CALVO VS. UCPB GENERAL INSURANCE CO., INC.

G.R. No. 148496 March 19, 2002

FACTS:
Virgines Calvo is the owner of Transorient Container Terminal Services, Inc. (TCTSI), a sole
proprietorship customs broker. She entered into a contract with San Miguel Corporation (SMC) for the
transfer of 114 reels of semi-chemical fluting paper and 124 reels of kraft liner board from the Port
Area in Manila to SMC's warehouse Ermita, Manila. The cargo was insured by respondent UCPB
General Insurance Co., Inc.

On July 14, 1990, the shipment in question, arrived in Manila and, after 24 hours, were unloaded from
the vessel to the custody of the arrastre operator, Manila Port Services, Inc.

From July 23 to July 25, 1990, petitioner, pursuant to her contract with SMC, withdrew the cargo from
the arrastre operator and delivered it to SMC's warehouse. Then, the goods were inspected by Marine
Cargo Surveyors, who found that 15 reels of the semi-chemical fluting paper were "wet/stained/torn"
and 3 reels of kraft liner board were likewise torn.

SMC collected payment from respondent UCPB under its insurance contract for the aforementioned
amount. In turn, respondent, as subrogee of SMC, brought suit against petitioner.

The RTC found the petitioner liable. The RTC's decision was affirmed by the CA. Thus, this instant
petition.

ISSUE:
Whether or not the CA erred in classifying the petitioner as a common carrier and not as a provate or
special carrier who did not hold its services to the public.

RULING:
The contention of the petitioner that she is not a common carrier has no merit.

Article 1732 of the Civil Code which defines common carriers makes no distinction between one
whose principal business activity is the carrying of persons or goods or both, and one who does such
carrying only as an ancillary activity . . . Article 1732 also carefully avoids making any distinction
between a person or enterprise offering transportation service on a regular or scheduled basis and one
offering such service on an occasional, episodic or unscheduled basis. Neither does Article 1732
distinguish between a carrier offering its services to the "general public," and one who offers services
or solicits business only from a narrow segment of the general population.

There is greater reason for holding petitioner to be a common carrier because the transportation of
goods is an integral part of her business. To uphold petitioner's contention would be to deprive those
with whom she contracts the protection which the law affords them notwithstanding the fact that the
obligation to carry goods for her customers, as already noted, is part and parcel of petitioner's business.

"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."

Art. 1733 of the Civil Code provides:

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. . . .

PHILIPPINE AIRLINES VS. CIVIL AERONAUTICS BOARD

G.R. No. 119528 March 26, 1997

FACTS:
On November 24, 1994, GrandAir applied for a Certificate of Public Convenience and Necessity with
the Board. Accordingly, the Chief Hearing Officer of the CAB issued a Notice of Hearing setting the
application for initial hearing and directing GrandAir to serve a copy of the application and
corresponding notice to all scheduled Philippine Domestic operators. GrandAir filed its Compliance,
and requested for the issuance of a Temporary Operating Permit. Petitioner, itself the holder of a
legislative franchise to operate air transport services, filed an Opposition to the said application.

Evenually, the Board promulgated a Resolution approvig the issuance of a Temporary Operating Permit
in favor of GrandAir.

ISSUE:
Whether or not Congress, in enacting Republic Act 776, has delegated the authority to authorize the
operation of domestic air transport services to the CAB, such that Congressional mandate for the
approval of such authority is no longer necessary.

RULING:
It is generally recognized that a franchise may be derived indirectly from the state through a duly
designated agency, and to this extent, the power to grant franchises has frequently been delegated, even
to agencies other than those of a legislative nature. 15 In pursuance of this, it has been held that
privileges conferred by grant by local authorities as agents for the state constitute as much a legislative
franchise as though the grant had been made by an act of the Legislature. n pursuance of this, it has
been held that privileges conferred by grant by local authorities as agents for the state constitute as
much a legislative franchise as though the grant had been made by an act of the Legislature.

