty.
Conrado L. Manicad who was driving a Mustang car coming from the direction of Sta. Cruz and
proceeding towards the direction of Manila, he stopped at the intersection to give way to the jeepney
driven by Grajera. Behind Manicad were two vehicles, a car of his client and another car. A Laguna
Transit bus had just entered the town of Pila ahead of Atty. Manicad.

The KBL bus ignored the stopped vehicles of Atty. Manicad and the other vehicles behind Atty. Manicad
and overtook both vehicles at the intersection, therefore, causing the accident. the road was clear, the
jeepney which had stopped at the intersection began to move forward, and for his part, Atty. Manicad
stopped his car at the intersection to give way to the jeepney. At about this time, the KBL bus was
approaching the intersection and its driver was engaged in determining from his conductor if they would
still pass through the town proper of Pila. Upon learning that they were already full, he turned his
attention to the road and found the stopped vehicles at the intersection with the jeepney trying to cross
the intersection. The KBL driver chose to gamble on proceeding on its way, unfortunately, the jeepney
driven by Grajera, which had the right-of-way, was about to cross the center of the highway and was
directly on the path of the KBL bus. The gamble made by Llamoso did not pay off. The impact indicates
that the KBL bus was travelling at a fast rate of speed because, after the collision, it did not stop; it
travelled for another 50 meters and stopped only when it hit an electric post.

~RTC DECISION: On 15 October 1986, after trial, the trial court rendered a judgment in favor of private
respondents and ordering Kapalaran:

• to pay Angel Coronado the sum of P40,000.00 as compensation for the totally wrecked jeepney, plus
the sum of P5,000.00 as attorney's fees and litigation expenses, and

• to Dionisio Shinyo the sum of P35,000.00 representing the expenses incurred by said intervenor for
his treatment including his car-hire, the further sum of P30,000.00 representing the expenses said
defendant will incur for his second operation to remove the intramedulary nail from his femur, the
additional sum of P50,000.00 to serve as moral damages for the pain and suffering inflicted on said
defendant, plus the sum of P10,000.00 in the concept of exemplary damages to serve as a deterrent
to others who, like the plaintiff, may be minded to induce accident victims to perjure themselves in
a sworn statement, and the sum of P15,000.00 as attorney's fees and litigation expenses.

From the above judgment, Kapalaran appealed to the Court of Appeals assailing the trial court's findings
on the issue of fault and the award of damages.

~CA DECISION: The Court of Appeals, on 28 June 1988, affirmed the decision of the trial court but
modified the award of damages by setting aside the grant of exemplary damages as well as the award of
attomey's fee and litigation expenses made to Dionisio Shinyo.

ISSUE: WON KAPALARAN BUS LINE (KBL) is liable for damages from the collision.

RULING: Yes. The law requires petitioner as common carrier to exercise extraordinary diligence
incarrying and transporting their passanger safely "as far as human care and foresight can proved, using
the utmost diligence of very cautious persons, with due regard for all circumstances." In requiring the
highest possible degree of diligence from common carriers and creating a presumption of negligence
against them, the law compels them to curb the recklessness of their drivers. The bus driver was
actually violating the following traffic rules and regulations, among others, in the Land Transportation
and Traffic Code, Republic Act No. 4136, Thus, a legal presumption arose that the bus driver was
negligent 3 a presumption Kapalaran was unable to overthrow.

In much the same vein, we believe that the award by the trial court of P15,000.00 as attorney's fees and
litigation expenses, deleted by the Court of Appeals, should similarly be restored, being both authorized
by law and demanded by substantial justice in the instant case. The Petition for Review on certiorari is
DENIED for lack of merit The Decision of the Court of Appeals is hereby AFFIRMED, except (1) that the
award of exemplary damages to Dionisio Shinyo shall be restored and increased from P10,000.00 to
P25,000.00, and (2) that the grant of attorney's fees and litigation expenses in the sum of P15,000.00 to
Dionisio Shinyo shall similarly be restored. Costs against petitioner.