Given the foregoing postulates, we find that the Civil Aeronautics Board has the authority to issue a
Certificate of Public Convenience and Necessity, or Temporary Operating Permit to a domestic air
transport operator, who, though not possessing a legislative franchise, meets all the other requirements
prescribed by the law. Such requirements were enumerated in Section 21 of R.A. 776.
There is nothing in the law nor in the Constitution, which indicates that a legislative franchise is an
indispensable requirement for an entity to operate as a domestic air transport operator. Although
Section 11 of Article XII recognizes Congress' control over any franchise, certificate or authority to
operate a public utility, it does not mean Congress has exclusive authority to issue the same.

CERTIFICATE OF PUBLIC CONVENIENCE

Public convenience and necessity exists when the proposed facility will meet a reasonable want of the
public and supply a need which the existing facilities do not adequately afford. It does not mean or
require an actual physical necessity or an indispensable thing.
The terms "convenience" and "necessity" are to be construed together, although they are not
synonymous, and effect must be given both. The convenience of the public must not be circumscribed
by according to the word "necessity" its strict meaning or an essential requisites.

The use of the word "necessity", in conjunction with "public convenience" in a certificate of
authorization to a public service entity to operate, does not in any way modify the nature of such
certification, or the requirements for the issuance of the same. It is the law which determines the
requisites for the issuance of such certification, and not the title indicating the certificate.

MALLARI VS. COURT OF APPEALS

G.R. No. 128607 January 31, 2000

FACTS:
The passenger jeepney driven by petitioner Alfredo Mallari Jr. and owned by his co-petitioner Alfredo
Mallari Sr. collided with the delivery van of respondent Bulletin Publishing Corp. The impact caused
the jeepney to turn around and fall on its left side resulting in injuries to its passengers one of whom
was Israel Reyes who eventually died due to the gravity of his injuries.

Claudia G. Reyes, widow of Israel then filed a complaint for damages against petitioners and also
against BULLETIN, its driver Felix Angeles and the N.V. Netherlands Insurance Company.

The trial court held BULLETIN and its driver liable and ordered them to pay damages to Claudia.

The CA modified the decision of the trial court and found no negligence on part of BULLETIN and its
driver. Instead, it ruled that the collision was caused by the negligence of the petitioner.

ISSUE:
Whether or not the owner of a PUV is also liable in case his driver is found to be negligent and
careless.

RULING:
The negligence and recklessness of the driver of the passenger jeepney is binding against petitioner
Mallari Sr., who admittedly was the owner of the passenger jeepney engaged as a common carrier,
considering the fact that in an action based on contract of carriage, the court need not make an express
finding of fault or negligence on the part of the carrier in order to hold it responsible for the payment of
damages sought by the passenger. Under Art. 1755 of the Civil Code, a common carrier is bound to
carry the passengers safely as far as human care and foresight can provide using the utmost diligence of
very cautious persons with due regard for all the circumstances. Moreover, under Art. 1756 of the Civil
Code, in case of death or injuries to passengers, a common carrier is presumed to have been at fault or
to have acted negligently, unless it proves that it observed extraordinary diligence. Further, pursuant to
Art. 1759 of the same Code, it is liable for the death of or injuries to passengers through the negligence
or willful acts of the former's employees. This liability of the common carrier does not cease upon
proof that it exercised all the diligence of a good father of a family in the selection of its employees.
CALALAS vs. COURT OF APPEALS
G.R. No. 122039

FACTS:
Private respondent Sunga, then a college freshman, took a passenger jeepney owned and operated by
petitioner Vicente Calalas. As the jeepney was filled to capacity of about 24 passengers, Sunga was
given by the conductor an "extension seat," a wooden stool at the back of the door at the rear end of the
vehicle.

When the jeepney stopped to let a passenger off, Sunga gave way to the outgoing passenger. Just as she
was doing so, a truck driven by Iglecerio Verena and owned by Francisco Sava bumped the left portion
of the jeepney resulting to Sunga being injured.

Sunga filed a complaint against Calalas, alleging a violaton of the contract of carriage by the former in
failing to exercise the diligence required of him as a common carrier. Calalas, on the other hand, filed a
third-party complaint against Francisco Salva, the owner of the truck.

The lower Court rendered judgment aganst Salva and absolved Calalas. On appeal to the CA, the ruling
of the RTC was reversed on the ground that Sunga's cause of action was based on a contract of carriage,
not quasi-delict.

ISSUE:
Whether or not Calalas was liable for contract of carriage.

RULING:
The petition has no merit.

Quasi-delict, also nown as culpa aquiliana or cula extra contractual, has as its source the negligence of
the torfeasor. The second, breach of contract or culpa contratual, is premised upon the negligence in the
performance of a contractual obligation.

In quasi-delict, the negligence or fault should be clearly established because it is the basis of the action,
whereas in breach of contract, the action can be prosecuted merely by proving the existence of the
contract and the fact that the obligor, in this case the common carrier, failed to transport his passenger
safely to his destination. In case of death or injuries to passengers, Art. 1756 of the Civil Code provides
that common carriers are presumed to have been at fault or to have acted negligently unless they prove
that they observed extraordinary diligence as defined in Arts. 1733 and 1755 of the Code. This
provision necessarily shifts to the common carrier the burden of proof.

The doctrine of proximate cause is applicable only in actions for quasi-delict, not in actions involving
breach of contract. The doctrine is a device for imputing liability to a person where there is no relation
between him and another party. In such a case, the obligation is created by law itself. But, where there
is a pre-existing contractual relation between the parties, it is the parties themselves who create the
obligation, and the function of the law is merely to regulate the relation thus created.

In the case at bar, upon the happening of the accident, the presumption of negligence at once arose, and
it became the duty of petitioner to prove that he had to observe extraordinary diligence in the care of
his passengers.
PHILIPPINE-AMERICAN GENERAL INSURANCE CO., INC. VS. MGG MARINE
SERVICES
G.R. 135645 March 8, 2002

FACTS:
On March 1, 1987, San Miguel Corporation insured several beer bottle cases with petitioner Philippine
American General Insurance Company.

The weather was calm when the vessel started its voyage. The following day, M/V Peatheray Patrick-G
listed and subsequently sunk off. As a consequence thereof, the cargo belonging to San Miguel
Corporation was lost.

Subsequently, San Miguel Corporation claimed the amount of its loss from petitioner.

The circumstances surrounding the loss of the cargo was investigated. The surveyor stated that the
vessel was structurally sound and that he did not see any damage or crack thereon. He concluded that
the proximate cause of the sinking of the vessel was the shifting of ballast water from starboard to
portside.

The Board of Marine Inquiry also conducted its own ivestigation and found that the cause of the
sinking of the veseel was the existence of strong winds and enormous waves which was a fortuitous
event.

ISSUE:
Whether or not the respondents should be held liable for the loss of cargo of SMC.

RULING:
Common carriers are mandated to observe extraordinary diligence in the vigilance over the goods and
for the safety of the passengers transported by them. Owing to this high degree of diligence required of
them, common carriers, as a general rule, are presumed to have been at fault or negligent if the goods
transported by them are lost, destroyed or if the same deteriorated.

However, this presumption of fault or negligence does not arise in the cases enumerated under Article
1734 of the Civil Code.

In order that a common carrier may be absolved from liability where the loss, destruction or
deterioration of the goods is due to a natural disaster or calamity, it must further be shown that the such
natural disaster or calamity was the proximate and only cause of the loss; there must be "an entire
exclusion of human agency from the cause of the injury of the loss."