22. Lara v Valencia; G.R. No. L-9907 ; June 30, 1958

FACTS: The deceased was an inspector of the Bureau of Forestry stationed in Davao. The defendant is
engaged in the business of exporting logs from his lumber concession in Cotabato. Lara went to said
concession upon instructions of his chief to classify the logs of defendant which were about to be loaded
on a ship anchored in the port of Parang. Lara boarded with several others a pick-up bound for Davao
and were seated at the back on an improvised bench. Lara accidentally fell from the pick-up and as a
result he suffered serious injuries which lead to his death.

~RTC DECISION: The RTC held that the defendant failed to observe ordinary care or diligence in
transporting the deceased from Parang to Davao

ISSUE: WON the respondent failed to exercise the ordinary required?

RULING: Yes. The owner and driver of a vehicle owes to accommodation passengers or invited guests
merely the duty to exercise reasonable care so that they may be transported safely to their destination.
Thus, “The rule is established by weight of authority that the owner or operator of an automobile owes
the duty to an invited guest to exercise reasonable care in its operation, and not unreasonably to expose
him to danger and injury by increasing the hazard of travel. The owner of the vehicle in the case at bar is
only required to observe ordinary care, and is not in duty bound to exercise extraordinary diligence as
required by our law. A passenger must observe the diligence of a father of a family to avoid injury to
himself which means that if the injury to the passenger has been proximately caused by his own
negligence, the carrier cannot be held liable. Indeed, the law provides that "A passenger must observe
the diligence of a good father of a family to avoid injury to himself" (Article 1761, new Civil Code)
23. Brinas v People G.R. No. L-30309
FACTS:
In the afternoon of January 6, 1957, Juanito Gesmundo bought a train ticket at the railroad
station in Tagkawayan, Quezon for his 55-year old mother Martina Bool and his 3-year old
daughter Emelita Gesmundo. The two were bound for Lusacan in Tiaong, Quezon.

They boarded the train of Manila Railroad Company at about 2pm. Upon approaching
Barrio Lagalag at 8pm, the train slowed down and the conductor, accused-appellant,
Clemente Brinas, shouted “Lusacan, Lusacan!”

The old woman walked towards the train exit carrying the child with one hand and holding
her baggage with the other. When they were near the door, the train suddenly picked up
speed. The old woman and the child stumbled from the train causing them to fall down the
tracks and were hit by an oncoming train, causing their instant death.

A criminal information was filed against Victor Milan, the driver, Hermogenes Buencamino,
the assistant conductor and Clemente Brinas for Double Homicide thru Reckless
Imprudence.
RTC: But the lower court CONVICTED Milan and Buencamino.
CA: On appeal to the CA, respondent CA affirmed the decision.
Issue: Liable?
Held:
Yes. 'The proximate cause of the injury is not necessarily the immediate cause of, or the
cause nearest in time to, the injury. It is only when the causes are independent of each other
that the nearest is to be charged with the disaster. So long as there is a natural, direct and
continuous sequence between the negligent act the injury (sic) that it can reasonably be said
that but for the act the injury could not have occurred, such negligent act is the proximate
cause of the injury, and whoever is responsible therefore is liable for damages resulting
therefrom.
It is a matter of common knowledge and experience about common carriers like trains and
buses that before reaching a station or flagstop they slow down and the conductor
announces the name of the place. It is also a matter of common experience that as the train
or bus slackens its speed, some passengers usually stand and proceed to the nearest exit,
ready to disembark as the train or bus comes to a full stop. This is especially true of a train
because passengers feel that if the train resumes its run before they are able to disembark;
there is no way to stop it as a bus may be stopped. The appellant was negligent because his
announcement was premature and erroneous, for it took a full 3 minutes more before the
next barrio of Lusacan was reached. The premature announcement prompted the two
victims to stand and proceed to the nearest exit. Without said announcement, the victims
would have been safely seated in their respective seats when the train jerked and picked up
speed. The proximate cause of the death of the victims was the premature and erroneous
announcement of petitioner-appellant.
24. Phil National Railways v Vizcara
Facts:
On May 14, 2004, at about three o’clock in the morning, Reynaldo Vizcara (Reynaldo) was
driving a passenger jeepney headed towards Bicol to deliver onion crops, with his
companions, namely, Cresencio Vizcara (Cresencio), Crispin Natividad (Crispin), Samuel
Natividad (Samuel), Dominador Antonio (Dominador) and Joel Vizcara (Joel). While
crossing the railroad track in Tiaong, Quezon, a Philippine National Railways (PNR) train,
then being operated by respondent Japhet Estranas (Estranas), suddenly turned up and
rammed the passenger jeepney. The collision resulted to the instantaneous death of
Reynaldo, Cresencio, Crispin, and Samuel. On the other hand, Dominador and Joel,
sustained serious physical injuries.4
In their complaint, the respondents alleged that the proximate cause of the fatalities and
serious physical injuries sustained by the victims of the accident was the petitioners’ gross
negligence in not providing adequate safety measures to prevent injury to persons and
properties. They pointed out that in the railroad track of Tiaong, Quezon where the
accident happened, there was no level crossing bar, lighting equipment or bell installed to
warn motorists of the existence of the track and of the approaching train. They concluded
their complaint with a prayer for actual, moral and compensatory damages, as well as
attorney’s fees.6