Moreover, even in cases where a natural disaster is the proximate and only cause of the loss, a common
carrier is still required to exercise due diligence to prevent or minimize loss before, during and after the
occurrence of the natural disaster, for it to be exempt from liability under the law for the loss of the
goods. If a common carrier fails to exercise due diligence--or that ordinary care which the
circumstances of the particular case demand -- to preserve and protect the goods carried by it on the
occasion of a natural disaster, it will be deemed to have been negligent, and the loss will not be
considered as having been due to a natural disaster under Article 1734.
Since the presence of strong winds and enormous waves was shown to be the proximate and only cause
of the sinking of the M/V Peatheray Patrick-G and the loss of the cargo belonging to San Miguel
Corporation, private respondents cannot be held liable for the said loss.

ARADA VS. COURT OF APPEALS

G.R. No. 98243 July 1, 1992

FACTS:
Alejandro Arada, herein petitioner, is the proprietor and operator of the firm South Negros Enterprises.
It is engaged in the business of small scale shipping as a common carrier, servicing the hauling of
cargoes of different corporations and companies

Petitioner entered into a contract with private respondent to safely transport as a common carrier,
cargoes of the latter from San Carlos City, Negros Occidental to Mandaue City using one of petitioner's
vessels, M/L Maya.

M/L Maya was given clearance as there was no storm and the sea was calm. Hence, said vessel left for
Mandaue City. While it was navigating towards Cebu, a typhoon developed and said vessel was
buffeted on all its sides by big waves. Its rudder was destroyed and it drifted for sixteen (16) hours
although its engine was running. Eventually, the vessel sank with whatever was left of its cargoes.

The Board of Marine Inquiry then conducted a hearing on the basis of a marine protest by Vivencio
Babao.

ISSUE:
Whether or not the petitioner is a private carrier which duty does not require extraordinary diligence
and it should not be liable for the private respondent's loss of goods.

RULING:
The petition is devoid of merit.

In the case at bar, there is no doubt that petitioner was exercising its function as a common carrier when
it entered into a contract with private respondent to carry and transport the latter's cargoes.

A common carrier, both from the nature of its business and for insistent reasons of public policy is
burdened by law with the duty of exercising extraordinary diligence not only in ensuring the safety of
passengers, but in caring for the goods transported by it. The loss or destruction or deterioration of
goods turned over to the common carrier for the conveyance to a designated destination raises instantly
a presumption of fault or negligence on the part of the carrier, save only where such loss, destruction or
damage arises from extreme circumstances such as a natural disaster or calamity ... (Benedicto v. IAC,
G.R. No. 70876, July 19, 1990, 187 SCRA 547) .

In order that the common carrier may be exempted from responsibility, the natural disaster must have
been the proximate and only cause of the loss. However, the common carrier must exercise due
diligence to prevent or minimize the loss before, during and after the occurrence of flood, storm or
other natural disaster in order that the common carrier may be exempted from liability for the
destruction or deterioration of the goods (Article 1739, New Civil Code).
SERVANDO VS. PHILIPPINE STEAM NAVIGATION
G.R. No. L-36481-2 October 23, 1982

FACTS:
Appellees Clara Uy Bico and Amparo Servando loaded on board the appellant's vessel, FS-176, for
carriage from Manila to Pulupandan, Negros Occidental cargoes.

Upon arrival of the vessel at Pulupandan, the cargoes were discharged, complete and in good order,
unto the warehouse of the Bureau of Customs. In the afternoon of the same day, said warehouse was
razed by a fire of unknown origin, destroying appellees' cargoes.

It should be pointed out, however, that in the bills of lading issued for the cargoes in question, the
parties agreed to limit the responsibility of the carrier for the loss or damage that may be caused to the
shipment. The appellees contended that the stipulation did not bind them because it was printed in fine
letters on the back of the bills of ading and that they did not sign the same.

ISSUE:
Whether or not the stipulation written on the back of the bills of lading/ contract of adhesion is binding
upon the parties even when one party did not sign the same.

RULING:
It is what is known as a contract of 'adhesion', in regards which it has been said that contracts of
adhesion wherein one party imposes a ready made form of contract on the other, as the plane ticket in
the case at bar, are contracts not entirely prohibited. The one who adheres to the contract is in reality
free to reject it entirely; if he adheres, he gives his consent." (Tolentino, Civil Code, Vol. IV, 1962 Ed.,
p. 462, citing Mr. Justice J.B.L. Reyes, Lawyer's Journal, Jan. 31, 1951, p. 49).

Thus, where fortuitous event or force majeure is the immediate and proximate cause of the loss, the
obligor is exempt from liability for non-performance. In the case at bar, the burning of the customs
warehouse was an extraordinary event which happened independently of the will of the appellant. The
latter could not have foreseen the event.

TELENGTAN BROTHERS & SONS, INC. vs. COURT OF APPEALS

G.R. No. 110581 September 21, 1994

FACTS:
Private respondent Kawasaki Kishen Kaisha, Ltd. is a foreign shipping company doing business in the
Philippines and entered into a contract of affreightment with Van Reekum Paper, Inc. The shipment
was consigned to herein petitioner La Suerte Cigar & Cigarette Factory. The contract of affreightment
was embodied in Bill of Lading No. 602 issued by the carrier to the shipper.

The Island Brokerage Co. presented, in behalf of petitioner, the shipping documents to the Customs
Marine Division of the Bureau of Customs. But the latter refused to act on them because the manifest
of the SS Far East Friendship covered only 10 containers, whereas the bill of lading covered 12
containers.
The broker, therefore, sent back the manifest to the shipping agent with the request that the manifest be
amended. Smith, Bell & Co. refused on the ground that an amendment, as requested, would violate
§1005 of the Tariff and Customs Code relating to unmanifested cargo. Later, however, it agreed to add
a footnote.

ISSUE:
Whether or not the petitioner is liable for demurrage for delay in removing its cargo from the
containers.

RULING:
Yes. The petitioner is liable.

Demurrage, in its strict sense, is the compensation provided for in the contract of affreightment for the
detention of the vessel beyond the time agreed on for loading and unloading. Essentially, demurrage is
the claim for damages for failure to accept delivery. In a broad sense, every improper detention of a
vessel may be considered a demurrage. Liability for demurrage, using the word in its strictly technical
sense, exists only when expressly stipulated in the contract. Using the term in [its broader sense,
damages in the] nature of demurrage are recoverable for a breach of the implied obligation to load or
unload the cargo with reasonable dispatch, but only by the party to whom the duty is owed and only
against one who is a party to the shipping contract.

Now a bill of lading is both a receipt and a contract. As a contract, its terms and conditions are
conclusive on the parties, including the consignee.

Petitioner's argument that it is not bound by the bill of lading issued by K-Line because it is a contract
of adhesion, whose terms as set forth at the back are in small prints and are hardly readable, is without
merit.

Indeed, there is no reason why petitioner should not get its cargo after paying all demurrage charges
due on July 13, 1979. If it paid P20,180.00 more in demurrage charges after July 13, 1979 it was only
because respondents would not release the goods. Even then petitioner was able to obtain the release of
cargo from five container vans. Its trucks were unable to load anymore cargo and returned to
petitioner's premises empty.

In sum, we hold that petitioner can be held liable for demurrage only for the period July 3-13, 1979.

HOME INSURANCE COMPANY VS. AMERICAN STEAMSHIP AGENCIES

G.R. No. L-25599 April 4, 1968

FACTS:
"Consorcio Pesquero del Peru of South America" shipped jute bags of Peruvian fish meal through SS
Crowborough, covered by clean bills of lading. The cargo, consigned to San Miguel Brewery, Inc., and
insured by Home Insurance Company arrived in Manila and was discharged into the lighters of Luzon
Stevedoring Company. When the cargo was delivered to consignee San Miguel Brewery Inc., there
were shortages, causing the latter to lay claims against Luzon Stevedoring Corporation, Home
Insurance Company and the American Steamship Agencies, owner and operator of SS Crowborough.