For their part, the petitioners claimed that they exercised due diligence in operating the
train and monitoring its roadworthiness. They asseverate that right before the collision,
Estranas was driving the train at a moderate speed. Four hundred (400) meters away from
the railroad crossing, he started blowing his horn to warn motorists of the approaching
train. When the train was only fifty (50) meters away from the intersection, respondent
Estranas noticed that all vehicles on both sides of the track were already at a full stop. Thus,
he carefully proceeded at a speed of twenty-five (25) kilometers per hour, still blowing the
train’s horn. However, when the train was already ten (10) meters away from the
intersection, the passenger jeepney being driven by Reynaldo suddenly crossed the tracks.
Estranas immediately stepped on the brakes to avoid hitting the jeepney but due to the
sheer weight of the train, it did not instantly come to a complete stop until the jeepney was
dragged 20 to 30 meters away from the point of collision.7
RTC: Against the PNR
CA: Affirmed with modification on the value of damages.
Issue:
Negligent?
Held:
Yes. PNR is negligent. the records bear out that the factual circumstances of the case were
meticulously scrutinized by both the RTC and the CA before arriving at the same finding of
negligence on the part of the petitioners, and we found no compelling reason to disturb the
same. Both courts ruled that the petitioners fell short of the diligence expected of it, taking
into consideration the nature of its business, to forestall any untoward incident. In
particular, the petitioners failed to install safety railroad bars to prevent motorists from
crossing the tracks in order to give way to an approaching train. Aside from the absence of a
crossing bar, the "Stop, Look and Listen" signage installed in the area was poorly
maintained, hence, inadequate to alert the public of the impending danger. A reliable
signaling device in good condition, not just a dilapidated "Stop, Look and Listen" signage,
is needed to give notice to the public. It is the responsibility of the railroad company to use
reasonable care to keep the signal devices in working order. Failure to do so would be an
indication of negligence.25 Having established the fact of negligence on the part of the
petitioners, they were rightfully held liable for damages.
Contributory negligence?
Here, we cannot see how the respondents could have contributed to their injury when they
were not even aware of the forthcoming danger. It was established during the trial that the
jeepney carrying the respondents was following a ten-wheeler truck which was only about
three to five meters ahead. When the truck proceeded to traverse the railroad track,
Reynaldo, the driver of the jeepney, simply followed through. He did so under the
impression that it was safe to proceed. It bears noting that the prevailing circumstances
immediately before the collision did not manifest even the slightest indication of an
imminent harm. To begin with, the truck they were trailing was able to safely cross the
track. Likewise, there was no crossing bar to prevent them from proceeding or, at least, a
stoplight or signage to forewarn them of the approaching peril. Thus, relying on his
faculties of sight and hearing, Reynaldo had no reason to anticipate the impending
danger.27 He proceeded to cross the track and, all of a sudden, his jeepney was rammed by
the train being operated by the petitioners
Last Clear Chance?
Absent preceding negligence on the part of the respondents, the doctrine of last clear
chance cannot be applied.
he doctrine of last clear chance provides that where both parties are negligent but the
negligent act of one is appreciably later in point of time than that of the other, or where it is
impossible to determine whose fault or negligence brought about the occurrence of the
incident, the one who had the last clear opportunity to avoid the impending harm but failed
to do so, is chargeable with the consequences arising therefrom.