Because the others denied liability, Home Insurance Company paid the consignee — the insurance
value of the loss, as full settlement of the claim. Having been refused reimbursement by both the Luzon
Stevedoring Corporation and American Steamship Agencies, Home Insurance Company, as subrogee to
the consignee, filed against them on a complaint for recovery.

In answer, Luzon Stevedoring Corporation alleged that it delivered with due diligence the goods in the
same quantity and quality that it had received the same from the carrier.
American Steamship Agencies denied liability by alleging that under the provisions of the Charter party
referred to in the bills of lading, the charterer, not the shipowner, was responsible for any loss or
damage of the cargo.

ISSUE:
Whether or not the stipulation in the charter party of the owner's non-liability valid so as to absolve the
American Steamship Agencies from liability for loss.

RULING:
Under American jurisprudence, a common carrier undertaking to carry a special cargo or chartered to a
special person only, becomes a private carrier. As a private carrier, a stipulation exempting the owner
from liability for the negligence of its agent is not against public policy, and is deemed valid.

The consignee may not claim ignorance of said charter party because the bills of lading expressly
referred to the same. Accordingly, the consignees under the bills of lading must likewise abide by the
terms of the charter party. And as stated, recovery cannot be had thereunder, for loss or damage to the
cargo, against the shipowners, unless the same is due to personal acts or negligence of said owner or its
manager, as distinguished from its other agents or employees. In this case, no such personal act or
negligence has been proved.

BA FINANCE VS. COURT OF APPEALS

G.R. No. L-105190 December 16, 1993

FACTS:
The defendant entered into a purported contract of lease with the plaintiff, leasing one motor vehicle
with a monthly rental.

The defendant defaulted in complying with the terms and conditions of their agreement by failing to
pay several monthly installments stipulated therein.

The trial curt ruled in favor of the private respondent, prompting the petitioner to elevate the case to the
CA . The CA affirmed the decision of the trial court.

The transaction involved in the present case admittedly is one of a "financial leasing," where a
financing company would, in effect, initially purchase a mobile equipment and turn around to lease it to
a client who gets, in addition, an option to purchase the property at the expiry of the lease period. A
financial lease is a species of secured financing which is fairly new. It is considered a legitimate
contract, and it has been accorded statutory and administrative recognition.

In the case at bench, the contract was executed over a motor vehicle, with the petitioner, as lessor, and
the private respondent, as lessee.
It is the Court's perception that the plaintiff purchased the automobile involved herein for the sum of
P54,000.00 from the Automart Corporation which delivered the same to him on November 4, 1975
(Exh. E). On June 20, 1977, the plaintiff and the defendant signed the purported contract of lease, using
the printed financing form of the plaintiff, but which transaction, according to the existing facts and
circumstances, was, actually, a financing scheme, with the plaintiff as the financier, advancing the
payment of defendant's automobile, whereby the defendant on his part, agreed to pay to the plaintiff,
for purposes of the financing scheme for agreement, even as it appears that the automobile involved
herein was actually already delivered by Automart Corporation to the defendant who acknowledged
receipt thereof.

ISSUE:
Whether or not the registered owner has a liability if his vehicle is already sold to another person.

RULING:
The only logical conclusion is that the private respondent did opt, as he has claimed, to acquire the
motor vehicle, justifying then the application of the guarantee deposit to the balance still due and
obligating the petitioner to recognize it as an exercise of the option by the private respondent. The
result would thereby entitle said respondent to the ownership and possession of the vehicle as the buyer
thereof.

BASCOS VS. COURT OF APPEALS

G.R. No. 101089 April 7, 1993

FACTS:
Rodolfo A. Cipriano representing Cipriano Trading Enterprise entered into a hauling contract with
Jibfair Shipping Agency Corp. To carry out its obligation, CIPTRADE, subcontracted with Bascos.
Petitioner failed to deliver the said cargo. As a consequence of that failure, Cipriano paid Jibfair
Shipping Agency the amount of the lost goods in accordance with their contract.

Cipriano demanded reimbursement from petitioner but the latter refused to pay. Eventually, Cipriano
filed a complaint for a sum of money and damages with writ of preliminary attachment for breach of a
contract of carriage. The trial court granted the writ of preliminary attachment.

In her answer, petitioner interposed the defense that there was no contract of carriage since CIPTRADE
leased her cargo truck to load the cargo from Manila Port Area to Laguna and that the truck carrying
the cargo was hijacked and being a force majeure, exculpated petitioner from any liability.

The trial court rendered a decision in favor of Cipriano and against Bascos.

Petitioner appealed to the Court of Appeals but respondent Court affirmed the trial court’s judgment.

Hence this petition for review on certiorari.

ISSUE:
1. Whether or not petitioner a common carrier
2. Whether or not the hijacking referred to a force majeure

RULING:
The petition is DISMISSED and the decision of the Court of Appeals is hereby AFFIRMED.

1. YES

In disputing the conclusion of the trial and appellate courts that petitioner was a common carrier, she
alleged in this petition that the contract between her and Cipriano was lease of the truck. She also stated
that: she was not catering to the general public. Thus, in her answer to the amended complaint, she said
that she does business under the same style of A.M. Bascos Trucking, offering her trucks for lease to
those who have cargo to move, not to the general public but to a few customers only in view of the fact
that it is only a small business.

We agree with the respondent Court in its finding that petitioner is a common carrier.

Article 1732 of the Civil Code defines a common carrier as “(a) person, corporation or firm, or
association engaged in the business of carrying or transporting passengers or goods or both, by land,
water or air, for compensation, offering their services to the public.” The test to determine a common
carrier is “whether the given undertaking is a part of the business engaged in by the carrier which he
has held out to the general public as his occupation rather than the quantity or extent of the business
transacted.” 12 In this case, petitioner herself has made the admission that she was in the trucking
business, offering her trucks to those with cargo to move. Judicial admissions are conclusive and no
evidence is required to prove the same. 13

But petitioner argues that there was only a contract of lease because they offer their services only to a
select group of people. Regarding the first contention, the holding of the Court in De Guzman vs. Court
of Appeals 14 is instructive. In referring to Article 1732 of the Civil Code, it held thus:

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

2. NO

Likewise, We affirm the holding of the respondent court that the loss of the goods was not due to force
majeure.

Common carriers are obliged to observe extraordinary diligence in the vigilance over the goods
transported by them. Accordingly, they are presumed to have been at fault or to have acted negligently
if the goods are lost, destroyed or deteriorated. There are very few instances when the presumption of
negligence does not attach and these instances are enumerated in Article 1734. 19 In those cases where
the presumption is applied, the common carrier must prove that it exercised extraordinary diligence in
order to overcome the presumption.

In this case, petitioner alleged that hijacking constituted force majeure which exculpated her from
liability for the loss of the cargo. In De Guzman vs. Court of Appeals, the Court held that hijacking, not
being included in the provisions of Article 1734, must be dealt with under the provisions of Article
1735 and thus, the common carrier is presumed to have been at fault or negligent. To exculpate the
carrier from liability arising from hijacking, he must prove that the robbers or the hijackers acted with
grave or irresistible threat, violence, or force. This is in accordance with Article 1745 of the Civil Code
which provides:

“Art. 1745. Any of the following or similar stipulations shall be considered unreasonable, unjust and
contrary to public policy; xx

(6) That the common carrier’s liability for acts committed by thieves, or of robbers who do not act with
grave or irresistible threat, violences or force, is dispensed with or diminished;”

PAL vs. COURT OF APPEALS

G.R. No. L-82619 September 15, 1993

FACTS:
Zapatos filed a complaint for damages for breach of contract of carriage against PAL. He took a flight
from Cebu-Ozamiz. 15 minutes before landing at Ozamiz, the pilot received a radio message that the
airport was closed due to heavy rains and inclement weather and that he should proceed to Cotabato
City instead.

He was not given accommodation to the flight back to Cebu and the flight thenext day to Ozamiz. His
belongings (including camera worth 2k) were still on board when the plane flew back to Cebu and were
no longer recovered. He received under protest a free ticket to Iligan. PAL did not provide him with
transportation from the airport to the city proper nor food and accommodation for his stay in Cotabato.
The next day, he purchased a ticket to Iligan, informing PAL he would not use the free ticket because
he was filing a case against it.

RTC ordered PAL to pay. CA affirmed.

ISSUE:
Whether or not PAL is liable.
RULING:
PAL did not rebut the evidence alleging its negligence in caring for its stranded passengers.

The contract of air carriage is a peculiar one. Being imbued with public interest, the law requires
common carriers to carry the passengers safely as far as human care and foresight can provide, using
the utmost diligence of every cautious persons, with due regard for all circumstances.

Undisputably, PAL's diversion of its flight due to inclement weather was a fortuitous event.
Nonetheless, such occurrence did not terminate PAL's contract withits passengers. Being in the
business of air carriage and the sole one to operate inthe country, PAL is deemed equipped to deal with
situations as in the case at bar.What we said in one case once again must be stressed, i.e., the relation of
carrier and passenger continues until the latter has been landed at the port of destinationand has left the
carrier's premises. Hence, PAL necessarily would still have toexercise extraordinary diligence in
safeguarding the comfort, convenience and safety of its stranded passengers until they have reached
their final destination. On this score, PAL grossly failed considering the then ongoing battle
between government forces and Muslim rebels in Cotabato City and the fact that the private respondent
was a stranger to the place.

Since part of the failure to comply with the obligation of common carrier to deliver its passengers
safely to their destination lay in the defendant's failure to provide comfort and convenience to its
stranded passengers using extraordinary diligence, the cause of nonfulfillment is not solely and
exclusively due to fortuitous event, but due to something which defendant airline could have prevented,
defendant becomes liable to plaintiff.

Admittedly, private respondent's insistence on being given priority in accommodation was

unreasonable considering the fortuitous event and that there was a sequence to be observed in the
booking, i.e., in the order the passengers checked in at their port of origin. His intransigence in fact was
the main cause for his having to stay at the airport longer than was necessary. (moral damages is
reduced)

Presumption of Negligence- Art. 1756

Force Majeure

VICTORY LINER VS. GAMMAD

G.R. No. 159636 November 25, 2004

FACTS:
Gammad's wife Marie Grace Pagulayan-Gammad, was on board a Victory Liner bus. The bus, while
running at a high speed fell on a ravine, which resulted in the death of Marie Grace and physical
injuries to other passengers.

Respondent heirs of the deceased filed a complaint for damages arising from culpa contractual against
petitioner. Petitioner claimed that the incident was purely accidental and that it has always exercised
extraordinary diligence in its 50 years of operation.

ISSUE:
Whether or not the petitioner should be held liable for breach of contract of carriage.

RULING:
Petitioner was correctly found liable for breach of contract of carriage. A common carrier 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 to all the circumstances. In a contract of carriage, it is presumed
that the common carrier was at fault or was negligent when a passenger dies or is injured. Unless the
presumption is rebutted, the court need not even make an express finding of fault or negligence on the
part of the common carrier. This statutory presumption may only be overcome by evidence that the
carrier exercised extraordinary diligence.

In the instant case, there is no evidence to rebut the statutory presumption that the proximate cause of
Marie Grace's death was the negligence of petitioner.